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Labour needs to come clean on ETS windfall profits

Hon Dr Nick Smith MP National Party Climate Change Spokesman

20 May 2008

Labour needs to come clean on ETS windfall profits

National today challenged the Government to release the official papers that reveal just how much the Government is set to profit from the emissions trading scheme.

National's Climate Change spokesman, Nick Smith, says: "The Government is set to make billions under this scheme from higher electricity prices and from the sale of emission permits, but the only figure the Minister talks about is the Kyoto liability of $483 million.

"The windfall profit arises because state companies like Meridian, Mighty River Power, and Genesis get the benefit of higher power prices over all their power sales, but are not having to buy emission permits for their renewable generation. The mid-range estimate is an increased profit of $150 million per year or an increase in the value of these state companies of $1 billion."

The emissions trading scheme Cabinet Paper (CAB (07) 589) notes: 'The increased revenues for government, associated with increased costs of electricity could also be significant. Estimates of the windfall profits that are likely to be received by SOEs ... is $70-220 million/year.'

"Officials have also advised that the Government would make between $6 billion and $22 billion from the sale of emission permits, depending on the carbon price. These permits arise from the Government having more units to sell than it allocates in the years 2013 to 2025.

"I am appalled the Government denied leave in Parliament today to table the Emissions Trading Group Report on the flow of revenue to the Government under the emissions trading scheme, and have removed from their website the Cabinet paper revealing the windfall profits from electricity.

"It is time for Labour to come clean. They are promising tax cuts to New Zealanders on one hand whilst secretly planning to take billions off them with the emissions trading scheme with the other.

"National does not support the emissions trading scheme being used as another tax and will redesign it so it is not used as a cash cow."


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