Govt urged to take its time on climate

The Business Roundtable says a carbon tax would be simpler to administer than complicated emissions trading. Photo / AP

The Government should not implement any measures on climate change until it is clear a sustainable economic recovery is firmly in train, the Business Roundtable says.

The economic crisis was likely to delay action on climate change by other countries and make "early" action by New Zealand both less desirable economically and more difficult politically, it said in its submission to the parliamentary select committee reviewing the emissions trading scheme.

The economy was not in a position to bear additional regulatory burdens, it said.

"Now that Australia and possibly the United States are committed to Kyoto-type action we do not believe it is credible for New Zealand to stand apart.

"However these countries and others such as Canada, Singapore and South Korea do not appear to have suffered international ostracism for their respective stances on Kyoto issues."

A regulatory impact analysis, or cost/benefit study - of which there is no sign - should be the crux of the committee's work, the Roundtable argues.

While acknowledging the difficulty of such an exercise, it said: "It is of paramount importance in evaluating possible climate change policies to know whether the costs to New Zealand are likely to be of the order of, say, $50 million, $500 million or $5 billion annually, and similarly the order of magnitude of the benefits."

It advocates a carbon tax - set low, at least initially - in preference to carbon trading. It has in mind a range of $5 to $10 a tonne.

There should be exemptions for trade-exposed industries "unless and until" competing countries adopt similar measures. It should be accompanied by a subsidy, set at the same rate, for forest sinks.

And any net tax receipts should be recycled as income tax cuts.

A carbon tax would be simpler to administer and comply with and give firms and households certainty about the costs they faced, the Roundtable said.

It could be converted into an emissions trading scheme if a deep international carbon market developed, as the underlying infrastructure of measuring, reporting and auditing emissions was the same for both regimes.

"We think the final decisions on any New Zealand measures should await the results of the Copenhagen meeting [in December] and final Australian decisions."

New Zealand was less able to sustain the costs than that country.

Cooling off

The Business Roundtable says:

* Any climate change measures should wait until economic recovery is firmly established.
* The costs should be set lower than whatever Australia opts to do.
* A carbon tax would be better than emissions trading.