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Emissions Trading Scheme—Costs to Taxpayers

Tuesday 22 September 2009 (advance copy) Hansard source (external site)

Chauvel8. CHARLES CHAUVEL (Labour) Link to this
to the Minister for Climate Change Issues

Have officials advised him that the changes to the emissions trading scheme transfer the costs away from polluters to taxpayers?

SmithHon Dr NICK SMITH (Minister for Climate Change Issues) Link to this

No. In fact, Treasury estimates over the first decade of the emissions trading scheme with our changes actually show a saving of about $100 million. The irony of Labour’s cries of billion-dollar subsidies for big polluters is that for the first 10 years of the scheme Labour had bigger subsidies. That is because our scheme starts phasing out industry support in 2013, whereas under Labour those high levels relate all the way through to 2018.

ChauvelCharles Chauvel Link to this

Does he agree with the comment from David Carter last week in relation to the phase-out of allocation units that “We are proposing to move it at 1.3 percent over 90 years.”; if so, what is the fiscal cost of extending the phase-out for allocation units for the agriculture sector to 2099?

SmithHon Dr NICK SMITH Link to this

I am ambitious for this Government, and I know that it will be a long Government; I am not sure whether we will be here for 90 years! What I do know is that in the foreseeable future, between 2012 and 2018, Labour’s scheme provided no reduction in allocations at all, whereas under the revised scheme we are starting to phase out that support for industry from 2013.

ChauvelCharles Chauvel Link to this

Has the Minister seen the recent environment report from Methanex, the world’s largest supplier of methanol, which shows that its New Zealand plant has the highest emissions intensity per unit of output of any such plant on the planet; and what financial benefits will Methanex receive from the proposed changes to the emissions trading scheme—in particular, the switch to an intensity-based allocation with no cap?

SmithHon Dr NICK SMITH Link to this

One of the changes we are making to the emissions trading scheme is to allocate on industry averages, rather than, as under the existing law, just 2005 figures. There is a good reason for that. Some companies out there that have invested in new energy efficiency will be disadvantaged by Labour’s scheme. With our approach, those industries that are better than the industry average will get higher allocations, and those that are behind the pace, who have not invested in any efficiency, will be worse off. That makes common sense.

SmithMr SPEAKER Link to this

Before I go to the next member, it would be helpful if the Minister, if he is able, was to answer some aspect of the question about Methanex. I invite the Minister to do so.

SmithHon Dr NICK SMITH Link to this

Methanex is just one of a number of companies in terms of the issue of industry allocations; there are about 80 of them. I do not have specific information about that company, any more than I do about the other 79.

ParataHekia Parata Link to this

Tēnā koe, Mr Speaker. Tēnā tātou e te Whare. How does New Zealand’s revised emissions trading scheme compare internationally, noting that Jeanette Fitzsimons has said in response to the changes that when she goes to Copenhagen she will wear a sign around her neck stating “Ashamed to be a New Zealander”?

SmithHon Dr NICK SMITH Link to this

Jeanette Fitzsimons needs to consider the facts. On 1 July 2010 New Zealand will have the first emissions trading scheme up and running outside Europe, and it will cover more sectors than the European scheme does. We were also the first country in the world to include forestry, in 2008, and we were the very first country in the world to have a plan for introducing agriculture, in 2015. If we can settle our emissions trading scheme by December, we will be at the front end of international action on climate change, and will actually have the most comprehensive emissions trading scheme of any country in the world.

GarrettDavid Garrett Link to this

Does he classify carbon dioxide as a pollutant; if so, on what scientific grounds?

SmithHon Dr NICK SMITH Link to this

As with all things, it depends on its concentration. Carbon dioxide is absolutely required for life, but as its concentration increases, it has the potential to destabilise the climate. That is why there is international concern and international negotiations to limit the amount of carbon dioxide that we emit into the atmosphere.

ParataHekia Parata Link to this

What reports has the Minister received on the claims made by Phil Goff that the taxpayer will hand over $2 billion to Rio Tinto’s Bluff smelter?

SmithHon Dr NICK SMITH Link to this

Those numbers are a nonsense. I would point out that of the more than 100 aluminium smelters in the world, the Bluff smelter, on 1 July next year, will be the very first to face a carbon price for its pollution. The European scheme excludes aluminium smelters until 2013, the Australian scheme excludes them until 2011, and the Waxman-Markey Bill in the United States excludes them until 2012. Let me tell members how much aluminium would need to be produced at the smelter for Mr Goff’s figures to be accurate: all of the aluminium produced in the whole world, from all 100 smelters, would need to come out of Bluff. I do not think that is a reasonable scenario, I say to Mr Goff.

SmithMr SPEAKER Link to this

I call Charles Chauvel. [ Interruption] I have called Charles Chauvel. [ Interruption] I ask members to please cease conducting a debate across the Chamber, and to show some courtesy to Charles Chauvel, whom I have asked to ask a supplementary question.

ChauvelCharles Chauvel Link to this

How long will Rio Tinto receive taxpayer funding to offset its emissions, under the proposed changes to the emissions trading scheme, and what is the fiscal value of that increased taxpayer subsidy to Rio Tinto?

SmithHon Dr NICK SMITH Link to this

Let me make the point again, because it is important. On 1 July next year the Bluff smelter will be the very first aluminium smelter of the 100 smelters in the world to face a cost—

ChauvelCharles Chauvel Link to this

I raise a point of order, Mr Speaker. It was a very simple question with two elements and no political spin to it: how long will the subsidy last and what is the fiscal value? The question is not being addressed.

SmithMr SPEAKER Link to this

I ask the Minister to answer either one. He does not have to answer both bits, but I would ask him to answer at least one of them.

SmithHon Dr NICK SMITH Link to this

The level of allocation made to the smelter in Bluff at 90 percent of its production levels will provide a level of support no different from what Labour provided under its legislation, and the reality of the changes is that it will get a lesser level of allocation between 2013 and 2018. The idea that I have specific figures for every one of the 80 industries—

GoffHon Phil Goff Link to this

Oh well, you had them before.

SmithHon Dr NICK SMITH Link to this

I can say this to Mr Goff: it is less than what was provided under Labour’s scheme.

SmithMr SPEAKER Link to this

Question No. 9, Shane Ardern. [ Interruption]

SmithHon Dr NICK SMITH Link to this

I raise a point of order, Mr Speaker. Mr Cunliffe, who seems to be getting a bit agitated about this issue—

SmithMr SPEAKER Link to this

I would ask members when raising points of order to please not use that kind of language.

SmithHon Dr NICK SMITH Link to this

Mr Cunliffe made false claims, saying that I was misleading the House, that I was shifty, and that I was not telling the truth. I take offence at that.

SmithMr SPEAKER Link to this

The Minister has taken offence at an interjection made across the House. I would ask the member who made the comment to withdraw and apologise for it.

CunliffeHon David Cunliffe Link to this

First, a correction—

SmithMr SPEAKER Link to this

No. Offence was taken and I have asked the member to—

CunliffeHon David Cunliffe Link to this

I apologise. Point of order.

SmithMr SPEAKER Link to this

But I have asked the member to withdraw and apologise for the comment.

CunliffeHon David Cunliffe Link to this

I have, Mr Speaker.

CunliffeHon David Cunliffe Link to this

I raise a point of order, Mr Speaker. I would simply contend that in light of the Minister’s answer, which—following your ruling—refused to provide information—

SmithMr SPEAKER Link to this

I ask the member to resume his seat and reflect on whether it is helpful to the good order of the House for him to carry on in that way. I asked the Minister to answer the question asked, which not too many Speakers have done. I believed that it was in the interests of the House. It is not helpful then to have insulting accusations made across the House. The Minister took offence. I asked the member to withdraw and apologise, and that should be the end of the matter.

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