Norman Russel: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeNorman Russel: Questions for Oral Answer — Questions to Ministers[Sitting date: 17 June 2014. Volume:699;Page:18521. Text is incorporated into the Bound Volume.]1.Dr RUSSEL NORMAN (Co-Leader—Green)to the Prime Minister: Does he stand by all his Government’s policies?Hon BILL ENGLISH (Acting Prime Minister):Yes particularly those that are supporting a stronger economy and better communities.Dr Russel Norman: With regard to the Government’s emissions trading scheme policy does he agree with OECD Secretary-General Angel Gurría that it is easier to deal with carbon emissions via a tax than an emissions trading scheme and that a fiscally neutral tax like the Green Party’s climate tax cut is “a more business friendly labour friendly and a greener friendly tax structure” than an emissions trading scheme; if not why not?Hon BILL ENGLISH: No. New Zealand remains the only country outside the European Union with a comprehensive emissions trading system. I know the Greens believe that the price should be higher because it wants to punish businesses and households for using any fossil fuels but the fact that the price is low indicates that demand for carbon credits is low because carbon emissions are lower than people expected them to be. And that is good news not a problem.Dr Russel Norman: What is his response to the editorial in the Dominion Post on 5 June describing the Green Party’s climate tax cut as “a systematic and intelligent attempt to deal with climate change” and the Government’s response to it as “lazy and arrogant”?Hon BILL ENGLISH: I do not think I read that editorial. I was probably reading the Southland Times editorial. But in this case—[Interruption]Mr SPEAKER: Order!Hon BILL ENGLISH: The Greens did make an intelligent and insightful contribution to setting up the emissions trading scheme. At that time they believed that a pricing mechanism was the best way to alter behaviour—a pricing mechanism that was flexible according to supply and demand for carbon credits. I am not quite sure why they have changed their point of view. Certainly the Government has not been arrogant or dismissive about the emissions trading system. We have been a bit dismissive of the Greens’ policy which is intended to shut down business destroy jobs and make households poorer.Dr Russel Norman: What is his response to business commentator Pattrick Smellie’s description of the Green Party’s climate tax cut as “a good idea” and the Government’s response to it as “mildly hysterical”?Hon BILL ENGLISH: I do not think either the Dominion Post editorial writers or Pattrick Smellie have thought it through quite frankly. The Greens were part of the original debate about whether to have a carbon tax or an emissions trading system. They were part of a Government that decided on the emissions trading system and frankly we think they made the right choice. The emissions trading system is the most efficient way of reducing carbon emissions and that is why we have stuck to it and we do not agree with the Greens’ policy.Dr Russel Norman: What is his response to comments by business commentator Bernard Hickey that “the ETS has been a failure” and the Green Party’s climate tax cut would be a more efficient solution?Hon BILL ENGLISH: He is wrong about efficiency but a number of commentators simply believe that too much carbon is being emitted and they want to deliver as much punishment as possible to those who deliver it. So why limit the carbon price to $25? You could get to a zero carbon economy if you made it $500 a tonne; people would stop using it straight away. So I expect the Greens to follow the logic of their argument. If they are really concerned about climate change they would set that price much higher than they have.Dr Russel Norman: Why do the Government and the Minister prefer an emissions trading scheme where consumers just face increased costs rather than a climate tax cut which is fiscally neutral where the charge on carbon is returned to households and companies through tax cuts—so under a climate tax cut income tax is reduced and company taxes are reduced to account for the fact that households and businesses face those costs?Hon BILL ENGLISH: I would acknowledge that the Greens did in their policy follow some sound logic when they said they would reduce income taxes because up until now they have been strong advocates of increasing income taxes regardless of merit just on a point of principle. The Government favours an emissions trading system because it is a market pricing mechanism that incentivises everyone participating—from consumers to emitters to Governments including the fact that it was consistent with the international regimes that were being put in place at the time. So we agree with the original logic that the Greens applied in supporting and developing the emissions trading system and we have not seen persuasive arguments to change to a carbon tax—and particularly not to a punitive carbon tax where the tax is higher than it needs to be given emissions around the world and it would punish households.Dr Russel Norman: What is his response to the economist John Small’s assessment that the Green Party’s climate tax cut “would stimulate innovation in New Zealand” while the risk of doing nothing as is the case under the failed emissions trading scheme is that “valued trading partners might one day stop buying from us because they don’t like our production methods”? What is his response to the economist John Small’s comments?Hon BILL ENGLISH: He makes the same mistake as the Greens. I mean the emissions trading system was set up to reflect the world carbon price. At one stage we thought it would be $25 or $30. Because of recession and other changes in how industries work in different parts of the world we have ended up with a large supply of credits and therefore a lower price on carbon. That reflects the fact that there are fewer carbon emissions than people thought there were. The Greens are picking a random number as a tax which will punish households and businesses and actually puts too high a price on reducing carbon emissions—higher than it needs to be.