ETS passes 2nd reading

August 28, 2008

The Bill which will introduce the Emissions Trading Scheme passed it’s second reading with 63 votes in support and 56 against.

Labour, the Greens, New Zealand First and the Progressive party voted for it. National, United Future, Act, the Maori Party, Gordon Copeland and Phillip Field opposed it.

The Maori Party  media release on the Bill makes interesting reading:

We remain strong in our belief that, fundamentally, the ETS is still just an Emissions Trading Scheme, when what is required is an Emissions Reduction Programme,” said Co-leader Tariana Turia.

“A 2% reduction in emissions over ten years is simply fiddling while Rome burns. The time for scheming is over. Now is the time for a programme of action,” said Mrs Turia.

“A real Emissions Reduction Programme will require significant changes in our lifestyle, but the alternative, of doing almost nothing, will be a lot worse,” she said.

Doing something is not always better than doing nothing – this something will sabotage the economy for little or no environmental gain

“A sound programme would be comprehensive, covering all industries and all gases. The government’s scheme is on the right track in that respect.

“But a scheme worth supporting would also be fair to all industries and consumers, and transparent, so everyone can see how the costs and credits have been allocated,” she said.

“Pollution is a cost of business that should be identified at source, and that business must be held responsible. Any cost they pass on to consumers will at least encourage environmentally responsible choices. The principle must be that polluters pay, because the purpose of the programme is to cut emissions.

But there’s no point in levying what is effectively a tax on primary production when science has yet to come up with much in the way of effective ways to counter emissions.

“Instead we have deferred liability and masses of free credits going to the biggest industries and the worst polluters for years to come. This negates any incentive for them to make changes. This is not ‘polluter pays’ – it’s ‘pay the polluters’,” said Mrs Turia.

“Credits to assist export-exposed industries to adjust to the new regime should be allocated on the basis of need – not by blanket donations and exemptions to huge corporate lobbyists.

“Those free credits could be invested by the government in speeding up energy savings and moving to renewable sources, in building resilient and sustainable communities, and supporting poor and vulnerable people who will be worst affected by the social and economic upheaval,” said Mrs Turia.

“The government is not willing to fully explain the disastrous consequences of doing so little to save the planet, for fear of a voter backlash. We have to know the truth, so we can make the tough decisions that are needed right now.

Of course there would be a voter backlash if it was understood that the ETS will impose such huge costs for little or no gain.

“We are told the Green Party and NZ First have signed up to it. I predict that the concessions won by them will seem like a mere thirty pieces of silver, once the full impacts of climate change start to be felt,” she said.

“We maintain our original position – that we need a radical rethink of the whole approach. This scheme represents a failure of leadership.

The need to make drastic changes to curb greenhouse gas emissions is what defines this moment in our history. We have no time to lose. The common interest must prevail in the pursuit of environmental justice, and social and cultural wellbeing,” said Mrs Turia.

Regardless of the science, the politics requires action. Good leadership would have achieved cross party consensus which balanced costs and benefits. But bulldozing through this legislation will do economic and social harm with little or no environmental good to show for it.

Hat tip: The Hive


Kiwi Party’s wish list

August 9, 2008

The Kiwi Party is holding its inaugural conference today and it has announced its first five priorities.

They are repealing the anti-smacking law; appointing a Royal Commission on child abuse;  introduce binding referenda on controversial issues; increase the drinking age, clamp down on those who supply alcohol to under-age drinkers and establish faith based detox and rehabilitation centres; increase the minimum wage to $15; and invest in marriage preparation and relationship enrichment courses (which by my count is six priorities).

There are no surprises there. The big surprise would be if the party actually got in to parliament and history shows how difficult that would be.  Party leader Gordon Copeland is only in parliament because Future New Zealand, the manifestation of the Christian party he was in at the time, was subsumed by the United Party.

The best result for a Christian party was the Christian Colaition’s 4.3% of the party vote in 1994. In 1999 Chirstian Heritage got 2.4% and Future New Zealand got 1.1%.

Three years later Christian Heritage got 1.4% and United Future NZ got 6.7% – but that was because the television worm liked its leader Peter Dunne and National was decimated.

At the last election United was down to 3% and Destiny got .6%.

MMP does enable wee parties to get in to parliament but no new party has got in without an electorate seat and I can’t see the Kiwi Party having a broad enough appeal to change that.


Peters’ fiasco shows MMP flaws

August 1, 2008

Public law specialist Andy Nicholls says the Peters’ debacle shows a review of MMP is needed.

Winston Peters’ value to both Labour and National has become abundantly clear. Both parties are pulling their punches over the donations allegations for fear of alienating him as an ally or future ally.

MMP creates hostage situations. Remember Alamein Kopu and her pull over Jenny Shipley?

In this most recent row Sir Robert Jones has unexpectedly been firing most of the bullets at Peters. He probably summed up the view of many when he said, “I belong to a different era. I don’t like it now under MMP.”

John Key has said National will, if elected, hold a referendum into MMP. Key’s referendum will first ask voters: are you satisfied with MMP? If the majority says no, then a second referendum will be held pitting MMP against some other unspecified alternative.

But is this what we need? MMP was itself born out of a referendum, and voter frustration at the unbridled power of first-past-the-post governments. First Sir Robert Muldoon, then Sir Roger Douglas proved if you could control the Cabinet you could control the country.

But one wage freeze and an unadvertised rapid economic transformation later, voters realised they wanted their leaders on a tighter leash. They wanted them to have to work harder, and more consensually, to get their own way. Which is what MMP delivers with its minority or coalition governments, its requirements to consult and its generally slower pace of change.

Referendums are very blunt instruments and support for MMP in the 1993 one came at least in part from people voting against politicians rather than for a change in the voting system.

Plus, of course, for anyone younger than 32, two-tick voting is voting. So why would we ditch it? Because MMP has flaws which undermine the legitimacy of our parliamentary system.

Nicolls gives examples such as the ability for MPs like Gordon Copeland to abandon their parties, switch allegience and still be an MP; or those like Rick Barker who lose a seat but still get back into parliament – and even cabinet – on a party list. Although this also allows MPs to enter parliament when standing in an unwinnable seat, as Katherine Rich has in Dunedin North.

If that is justified by the sanctity of the party list, then what about Mike Ward and Catherine Delahunty? Both Greens and both higher placed on the list than Russel Norman, yet both pushed inelegantly aside when Nandor Tanczos’s early retirement offered the co-leader the chance to get to Parliament in time for some pre-campaign publicity.

All these inconsistencies create unfairness, though not so much as the threshold rule itself.

Under MMP a party must win 5 per cent of the party vote or an electorate seat. A win in an electorate, where the party scores lower than 5 per cent, still gets a proportionate top-up. So Rodney Hide’s win in Epsom gave Act two MPs even though the party won only 1.5 per cent of the party vote.

By comparison, in 1996, the Christian Coalition won 4.33 per cent of the party vote, a hair’s breadth from the magic threshold. But it failed to win in any electorate – so bad luck, no MPs.

There are two issues. Firstly, is the 5 per cent threshold too high? The commission that recommended MMP preferred 4 per cent, but the two major parties argued for a higher threshold. Those fears have proved unfounded. In fact, as much as MMP has delivered a more diverse Parliament, only one new party (Act) has broken in since the switch to MMP. The others have all been created around a sitting member.

But is the electorate threshold too low? In Germany, a party must win three electorates before qualifying for list seats. Adopting a three-electorates or 5 per cent criterion at the 2005 election would have seen five parties able to get in list MPs.

United Future and Act would have been restricted to Peter Dunne and Rodney Hide. As Jim Anderton couldn’t bring in a list MP under current arrangements, the Progressives would have been unaffected. Since none of those three parties attracted more than 2.6 per cent of the party vote, is that an unfair result?

And then there is the Maori vote. Last election, the Maori Party won 2.12 per cent of the party vote and four electorates, hence it has four MPs. This coming election it may win more electorates even though polling indicates its party vote will be no higher.

Since the number of Maori seats grows in accordance with the number on the Maori roll, it is entirely possible that over time this disparity between the number of MPs elected and the party’s proportion of the party vote will grow. That will mean a larger and larger over-hang and the leading party will need to garner not 61 votes to govern, but 63, 64, 65. Is this what we want?

These are all valid issues in need of debate. But they do not fit the yes-no format of a referendum. Nor do they provide evidence that MMP itself is beyond repair.

What they point to is the need for a considered review of the electoral system. Learning the lessons of the Electoral Finance Act, this should be conducted in a non-partisan way with a clearly stated purpose of seeking greater fairness.

In the spirit of fairness, perhaps such a review should also look at the Prime Minister’s prerogative to set the election date. Or the length of the political term; four years might be more productive.

The problem is that these changes require MPs to vote against their own interest. History tells us MPs don’t do that. Which is why a simplistic question in a referendum is so appealing. It looks as if something substantive is being done, even if it isn’t.

But concerns about MMP’s peculiarities are genuine and a more considered review would be more constructive.

I agree a considered review if not instead of, at least before, a referendum would serve us better than the blunt instrument of for or against vote in isolation.


Tax thresholds might be lifted

May 20, 2008

 

Michael Cullen  has hinted that tax thresholds might be lifted in Thursday’s budget.

 

Finance Minister Cullen has ruled out a number of options for his tax cuts package, but today suggested there could be an across the board lift in the thresholds at which people pay more tax.

Answering questions from independent MP Gordon Copeland about why he had not cuts personal taxes over the last nine years, Dr Cullen said he had good news for the MP.

“On Thursday I will be announcing such cuts. I look forward to his support for those which are consistent with the views he has expressed over many years,” Dr Cullen said.

 

Thresholds would be a good place to start because people on lower earnings have also found the benefit of normal inflation-based wage rises partially negated because they’ve put them into the next tax bracket. When the top tax rate was lifted to 39c it was only supposed to catch 5% of tax payers but now gets more than twice and it is ridiculous that many of these so called rich people are also eligible for Welfare for Families payments.

 

Dr Cullen announced in 2005 that from the beginning of the 2008 tax year tax thresholds would have inflation indexing built in. They were mocked as the “chewing gum” tax cuts and last year Dr Cullen axed them and instead made KiwiSaver more attractive.

Parliament will go in to urgency to ensure any tax cuts announced in the budget are enshrined in legislation to forestall accusations from the Opposition that the promised cuts won’t happen.

Dr Cullen’s comments today suggest that he could be reintroducing some form of indexation to the thresholds as part of his package, though it is also possible that he was just teasing Mr Copeland.

Most speculation around Parliament is that Dr Cullen will cut the tax rate at the lower end of the scale as the centrepiece of the tax cuts. This would meet his self-set test of fairness and equity, as it would deliver something to everyone – even if it is very expensive.

Revenue would fall by around $1 billion for every $10 a week put into taxpayers pockets.

Dr Cullen has already ruled out the creation of a tax free income bracket and cuts to GST. Yesterday he indicated there would be less money to deliver cuts but they were less likely to be inflationary given tougher economic times. He also ruled out a lump sum dividend payment saying there was “no basis” for speculation about one.

The simplicity of a tax-free income bracket is attractive and it is one way to help everyone, where a straight rate cut helps those who earn more most because of course they also pay most.

 

It’s interesting that tax cuts are almost always referred to as giving something as if it’s some sort of Government largesse, rather than as allowing people to keep more of what they earn.


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