Kyoto deficit now a surplus

Wow, National has been in office over six months, and it has already solved climate change. Nick Smith announced today that previous Kyoto deficit (which had been getting as high as $1 billion) is now a Kyoto surplus of $240 million. We can all relax now – the world has been saved.

Okay I am being sarcastic, but the change in forecast shows how much uncertainty there is – even counting the level of greenhouse gases is no simple thing.

We are now forecast to be 9.6 million tonnes under our Kyoto target of 1990 levels of net emissions. So what has happened?

The 2007/08 drought and better information on carbon captured in forests. I always said we should simply shoot one in ten cows, but instead a drought is just as good it seems. Now here is an interesting idea – global warming is predicted to cause more droughts, which will lower our carbon emissions – so maybe it is self correcting?

Now the figures may be a bit dodgy, as they are done by the Ministry for the Environment. They are being checked, rechecked and audited.

But whatever the figures really are, even the possibility of a surplus completely undermines Labour’s claim that its Emissions Trading Scheme was about “who pays New Zealand’s deficit?”

The truth is that Labour’s ETS was always about one of the biggest illicit tax grabs in New Zealand’s history.

According to David Parker himself  (see attached document letter-from-minister-re-revenue-and-cpr-30-may-20081 which a friendly Kiwiblog reader dropped me) Labour always knew that it would receive a $21 billion windfall from households and firms. Colin Espiner wrote about this before the election but it never really took off as a story because everyone was distracted by Winston Peters and the election.

The $21 billion windfall was why Michael Cullen was so keen on the ETS – he could raid our wallets by $21 billion without us even noticing. It was taxation by stealth at its worst. This is also why Cullen was so willing to pay billions in policy concessions to New Zealand First and the Greens – it was nothing compared with the $21 billion he knew was on its way.

National has always promised to make the ETS fiscally neutral but here’s the problem. Cullen designed the scheme to take money from households and firms and deliver it to him – how can you modify it to turn a $21 billion tax grab into a fiscally-neutral scheme? Or even one that hands the $241 million back to the public?

It is looking more and more likely that a carbon tax is the superior way to go, as the Greens originally proposed.