No money has been budgeted to pay for New Zealand’s contribution to a $44 billion component of the Copenhagen Accord on climate change or to withstand losses from the emissions trading scheme beyond Kyoto’s lifetime. The gaps in last week’s Budget have raised fresh questions about the Key government’s commitment to curbing greenhouse gases despite Prime Minister John Key’s continued insistence that the ETS rollout will not be further deferred. Mr Key says he does not know why the sums are missing from the Budget but speculated that Treasury could not register a liability or asset beyond Kyoto’s first commitment period without a fresh international commitment…
Last year when the revised ETS was going through Parliament, Treasury calculated that the long-run costs of the changes, particularly granting big industrial emitters and agriculture more free carbon credits for longer, could cost $110 billion or 13 to 17 percent of GDP by 2050 an estimate Mr Key dismissed at the time as nonsense. However in the Budget papers, the Treasury says that beyond 2012 when Kyoto expires, it has modelled the ETS net revenues to be neutral ‘as New Zealand has no international commitments beyond this period’. It adds that net revenue is assumed to be recycled back to the public through fiscally equivalent, unspecified tax reductions or spending increases.
I agree with Labour’s Charles Chauvel who asks:
‘It begs the question why would we have gone through all of that and put the markets and New Zealand consumers through the convulsions we have if we’re just going to revert to a revenue recycling scheme.’
Or is it because National’s budget was already so much in the red they didn’t want it to blow out even more?