Matthew Hooton: The ETS turns 33: comedy or farce?

11 February 2011

It’s 2041.

Dominating the bureaucracy is the National Bookkeeping Office (NBO), established when the first Key government decided Treasury’s forecasting ability was so poor and its policy advice so unnecessary it should be cut back to its only valuable function.

The choice of “bookkeeping” instead of “accounting” was one of then-finance minister Steven Joyce’s little jokes, made at the last minute around the Cabinet table.

The NBO’s largest department is the debt management division (DMD), led by that ultimate mandarin, Sara Goff, and charged with trying to pay off the billions borrowed by the first Key government in the 2010s.

Ms Goff jokes that if her dad had become prime minister her department would be twice as big and she would be twice as powerful.

At 88, her old man is a national icon, still without a fleck of grey. Now the father of the House, and with three stints as leader of the opposition behind him – including when he came oh-so close in 2023 – he still rattles into the debating chamber to ask his questions of the prime minister.

Stephanie Key answers them generously, having succeeded her father when he finally stepped down in 2036 to take a job at Versace.

The CAD
Down in the bowels of the NBO is the carbon accounting department (CAD), with its formidable boss, known simply as Dr Smith.

When she visits her dear old dad Nick at Nelson’s Stillwater Gardens, he says he knows nothing of any emissions trading scheme.

The doctors say it’s to be expected; just the natural progression of the disease. Dr Smith the younger suspects there’s more to it.

CAD is tasked with monitoring those who traded carbon credits back when people thought an international carbon market would be established.

After the failure of climate-change talks in Copenhagen in 2009, Cancun in 2010, Durban in 2011, Seoul in 2012, Monaco in 2013, the Bahamas in 2014 and St Moritz in 2015, the world finally abandoned the Kyoto system and adopted a new legally binding treaty around the measurement, reporting and verification of carbon emissions rather than feel-good targets countries had no intention of achieving.

Over the following decade, countries rebalanced their tax systems away from wages and profits and towards consumption and carbon.

It was too late to stop all climate change but temperature rises turned out not to be as bad as the more alarmist predictions in the early part of the century.

Nevertheless, slowly the dairy industry became less viable in the Waikato. Then again, without rising temperatures, Hamilton may never have become known as the Bordeaux of the South.

The 2016 abandonment
All these years on, Dr Smith is sad that New Zealand was left as the only country in the world with an ETS but still proud her dad actually achieved something in politics.

Ms Key remembers her old man saying he would never have held Auckland Central in 2011 without it.

While the scheme was obviously abandoned in 2016, having failed utterly to stimulate significant tree planting and turning Glenbrook’s steel mill into a museum, by then millions of carbon credits had been traded.

Today, it’s CAD’s job to make sure all those who traded credits are still meeting their legal obligations, keeping an eye on every tree, and monitoring how pre-2016 factories source their electricity.

Satellite pictures of the whole country are still taken each hour and downloaded to CAD on The Terrace.

There, its 462 analysts scrutinise them to check no one who sold carbon credits 30 years ago cuts down a tree.

Pub talk
Some days, Dr Smith feels her work is not as glamorous as in other parts of the NBO but she can still get a chuckle from her colleagues telling that story of when she ordered her enforcement officers on to a Southland farm because it looked like some trees had been cut down.

Turned out someone had just split some coffee on the satellite pics!

How they all roared that night down at the Occidental.

It wasn’t so funny when they wrongly accused a Fonterra factory of breaching its agreed ratio of coal-, gas-, windmill- and tidal-sourced electricity.

That one went all the way to Ms Key when that bloody Norgate woman got involved as chief executive.

Still, Dr Smith remains proud of her work and her team. What more could she have done with her PhD from Cornell, earned after winning a prime minister’s business scholarship all those years ago?

The same goes for the rest of her thousand-strong staff, including the 52 in policy.

And the way the scheme was set up in the 2000s, and then expanded in the 2010s, the work will go on into the next generation ... and the next and the next and the next.