10. CHRIS AUCHINVOLE (National—West Coast - Tasman) Link to this
to the Minister for Climate Change Issues
What benefits are there for New Zealand in proceeding with the moderated emissions trading scheme on 1 July 2010?
Hon Dr NICK SMITH (Minister for Climate Change Issues) Link to this
The emissions trading scheme has three main benefits: firstly, it provides a clear financial incentive to plant trees and not deforest, and given the trend of recent years, that is critical for New Zealand’s long-term future; secondly, it provides an incentive for investment in renewable generation after a decade of a declining proportion of renewable power; and, thirdly, it provides the right environment for business and industry to invest in new, energy-efficient technologies that will be critical to New Zealand’s long-term competitiveness. Without the emissions trading scheme, New Zealand would not meet its Kyoto Protocol target, and that would come at a cost to all New Zealand taxpayers.
Are claims correct that New Zealand is the first in the world to have an emissions trading scheme, and that it is just a tax for revenue purposes?
Hon Dr NICK SMITH Link to this
No, 38 countries have commitments under the Kyoto Protocol, and 29 of them, or three-quarters, already have an emissions trading scheme. Nor is the scheme a tax. Although consumers and businesses will pay $350 million in the first year of the scheme for their emissions, foresters will receive $1,100 million in carbon credits for post-1989 forests. Far from providing net revenue to the Government, the scheme is actually a cost to the Crown. There are 12,000 New Zealanders who, in good faith, planted trees on the assurances of both National and Labour Governments that they would receive carbon credits for those post-1989 forests. The emissions trading scheme honours that commitment.
John BoscawenDoes he agree with the statement: “… New Zealanders will be the only people in the world paying it. It will drive up the costs of living and undermine the competitiveness of New Zealand business for negligible environmental gain. … Ministers may take pride in being toasted at international Climate conferences for being so bold and brave, but there is no justification for New Zealand going out in the cold by itself on this issue.”; if not, what part of the honourable member for Nelson’s statement in November 2005 does he disagree with?
Hon Dr NICK SMITH Link to this
The member very conveniently ignored that in that quote was reference to Labour’s carbon tax. National has been absolutely consistent in opposing a carbon tax. An emissions trading scheme is significantly different, in that next year it will provide over $1,100 million of credits to foresters, and it does not produce a net revenue gain for the Crown.
What steps has the Government taken to reduce the cost of the emissions trading scheme for households and businesses, and to ensure that New Zealand’s international competitiveness is not adversely affected?
Hon Dr NICK SMITH Link to this
This Government has more than halved the cost of the emissions trading scheme for households and businesses by providing for only a half-obligation from 1 July. Most countries in the Kyoto Protocol have a full obligation on their energy and industrial sectors. We have introduced a price cap of $25, and we have addressed the international competitive issues by taking an intensity-based approach to allocations. This Government is very cognisant of international developments, which is why the legislation provides for a review in 2011. I have signalled that we would not proceed with a full obligation or the entry of further sectors unless progress was made by New Zealand’s significant trading partners.
Why has the Government abandoned its policy of harmonising our emissions trading scheme with Australia’s, and why will the Government not follow the decision of the Australian Prime Minister, Kevin Rudd, to put Australia’s emissions trading scheme on hold until 2013?
Hon Dr NICK SMITH Link to this
Over lunch I spoke with the Hon Penny Wong, the Australian Minister for Climate Change and Water. She reinforced to me that the Australian Government’s preference remains an emissions trading scheme or carbon pollution reduction scheme, but it has been unable to secure the numbers within its Parliament to progress it. I remain of the view that the changes this Government made to the emissions trading scheme last year were in New Zealand’s best interests, and that is why we passed them into law. I would much rather be in the position that New Zealand is of having settled emissions trading scheme legislation than have the uncertainty that exists in Australia and the United States in this important area of public policy.
Charles ChauvelDoes he recall Treasury’s warning to Cabinet last September over the risks to the “overall credibility and effectiveness of the New Zealand emissions trading scheme” from “harmonising with an overseas scheme that has not yet been finalised”; and does not yesterday’s suspension by Australia of its emissions trading scheme confirm the wisdom of that advice and his folly in ignoring it?
Hon Dr NICK SMITH Link to this
It is quite the opposite. The changes that we made to the emissions trading scheme halved the cost for consumers, and halved the cost for businesses to ensure that there was not a disincentive for businesses to grow, despite the fact that all last year Labour criticised those changes. I think that what has occurred in Australia confirms that the changes we made to soften and delay the emissions trading scheme were exactly the right approach. I find it particularly ironic that Labour members are complaining about the cost of living but are proposing an emissions trading scheme that would be twice as expensive for consumers.