Chauvel Charles: Questions for Oral Answer — Questions to Ministers 
Chauvel Charles: Questions for Oral Answer — Questions to Ministers 
[Volume:656;Page:5590] 
7.  
CHARLES CHAUVEL (Labour) 
 to the  
Minister for Climate Change Issues 
: Does he have confidence in the economic modelling used to inform the Government’s decision on the 2020 emissions target? 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 Yes but I also acknowledge that macroeconomic modelling in this area is inherently difficult. There are significant unknowns around the price of carbon and the extent to which other countries will constrain their emissions. The assumptions behind the analysis are reasonable and the New Zealand Institute of Economic Research and Infometrics are both reputable economic analysts. Treasury’s analysis which was released today was very similar. In fact it recommended a considerably lower target because it was concerned about the cost to the New Zealand economy. 
Charles Chauvel 
: Does the Minister agree with Dr Hugh Saddler that it is inherently contradictory to use a general equilibrium model to determine the impact of a carbon price and how does he justify commissioning analysis of the 2020 emissions reduction target that is “incapable of describing the way in which real economies can and do respond to changes in selected input costs like a price on carbon”? 
Hon Dr NICK SMITH 
: I think it was important for the Government to do some economic analysis so that we balance the ambitiousness of the target with some realism about what the costs to the economy are. I acknowledge that such macroeconomic analysis is difficult but if we are to make a well-informed decision it is proper that the analysis is done. 
Aaron Gilmore 
: What reports has the Minister received on the claims made by Charles Chauvel that the Government had cynically and blatantly misled the public with the dubious cost estimate by the New Zealand Institute of Economic Research and Infometrics of approximately $30 per week in 2020 when in fact the cost was one-tenth of that spread over 10 years? 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. Given the way that that question was put I ask you what responsibility the Minister has for a member of the Labour Party. 
Hon Dr NICK SMITH 
: Point of order Mr Speaker. 
Mr SPEAKER 
: I do not think I need it. If I recollect the question was asked correctly. The member asked what reports the Minister had received on a statement. The Minister is at liberty to answer a question such as that as long as he does not go into detail and himself criticise what the Opposition member has said. 
Hon Dr NICK SMITH 
: Yes I have received reports from both Infometrics and the New Zealand Institute of Economic Research which were both stunned by the elementary mistake made by Charles Chauvel in his claims. Of course the reduction in gross real national disposable income cannot be divided by 10 because it happens to be an estimate for 2020. I suggest members opposite do some elementary mathematics. 
Charles Chauvel 
: How can the Minister claim to have confidence in the modelling given that it did not take into account likely increases in new forestry plantings comparable action to be taken by other countries benefits from improved domestic energy efficiency or the adoption of new low-carbon technologies in New Zealand; and will he accept that he has overstated the costs when more appropriate modelling would have shown that deeper emissions cuts were possible at relatively modest cost? 
Hon Dr NICK SMITH 
: The simple point I would make to Labour is this: if reducing emissions was so easy and so inexpensive why did they go up in every single year that Labour was in Government? I would further point out that the Treasury analysis of the costs would suggest that the analysis done by Infometrics and the New Zealand Institute of Economic Research was conservative. The third point I would make is that the member is incorrect in saying that the analysis did not include the impact of what other countries would do; it specifically addressed that point. 
David Garrett 
: Does the Minister agree with the New Zealand Institute of Economic Research and Infometrics report to the Emissions Trading Scheme Review Committee that a carbon price of $100 a tonne would still leave emissions 20 percent above 1990 levels; and what price has he been advised would be needed to take New Zealand 20 percent below 1990 levels by 2020 or does he not know? 
Hon Dr NICK SMITH 
: I think it is very important for the member to recognise the difference between an emissions reduction target and a responsibility target. What is being debated and what is being agreed in international forums around climate change is a responsibility target—that is that New Zealand has the option either to reduce emissions to deal with sinks such as forestry or to buy units internationally. The New Zealand Institute of Economic Research and Infometrics analysis was based on a responsibility target which is proper because that is what the debate is about. 
David Garrett 
: I raise a point of order Mr Speaker. The question was quite precise: does the Minister agree with the report’s figure of $100 a tonne to keep emissions 20 percent above 2020 levels and what price has he been advised would be needed? The question did not go anywhere near responsibility targets or whatever other label the Minister gave. 
Hon Dr NICK SMITH 
: The point I am making to the member is that the 10 to 20 percent target that the Government has tabled at the international negotiations does not necessarily equate to a reduction in emissions in New Zealand. That is why his question is incorrect in that New Zealand has the option under the international model to buy units at the international carbon price. 
Mr SPEAKER 
: To deal with the point of order raised by David Garrett it would appear that the Minister is disputing the information that the member provided in the first part of his question. The Minister does not need to answer the second part. 
Aaron Gilmore 
: Has the Minister received any reports in response to the claim that the 10 to 20 percent target relative to 1990 would result in New Zealand facing trade penalties from North America? 
Hon Dr NICK SMITH 
: Yes. I have been flabbergasted by the claim that New Zealand’s 10 to 20 percent target would according to Mr Chauvel result in New Zealand facing trade barriers and tariffs from North America. The reason it is extraordinary is that the United States has a target of zero percent compared with our target of minus 10 to 20 percent and Canada has tabled a target of minus 3 percent relative to 1990. It is extraordinary and a disservice to New Zealand that the Opposition is making claims of tariff barriers when New Zealand is going significantly further than either major North American country. 
Charles Chauvel 
: Why does the Government continue to present climate change policy as a trade-off between economic and environmental outcomes and in doing so ignore the fact that the future costs of failing to avoid large-scale climate change greatly exceed the costs of starting to reduce greenhouse gas emissions now? 
Hon Dr NICK SMITH 
: Quite simply because the repeated claims made by members of the Opposition that New Zealand can radically reduce emissions with absolutely no cost are off in fairyland. This Government is taking a realistic approach of balancing the economic and environmental challenges associated with climate change. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. In the Minister’s answers he referred to some reports he had from Infometrics and the New Zealand Institute of Economic Research. I wonder whether those are official documents; if so I would ask the Minister to table them. 
Mr SPEAKER 
: The Minister would be required to table them only if he had quoted from them. I ask the Minister whether he was quoting from official documents. 
Hon Dr NICK SMITH 
: I am more than happy to table them; they are in the public arena. They were released by the Government 2 weeks ago. If tabling them would please the member I am happy to do so. 
Mr SPEAKER 
: It seems that the Minister is perfectly happy to provide those documents. 
Document laid on the Table of the House.