Hon Dr Nick Smith
Minister for Climate Change Issues

11 August 2009
Media Statement

Labour wrong on 2020 costs

Labour’s claims that the Government has exaggerated by tenfold the costs of a 10% to 20% emissions reduction target announced yesterday raises serious questions about the economic literacy of the Opposition.

“The $30 a week figure used by the Prime Minister and I was based on the NZIER-Infometrics report on the macroeconomic impacts of climate change policy,” Dr Smith said. “The report concluded that a responsibility target of 15% below 1990 levels by 2020 would reduce real gross national disposable income (RGNDI) by between $1200 and $1500 per year based on an international carbon price of $100/tonne.”

“It’s extraordinary for Labour to claim this cost would be spread over 10 years, when this is an ongoing reduction in RGNDI. The authors of the report, Dr Adolf Stroombergen of Infometrics and Chris Schilling of NZIER, have confirmed the approach of spreading the cost over 10 years is quite flawed.

“The Government acknowledges that it is difficult to accurately predict costs on New Zealanders of reducing emissions when there are considerable uncertainties, but there is a cost and best efforts need to be made to estimate it. I have no difficulty in debating the assumptions in the report but these claims by Mr Chauvel are a nonsense.

“The idea from Labour and the Greens that New Zealand can make big emission reductions without any costs on consumers or business is naive and unrealistic. If it were so easy, they would have made progress in constraining emissions during their nine years in government.

“Making claims that the Government is being dubious, misleading, cynical and pulling the wool over the eyes of Kiwis is embarrassing when it is Labour that has misrepresented the economic analysis.

“My disappointment in these erroneous claims is that it undermines genuine efforts to build broader cross-party support for durable climate change policy.”

ENDS

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