The Key Govt made significant progress this week on two of the most politically controversial programmes it is implementing: the emissions trading scheme, and the Auckland super-city project. In delivering a credible scheme for reducing NZ’s carbon emissions, the PM and his Climate Change Minister Nick Smith sealed a deal with the Maori Party, much to the surprise of those who had been canvassing the idea of a “grand coalition” with Labour. But National, far from risking putting Labour into a position where it begins to look like an effective political player again, sought to ensure the Opposition was left arguing in favour of a much tougher regime, doubling the costs for households, ruining export industries, and seeing thousands of workers at plants like the Bluff smelter, the Glenbrook steel mill, the Holcim cement works thrown out of their jobs.

Labour bleated it had been subject to “sneaky” and “shambolic” tactics, and so-called “experts” yelped NZ taxpayers would be subsidising major polluters. The Govt was well aware it would face a revolt from farmers if it placed NZ even further out in front of the rest of the world in bringing in agriculture into the scheme so far ahead of other countries. So too did the Maori Party when iwi leaders got on to the phones and drummed in the message on how a harsher regime would damage Maori commercial interests not only in farming but in forestry and fishing. This is why the Maori Party executed such a swift U-turn.

The deal contains an intensity-based approach to the free allocation of carbon credits before an industry is exposed to carbon prices, aligning the scheme with Australia. This remains the critical difference between National and Labour on how the ETS will operate. National says it is still open to a deal with Labour and this may yet be negotiated. The scheme in its present form embraces the kind of incentives which could accelerate new forest planting and help to mitigate, even offset, NZ’s emissions.

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