Key on Emissions Trading Scheme
John Key devoted most of his speech at National’s LNI conference today to the legislation setting up an Emissions Trading Scheme (ETS). He made very clear on numerous occassions that he supports an ETS as the best response to the challenges of climate change:
It is to that end that we consider a well-designed, carefully balanced Emissions Trading Scheme (ETS) to be the best tool available for efficiently reducing emissions across the economy.
He then pointed out some issues with the current legislation:
- Submitters on the bill have had their speaking time cut drastically short.
- There’s been little transparency about the effects the ETS will have on already struggling Kiwi households.
- Officials have admitted that the Government will profit by between $6 billion and $22 billion from the tendering of emissions permits.
- No clear analysis of exactly how much the scheme will reduce emissions, and
- The scheme has been subject to last-minute changes, including the decision to push out the date for inclusion of the transport sector. This decision has flow-on effects that the Select Committee has been given no opportunity to analyse.
Now this legislation is incredibly complex. It took years for the EU to get their scheme worked out. In fact it is so complex that a lobbyist involved with the scheme remarked to me he figured there were only three MPs in Parliament who truly understood it. They were Jeanette Fitzsimons, Michael Cullen and Nick Smith. I inquired as to their view of the understanding of the Minister on charge of the legislation, David Parker, and they were adamant he is truly out of his depth. But they reassured me this was not a problem as he has been cut out of the decision making loop on it.
Labour has been racing towards a political deadline – the 2008 election – and has been prepared to cut corners to get there.
National is not prepared to cut those corners. Not when the financial security of Kiwis is at risk. Not when getting this wrong means exporting jobs, ratcheting up inflation, and viciously squeezing household budgets.
We believe that the current rushed timetable for the design of the ETS and the Select Committee process is reckless, given the importance of the issue. National thinks that this process, left unchecked, is likely to lead to an ETS that will meet neither New Zealand’s economic needs nor our environmental obligations. In particular, it could well have negative and unintended consequences.
So today, I am calling for a delay in the passage of this legislation.
The fact there is an election later this year is no reason to rush the scheme into law. Hell Labour signed up to Kyoto in 2000 and have had eight years to get policy on place. Just because they left it so long is no reason to sacrifice good decision making in a mad rush. And look at the last law pushed through with lots of last minute changes – the Electoral Finance Act.
Now some will say that Key is being populist or playing it safe by calling for a delay. Far from it – his move is in face very much against what is best for him politically. Assuming National wins the election, he will have prime responsibility for getting an ETS into law as soon as possible, and in a way which actually will reduce emissions but not drive industry offshore. There is no way the Greens and environment groups would allow National to do nothing, even if they wanted to.
It would in fact have been politically far easier to let the hapless David Parker rush through the legislation in June and July, and then Key could just blame the previous Government for it, as problems emerged. But by having it pass when he is Prime Minister, Key will be responsible for its implementation.
Let me state clearly: National has not given up on this legislation. We are committed to a well-considered, carefully balanced Emissions Trading Scheme for New Zealand. We believe this bill can be amended and progressed to that end, and we believe it can be done in a timely fashion. But the New Zealand Parliament must take the time needed to get it right. New Zealanders’ livelihoods depend on us taking that time.
I have no doubt there will be some mindless abuse which will probably try to paint this as something it is not. But talk to anyone involved with this legislation and you would know the folly of trying to have it reported back to Parliament next month. It is the biggest change to the NZ tax system in 20 years. It is incredibly complex and the current bill will have to be so amended that it is only common sense to allow affected parties a chance to resubmit on the amended law.
National believes that getting it right means adhering to the following principles:
- The ETS must strike a balance between New Zealand’s environmental and economic interests. It should not attempt to make New Zealand a world leader on climate change. Kiwis simply can’t afford to pay the price for that particular experiment.
- The ETS should be fiscally neutral rather than providing billions of dollars in windfall gains to the government accounts at the expense of businesses and consumers. National does not think it’s responsible for government to use green initiatives to pad the Crown coffers while thinning out Kiwis’ wallets.
- The ETS should be as closely aligned as possible with the planned Australian ETS, with common compliance regimes and tradability. In my second speech as National Party Leader, I called for close co-operation with our biggest trading partner on this issue, and I continue to call for it. Given the Australian timetable for developing an ETS, I believe it’s still possible.
- The ETS should encourage the use of technologies that improve efficiency and reduce emissions intensity, rather than encourage an exodus of industries and their skilled staff to other countries.
- The ETS needs to recognise the importance of small and medium enterprise to New Zealand and not discriminate against them in allocating emission permits.
- The ETS should have the flexibility to respond to progress in international negotiations rather than setting a rigid schedule. This way, industry obligations can be kept in line with those of foreign competitors.
I think No 2 and No 3 are key. The ETS should not be a get rich scheme for Dr Cullen at the expense of consumers. But having it tied into the scheme of our largest trading partner is quite vital. No 5 is also important – big businesses should not get an unfair advantage over smaller businesses with the allocation of permits.
Key also touches on the proposed ban on new thermal power, and that as 75% of new power generation under Labour has been thermal, it is dangerous to assume one can suddenly go to 0% thermal for further generation. With the massive delays in getting RMA consent for renewable power projects, there would be a real risk of NZ having insufficient power in the future. The best thing one could do for the environment would be to reform the RMA so one can get renewable power projects built more easily. Until you do that, you can’t ban more thermal.
And finally Key touched on the biofuels legislation, which the Parliamentary Commission for the Environment said should be voted down. Key says:
The Parliamentary Commissioner for the Environment has spoken out against the Biofuels Bill, saying it will damage our clean, green image.
National is opposed to a mandatory biofuels obligation until there is a sustainability standard. This standard needs to deal with the lifecycle emissions savings, the effects on the food supply, and the biodiversity impacts.
New Zealanders want to ensure that their efforts to tackle climate change are doing more good than harm. Paying an extra 7 cents a litre for a flawed biofuels policy is not the way forward. So National will not support the Biofuels Bill in its current form.
Even the Greens say the biofuels bill should not pass in its current form.
So a key speech on environmental issues, and good to see a commitment to getting the policy right, even though it would be politically expedient to let Labour pass a flawed ETS and then just blame them when it goes wrong.
May 18th, 2008 at 5:49 pm
This was a very balance and sensible speech. It looks like Key has come up with a way of balancing NZ’s obligation to “do out bit” without destroying our economic base. He has moved on from silly ideas of “leadership” to doing what makes environmental and economic sense.
May 18th, 2008 at 5:50 pm
Finally, someone talking a little sense on this issue.
With the doubts presently being raised about a lot of the ‘Global Warming’ data, the longer we take over this the better.
Labours approach to this has been all negative.
Deep breaths are what is needed.
May 18th, 2008 at 6:22 pm
I just saw that (predictably) the NZPA gave Jeanette Fitzsimons an open forum to attack John Key in response to this speech.
And naturally she took full advantage of it, and lambasted him for ‘not going far enough’, as any responsible leader of a left wing extremist fringe party dutifully would.
I’m just wondering though; am I the only one who’s getting tired of these old NZ media tricks?
I mean; when’s the last time the NZPA asked Rodney Hide for a response to another one of the Labour Party’s flawed economic policies? It just doesn’t happen…
I would really like to see more balance in the media, although I’m fully aware that this is wishful thinking…..
Btw; having the Green party attack this speech is a GOOD thing. It proves that John Key’s proposals are sensible and moderate…..
May 18th, 2008 at 6:27 pm
About time.
And when the lefties start bitching about the increased cost of complying with Kyoto can someone please inform them once and for all that the public of NZ didn’t sign up to it, the bloody Labour party did.
What happens if you don’t pay up? Do you just get a bad Kyoto credit rating?
May 18th, 2008 at 6:35 pm
Gorge Bush will invade us
May 18th, 2008 at 6:40 pm
Didnt need to wait long, As I said yesterday in response to the post on Nick Smith, “I will not vote for any party in the general election that will place NZ in any Emissions trading scheme that will be comparatively harmful to our economy, or to simply be first cab off the rank.
I’ll wait until the Nats roll out policy and then make up my mind.”
Key sounds encouraging!!
The haste of the left to be this poster child would simply undermine our economy, only fools rush in, which I expect from labour and the greens, not the Nats!
if you’ve got 45 minutes watch the doco on whaleoil http://video.google.com/videoplay?docid=-3309910462407994295&hl=en
Then ask yourself why we even signed up?
Dr David Legates; Centre for Climate Research makes a lot of sense;
“The science in this case is indicating from incomplete models, that we need to make political assertions and political changes but part of the problem is that with incomplete science we can make mistakes in policy that can have serious ramifications in the future.”
he also says;
“You can disagree with the global warming statement (IPCC) but if you do …….they attack you personally and so forth.”
Sounds a typical left wing strategy?
May 18th, 2008 at 6:41 pm
I note that this led TV One’s news tonight, Comrade Espiner was at his usual vicious best when confronted with a National party story.
Make no mistake people, the sniveling left wing media have launched their attack mode, they like Labour are in a panic about the gap in the polls, expect to see this type of negative story about National every night until the election.
One can only hope that the first “asset” Key does sell in his second term are the sate broadcasters.
May 18th, 2008 at 6:44 pm
“One can only hope that the first “asset” Key does sell in his second term are the sate broadcasters.”
Just shut them down and sell off the assets. Leftist scum. A blight on democracy.
May 18th, 2008 at 7:00 pm
Sensible stuff from Key, on one hand it’s a smart position to take pre-election whilst on the other hand he isn’t painting himself into a corner when he becomes the PM.
One other brief comment about Key is that he is now much better at handling media scrums like the one on TV tonight. He’s talking a bit slower and above all he is a bit more concise in what he is saying.
May 18th, 2008 at 7:04 pm
Bloody shit hot, I bet there is some heavy duty spewing going on in the top echelons of the Liarbore and melon partys but I also suspect there is some relief as far as Liarbore is concerned. The writing was on the wall, the EFS is now seen as a total abortion and now John Key has handed the suckholes a way out on a plate. David Parker claims the EFS is still a doer but if they fail to get the votes National will be held up to be the scapegoat, quite frankly who gives a fuck, this is great news. The AGW lie is slowly unravelling and this is just a start. And if Mrs bloody King is reading, this is real “common sense”.
May 18th, 2008 at 7:11 pm
big bruv, I noticed that feral interview as well. I would have thought that Espiner’s wee lay down after his “Do you BELIEVE? … do YOU BELIEVE!!” melt down would have restored some degree of impartiality. Seems not.
Its a shame to see the State broadcaster attempting to reverse the polls, and for that reason alone I agree with redbaiter, its an assest well worth selling. The problem with that is that we wouldn’t find any one as stupid as Cullen to buy it.
May 18th, 2008 at 7:14 pm
This is what I like about John Key – he seems to want to do the best for New Zealand and New Zealanders. Not the best for him or his colleagues, no radical social agendas, no vote-bribing policies, no power-at-all-costs legislation, just common sense.
I must say – it is refreshing!
May 18th, 2008 at 7:29 pm
big bruv and Rich Prick – I put Espiners effort tonight and with Bill English on Agenda, which I only saw on the news, as the start of the `mindless abuse’ DPF referred to in his post.
Labour have one sure vote with Guyon Espiner.
May 18th, 2008 at 7:35 pm
This is a long overdue dose of common sense from our next prime minister. He talks about what is good for Kiwis and has slipped a knife into Parker and Labour. Nice job and I hope there is plenty more to come.
May 18th, 2008 at 7:45 pm
Mmmm I note ACT voted against this from the beginning – right, right from the start.
Emissions Trading System only understood by Jeanette Fitzsimons, Michael Cullen and Nick Smith. I have to say that would do it for me…… can’t possibly be sensible.
May 18th, 2008 at 7:46 pm
Where is Gnome and Ghostie? Off giving Parker some sympathy hugs?
Doesn’t Parker remind you of the teachers pet?
He is so driven by being the first in the world to introduce this oppressive regime that there is no after thought for the effect on the people they are supposed to represent.
0.2% margin in the last election does not give them a clear mandate to do jack shit.
May 18th, 2008 at 8:17 pm
Outstanding speech from Key. There is way too much at stake with this legislation for it to be rushed through merely for political ends. Park it until the election, then try again.
http://keepingstock.blogspot.com/2008/05/national-and-ets.html
May 18th, 2008 at 8:19 pm
I agree that the bill shouldn’t be going through in its present form. It just has too many loopholes for polluters, and numerous other faults.
Having said that, I’m dubious about National talking straight here. They’ve got even less credibility than Labour when it comes to environmental issues.
May 18th, 2008 at 8:47 pm
Woger
What say you about the shocking bias shown by Comrade Espiner?, you and the rest of the pinko’s are happy to abuse Paul Henry yet as usual you say nothing about Comrade Gyon.
May 18th, 2008 at 8:55 pm
However welcome some find John Key’s re-statement of National’s position on an Emissions Trading Scheme, the very fact of it’s extraordinary complexity should be enough to make sane people back completely off and look at the more straightforward approach of a low carbon tax. Ultra complex schemes rarely work out in the private sector without grief and loss.
And when has any government *ever* been any good at working out the dynamic consequences of activist, interventionist programs. And the ETS is one helluva shift in how an economy works. Property rights can effectively be created and traded in all sorts of intangible entities. But it doesn’t mean its a good idea to do so.
The alternate tax approach will provide most all the incentives needed to price carbon emission activity and make it straightforward to wind back the imposition if the climate change scenarios play out to be much more modest. Which could well be the case.
Key’s support of an ETS shows he is a supporter of big clunky gubmint solutions. Pretty disappointing really.
May 18th, 2008 at 9:01 pm
It is ridiculous here in Australia that we get so bogged down about “emissions” and “global-warming/climate-change”, but even more ridiculous that New Zealanders are even concerned about all this doom and gloom stuff.
My understanding is that even if you could completely shut down the entire United kingdom and Australia – the reduction in total world emissions is not worth calculating.
So why does an isolated, pretty-much non polluting country like New Zealand get involved in all this religion-like fanaticism?
Yes I am very much a “man-made climate change” sceptic. The climate has always been changing……….all by itself!
May 18th, 2008 at 9:24 pm
FFS Key, grow some balls and call the ETS/AGW for what it is, within the country of which you’re trying to become the leader.
Just because your advisors and Nick Smith have been sucked in don’t make it so.
It’s obvious that NZ has to comply with this global
bollocksnewsspeak, which has negative growth prospects for every nation that adopts it, but it’s not obvious that in order to retain its international reputation and export prospects, NZ needs to do anything more than that done by its current next lowest OECD ranking. That’s the standard, for AGW.Key, be a leader, not a follower, and harden up FFS.
May 18th, 2008 at 9:29 pm
“FFS Key, grow some balls and call the ETS/AGW for what it is, within the country of which you’re trying to become the leader.”
Sorry reid – focus group says no.
May 18th, 2008 at 9:38 pm
Any delay is welcome. The Global Warming scam surely can’t last much longer unless there is a serious increase in research grants to pay off all the sceptical scientists. Having said that there is a saying that ‘markets can remain irrational longer than you can remain solvent’. Who would bet on the Global Warming thing falling apart this year? Next year? Only a brave man would bet with confidence.
And even if Key is not of the religious persuasion he can hardly disavow it. Imagine a candidate for US Presidency who doesn’t believe in God? It’s the same thing with Global Warming here in New Zealand. Sadly as always you get the government you deserve. We will get a government with a strong environmentalist bent, perhaps even stronger than Labour.
Right now i would settle for an ETS if we could get a dozen more power stations and some decent roads.
May 18th, 2008 at 9:39 pm
Roger,
National is never going to get the Greens because, apparently, they’re insane. Therefore, if they have any sense, the Nats will start focusing on the Grey Power/Baby Boomers because using Winston’s tactics (e.g. free local travel) they can beat him in that demographic, and those are much more their natural constituents than Bradford/Locke/etc. That eliminates NZF from Parliament and allows them to form a govt without the Greens or the Maori Party, neither of which will ever play ball with the Nats.
I haven’t said they have sense, but that’s their natural alternative.
The message in 2008 hearts and minds despite the media hysteria, is that for everyone outside the Greens, AGW matters less than economics.
May 18th, 2008 at 9:52 pm
Good speech. I worry about Key being committed to the ETS – he’s a trader, he likes markets. I like a carbon tax. I’m not sure he will see the flaws in an ETS.
May 18th, 2008 at 9:56 pm
He is a trader PaulL, and he’s also a very quick study. It’s a common mistake to stereotype people. I’m sure you wouldn’t do that, would you?
May 18th, 2008 at 9:56 pm
PaulL – we may be in agreement for once. I think a flat carbon tax would be simpler and more efficient also. National wouldn’t like the impact on the dairy industry though, so I don’t see that ever going through.
May 18th, 2008 at 10:04 pm
Roger, I’m sure that Hulun also pays more than passing attention to the Dairy Industry, given her recent applaudable promotion of trade deals around Asia. What do you imagine she was pushing if not that?
May 18th, 2008 at 10:49 pm
Thats why the Nats are pulling back on the ETS as it stands, to allow time to formulate a proper policy. And to see what the hell the rest of the world end up doing. There is no point being first out of the blocks on this one if its going to screw the NZ economy. Hulun and Mikhael just wanted a nice election fuzzy – and a good CV point to go oonto the UN with.
May 18th, 2008 at 11:59 pm
reid: sure I would. There’s a reason people often use stereotypes. People are pattern recognisers, one of the reasons that as a species we are successful. Stereotypes are patterns, they allow us to understand the world and predict behaviour. Of course, if stereotypes weren’t useful, we wouldn’t use them……
May 19th, 2008 at 6:37 am
Helen has rejected Key’s suggestions. This will only serve to highlight her intransigence and illustrate to the voters taht she has a tendency to ride rough-shod over peoples’ concerns if it suits her. I think she has been put into ‘check’ with this strategy. The election may well be ‘check-mate’.
May 19th, 2008 at 6:38 am
Mad Clark says she is going to press ahead. She says a delay in passing the Bill from the current June deadline would cost taxpayes. How? It doesn’t come into force until 2011! The only reason to pass it in June 2008 is for her own election timetable.
May 19th, 2008 at 6:47 am
“I think a flat carbon tax would be simpler and more efficient…”
That’s your problem Roger. You see and suggest taxation as the only means to achieve this objective, even at the price of crippling the NZ economy and hurt those you claim to defend (…not).
Socialists/communists of your ilk are to blame for the sorry state of NZ in social, economic and freedom aspects.
The sooner you disappear from wielding political power, the better for our country.
May 19th, 2008 at 7:02 am
Weren’t the Greens threatening to pull the plug because of the delays in various components that Labour themselves were proposing. Privately they are all happy. Those kind of announcements undermine the whole select committee process, submitters are being told yes but we changed all of that yesterday so don’t worry. What is being delayed is a watered down version of a scheme that was never going to make any difference anyway. Tax carbon, especially the coal and oil we export. Nome, feeling better today?
May 19th, 2008 at 8:28 am
Manolo:
A carbon tax that applied to everybody, was refunded on exports, was levied on imports, and came with offsetting income tax reductions would not in any way cripple the NZ economy, unless you can show that it would. I will agree with you that nobody in their right mind would trust the Labour govt to implement such a thing – they would more than likely refuse to do the important part – the offsetting income tax savings.
An ETS doesn’t allow the refund on export, impose on imports part. It therefore will destroy our export economy, and drive some industries to offshore production and importing. That would be stupid. Hopefully John Key will come to see this, as increasing numbers of people around the world are doing.
May 19th, 2008 at 9:17 am
It’s ww1
The carbon bullets are flying thick and fast.
NZ jumps up and says… over the top lads (and ladesses), we’ll lead the way!
The rest of the world shouts, good on yah.. we will follow soon behind.
NZ charges off across no-mans land………………..
May 19th, 2008 at 9:47 am
It is positive to hear Key delaying the ETS, but concerning that he still think an ETS is a good idea.
The problem with all this is Kyoto. Kyoto is fundamentally flawed from the start. Any legislation to reduce emissions within the Kyoto framework will necessarily be faulty.
Kyoto measures emissions as the total emissions from the land area of NZ. This means that if a company moves off-shore, even though there is a global increase in emissions (more transport emissions and less use of renewable electricity), according to Kyoto NZs emissions have decreased. Read again: Global emissions INCREASE, Kyoto calls this a DECREASE. On the other hand, our agriculture is highly efficient per unit output by global standards. If we were to reduce agricultural output to reduce emissions, agriculture somewhere else would have to be intensified to make up. Again, global emissions INCREASE, Kyoto calls it a DECREASE. Completely faulty.
We can’t keep trying to patch Kyoto. We need to ditch Kyoto and start afresh.
PaulL is right when he suggests we should not count exports but count imports (although whether tax is the best way to do this is debatable). This makes most sense scientifically, and encourages local efficient production rather than imports. However it CANNOT be implemented within Kyoto, as it goes against the basic emissions calculations and ‘developed / developing country’ differentiation Kyoto is based around.
May 19th, 2008 at 10:06 am
Although I support a carbon tax to an ETS as the lesser of two evils, a carbon tax which produces a bias toward exports over imports will still leave a long run of reduced wealth growth because it fights the law of comparitive advantage, which does not notice national boundaries very well in its ability to most efficiently direct the allocation of resources through undistorted price signals.
May 19th, 2008 at 10:29 am
bruceh: if every country ran an import/export regime that was broadly similar, and imposed a local carbon tax, there would be no distortion. The advantage of this regime is that it still works when some countries don’t participate. Over time I would expect trading blocs to form that recognised each other’s carbon tax – so we would give tax free entry status to goods from Australia because we recognised that their tax equated to ours, so all the paperwork was unnecessary. There are many examples of similar arrangements globally today.
Sure, it is still imperfect. There is a substantial compliance cost, it is hard to estimate the carbon content of foreign sourced items, setting a tax rate for carbon is difficult. But it is one hell of a lot better than a trading scheme that ignores imports and exports. I don’t believe we’re going to be given a choice of doing nothing, so we may as well do something that doesn’t destroy our economy.
May 19th, 2008 at 10:35 am
bruceh,
A tax that is run as a carbon footprint consumption tax (equivalent to GST – none on exports) could be import/export neutral. Cuts could be made to income tax or GST to mitigate the increases due to carbon taxation and keep it fiscally neutral. Unfortunately it would require a quite complicated methodology for working out carbon footprints for goods locally and foreign produced, but so does ETS.
Also because we have a small consumer population and a large agricultural sector it might be unworkable under Kyoto. This does not matter, because (like Mr Dennis says) Kyoto is unabated crap that is actively encouraging the growth of AGW gases. Under Kyoto we would cut our production, driving up commodity prices – starving poor people and encouraging production in the 3rd world with less efficiency and higher AGW gas output.
May 19th, 2008 at 11:08 am
Thanks unaha-closp, nice to see others have seen through the propaganda too.