The co-leader of the Green Party says he is "incensed" at National's proposals to use some of the money raised by the Emissions Trading Scheme (ETS) to fund tax cuts.
James Shaw says that cash should be used to reduce greenhouse gas emissions instead.
Using ETS money to help pay for tax reductions is part of a tax policy outlined by the National Party, which calls it a "climate dividend".
Shaw says that really angers him because it is not a climate dividend at all.
"A climate dividend would go up and down depending on the distributional impact of the carbon price.
"What they are doing is taking the money that is set aside for action on climate change and they are ploughing it into a general tax cut.
"That incenses me, because it is completely irresponsible. It co-opts the language of action on climate change to fund their tax cuts."
National has long argued that inflation has pushed ordinary people into higher tax brackets without becoming any richer in real terms. So it has sought to raise tax thresholds among other changes to "correct years of economic mismanagement by Labour".
The whole cost of National's proposals would be $14.6 billion over four years, according to the party's own numbers. This would be funded by a several things, including using money from the ETS at an average rate of $590 million a year.
"National believes that the best way of reducing the impact (of ETS-derived price rises) is to return ETS revenue back to New Zealanders by a climate dividend," the party says in its official publication.
There have been some suggestions that the use of the term "climate dividend" is misleading because it implies money will be coming in to the public like earnings from stocks and shares.
In fact, it will go into the Government's offers and offset the cost of the tax cuts.
Shaw agrees with the criticism of the National Party's language.
"It is extremely misleading. And look, some years ago we asked people what should we do with the money that is coming in from polluters. Over 90% said it should be recycled into action on climate change, and what National is doing is putting it into the kitty to fund their tax cuts."
At present, Government money is put into a multi billion dollar fund, the Climate Emergency Response Fund (CERF) at a rate proportionate to income from the ETS.
Some of that money is used to help businesses produce cleaner products via the Government Investment in Decarbonising Industry (GIDI) fund.
One case in point was the $140 million dollar commitment to help NZ Steel reduce emissions from its plant at Glenbrook.
Shaw worries that further schemes like this are now at risk.
"If National are going to raid the Climate Emergency Response Fund, that means there is no money for decarbonisation, there is no money for GIDI, there is no money for home insulation schemes.....and it is a completely irresponsible approach."
The National Party, though, insists it is not being irresponsible. It argues that the current policies are the wrong ones, not its own proposals. It says the current Government uses ETS money to pay profitable companies to decarbonise when they should be doing it themselves with their own money.
The party goes on to say a rising price for carbon would incentivise companies to reduce emissions with or without the Government telling them to do so or paying for some of the work.
The consequence of that would however be higher prices for the public, which could be mitigated by lower taxes, funded in part by the ETS.
67 Comments
he has had 6 years in power as teh minister -- they have signed of ont he largest extraction of fresh water ever in NZ raiding our SI aquifers -and touting teh 140mill subsidy to a private company to clean up its act as a win .....
achieved very very little in his time in power --- more interested in woke social handouts than the environment --
People only got upset because these new bottlers were Chinese in Christchurch.
Never mine the estimated 250ltrs of irrigation water farmers use to make 1 litre of milk, which fronterra burns coal to remove the water to make milk powder to ship overseas.
https://i.stuff.co.nz/business/78652406/the-bottledwater-giants-who-are…
The greens have done nothing to avoid our biggest tangible issue, landfills.
people would pay to not use landfills and the Green have done nothing to promote and alternative. Instead focusing on dreams and saving the world.
They need to get real to have any credibility.
And they have done nothing about the new wide bodied jet international airport to be built in Central Otago. What carbon uptake goes into that construction, concrete, ashphalt, steel, plastics, glass, diesel you name it, then it’s continuing operation. How much are all New Zealanders to be carbon taxed to compensate Why isn’t Mr Shaw really angry about that one then?
Isn't the central Otago economy almost entirely dependent on millions of people arriving in planes each year and driving around in private cars to see our pristine landscape? How else are our export earnings to grow and cover our large current account gap if we can't bring in millions of more tourists each year?
I am not saying that's what we should be doing but what alternative do we have to pay for all the EVs, fast chargers, solar panels, wind turbines, batteries, inverters, cables, switchgears, etc. needed to decarbonise our economy.
The Greens are not in government. They have a cooperation agreement, not a coalition agreement. This gives them a couple of minister portfolios (Climate Change and Prevention of Family and Sexual Violence) and no say in cabinet so anything they propose can be overruled by Labour.
Also, landfills fall under the Environment Minister - David Parker (Lab)
Imagine then the annoyance on election night when the coveted cabinet seats are even further out of reach. Last time, co-leader Davidson was claiming one even before the ballot boxes had been stashed away and even though the electorate had delivered no need for them to be in government and in fact, at that point, they had come in fourth.
So James Shaw is incensed / P'D off by the Nats.
Well that just proves they must have go this right!
He has been climate Min for 6 years what's he done, traded off some of NZ's trading advantages, Susbidised some Teslas for Champagne Socialists and Greenies. Hit Tradies and Farners on Utes when there is no practical alternative.
The Greens are joke these days, Rod Donald and Jeanette Fitzsimmons would rollover in their Graves to see what they have become. You may not have agreed witg Rod and Jeanette but they had credibility. The Greens under Davidson and Shaw are a ragtag group of pseudo Marxists, how could you vote for them!
I do not agree people should be shamed for desiring more autonomy over their own money to make an impact where they see fit. The underlying assumption of your comment is that the government taxing us was going to improve to climate crisis. The books on the last 6 years are an open and shut case in that respect no matter your politics.
That's a fair detail but it still contains the assumption of effectiveness. I'm not an ETS expert so happy to be educated. My key question would be if you deduct the CO2e offset value linked to the monoculture pine plantations how would it look? I'm categorically against that incentive/offset structure and think those plantations do more direct damage to NZ than any count of CO2e.
We have signed up to the Paris agreement , so like it or not , we have to pay for our carbon emissions. The pine carbon forests are awarded carbon credits , based on how much carbon their forests are calculated to remove from the atmosphere. Emitters of carbon have to buy carbon credits to cover the carbon they emit. there is no "dividend" to the taxpayer in this transaction.
The government has a stock of carbon credits , it auctions off blocks of them a few times a year . Noone seems to have a clear idea where these credits come from , be it from native forests , legacy exotic forest , or whatever. The proceeds from these auctions are where the "dividend" comes from.it is earmarked for helping industry reduce emissions. It is limited in numbers , once the govt exhaust it stock , it will have to buy more, if not form NZ forests , then overseas accredited sources. I don't think anyone thinks they will get cheaper , they will at least double , maybe quadtriple in price.
Therefore, unless the credits are used to reduce emissions , we are effectively flogging the families silver, to make it worst , our children ( or maybe us ) will have to buy it back at double or more the price.
Without offsets (domestic via tree planting and offshore), we won't meet our climate agreements. To reduce gross emissions would require a much higher ETS price. The mechanism of charging for carbon then returning this as a tax break is inefficient so what this means is higher prices for everything which is not compensated for by the "dividend".
So what if we don't meet out self imposed targets? "The achievement by a party of its NDCs is not a legally binding obligation."
https://www.c2es.org/content/paris-climate-agreement-qa/
No other country gives a toss about Paris. Labour are reckless to create binding CO2 related trading agreements, when Paris is non binding, and we could have Tombora tomorrow.
"Not a single G20 country is in line with the Paris Agreement on climate, analysis shows
...“Of particular concern are Australia, Brazil, Indonesia Mexico, New Zealand, Russia, Singapore, Switzerland and Vietnam"
https://edition.cnn.com/2021/09/15/world/climate-pledges-insufficient-c…
Yeeeeeeeeah. So the key thing about pricing carbon emissions is it creates the incentive to change. The higher the carbon price, the higher your incentive to change. If you are faced with an input cost you can avoid without impacting your ability to do business as a business, you avoid it.
Now you can either fund those projects through the government holding on to the ETS money or you can return the $$$ to the public. But the incentive to change is there either way.
If you fund it through the government, you are implying that the government is more efficient than the market at making these investments, investments like:
- ebikes,
- electric cars,
- solar panels, wind farms
- manufacturing equipment
I'll let you decide whether you think the government or individuals are best at making investments like that on behalf of the general populace/corporations...
If you fund these investments through the government you also run the risk of inefficient investments being funded as politicians push pet projects, with poor distributional impacts. I have gotten nothing personally from the clean car discount scheme as like most people, I can't afford to buy a brand new car. Remuera on the other hand...
If you return the $$ to the general populace then they choose what to do with it, including reducing their ETS cost each year.
The only difference I can see between a 'carbon dividend' (i.e a payout to each citizen that varies year to year based on ETS revenues) and using the ETS revenues to fund general tax cuts, is that under the former, citizens are also more directly incentivized to want the ETS price to be high, only because the higher ETS revenue directly leads to higher carbon dividends. The only reason this relationship isn't as strong under the 'fund general tax cuts' approach, is because there's no guarantee that future ETS revenue will be passed on in higher tax credits, and if the revenue is higher than forecast, then it will not necessarily lead to further tax cuts.
Tiny is the operative word. Much ado about nothing comes to mind.
We are staring down the barrel of oceans ecosystem collapse; freshwater ecosystem collapse; aquifer depletion; massive top soil erosion and depletion; biodiversity collapse; significant weather change/disruption; underground infrastructure collapse; stormwater systems collapse; flood defenses collapse; etc.
But, hey, I'll have a tiny bit of additional loose change in my back pocket.
But, hey, I'll have a tiny bit of additional loose change in my back pocket.
Like that would solve any of these problems if it went to Government instead...
oceans ecosystem collapse; freshwater ecosystem collapse; aquifer depletion; massive top soil erosion and depletion; biodiversity collapse; significant weather change/disruption; underground infrastructure collapse; stormwater systems collapse; flood defenses collapse; etc.
It annoys me how the Greens always go on about home insulation schemes when talking about the climate. Insulation has been proven NOT to save energy and therefore carbon emissions in the residential context because people like to be warm, not stay cold for cheaper. It HAS been proven to increase health outcomes however.
Insulation doesn't save energy, really? And a thermos doesn't keep your tea hot?
How about walls and a roof, do they keep us warm? If so how? Or would we all be warm sleeping outside list night when it was < 5 degrees in most places.
How about sleeping bags? Does the human body save energy sleeping in a sleeping bag, vs just in a tent or under the stars?
Kind of agree with JS here, national were so close to getting it right.
It should be 75% (or whatever number they want) of the ETS proceeds is given out as a climate dividend to everyone. And it should change depending on the price of carbon. This would get everyone behind the ETS and benefit the poor (who use much less carbon than the rich).
The ETS is a joke - pretending a market mechanism can solve an existential crisis.
The time for these 'clever' theoretical emissions reduction schemes has passed - just tax carbon use (i.e., like the Auckland fuel tax; like travel taxes; like carbon miles to market taxes, etc.) and get on with the job of cleaning up the mess we've made of our environment to date. We need to learn to live with less - it's that simple.
Why is the answer taxes? What evidence exists to say the government getting new sources of revenue will make any difference to the climate crisis? I must be too old school wanting to work hard in the market interpersonally with smart people and prosper on merit. This tax us to death nonsense is similar to the people fastening themselves to the road to get back light rail. There's no empirical (or even rational) evidence to suggest this tactic will actually achieve the construction of a major transport project AND it's destructive to the public.
The rational for taxes is that the market does not capture the true cost of producing something. In the case of petrol, the market does not capture the cost to the environment of producing it. This is where taxes can be used so that the market pays the 'true cost' of the product.
Happy to have a dig through my high school economic text books to answer any other questions you have.
The answer is burn less fossil fuels. Higher taxes serve to change social behaviour - witness higher and higher and higher tobacco excise taxes every year. And what happens? The market finds a viable substitute - vapes.
Same would be the case with higher and higher and higher fossil fuel taxes each year. And given the increased tax revenue earned, governments can invest more and more and more each year into public transport and renewable energy, storage and efficiency measures. The market would invest in shared transport solutions and home delivery mechanisms.
I love markets - they make the world go around - but a carbon market (it's always been a ruse/a joke/a do-nothing/delay tactic). The inevitable energy scarcity market is staring us in the face, but we are so far behind in making social adjustments, it's beyond belief.
You said it there clearly - social engineering through taxes and central government policy. The rest is speculative and oversimplified. I'm not into it. But I am on your side with respect to the challenge and working very hard practically on climate/environmental stuff at scale.
The ETS literally is a tax on carbon, not to mention taxes ARE a market mechanism.
I agree, carbon should be taxed but I think the ETS with reasonable adjustments could be a very useful tool. We have a budget of carbon, the market is best placed to decide how it is used. I think markets are a very powerful tool but they will only achieve what they are incentivised to achieve.
OMG - it's been around for decades and government's still can't make it right - the unintended consequences have caused more ecosystem and social damage than good. The UNFCCC framework has never been the right one for NZ - we keep growing our emissions despite adhering to it. And globally - not a smidgeon of difference either. How many more decades will we persist with this notion of offsets? It's a we can keep burning FF strategy provided we offset that with pie-in-the-sky, Hail Mary schemes.
Tax carbon directly - the ETS is an offset, not a tax scheme.
Yup , around for decades , and people are not going to change their habits, so we need to offset .
How high does tax on petrol need to be before people use significantly less?Touching $ 3 per litre now , and no significant change.
The steel mill deal alone is equilvalent to removing 300 000 cars off the road.
So are we prepared to change???
If not , pine trees and the ETS it is .
As a tax, the ets actually has to hurt to achieve anything. The gov cutting tax on ffs as soon as a little pressure appears speaks volumes about commitment to actually reducing ff use. Energy flow is the economy, energy is mainly burning fossilised carbon, taxing that energy flow slows the economy and inflates the price of the base resource. Something has to give! It'll either be growthist ideology, or a survivable environment. So far we've voted to ditch the environment.
The ETS hasn't been allowed to set the 'true cost' of carbon, what makes you think taxes would instead? I think the ETS would work better than 100's of arbitrary taxes but either way the problem is political will. The ETS can always be adjusted but the principles that underlie it are solid I believe.
Our methane emissions have not increased much, if any, over the past multi-decades. However, our fertilizer use has grown exponentially over the same period. Tax the hell out of fertilizer. It's the FF input that is killing us and our waterways. There are more ecologically sound alternatives.
https://kissthegroundmovie.com/
It's ok when Robbo does it. Or perhaps the socialists were on their fourth Chardonnay and didn't notice.
"Robertson acknowledged some $236m was coming from the Climate Emergency Response Fund, which would normally be ringfenced for the climate spending but was instead being returned to the government's general coffers."
https://www.rnz.co.nz/news/political/496763/government-shaves-off-4b-wh…
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.