The subsidy myth

16/11/2009

Business New Zealand has released a paper analysing claims that farms and other businesses will be subsidised by households under the proposed emissions trading scheme.

Chief Executive Phil O’Reilly says :

The subsidy myth is based on the mistaken belief that ‘households are good and business is bad’ and that business should be punished for any emissions.

“The truth is not so one-sided. In reality, we are all in this together. Businesses are consumer-driven, and consumers need to see a price signal on carbon in order for carbon emissions to be reduced.

“By making an early start on emissions trading we will be putting NZ export companies in a vulnerable position – they will have to compete against companies overseas that won’t be paying any carbon charges. Allocating carbon credits is simply a way of reducing that vulnerability in the short term, and is in the interest of all New Zealanders.

“Once other countries also adopt emissions trading that vulnerability will cease, reducing the need for carbon credit allocations. So, alarmist publications about ‘decades of subsidies’ are wrong in fact as well as assumption.

“Emotive statements about ‘bludging business’ have the effect of undermining confidence in emissions trading. They reflect an anti-business attitude that could harm our future prosperity.

“We have an altogether more positive view on how businesses and consumers can adapt to carbon pricing,” Mr O’Reilly said.

The Subsidy Myth paper is here.

One of the questions about the ETS no-one seems able to answer easily, is where will the money go? Paul Henry tried to get an answer from carbon credit expert Seeby Woodhouse on Breakfast this morning, but he wasn’t entirely successful.

If no-one can say where they money’s going how can anyone know if it will do any good?

Especially when, as Matthew Hooton pointed out in Friday’s NBR (print edition not online) that any government which seriously proposes paying a liability will be kissing re-election goodbye.


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