Govt accused of $50bn ETS blunder

File photo / Alan Gibson

The Government is being accused of a $50 billion blunder after Treasury said proposed changes to the Emissions Trading Scheme (ETS) could cost twice as much as originally estimated.

The finance and expenditure select committee was only told on Thursday of the revised cost of the proposals, after spending weeks dealing with legislation designed to change the ETS passed by the previous government.

The committee reported on the bill today, saying its members could not reach agreement on its future and revealing Treasury's revised figures.

The controversial bill significantly changes the existing ETS, which was put on hold after National won the election, and gives big polluters a much easier ride.

The ETS will eventually bring all sectors of the economy under a regime which limits greenhouse gas emissions.

The unusual outcome of the committee's deliberations was a series of minority reports - all with widely different views on how an ETS should work.

But opposition parties focused on the cost to taxpayers if New Zealand doesn't meet its international climate change obligations.

"Initial costings were hopelessly inaccurate," Labour Party leader Phil Goff said.

"Environment Minister Nick Smith first told New Zealanders the long-term fiscal impact of his ETS bill would be 6 per cent to 8 per cent of GDP, or around $50 billion."

But Treasury told the committee the cost to taxpayers could reach $100b by 2050.

"That's a $50 billion mistake by National in its calculations," Mr Goff said.

The Greens also complained about a $50b discrepancy and said officials had been under too much pressure as Dr Smith rushed the bill through.

"The minister needs to front up and explain how he got it all so wrong," said co-leader Russel Norman.

The inconclusive committee leaves the Government with no choice but to take the bill forward on its own - if it still has the numbers to get it passed.

It is depending on the Maori Party, which is still negotiating for a Treaty of Waitangi clause to be put into it.

The Act Party doesn't want an ETS at all and the Greens consider it is hopelessly inadequate to meet climate change challenges.

Apart from the cost, Labour is concerned that the proposed changes significantly dilute the ETS it put through Parliament just before the last election.

It says the Government's proposed changes would transfer wealth from taxpayers to polluters.

- NZPA