Editorial: Key missed bipartisan opportunity

Opinion

Not a fortnight ago we welcomed the possibility that National and Labour would have to come to agreement on a carbon emissions trading scheme because neither of the Government's regular supporters, Act and the Maori Party, could agree with it in the parliamentary select committee considering National's emissions trading legislation.

A bipartisan policy on a subject so important for long-term investment decisions would be a rare and splendid thing, giving all sectors confidence that carbon emission costs would survive the next change of government.

Sadly, those hopes have been dashed. The Maori Party has had a change of heart. The principles it proclaimed in its rider to the select committee's report appear to have been rescinded.

At that time it opposed emissions trading because it "allows sectors to pollute and trade up to the Kyoto target (and) does not include incremental emission reduction targets in its design". The scheme failed to "address the overarching problem of unsustainable economic growth" and amounted to "subsidisation of the nation's largest polluters at the cost of households and small-medium businesses".

The Maori Party had opposed the Labour Government's scheme on those grounds and "would do so more strongly if a replacement scheme were to be less effective and more inequitable". How empty those words look now. National's scheme, which the Maori Party will now support, is intended to be less effective than Labour's and it will transfer more of the country's Kyoto costs on to taxpayers.

It will halve the Labour scheme's likely impact on power and petrol prices by 2013, but by then it will add an estimated $400 million to the nation's bill for missing its Kyoto targets. The public does not gain anything from paying through taxation rather than fuel payments but the country loses the economic benefit of ensuring costs fall where they are incurred and can thereby influence patterns of production and consumption.

The economic good sense of ensuring emission costs are passed into prices will be obvious to those in industries that may be relieved by National's transfer of their costs to the taxpayers.

Relief in those industries will be tempered by the knowledge that the next government is quite likely to reinstate economic sense. That likelihood already makes investment decisions difficult. Such is the folly of National's failure to embrace a bipartisan approach.

Labour was quick to make the offer in its rider to the select committee report. It was mainly determined to see that the emissions trading system captured all greenhouse gases, including those from agriculture and forestry. It was prepared to compromise on the timing of the scheme's phase-in.

In some respects the scheme National can now enact with Maori Party support is superior to the previous government's. Permissible emissions will be based on an industry standard rather than an arbitrary base year so that firms that are efficient by their industry's measure will be allocated free emission rights. The free allocations will be withdrawn much more slowly than Labour's scheme allowed, sensibly aligning New Zealand's scheme with Australia's.

Labour might have agreed with all of these changes for the sake of a bipartisan consensus. It has found that leadership on climate change is not an election winner. The subject is too big for campaign slogans and some of the nominated solutions - dimmer light bulbs, dribbling shower heads - are annoyances that Labour now regrets.

The failure to seize this bipartisan opportunity was not John Key's finest hour, as may be evident in years ahead.