The ‘subsidy’ myth

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The ‘subsidy’ myth

Extreme and misleading statements are causing unnecessary confusion and fear around emissions trading, says Business NZ.

Business NZ today released The Subsidy Myth, an analysis of recent claims that farms and businesses will get a subsidy from households under proposed emissions trading legislation.

The Subsidy Myth examines assumptions under which recent claims of subsidies have been made. It reveals flawed assumptions regarding the allocation of carbon credits, carbon pricing and the treatment of forestry under the proposed emissions trading scheme.

Chief Executive Phil O’Reilly says the subsidy myth is based on the mistaken belief that ‘households are good and business is bad’ and that business should be punished for any emissions.

“The truth is not so one-sided. In reality, we are all in this together. Businesses are consumer-driven, and consumers need to see a price signal on carbon in order for carbon emissions to be reduced.

“By making an early start on emissions trading we will be putting NZ export companies in a vulnerable position – they will have to compete against companies overseas that won’t be paying any carbon charges. Allocating carbon credits is simply a way of reducing that vulnerability in the short term, and is in the interest of all New Zealanders.

“Once other countries also adopt emissions trading that vulnerability will cease, reducing the need for carbon credit allocations. So, alarmist publications about ‘decades of subsidies’ are wrong in fact as well as assumption.

“Emotive statements about ‘bludging business’ have the effect of undermining confidence in emissions trading. They reflect an anti-business attitude that could harm our future prosperity.

“We have an altogether more positive view on how businesses and consumers can adapt to carbon pricing,” Mr O’Reilly said.

The Subsidy Myth is on www.businessnz.org.nz.