Fitzsimons Jeanette: Budget Debate 
Fitzsimons Jeanette: Budget Debate 
[Volume:626;Page:20817] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 In this Budget Labour has taken the first tentative steps towards ecological tax reform—an approach the Greens have been advocating since well before any of us came to Parliament. The principle is that for a given revenue tax is shifted off the things we want to encourage like work incomes innovation and enterprise and on to the things that are harmful like waste pollution and overuse of scarce resources. In short we need to tax the bad things more and the good things less. The Government has begun this shift with a carbon charge on the carbon content of fossil fuels. 
Burning coal oil and gas is primarily responsible for the human-induced climate change that we are already experiencing and which is the greatest threat to our economy and our way of life. That is without mentioning the lives of many other species that may become extinct as their habitat changes with the climate. The Government’s intention is to make it more expensive to burn fossil fuels and correspondingly cheaper to invest in renewables and energy efficiency. We applaud the charge but not its delay until 2007 by which time New Zealand’s contribution to climate change will have grown even further. 
Like the Greens the Government says it wants the carbon charge to be revenue neutral but the way it is going about this is very different from our policy. First we need to look at who is going to pay. The highest carbon emissions per unit of energy are from coal so coal-burning power stations the steel industry and the dairy industry with its coal-fired processing plants will have the greatest incentive to change. The big incentives here are for power generators to shift to wind and other renewables and the dairy industry and other industrial users to investigate waste-wood cogeneration as a number of industries have already done. 
Oil with the next highest emissions per unit energy is used mostly in transport. The incentives here are to buy a more efficient car or truck send more freight by coastal shipping or rail and use the bike or one’s feet to go down to the corner store. Gas with the lowest emissions is used in power stations and industry and homes but it is a higher value fuel and the tax on it will be relatively low. 
So far so good. But where we differ from the Government is in how the revenue should be recycled. We are told the average household will pay another $4 a week for its power and fuel. The Government proposes no revenue recycling for them unless we believe that the carbon charge is paying for the change in tax thresholds in 3 years’ time. The Greens propose that a package of eco-taxes including the carbon charge should be offset by removing tax altogether from the first $5000 of personal income. The carbon charge itself would not be enough but would be part of a package that could include taxes on other waste and pollution. 
Removing tax from the bottom band of income treats all taxpayers the same. It gives them all the same rebate but they will feel it differently. One dollar to someone on $9000 a year is more valuable than $1 to someone on $100000 a year but it is still $1. What the Government and United Future have done instead is make the gap between the haves and have-nots even wider. They have given people on the lowest incomes 67c a week and themselves on their MP salaries $10 a week. Yet it is often those on the lowest incomes who drive the old cars live furthest from town and have old poorly insulated homes. As the Council of Trade Unions has commented removing tax from the bottom $5000 of income is a fairer system than these changes in thresholds which increase the gap. 
 There are some of course who will be exempt altogether from the carbon tax. Very large energy users like the refinery mining companies and eventually steel and cement companies are able to negotiate an exemption if they would be made uncompetitive by the tax as long as they move to industry best practice over the period. This is not a silly idea. It may lead to substantial savings in greenhouse emissions if the firms have to meet high standards in terms of world-best energy efficiency and use of renewables. But it is not a transparent process. We are not told how much greenhouse gases will be reduced by these companies so we cannot work out how much per tonne of carbon saved the rest of us are paying in order to exempt them from the tax. It may be that we are getting a bargain with major carbon savings for little cost or it may be that they are and that they have to do very little in order to be exempted from a tax that the rest of us have to pay. We just do not know. 
Householders of course could easily save $4 a week by keeping their cars better tuned keeping the tyres inflated walking or cycling occasionally instead of using the car turning their computers off when they are finished for the day and a host of other measures that save energy very easily. If power prices rise this will increase the savings from energy-efficiency investments. One of these is the obvious opportunity of using the heat of the sun to heat their water. 
Last Wednesday the Greens launched a comprehensive energy policy showing how we could move much faster to a sustainable energy future based on energy efficiency and renewable forms of energy. One of our initiatives is a competitive tender to supply and install half a million solar water heating panels over 5 years. This would use the market to bring the price down by at least a third with economies of scale and competition and that would be passed on directly to householders. It would build the industry sustainably and provide security of quality and of work for newly trained installers. The very next day the Minister of Energy launched his policy on solar water heating. Trevor Mallard announced that two peanuts were to become four peanuts. He announced that funding for the solar water heating loans scheme would be increased from $200000 to $400000—basically from almost nothing to twice almost nothing. 
This is when we learnt of this Government’s deep commitment to recycling. Bereft of new ideas it has dredged up Pete Hodgson’s release of 23 May last year when the budget for solar water heating was doubled from $200000 to $400000. We can only guess at what has happened in between. What has actually been spent of last year’s budget? Has it been underspent or does this year’s announcement amount to saying that this year there will be no change in this pitiful commitment to the energy of the future? It is the most extraordinary recycling of a Budget statement from one year to the next that I have ever seen. 
Last year I criticised the Government for getting it so wrong on oil price predictions. It was rather an embarrassment really. 
There was a prediction of $19 a barrel by late 2004 and remaining stable at that level in the long term. It was already way out of date by the time the Budget went to press and by the time it was finally passed the price was actually $57. This time at least they have understood that the several-fold price rises of the last year and a half are not a flash in the pan but an indication either of a new permanent state or more likely of a period of constantly escalating price as we reach the peak of oil production and begin the decline. 
This year the Budget forecast that prices will rise back to $56 in the third quarter then drop to $47 and remain at around that level. There is a recognition though that uncertainty around oil prices is a risk to inflation and to our terms of trade. It is quite heartening to see that after a year of the Greens making statements about the closeness of peak oil and after those statements being borne out in the reality of the price increases that went steadily right through last year Government is now admitting that the days of oil costing $19 a barrel are gone forever and that we have to adjust to a new state. However there is still no analysis of the effect of permanently higher oil prices on the New Zealand economy or on our trading partners. It is still assumed that they will be able to buy our current exports and that we will be able to continue to afford to ship them. There is no plan to reduce our vulnerability or to help us weather the shock. There is no investigation of which sectors of the New Zealand economy will prosper under this new scenario which sectors will lose and what Government ought to do to assist with an adaptation. That it seems must wait for the Greens to enter Government and if that is what the voters decide this year we are ready.