John Armstrong: Business needs political stickability, not shifting sands

Climate Change Issues Minister Nick Smith. Photo / Mark Mitchell

Delay did you say? You want us to delay our greenhouse gas emissions trading scheme? Well, maybe we'll delay a major part of it. But not the part you want - at least not yet.

Such are the constantly shifting sands of pragmatism upon which the policies of the minority National Government are constructed.

New Zealand's emissions trading scheme is still here. But the Government yesterday issued a "we hear what you are saying" message to an increasingly grumpy business sector whose mounting chorus is demanding a halt to be called to the phasing in of that scheme.

Until a couple of days ago, the Government had seemed somewhat immune to those cries which have been prompted by the growing reluctance of other trading partners to introduce matching schemes of their own.

That apparent indifference evaporated yesterday after Australia - New Zealand's largest export market - announced its scheme will go on the back burner until after that country's election later in the year.

Suddenly Climate Change Issues Minister Nick Smith was highlighting next year's scheduled review of the New Zealand scheme.

Suddenly he was emphasising that the phased introduction of sectors of the economy might be put on hold if there was a lack of progress in such schemes being implemented by this country's major trading partners.

Both Smith and Prime Minister John Key must have counted their blessings that they had included provision for a mandatory, election-year review as part of National's modification of Labour's scheme.

That gives National the option of delaying agriculture's introduction into the scheme which is currently scheduled for 2015.

Agriculture is responsible for more than half of the country's greenhouse gas emissions.

But deferring its inclusion is unlikely to satisfy the business sector which is complaining about the threat to export competitiveness posed by the transport and energy sectors coming under the scheme's ambit from this July.

Suddenly, New Zealand has become a world leader in combating climate change instead of following behind in the pack. Or so the business lobby argues.

National's scheme has also been castigated for being a major weakening of Labour's model which will protect heavy emitters of greenhouse gases.

The very minimalism of National's scheme is its best protection and the reason why the transition phase will likely continue. Unlike Act, National accepts climate change as fact.

Without an emissions trading system or some other tool like a carbon tax, the Government would lack a mechanism for meeting New Zealand's Kyoto Protocol obligations and longer-term targets for emission reductions which flow from the acceptance of climate change.

There are other valid reasons for carrying on with the scheme's introduction.

The longer New Zealand delays biting the bullet, the more likely that governments will have to make increasingly tougher decisions on curbing emissions.

Arguably, business is better off knowing exactly what it is up for cost-wise. Likewise, potential investors in new enterprises know where they stand.

In particular, the Government needs to keep faith with the forestry sector where new plantings have been made on the expectation of securing potentially-lucrative carbon credits.

The pertinent question is National's stickability. Judging from yesterday's wavering, the emissions trading scheme may yet fall victim to the lack of that commodity. The rule to apply to this Government is simple: rule nothing out.