ETS MAY HIT CONSUMER POCKETS - AGAIN

Source: NZPANick Smith

The controversial Emissions Trading Scheme (ETS) looks set to hit consumers in the pocket - again.

Climate Change Minister Nick Smith on TV ONE's Q+A programme did not rule out more power and petrol price hikes to cover costs.

"We are expecting power prices to increase by 5% and 3 cents a litre on petrol as well as some other flow on costs," he said.

Tax increases were supposed to cover the cost of the Emissions Trading Scheme until 2012, but the minister now says households may have to pay more.

"The legislation provides for a review in 2011. This is one of those issues where the smart thing for New Zealand to do, and our policy in New Zealand is doing it's fare share for climate change, is to regularly review where the rest of the world has got and to make sure we're not getting outselves out of step," said the minister.

This has caused an uproar.

"It goes beyond being unfair. It's really inefficient because these costs are making households now so poor they can't afford food," says Molly Melhuish from the domestic Energy Users' Network.

But Act Party's John Boscawen on TV ONE's Q+A this morning says the government is under-estimating the cost for householders.

"They're saying that the average household's going to pay an extra $3 a week. For farmers that'll be $80 a week, and it also understates the flow on effect.

Boscawen attacked the ETS, saying New Zealanders do not want it.

"I've travelled up and down the country from Northland down to Gore in Invercargill and I get a consistent message from National supporters, farmers and New Zealanders generally that they don't want this, they don't understand this, they don't understand where the money's going."

But Smith says prices need to go up to provide a disincentive.

"We're being quite up front with New Zealanders... We are expecting power prices to increase by 5%, and three cents a litre on diesel and petrol, as well as some other flow on costs that we've been quite up front about acknowledging with New Zealanders."

Agriculture's role in ETS hazy

The government is also signalling that it may back away from the date set for farmers to enter the scheme

Smith today refused to commit to including agriculture in the ETS, despite saying last year the sector would "have to be" part of it.

On TV ONE's Q+A programme this morning, Smith said the government will be flexible on previous plans to force the agriculture industry to enter the scheme in 2015. He says that is because the technology available at the moment for farmers to get emissions down is too limited.

"Firstly, I want some technology that farmers can practically use to reduce their emissions, that's why we've got a huge initiative around the Global Research Alliance on agricultural emissions."

He says there is no point in disadvantaging the New Zealand farmer against foreign farmers who won't have the same restrictions.

Smith says there are two reviews taking place between now and 2015 to decide if agriculture will be included.

"A National government would only be wanting to include agriculture if the world has made more progress, and if we have practical technologies that will enable farmers to contain their emissions.

But critics say the agriculture industry is responsible for a large amount of New Zealand's emissions.

"The government keeps watering down the ETS and moving the goal posts out, particularly for the biggest polluters which is the agricultural sector, and that means the taxpayer is subsidising the pollution," says Green Party co-leader Russell Norman.

The Emissions Trading Scheme comes into force from July 1.