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Dunne: ETS to wipe out tax cuts and then some

Media statement
For immediate release
Thursday, 5 June 2008

Dunne: ETS to wipe out tax cuts and then some

UnitedFuture leader Peter Dunne has warned that the Government’s tax cuts will be all but wiped out by the skyrocketing price of carbon if Parliament passes the Emissions Trading Bill in its current form.

“Latest indications are that the cost of carbon will continue to rise over the short to medium term, significantly increasing the price of electricity, fuel and food,” said Mr Dunne.

The price of carbon on the European market has risen over NZ$50 a tonne for primary credits and NZ$35 a tonne for secondary credits, which are the units most New Zealand businesses will have to buy under the proposed ETS.

“If the cost of secondary carbon credits hits $60 a tonne, that's four times what the Government predicted when the ETS legislation was tabled. At $15 a tonne Climate Change Minister David Parker said household costs would raise about $6 a week.”

Carbon analysts are predicting that the price of primary credits will reach NZ$75 a tonne this year with the secondary price tending to follow not far behind.

“Average household costs of around $25 a week will more than wipe out the savings from tax cuts for most low and middle income earners.

“It is imperative that the Government and the select committee takes this into account and introduces a means of relieving the burden on New Zealand households which are already feeling the pinch of higher power, food and fuel prices.

“Whether relief comes in the form of a compensation package to New Zealand families, a cap on the price of carbon, or a more partial emission trading scheme it is imperative that the Government does not leave us totally at the mercy of the international carbon trading market,” said Me Dunne.


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