Kerr: The Real Environmental Crisis

EMBARGOED UNTIL 7.00 PM TUESDAY 11 NOVEMBER 2008
ROTARY CLUB OF PUKEKOHE
THE REAL ENVIRONMENTAL CRISIS
ROGER KERR
EXECUTIVE DIRECTOR AUCKLAND
NEW ZEALAND BUSINESS ROUNDTABLE 11 NOVEMBER 2008

The Real Environmental Crisis

The environment matters to people. It is part of their overall quality of life.

All parties at last weekend’s election had environment policies. The public and political debate is not mainly over environmental goals. It is more over the means of achieving them and over trade-offs, where they exist, with other goals such as economic growth, freedom and equity.

The Business Roundtable has had a longstanding interest in environmental issues. We have been involved in debates over the Resource Management Act (RMA) and climate change from the outset. With the change of government it is pleasing that policies in both these areas are up for review. The election result suggests that voters at large are unhappy with them. On climate change National must not make the mistake it made in the 1990s on the RMA of only tinkering with the policy it inherited and regretting it ever since. A more fundamental reappraisal is essential.

In its work on environmental issues, the Business Roundtable has emphasised the importance for environmental management of secure property rights, compensation for regulatory takings, proper economic pricing and the use of markets wherever possible. These policy elements scarcely feature in the RMA, in contrast to the much sounder Public Works Act. Environmental regulation is sometimes necessary but needs to be well designed if it is not to do more harm than good. The previous government’s climate change policy was an incoherent mix of a market mechanism (an emissions trading scheme) and ‘command and control’ regulation (such as the ban on new thermal generation). My view is that a better market mechanism for New Zealand to start with would be a low carbon tax (with offsetting income tax reductions). This could be superseded by an emissions trading regime if a broad international carbon market developed (which is not in prospect at present). A key advantage of a low tax is that it would give certainty as to price, which would help firms to plan and help make what needs to be a stable, long-term policy more politically sustainable.

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