Shaw James: Oral Questions — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeShaw James: Oral Questions — Questions to Ministers Questions to Members[Sitting date: 03 June 2015. Volume:706;Page:4252. Text is incorporated into the Bound Volume.]6.JAMES SHAW (Co-Leader—Green) to the Prime Minister: Does he stand by his answer to a supplementary question yesterday about carbon emissions that “A target of a 40 percent reduction on 1990 levels would be disastrous for the New Zealand economy”?Rt Hon JOHN KEY (Prime Minister): Yes.James Shaw: Does he agree with the Infometrics modelling commissioned by his Government that shows that the impact of a 40 percent reduction in emissions by 2030 would be just one-tenth of 1 percent of GDP growth compared with no reduction in emissions?Rt Hon JOHN KEY: There has been a wide range of modelling done but one of the models I have seen indicates that if we were to take a 40 percent reduction target off 1990 levels that would come at a $5 billion cost to the economy. Probably more interesting is that by about $1800 a household per year households would be worse off. Of course that impact would have the biggest impact on lower-income households.James Shaw: I raise a point of order Mr Speaker. I just ask that the Prime Minister table that document.Mr SPEAKER: Well only if the Prime Minister was quoting from an official document. [Interruption] It was not an official document.James Shaw: Does he agree with the Infometrics modelling commissioned by his Government that shows that whether New Zealand has an emissions reduction target of 5 percent 20 percent or 40 percent by 2030 our GDP will still grow at 2.1 percent on average throughout the 2020s?Rt Hon JOHN KEY: Our GDP will continue to grow. What is true is that if you have a 5 percent reduction it comes at about a $3.5 billion cost. So the biggest cost actually comes in doing something off a 1990 base. But there is no question that a bigger target has a greater impact on the economy. I think it is worth for a moment to actually look at some comparisons because for the same level of cost as the EU’s minus 40 percent target New Zealand should be setting a target of a 10 to 20 percent increase. The facts of life are that New Zealand has had a large population increase since 1990 half of all its emissions come from agriculture and it has a very high level of renewable energy. In fact setting targets at the sort of level that the Greens are advocating is very expensive for households and New Zealand businesses.James Shaw: So would he agree that the Infometrics modelling overstates the cost of acting to prevent climate change because it deliberately does not take account of the rapid adoption of new lower emissions technologies like electric cars or solar panels which have trebled in the last 18 months?Rt Hon JOHN KEY: There is no question actually that modern technology will help New Zealand meet its climate change targets. That is likely to be the case I think not just in transport actually but equally when it comes to agriculture where half of our emissions come from. That is why New Zealand was at the forefront of establishing the Global Research Alliance on Agricultural Greenhouse Gases and why we think we will find scientific solutions. But for New Zealand to go to Paris on the whim of a hope that we will find a solution without one is I think actually a bit irresponsible for households and the economy.James Shaw: I seek leave to table a document dated 2 June 2015 showing that solar panels trebled in New Zealand in the past 18 months from the Electricity Networks Association.Mr SPEAKER: Leave is sought to table that particular information. Is there any objection? There is none.Document by leave laid on the Table of the House.James Shaw: Why is his Government making it more expensive to prevent climate change by under-investing in clean transport options like Auckland’s City Rail Link meaning that New Zealanders will have to pay to offset our emissions rather than saving money to lower them?Rt Hon JOHN KEY: That is not true. The Government has made it clear that it is committed to the central business district rail tunnel in Auckland but it wants to do that under a time frame that is actually fair on Auckland ratepayers who also have to pay half of the costs.James Shaw: Why has the Government not released any economic modelling to show what the costs of doing nothing to stop climate change are?Rt Hon JOHN KEY: There will be plenty of people who will want to put up their own models and the truth is that all of them rely on some form of assumption. But the Government has released a discussion document which the member will be aware of. The discussion document makes it clear actually that the Government’s intention is to set what it believes is a realistic target and to do the right thing. I simply make the point that for New Zealand to achieve the sort of reduction targets that you are seeing proposed in the EU is far more expensive. In fact actually if the member wants to go and use the Official Information Act or go on to the Treasury website and have a look at the recommendations from Treasury the Treasury’s recommendations are that the Government should do a lot less than what it is proposing to do because it believes the relative costs to New Zealand compared with our competitors is much greater.James Shaw: Given his reference in that last supplementary answer to the Government’s discussion document in relation to the current consultation that ends today the modelling in the document shows that a 40 percent reduction in emissions would be one-tenth of 1 percent of GDP growth. Does he still believe that that would be disastrous?Rt Hon JOHN KEY: As I said the consultation document includes—or I did not say but the consultation document does include some modelling from Infometrics. But it is also true that if you look at other modelling—which I think is also in that document though I would have to check—it shows that the costs to the consumers in New Zealand would be about $1800 a household. That by the way is assuming carbon prices are $50 a ton. But in 15 years from now carbon prices could be a lot greater than that and the costs could be a lot greater. In the end New Zealand has to do the right thing but putting our businesses—particularly our trade-exposed ones—out of business simply to meet some target that most other countries find much easier to reach when some very large emitters are not prepared to take those steps isnot I think an economically rational thing to do.