Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:625;Page:20224] 
4. 
JOHN KEY (National—Helensville) 
 to the  
Convenor Ministerial Group on Climate Change 
: Does the Government intend to impose a carbon tax; if so what are the estimated impacts of this new tax on household electricity bills and petrol prices? 
Hon PETE HODGSON (Convenor Ministerial Group on Climate Change) 
: 
 The Government’s intention to introduce a carbon tax was announced 3 years ago in 2002. Today’s announcement confirms that policy. The estimated impacts were also indicated in 2002 and today are confirmed at around $4 per week for a typical household. 
John Key 
: Why is it necessary to put an additional tax burden of around $200 per year on every household at a time when the Government in the last 6 years has collected an additional $50 billion in extra taxes and continues to run surpluses in excess of $6 billion per year? 
Hon PETE HODGSON 
: The member fails to understand a very fundamental aspect of the carbon tax which is this: it is not a tax increase; it is a tax—[ 
Interruption 
] 
Madam SPEAKER 
: Members will please quieten down. They have expressed their view. Now let us hear the Minister. 
Hon PETE HODGSON 
: It is not a tax increase; it is a tax shift. The percentage of GDP flowing through the Government will not change. In fact it will be reduced a little as we shall see in 2 weeks’ time. 
Rodney Hide 
: I raise a point of order Madam Speaker. I do apologise. It was hard not to laugh but the Minister said that it is not a tax increase—that it is something else. I do not think anyone heard what the “something else” was. I wonder whether the Minister could just say what it is if it is not a tax increase. 
Madam SPEAKER 
: I did ask members to keep their voices down for that very reason. I will ask the Minister again but I will not make a practice of doing that when members have been asked to lower their voices. Of course they can express themselves as they did but to go on so that the Minister cannot be heard does not seem to be reasonable. Would the Minister please repeat the last answer. 
Hon PETE HODGSON 
: I am grateful to the House for a chance to explain Government policy which is that the carbon tax does not represent a tax increase. It is a tax shift by which—[ 
Interruption 
] 
Madam SPEAKER 
: Do members wish to hear the answer or not? 
Hon PETE HODGSON 
: —I mean that all revenue collected through this carbon tax will be recycled through other tax changes to be announced in the Budget. 
Dr Ashraf Choudhary 
: Who supports the introduction of the carbon tax? 
Hon PETE HODGSON 
: Besides ongoing support from many businesses—for example Fisher and Paykel Infratil and Toyota—there is support from environmental groups across the spectrum from Greenpeace to Nick Smith’s Bluegreens which states today on its website www.bluegreens.org.nz that to introduce a fiscally neutral low-level carbon charge is a critical but achievable step in National’s next term of office. 
Madam SPEAKER 
: Members will be quiet please. I know that this is a particularly humorous topic although no one else would have thought so until today. 
Peter Brown 
: Noting those answers does the Minister accept in any way shape or form that this increased tax—or cost if he wants to put it another way—will impose a financial burden on fixed-income low-paid people on small-business people and that it will give them some incentive to move offshore; secondly can he tell the House how long he has been guided by Nick Smith’s policies? 
Hon PETE HODGSON 
: It would appear if I am to understand Nick Smith’s policies that he is guided by us. However the member referred to people on fixed-incomes. Of course as those costs go up they will be reflected in any consumer price indexation of superannuation or similar. As far as businesses are concerned the member may recall that we have a policy called negotiated greenhouse agreements for large businesses and another grants policy which is only a couple of weeks old for small energy-intensive businesses. There will not be an economic downside. There will be in fact when we see the other half of this deal an economic upside. 
Hon Ken Shirley 
: Is there any chance or hope that the Convenor and his Labour Cabinet colleagues will at this late stage come to their senses recognise the damage that the impact of their climate change policies will have on the New Zealand economy and adopt ACT’s policy and simply dump the Kyoto Protocol? 
Hon PETE HODGSON 
: None whatever. This Government is about protecting our environment—and as I explained earlier is not about raising revenue through the process. It is about ensuring that there is no failure to act because if we do fail to act that does threaten New Zealand’s economy and quality of life. I would suggest to the member that this House does have a responsibility to take action for future generations. 
Jeanette Fitzsimons 
: Can the Minister confirm that Treasury’s policy development work on the operation of a carbon tax was done under a National Government in the 1990s and has he received any suggestions at all from the National Party since Simon Upton failed to convince his colleagues of what measures New Zealand might take to address this most serious environmental issue or have those members made none? 
Hon PETE HODGSON 
: Apart from the Bluegreens led by Nick Smith and recently endorsed by the leader of the National Party Dr Don Brash when no one else was listening the National Party has done nothing but support the idea of the Kyoto Protocol and a carbon tax while in Government and oppose it while in Opposition. 
Larry Baldock 
: Is this not really just a case of the Government giving and the Government taking away and still leaving our businesses facing competition from our major trading partners that will not face a carbon tax and from China which we are entering into a free-trade agreement with and is there not a better way of incentivising investment so that we can actually solve this problem through new technology rather than giving our economy in this country a smack over the head with a piece of four-by-two? 
Hon PETE HODGSON 
: Any incentivisation will need to wait 2 weeks but I remind the member that the negotiated greenhouse agreements announced 3 years ago some of which have been completed are designed precisely to ensure that we get an environmental benefit with no economic disbenefit. It takes a bit of imagination but we can get there. 
Dr Ashraf Choudhary 
: Could the Minister tell the House who else has supported the development of a carbon tax in recent years? 
Hon PETE HODGSON 
: One group has a policy and I quote it: “To support current targets for the reduction of carbon dioxide emissions and the introduction of a fiscally neutral carbon tax should these targets not be achieved.” Another group has consistently pledged a coherent plan to reduce carbon dioxide emissions to 50 percent of 1990 levels by 2020. The first group is United Future and the second group is the New Zealand First Party. 
John Key 
: What is the logic behind punishing New Zealand companies that burn coal while at the same time doing nothing about the fact that this very coal is likely to be exported to China where it will be burned with no carbon tax being applied? 
Hon PETE HODGSON 
: The member has a very limited understanding of the Kyoto Protocol. There is no carbon charge placed on New Zealand coal exports in the same way that Saudi Arabia does not pay a carbon charge for petrol exported to New Zealand. 
Jeanette Fitzsimons 
: Can the Minister confirm that if the carbon charge was recycled in the economy as a flat reduction in personal income tax for all taxpayers they would each get about $180 per year which is enough to tune their cars properly wrap their water cylinders install some energy-efficient lights and reduce their energy bills by more than they would pay in carbon tax; if so why does he not give them that opportunity? 
Hon PETE HODGSON 
: I regret entering an arithmetic debate with the Green Party but my best guess is that if we were to give tax-free status for the first $5000 of income as is proposed by the Greens then the carbon tax would need to be not $15 a tonne but certainly in excess of $60 a tonne. 
John Key 
: Why does the Government want to put New Zealand at a competitive disadvantage to Australia and America both of which have refused to ratify the Kyoto Protocol or to add a carbon tax because they know that that would be bad for jobs and bad for the economy; or does this Government care more about workers in Australia and America than it does about the ones here at home? 
Hon PETE HODGSON 
: The member still does not get it. We will try again. The way the Kyoto Protocol policy in this country has been designed—[ 
Interruption 
] I did not interrupt the member when he was asking his question. The Kyoto Protocol policy in this country has been designed so that there will not be a competitive disadvantage to New Zealand. In fact the carbon charge has been fully modelled—it is in the public arena—and it is almost impossible to discern any effect at all. Contrary to the member’s view one could easily argue that by bringing the future forward one advantages the New Zealand economy rather than damaging it.