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NZ Emissions 'Tax' Attacked

Monday, March 15, 2010

The ACT New Zealand Party, a member of the country’s present coalition government, has continued its opposition to New Zealand’s new carbon emissions trading scheme (ETS), calling it a tax that will increase inflation in the economy.

The ETS that was passed in parliament in the November last year, with revised entry dates of July 1, 2010 for the transport, energy and industrial sectors and January 1, 2015 for agriculture, also established a transitional phase from July 1, 2010 until January 1, 2013 in which emitters will only have to meet 50% of their obligations.

The government’s amendments were aimed at making the ETS affordable, by reducing costs to households and the impact on employment. It was said that power and petrol price increases would be halved for households and businesses during the transitional period.

However, on March 11, Allan Bollard, Governor of the Reserve Bank of New Zealand, confirmed that, while inflation is currently at 2%, implementation of the amended emissions trading scheme on July 1 would increase the prices of electricity and petrol and help to push inflation toward the top of the target range (of 2%-3%).

However, the ACT has said that “the real impact on inflation (of the ETS) is likely to be much greater than the Reserve Bank's 0.4% calculation as the Bank has only taken into account the expected electricity and petrol increases and their indirect consequences.”

In addition, it added, “industrial processes will also be included in the ETS from July 1 although the Bank has failed to allow for this. Processing of basic food stuffs, like milk and bread, will be captured by the ETS and will percolate through the economy.”

It asked for what it calls “this extra tax” to be delayed indefinitely. It concluded that: "With none of our three major trading partners - Australia, USA or China - likely to adopt an ETS in the foreseeable future, it is time for the government to join in our call to halt this expensive experiment.”