More tax, higher costs, fewer jobs

June 2, 2014

The Green Party plans to impose a carbon tax on us:

. . . Co-leader Russel Norman wants to scrap the current carbon pricing system – the Emissions Trading Scheme.

In its place would be a tax of $25 per tonne of carbon on industry polluters. . .

Critics of the tax claim the tax is a burden on households, who pay higher electricity and fuel costs.

However, the Greens say their levy would be offset by a ”climate tax cut” on the first $2000 of income. 

”We can reduce our emissions without hurting household budgets,” he said. ”Households will be on average $319 better off every year under the Green party policy.” . .

Imposing a tax with one hand and giving a tax with another won’t make anyone better off because the tax will lead to other cost increases on fuel, power and food which will passed on, in part or full, to consumers.

Agriculture – which is currently exempt from the ETS – would pay a reduced rate of $12.50 per tonne. This works out as an 12.5 per cent hit on farmers’ income. This includes 2 per cent on the working expenses of the average farm. A Berl Economics report, released with the policy, said dairying will be ”adversely affected.”

Dairying won’t just be adversely affected by the carbon tax, it will be hit by other Green policies too.

But it adds: ”However, at the currently projected pay-out for milk solids, even dairy farms in the lowest decile would remain well above break even in the face of an emissions levy.”

What happens when the payout drops to its long-term average which is well below the $7 forecast for the coming season?

What about the environmental impact of less efficient farmers in other countries increasing production because our produce is more expensive which makes it easier to compete with us?

And what about the poor people who will face higher prices for dairy products, power and fuel?

Other gas-emitting industries – such as electricity and road fuels – are less likely to be affected because they would be able to ”pass-on any production cost increases to households.” . . .

That will be the households whose earners will be getting a tax cut, the benefit of which will be less than the cost increases from the extra tax.

BusinessNZ Chief Executive Phil O’Reilly said the levy may threaten jobs. 

“Our approach should be unlocking business solutions rather taxing business more,” he said. 

As a “small open trading economy” New Zealand should participate in international emissions trading schemes.

Federated Farmers president Bruce Wills said the tax will make dairy farmers “less competitive” in international markets. . .

Less competitive means lower returns which means less export income which means less economic growth which means we’ll be less able to fund the first world education, health and other services we need.

However green they want to paint it, this is a red policy which will add costs, put downwards pressure on wages and threaten jobs.

Bernard Hickey told last week’s  Alliance Group Pure South conference that the election will be close.

He then went on to list the policies that farmers could expect to adversely affect them under a Labour/Green coalition with whichever other left-wing parties they’d need to govern.

They included: capital gains tax, compulsory KiwiSaver and water restrictions and charges.

Those are three very good reasons to vote National and the Green carbon tax is another.

And Steven Joyce points out some inconvenient truths:




Including ag emissions in ETS red not green

July 29, 2013

Federated farmers’ president Bruce Wills explains why including agricultural emissions in an ETS isn’t good policy:

In every other country, putting farm biological emissions in an ETS type-framework is as alien as Richie McCaw donning the green and gold and singing Advance Australia Fair.

Take this golden Daily Mail headline in Britain from last year: “Buy New Zealand lamb to save the planet.” Then in May came the UK’s Observer with: “Why worrying about food miles is missing the point.” . . .

We would argue that inclusion penalises us for being good farmers that will only leak carbon to less efficient countries. Where’s the global good in that?

As Jay Rayner put it to his British readers when comparing apples with, well, apples: “The researchers found that the actual weight of nitrogen fertiliser used was roughly similar in both countries (80kg per hectare in NZ to 78kg in the UK).

“However, in New Zealand they were getting a yield of 50 tonnes per hectare, as against 14 tonnes in Britain. Where lamb was concerned yield was higher in the UK than New Zealand, but so was nitrogen fertiliser use by a factor of more than 13.

“New Zealand simply has a better landscape and climate for rearing lamb and apples.”

This doesn’t fit with the radical red anti-trade agenda which would take us back centuries to when almost all food was grown locally.

Letting New Zealand farmers do what we do best and shipping the produce half way round the world is being better for the environment than buying local in Britain.

A tax which would reduce production here and increase where they can’t farm as efficiently as we can, as including agricultural emissions in an ETS would,  is red policy not green.

Give a little take a lot

April 22, 2013

The LabourGreen power play is supposed to save people money.

It is unlikely to do so in isolation and certainly won’t when other policies are taken into account.

Claims that households would save money on power under a Greens-Labour Government are demonstrably false, Economic Development Minister Steven Joyce says.

“When National was elected to Government in November 2008, Labour’s Emissions Trading Scheme was estimated to cost an average family of four around $330 a year based on a carbon price of $25/tonne,” Mr Joyce says.

“The National Government amended the ETS and more than halved the cost to families and businesses. However the Greens-Labour coalition have stated publicly as recently as the beginning of this year that if they were the Government they would increase the price of carbon to $50/tonne.

“This would see a family of four paying $495 extra a year on electricity and fuel; which would more than wipe out any of their claimed savings from their plan to nationalise the power supply.

“They need to answer for their policy inconsistency before making any claims about power savings to the New Zealand public.

“The reality is that under a Greens-Labour ETS – or carbon tax – and the so-called power ‘plan’ it announced this week, households and businesses would be paying significantly more for electricity and fuel.

“And the worst part is that there would be fewer jobs for New Zealanders. As we already heard from firms like JB Were, investment in New Zealand would dry up as a result of government effectively nationalising such a big industry.

“What the opposition either doesn’t know, or doesn’t want to understand, is that savers and investors in this day and age can choose which country to invest in. This Government is working hard to attract investment and jobs for New Zealanders by applying good quality regulation that encourages competition, new investment and jobs. This sort of policy would do the exact opposite.”

Like many other socialist policies, the LabourGreen power play would give a little with one hand while taking a lot with the other.

Rural round-up

February 18, 2013

Call for tighter rules – Gerald Piddock:

Federated Farmers is demanding the rules for importing palm kernel expeller (PKE) be tightened.

This comes after two members of the group’s grain and seed executive observed massive breaches of the New Zealand import health standards for importing 

Federated Farmers is demanding the rules for importing palm kernel expeller (PKE) be tightened.

This comes after two members of the group’s grain and seed executive observed massive breaches of the New Zealand import health standards for importing PKE into New Zealand during a visit to a Malaysian PKE crushing plant.

Mid Canterbury farmer David Clark along with Whakatane farmer Colin MacKinnon visited the country in September last year.

They detailed the breaches along with several recommendations to improve New Zealand’s biosecurity process in a report they submitted to the Ministry for Primary Industries last year.

into New Zealand during a visit to a Malaysian PKE crushing plant.

Mid Canterbury farmer David Clark along with Whakatane farmer Colin MacKinnon visited the country in September last year.

They detailed the breaches along with several recommendations to improve New Zealand’s biosecurity process in a report they submitted to the Ministry for Primary Industries last year. . .

Irrigation scheme on target -Gerald Piddock:

The first of the giant ponds at the Rangitata South Irrigation scheme could be filled by the end of the month, as construction of the project continues.

Workers were one third of the way through lining the surface of the first of the ponds, Rooney Earth Moving general manager Colin Dixon said.

The plastic lining came in large rolls that were unwrapped and the edges were then joined together.

“It’s like a sewing machine, it runs up the seam really slowly and melts them together,” Mr Dixon said.

He estimated it would take four to six weeks to line each pond. The ponds were lined one after the other, rather than all at the same time. As soon as one pond is lined, it can be filled with water. . .

Time to merge ag unis?- Marie Taylor and Rebecca Harper:

Merging agriculture courses offered at Lincoln and Massey universities is one way to make better use of limited resources, Beef + Lamb chairman Mike Petersen says.

It emerged last week that Lincoln was undertaking a major review of its qualifications.

It is the country’s smallest university, with 3500 full-time equivalent students, and has faced a series of financial losses in the past few years. It had a $5 million loss last year and a $5m loss is budgeted for this year.

Lincoln wants to reduce the number of undergraduate degrees it offers from 13 to three land-based three-year degrees, with a common first year. . .

The carbon-neutral dairy farm, is it possible? – Milking the Moove:

What does a dairy farmer have to do to become carbon neutral?

There has been much wailing and gnashing of teeth at the prospect of agriculture being included into New Zealand’s Emission Trading Scheme (ETS). 

So I thought to my self, what would a dairy farmer need to do to become carbon neutral?

But first, why would a farmer what to be carbon neutral?

Some may say because it’s the right thing to do for the environment.

Others will want to eliminate any tax paid on the carbon they emit. 

Other people will say that, being carbon neutral gives that farmer a wonderful point of difference in which to differentiate their products.

In order to avoid getting into a debate about whether climate change is real or not, I’m going to approach this from the marketing angle. . . .

Sector pins hopes on golden fleece – Tim Cronshaw:

A golden yarn developed by Kiwi scientists and containing pure gold is expected to be sold to wealthy buyers of luxury carpets, rugs and furnishings.

Unlike the golden fleece in Greek mythology the yarn and completed woollen products will not have a golden colour at this stage.

The Aulana-branded wool has been developed by Professor Jim Johnston and Dr Kerstin Lucas of Victoria University after $3 million of research and development.

A tiny amount of pure gold is combined with wool and the chemistry between the two causes it to bond and produce the colours of purple, grey and blue.

The range is expected to be extended and include a golden hue later. . .

Shearers busy as farmers heed market – Tim Cronshaw:

Canterbury shearers have gone into overdrive after an unexpected surge in sheep needing to be shorn.

The December to early February stint is usually quiet for shearing, but an influx of lambs and cull ewes needing their fleece removed put the pressure on shearers during the hot spell, when temperatures soared above 30 degrees in shearing sheds.

Farmers appear to have moved quickly in line with lower lamb prices and this acted as a catalyst for more shearing.

January was expected to be a slow month for shearing, but only in the last week has the pace slowed, said Barry Pullin,  an owner of Pullin Shearing, and chairman for the New Zealand Shearing Contractors Association. . . .

Kyoto is the past

November 11, 2012

Quote of the day from Climate Change Minister Tim Groser:

“Kyoto is the past”, he said. “The future rests on getting countries outside Kyoto to start doing something serious about climate change.”

He said it would be wrong to tie the hands of a future New Zealand government for eight years while a single new treaty is negotiated.

The Kyoto Protocol was the triumph of politics and bureaucracy over science and reason.

It was a lot more about being seen to do something than actually making a difference.

It was riddled with inconsistencies and its one-rule-fits-all approach

The best thing done to address climate change is not anything achieved through the ETS imposed under Kyoto but the  New Zealand-initiated Global Research Alliance on agriculture greenhouse gases.

Instead of the tax-it approach taken by Kyoto and its supporters this initiative brings countries together to find ways to increase food production while minimising emissions.

Kyoto and its supporters take a negative approach, the Global Alliance takes a positive one.

Farmers face ‘perfect policy tsunami’

August 30, 2012

Farmers would face a perfect policy tsunami in the agricultural policies of a Labour-Greens government, Federated Farmers vice-president Dr William Rolleston said.

This tsunami included adding agricultural emissions to the ETS, resource rentals for water, land and water plans put out by regional councils around the country and a capital gains tax. 

 It was not unreasonable to think a Labour-Greens government would be formed in 2014, he told farmers and scientists at a forum at Lincoln on the emissions trading scheme organised by the New Zealand Institute on Agricultural and Horticultural Science. 

 “We cannot sustain a tsunami of policies that drowns agriculture in a sea of red ink,” he said.

He gave examples of costs a Labour-Greens government would impose on farming including $40,000 a year if agriculture was forced into the ETS.

MAF modelling showed that had agriculture been in the ETS sheep farmers would have made surpluses in only two of the last four years and those surpluses would have been $4000 and $468.

Water resource rentals would add to costs, turning small profits into big losses.

   All of New Zealand farms would be foreign-owned and all would be dairying because it would be the only way for land owners to achieve an economic return, he said. 

Dr Rolleston also spoke of the extreme nutrient limits being set in land and water plans which would drive production levels down to those of hobby farms.   

    It could also trigger a banking crisis as the reality of digesting these policies all at once could sink the economy. Farmers would walk off their land and the banks would face a $48 billion write down of the debt owed to them in the rural sector. 

    “Foreign buyers funded by foreign banks would be the winners,” Dr Rolleston said. 

    Opposition to genetic modification meant the agricultural sector was being denied the tools to address its environmental responsibilities in the short timeframe demanded by environmentalists. 

    “It’s vital that the Greens and Labour wake up to the risks this policy tsunami imposes to the entire economy.”

This is strong speaking from the vice-president of an organisation which is non-partisan but it is not an exaggeration.

The Timaru Herald reports on farmers’ fears of needing consent to farm under Environment Canterbury’s land and water plan.

Farmers in other regions have similar concerns and if they are worried now they will be even more so under a Labour-Greens government.

I listened to an Opposition MP speak at a seminar recently.

It was under Chatham House rules so I cannot give any details. But I will say it left all of us listening with exactly the same view Dr Rolleston has on the devastating impact a Labour-Greens government would have not just on farming but the wider economy and society too.

ETS imposes cost on food production

July 4, 2012

The left are continually complaining about the cost of food.

But they are also criticising the government for taking a cautious approach to the Emissions Trading Scheme which would impose extra costs on food production.

Those who produce the food understand the damage it would do to their industries and the costs to consumers by forcing agriculture into the scheme before 2015 – or later if our trading partners don’t include agriculture in their schemes.

Federated farmers reminds us it is only biological emissions which are exempt.

“All farms and orchards have been in the ETS since July 1, 2010 – farms pay the  ETS on fuel and electricity, they pay it indirectly through the supply chain on  things as diverse as processing costs, animal remedies, wire netting, fencing,  feed and fertiliser.”

Dairy NZ says:

The Government’s confirmation that it will defer the entry of agricultural emissions into the ETS until at least 2015, pending a review to assess whether such technologies exist, is sensible and pragmatic, says DairyNZ General Manager Policy and Advocacy Simon Tucker.

“DairyNZ’s position is that agricultural emissions should not be included in the ETS until practical, economically viable mitigation technologies are available under farm-level conditions,” Mr Tucker says.

“We are pleased to see the Government take a considered view of where our country sits, relevant to our trading partners, to ensure we can make progress while still being competitive.”

“The dairy industry is committed to a strategy of reducing its greenhouse gas emissions intensity and maintaining its position as world leaders in low carbon intensity dairy production.

“New Zealand’s dairy sector is working through the challenge of finding practical ways to reduce our emissions by investing heavily in research.

“To-date our investment in dairy farm system research shows it is quite possible to make good progress in this area by making efficiency improvements on farms. But we do not yet have a reliable silver bullet.

“DairyNZ alone invests nearly $1m each year into reducing methane and other agricultural gas emissions through funding the world-leading science being carried out by the Pastoral Green House Gas Research Consortium (PGgRC).

“A similar amount of funding is being invested into a seven year DairyNZ-led research project where dairy cows are being evaluated to see how efficiently they can convert feed into milk while reducing emissions.

“DairyNZ has also maintained that New Zealand’s dairy farmers should not face a price on carbon until our trading competitors face similar and equivalent obligations. 

“It’s appropriate that this is also a factor in the Government’s 2014 review.

Dairying is one of the food producing industries which would face huge costs if the ETS was imposed on it. Greenhouse vegetable growers would also face very high costs and they too welcome the government’s latest announcement:

Wim Zwart, Chair of Tomatoes New Zealand, said that the move would be widely welcomed by the country’s greenhouse vegetable growers.

“The decision to extend transitional measures designed to reduce the initial cost impacts of the scheme beyond 2012 is particularly welcome,” said Mr Zwart.

“The ETS has had a major impact on production costs for many of New Zealand’s hothouse tomatoes growers, making them less competitive against those overseas growers who are not facing carbon costs.”

There are over 200 tomato growers in New Zealand who produce standard and specialty fresh tomatoes with a farm gate value of $90 million per annum. In 2011 the tomato export market was valued at approximately $15 million.

“This is a common sense decision that will allow our growers to continue to expand and grow the commercial export market,” added Mr Zwart.

“Many hothouse tomato growers have been investigating and introducing innovative measures to reduce emissions. This will provide them with some short term certainty around production costs and some more time to prepare for the long-term impacts of ETS.”

Food producers are putting large amounts of money into research in an effort to find cost-effective ways to reduce emissions.

Some progress is being made. Scientists at Waikato University are looking at how enzymes in the rumen might be manipulated to make dairy cows more productive and reduce the greenhouse gases they produce.

But they are a long way from finding something which can be used on farms.

Until that and other research produces results that can be widely applied there is nothing at all to be gained  by imposing extra costs on the industry and ultimately consumers.

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