A costly exercise in hypocrisy

Photo: Dominion Post

Endangered species: Environment Minister Nick Smith's proposed ETS changes put us all at risk.

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OPINION: The Government has made an utter mockery of the emissions trading scheme. Such is National's abuse of policy-making, consultation and parliamentary process, the country will pay dearly for the government's ETS mistakes for years to come.

Prime Minister John Key should care enough to stop the nonsense, even if motivated only by National's political self-interest.

If you want a flavour of the shambles created by Climate Change Minister Dr Nick Smith and endorsed by the prime minister, download the report on the legislation by the finance and expenditure select committee at www.parliament.nz/en-NZ/PB/SC/Documents/Reports/.

The committee was supposed to consider submissions on the extensive changes to the ETS the government proposed, gather analysis from Treasury and other expert witnesses, and make appropriate changes to the bill before sending it back to parliament.

Instead, the committee, chaired by Craig Foss of National, failed to execute all three of its tasks. Unable to produce a majority report, it sent the bill back without a single amendment. Instead the report consists only of minority reports from each of the parties represented on the committee.

Everybody was deeply unhappy, from climate change deniers and heavy emitters such as Fonterra, to Treasury and independent expert witnesses hired by the committee and committed climate campaigners.

Treasury's comments are some of the more moderate: "The level and quality of analysis presented is not commensurate with the significance of the proposals, which represent major design changes to the Emissions Trading Scheme, and the Regulatory Impact Statement does not provide an adequate basis for informed decision-making."

Moreover, Treasury added, the changes to the ETS "come at a cost to the economy as a whole, by delaying the transition of the New Zealand economy to a carbon constrained world".

And, it says, the costs will be far higher under National's proposals than under the existing ETS legislation passed by the Labour-led government last year.

But undeterred, the government is pressing on with the only friend it has left in parliament on this issue, the Maori Party. Even though the party expresses in its minority report very grave concerns about the ETS changes, it will still support them if it can gain concessions to benefit Maori.

In these negotiations Maori are trying to set a new principle: governments must guarantee in perpetuity the value of any Treaty of Waitangi settlement against possible devaluation of assets caused by any subsequent policy action of government.

But would Maori except the equal but opposite principle that the government should claw back any asset appreciation caused by beneficial policy changes?

Of course not. Thus, the only fair and reasonable approach by Maori is to accept the minuses and the pluses. Climate change policy, done right, will deliver economic and environmental benefit to everyone that will eventually out-weigh any negatives.

But the Maori Party is hell-bent on doing a deal with National. They will regret it. It will result in bad legislation that will damage their credibility and the very environment and economy they claim they are protecting.

It all comes to a head this week, the last chance Smith has to meet his cherished deadline to complete these changes before global climate change negotiations start in Copenhagen on December 7.

Given the failure of the select committee, the government will have to use parliament as a "committee of the whole" to make legislative changes. It will do so via Supplementary Order Papers. Some of the amendments will be massive yet the text of them need only be offered to MPs a maximum of 24 hours before the debate.

Moreover, MPs can propose amendments to the amendments that need not be integrated into the complete text. When parliament has degenerated to such shoddy process in the past it has often made horrendous and expensive mistakes.

So maybe it is time to heed the words of an experienced parliamentarian: "The importance of getting this legislation right cannot be overstated. [The development of an ETS] represents the most significant economic reform since the deregulation of the economy in the late 1980s. Getting this bill right is also important for the environment. Poor policy can also have unintended adverse environmental consequences."

Moreover, "the legislative process has been rushed and inadequate given the bill's complexity and significance. The public has not had adequate time to examine and submit on the bill, and it is inevitable that serious mistakes will be made that will adversely affect New Zealanders".

Thus, "this process has not been conducive to getting such an important bill right nor in getting the cross-party support needed to ensure the stability and longevity of New Zealand's ETS".

So wrote Smith last year in National's minority report on Labour's ETS bill. Yet, now it's his turn to steer the legislation, his hypocrisy is breath-taking.

He slammed Labour last year for the long-term estimates of the potential cost to the government of its ETS. Yet, now that Treasury has doubled the estimates, thanks to the changes Smith is proposing, he argues that such estimates have no legitimacy because they involve so many unknowns.

The government could call a halt to this damage to itself, parliament, the treaty process, the economy and environment by passing a simple bill to delay the timetable of the current ETS. After Copenhagen, we could take more time to get this right.

Of course, we'd still have to deal with the continuing naked self-interest of the heavy emitters and the deceptions they perpetrate. For example this past week, the Greenhouse Policy Coalition conveniently forgot that forest credits become a liability from about 2020 when Kyoto compliant trees begin to be harvested; and Business New Zealand argued that it was a "myth" that heavy emitters were being subsidised by other sectors of the economy.

But here's the most egregious recent example. On November 2, the NZ Business Council for Sustainable Development, the only authoritative business lobby prepared to take on the heavy emitters, released its most recent poll.

Of the 2228 people surveyed, a scientifically valid sample, a substantial proportion were opposed to National's ETS changes. Fully 82%, for example, want emitters not taxpayers to carry the cost of emissions. There was also significant opposition among National supporters to the government's plans. But in contrast to its constructive engagement for years on these and other economic and environmental issues, the council has been curiously quiet since.

Why? Because on November 5 Barry Harris, Fonterra's head of milk supply and sustainability, delivered a withering speech to the council's meeting. There were 31 other representatives of corporate members in attendance.

Harris sharply criticised the council for what he considered its failure to represent the interests of members like Fonterra that "had a lot of skin in the game".

The council's insight into how opposed much of the public and some of business is to the ETS changes has clearly rattled some of its less sustainable members.

According to some attendees, council chairman Bob Field, chairman of Toyota New Zealand, ordered council staff to stop making public statements on the ETS.

Harris and Field failed to return my calls. Peter Neilson, the council's chief executive, declined to comment. The council has issued no press release on the ETS this past fortnight, the most turbulent time in the history of the issue.

If heavy emitters believe such suppression will help their cause, they are in for a rude shock. Likewise, National is making a dreadful mistake if it believes it can railroad through incompetent, damaging legislation hugely favouring heavy emitters.

At the next election, it will be easy for Labour and Greens to win support from the substantial number of voters who want an ETS that might actually cut emissions. Such an ETS would save the next government some $2 billion a year in subsidies to the heavy emitters, money voters would like spent instead on them and investment in new, clean technologies.