Climate Change Policies Need Better Analysis and Alignment With Key Trading Partners

“New Zealand should move cautiously and in line with key trading partners in response to concerns about climate change. It should not proceed with ill-considered actions that could involve large costs for firms and households, seriously damage the New Zealand economy, and have no discernible impact on global warming”, Roger Kerr, executive director of the New Zealand Business Roundtable, said today.

The Business Roundtable has released a submission made in response to the government’s discussion documents on climate change issued late last year.

Mr Kerr said that while there is evidence that some degree of global warming is occurring as a result of human activities, there is still much scientific uncertainty about its magnitude and, in relation to New Zealand, no reliable analysis as to whether its effects would be negative or positive.

“There is, however, a strong consensus among mainstream New Zealand business organisations and among leading economists internationally that aggressive early action to combat warming is not warranted.

“New Zealand’s emissions are too small to affect the global climate, and it is highly unlikely that any action we might take would induce larger countries to change their emission paths.

“Households and firms are already responding sensibly to climate change independently of government action, and New Zealand should act as a responsible international citizen and work to protect its commercial interests. A prudent strategy would be to move in line with its major trading partners, in particular Australia and the United States.”

Mr Kerr said the Business Roundtable and other major business organisations opposed the government’s plans to impose a narrow, tradeable permits regime on electricity and stationary energy.

“To have a meaningful impact on emissions, such a regime could require a doubling or trebling of electricity prices, with massive resulting costs to firms and households.

“Proposals to discourage forestry land conversion are also opposed as unfair and an infringement of the property rights of forest owners, who should be entitled to the value of their carbon sinks.

“Instead the government should encourage research and development related to low-carbon-emission technologies and agricultural emissions, and take stronger action in future if warranted by firm scientific evidence and technological advances. It should also adopt policies to promote an efficient and flexible economy, including better infrastructural policies, and evaluate the relative merits of market-oriented tax/subsidy and tradeable permits regimes applied on a broad basis.

“Of particular concern to the Business Roundtable is the fact that no proper cost-benefit analysis of the case for the proposed policy actions has been produced by the government.

“We are dismayed to find that the government’s policy proposals do not even stand up to the test of its own Cabinet Manual guidelines for regulatory analysis. Indeed they comprehensively fail to meet them.

“Rigorous analysis should be the starting point for any work that is likely to have profound and costly consequences for New Zealanders. Rhetoric about fanciful goals such as ‘carbon neutrality’ bears no relationship to reality. Ministry for the Environment figures (included in our submission) suggest that even if New Zealand were to shut down the whole of its agricultural sector, and to ban the use of all cars and other transport, and even if economic growth were to stop entirely, achieving carbon neutrality would be unattainable for the foreseeable future.

“Given past policy failures such as the aborted methane and carbon taxes and the Kyoto forest liabilities, better analysis and further consultation are needed to establish the costs that New Zealanders are willing to bear to support action on climate change and to provide a foundation for stable policies.”

_The New Zealand Business Roundtable’s Overview Submission on the Government’s Discussion Documents on Climate Change is available at www.nzbr.org.nz

ENDS