Monday, November 16, 2009

Climate change: Costing us an arm and a leg

When Dr Christina Hood pointed out that the government's costings on the ETS were wrong, and that the scheme would cost us $105 billion by 2050, Climate Change Minister Nick Smith was quick to denounce her figures as "wrong". It turns out they weren't so wrong after all. From the Finance and Expenditure Committee's report on the ETS bill:

The Treasury has modelled the cost of the never-ending subsidies. It estimates that, if a 1.3 percent phase out rate is maintained into the long term, the proposed policy settings for intensity-based allocation indicate a cumulative increase in Government debt of around 13–17 percent of GDP by 2050, at a cost of about $110 billion.
According to the Labour minority report, Treasury dropped this little bombshell on Friday, the Committee's last day of deliberation. Which was typical of the government's tactics to rush through the committee's "deliberation" and ram the bill through with minimal scrutiny. But it makes it official: the subsidies this bill gives to polluters are simply fiscally unsustainable. A responsible government would admit that and scrap them. Instead, National will likely pass them, and just put the issue off, leaving it to be someone else's problem.