The ETS was introduced to help NZ fulfill its Kyoto Protocol obligations.
The Kyoto Protocol expires at the end of 2012 and as a result, the ETS
should be repealed. But no - indications are that the government is
planning on turning the ETS into a permanent carbon tax (see our
you believe the ETS should be repealed, please sign this NZCPR petition
- and ask others to do the same!
*We intend to
vigorously campaign against this outrageous new tax - if you would like to
support our campaign, please click
*If you have examples
of how the ETS is hurting New Zealand by forcing up prices, causing
businesses to close or relocate offshore etc... please share them by
The government called for submissions on
of the ETS. Below is the submission of the NZCPR - lodged on Friday 11
For more information see:
New Carbon Tax by Dr Muriel Newman
Great Government Green-wash by Hon Barry Brill.
NZCPR Submission on
the Emissions Trading Scheme Review
SUBMISSION IS FROM:
Dr Muriel Newman on behalf of the New Zealand Centre for Political
PO Box 984,
The New Zealand Centre for Political Research is a
public policy think tank established in 2005 by former Member of
Parliament Dr Muriel Newman. The NZCPR takes a research based approach to
public policy matters of a national interest. The NZCPR Weekly electronic
newsletter is the biggest in the country with almost 30,000 subscribers,
and the NZCPR.com
website attracts upwards of 1 million visitors each year. This
submission is also on behalf of over 6,500 people who have signed an
on-line petition to suspend the ETS.
The NZCPR wishes to address Question 1 of the
consultation document: What do you
think of the overall package of amendments the Government is proposing to
make to the ETS as outlined in this document?
The NZCPR believes that the amendments to the ETS that are being proposed
are fundamentally flawed and that the on-going cost burden it will impose
on New Zealand businesses and families makes it unaffordable.
- The NZCPR strongly rejects
the proposed changes to the ETS and recommends that the scheme is repealed
at the end of 2012, once the Kyoto Protocol expires.
5. KEY POINTS:
*KYOTO PROTOCOL WILL
EXPIRE IN DECEMBER AND SHOULD BE REPEALED AT THAT TIME:
The ETS was introduced by the Labour
government as a mechanism to ensure that New Zealand complied with the
provisions of the Kyoto Protocol that required countries to keep their
emissions of man-made greenhouse gases at no more than 1990 levels during
the four year period from 2008 to 2012. Since the Kyoto Protocol expires
in December 2012, and there is no on-going binding agreement, the
justification for the scheme also expires.
- After December there will be no international obligations to meet - for
that reason, the NZCPR recommends that the ETS should be repealed at the
end of the year.
*THE ETS IS INEFFECTIVE:
Figures released by the government,
indicate that New Zealand will easily meet our Kyoto obligations – but not
because of the ETS.
Some of the biggest reductions in emissions occurred
as a result of the drought in 2008, when farmers reduced livestock
numbers. Since livestock contribute almost half of New Zealand’s
greenhouse gases slaughtering cows and sheep helped to reduce our
Higher rainfall helped too. When the lakes are full,
hydro and geothermal generation go a long way towards meeting New
Zealand’s demand for power.
The recession followed by the global economic crisis
have dampened the economy - including output from the transportation and
manufacturing sectors, two of the main contributors to the production of
man-made greenhouse gases.
It was a combination of factors such as these that
have reduced New Zealand’s emission of greenhouse gases.
- The ETS has created an
ineffective bureaucracy and should be repealed.
*THE ETS IS UNAFFORDABLE
AND PLACES AN UNFAIR COST BURDEN ON HOUSEHOLDS:
The ETS has been designed to pass the cost
of carbon and the bureaucracy onto households. Former Minister Nick Smith
acknowledged the success of the scheme in transferring costs onto
consumers last year: “Early signs are that a price on carbon has
successfully entered the New Zealand economy; businesses and foresters are
factoring in this price into their long-term decisions and passing the
price of carbon down to consumers”.
It is estimated that the ETS has
cost businesses $350 million a year since it was introduced in 2010. Once
the transition phase is over, it will cost over $700 million a year. The
scheme is designed to pass these costs on to households.
To date the
cost burden on the average family of four has been estimated to be around
$750 a year. This is expected to double over the next three years to
around $1,500 a year.
These costs represent an unaffordable government
regulatory impost on businesses and households that are struggling in an
extremely difficult economic climate.
- If the government is serious
about its desire to grow New Zealand’s economy and raise our living
standards, the ETS must be repealed.
*THE ETS IS DAMAGING THE COMPETITIVENESS OF NEW
Before the Emissions Trading Scheme was introduced,
many businesses expressed concern that a price on carbon would be
unaffordable and could affect their viability - especially those competing
against rivals in countries that do not have carbon charges. Many of those
businesses will have managed to cope with the present carbon prices. But
the proposed doubling of charges will inevitably force some to close,
others to lay off staff, and some businesses with a strong manufacturing
component to relocate to countries where such arbitrary costs are not
- The ETS has imposed an
unacceptable cost burden on businesses that have to compete with countries
that do not have an ETS and should be repealed.
*NEW ZEALAND’S ETS
ENSURES WE DO MORE THAN OUR “FAIR SHARE”:
The government continues to pretend that New
Zealand should only do its “fair share” - while ensuring the ETS doesn’t
impact unreasonably on business and households. Under the present ETS,
this statement is a grossly misleading fabrication.
The ETS has
been specifically designed to ensure that New Zealand does far more than
its fair share, as the former Minister Nick Smith explained to Parliament:
“On 1 July 2010 New Zealand will have the first emissions trading scheme
up and running outside Europe, and it will cover more sectors than the
European scheme does. We were also the first country in the world to
include forestry, in 2008, and we were the very first country in the world
to have a plan for introducing agriculture, in 2015. If we can settle our
emissions trading scheme by December, we will be at the front end of
international action on climate change, and will actually have the most
comprehensive emissions trading scheme of any country in the world.”
Zealand’s ETS remains the only country-wide trading scheme in the world
outside of the European Union. The EU scheme is not an “all gasses, all
sectors” scheme like New Zealand’s - instead it targets just 43 percent of
industrial emissions. It excludes the transport sector, households and
small businesses, agriculture, and construction and waste. In addition,
the EU scheme is based solely on carbon dioxide and excludes methane,
which is such a major part of our emissions profile.
If our ETS had been modelled on
the EU scheme, to include only manufacturing and heavy industry, the cost
burden on the country would have been minimal. But rather than deal
fairly, by excluding food producers, households, small businesses and
transport, all sectors are included in our scheme.
- The ETS inflicts a
disproportionate cost on the New Zealand economy and should be repealed.
*AN ETS CARBON TAX IS
the objective of the government is to convert the ETS into a permanent
carbon tax – as appears to be being signalled in the consultation document
– then this should be strongly rejected.
The ETS was not promoted to New
Zealanders as a permanent carbon tax - it was justified as a temporary
mechanism to help us comply with our Kyoto Protocol commitments.
- To convert the ETS into a
permanent carbon tax by stealth is dishonest and should be rejected – the
ETS should be repealed.
*NEW ZEALAND VERSUS
AUSTRALIA - HOW OUR GOVERNMENT PENALISES CITIZENS:
While the New Zealand
government is proposing to punish New Zealand householders permanently
with an unaffordable carbon tax, the Australian government has gone to
great lengths to ensure that the public does not bear the cost of their
controversial carbon tax. Some $15 billion worth of tax cuts and other
benefits have been proposed to compensate households for the cost. In
total, 90 per cent of households are expected to get tax cuts and/or extra
payments when the $23 per tonne price kicks in on July 1st
this year. These tax cuts and other compensation measures are meant to
ensure that the average household will be 20 cents a week better off, not
It is no wonder that record numbers of New Zealanders
are flocking to Australia, when our government, in comparison, is planning
to punishes citizens permanently by converting the most far reaching,
costly and bureaucratic ETS in the world into a permanent carbon tax on
- To help stop the
exodus of New Zealanders to Australia, the ETS should be repealed.
COPY OF LETTER TO THE PRIME MINISTER
TO SUSPEND THE ETS:
19 May 2010
Hon John Key
Dear Prime Minister,
The 4,402 people whose details are attached, signed a petition
calling for your government to follow the lead of Australia and suspend
the Emissions Trading Scheme (ETS) until 2013. On behalf of these
petitioners, I would therefore like to formally request that you
announce that the ETS will be suspended until 2013 at the earliest
As you are aware, this is the worst possible time for a government
to be increasing the financial pressure on families and small businesses
through the imposition of an emissions tax. Given the severity of the
recession and the widespread impact of a rise in GST, the 5 percent
increase in the cost of power and four cents a litre increase in petrol
and diesel will cause undue hardship. The cost increases across the
economy will be significant, with power bills expected to rise by a
total of $270 million over the next year and fuel by $260 million – a
total of $526 million in the first year alone. These costs will
seriously undermine the competitiveness
of New Zealand businesses, with the impact on agriculture
alone in the year from 1 July expected to be in the region of $200
The reality is that while New Zealand’s comprehensive “all gases,
all sectors” ETS will generate a significant income flow for the
government, it will seriously damage our economy. In comparison, the
European Union's ETS targets just 43 percent of industrial emissions,
excluding the transport
sector which generates 21 percent of EU emissions, the household and
small business sector which generates 17 percent, agriculture which
generates 10 percent, and construction and waste which generate 9
percent. Furthermore, the EU scheme is based solely on carbon dioxide -
methane, nitrous oxide and fluorocarbons, which make up 48 percent of
the European Union's greenhouse gas profile, are all
Apart from European Union countries, none of our other trading
partners have an emissions trading scheme – Australia’s scheme is now
suspended until 2013, Japan’s scheme has been delayed until 2012, the US
scheme is stalled, and Canada’s scheme is still on the drawing board.
Meanwhile China and India have no intention of imposing any scheme that
would slow their economic progress.
What all of this means, Prime Minister, is that under your
stewardship, New Zealand is now totally out of step with our trading
partners. Your ETS will not only impose a massive anti-competitive cost
burden on Kiwi exporters struggling to succeed in markets where there
are no such impediments to growth, but it will also undermine New
Zealand businesses competing against imports from non-ETS countries.
Your ETS will increasingly be recognised as a millstone holding back New
Zealand and denying voters that brighter and more prosperous future that
you promised them during the 2008 general election campaign.
In light of these very serious matters, I do urge you to consider
our request to suspend the ETS until 2013 favourably – and please be
assured that I will personally advise the 4,402 people who are
supporting this request of your response.
Thank you for your
*The Prime Minister has not replied. We received an acknowledgement from
the Climate Change Minister only.
Dr Muriel Newman
Centre for Political Research