By David Seymour, ACT Party Leader.
Political commentators seem to believe the Greens have been given a raw deal inside the current Government. Nevertheless, they’ve been able to secure several policy wins.
Unfortunately for New Zealanders, these policies are likely to make them financially poorer while having little impact on the environment.
The Government’s environmental policy appears to be driven by a combination of a deeply ideological Green Party and a Prime Minister that is only too happy to serve up feel-good policy in order to grab international headlines.
Zero Carbon Act
Jacinda Ardern has made clear that her Government’s recently-announced Zero Carbon Act is really just an attempt to show global leadership. But the idea that the United States, China and others will follow our lead on climate change is deeply naïve. The same problem is found in the Government’s positions on oil and gas exploration, gun laws, and social media.
The PM is more concerned about playing to a global audience than good policymaking.
New Zealand will not prosper if we are forced to make significantly deeper emissions cuts than our trading partners. We will simply impoverish ourselves and push economic activity to other countries with lower environmental standards.
Economic consultancy NZIER says New Zealanders could lose a quarter of what would have been their 2050 incomes and that losses will be disproportionately felt by low-income earners. Tailrisk Economics has called the Zero Carbon Act a ‘feel good’ project which will cost the economy $200 billion and which is unlikely to have any impact on the behaviour on the rest of the world.
The Zero Carbon Act may have little effect on emissions.
Allowing for economic growth and long-term trends, the UK Climate Change Act has seen that country reduce its emissions no faster than New Zealand since 2008. Our own Productivity Commission reports the UK will be even less effective in the future as the low hanging fruit are picked.
The extent to which the Zero Carbon Act will improve the climate is unclear.
I asked the Climate Change Minister in Parliament last year what impact his legislation will have on global temperatures. He could not provide an answer.
The risk of shooting ourselves in the foot is very real. If we set more aggressive targets than other countries, it will not only harm the economy but also force activity to less efficient jurisdictions, actually increasing global emissions.
A more sensible approach would be to simply tie our carbon price to the prices paid in our top five trading partners. That would show the world we are doing our bit, be administratively simple, politically durable, and effective.
Oceana Gold decision
Last week, mining company Oceana Gold Ltd’s application to purchase 178 hectares of rural land for a new tailings reservoir near Waihi was declined by the Government.
The law says that a foreign company can only buy land if two Government Ministers are satisfied it would have a “substantial and identifiable benefit” for New Zealand.
(The only benefit that really matters is the benefit derived by the New Zealand vendor. If there were no benefit to a New Zealander selling land to a foreigner they would not sell it at all. Astonishingly, the ‘benefit to New Zealand’ test does not consider this benefit.)
Despite government officials and Associate Finance Minister David Clark believing the application would have benefits for New Zealand, the other Minister involved, Eugenie Sage, disagreed.
Sage has a history of environmental activism. This was almost certainly the reason she prevented the project from going ahead.
It will cost New Zealand hundreds of jobs.
New Zealand already has the most restrictive foreign investment rules in the developed world. We cannot also have a Minister using the law to pursue a personal agenda against mining.
100 per cent renewables target
The Government has also signed up to the Green Party’s goal of 100 per cent renewable electricity by 2035. This is more emotional environmentalism.
The Interim Climate Change Committee – set up by the Government – has said the plan would significantly increase power prices for little environmental gain.
Our response to climate change should be to set a price for emissions and let polluters find the cheapest way of reducing them. A properly-functioning emissions trading scheme does just this.
There is no need for politicians to pick winners.
By forcing the public to use a particular source of energy, rather than basing energy policy on sound economics, the Government will send power prices through the roof and hurt New Zealanders, particularly those on lower incomes.
Oil and gas ban
Finally, the Government’s naïve ban on offshore oil and gas exploration will do massive damage to the economy and to New Zealanders’ incomes.
NZIER found the ban could cost the economy up to $30 billion by 2050 and cost 3000 jobs, but will have an “undetectable” contribution to reducing global emissions.
That is economic vandalism.
The oil and gas industry creates thousands of jobs, contributes $2.5 billion to the economy and $500 million to the government in royalties each year. Not only will the ban make us poorer, it will drive production of oil and gas to countries with lower environmental standards, increasing emissions and harming the planet.
The decision to ban offshore exploration was made without cost-benefit analysis or consultation. It was ultimately a political decision that was intended to make people feel good and provide a global platform for the Prime Minister.
David Seymour is Leader of the ACT Party.