Labour's election strategy - power price rises

Last updated 11:33 17/09/2007

So part of Labour's great re-election strategy has been revealed. The Government is going to implement a carbon emissions scheme that will hike the price of power and petrol.

Brilliant. Hit middle-income Kiwi battlers in the wallet during election year while they're struggling with sky-high house prices, mortgage rates, and no tax relief. That ought to ensure Labour's re-election.

Labour's latest plan to lower New Zealand's carbon emissions - or at least slow their rate of growth - will be released on Thursday. But already the Government is feeding tid-bits of it to the media, to get as much mileage as possible from the policy release.

It's part of a bigger re-election strategy around the environment, which Clark picked earlier this year as one of the big issues on which she planned to fight the election. She also made a pledge to make New Zealand "carbon neutral'' at some point in the future, although she didn't say how or when.

This scheme is part of the how. Whether or not it works - politically or otherwise - is another question altogether.

The scheme sounds like it will be very complicated, but essentially it's a form of the carbon charge that Labour backed off from last election because it was too unpopular. It also had too many exemptions for big business and farmers.  Emission limits for everyone will be set, and those who breach them will have to pay.

Oh, except low income-earners. They will be compensated through a yet-to-be-determined formula. The reason, Clark claims, is that lower-income people are "not in a position to radically alter their pattern of use'' of non-renewable energy.

Presumably the Government thinks everyone else is. Or that the pattern of energy consumption of lower-income people won't make as much of an impact on the environment as energy consumed by people with more money. Or simply that they would kick up too much of a fuss.

I'm not sure those on higher incomes - i.e. middle-income Kiwis who still struggle to pay the mortgage and put food on the table - will welcome power and petrol price rises either, even if it is all in a good cause.

The Government might well find that while everyone loves the environment, a majority of people are not keen to sacrifice their own living standards for its benefit. Particularly if they are unclear why the Government is charging them more and whether greenhouse gas emissions would even reduce as a consequence.

Allowing lower-income consumers off the hook also smacks of the tax-and-spend, nanny-state, redistributive approach that many voters are heartily sick of. Surely if the Government is going to impose what is effectively a new tax it should apply to everyone equally? What's next, graduated petrol prices graded by income level?

Climate Change Minister David Parker says any rise in the price of petrol or power will be "very small'' as a result of the new scheme. ``These costs are not substantial, they are not going to happen tomorrow and they are certainly not 4 percent per annum,'' he said on Radio New Zealand.

This poses an interesting question. If the price rises will be very small, then surely they will not change consumer behaviour, which, after all, is what the carbon charge is all about, surely? Labour can't have it both ways. If it wants consumers to sit up and take notice of their energy consumption it must sock them in the wallet and suffer the electoral consequences.

Implementing a scheme which the Government claims won't cost very much at all and won't cost lower-income people anything doesn't sound like one that is going to make any difference to energy consumption at all.

That makes me lean to the supposition that this scheme is being implemented because Clark has decided that the environment is to be a central election issue. This means that the Government, at some point, has to put its money - sorry, your money - where its mouth is.

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