Brian Fallow has a great post over at Granny Herald this morning. “Emitters on bludger’s end of deal” deals with the way that the NACT government has been loading costs onto future voters and taxpayers.
By siphoning off and investing around another 1 per cent of GDP while the babyboomers are still in their peak earning and taxpaying years the intention of the fund was to reduce the burden on future taxpayers by around 1 per cent of GDP.
A 40 per cent increase from 5 to 7 per cent of GDP would be easier to handle than a 100 per cent increase from 4 to 8 per cent.
Moreover, the government is also avoiding making the decisions that go with that decision:
…it is clearly craven and irresponsible for the Government to refuse to even discuss a reduction in the entitlement parameters of the scheme, such as pushing back the age of eligibility. Instead it plans to just pass on the now much larger bill to future taxpayers.
Now I wouldn’t be in favour of changing the terms of the superannuation. But as Brian says doing one without the other is completely moronic in terms of the future viability of the accounts. What Key’s government is doing is putting the costs onto the plastic. The inevitable higher bills will be picked after the current cabinet is safely picking up their super.
Same thing on the Emissions Trading Scheme (ETS):
Conspicuously, and for the first time anyone can remember, the Treasury has refused to endorse a regulatory impact statement for the legislation.
The quality of the analysis, it says in the bill’s explanatory note,”is not commensurate with the significance of the proposals”.
The reason is made clear in a report from the Substainability Council which is doing something that the government has been unwilling to do. You’d have to ask why exactly the government has been avoiding doing a analysis of the effects of their changes to the ETS. Possibly because it shows Nick Smith as being a serial liar as we have discussed here and here (and several other posts). But more likely because they are pushing the costs onto the plastic and onto future generations of taxpayers.
What has to be understood is that the Kyoto bill gets paid one way or the other. The question the government has is who pays for it? The emitters of the gases that it is meant to constrain the growth of? Or the taxpayers. Clearly they have come down on the side of the taxpayers paying for it, and emitters being given little or no incentive to change their operations. Indeed and in the spirit of Robert Muldoon on SMP’s to sheep farmers (PDF) 30 years ago, the rationale is that this will encourage exports. Nick Smith explicitly states this in a article at the granny:
The Government makes no apologies for being pretty pragmatic about climate change and the ETS. We want to get the economy moving again and particularly to get growth in the trade sector.
What the hell? I can remember almost exactly the same words being used to justify the SMP’s. As a taxpayer I’ve been paying them off most of my life – the experiments didn’t work!.
This government seems to be giving an incentive to emitters to increase their emissions. They will get more cheap credits. However like SMP’s it is far more likely to encourage industry dependence and discourage adaption to a changing world economy.
The councils report states:
Proposed changes to the emissions trading scheme (ETS) would result in 84% or more of the nation’s multi-billion dollar Kyoto liability being put on to future taxpayers. Today’s polluters will pay nothing like today’s emissions bill.
Frankly this government seems to be in denial. Borrowing to cover the current recession is one thing. But they’re just popping the structural bills on to the plastic. They will still be having to be paid decades past the recession costs, and hoping no-one will notice because they’re claiming it has something to do with this current recession.
BTW: I wonder if anyone told Bill?
Update: Toad points out that I’m in agreement with Cactus Kate. She comes at it from a different angle but essentially argues against the distortion in the economy – which was what the SMP analogy was about.