6. JOHN BOSCAWEN (ACT) Link to this
to the Minister for Climate Change Issues
What will be the cost applied to the average dairy herd by the emissions trading scheme from 1 July this year?
Hon Dr NICK SMITH (Minister for Climate Change Issues) Link to this
Dairy herd methane emissions have grown from 5,000 million tonnes in 1990 to 9,000 million tonnes today. Although this is a cost to New Zealand under the Kyoto Protocol, it is not being borne by farmers. This Government has deferred the entry of agriculture for 2 years because of competitiveness issues. Dairy farmers, like all New Zealanders, will face a price impact for fuel of 3.5c per litre, and for power of 1.2c per kilowatt hour, from 1 July. This cost was halved by National’s moderation of the emissions trading scheme. The cost of that scheme for dairy companies is estimated to be 1.8c per kilogram of milkfat, which amounts to $2,100 for the Ministry of Agriculture and Forestry’s model farm on an average milk income of $820,000, or 0.2 percent of turnover.
How does the Minister reconcile his answer with Meat and Wool New Zealand’s analysis that the emissions trading scheme will cost the average dairy farmer $3,900 per annum from 1 July this year, another $3,900 per annum from 1 January 2013, and finally a further $2,400—a total of $10,200 per annum—from 1 January 2015?
Hon Dr NICK SMITH Link to this
I will make three points. The first is that I have not seen the analysis that the member has referred to, but I note that the largest emissions from farms are those for methane and nitrous oxide, which are not to be applied from 1 July. In fact, this Government has deferred their cost by 2 years. In respect of the cost for fuel and power, the cost for a dairy farmer will be exactly the same as for all New Zealanders. In respect of the analysis I have seen, the cost to dairy companies will be 1.8c per kilogram of milkfat—the price of which at the moment, I think, is 680c per kilogram—or 0.2 percent of a dairy farmer’s turnover.
Chris AuchinvoleWhat advice has the Minister received on the overall cost of the emissions trading scheme to consumers and businesses in its first year; and how does this compare with the value of the allocation this year to the forestry sector?
Hon Dr NICK SMITH Link to this
The overall cost to consumers and businesses of the emissions trading scheme in the first year will be $400 million. It is estimated, though, that in the same first year $1.1 billion will be allocated in carbon credits to the forestry sector. By honouring commitments to give credits to the forestry sector, and by softening the costs to consumers and businesses, the Government will be making a significant loss on the emissions trading scheme. Those advocating deferring the emissions trading scheme need to acknowledge that they would be interfering in the property rights of foresters who, in good faith, have planted trees since 1990, thus offsetting New Zealand’s 23 percent increase in gross emissions.