Graham Kennedy: Estimates Debate — In CommitteeText is incorporated into the Bound VolumeGraham Kennedy: Estimates Debate — In Committee[Sitting date: 02 July 2014. Volume:700;Page:19181. Text is incorporated into the Bound Volume.]Dr KENNEDY GRAHAM (Green):Tēnā koe Mr Chairman. This is a Government whose 2014 estimates contain a time bomb of fiscal deficit over the next two decades through a failure in carbon budgeting. This is a Government whose climate change policy is a mess. It has paltry targets with no plan to attain them. It has weak policy settings so emitters have no incentive to change and that I say to the Minister for the Environment will kill the golden goose. But even worse is the failure to convey to the taxpayer the fiscal costs that its climate policy will impose on future generations. The emissions trading scheme under current settings aspires to manage fiscal risk primarily through forestry and the harvesting of trees is therefore fully priced. But the impact of the emissions trading scheme on other sectors is softened by compensation the gifting of units and the exclusion of an entire sector that makes up half of our emissions.In 1992 New Zealand undertook to reduce emissions. Since then its emissions have soared and are projected to continue to do so out to 2050. What is the fiscal effect of that? New Zealand has committed to three emission targets: 2008-12 2020 and 2050. By drawing straight lines between these targets the Government sets a primitive kind of national carbon budget. It calculates the annual emissions within those lines and then compares the limits with the projected emissions to find the excess. For the period 2013-50 Treasury projects that under current policy settings excess emissions will total around about 1 billion tonnes of emissions. Net emissions will more than double the Government’s target in 2050.One way or another this excess has to be paid for. This Government refused to enter a binding commitment under Kyoto II so we face no financial penalty if we fail and exceed our 2020 target but after 2020 there will certainly be an international carbon price of some kind and it will rise fast. It cannot be otherwise. The British climate commission assumes that international prices will rise from about US$50 to US$150 a tonne during that decade. There will be a binding obligation on emission limits by then and a financial penalty of some kind for exceeding them. At US$25 a tonne the external carbon budget deficit for New Zealand will amount to maybe US$30 billion. Imagine the fiscal hurdles for the next generation when we might be paying up to six times that price.In 2 months voters choose which party will govern for the next 3 years. They have two considerations: security for themselves and a future for their kids. This is a Government that flaunts a reduction of current account deficit next year and ignores the future. But the fiscal debt from current climate change policy will be simply horrendous—a major financial haemorrhage in the 2020s. Because our accounting methods are inadequate this is hidden from the taxpayer and the voter. The principle of carbon responsibility is lost on this Government. The Public Finance Act requires the Government to manage fiscal risk with prudence. How is the public going to judge the Government on that basis?This is a Government that misrepresents the facts to the public. Over the past month it has derided the Green Party’s proposal for a carbon tax claiming that our tax would be five times the global price. What pure rubbish! There is no single global price; there is a range of international prices. So how does the Green price level compare? The Green proposal is for US$22 a tonne for carbon dioxide and US$11 for biological emissions. So how does this compare with international prices? Well there is China Quebec California and France at US$10 then there is the UK at US$16 Australia at US$22 Finland at US$48 Switzerland at US$68 Tokyo at US$95 and Sweden at US$168. So our proposal sits very comfortably within the carbon price range overseas. This is a Government whose estimates along with its spin are misleading tendentious and dangerous.Vote agreed to.