When are subsidies sustainable?

by frog

That is not a trick question, nor an economics one. The National-led government has decided that a biofuel subsidy is preferable to a sales obligation, no doubt on ideological grounds rather than economic grounds.

We now have the Biodiesel Subsidy Scheme, which pays biodiesel producers in New Zealand up to 42.5 cents per litre to compensate them for the fact that ethanol does not have to pay excise tax.

There is one significant problem with the scheme – it doesn’t differentiate between locally produced biodiesel feed stocks, which are quite often sustainable, and foreign feed stocks, which are often unsustainable. It is possible that our taxes will subsidise foreign farmers.

As Jeanette said in her press release:

National threw the baby out with the bathwater when they repealed sustainability standards. I assume it must have been a mistake because their biodiesel scheme defeats the purpose which is to look after our environment and our economy.

What we need to do is put the sustainabilty standards that parliament has already approved back into the law. That’s it!

So Jeanette has a new Member’s Bill doing just that. It leaves the ideological bathwater out, but brings the sustainability baby back to life.

I hope it gets drawn from the ballot tomorrow.

frog says

Published in Environment & Resource Management by frog on Tue, June 16th, 2009   

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