Carbon tax adds costs

“The carbon tax decisions announced today by Government will make not one shred of difference to the global problem of climate change but will deter investment in New Zealand”, according to the Chairman of the Major Electricity Users’ Group Terrence Currie.

Mr Currie stated that, “A carbon tax of $15 per tonne of carbon dioxide will put up average wholesale electricity prices by approximately 20%”

He said, “In describing the increase in electricity costs as only an increase of one cent a unit the Convenor of the Ministerial Group on Climate Change Pete Hodgson has attempted to trivialize the impact on energy users.”

“As energy intensive industries are already suffering from a lack of security of supply plus price increases which have eroded our manufacturing sectors international competitiveness, today’s announcements will further reduce confidence in New Zealand as a place to invest in.

“This reduced confidence will flow through to the whole economy and the Ministers predicted drop in GDP of 0.03 per cent is likely to significantly understate the consequences of this tax.

“There are no quantifiable benefits to the New Zealand environment from a carbon tax and rather than achieve the win/win situation claimed by the Minister the economy and our growth targets face a lose/lose scenario – higher input costs, higher output costs which flow through ultimately to losses of jobs, of investment and of international competitiveness. In fact the supreme irony about today’s announcements is that the only winner in this whole exercise is the owner of Mighty River Power and Meridian Energy- namely the Government who will receive windfall profits of millions of dollars. The carbon tax will force up the average price of all electricity but the carbon tax will only apply to the generators using thermal fuel. The hydro generators will therefore reap windfall profits.

“Everyone knows that seventy per cent of New Zealand’s electricity already comes from renewable energy sources which are high by international standards.

“To erode that international advantage for the sake of some over developed sense that New Zealand must show leadership in the politically correctness stakes is hard to accept. To also assume that the introduction of a carbon tax in NZ, which the Government acknowledges will reduce our economic welfare, will influence the 160 countries that do not have Kyoto obligations to adopt emission constraining policies is absurd.

“With the exception of the two hydro generators owned by the Government there are no winners in today’s announcement. Not even the environment,” concluded Mr Currie.

ENDS

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