• Further amendments to come
• Treasury miscalculates ETS costs
• Opposition flays flawed process

Parliament faces one of the more shambolic legislative processes between now and Christmas as it seeks to ram through the Climate Change Response (Moderated Emissions Trading) Amendment Bill in time to replace the January 1 start date for key parts of the ETS legislation already in place. A host of Supplementary Order Papers is likely, including new clauses yet to see any light of day relating to the deal still being stitched together between National and the Maori Party, among others.

Labour’s minority report says “we understand … that the Govt took little or no official advice on the substance and effect of many of these proposed amendments.” Among key issues identified in hearings but not dealt with by the Select Committee is Fonterra’s well-made case it will be disadvantaged relative to Aust and other food processors because of the way the ETS will apply to it in NZ. This is one area ripe for Supplementary Order Paper amendment.

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Perhaps most extraordinary is the Select Committee reportback revelation on the last day of deliberations, the Committee had to adjourn for 90 minutes while Treasury officials confirmed a huge blunder in their calculation of the costs to the nation of the ETS. Instead of adding debt equivalent to between 6 and 7% of GDP, the Treasury suddenly discovered it was more likely to add between 13 and 17% of GDP by 2050 - around $110bn in additional debt. The error is understood to have arisen from failure to calculate potential costs with carbon at $50 per tonne rather than $25 per tonne, but details were only slowly emerging on this issue as NZ Energy & Environment Business Week went to press. As it was, there was insufficient time for normal process to be followed, with the Committee declining the usual marked-up version of the Amendment Bill from the Parliamentary Counsel Office because of pressure of time. The Committee was also unable to hear further from the Treasury official who penned the regulatory impact assessment statement which found the Bill’s underpinning analysis inadequate.

Labour also highlighted the potential for whatever Treaty of Waitangi clause is inserted in the Bill to “create an implicit precedent for the treatment of other settlements in similar situations in the future,” potentially allowing Treaty settlements to be relitigated based on future policy changes. The Maori Party minority report says the Treaty clause “must provide more than simple procedural participation, and deliver substantive outcomes that accommodate the full breadth of Treaty rights and interests.” The party is also seeking better treatment for forest owners seeking to change land use.

Environment Minister Nick Smith is still negotiating with the Maori Party. A deal could deliver hundreds of millions of dollars in carbon credits to iwi, who would also be able to enter contracts to plant forests on conservation and other Crown-owned land. Smith says there’s no preferential treatment for iwi, and similar deals have already been done with private businesses. He says such deals are “good for NZ.”

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