Key’s $155b subsidy to polluters

Written By: - Date published: 1:27 pm, November 16th, 2009 - 38 comments
Categories: climate change, economy, Environment - Tags:

A month ago, I wrote that National’s moves to gut the Emissions Trading Scheme would increase government debt by $73 billion by 2050.
A Treasury report said that National’s ETS changes to subsidise polluters would see government debt 6-8% of GDP higher than it otherwise would be. GDP in 2050 is modelled at $914 billion, so 8% is $73 billion. It turns out that was a gross under-estimate.
Treasury has now revealed that National’s ETS will increase government debt by 13-17% by 2050. That’s up to $155 billion more debt that John Key and Nick Smith are planning to saddle our children with.
Remember that’s only the total by 2050. It will be building up the whole time until then – nearly $4 billion a year on average – and we’ll be paying interest the whole time. National’s sop to polluters will cost us as much as $100 billion, over $9 billion in 2050 alone, over the next forty years just on interest payments.
I’m not sure what is worse – that National is prepared to put us in so much debt for a short-term pay-out to their polluter mates, that the ETS won’t even reduce emissions according to the Parliamentary Commissioner for the Environment, or that Key and Smith seem completely unaware of the problems to the extent that they don’t even know how much debt they’re loading on us. No wonder Treasury has refused to endorse National’s ETS and “has formed the view that the level and quality of analysis presented is not commensurate with the significance of the proposals”.
An incompetent minister, a Prime Minister who’s too busy heading off to the next PR op, and an ideology that says profits first-people and environment second. It all adds up to a recipe for disaster.
[I don’t know why my numbers don’t agree with the Green’s but you can following my working and they haven’t provided theirs]

38 comments on “Key’s $155b subsidy to polluters ”

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  1. Michael Foxglove 1
    16 November 2009 at 1:38 pm

    Good analysis Marty. I’m a bit shit at maths, but isn’t the $155 billion basically a $40,000 subsidy from every man, woman and child in New Zealand?

  2. gitmo 2
    16 November 2009 at 1:42 pm

    Yet more proof that an ETS is a waste of the time and money.

    • Draco T Bastard 2.1
      16 November 2009 at 2:06 pm

      No gitmo, it doesn’t prove that. It proves that National and the Maori Party are incapable of producing sound legislation.

      • Steve Withers 2.1.1
        16 November 2009 at 4:23 pm

        National and ACT wouldn’t allow it. By itself, the Maori Party probably WOULD be able to produce a good ETS. Anyone but National and ACT would have done better.

        • Draco T Bastard 2.1.1.1
          16 November 2009 at 4:31 pm

          I was going to say NACT but ACT don’t support the ETS amendment. Of course, that’s because it doesn’t go far enough in subsidising business as far as they’re concerned.

          The Maori Party may be able to do better by themselves but they’ve put their support to this amendment which tends to prove the opposite. IMO, as far as the MP are concerned, they haven’t done anything to support the thesis that they could do better.

    • Bright Red 2.2
      16 November 2009 at 2:33 pm

      The ETS we have now will reduce emissions (not by enough) and doesn’t subsidise polluters.

      • Ari 2.2.1
        16 November 2009 at 6:41 pm

        Actually, you’re wrong on two counts.

        1) We don’t have an ETS right now, it was repealed.

        2) The previous ETS did subsidise big polluters, just not anywhere near as much as the proposed one will.

  3. prism 3
    16 November 2009 at 1:50 pm

    When they stop being MPs they will have doors open for jobs at these businesses. Good forward thinking! InTM pleasant get-togethers with people its handy to know will follow from such climate change policies.

    • Bored 3.1
      16 November 2009 at 1:58 pm

      Its all a bit of a jokes really. Lets all agree we have a problem but not agree on how big, or even believe it is true…then lets argue about who will pay and defer all costs to our children or anybody else we can. I think we might use some remaining wood to build a boat to transport cattle to graze the newly subtropical isle of South Georgia, Jonkey and his NACTsissies can stay here and face the heat.

  6. Steve Withers 6
    16 November 2009 at 4:09 pm

    This government, like other conservative governments in the English-speaking world, isn’t really interested in the evidence or the facts….and prefers to think it can define its own version of reality by fiat.

    As George W Bush found out, reality begs to differ….and will always win.

    It’s struck me as odd that having avoided the monstrous mistakes of the Bush era of brain-dead conservatism by avoiding electing a conservative government here through that period……Kiwis then succumbed and embraced the conservative policy set AFTER they were proven to have failed by any objective measure….from the finance crash, to the housing bubble to the endless, pointless conflicts in Iraq and Afghanistan. Wisdom failed.

    Of course they did nothing of the kind. Most National Party voters didn’t have a blind, lonely clue about about what they were really voting for. Not because they weren’t told, but because they don’t actually understand what they are looking at. They see a National Party they believe to be good for the economy, sensitive to ‘real’ Kiwis…and who can get stuff done.

    That this translates into Billions-for-Buddies largesse while their own wages and conditions head toward the minimum wage……..wasn’t obvious. To them.

    On climate change, the rush to gut the ETS and the RMA and build expensive roads while the oil is running out and population densities rise…merely proves the rest of us correct: This government are a pack of deluded idiots we’ll have to put up with until they get the boot.

    That such a party wins a significant share of the vote says New Zealand is paying a high price for de facto the negligence and ignorance of its voters, who voted on emotive issues like “smacking” while failing utterly to comprehend the important stuff.

    These voters will ultimately be held to account – by reality – for their poor judgement.

    Shame about the rest of us…who tried to warn them. But these modern conservatives (as distinct from the old sort who valued integrity and truth) don’t do evidence or persuasion. They’d have a hard time remaining ‘noovaux’ conservatives they did. Reactionary prejudice is fundamentally irrational.

    • Tigger 6.1
      16 November 2009 at 4:25 pm

      “Kiwis then succumbed and embraced the conservative policy set AFTER they were proven to have failed by any objective measure”

      So true. I still keep hoping one day I’ll wake up and NACT will be gone…

    • prism 6.2
      16 November 2009 at 8:31 pm

      For democracry to work well people need to take an interest in politics and the process of distribution, fair management of resources, encouragement and control of business, fair treatment of workers. So many and particularly those of the right wing persuasion, talk and think about government as if it is a service centre for their own needs and wants. Teachers must notice this. Actually thinking about what is needed from a countrywide view, as well as their individual preferences, is beyond many people.

  7. BLiP 7
    16 November 2009 at 4:57 pm

    Labour are as much to blame for this fiasco as National Ltd®. By opting for the trading scheme casino instead of an open and equitable carbon tax, the true cost is obscured, hidden away in accountants’ spread sheets and speculators’ machinations so as to befuddle the poplace and allocate costs to those least liable.

    • Herodotus 7.1
      16 November 2009 at 5:05 pm

      NZ will be so poor, ACC, super, education etc will not be isssues. We will be mirrowing Africa. A select few who are wealthy the rest of us running on a survival mechanism basis.

    • Bright Red 7.2
      16 November 2009 at 5:11 pm

      they didn’t have the numbers for a carbon tax after 2005 – thanks to bloody Peter Dunne and Winston Peters who wouldn’t back one.

  9. Matthew Hooton 9
    16 November 2009 at 5:41 pm

    If this analysis is sound, it will have something to do with the fact that Labour’s ETS would have transferred $21 billion from households and firms to the Crown – see http://www.stuff.co.nz/the-press/491283 Labour’s ETS was always more about tax collection than the environment because it was never forecast to reduce net carbon emissions by much, if at all.

    National says its ETS will be fiscally neutral and that it won’t collect this effective taxation, which may be why net Crown debt would be higher under National’s scheme than Labour’s.

    All these estimates of course rely on the Kyoto rules remaining in place till 2050 and New Zealand and the world not making any breakthrough on agricultural science.

    Both Labour and National’s schemes are entirely foolhardy and will achieve nothing environmentally but will cost jobs, wages and profits. An entirely different approach would be much more sensible.

    • Bright Red 9.1
      16 November 2009 at 5:47 pm

      If you’re right about that $21 billion, Matthew, I’m still trying to work out where the other $134 billion comes from.

      hmm, maybe from giving away the right to pollute to polluters for free (for the first 90%, falling slowly), rather than charging them.

    • Zaphod Beeblebrox 9.2
      16 November 2009 at 8:28 pm

      Not sure how else you convince the Chinese to stop building coal-fired stations- when you are the second or third highest per capita CO2 emitter on earth, it would be a bit hypocritical to ask them to act when you won’t yourselves.

      Or are you counting on NZ being about the only place on the planet that can feed itself- because that is the likely scenario as CO2 heads to 4, 5 and 600 ppm.

  10. Herodotus 10
    16 November 2009 at 5:50 pm

    Either CO2 is going to destroy the world (As there is nothing being done to reduce emisions, only transfer wealth as a byproduct) so who cares as wea re all doomed anyway. Or it is a falicy and the wealth transfer is intentional (I follow this course). Either way we are being stuffed !!
    At least Nick S is consistent screwing you and me not once but twice. There are gifted people serving in cabinet.

  11. Nick C 11
    16 November 2009 at 7:07 pm

    National argues that if we dont subsidise the polluters they will move overseas and net emmissions wont fall as they will just do the polluting in another country.

    What is your response to that arguement?

    • Doug 11.1
      16 November 2009 at 8:52 pm

      Farmers could move to Australia.

      AUSTRALIA is likely to have an emissions trading scheme locked in by the end of next week, with the Government caving in to a key Coalition demand to permanently exclude the farming sector.

      In a significant concession, and a huge win for the farming lobby, a senior Government source revealed Labor will this week agree to exclude agriculture from the scheme “indefinitely” – knocking out a key sticking point in negotiations with the Opposition.

      In a further concession, the Government will also examine giving farmers the opportunity to earn cash by selling carbon offsetting credits on the open market, including Opposition Leader Malcolm Turnbull’s favoured “biochar” method of storing carbon in soil.

    • Zaphod Beeblebrox 11.2
      16 November 2009 at 9:02 pm

      If they can find a govt who will subsidise them more than $109K per job, good luck to them. Personally I can think of lots of better ways to have my taxes spent.

  12. Doug 12
    16 November 2009 at 9:16 pm

    Would this happen in New Zealand?

    Farmers, greenies and Nats back ETS exemption

    16 Nov, 2009 12:58 PM
    An unlikely trio of farm groups, the Humane Society and The Nationals are all publicly backing the Federal Government’s decision to permanently exclude agriculture from its emissions trading scheme.
    The decision came as a result of Climate Change Minister Penny Wong’s on-going negotiations with her Liberal counterpart Ian Macfarlane, as they try to reach consensus on a package acceptable to both sides of politics.

    “There’s obviously other things on their list,” Sen Wong said. “We have said to them – economically responsible, environmentally effective. They are the tests we’ll apply.

    “But in terms of agriculture, this is an offer that is made by the Government on an issue that we know is important to the Opposition because we are serious about getting this legislation through.”

    Sen. Wong said that while farmers were excluded from having to reduce emissions, they would be able to sell credits for offsets they create via soils or forestry.

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