A note of caution: don’t let the Aussie company tax decision divert our attention from the ETS

Alf has only just caught up with an on-line account of what ACT MP John Boscawen had to say about the emissions trading scheme at the weekend.

Boscowen reckons National backbenchers as well as some senior Government Ministers now want to defer the scheme.

Speaking on TV3’s “The Nation” Mr Boscawen said the Government needed to immediately to defer the scheme now that Australia has decided to defer its scheme.

The New Zealand scheme is due to begin on July 1.

“I’ve heard from several sources in recent days that several members of Cabinet are concerned, “he said.

“Back bench lobby MPs are lobbying Cabinet Ministers, they’re very concerned about the damage it’s going to do to New Zealand and the damage there is to their re-election prospects.”

Dunno about the others, but Alf can be counted among the Nat back-benchers who are very unhappy with our team’s determination to go ahead with the ETS scheme.

Fair to say, his concern is really about the damage the ETS might do to do to our re-election chances, but he prefers to keep quiet about this and to insist his real concern is the economy.

He knows this line of argument goes down big among farmers – Federated Farmers has never been happy about the scheme.

He thought the Australian Government’s decision to postpone the implementation of its Emissions Trading Scheme until 2013 gave John Key bloody good justification to cry off and announce a delay.

Boscowen likes to quote from Key’s campaign blog on October 23 2008:

‘…while we must play our part in the fight against climate change, we shouldn’t be the world leader, because that will come at the expense of our economy … I see no sense in New Zealand exporting emissions – and jobs – to another part of the world.’

In his TV interview at the weekend, Boscawen also challenged Climate Change Minister Nick Smith’s claim that scrapping the scheme would cost $1.2 billion in compensation to foresters.

“That’s rubbish because his officials told me in my office on Thursday that more than a third of that relates to pre 1990 forests and is a key difference,” he said.

” Second point why would you pay compensation, why are we giving subsidies massive subsidies to farmers who planted trees in 1990, 91, 92, 93, 94, 95, before the Kyoto Treaty even came into being, let alone ratified by New Zealand. ”

Mr Boscawen claimed the total compensation payable by the Government would be only $20 million at the most.

This sounds like good stuff, although Alf faltered when he learned that Labour MP Charles Chauvel is agreeing with Boscawen and claims the scheme was not well designed.

When it comes to trans-Tasman competitiveness, the Government’s attention will be turned to the Aussies taking a softer approach than expected on corporate tax rates.

A major tax review there recommended the corporate tax rate be slashed to 25 per cent but yesterday the Australian Government said it would only drop the rate from 30 to 28 per cent by 2014.

KPMG tax partner Paul Dunne said it would still put some pressure on New Zealand, which currently has a 30 per cent tax rate, but the delayed change had given the Government time.

“It has given us time to think about where we want to go to be competitive.”

Bill English is reported to be tight-lipped over whether it would mean any changes in New Zealand.

“It’s important that our tax system generally remains competitive with other countries, particularly Australia, given our close economic and trade ties with our transtasman neighbours.

“The Government will set out details of its tax package in the Budget later this month and I don’t want to pre-empt that process today,” he said in a statement yesterday.

But Alf reckons even a small difference between Oz and Kiwi company tax rates is bothersome, and even though things might have been worse, we can’t afford to be complacent.

More important, we should not allow the company tax issue to divert our attention from the much more perplexing ETS and the way it will knee-cap our economy.

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