KEY POINTS:
Images of job losses and the economic reforms of the 1980s are being raised by business groups wanting to amend the Government's emissions trading system, a flagship climate change policy.
In the first day of select committee hearings on the climate change legislation yesterday, MPs heard from a succession of business groups which, while accepting global warming needed to be addressed, argued that details of the proposed trading system would harm businesses too much.
Business New Zealand chief executive Phil O'Reilly said the business sector was "up for" an emissions trading system and thought it was a good idea.
His organisation had even agreed the system should include all gases and all sectors - something no other business group had done.
But the problem was "this particular version" of the bill, he said.
The Climate Change (Emissions Trade and Renewable Preference) Bill sets up a trading scheme which will eventually affect all sectors of the economy, including agriculture.
The system will make greenhouse gas emitters pay for their emissions through the trading of carbon credits between those who emit too muchgas and those who undershoot their targets.
When the framework of the scheme was unveiled last year it won broad cross-party support, but as more detail has emerged and the Government has moved closer to making tough decisions, the political climate has turned less favourable.
The costs that the scheme will put on to businesses, which then pass them on to consumers - a key factor proponents say must occur if behaviour is to be changed - are nowat the forefront of arguments being presented to the select committee examining the bill.
Yesterday's business and industry submitters expressed concern about the uncertain future path of the price of carbon, and suggested that a "safety valve" be inserted into the legislation that prevented costs soaring uncon-trollably.
They also emphasised the risk that companies would move their operations overseas if New Zealand was too extreme in its emissions trading scheme and made the businesses less competitive internationally.
"You need to think very clearly about protecting the competitiveness of New Zealand firms," Mr O'Reilly told the MPs.
"In our view the bill doesn't do a great job of protecting firms as it's currently drafted - there's no reason it can't do so though."
A planned ban on new thermal electricity was described as superfluous by the submitters and a risk to the security of the electricity supply.
One other major theme to emerge from the day's submissions was a clear push for New Zealand's scheme to be aligned as closely as possible with what Australia does.
The Australian Government is in the process of putting together a paper on an emissions trading scheme, but it will not be ready until July.
Mr O'Reilly said that if the bill proceeded in its present form, there was a significant danger the country could experience a 1980s-style level of economic and social dislocation.
Companies could stop investing, and there was the potential that hundreds of medium-sized businesses would relocate - many were already struggling with a high New Zealand dollar and other higher costs.
He urged the committee to minimise those impacts, although he conceded any change would have some consequences.
Finance Minister Michael Cullen later said there had been some exaggeration of concerns. There had to be costs because the whole idea of the system was to send a price signal to reduce emissions.
"That can't be done without any cost to anybody."
