Dean Jacqui: Questions for Oral Answer — Questions to Ministers 
Dean Jacqui: Questions for Oral Answer — Questions to Ministers 
[Volume:663;Page:11294] 
8. 
JACQUI DEAN (National—Waitaki) 
 to the  
Minister for Climate Change Issues 
: What are the impacts of the changes this Government has made to the emissions trading scheme on costs for consumers? 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 This Government amended the emissions trading scheme to halve the impacts on consumers by requiring only one unit for every 2 tonnes of emissions for the transport and electricity sectors and by putting a cap of $25 per tonne on the price. This reduced the cost per household from $330 a year to $165 a year or $3.17 per week to be precise. 
Jacqui Dean 
: Which officials were responsible for calculating the $165-per-year or $3-per-week cost of the emissions trading scheme for the average household? 
Hon Dr NICK SMITH 
: The figure was produced by the emissions trading group of officials in Treasury. The methodology was included in the original regulatory impact statement on the legislation. The analysis is based on a household using 8000 kilowatt hours of power and driving 28000 kilometres per year and on a power price increase of 1c per kilowatt hour and a petrol price increase of 3c per litre. 
John Boscawen 
: Does the Government’s forecast of the increased value of electricity generation assets of $821 million shown on page 136 of the Budget document include the windfall profits to energy companies like Mercury Energy which announced yesterday a 3.3 percent increase from 1 July on account of the emissions trading scheme; if not why not and if so how much of that $800 million - plus is due to those windfall profits? 
Hon Dr NICK SMITH 
: The increase announced yesterday by Mercury Energy was 3 percent which is less than the 5 percent that the Government has indicated to consumers will be the cost of the emissions trading scheme. No the change in valuation is not a reflection of the emissions trading scheme. It is quite complex having both the emissions trading scheme and the complexities of the electricity market to determine the exact impacts. I note that neither Genesis nor Meridian Energy is planning to increase its price in the short-term. The Government will be watching the power companies closely and if we believe that they are unfairly putting up prices as a consequence of the emissions trading scheme we reserve the right to have some form of inquiry. 
Jacqui Dean 
: What reports has he received of the price impacts on consumers of other countries’ emissions trading schemes noting claims that New Zealand’s emissions trading scheme is leading the world and is the most expensive? 
Hon Dr NICK SMITH 
: Twenty-nine of the 38 countries with Kyoto Protocol commitments have an emissions trading scheme. I am advised that the power price increases range from between 23 percent and 33 percent. A specific report in 2008 on the European emissions trading scheme put the price impact at between €10 and €12 per megawatt hour which would relate in New Zealand terms to between 1.8c and 2.2c per kilowatt hour—that is more than double ours. The 5-percent increase imposed by our amended emissions trading scheme is very modest and is far from world leading. 
John Boscawen 
: Does he agree with his colleague the Minister of Agriculture that under current Government policy the cost of the emissions trading scheme for the average dairy farmer will be $3900 per annum for the period 1 July 2010 to 31 December 2012 $7800 per annum for the period 1 January 2013 to 31 December 2014 and $10200 per annum from 1 January 2015 as calculated by Meat and Wool New Zealand; if not why not? 
Hon Dr NICK SMITH 
: I think the member is being quite misleading— 
Mr SPEAKER 
: The member asked him whether he agreed with the Minister of Agriculture and some figures used by the Minister of Agriculture as I understood the question. The answer should not start with: “The member is being misleading” because the member has not alleged anything; he has asked the Minister whether he agrees with some figures someone else has used. 
Hon Dr NICK SMITH 
: No I do not accept the accuracy of those figures for a very simple reason: this Government has made it plain that we will not be proceeding with the step-up in the emissions trading scheme in 2013 or with the addition of additional sectors unless there is progress by our key trading partners. So the figures the member is using for 2013 and beyond are quite misleading. 
Jacqui Dean 
: Has the Minister received any advice on the price impacts for households of adopting a 40 percent emissions target by 2020? 
Hon Dr NICK SMITH 
: I have seen economic analysis that shows that to meet that sort of reduction in emissions the price of carbon would need in New Zealand to be $500 per tonne. This would involve the cost being 40 times what our emissions trading scheme would cost or $120 a week. It beggars belief that some members are complaining about the power price increase of our very modest emissions trading scheme while at the same time they are promising a 40 percent reduction in emissions by 2020. Members opposite should reflect on those contradictory messages.