Russell Bell: Climate policies hit producers crucial to post-Covid recovery

Farmers will be among the first in our region to feel the impact of climate policies, writes Russell Bell. Photo / NZME

OPINION:

I took comfort in assurances made back in October 2020 that the current Government would "govern for all New Zealanders". But now I find myself wondering why businesses appear to be excluded from this.

Of course, you can argue that during Covid, when we locked down to protect ourselves and an unprepared public health system, there was significant stimulus directed at businesses (and it was gratefully received and appreciated). However, what was delivered then was one part of a much bigger stimulus delivered under exceptional circumstances. And the bulk of the funding was directed at retaining jobs via a wage subsidy, rather than specifically maintaining or investing in the businesses which create the jobs.

The recent Budget was pretty much devoid of anything substantive for the business community and the more recent political statements following the recommendations of the Climate Commission (and the poorly executed EV subsidy) seem to present further evidence of the sentiment expressed at the start of this column.

Stating climate as a generational "nuclear-free moment" is much like "hard and early" and "team of five million" – it is a carefully crafted soundbite. This is not an example of New Zealand standing up to a world power, it is an example of New Zealand "doing what it is told" by world powers. And unlike the largely diplomatic consequences of David Lange's Oxford Union speech, the economic consequences of overreaching on climate will likely hit mums and dads in the pocket and cause financial pain for businesses.

As a nation we produce 0.17 per cent of the world's emissions and yet we will have aggressive climate policies which are unlikely to be replicated by the world's biggest emitters. The "Climate Doomsday Clock" will keep ticking no matter what we do or how aggressively or passively we do it. This is not to say I don't believe there is a problem - and I actually support action being taken – however, our response needs to be proportionate to our contribution to the problem rather than us paying a high price to be seen to be trailblazers.

For our region, the first impacts will be felt by farmers and producers who for some time seem to have been targets for additional costs and new compliance requirements. A new example is the EV subsidy announced earlier this week, which is step one in many steps for reorganising the economy for climate and imposing costs on the productive sector.

Lobbing a tax on new vehicles used in production makes no sense when there is no viable electric alternative (Toyota yesterday refuted a statement by the PM that they were developing and would soon introduce an "electric ute"). Add to that, the cost of EVs capable of actually towing something with appropriate range capability is likely to be more than the $80,000 subsidy threshold. If you want a battery-powered shopping cart that won't reach Taupō on full charge, fine, but any costs added to production will be recovered by higher prices, which fuels inflation, and, inevitably, higher interest rates, leading to less investment in capital.

Producers and manufacturers are going to be crucial to the "post-Covid" recovery, yet there appears to be an unintended consequence of hamstringing the very producers who are keeping our GDP afloat in a time of increasing inflation and world economic uncertainty.

But, hey, there is plenty of money to build a cycle lane so lattes can be drunk by walkers and cyclists on both sides of Auckland harbour. I hope that the carbon cost of the materials and other inputs to build it are well known and added to the $750 million price tag before the project starts.