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UF opposes ETS Bill

Tuesday, 17 June 2008

UF opposes ETS Bill

UnitedFuture leader Peter Dunne says his caucus affirmed today that it will not be supporting the Government’s Emission Trading Bill.

“We are disappointed that the Labour-led Government has turned a deaf ear to our consistent calls for the true costs of an emissions trading scheme to the average Kiwi household,” he said.

“We note from media reports that the Government is consulting other parties about a household compensation scheme and may be considering some compensation by way of insulating a few homes and subsidising the power bills of elderly superannuitants.

“Even a move in this direction will leave the bulk of New Zealand households facing increased living costs of at least $30 a week, on top of already rising petrol prices, food prices and mortgage bills, and we think this is too great a cost for them to have to bear.

“As a confidence and supply partner of Labour, UnitedFuture is disappointed the Government has failed to talk to us about this important issue, despite the fact at the first reading of the Bill in December last year, we raised legitimate concerns about the implications of an ETS for households which would have to be addressed.

“The fact the Government has declined to do so leads to the conclusion that Labour is more interested in creating an ETS before the election and not in having a durable, long-term system that most of the country can sign up to and can afford,“ said Mr Dunne.

Attached: Hansard record, December 11, 2007

Hon PETER DUNNE (Leader—United Future) : In 1989 I had the privilege of leading the New Zealand Government delegation to the first Conference on Atmospheric Pollution and Climate Change, in a little village called Nordvijk just outside The Hague in the Netherlands. The events of that meeting, which was attended by representatives of 160 countries, became somewhat overshadowed when on day 2 of the conference the Berlin Wall fell and most of the Eastern European delegates who had been there suddenly shot home very quickly. I recall at breakfast on the day of that event dining with the East German Environment Minister, who assured me that there would have to be one or two changes back home, but nothing serious was going to happen. By lunchtime, he was gone—

Hon David Carter: At least he’d finished his breakfast!

Hon PETER DUNNE: It was a good breakfast, too. That meeting set the pathway for what became the Rio Earth Summit in 1992, which, in turn, set the groundwork for the Kyoto meeting that led to the Kyoto Protocol, and, now, the Bali meeting, which is looking at the post-Kyoto environment. It is interesting to track the change in thinking that has occurred over those two decades. Back in 1989, the focus was much more on atmospheric pollution, the concern about deforestation, the fact that there were issues relating to international development and debt, particularly amongst Third World nations, and there was this consequential thing in the background about how this might be doing something to promote greenhouse gases, which might be damaging to our environment.

Over the subsequent two decades the emphasis has shifted 180 degrees. We are now totally preoccupied, and quite properly so, with climate change and the ways in which that can be mitigated. These other matters that were at the forefront of the agenda at that first round of discussion are now seen as more of the symptoms of the problem, rather than the problems themselves to be resolved.

Over those two decades a number of issues have arisen as ways in which we should address those issues. The bluntest instrument of all, in my view, was the notion of a universal carbon tax. I think it is totally appropriate that having looked at this matter the New Zealand Government abandoned it in 2005, because it was too blunt an instrument. I do not accept the viewpoint put forward by an earlier speaker that moving to an emissions trading regime is a second-best option.

I have long felt that that is actually the better option, where we put a price on a product, enable people to trade in the commodity, and establish the type of regime that is, in fact, envisaged in this bill.
Having said that, it is one thing to take a view in theory about what is desirable; it is quite another thing to design a workable system in practice. While we will support the introduction of this bill, we give notice that the detail that needs to be resolved will require a great deal of work by the select committee before we could feel confident—and I am sure others would have a similar view—that the regime we are putting in place is a sustainable and workable one.
For example, let me turn to the provisions under Part 1 relating to the point at which various sectors will enter the regime. On the face of it, it seems logical to have a staged approach, presumably based around the complexity of resolving industry or sector-specific issues. I suppose one could say, given the work that has already been done in some quarters, that it is logical that forestry should be the first entrant, liquid fossil fuels should follow, stationary energy, industrial processes, agriculture, waste, and so on. But it is actually not as simple as that, because while forestry might, for example, appear to be the obvious candidate, it does not necessarily follow that all of the issues relating to forestry are resolved at this point, or are in a state where they are likely to be resolved to enable, without significant work being done, the entry of the forestry regime in part by 2008—that will not happen—but certainly by 31 December 2009. There are issues relating to some of the technical details, and I had advice only this afternoon about more problems that will need to be addressed in that regime. The same applies to the various other sector areas set out in this bill.
So we support the bill going to a select committee. We support it being carefully considered and these matters being resolved to the greatest extent possible. But I want to enter a couple of caveats. There will be natural tendency to have this bill passed before the election, because the Government, and, I suspect, parties supporting it, will want to be able to go out and say: “We have done something. Look at this, it has been passed into law. New Zealand has a strategy.” If that can be achieved, well and good, and the cards will fall where they will. But this is an issue—and I think Dr Smith made this point in his remarks earlier on—that is bigger than any particular political party, this Parliament, or any particular Parliament. I would far rather that we took a little longer and got it right, rather than rush to a glory that might be very short-lived because we are amending it at our leisure over the subsequent years. That is the first point I have some concern about.
The second point is that, as we work our way through this, it is going to be critical to get the maximum buy-in from the largest number of people possible.

As I hear all the discussion about this group being involved, that these meetings are being held, that these people are in favour, and so on, there is one large group of New Zealanders who are completely left out of the process to date, but who are in fact going to be critical to its ultimate achievement in so many different ways. I refer to New Zealand households. We are going to be talking, through the various stages of sectors joining this regime, about all sorts of impacts on households.

Reference has been made to some form of compensatory adjustment being made available to them so that they are not adversely financially affected by the provisions of this bill. That is all fine in theory, but the real test will be the extent to which they feel, as the regime unfolds, they are actually part of what is happening. Because if they feel in any way disconnected or imposed upon, or unfairly treated, or unequally treated, then I strongly predict that there will be an adverse political reaction that will see the Government of the day, whichever it might be, forced to make compromises and changes that will challenge the fundamental integrity of what we are trying to do. I strongly urge that the Government—in the first instance—the select committee, and all those involved with furthering the development of this process take some time over the next few months to make sure that we are not just putting in place a high-level strategy with a language all of its own that most New Zealanders do not understand, but that we start to talk about it at a level that people can relate to and can start to see what the impact on them will be, what the consequences will be, and where those compensations, if they are to be made, might be.

Otherwise, we will be setting this up to fail. We have gone down the path previously of saying that we do not want a carbon tax. I think that is absolutely right, because it is a blunt instrument, unevenly imposed, etc. There is an overwhelming public view that we have to do something. The danger here is that if we put in place a regime that is half-baked, ill-considered, and does not have public buy-in, it too will go the way of a carbon tax, and as other regimes and other agreements enter into it, New Zealand will still be left in the position of trying to figure out what its response is. I do not think we can afford to do that.

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