Guest Post – Climate Change, ETS Policies and Cunliffe’s Conflict of Interest

Photo/ Stuff.co.nz

Photo/ Stuff.co.nz

This is a guest post from a long time reader. The writer states:

I have been looking at and thinking about this issue for a few weeks now and had expected some coverage on the issues in the media leading up to the election but there’s been nothing.

Your post last weekend leading up to Father’s Day and suggestion to send in a post to Pete got me thinking.  However my apologies that this is not a short 500-1000 word post.

I am not a public figure, a journalist, or blogger.  I am not a member of any political party either.  I am currently a stay at home mother who also does a bit of charity work for a national charity which has nothing to do with these issues.


I have a question. It is important and arises out of an issue that ought to have some light shed on it before we cast our vote in less than a week as we weigh up who we trust to run our country because there is a risk that decisions might be made following the election that none of us thought we voted for. By then it is too late. This issue has not featured during this entire election campaign and I suspect the media’s insatiable lust for the “dirty politics” saga has taken up so much of the oxygen that even the proponents of global warming and climate change have choked on all the hot air arising from the political storm that has ensued.

‘Climate change’ and in particular the mechanism for a “polluter-pays” regime has been high on the agenda and a significant issue for all of the political parties in the previous three election campaigns with plenty of debate. This time it has been buried under all the popular issues de jour such as child poverty, capital gains tax and the minimum wage.   It surprises me especially when I recall previous elections and the spectre of an increase in the cost of living arising out of taxes on carbon pollution.

Much like the ongoing debate as to whether climate change is a controllable impact on our environment, until recently there has been a lot of debate on all sides of the political and environmental spectrum as to the desirability, credibility and effectiveness of the NZ Emissions Trading Scheme (ETS) versus a simple carbon tax. I don’t pretend to know all the ins and outs of all the competing arguments. I am not an industry participant by any definition but an end-use consumer, a mother of three young children in her 40s, with a sizeable mortgage to pay on top of other increasing living costs.

The sustainability of our planet, protecting our environment and ensuring the generations that follow in our footsteps aren’t adversely affected by the excesses of our times is important to me and yet I remain concerned at the rising cost of living and the potential impact the introduction of new taxes or costs based on amorphous concepts such as climate change will have on our economy.

I also want to know the detail and what the deal is for each of the parties.   We didn’t need the “Dirty Politics” book to teach us that behind political parties’ policies lie individuals, lobby groups and industry sector groups with a vested interest in the success or otherwise of proposed laws that will affect them.

As a voter and an individual I am no different in that I want to know what I am up for and what will affect me in the pocket following this election. So I went looking for party policies on this issue and the future of the ETS in particular, because it doesn’t take a genius to note that as ‘polluters’ responsible for around 47% of New Zealand’s total emissions (based on 2010 figures[i]) if the agricultural sector is included in the ETS the high costs faced by farmers will inevitably be passed on to us as consumers of dairy and meat products.

What did I learn?   

Labour implemented the New Zealand Emissions Trading Scheme (NZ ETS) in 2008 shortly before they were cast out of government and the incoming National Government, amid the onset of the Global Financial Crisis, moved firstly in 2009 to delay the start date of the pastoral agricultural sector’s entry to the scheme and then in 2012 removed the start date for the agricultural sector altogether. The Ministry for the Environment’s policy stating the purpose being “to maintain the costs that the ETS places on the economy at current levels. This will ensure businesses and households do not face additional costs during the continued economic recovery and that New Zealand continues to do its fair share on climate change.”[ii]

Currently the NZ ETS “covers forestry (a net sink), energy (43.4% of total 2010 emissions), industry (6.7% of total 2010 emissions) and waste (2.8% of total 2010 emissions) but not pastoral agriculture (47% of 2010 total emissions).”[iii]

National’s position is that “agriculture will enter only if our trading partners make more progress on tackling climate change, and there are practical technologies for farmers to reduce emissions.”[iv] The 2012 amendments as noted before, specifically removed the agriculture sector from the ETS and farmers and consumers alike can heave a sigh of relief that a further tax on agricultural enterprise in that guise is unlikely in the short term at least under a National-led government.

Currently there is no minimum price for carbon and the international carbon market collapsed recently with the price per tonne trading at around $3-$4.45 per tonne. Labour plans to “put a price on carbon… [and bring] agriculture in on 1 January 2016.”[v] As the country’s largest greenhouse gas emitters, cue then a big jump in the price of that block of cheese for one thing I would think.

The Greens on the other hand want to get rid of the ETS altogether and set an initial price on carbon of $25 per tonne on CO2 equivalent emissions for all sectors except agriculture, with dairy emissions paying $12.50 per tonne and forestry credited at $12.50 per tonne. This is dressed up with a so-called ‘carrot’ that the “recycling of all revenue raised from a carbon charge [will go] back to families and businesses through a $2000 income tax-free band and a one percent company tax cut.” They say “the Climate Tax Cut will leave households better off.”[vi] I can’t get past the difference between the current market price at $4.45 per tonne[vii] and an artificially inflated price at $12.50 or $25 per tonne depending on the sector and what extra costs will be passed onto the household. I doubt very much that households will be better off under that scenario.

Around the fringes, NZ First opposes the ETS calling it nothing but “another tax on people and production,” and a “Carbon Credit Bank’ to trade on turning environmentalism into a speculative business.” NZ First supports “developing strategies, plans, research programmes and targets (which incidentally is what National is already doing[viii])”, to achieve carbon reduction.[ix]

Act similarly seeks to abolish the ETS and states their bottom line is that there ought to be “no expansion of the ETS until China, the United States, the European Union, Brazil, Indonesia, Russia, India and Japan and Canada take similar material steps to implement ETSs across their economies, including agriculture”. That is a fair chunk of the world! Act makes the point that “we are the only ones even considering including agricultural emissions” and “we should not move any further ahead until the world’s top ten emitters follow.”[x]

Internet-Mana follows a similar line to the Greens.   United Future wants to investigate minimum pricing to ensure the pricing of carbon on the ETS remains at a level high enough to reduce emissions and the Conservative Party would “scrap the pointless ETS and instead focus on cleaning up our environment.”[xi]

It was alongside this analysis of party policies on the ETS and its impact on our economy that I have also pondered the possibility that David Cunliffe might lead the next government and implement Labour’s ETS/Climate Change policies if National and its likely partners fail to hold onto a majority.

His “I’m sorry for being a man” and other gaffes, together with his inability to remember his own Capital Gains Tax policy detail and his spoken unwillingness “to get down in the weeds[xii]” on the detail of his party’s policies has really made me wince. Who is this man I find myself wondering?

During election campaigns we are often given an insight into the private lives of our most high profile politicians so it was with interest that I also learned a bit more about the woman behind the man himself. Karen Price (aka Mrs David Cunliffe) is a wife and mother of two school aged boys and presents as an all-round lovely person. She is hailed in the media as an environmental lawyer with her own law firm and more recently is better known (courtesy of the “At Home with the Leaders” series on Campbell Live) as a beekeeper and keeper of various other furry animal friends and domesticated birds.

Karen Price

Karen Price

What is less well known is her commercial interest in the climate change industry. Ms Price is one of three directors and a one-third shareholder of NZCX Limited (NZCX), a company which has teamed up with the international brokerage firm ICAP forming New Zealand’s largest single broker in the trade of carbon credits under the NZ ETS.

This company was formed in December 2006, during the time the last Labour government was drafting policy and legislation to implement the ETS in 2008. It was also around this time she set up ChanceryGreen,[xiii] a “specialist legal practice, advising on all aspects of environment, resource management and climate change law and strategy” with “a particular focus on large projects and expert advice in the climate change area.”

Taking advantage of a developing market is enterprising and to be applauded. I have admiration for her as an example of a high achieving woman in her sphere of business. But I question the potential conflict of interest her commercial interests present to her husband and his current career as the leader of the Labour Party and potentially our next Prime Minister.

Rob Hosking of the National Business Review touched on this issue in his pay-walled article “Cunliffe wife’s carbon conflict under scrutiny”[xiv] earlier this year following Cunliffe’s ascension as the leader of the Labour Party. Hosking noted that while Labour’s policy predated his appointment “it certainly was developed while he was a senior member of caucus.” In his article he was particularly referring to Labour’s policy to prevent New Zealand firms from using “cheap offshore credits”, which at the time traded “at around $3 per tonne,” and whether their policy to push up the price of credits and moves to make New Zealand firms buy at least 50% of their credits internally might mean that the “Cunliffe/Price family would do very well out of Labour’s policy if there were a change of government.”

Ms Price denied it would suggesting that “a buoyant market would make more trade and therefore more work for brokers but the prices don’t actually make much difference to what the broker earns. We get paid for putting the deal together and our fee is for that. We don’t own the credits. It doesn’t matter to us what the parties’ price is. What it does do, if the price were to go up, is there might be people inclined to sell their credits who at the moment would not be prepared to.”

Hang on a minute. Her explanation that the price of carbon is irrelevant might be correct but her reference to that as an attempt at denying any conflict of interest with reference to Labour’s policies is unsound. NZCX and Ms Price as a shareholder makes money based on the volume of trades,[xv] not the price per unit of carbon bought or sold through the brokerage firm. With more trades in a buoyant market and more work for brokers in her business you would expect she would profit from that increase in business.

When you factor in her greater on the spot opportunity to provide the potentially more lucrative advisory work as a specialist lawyer to clients of NZCX[xvi] and Labour’s policy to include the agricultural sector, representing what is nearly a 100% increase in the amount of carbon emissions being dealt with under NZ ETS compared with the current volumes, then you reach an inescapable conclusion: David Cunliffe, via his wife’s enterprise is personally enriched by the implementation of his party’s own policies. That smacks of a big bad conflict of interest to me that certainly warrants a full and frank disclosure to the public.

So what he might say? It’s her business, it is all information in the public domain. All of which is true except that there has been no disclosure by him as to his personal interest in these policies, no debate or public scrutiny on this issue aside from a pay-walled article on NBR that has a limited audience and a few mentions in articles on Whale Oil?[xvii]

To test this I canvassed a number of my friends. All are highly educated, well-read business professionals working in our largest city. I asked them if they knew about David Cunliffe’s wife’s commercial interests in NZCX. None of them did. All of them were shocked that in an election that has focused so much on the perceived wrong-doings of former Minister of Justice, Judith Collins with her visit to Oravida, a company in which her husband is a director but not a shareholder, there has been comparatively no scrutiny of this issue or David Cunliffe’s direct financial interest in the success of his party’s own policy.

From my analysis of the various policies I have no doubt that a Labour-led government will mean farmers facing significant increases in their costs and we will all pay a lot more for our food. I shudder at the impact on families living in real poverty in this scenario.

The decision as to who will lead our country after 20 September is in our hands. I can’t help but ask the question – is David Cunliffe the man we can trust to lead our country and to make decisions for the good of us all – or simply himself?


 

[i] http://en.wikipedia.org/wiki/New_Zealand_Emissions_Trading_Scheme

[ii] http://www.climatechange.govt.nz/emissions-trading-scheme/ets-amendments/

[iii] http://en.wikipedia.org/wiki/New_Zealand_Emissions_Trading_Scheme

[iv] https://www.national.org.nz/news/media-releases/detail/2012/04/11/consultation-underway-on-the-ets-changes

[v] https://www.labour.org.nz/sites/default/files/issues/climate_change_final.pdf

[vi] https://home.greens.org.nz/press-releases/green-party-launches-major-climate-protection-plan

[vii]https://www.commtrade.co.nz/

[viii] http://bluegreens.org.nz/climate-change/

[ix] http://nzfirst.org.nz/speech/stop-piddling-down-our-backs-and-telling-us-it%E2%80%99s-raining

[x] http://www.act.org.nz/posts/act-says-responsible-climate-change-policy-is-a-bottom-line

[xi] http://www.conservativeparty.org.nz/index.php?page=FAQ

[xii] Interview with Duncan Garner on Radio Live discussing the CGT policy 4/09/2014

[xiii] http://www.chancerygreen.com/

[xiv] NBR; Friday May 30, 2014

[xv] http://www.nzcx.com/faq.htm.” ICAP-NZCX “facilitate[s] and broker[s] trades with a minimum parcel size of 5,000 units” and “charges a market competitive, volume-based brokerage fee per unit successfully transacted.”

[xvi] http://www.nzcx.com/faq.htm, “The Principals of NZCX can also provide specialist advisory and legal services, through their other businesses”

[xvii] http://www.whaleoil.co.nz/2014/03/prime-minister-opens-law-firm-owned-by-mps-wife/#more-129344

 


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet.   Cam Slater doesn’t do quiet, and as a result he is a polarising, controversial but highly effective journalist that takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him.  But you can’t ignore him.

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