Rotten to the core

New Zealand, and the New Zealand public service, have an admirable record for being free of corruption. Bribery is just not something we think about, and the idea of slipping an official a few hundred dollars to "assist" their decision making is as alien to us as invading countries for their oil resources.

Unfortunately, it seems the same cannot be said of the Immigration Service. TVNZ last night reported that Immigration's Pacific division had persistent problems with corruption:

Around 60 people work at the Pacific division. But ONE News has discovered in just three years from 2004, 19 cases of serious offences were proven against staff there, including theft, bribery and fraud.

From those 19 cases, nine people were fired or resigned and three were referred to police.

Even one incident of corruption is too many - but this seems to be widespread and pervasive. And it has to be stamped out.

As for Immigration, this just rubs it in: the whole department is rotten to the core. Led by a self-serving fraud, agreeing to lie in unison to prevent proper public oversight, and now taking bribes and kickbacks for favours. And they want even more power to abuse? Screw that - they can't possibly be trusted. The whole department needs a full, independent review to cut out the rot - and once that is done, it needs to be watched like a hawk to make sure it never reappears.

Equality wins in Californa - for now

The California Supreme Court has ruled that the state's ban on gay marriage is unconstitutional. So, in a day or two, gay couples in California will be able to marry. Not just get a civil union, but marry.

But while this is a stunning victory for equality, it is already under threat: the ruling has been widely anticipated, and an an anti-gay marriage initiative to amend the state constitution already has enough signatures to get on the ballot in November. Kevin Drum points out that California's last anti-gay marriage referendum, in 2000, succeeded by 63% - 37%. This time, the odds will probably be better, but its going to be a very tough fight.

WTF?

Thanks to Winston Peters, ordinary New Zealanders will now be subsidising the racing industry - and specifically, its richest breeders and horse owners - to the tune of $9 million a year. And not by funding the construction of venues or by covering the costs of events to represent their presumed entertainment value to the public, but by directly subsidising prize pools.

Sure, it's not a hell of a lot of money, but its objectionable all the same. I'm dubious about subsidising sport as it is, but this is a particularly bad way of doing so, a direct subsidy from the poor to the rich. And from a Labour government, that stinks.

Climate change: NZ's net position

The government has released its Net Position Report 2008: Projected balance of emissions units during the first commitment period of the Kyoto Protocol [PDF], which it recently cited as justification for its cowardly backdown on the ETS. On reading it, some of my initial fears have been confirmed - the numbers used to justify pulling transport from the ETS assume that transport is part of the ETS, while the methodological improvements in forestry are unexplained. However it also explains some of the other assumptions which makes them seem a lot less dodgy. In particular:

• The "methodological improvement" to transport emissions projection is using more realistic assumptions (US$100 / bbl rather than US$60/bbl). As a result, they're now projecting transport emissions to basically flatline during CP1, which seems reasonable (they mention 2007 petrol usage data which shows that transport emissions actually dropped between 2006 and 2007, solely as a result of high oil prices). Of course, with oil currently hovering around $125/bbl and setting a new record every day, this still seems low. But its not as obscenely wrong as previously.
• The current drought is incorporated into agricultural emissions because it is expected to result in substantially fewer sheep being around next year, so that is a real reduction. On the down side, they're projecting more and dirtier cows, producing 2.17 TCO₂-e / yr rather than 2.05. Multiply that by the expected 6.06 million dairy cows, and we're looking at 0.72MTCO₂-e / yr just from the dairy sector alone. And thanks to the government's continued pandering to farmers, you and I will be paying for that increase in pollution.

And back on the bad news front: the reduction in deforestation emissions is predicated on the ETS as it stood pre-backdown, and therefore on forest-owners having someone to sell credits to. With transport's entry delayed, then prices will be lower, which will probably see more deforestation. So those numbers will probably get worse, unless the government jiggles the electricity sectors allocation to compensate.

Poneke bows out

Poneke has hung up his keyboard and deleted his blog. His actual farewell message is difficult to find, but is reproduced on the Thorndon Bubbles' RSS feed, several pages in:

Blogging has been fun. I have really enjoyed writing this blog. But writing a blog, given my occupation and family circumstances, is hard to juggle with work and family commitments.

Election year makes it especially so. I am genuinely non-partisan, but the New Zealand blogsosphere is so partisan that to continue blogging would, I fear, eventually cause some other bloggers to accuse me of being partisan.

Therefore, it’s time to stop, at least for now. Thank you for reading, and especially, thank you for the huge number of comments you’ve posted in response to the articles posted here.

And so the sewer (who had been turning up recently and leaving their usual turds around, and reacted particularly nastily to Poneke's recent pieces criticising them) bullies another intelligent, articulate voice into silence. It's a great loss to the NZ blogosphere, and to our hopes of becoming something better.

As for partisanship, whatever I thought of Poneke's opinions, one thing that was clear was that they were actually his, rather than being grabbed verbatim from some party's daily talking points. Like me, he was fighting for his own "team", not someone else's (to the extent he was fighting at all, rather than merely making cynical observations). Unfortunately, for some in the blogosphere, any failure to toe their party line makes you a toady and a hack. If you're not with them all the way, you're against them - a "partisan" for the other side who must be beaten into silence. And sadly, they've won again.

Drinking Liberally in Wellington

Drinking Liberally is a US political movement aiming to connect people on the left, from unionists to greens, anarchists to Democrats over a few glasses of their beverage of choice. The aim is to provided a social space for lefties to get together, swap ideas, vent their collective spleens and argue about politics. And now it's coming to New Zealand - and specifically, to Wellington.

When: Wednesday 21 May; after that, the first and third Thursday of every month
Where: Southern Cross Tavern, Abel Smith St
How much: Obviously, you will need to buy something to drink. Or get someone to buy it for you.
Contact: wellington@drinkingliberally.org, or join the mailing list.

It kicks off next Wednesday; the first speaker will be the Greens' Nandor Tanczos. Be there, or be thirsty.

Climate change: reducing the impact

One of the concerns about the Emissions Trading Scheme is the impact of higher electricity prices on the poor. The standard way of solving this problem is through revenue recycling - using money from the ETS to reduce the impact on the poor by reducing their emissions. And that's exactly what the government is doing. The Greens have convinced the government to spend $53.4 million over 5 years (three quarters of it in the first two) to upgrade the energy efficiency of state houses, installing insulation, draft-proofing, pipe-lagging, hot water cylinder wraps, and energy efficient heating. Not only will this reduce the electricity bills of state housing tenants (thus reducing the impact of the entry of electricity into ETS), it will also significantly improve their health:

"Research indicates that insulated homes use on average a fifth less energy than uninsulated homes. People report health improvements, including half the number of respiratory symptoms. Children in insulated houses had half the number of days off school," Ms Fitzsimons says. "About three-quarters of the money will be spent in the first two years, meaning that by the time electricity is brought into the Emissions Trading Scheme most tenants will be paying lower electricity bills.

It's an excellent move, and a big policy win for the Greens. At the same time, the government needs to do more in this area. State house tenants are not the only people affected by the ETS, and the payoffs for insulation are significant (in colder areas, it pays for itself from the health benefits alone). Given those payoffs, it should be significantly expanding the EECA insulation grant scheme as well.

Dropped

The Bush administration has dropped charges against Guantanamo detainee Mohammad al-Qahtani, who they had alleged would have been the "20th hijacker" in the 9/11 attacks. For those who don't recognise the name, al-Qahtani is otherwise known as "detainee 063". He was subjected to prolonged torture - sleep deprivation, forced exercises, stress positions, white noise, sexual humiliation, snarling dogs, forced enemas and prolonged isolation - under the personal supervision of then US Defence Secretary Donald Rumsfeld. This torture eventually drove him mad:

By late November 2002, an FBI agent wrote, Detainee 063, Mohamed al-Kahtani, was "evidencing behavior consistent with extreme psychological trauma (talking to nonexistent people, reporting hearing voices, cowering in a corner of his cell covered with a sheet for hours on end.)"

No court in the world would convict a defendant after that sort of criminal misconduct by the prosecution, or regard statements extracted by such methods as even remotely reliable. And this is why the charges have been dropped. So the Bush administration's policy of torture isn't just a disaster for human rights - it is also a disaster for justice.

The question now is what the US will do with al-Qahtani. They can't prosecute him. They can't even use him as a witness. They should therefore let him go, but I doubt they'll do that. Instead, they will almost certainly continue to detain him, effectively punishing him without trial or appeal. In their effort to fight monsters, the US have become monsters themselves.

The thermal moratorium and the market

Green co-leader Jeanette Fitzsimons blogs at Frogblog on the ETS, and the government's proposed moratorium on new thermal generation. She points out that the moratorium has no teeth - given the list of exemptions, it permits precisely what it purports to ban, to the extent that no submitter could find an example of a thermal plant that could not be squeezed through the numerous loopholes.

This poses a real challenge to the government's 90% renewables target. State-owned Genesis energy is currently planning on squeezing a 480MW gas-fired power plant through those loopholes, and this will discourage investment in renewable generation:

[Genesis have] figured out that if they build it as a peaking plant (not allowed to run more than say, 30% of the time) then whenever supply gets a little tight they can apply under the “emergency” clause to run it all the time for “security of supply”. Knowing there are 480 MW of gas station just sitting there waiting for an opportunity will discourage others from building renewables, so supply is guaranteed to get a little tight. However, if that doesn’t work there are other exemptions it can try.

The upshot is that if we don't want renewables to be Maui-ed by dirty generation, then we need a moratorium with teeth. Or alternatively, a Minister with balls - something neither party seems to be offering.

Underlying this is the problem of the market. According to free market dogma, the market will produce the most efficient allocation, but in practice it favours underinvestment. Shortages are profitable as they drive up the spot price (expect record dividends from electricity generators next year), while investment in security of supply - or "overcapacity" as they call it - drives down profits. So we go from shortage to shortage, never quite having enough, at an economic cost of a few hundred million dollars every couple of years.

Markets are useful tools. But clearly, they do not work for electricity. If we want to ensure that we have enough all the time, without the price spikes we've seen over the last decade, we need to bring the sector back under government control.

Election funding: unsurprising

So, Trevor Mallard's Labour-emblazoned electorate vehicle has been deemed an "electoral advertisement" under the Electoral Finance Act. What's surprising is that anyone is surprised by it. The EFA uses a "reasonable person" test, and I think any reasonable person would agree that this eye-catching paint job is intended to persuade people to vote in a particular way (and if it wasn't, why would he be doing it?). That makes it an advertisement, which must bear a promoter statement.

As for DPF's contention that this makes the entire vehicle attributable expenditure, I doubt it. The advertising is in the paint job. Without it, it's just a van. But I guess he has to adopt extreme positions to keep the sewer-dwellers fed.

Climate change: another subsidy for a polluter

How would you feel if a multinational company came to town, made a mess, and left us with an $18 million bill?

That's what will effectively be happening when Methanex restarts its Motunui methanol plant next year. The plant will produce around 700 kTCO₂ a year, at a cost to the taxpayer of around $18 million. We will be paying that cost because Methanex will restart that plant, then shut it down again before industrial emissions are brought into the ETS in 2010. They'll be in and out like lightning, leaving us to pay for their mess.

This is simply unacceptable. I take it as axiomatic that companies should pay the full cost of their activities, rather than being allowed to externalise them and dump them on the rest of society. But thanks to the government's systematic inaction on climate change and its refusal to use the RMA as a backup policy, that is exactly what will happen. And Methanex will be laughing all the way to the bank at our expense.

Climate change: hoisting Rio-Tinto with their own petard

Yesterday saw Rio Tinto stick their hand out for corporate welfare, threatening to shut down their Tiwai Point aluminium smelter unless shielded from the effects of the emissions trading scheme. It is, of course, motivated purely by self-interest - the ETS would mean paying more for electricity, which would mean lower profits for Rio Tinto's shareholders. And it's par for the course for Rio Tinto, who made exactly the same threat just a few years ago to get government-owned Meridian Energy to cut them a cheap deal on power, and a few years before that in an effort to get the government to sell them the Manapouri power station (fortunately, they were unsuccessful). And its particularly egregious because Tiwai Point is already shielded - the ETS includes provision for companies which are "trade exposed" and adversely affected by either the cost of emissions or the cost of electricity to receive substantial amounts of carbon credits as compensation to ensure their profitability. While this shielding - essentially a subsidy from the New Zealand taxpayer to Rio Tinto's foreign shareholders - will eventually expire, by that time we expect much of the rest of the world to be part of a global climate regime (either by imposing their own carbon price, or by having it imposed for them in the form of border taxes on imports from polluter nations).

Rio Tinto's naked self-interest has naturally produced a backlash, with comments ranging from fuck 'em to fuck off. And I agree. But not just because I dislike capital acting as a "virtual senate" to veto the policy of democratically elected governments, but also because Tiwai Point is not actually economically beneficial to New Zealand. We would be better off if we simply shut it down. And the glorious thing is you can show it with Rio Tinto's own numbers.

Back in 2004, when Comalco (as it was known then) was threatening to leave New Zealand if forced to pay market rates for electricity, it produced a self-serving little report on The Continued Economic Contribution of the Tiwai Point Aluminium Smelter, 2004 – 2012 [PDF]. This assessed the smelter's aggregate economic benefit to New Zealand - including corporate taxes, employment, fixed charges, dividends from SOEs, and deferred investment in the national grid (that apparently being a "benefit") - at a grand total of $121.2 million per year. For the period 2013 to 2022 (which is the period we're talking about here), they expect a lower benefit: $103.8 million per year.

These benefits are outweighed by the benefits of shutting the plant down. How? Because as many people have noted, Tiwai Point uses around 15% of the nation's electricity - electricity that could (with a significant grid upgrade) be used elsewhere. That is more than the around 12% generated annually by coal, so the most significant advantage of such a shutdown would be that we would be able to effectively shut down the inefficient, coal-burning Huntly power station and relegate it to permanent dry-year backup. And that's where the benefit would come in, because Huntly costs us a lot of money.

According to the Ministry of Economic Development report on New Zealand Energy Greenhouse Emissions 1990 - 2006, Huntly's emissions in 2006 totalled 4.671 MTCO₂ (yes, they're it for the coal column; co-gen is counted separately). Assuming a carbon price of $25/ton, that effectively cost us $116.775 million (2005 emissions were even higher). So, at current prices, it is economically worthwhile simply to let them leave, and stick the extra $10 million a year into an economic development agency for Southland. But it gets better. Remember the need for a grid upgrade? We're already doing part of it. That knocks just over $13 million off Comalco's calculated benefit (because remember, having a shitty national grid is a Good Thing in their books), increasing the benefit of their departure to $26 million per annum. So, the economically rational thing to do is call Rio Tinto's bluff, get Transpower to upgrade the Invercargill-Livingstone link, and watch them go.

This is on their own numbers, remember. They have been hoist with their own petard.

The police haven't learned

A year ago, the government released the Report of the Commission of Inquiry into Police Conduct. Sparked by the flood of complaints which followed Louise Nicholas going public, the report damned the police for failing to deal properly with allegations of rape and sexual misconduct by officers, and for maintaining a toxic internal culture which permitted officers to rape and abuse women with impunity.

One of the recommendations of the report was for a comprehensive code of conduct for sworn staff [PDF], including standards on sexual behaviour:

New Zealand Police should develop standards, policies, and guidelines on inappropriate sexual conduct towards, and the forming of sexual relationships with, members of the public. These should be incorporated into all codes of conduct and relevant policy and training materials. The standards, policies, and guidelines should be developed with the assistance of an external expert in professional ethics and should

• specify actions and types of behaviour of a sexual nature that are inappropriate or unprofessional
• prohibit members of police from entering any relationship of a sexual nature with a person over whom they are in a position of authority or where there is a power differential
• provide guidance to members and their supervisors about how to handle concerns about a possible or developing relationship that may be inappropriate
• emphasise the ethical dimensions of sexual conduct, including the need for police officers to avoid bringing the police into disrepute through their private activities.

Note that this isn't about what police do in their bedrooms (which is nobody's business but their own); rather it is about preventing the sorts of abuses of power which saw them using the power of their uniform to coerce vulnerable young women into sex.

Today the police issued their draft code. It completely ignores the recommendation above, and does not mention sexual misconduct at all. So, after five criminal trials and a high-level commission of inquiry, the police have learned precisely nothing. The attitudes which led officers to look the other way on the rape and abuse of Louise Nicholas and others remain. The belief that abusing the uniform to get laid is a perk of the job remains. The hostility to public oversight and control remains. And so the distrust and the belief that the police harbour rapists will remain. The police have just destroyed their best opportunity to show they have changed and are no longer the force which stood by and watched and protected their own while officers raped and abused and molested. The result will be that the victims of such crimes will not feel that they can report them, and their victimisers will continue to enjoy impunity. And we are all the losers from that.

Is Bush trying to start a civil war in Lebanon?

That was the question which sprang to mind after reading about US President George Bush's offer to strengthen the Lebanese army this morning. Yeah, let's paint the only stabilising force in the country as a US-backed puppet! In a part of the world where the US is deeply unpopular (to put it mildly), that's a stunningly stupid and counterproductive move.

America should condemn Hizbollah for bringing out the guns. But if it wants to avoid making the situation worse (and to be honest, I'm not sure that they do), then a little subtlety would help.

Gone

Immigration Service head Mary Anne Thompson has resigned. Good. What she was accused of doing - arranging visas and residency for relatives in contravention of normal immigration guidelines - undermined both our immigration policy and the entire public service. Such corrupt behaviour cannot be tolerated, and it is good that she was forced out. At the same time, I'm concerned that this will be used as an excuse to bury the SSC investigation, or put it on the back burner, which would be a mistake. We've had a serious incident of self-serving behaviour in our normally professional public service. We need to know how it happened, so as to prevent it from happening again in the future.

Climate change: more bad news

While the New Zealand government dithers over the ETS, climate change marches relentlessly onwards. Carbon Dioxide concentrations reached a record of 387 parts per million last year - the highest they have been for 650,000 years. Worse, the rate of growth is increasing, possibly signalling reduced ability by natural mechanisms to absorb the pollution we are putting out (since such absorption generally depends on temperature). So, its getting worse, and getting worse faster.

New Zealand's emissions are small on a global scale, and capping them will not make much difference while the Americans continue to drive around in gas-guzzling SUVs. But it will mean that we are no longer part of the problem, and it may make it easier to convince others to return to sanity. Unfortunately, it seems our local greedy would rather continue to make money by destroying the planet and undermining the quality of life of their children and grandchildren.

The Green list

The Greens have released their party list for this year's election. There's a few changes from DPF's version - David Clendon and Gareth Hughes have swapped places, while Mike Ward has moved up significantly. The top order are as you'd expect, with co-leader Russel Norman taking Rod Donald's number two slot, and Meyt moving up. Newcomer Kevin Hague is almost guaranteed a seat if the Greens make it back into Parliament, and if they do well, Catherine Delahunty may be joining them.

As with last election, I've done a table showing candidate's relative placements with last time. As with all small parties, there's a high degree of turnover, and a lot of new faces.

2008 Rank	Name	2005 Rank	Difference
1	Jeanette Fitzsimons	1	0
2	Russel Norman	10	+9
3	Sue Bradford	3	0
4	Metiria Turei	6	+2
5	Sue Kedgley	4	-1
6	Keith Locke	5	-1
7	Kevin Hague	--	--
8	Catherine Delahunty	9	+1
9	Kennedy Graham	--	--
10	David Clendon	12	+2
11	Gareth Hughes	--	--
12	Steffan Browning	--	--
13	Mojo Mathers	16	+3
14	Mike Ward	8	-6
15	Quentin Duthie	--	--
16	Mikaere Curtis	17	+1
17	Richard Leckinger	--	--
18	Jeanette Elley	19	+1
19	Virginia Horrocks	--	--
20	Donna Wynd	--	--
21	David Hay	--	--
22	Diana Mellor	--	--
23	James Redwood	--	--
24	Lisa Er	--	--
25	Jan McLauchlan	--	--
26	Lizzie Gillett	--	--
27	Claire Bleakley	27	0
28	Rayna Fahey	--	--
29	Craig Carson	--	--
30	Richard Tindall	--	--
31	Paul Doherty	--	--
32	Ryan Garland	--	--
33	Michael Gilchrist	--	--
34	Alan Liefting	47	+13
35	Linda Persson	--	--
36	Baker Postelnik	--	--
37	Jon Sadler	--	--
38	James Shaw	--	--
39	Gary Stewart	--	--
40	Peter Taylor	--	--
41	Lynette Vigrass	--	--
42	Michael Woodcock	--	--

Further canidate details can be found here.

Out of time?

The Herald's Claire Trevett breathlessly reports that the government may be running out of time to pass the emissions trading bill and other key legislation before the election:

With fewer than 37 sitting days left before Parliament is likely to dissolve for the election, Labour still has about 70 bills to push through.

Firstly, Ms Trevett should learn to count - and in particular distinguish between government, local and member's bills in committee while doing so. From my count the government has 22 bills currently before the House (of which 10 are "parked" and which it will not try to progress), and 32 in various select committees (of which two have been buried for more than two years and are going nowhere). So, that's 42 bills, not 70. Secondly and more importantly, the government has control of the Order Paper, so it can arrange business to suit itself. But thirdly and most importantly, the government is only interested in a handful of those bills. They have never had much of a legislative agenda this term, and three quarters of that legislation is makework, the ordinary day-to-day process of tweaking and updating legislation. And they will happily ignore that to get their "policy" bills through.

Important bills include the emissions trading bill (due out of committee on June 11), the biofuel bill (June 4), the Criminal Proceeds (Recovery) Bill (July 25), the Summary Offences (Tagging and Graffiti Vandalism) Amendment Bill (waiting below the line), the Immigration Bill (30 June) and possibly the Employment Relations (Breaks and Infant Feeding) Amendment Bill (July 22). Everything else is fluff. The Budget will neatly fill in time until the first of these bills pops out of committee, but after that they have plenty of time, precisely because the rest of their agenda is so light. It takes 6-7 sitting days from the report back to pass a bill (3 for it to lie on the table in accordance with SO 292, one for the second reading, one or two for the committee stage, and one for the third reading; remember Members' Days get in the way), so even the latest of these bills (due back in July) can be passed by the end of August if the government prioritises them. Which they will.

The only way these bills will not pass before the election is if, as Trevett speculates, they are held up in committee. But I don't think that's likely, particularly with the emissions trading bill. Yes, National could embarrass the government if it voted for a delay - but only at the cost of becoming responsible for the problem itself. And in the case of climate change policy, that is the last thing they want.

Carnival of the Liberals

The 64th carnival of the liberals is now up at Sir Robin Rides Away.

No freedom of speech in Nepal

Today, Tibetan women demonstrated peacefully in Kathmandu, calling for a free and independent Tibet.

They were arrested. Over 500 of them are now in a government detention centre, simply for peacefully expessing their views.

This is an outrageous denial of freedom of speech, from a government which should know better. In case they've forgotten, they are only in power today because so many Nepalese took to the streets to defend the right to speak out against their absolute monarch. But like their (almost former) king, the Nepalese government claims the right to jail any who disagree with it. I guess nothing has changed there after all.

Climate change: how will the ETS work?

Over at Truth Seeker, Steve asks how does the proposed emissions trading scheme work? Reading further, he's familiar with the theory that "if you make people pay to pollute, they will pollute less", and this is not so much about the theory behind emissions trading than with questions of allocation:

I don't know how this has been proposed to work here in NZ. I'm aware of debate about who holds the credits, but not the outcome...

I want to find out so I can better distinguish between those who have legitimate issues with the proposed trading regime and those who may be seeking to shirk their responsibility to deal with their carbon emissions constructively.

The short answer to this question is "it's still up in the air". The Climate Change (Emissions Trading and Renewable Preference) Bill is currently before select committee and will be amended in various ways before it comes back to the House. But currently the plan is for the scheme to (eventually) include "all sources and all gases", and that is unlikely to change. What may change is the timing of various sectors' entry into the scheme. So we've already seen the government announce that the transport sector's entry into the scheme will be delayed from 2009 to 2011, and we may see further delays in response to sectoral lobbying or flow-on effects.

Exactly who is liable under the scheme - the "point of obligation" - is defined in schedules 3 and 4 of the bill. The points of obligation differ by sector and source, but all are chosen to be relatively high up in the economy to minimise the number of participants and hence compliance costs. So the average consumer or small business (or even large business in the case of transport) will not have to deal with the ETS at all; instead we will respond to the higher prices passed on by emitters. But energy and industrial emitters will be directly exposed to the scheme, and thus it will directly impact their investment decisions, hopefully driving them in a more sustainable direction. In the case of agriculture, the government will initially target fertiliser companies and meat and dairy processors, but can devolve the scheme to individual farmers at a later date (once they have a good way of measuring on-farm reductions).

The general effect of the scheme will be to impose the full international price of carbon across the entire economy. The primary effect of this will be through impacting the investment decisions of major emitters. For example, during the 90's most electricity generators built gas-fired plants because they were (artificially) cheap. But carbon pricing makes renewables cheaper than gas, and makes coal financially unsustainable. So we'll be getting cleaner electricity. We'll also be getting cleaner industry, as those industrial emitters which can make reductions and efficiency gains will have a direct financial incentive to make them. More generally, it will push us all towards greater efficiency and reduced emissions. The strength of price-based mechanisms such as emissions trading are that thy produce widespread distributed action as we each look for ways to reduce our costs, thousands of little things which all add up. In addition they also "find" reductions the government may not have thought of, and encourage people to exploit them by making it profitable for them to do so (this is one of the strengths of markets; weaknesses are left as an exercise for the reader).

All of this will affect the profitability of businesses. That's the point - to make it unprofitable to pollute. But those whose profitability is threatened have kicked up a fuss, and so there are free allocations for polluters (even a completely unnecessary $800 million a year environmental subsidy to our polluting dairy industry). None of this affects the overall effectiveness of the scheme - allocation only affects who pays who, not how much, and so the financial incentive to reduce emissions is the same. But the decision to delay the entry of various sectors will affect the supply and demand for permits, and hence the price. The cowardly decision to delay the entry of transport could leave us with a market consisting primarily of sellers, with a carbon price too low to produce any meaningful reductions. Alternatively, the government could compensate by auctioning fewer permits to the energy sector, forcing them to buy permits from the forestry sector or credits on the international market. So what you save on petrol, you may very well pay for in higher electricity prices. Unless of course the government delays the entry of the electricity sector as well. In which case, we might as well not bother to even have an ETS...

New Fisk

Hizbollah rules west Beirut in Iran's proxy war with US
The mystery of the man who shot Nelson
Lebanon does not want another war. Does it?

A social dividend?

The Sunday Star-Times has more tax-cut speculation today, this time of $1,000 cash payments to low-income earners in lieu of cuts to the bottom tax rate. It's a good idea, and certainly far better than anything offered by the "tax cuts for the rich" brigade. It targets support at the needy rather than the greedy, and while it doesn't deliver as much to low-income workers as the proposed tax-free bracket Michael Cullen ruled out last week, it delivers more to those at the very bottom, and significantly more to low-income workers than an equivalent-cost cut to the bottom tax rate.

(There are 1.528 million taxpayers with incomes of less than $20,000, so the cost of a $1,000 social dividend to each of them would be $1.528 billion ($1.29 billion if those with zero income are excluded). A 1% change in the bottom tax rate costs $220 million, so this would fund a cut of 7% (or 6%). Such a cut would deliver a maximum of $660 (or $570) to those earning $9,500 or above).

But in addition to delivering more to those in need, this also points the way to how such things should be handled in the future. Rather than cutting taxes (which permanently reduces income and almost always disproportionately benefits the rich) the government should be paying social dividends. While initially these should be aimed at those on low incomes, the ultimate goal should be for equal payments to every taxpayer (or better, every New Zealander), on the basis that we are all equal participants in our society. Beyond that, we should be aiming to build the system towards a universal basic income - a universal payment given to every adult regardless of circumstances. This could not only substantially replace the existing benefit and pension schemes, it would also remove the employers' boot from our neck. It would substantially improve the actual, substantive freedom of people to lead their lives how they wish. And that should be a core goal of any left-wing government.

For those who are interested, Keith Rankin has some old papers on UBI here.

Qantas media awards

Apparently, I was a finalist in the blog category of the Qantas media awards - as was DPF. It would have been nice if someone had told me. As for the winner - ReadWriteWeb - they're a serious technology blog with a global audiance and actual writers doing real journalism. Exactly the sort of blog we should be encouraging, in other words.

New Fisk

Gun battles as Hizbollah claims Lebanon is at war

Climate change: a carbon windfall?

Over at Kiwiblog, DPF is getting exercised about Solid Energy CEO Don Elder's claim that the government will reap an $80 billion windfall from the ETS. Naturally, DPF is ignoring Elder's unrealistic assumptions - a carbon price of $200/ton which produces no reduction in emissions. Given that a few years ago during the debate over the carbon tax the right were claiming that the entire economy would stall and emitters would go out of business (and therefore cease emitting) if forced to pay a mere $10/ton, it seems that (as usual) they're trying to have their cake and eat it too. But I digress. Beneath Elder's self-interested squealing and transparent attempt to smear the ETS as a revenue-grab, he has a point: the government will be collecting revenue from the ETS, and this revenue will (once transport is part of the scheme) likely exceed the amount required to pay its obligations under the Kyoto protocol. So what do we do with the money?

The answer depends in part on what happens after 2012. If there is a comprehensive global deal setting tough targets for a further commitment period, there likely won't be any money. While the ETS is set up to make a profit, given the government's late start and its plans to continue to shield agricultural and industrial polluters, we're likely to be using the revenue to buy credits on the international market for a long time yet.

But still, it is possible that there might not be a deal, or that a repeat of our pre-Kyoto special pleading results in a generous target which would leave substantial revenue left over from the ETS. So what should we do with any money left over?

As I've said before, my preference is to invest it in further emissions reductions and reducing the costs for those adversely affected. So for example excess revenues from the Kyoto period should be invested in home insulation, in getting wave and tidal energy off the ground, in energy efficiency for the poor, and in public transport (with free or heavily subsidised access for those adversely affected). In the long run, once we know what our post 2012 goal is, we could also use it to fund other public services, thus displacing some ordinary taxation. But what we should emphatically not be doing is forgoing that revenue by allocating free permits to polluters; this effectively funnels the gains into private pockets, while locking us into a high emissions pathway. The winners of such a scheme would be polluters - and the losers would be the rest of us.

Lyndon Hood strikes again

Scoop Satire: Emitting Sector To Be Excluded From Emission Trading Scheme.

Once again, reality makes satire redundant.

Field to stand trial

Stuff reports that the District Court has ruled that there is a prima facie case against MP Taito Phillip Field, and that he will stand trial on 40 charges of corruption and perversion of the course of justice.

It couldn't happen to a nicer guy.

A new top tax rate?

Over at Inside the Beltway, Vernon Small reads the entrails of Michael Cullen's pronouncements on his tax programme, and speculates that tax cuts might be partially offset by a new top tax rate. It's an interesting piece of speculation. The advocates of tax cuts are constantly clamouring for greater alignment with Australia. But somehow, I don't think Australian-style progressivity (Australia has five tax bands, and sharply higher rates on the rich) was what they had in mind.

To flesh out some of Vernon's numbers, a new top tax band starting at $150,000 would affect a mere 45,000 people - 1% of the taxpaying population. Unfortunately, I can't model the income, as Treasury doesn't include ultrahigh incomes in its detailed model data. But its on the order of a couple of hundred million dollars - nothing to sneeze at. And if its the price of the vast bulk of New Zealanders - the two thirds of us who don't even pay the middle tax rate - getting theirs, then I don't think too many people will object. These are incomes most of us can never even aspire to, and we know it, so it would have no effect whatsoever on ordinary people. And while few would go so far as to quote Marx - "from each according to his abilities, to each according to his needs" - there's a strongly ingrained sense of fairness in New Zealand and a recognition that the rich should pay more.

Naturally, Vernon's comments are already full of dire threats of economic collapse and threats to move to Australia (I'm waiting for them to start on tiresome metaphors about restaurants). But as he points out, the imposition of the 39% rate did not result in the sky falling in. Neither does it seem to have resulted in widespread tax evasion. Most New Zealanders on high incomes accept taxation as the price they pay for living in a civilised society (one which, for example, protects their property rights against those who have less, cares for their relatives when they are sick or old, and protects the equality of opportunity which allows a man who grew up in a state house in Bishopdale to end up in a mansion in Parnell). Which is more than you can say for ACT on campus.

Bob hands in his Burqa

So, Burqa Bob Clarkson will step down at the election. My initial reaction was "good riddance", but there's also some regret. Yes, Clarkson was a waste of space - he didn't really want to be an MP, he never turned up to the House, and when he did, he never said anything (he famously said all of 19 words over a three month period last year, all of which were abuse; I'm sure someone will do a finally tally of his sum contribution to New Zealand politics when he leaves). And he was an outright bigot, with frequent foot-in-mouth incidents against Muslims, gays, and anyone else who wasn't a dead white male like him. But the man was comedy gold. I mean, how many other MPs destroy their reputations even before election by groping their crotch and talking about their testicles?

That said, I'm pleased he's going. And now maybe Tauranga can get a serious MP. OTOH, maybe they'll just re-elect Winston instead...

New Fisk

Lebanon descends into chaos as rival leaders order general strike