Friday, May 27, 2011

Carbon Tax or ETS

Why on earth did NZ follow the Europeans and choose a ETS rather than a simple Carbon Tax option. The logic escapes me.

In my former industry, forestry, the scheme is a continuing disaster. First, thousands of hectares were clear-cut to beat the legislation. Now the ETS distorts sensible market and land-use decisions and, worst of all, creates complex compliance issues - fodder for a growing army of carbon measurers, consultants, auditors and bureaucrats. Soon there will be auditors to audit the auditors!

Believe me whenever government intervenes in forestry the market reacts in quite the opposite way to what the government intends. They get it wrong every time. Think Helen Clark's campaign to stop logging private native forests. In three years she caused a logging bonanza as landowners raced to beat her draconian legislation. By the time the Governor-general signed her law there were few intact forests left.

What was wrong with a simple tax on all energy carbon emissions? For petrol and diesel, combine all the other fuel taxes (excluding GST) into one super "carbon" tax. The revenue can then be apportioned to roads, ACC, research, etc, and the surplus skimmed off to support better energy alternatives plus lower personal and/or company tax. The latter gives the government the means to change behaviours while compensating the cost to consumers.

Forget livestock burp and fart taxes - absolute political stupidity that no other nation will copy. Farmers have enough market forces already. And finally take away the idiotic carbon sequestration payments to foresters before we loose more land to manuka, gorse and planting designed to create derelict exotic forests.

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