The long awaited report of the special select committee to review the ETS – yes, that one with the terms of reference that didn’t even mention reviewing the ETS – you know, the one forced on the government by a coalition partner who then mostly didn’t even turn up to occupy their place on it – yes, THAT one – has finally reported.There is a main report – and four minority reports. That’s right, Labour, the Greens, the Maori Party and Act all disagreed sufficiently with the report that they wrote minority reports attached to it. Nothing could illustrate better that we do not have cross party consensus on climate change. The Government only managed to pass the report by majority because Act did them a favour and voted for it – despite a 12 page minority report dissociating themselves from almost everything in it. There are really only National and Peter Dunne supporting the report unconditionally. That’s a minority, both in the committee and in the House.
It would have been nice to try to reach agreement on more, and if we had really debated the issues we might possibly have done so. However, after many weeks of hearing submissions, most of them the same as the ones we heard last year when considering the legislation, we then didn’t sit for weeks until the government was ready to proceed, then crammed consideration into a few short meetings. The day we met to vote on the report we had still not discussed about half of its text.
This is not surprising. The special committee review was never about forming policy on the ETS. It was always a smokescreen to cover the gap while the government made up its mind what it wanted to do. It was allowed to conclude only when the government had done this, and then it had to conclude hurriedly without too much discussion. The problem for the Government is that it has not been able to keep either of its coalition partners with it.
At least the report sidelines the climate deniers and agrees the science is soundly based and there is a need for action. (Everyone except Act.) There is universal agreement that we must both mitigate and adapt to climate change, they are not alternatives. There is wide agreement on proceeding with an ETS (except Act and the Maori party, who prefer a carbon tax.).
The biggest sticking point is over who should bear the cost. Labour’s ETS, which is the current law, is overly generous in allocating the biggest polluters 90% of their 2005 pollution for free until 2019. This will be paid for by the rest of us. But National and Peter Dunne see this as too hard on heavy industry and propose the allocation of free credits on an output, or intensity, basis. That means no-one pays the full cost of carbon at the margin of their activities, and the more they grow and pollute, the more free credits they get at the expense of the rest of us. It also means NZ’s emissions continue to grow as fast as the economy grows. There is absolutely no transition to a low carbon economy. It is much, much worse than no ETS at all.
As if this wasn’t enough, the main report (which a majority voted for but only a minority supports) speaks very favourably of a price cap on carbon at least for a while. This would make it easier to align our ETS with the scheme the Australian government wants but can’t get the votes for in the senate, so it may never happen anyway. In order to align with a non-existent Australian ETS the NZ government (or some of it) wants to artificially reduce the price on carbon below the world price. This is a massive wealth transfer from households and small business and taxpayers to the big industrials and intensive farmers.
The winners would be the Rio Tinto Aluminium smelter, NZ Steel, Holcim cement, big MDF and other wood processing plants – all large corporates which are owned overseas. So that’s a large flow of funds out of the NZ economy. Nothing could illustrate so well what an economic colony we have become. The coal industry and intensive farmers would benefit too. Everyone contributing to accelerating climate change would get a subsidy, and everyone contributing to solving the climate change problem would pay more for the privilege.
Households would end up paying higher electricity and transport fuel prices to cover their own emissions, and higher taxes to cover the emissions of the big polluters.