AGENDA, JUNE 25
HON PETE HODGSON
SIMON Labour Minister Pete Hodgson is Convenor of the ministerial group on climate change. He recently released predictions showing New Zealand will exceed its emission limits under Kyoto during the treaty's first commitment period from 2008 to 2012. Pete Hodgson had been selling New Zealand's involvement in Kyoto partly on the basis that we'd make the country hundreds of millions of dollars a year, but his new figures show a switch from a gain of nearly 500 million to a cost of more than 500 million which would fall on the taxpayer. Pete Hodgson is with me to discuss the government's billion dollar bungle. Minister a billion dollar cock-up why haven’t you resigned over this?
PETE Well I'm in receipt of an update each year every year as to what New Zealand's projections will be for the 2008/12 period, and what's happening between last year and this year is pretty much as you’ve described, we've moved from being 500 million dollars in credit over five years not each year but over five years so 100 million dollars a year in credit to about 100 million dollars a year in deficit and that’s because there have been a bunch of changes and assumptions etc, and it's also because we have one of the highest performing economies in the western world and almost inevitably that starts to feed into increased emissions.
SIMON You didn’t know any of that a year ago? You’ve spent the last three years as a government trumpeting how successful the economy's been and none of this has been factored in?
PETE Well the technical reports that are received by this government and a previous government every year are based on a series of assumptions and those assumptions have given successive ministers the advice that we would be in credit, so that’s been the case right through the late 90s and right through until 2004 and then this year because of a variety of changes including factoring in significant economic growth…
SIMON Why weren’t these things not factored in before though? It's quite simple I mean there are no surprises really in the growth of the economy over the last year, why have they not been factored in earlier?
PETE I agree with you that the fact one could argue that they might have been factored in earlier, what's happened is that officials have been factoring in existing economic growth accurately but they are now predicting greater economic growth in the future than they had earlier been predicting.
SIMON This is a stuff up of monumental proportions, monumental proportions, who is accountable? Surely it ends on your desk?
PETE Yes it does, I am the Minister responsible, I receive these reports, I do not influence them, I think it would be outrageous if I were to influence them, I do have this report off for international peer review because it is a big change but finally I am responsible because though I don’t write the report, I don’t even ask for the report, it is my ministerial responsibility.
SIMON In essence it costs us a billion dollars as taxpayers you must resign surely.
PETE It'll cost us about 100 million dollars a year if this report is correct, and if last year's report turns out to be wrong and if all of the assumptions in this year's report are accurate, it's not at all clear that they will be.
SIMON Ifs and assumptions that cost us a billion dollars, how much faith can we have in the government's accounts?
PETE I must say that I was surprised, disappointed by the change in the projections because having pushed them around over these past five years as I have been minister I had come to – even though they changed each year – I had come to think that probably we were getting a more accurate picture as each year went by, I am now less confident that that’s the case, I do not know for example Simon what next year's report will show, will it show it getting even worse or will it show that actually we're back in credit, I simply at the moment don’t know, which is one reason why I have the report out for international peer review.
SIMON A billion dollars here and there, you say you're responsible, yes?
PETE Finally I am the minister for the portfolio.
SIMON Are you accountable?
PETE I'm accountable in the sense that I have to now – I now have to take this information whether it's accurate or not, I have to accept it at face value, I'm not entitled to quibble with it and I won't.
SIMON Well so we're dealing with a whole bunch of hypotheticals are we?
PETE Yes indeed we are. Let me try and give your viewers some sense of it. There is an assumption in the report that the future price of oil will be 30 dollars a barell, we know that today it's 60. There's an assumption in the report that a whole lot of science we're doing to reduce emissions from farm animals which happens to be half of our total emissions, that all of that science will be unsuccessful, whereas usually in a scientific programme you can look forward to some success, so they're quite conservative assumptions.
SIMON Me and everybody in this studio and everybody around the country has to pay for this, who is going to go? You say you're responsible, surely you're accountable, surely you must resign, who is going over this?
PETE This is a projection Simon.
SIMON We can't talk about – what's the point of projections if no one's going to be accountable, so projections don’t matter it's only the realities at the end of the day. You're deferring accountability.
PETE I think that’s a silly thing to say if you don’t mind me suggesting, that if we had another report…
SIMON Silly is to be told it's to sell to the country something that’s going to benefit us to hundreds of millions of dollars a year, to say and as you said, to reject Kyoto would be tantamount to setting fire to a cheque made out to New Zealand, that is silly when you don’t know that.
PETE Well now let's get on with that shall we? It is true that I have said that in years gone by, it is true that we have been advised every year since 1997 through to 2004 that we would be in credit, and because that advice has been received by successive governments yes I have as has my National Party predecessor said that we would be in credit. That advice has come to ministers year after year until this year when it changed. That however is not the reason why this government ratified the Kyoto protocol and more precisely is not the only reason. It is probably the least important.
SIMON What is the most important reason?
PETE The most important reason Simon is that climate change is coming, ready or not, and it is likely to damage the New Zealand economy more than most western economies because we are dependent on a high quality equable reliable mid latitude climate for the basis, the engine room of our economy which is primary production, so let's get off 100 million dollars a year expenditure in 2010 or something and ask yourselves whether or not a half billion dollar drought each year somewhere in the country is more important. Can we please join up the dots here and get a bit of perspective. I'm sorry that I'm coming on strongly but it's about time we started to face the fact that climate change is coming ready or not and we going to have to as a nation, as a world address it.
SIMON So you would have urged ratification despite…
PETE Absolutely, absolutely and what's more Japan knows that it's going to exceed its targets and has ratified, so has Canada, so has every Western European nation, and every Scandinavian nation, they know that they're going to exceed their targets, the only countries that are going to come in under targets now are going to be Russia and Eastern Europe, it used to be Russia, Eastern Europe and New Zealand, it's now just Russia and Eastern Europe, the rest of us are going to have to pay or get our emissions down and that’s the whole idea of Kyoto is to put economic pressure on economies to try and get on top of what is probably the most serious environmental issue facing human kind.
SIMON So we're gonna have to end up buying carbon credits from countries, huge polluters like Russia simply because they qualify as non developed nations?
PETE No. Simon the reason that Russia has got carbon credits for sale is that the year zero which is 1990 was when the Russian economy was trucking along and since then the Russian economy has collapsed as has much of the Eastern European economy, it's picking up a little now of course but because of that collapse they then went into credit that’s the reason.
SIMON So what you're saying is essentially that we are subscribing to a Kyoto because we must adhere to the principle of environmental sustainability, is that correct?
PETE We're adhering to Kyoto because every western nation, except for three, the US, Australia and Monaco, every western nation has signed and ratified the Kyoto protocol saying yes we do have to do something.
SIMON You just said that we've signed because they signed. I just asked you if it was because you adhere to the principle of environmental sustainability, you just told me we signed because all the other countries signed.
PETE Well if it's not already clear to you climate change is a global issue. It can only be undertaken – we can only get a response to it if we do so globally. Any one nation can't make a change, we can only do so if we collectivise our efforts, that’s what the Kyoto protocol was designed to do, and that’s why it was signed in Kyoto by all governments including the New Zealand National government of the day in 1997. We ratified it in 2002 and we think that the Kyoto protocol though it's far from perfect is the best thing we have to try and tackle this issue of international climate change.
SIMON Mr Pete Hodgson we'll come back to you again shortly, after the break more on Kyoto with the Opposition Environment Spokesman Nick Smith whose party first began negotiating the agreement.
SIMON Nick Smith is the opposition's Environment Spokesman and he joins me now. Dr Smith you heard what Dr Hodgson had to say, what's you're response?
NICK Oh I don’t think the excuses from the government wash. Helen Clark and Pete Hodgson sold New Zealand as a pup. When we debated their early ratification of the Kyoto protocol in 2002 we said hey look there are credible commentators that are questioning your government's numbers. The Minister rubbished those people, he attacked them personally, it now turns out they were right, he was wrong, he owes them an apology, people like Mr Sundakov, people like Simon Carlaw, he owes them an apology but more importantly he must accept responsibility for rubbishing their questions because they were right on the money and National was too in saying we should not have ratified in 2002 particularly ahead of our major trading partners like Australia and the United States, because what's going to happen is that New Zealanders are going to lose growth, lose jobs for absolutely no environmental gain, particularly with Australia and CER.
SIMON National's Simon Upton got us into this in the first place, okay it was ratified under a Labour government, but you would have received exactly the same official information that Dr Hodgson got, you know what could you have done differently?
NICK No that’s not correct, the first full estimates were done in 2001, New Zealand signed the Kyoto protocol in 1997 at exactly the same time when the United States and Australia were there, in other words what National's saying is yes we believe there are issues with climate change but for us to go out in the cold alone is unwise, that we need to move along particularly alongside Australia because there's such a huge level of integration between the New Zealand and Australian economies. So they signed in 1997 so too did New Zealand, we believe it was unwise of the government to rush ahead in 2002 and lock us in legally to this agreement with this poor information.
SIMON Don Brash said earlier this week that to justify participation he'd have to be satisfied of three things, that one climate change is occurring, two warming is being caused by human activity and three that the sacrifices were commensurate with the potential gain, true? That’s what he said.
NICK That’s absolutely correct and they are the right questions to ask.
SIMON But the leading science academies of all G8 nations plus China, India and Brazil have said that the first two questions are answered that climate change is occurring, does he have some sort of scientific knowledge that they don’t?
NICK Oh look there are a number of scientists including in New Zealand who have questions over the science in my view, and this is something I really disagree with Pete Hodgson on, is that so often the government will publish projections when they come from the scientists as scenarios. There is a huge difference between the two. Weather forecasters struggle to tell us what the weather is going to be next week let alone their being able to accurately forecast the weather in 80 or 100 years time, so National is absolutely right to acknowledge with the public of New Zealand that there are still substantive questions over the science.
SIMON Despite what the Met Office and NIWA have to say?
NICK Oh look the thing is if you read the detail as I have of what both NIWA and the Met Service has said, is they say that these things are scenarios, in other words if and if and if and if this will happen. There are a lot of ifs, there is still a lot of uncertainty over the science.
SIMON So you're saying that climate change isn't a given?
NICK We're saying is that there are still substantive scientist questions both about the scale of the climate change but also this is an important point that Don Brash has quite properly made, and if anything comes through in these figures Simon it is this. What those numbers that came out last week say is that it is actually incredibly hard to reduce emission levels and it's going to be very very expensive for us to reduce those and what we need to weigh up is if the temperatures are going to change by two degrees over a 100 years and there have been times in the world's climates where it's been more than two degrees warmer than now, we need to weigh up what is the cost of fixing that and what is the benefits of doing that, and they are exactly the right questions that Don Brash has proposed.
SIMON Well let's give Pete Hodgson a chance to answer those. Dr Hodgson.
PETE Well it just appears to me that these days the New Zealand National Party has its heads in the sand somewhat deeper than even President Bush and certainly Prime Minister John Howard, those gentlemen fully accept that climate change is a happening thing. We all understand that the precision about how bad it will get when Is not yet to hand but the general direction is absolutely agreed including by the scientific academies that you mentioned Simon, so we now have Nick Smith who in 2001 or 2 was putting out statements saying that climate change if we don’t get on top of it will stuff life on earth, is now joining what's left of the few sceptics in the world saying oh well maybe climate change is not coming anyway. I mean it's just a remarkable turn around and I frankly think that Nick Smith, but especially Don Brash are guilty of the most extraordinary denial, this thing is a happening thing and there is no denial, the only issue is what do we do about it because Nick Smith is right there, it is hard stuff.
SIMON Well what do we do about it, why don’t we do what Australia and the US have done?
PETE Are you asking that of me?
SIMON Absolutely. They haven’t ratified, they're two of our biggest trading partners.
PETE That’s true. We've got 38 countries who are western nations, who are western economies like us and of those three have not ratified they’ve decided to freeload, we are not going to freeload, the National Party will it would seem.
SIMON Helen Clark called it freeloading earlier this week, but that’s the same accusation's been made of us on defence, I mean you're picking and choosing your battles here aren’t you?
PETE Well we certainly are picking and choosing our battles that if New Zealand is going to be one of the most affected countries from changes in climate this is doubling or quadrupling the incidence of drought for example then we believe that it's reasonable for us to make a contribution to try and get rid of the worse effects of that climate change.
SIMON Again more projections and assumptions. I'm gonna go to Dr Smith again, I'm going to ask him – Dr Smith assuming that the climate change question is answered to the satisfaction that agrees with the world's leading science academies what would National do?
NICK Well the first thing we need to do is to get the numbers right, they’ve been all over the paddock, we have no confidence in the numbers that are being produced by the government and so we need to get those independently audited so we can have some good decisions made. The second thing is National will not send a billion cheque to the Russians. That will do absolutely nothing for our environment and if the government is so convinced that climate change is being caused by a growth in emissions they should plead guilty because emissions have been growing at twice the rate they were during the 1990s. So what we need to do is firstly look at the energy parts of the equation. Traffic congestion in Auckland is hugely contributing to growth in emissions. When you’ve got cars jammed up and they're jammed up for you know the average journey has grown by six minutes under this government, that means you're producing more emissions so for instance getting an efficient transport system is critical to this. Secondly, in terms of energy, you know you’ve got these awful decisions being made by this government around the Waitaki scheme that means that we're having to have Huntly pump out far more in emissions because we're not gonna be allowed to develop the Waitaki River.
SIMON What are you going to do about Kyoto though, are you going to pull out of it? Will you stay with it?
NICK The moment we get into government we want to ask some of those questions that you quite properly quoted Don Brash at earlier, we want the hard numbers – look what we're saying is that withdrawing, deratifying is a live option, it's a big decision to make Simon because National does take our international agreements, we argued against ratification in 2002, we believe it was a mistake, but if the only choice is deratification or sending the Russians a billion dollar cheque National will deratify.
SIMON If the numbers are as they are projected at the moment would you pull out?
NICK And the answer is, can I give you a really key area we want to look at?
SIMON No no no forget the auditing and forget the looking at, if the numbers are as they say they are will you pull out?
NICK The only way we think we could get out of this pickle would be a major forest planting scheme, you would need to plant about 60 thousand hectares of trees per year to be able to absorb that amount of carbon and prevent us having to send that cheque to the Russians. If that’s viable that would be our first choice. We want to get and sit down with the forest industry and look at how it's going to be possible for New Zealand to meet those numbers.
SIMON Would you offer incentives in the form of subsidies?
NICK That’s a live option. Can I give you a figure Simon, we've got about 800 thousand hectares of North Island high country that is vigorously eroding away, there could be a good case for planting a portion of that, we'd need to plant about 300 thousand hectares of that which would then give us sufficient forest credits that we would be able to meet those obligations, we need those hard numbers Simon to be able to make what is a really critical decision for New Zealand.
SIMON Pete Hodgson let's bring you back in. What do you say to that?
PETE Well I've listened to all of that from Nick, I agree with two bits of it, the first and the last. The first bit was can we please get these figures peer reviewed and we're doing precisely that. The last bit was we need to improve our planting and we've got law going through the House at the moment to ensure that should someone decide to put trees in the ground and leave them in the ground for water and soil conservation and biodiversity purposes then we can get carbon credits devolved to those people so it becomes more worth their while, that is the sort of thing that I think the Kyoto protocol does invite governments to do and societies to do, but there's a bit more you can do than that. I agree with him also that there needs to be the completion of the roading system in Auckland, that’s why we are running that at almost exactly ten times the pace that the National Party did when they were last in power. You could for example start moving towards biofuels, you could for example start having government procurement policies for hybrid vehicles. I've asked officials to start thinking around all of those ideas and to bring their best ideas forward to a government formed after the election on or before October 31st. We do need to dig in and start making some progress.
SIMON Will you subsidise or otherwise incentivise those industries that do help to reduce emissions such as the forest planting, such as the wind farms, would you offer any incentives to them?
PETE We haven’t offered incentives to ordinary forestry planting but certainly are offering credits for conservation forestry and Simon the reason that wind energy had quadrupled in this country in the last 18 months is precisely because they’ve had carbon credits to assist them, those carbon credits would not exist if we were not ratifying the Kyoto protocol.
NICK We've got no carbon credits, we're in debt.
PETE There is considerable business opportunity arising from Kyoto and wind energy since you mention it is a really good example.
SIMON One last comment from Nick Smith before we go to the break.
NICK All we'd simply say is that look the government's going to only support those that plant non commercial forestry, that’s where some of these hardest questions are, the government doesn’t have a bolter's hope of meeting its targets within the current policy, there's gonna have to be a change and that should include the option of pulling out because like I say writing a cheque to the Russians for a billion dollars is bad for the environment and bad for the economy.
SIMON Gentlemen thank you.
SIMON Joining us are guest commentators David Beatson and Bernard Hickey. Gentlemen are you reassured by all that, no resignations and the numbers – well who knows what they are?
SIMON We've had a number of instances of ministers blaming advisors and officials but this is one where it's absolute trash.
DAVID Well who is doing the revision of these estimates? They're being done by highly scientifically qualified officials team. You heard the Minister saying quite categorically that he wasn’t there to quibble with the figures he had to accept them. Well I'm sorry 50 million carbon credits, tons of carbon credits to 32 million to 36 million deficit in the space of two years, no way José you can't wear that and the documents- and I've had the misfortune to read the documents- the documents are impenetrable, but when it gets to the crunch point about asking you know why this savage adjustment has been made you get to a bottom line saying oh well yes the forest sinks quantifications have been reduced because the quantification of previously unknown risks concerning scrub land and the updating of previous estimates with improved scientific information – full stop. Well I'm sorry I want to know what it is.
SIMON Okay well let's ask the Minister. Minister would you like to answer that?
PETE Yeah I know what's happened there. What's happened is that because forests have been planted not on bare land but on land that already had for example manuka or kanuka on it which was cut down before the pine trees were put in then it turns out you can't count those pine trees as new forests because of the Kyoto rules and what officials have done is that they’ve estimated the proportion of land that this new forestry was put on that might have first had kanuka and manuka on it.
SIMON Once again there's a stuff up Minister, you're obviously not going to resign from my earlier questions, whose head's going to role is the aptly named Barry Carbon the head of the office going to go? Who's going to go, someone's gotta go it's costing all of us a heck of a lot of money.
PETE Can I just make this comment I do appreciate your remarks that these are surprising findings, guess who is the most surprised person around here. However it is not okay to simply say that because the data keeps changing we'd better go out and cause people to resign. What I would much prefer to do is get this thing internationally peer reviewed and then bring the peer reviewers and our people together if indeed there is a big difference between the two and say righto folks enough uncertainty can we please nail down a methodology which is going to be internationally acceptable and stick with it.
DAVID Minister can I just ask a question in regard, you made the point a second ago that we had suddenly discovered that some of the treatment given to scrubland converted to forest did not comply with the Kyoto rule, were those rules known and clear at the time the original calculations were carried out that gave us this wonderfully optimistic picture of what New Zealand could expect by way of carbon credits?
PETE Yes they were David but assumptions have changed and those assumptions frankly need to be tested yet so they will have been assumptions, let's – and I'll just make this up if you don’t mind because I actually don’t know precisely why and I won't know until I've had the peer review back so that I've got something to contest with. I don’t want to be seen to quibble but I do need clarity and it's well within the bounds of possibility that what's happened is that people have looked at for example satellite photography and said well on reflection it now looks that that shade coming out of the photograph means kanuka whereas earlier they might have decided that that shade does not mean kanuka or something like that.
BERNARD HICKEY – Editor, Business Day
PETE The carbon tax and these projections are unrelated, the idea of the carbon tax indeed the idea of the Kyoto protocol is to have a polluters pay future, because then if you can avoid the pollution you get rewarded. That’s the whole idea of a carbon tax, that’s the whole idea of the Kyoto protocol and that’s why we've put a carbon tax through into our economy beginning on the 1st of April 2007 which approximates what we think the international price of carbon will be.
SIMON Let's go to Nick Smith for a moment.
NICK Yeah my problem with the carbon tax is that it'll have absolutely no effect. The government's put up petrol price twice by the odd five cents a litre, it has had zero impact on the amount of consumption, so the idea that this carbon tax is somehow going to reduce the amount of emissions is just dreamer territory and the real danger, and I'll just give you a really practical example to bring us home to real people. I've got a tomato grower in my area whose major competition is Australia. The effect of the carbon tax on his business is an extra 70 thousand dollars a year, all it means is that more tomatoes will be imported from Australia and some of the 160 people in my electorate who work in that business are going to be unemployed and for no climate gain either, that’s why National says no carbon tax.
SIMON Dr Smith we've heard from Dr Hodgson that these figures are assumptions, they are forecast no one seems to be accountable, he's obviously not going to fall on his sword, he avoided the question over Barry Carbon head of the office who should be responsible, are we supposed to just accept that oh there's a billion dollars here we can't really know about it, or does someone have to be held accountable and if so who.
NICK There has to be some accountability, whether it's the 111 stuff up in the government or the scholarship NCEA cock-up, nobody is accountable, there needs to be some accountability and it's this Simon. If the officials didn’t know that there were a disclarity about what forest counted and what not that’s fine, sometimes that occurrs but it should have been upfront about it and the Minister shouldn’t be out there damning good people, good New Zealanders like Alex Sundakov who properly questioned the report, so yes heads should have rolled and if the Minister can't …
SIMON If you find yourself in government next year and you find yourself in a similar position you guarantee that you will resign if assumptions and forecasts become a problem?
NICK I'm saying that if the Minister has gone out and made a huge decision for New Zealand, ratified this protocol on the basis of numbers that are shonky somebody's gotta take responsibility and if he's not prepared to hold any official accountable he should do the honourable thing.
SIMON Opposition Spokesman Nick Smith and government Minister for the Environment in charge of climate change, Pete Hodgson thank you both very very much for your participation in the programme today.
SIMON Time for the final thoughts from our panel now, all happy over Kyoto now are we?
SIMON It's gonna go on and on isn't it?
BERNARD The real problem is here we only produce 0.2% of the world's carbon dioxide emissions and America's not in it, Australia's not in it, China which is growing so fast you don’t know and India are not in it, whatever we do it's a waste of time to be quite frank, and we're working ourselves up here about giving money to the government to buy carbon credits from Russia.
SIMON Yeah, it just makes no sense at the end of the day does it.
DAVID Well I'm looking forward to the government hybrid car. I want to know what this is.
SIMON It spins on the spot. What of the accountability question?
BERNARD Whatever happened to ministers resigning, I remember watching when there was a major problem there was a stuff up the minister went, what minister in this government has gone because of a mistake they’ve made in policy and there's been a few movements here and there on personal stuff, but whatever happens when there's a real mistake why doesn’t the minister go?
SIMON Is that an anachronism now is it?
DAVID I don’t know in this one, look you're dealing with how long is a piece of elastic with all these projections I've got a lot of sympathy for the minister and indeed for any minister trying to grapple with this mess.
SIMON But from year to year that’s a huge change and hard to justify on any basis.
DAVID And so little effort put into the reports to explain why the change. Very little. It's just skated over it's almost assumed, well science has moved on and so will we and it doesn’t matter somebody will pick up the bill somewhere and somebody else can worry about that.
SIMON Speaking of that were you any more reassured by what the Nats will do about it?
BERNARD Well that’s the problem they bought into Kyoto to start with and they basically sympathised with the whole push towards Kyoto. If they asked the question of most New Zealanders they'd say, 0.2%, our two biggest trading partners are uninvolved – why?
SIMON Yeah we're not getting answers from the Nats though it's the conference this week, what do you think we're going to see out of it, some policy?
DAVID Well I don’t think you're going to see the tax policy because the election hasn’t been called yet and it's obviously being saved and reserved for that, you might see some hints about it, but coming back to this question I mean you are dealing with elastic with the books these days aren’t you when the Minister of Finance can suddenly find 500 million dollars to put into roading projects.
SIMON Which he immediately applies to roads which of course create more carbon emissions.
DAVID Well no they'd say that reduces them by making the traffic flow faster or something, but the fact is some large unexpected payments from the financial sector – excuse me here we go again, is this another half million dollar shift.
SIMON Half billion.
DAVID Half billion and all I can say is if I was in opposition I'd be going what on earth is going on with these books? I wouldn’t be too specific either.
SIMON Yes well projections and assumptions you know that’s seems to be …anyway we have to go.
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