Fickle Cycle

Below is my submission to the Select Committee on the truly awful Emissions Trading amendment bill. National are going to as much effort as possible to avoid public scrutiny or even public knowledge of the bill. This has included regular, unneeded parliamentary urgencies, sending the bill to the Finance & Expedenture committee instead of the ETS Review committee (yes really) and giving the public just two weeks to submit on one of the most important pieces of  legislation of this government’s tenure. National really do make a mockery of parliamentary process and democracy in general.

To make things worse, the Maori Party will be voting for this despite not voting for the original scheme because it was “too weak”, and ACT will be voting for it despite their climate change denial (yes, the amended ETS is that bad). If you have any feelings towards this bill (and you should) then please send a letter/email the committee by 13 October explaining your feelings for the bill and why – it does not have to go into the detail of my submission or follow any strict format. If you want a quick refresher on what an ETS is then, as always.
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SUBMISSION on the CLIMATE CHANGE RESPONSE (MODERATED EMISSIONS TRADING) AMENDMENT BILL

SUMMARY

• I oppose the Climate Change Response (Moderated Emissions Trading) Amendment Bill, and ask that it not be passed.
• The bill creates the framework for large scale Government-taxpayer subsidisation of emitting corporations. The bill not only removes corporate incentive to reduce emissions, but subsidises larger amounts the more a corporation increases their emissions. The bill appears to be a way of giving money to big business rather than encouraging emissions reduction and climate change prevention. It transfers wealth from the many to the rich. The bill will have devastating effects on Aotearoa, financially and environmentally.
• I specifically oppose:

1. Massive subsidisation through halved obligation and the capping of the carbon price.
2. The switch to intensity-based allocation of free credits and its phase-out rate of 1.3%
3. The extending of the agriculture entry date to 2015.

• I do not wish to make an oral submission to the Select Committee.

1.  UNSUSTAINABLE AND UNETHICAL SUBSIDISATION

• Clause 61’s insertion of section 222A to 222F gives an obligation of only 50% to active industries and the capping of the carbon price at $25/tonne. This means there will be a taxpayer-funded subsidisation of $415 million per year from now to 2013. This figure is unrealistically based on a $25/tonne price despite predictions of a rise to $50/tonne at the end of 2009, with estimates rising to as much as $100/tonne. As such the $415 million figure, already as much as the yearly cost of the entire NZ court system, will likely be much higher. Considering the economy’s apparent “decade of deficits” and the global recession this is fiscally shattering on the state and taxpayer.
• In accordance with the fiscal costs table in the bill’s explanatory note, subsidies will rise to over $2 billion per year by 2030. $2 billion amounts to $20 a week per taxpayer, straight into the hands of corporations who do not deserve that kind of money from citizens who most likely do not benefit from business profit. It is more than the yearly cost of ACC or the prison system. Again, this figure is unrealistically based on a $50/tonne price which will almost certainly be higher by this date.
• By not forcing emitters to pay the full price for their pollution, there is less fiscal pressure on them to lower their emissions. Thus the ETS is horrendously ineffective in responding to the problem of climate change.
• As well as being fiscally and environmentally unsustainable, such large-scale subsidisation of businesses is simply unethical. It is the legislated transfer of wealth from the majority to a minority. Such vast amounts of taxpayer money could be used for better things such as ensuring the health system can keep up with demand, fixing public schools, or a host of other socially important initiatives that would receive wide public support.
• Recommendation: Remove Clause 61 from the bill.

2. UNSUSTAINABLE, EXPENSIVE INTENSITY-BASED ALLOCATION

• Clause 22’s rewritten subpart 2 of Part 4 establishes a system of intensity-based allocation of free credits. Thus, the more a business emits, the more money they’re given. Businesses will literally get given more money the more they pollute the country. This is clearly unsustainable and detrimental to the environment – and the taxpayers. It does not encourage the lowering of emissions at all. Taxpayers of New Zealand should not have to pay for a company’s growth – the company should.
• The switch to intensity-based allocation is being estimated as raising New Zealand’s emissions by 5% by 2020. This is obviously not in line with the Government’s apparent plan of lowering emissions by 10-20% by that year.
• Clause 22 also significantly lowers the subsidy phase-out rate from 8% to 1.3%. Under the existing scheme all free allocation would have stopped by 2030. Under the proposed change subsidies will only cease in 2090. This is unsustainable and a massive burden on the taxpayer and Government. This policy is not right for New Zealand and mustn’t be passed into law.
• To give an example: In the current ETS, Methanex would be set to start receiving $12.7 million a year based on their 2005 emissions. Under the proposed scheme it will start at $87 million a year. Under the current ETS, Methanex will stop receiving free allocation subsidisation in 2030 when the phase-out rate of 8% reaches its conclusion. Under the proposed scheme we will still be paying the company at least $60 million a year by 2030, with subsidies continuing for decades after that. Methanex is Canadian-owned and the New Zealand taxpayers will be giving the business millions. Using the mostly hard-earned money of NZ citizens to give money to rich foreign corporations is astonishingly bad policy. This bill is illogical and unsound on countless levels, unless its aim is to transfer money from the poor to the rich.
• Recommendation: Entirely remove Clause 22, Clause 38, and any other clauses relating to the intensity-based allocation and lowering of the phase-out rate.

3. UNNECESSARY EXTENSION OF AGRICULTURE ENTRY DATE

• Clause 59(2) delays the entry date of agriculture into the ETS by two years, until 2015. This is unnecessary and allows untaxed emissions for an extra two years. As the agriculture industry makes up nearly 50% of New Zealand’s total emissions, delaying its entry until 2015 means the proposed ETS will only be at half its strength until then. The agriculture industry has been expecting the entry date to be 2012 for years so this delay is completely needless. It appears to be yet another way of stalling any real action on climate change.
• Recommendation: Remove Clause 59(2) and any other changes made as a result of this clause.

CONCLUSION

• This bill is environmentally, fiscally and morally unsustainable. I urge that it be rejected or at the very least amended according to the recommendations made.