Trans-Tasman Carbon Scheme Studied

by Mary Swire, Tax-News.com, Hong Kong

22 June 2011

During a visit to Australia by John Key, New Zealand Prime Minister, Julia Gillard, Australian Prime Minister announced that government officials would be working with their counterparts in New Zealand to study whether the two countries’ emissions trading schemes can be linked.

Referring to the success of New Zealand’s scheme Gillard said at a joint press conference that: “If the Kiwis have had the guts to go and price carbon, why can’t we? Well my answer is we can, we can catch up with our Kiwi friends”.

Key responded: “Let me start by saying it’s not for me to determine what’s the right approach for Australia, that’s a matter for Australian politicians, but what I can tell you about the emissions trading scheme in New Zealand is it’s worked, so that’s the first point”.

"I think we’re all conscious of the impact on consumers. By pricing ours with a cap at NZD12.50 (USD10.15)… then we anticipated we’d have an impact of about NZD150 per household per year. We’re about a year on in terms of the anniversary of that and the indications are that it’s coming in at about NZD150 a year.”

“One thing I can say is that generally speaking the feedback we’re getting from businesses and the non-governmental organization sector is that they are more positive now that the scheme is actually in place, because they are confident it gives them surety of investment and we are just obviously conscious of what’s happening around the world, including what happens in Australia.”

However, the current New Zealand government plans alter the timetable for expanding the carbon scheme put in place by the previous Labour administration. This means that the key sector of agriculture will not be included in the scheme by 2013 as planned, and Key was vague about when the sector will be included.

Australia’s two-stage plan for a carbon price mechanism will start with a fixed price period for three to five years before transitioning to an emissions trading scheme. The government proposes that the carbon price commences on July 1, 2012, subject to the ability to negotiate agreement with a majority in both houses of Parliament and pass legislation this year.

Support from John Key will have boosted Julia Gillard’s confidence, however, in the same week Opposition Leader Tony Abbot, said that he was planning to introduce a bill into Parliament demanding the government hold a plebiscite on its proposed carbon tax.

Abbott has repeatedly criticized Gillard over her pre-election promise that she would not introduce a carbon tax, and on his call for a referendum, he said: “Everyone who believes in democracy should support my plebiscite. What could be fairer than giving the people a say?”

The Australian Prime Minister’s response was: “This is an AUD80m stunt from Tony Abbott, that’s all it is.”

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