Jamie Morton is the NZ Herald's science reporter.

Greens attack oil-spill levy

Govt proposal would still leave taxpayers facing massive bill, say Opposition MPs.

The clean-up after the Rena spilled 350 tonnes of heavy fuel oil cost $47 million. Photo / APN
The clean-up after the Rena spilled 350 tonnes of heavy fuel oil cost $47 million. Photo / APN

A proposed levy increase on the maritime industry to pay for cleaning up possible oil spills has been labelled "madness" by an MP who says the rate would still leave taxpayers with much of the bill for another Rena.

The Government is seeking millions more from the industry to boost its Oil Pollution Fund, overdrawn in the response to the Rena's grounding in the Bay of Plenty in October 2011.

Maritime New Zealand has proposed raising the levy on operators to increase the fund's annual base revenue from just over $3 million to $4.5 million, while a further $3 million would be drawn over three years to buy more response equipment and make improvements.

But Opposition MPs say these amounts still fall well short of what another major clean-up would take.

Green MP Gareth Hughes said Kiwis should not have to pay when corporations damaged the country.

"Essentially this means the Government is willing to use the taxpayer as the insurer for the cost of oil spills rather than industry themselves."

The levy-funded Oil Pollution Fund held about $12 million a decade ago, but had fallen to $4 million before the Rena spilled 350 tonnes of heavy fuel oil into the ocean.

After negotiations with the shipowners, the Government secured $27.6 million in compensation and to restock the pollution fund, with the possibility of a further $10.6 million.

But that was still $8.8 million to $19.4 million short of the $47 million cost to taxpayers, Mr Hughes said.

"The taxpayer will have to pay millions for the Rena clean-up because the Oil Pollution Levy on industry has for years been set too low, and yet this proposal still won't build up the reserves. This is madness given another shipping accident could occur at any time, and risky exploratory oil drilling is planned for deep water in New Zealand during the summer of 2013/14."

Mr Hughes also called for more training and better equipment, with the review finding the country's response capability was not good enough to deal with spills beyond port waters or the shoreline.

Labour's environment spokesman, Grant Robertson, also believed the levy increase was inadequate.

"In light of what happened with the Rena we need to be far better prepared ... This is an area where the industry does need to step up."

Changes to the levy, applying to commercial ships carrying over 100 gross tonnage and other operators, are due to be finalised by July.

The Rena disaster shone the spotlight on New Zealand's oil spill preparedness and left the Government embarrassed when it was revealed it had tarried on signing up to an international fund that would have raised the cap for claims against shipowners from $12 million to $29 million.

What's proposed

*Increasing base revenue levied from maritime industry for the Oil Pollution Fund from around $3 million to $4.5 million.
*Raising an extra $1.87 million over three years to buy oil pollution response equipment.
*Raising additional "capability revenue" of $1.209 million for operational improvements identified after the Rena disaster.

- NZ Herald

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