Matthew Hooton
PM’s petrol price promise
There is uncertainty about the Prime Minister’s policy on petrol prices. With a climate-change lens, her “nuclear-free moment” should see her welcoming price rises. Her ban on new oil and gas exploration was about restricting domestic supply, thereby increasing scarcity. Her new taxes on fuel are surely as much about deterrence as raising revenue for public transport projects like the Auckland and Wellington trams. Putting more bite into the Emissions Trading Scheme is pointless unless the carbon price continues rising, as forward prices indicate it will.
It is precisely when more businesses and families find the cost of fuel prohibitive, and so switch to KiwiRail for freight or public transport and cycling to get to work and school, that Jacinda Ardern can claim success.
To make good on her commitments to the South Pacific Forum, she should be seeking a petrol price of $3 per litre and eventually much higher, which would also shift the economics in favour of electric cars and trucks.
This would make sense. New Zealand’s road vehicle emissions represent around 40 per cent of all its carbon emissions and have nearly doubled since 1990.
In contrast, methane from livestock digestion has increased only 4 per cent since 1990, according to Stats NZ, despite the near doubling of the dairy herd at the expense of sheep and beef cattle. With New Zealand already having one of the world’s highest percentages of renewable electricity generation, and the science to reduce methane emissions still under development, transport is really one of the few areas where New Zealand can significantly reduce emissions.
But all such talk was last week in sunny Tuvalu.
This week, faced with a draft
Commerce Commission report suggesting the retail petrol and diesel market “is not as competitive as it could be”, Ardern’s climate-change rhetoric was quickly revealed as empty. Motorists, she declared, were being fleeced, despite that not being something commission boss Anna Rawlings was prepared to claim.
The oil companies will now spend some months or years challenging even the commission’s narrow finding but, assuming it is eventually confirmed, Ardern says her Government stands “ready to act”, presumably by regulating to reduce margins.
But Ardern surely cannot intend that prices at the pump will fall. Her intention must surely be that any reduced margin will be replaced with further government imposts, which already represent around half the retail price. The alternative would be absurd: Ardern’s Government singing the climate change anthem abroad while actively shifting the economics back towards petrol and diesel at home.
The Prime Minister does not have an economics background but has told reporters she has spent the last month reading Kate Raworth’s Doughnut Economics, which draws ideas from ecological, behavioural, feminist and institutional economics to propose a radical new paradigm. Hopefully this does not mean she thinks reducing the price of petrol and diesel would be consistent with her Government’s objectives and international commitments on climate change.
However, petrol prices are only the start of Ardern’s problems in delivering on her “nuclear-free moment”.
New Zealand First has been spooked by the reaction in the provinces to the Government’s Climate Change Response (Zero Carbon) Amendment Bill, which would establish a new independent Climate Change Commission and set targets to reduce all greenhouse gas emissions towards Ardern’s “zero carbon” goal.
The bill was originally developed through negotiations between Climate Change Minister James Shaw and National’s Todd Muller, with Ardern and Simon Bridges joining the discussions at key points. Shaw’s vision was to depoliticise climatechange policy, at least among National, Labour and the Greens, with the new commission perhaps even having the same powers over carbon emissions as the Reserve Bank has over interest rates.
Then in March, for reasons of coalition management, Labour suddenly required Shaw to stop dealing with National and began secret talks, mainly at staff level, with NZ First.
In May, just as the bill was being introduced, Labour, the Greens and NZ First revealed they had agreed that the agriculture sector must reduce methane emissions by 10 per cent by 2030 and 24 to 47 per cent by 2050, regardless of progress on agricultural science.
The brutal sidelining of National led to the extraordinary spectacle of Shaw publicly apologising to Muller on the floor of Parliament.
National is in two minds over the matter. On one hand, it has no obligation to support a bill when it was so deliberately excluded from the business end of its development, especially over the higher-thanexpected methane target.
On the other, the business community would prefer the relatively toothless commission being locked in through legislation over the risk of sudden swings in policy depending on elections and coalition negotiations.
The party is yet to make a final decision.
Everything, though, is set to become more complex as NZ First considers whether to pull the plug on its commitment to the 24-47 per cent target. While it believes it is still polling above MMP’s 5 per cent threshold, a small party can take nothing for granted and its MPs are eyeing the opportunity to be the only important party to stand against the consensus.
That would surely be the end of National’s support for the bill. It has no intention of allowing NZ First to target its rural and provincial base. The opportunity to completely humiliate the Prime Minister on yet another major policy area is also material.
Labour would have no one to blame but itself. It alone chose to cut out Muller, Bridges and National from the negotiations and instead rely on the word of NZ First staff.
The upshot is that “zero carbon” and the “nuclear-free moment” look set to join KiwiBuild in the lexicon of Ardern’s failure heading into the 2020 election. That in turn might just suit all three of NZ First, National and the Greens in the search for votes.
It is precisely when more businesses and families find the cost of fuel prohibitive . . . that Jacinda Ardern can claim success.