Does Nick Smith know what a subsidy is?

29 September 2011

Does Nick Smith know what a subsidy is?

Following his answers at Question Time in the House today, the Green Party is questioning whether Minister of Climate Change Issues Nick Smith knows what the word ‘subsidy’ means.

“The Government is convening the international group ‘Friends of Fossil Fuel Subsidy Reform’, which advocates phasing out fossil fuel subsidies. Yet they are ‘investing’ in fossil fuel developments here at home,” said Green Party spokesperson on energy and international climate change issues, Dr Kennedy Graham.

“Minister Nick Smith today denied that the Government’s gift of $25m of geotechnical data and 183 day tax exemptions to private overseas fossil fuel companies were subsidies.

“He denied that his proposals to further delay the Emissions Trading Scheme (ETS) would be a subsidy to polluting industries, although the ETS Review Report says that this action will have direct fiscal impacts on the Government, which could easily cost the taxpayer hundreds of millions of dollars, assuming a modest carbon price of NZD$25 a tonne.

“The Parliamentary Commissioner for the Environment has also warned that the large scale development of dirty lignite coal, proposed by Solid Energy and supported by this Government, could result in taxpayer liabilities running to hundreds of millions of dollars a year.

“According to Nick Smith, these are not subsidies, because New Zealand won’t be part of a post-Kyoto agreement, and therefore, won’t have to reduce its emissions or pay to meet its commitments.

“This is in direct contradiction to stated Government policy of supporting an international agreement, and reducing our greenhouse gas emissions.

“So, either the Minister has just admitted that the Government’s climate policy is green wash and they have no intention to reduce emissions or enter into another international agreement, or he doesn’t know what the word subsidy means.

“Either way, it seems the Greens are the only economically literate party with a plan to create green jobs and reduce our greenhouse emissions,” said Dr Graham.

“I invite Ministers Smith, Groser, Brownlee and English to discuss with the Prime Minister what this Government takes to be a subsidy, and make clear to the New Zealand public what falls within, and outside, that definition. The Green Party stands ready to assist. See below.”

The Concise Oxford English Dictionary (10th ed.) defines “subsidy” as a sum of money granted from public funds to help an industry or business keep the price of a commodity or service low, a sum of money granted to support an undertaking held to be in the public interest, a grant or contribution of money.

Link to Question 5 today, Kennedy Graham to the Minister for Climate Change (International Negotiations):
http://inthehouse.co.nz/node/10910

Link to Government release about Friends of Fossil Fuel Subsidy Reform:
http://www.beehive.govt.nz/release/new-zealand-coordinates-action-fossil-fuel-subsidy-reform

Link to Minster of Energy Gerry Brownlee’s opening address to Petroleum Conference Sept 2010:
http://www.beehive.govt.nz/speech/opening-address-new-zealand-petroleum-conference
excerpt:
“We've taken a number of actions as a government to support the oil and gas sector.
One of our first actions upon taking office was to repeal the ban on new thermal electricity generation, recognising the poor signal this sent to explorers.
We extended the 183-day tax exemption for seismic vessels and exploration rigs to the end of 2014 to make it easier for explorers to work in New Zealand waters.
The government has contributed to increasing our knowledge about our petroleum basins through sizeable investment in a seismic data acquisition programme.”

Link to Parliamentary Commissioner for the Environment report on lignite:
http://www.pce.parliament.nz/publications/all-publications/lignite-and-climate-change-the-high-cost-of-low-grade-coal/

Link to “The Carbon Challenge” which details how the ETS grants subsidies to polluters:
www.sustainabilitynz.org/docs/TheCarbonChallenge.pdf

Link to the ETS Review Report:
http://www.climatechange.govt.nz/emissions-trading-scheme/ets-review-2011/indexhtml
See Table 10.1 for estimated fiscal impacts to the Government.

ENDS