Nick Smith’s High Stakes Bet Irresponsible

John Boscawen MP, ACT New Zealand
Press Release Thursday, April 8 2010 


ACT New Zealand Climate Change Spokesman John Boscawen today called on Climate Change Issues Minister Hon Dr Nick Smith to explain why the Government is pressing ahead with its ETS, causing irreparable harm to the New Zealand economy, when he’s acknowledged it’s likely to be significantly reworked in 2011.

"Nick Smith admitted today that the Government probably won’t proceed with the ETS if our major trading partners haven’t followed suit by 2011.  With the stakes so high it makes you wonder why we are ‘betting the house’ for something that’s not a sure thing," Mr Boscawen said.

"From July 1 because of the ETS, New Zealand businesses will face price increases of five percent for electricity and four cents per litre of petrol.  These cost increases will not be faced by our competitors abroad.

"Nick Smith’s casual dismissal of such major costs as only ‘a sort of half-step’ shows how irresponsible and out of step with reality he is.  New Zealand is in the midst of a recession with near record unemployment.  Any cost increase, let alone the hundreds of millions that just this ‘first step’ of the ETS will impose on our economy, undermines our fragile recovery.

"Dr Smith also ignores that the ETS creates property rights.  Once the scheme starts on July 1 these can’t be reversed easily unless the Government pays significant compensation to those who’ve acquired such rights.

"The Government’s December 2009 ‘Development of Industrial Allocation Regulations under the NZETS’ consultation document noted that cost increases due to the ETS could result in ‘economic regrets for New Zealand as a result of losing business activity that may not return’. 

"By the Government’s own admission, the economic harm caused to New Zealand can’t just be reversed if the scheme is rewritten or even scrapped in 2011.  Therefore, I call on the Government to put the ETS on hold until we know what our major trading partners are doing and can form a long-term sustainable position," Mr Boscawen said.