Taxpayer Talk - podcast by the New Zealand Taxpayers' Union

Taxpayer Talk: Climate Change Commission Chair Dr Rod Carr

March 26, 2021 New Zealand Taxpayers' Union Inc.
Taxpayer Talk - podcast by the New Zealand Taxpayers' Union
Taxpayer Talk: Climate Change Commission Chair Dr Rod Carr
Show Notes Transcript

Jordan Williams gets 30 minutes with the Climate Change Commission's Chair, Dr Roderick Carr at their offices.  He is joined by Matt Burguss, the Senior Economist at the New Zealand Initiative think tank to put to Dr Curr many of the criticisms of the report.

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Jordan Williams:

Dr Rod Carr is the chair of the government's Climate Change Commission, an independent statutory body tasked with providing the government with independent analytical and credible advice on how New Zealand should meet its climate goals of carbon neutral by 2050. He's a banker or better central banker is probably a better description by background, professional director and served as vice chancellor of the University of Canterbury.

Jordan Williams:

Dr Carr, welcome to Taxpayer Talk.

Rod Carr:

Kia ora. Nice to be with you.

Jordan Williams:

Dr Carr, or Rod?

Rod Carr:

Rod is fine.

Jordan Williams:

Rod's fine? Great. With us as well, we have Matt Burgess. Matt's a senior economist at the New Zealand Initiative. Former senior economics advisor in the office of Sir Bill English, and a sceptic of some of the things, or the economical analysis of the Commission's draught advice to the government, which is currently open to public consultation.

Jordan Williams:

Welcome Matt.

Matt Burgess:

Hi.

Jordan Williams:

I want to start with some common ground, gents. I assume that we all here agree that emissions must come down. We accept the scientific consensus that climate change is man-made, but the real question is, how do we best get there. Is that a fair representation?

Rod Carr:

I think that's common ground.

Matt Burgess:

I think so, yeah.

Jordan Williams:

So I guess, why we're here is what took the Taxpayers' Union's attention Rod, was your public comments that, "These changes are going to be on the scale that will rival the transformation from our controlled and regulated economy in the 1970s through to the early 1990s. It will be on the scale of the de-militarization after the Second World War. It will be on the scale equal to getting ourselves out of the great depression of the late 1920s and I would guess it might rival the sums of all those parts." Do you stand by that? Why do you think so much change is necessary?

Rod Carr:

I think there are two drivers for the scale of change that's necessary. One is our emissions from agriculture, which is one of our split gases, and the other is essentially the long life gas emissions. If we take agriculture for a start, biogenic methane is a greenhouse gas, and it is a difficult to abate gas, with our ruminant pastoral livestock practises. So there's some very challenging issues there to achieve the desired reduction to meet the targets.

On the long life gases, the major source is the burning of fossil fuels in the open environment. There's no doubt there are other sources of fluorocarbons and so forth and nitrous oxide, but the biggie is the burning of fossil fuels in the open environment. That technology has been an incredibly powerful enabler of the civilization that we have built in the last 200 years, because fossil fuels have been source of significant energy.

Jordan Williams:

Yeah, I think we all would take that as read.

Rod Carr:

So the challenge is to de-carbonise not just our economy but the global economy, is going to require a substantial change in the sources and uses of energy.

Jordan Williams:

See, have you heard the earlier podcast we did with Oliver Hartwich and-

Rod Carr:

I have indeed.

Jordan Williams:

You have? So, Matt, obviously the New Zealand Initiative or your colleague Dr Hartwich has said that the Commission's analysis shows the plan isn't necessary, or at least many aspects of it, to achieve our emissions targets, but you argue that the plan nevertheless seeks to intervene into the lives, economy and livelihoods of New Zealanders. Take us through on why you think these measures aren't necessary, given Rod argues they are, particularly around these long term gases.

Matt Burgess:

Well I think there's a couple of really good take aways from the Commission's report. The first is that we have multiple pathways to net zero emissions in 2050. That's our target. The Commission identifies, under its plan we will spend $250 a tonne by 2050 delivers us to net zero, keeps us there. But the Commission also shows that current policies, including the Emissions Trading Scheme, can also get us to net zero emissions in 2050.

The second interesting implication of the Commission's analysis is that we can actually stay at net zero after 2050 quite comfortably. The Commission, I think it's fair to say, has made comments to suggest that that will, staying at net zero, even if current policies get us to net zero, staying there is going to take a lot of tree planting to keep us there, that's not acceptable. Actually the Commission's analysis doesn't show that. The analysis shows that we still have options for maintaining net zero after 2050 with current policies. We could plant no trees after 2050 and maintain net zero, again on what the Commission has found.

The consequence is that we have choices about how we get there. So each time the Commission says "We must de-carbonise this much in transport. We must do this time critical issue necessary action here or there", that word necessary is actually I think not correct in the sense that we could do none of the Commission's recommendations and still achieve and maintain net zero emissions, and that's on their analysis.

Jordan Williams:

Rod, do you think, are you guilty of overstating the cause?

Rod Carr:

I don't believe so. I think that, quite rightly Matt has said that the Commission's work has identified there are a number of pathways that are compatible with achieving our statutory targets. So that is ground we share in common, and it's reassuring to know there's not a single one.

Secondly, I do think it's worth being clear about what the pathway that the Commission has articulated as our path is, and what it is not. Our path is not a central plan for the New Zealand economy.

Jordan Williams:

But it does look like it, when you go through the list.

Rod Carr:

It is not. It is very clearly a demonstration pathway that says, there are a series of internally consistent inputs, assumptions, outputs and outcomes along a pathway. I can guarantee that from 2030 looking back, the path that we will have followed will not be that one. That external events, internal choices, prices, consumer preferences, will all shape the path we take.

Jordan Williams:

Okay, well lets, rather than get lost on different paths, lets just check that we want to go to the same destination. Do you accept that New Zealand or the role of the Commission, should be to find the cheapest or least economically damaging pathway to the targets?

Rod Carr:

No, and it's very clear that the Commission is not tasked with finding the least cost pathway. There are at least seven matters that the Act requires us to take into account in formulating emissions budgets and other matters that must be taken into account when we think about a reduction plan. Society is concerned about the cost, but is also concerned, and we are required to have regard to, a range of other matters, such as, the impact on generations to come. Such as the distribution-

Jordan Williams:

But isn't that the role of-

Rod Carr:

No, I'm saying what our Act requires us to do. Such as the distribution of impacts, and yes costs are one of the matters, but it is certainly not the case that a pathway that is required is the least cost pathway.

Jordan Williams:

But by definition, if you're determining who bears the cost, that sounds a lot like a plan Matt picked you up on use of the word necessary. What you're saying though is that it's not necessary, or do you accept the premise that your particular plan as opposed to what the Initiative propose, which is more reliance on the ETS, or at least in the areas covered by the ETS currently, is no more than that is necessary to hit the carbon zero by 2050. Do you at least agree with that?

Rod Carr:

But the Act is concerned about "how" we hit net zero. The Act is clear that there are matters that need to be taken into account, to inform what would be an emissions reduction.

Jordan Williams:

But you've just acknowledged we can't possibly predict the future to that degree.

Rod Carr:

No, but we can know that the advice can take into account other matters, and that includes the certainty or risk. That includes future generations. That includes the crown partnership with Maori. That includes the range of things listed in the Act.

Matt Burgess:

Can I just jump in there? Look, I don't see anything in the Act, and I am happy to be corrected, I don't see anything in the Act that prevents the Commission committing to a principle of least cost... achieving our emissions targets at least cost while having regard for these other things.

Rod Carr:

Except that's not what the Act requires. So we'd be absolutely wandering off, making up our own mandate.

Matt Burgess:

No, no, no. The Act gives you a purpose of mitigation, along with adaptation. It requires you to have a regard for a long list of things, there's no question about that, but there's nothing within that that contradicts the idea that you could commit to a principle, other things being equal lets say, of removing or reducing carbon at least cost where possible.

Rod Carr:

If parliament had wanted that, they would have written it in the Act.

Jordan Williams:

Do you think that you are obliged not to take the path of least cost?

Rod Carr:

No, I don't believe we're obliged not to take that, but I do say-

Jordan Williams:

So you're making a conscious choice.

Rod Carr:

I do say that the pathway that the Commission is required to give advice on, and the government will then ultimately have to decide on, needs to take account of cost, risk, the future, not just cost.

Jordan Williams:

The Intergovernmental Panel on Climate Change has said that "If a capping trade system", ie; like our Emissions Trading Scheme, "has sufficient stringent cap, then other policies such as renewable subsidies", which is something the Commission has recommended, "have no further impact on total greenhouse emissions." Rod, what do you know that the IPCC doesn't?

Rod Carr:

I think the first is the conditions about an effective and all embracing Emissions Trading Scheme.

Jordan Williams:

So you're saying that-

Rod Carr:

Lets start with a point. We believe, the Commission believes that markets, prices, producers and consumers making their preferences known through choices, has a significant contribution to make to achieving our statutory targets.

Jordan Williams:

Yeah, well that's the benefit of [crosstalk 00:10:49]. Yeah we'll take that as read.

Rod Carr:

But, we also believe that the ETS itself cannot do, in the time available, and the constraints the Act requires, all of the work.

Jordan Williams:

But your own modelling, I've seen the diagrams in your report, show very clearly we get there by 2050 under current policy settings, ie; the ETS.

Rod Carr:

But it also says that there are other pathways that can be taken, and they have, because of the Act-

Jordan Williams:

And you're choosing that other pathway.

Rod Carr:

Oh no, we're recommending that you look at all the pathways. We're consulting on the advice. We've given a demonstration pathway of a series of internally consistent trade-offs. We've already got six and a half thousand submissions from people coming back. In some cases saying you're not being ambitious enough, and some cases saying you haven't taken into account the impacts at regional or local levels enough, and in some cases people saying, you haven't let markets play their full part.

Jordan Williams:

In some cases saying that we should be getting there in the cheapest way possible.

Rod Carr:

As I'm sure some will say, and that certainly was what parliament had the opportunity to consider. It would have been a very simple criteria, however society is complicated.

Jordan Williams:

Rod, you've been accused of departing from your statutory mandate, or to use a colloquialism, departing your lane. Your draught report, or draught plan talks of "Reshaping our cities." For example you also say that, "We need to walk 25% more, cycle 95% more and take transport 120% more by 2030." You get into matters that look a hell of a lot like urban planning.

Rod Carr:

Yeah, but just be careful what we do say. We say, if you are on our path, which is a demonstration pathway, then you will observe a bunch of things that are consistent with what's going on, on our path.

Jordan Williams:

But if we're all in electric cars, why does it matter whether I'm walking or driving?

Rod Carr:

We are not saying you have to walk. We're saying, but on that path, you will find that you observe 25% of current ICE kilometres-

Jordan Williams:

Because cars will be too expensive.

Rod Carr:

Cars may be somewhat more expensive. People may choose to walk somewhat more.

Jordan Williams:

Well, I mean, these are your words, not mine. Cycle 95% more-

Rod Carr:

[crosstalk 00:13:04] how you describe them as if we are suddenly going to force people to walk. What we're saying is that we'll make different choices.

Jordan Williams:

So what you're saying then, is the government can't pick and choose areas of your pathway.

Rod Carr:

What we are saying is the government won't be able to tell you to walk if you don't want to. That is true. Nowhere in our advice do we say, "Make people walk."

Jordan Williams:

But you can't buy an internal combustion engine vehicle.

Rod Carr:

What we're saying is that by 2032, on the pathway we used to demonstrate a way forward, you would want to restrict the importation of ICE's to only those vehicles where there was not a practical alternative. Nowhere do we say ban the imports. So we have to be careful what we do say and what others say we say.

Jordan Williams:

So you're saying that New Zealanders will still be able to purchase internal combustion engines post 2030.

Rod Carr:

What we're saying in our advice, and its draught, is that there is a time between 2030 and 2035, and 2032 is a date that has been suggested, whereby you would not want to be importing internal combustion engine cars, except where there is a alternative.

Jordan Williams:

No, no, no, not want [crosstalk 00:14:16]. No, no, no, this is very important, because we seem to be hearing quite a climb down from what your report says.

Rod Carr:

No, I thought it was pretty clear.

Jordan Williams:

You talk about... Well, no.

Rod Carr:

There is no ban. It says simply-

Jordan Williams:

I've seen you quoted in articles saying that there is.

Rod Carr:

I have never said there was a ban on imports.

Jordan Williams:

Lets turn to the process being run by the Commission. Are you proud of the Commission's consultation process and the way you've run it? Do you think it's been a good one?

Rod Carr:

Yeah, so in the lead-up to preparing the draught advice on the direction and policy and the draught emissions budget, we spoke to over 700 individuals, groups, whether they're NGOs, whether they are business leaders, business groups, individual companies, over 700 in preparing the draught advice. The draught advice is now out for consultation. We've got over six and a half thousand submissions so far, and I expect that then when we finalise and report, it is still advice to the government. Any regulatory process that would need to follow the government adopting its emissions reduction plan and budgets, would go through the normal regulatory process.

Jordan Williams:

It's been reported to us earlier this week by a member of industry, I understand it's maybe one of the ones you're referring to, was in a meeting with one of your Commissioner colleagues, said that the Commission had received so many submissions that "They couldn't possibly all be read." Are you saying that you've asked those thousands of people, including many of our supporters, who have submitted in good faith, can you guarantee that their submission will be read and absorbed, or was this consultation a scam?

Rod Carr:

I can guarantee that every submission will be read. We have a team of 10 at the moment reading, handling each submission, some of which have come through our portal, and are therefore being processed in a database. Others are having to be manually loaded, because they did not come through our portal. They will all be in the database. They are all being tagged so that the principle analysts relating to particular matters are going to review those. They will then provide advice to workshops of the board, about what the submitters are suggesting, and advice about how we will respond.

So, in one way, our Commission member is correct. I do not propose to read six and a half thousand submissions. That would not be a reasonable expectation, but would every submission be read? Yes.

Jordan Williams:

So one of the areas that the business groups have also picked up on, and I note that 15 pan industry groups wrote a public letter to you calling for more transparency, particularly around your modelling. Matt, you've spent quite a lot of time in this area. Just explain, what are some of the areas where you've obviously worked in a Minister of Finance's office. You understand the budget process. We know all the transparency that goes on around there. Do you think that... Explain what those concerns are around lack of transparency around making the modelling available?

Matt Burgess:

Yes, so we've given... Let me start by saying the Commission has got an incredibly difficult job. The reason we've been a bit tough on the Commission around transparency and the willingness to get everything out there, is because of the cental role that analysis has to play in this space of climate change policy. If you've got multiple choices, and lots of degrees of freedom about how you get to your emissions target, you've got to make choices. That puts analysis right at the centre. You can't fly blind on matters as complicated and having to weigh off all the different tradeoffs that the Commission's been asked to consider. You need analysis right at the centre of it.

So, in order to understand the merits of a case for going early on electric vehicles for example, we really want to see the analysis underlying that to get a sense of whether actually it's a good deal for New Zealand, whether it's well aligned with what we think is important as a citizen of New Zealand, or whether what other objectives are being pursued instead, if that's what's happening. It's hard to do that without access to the modelling. As it turns out, a lot has been released, but ultimately we don't have the information we need to understand how the Commission has reached a conclusion that its sweeping reforms are going to cost less than 1% of GDP. We just don't have enough.

We know that there's wage information and wellbeing information in the general equilibrium models that we don't yet have. We also know the Commission said that it will release all the information, I think, in June or July. We don't understand why that can't happen now.

Jordan Williams:

Will the consultations close by then?

Matt Burgess:

Consultations closes in two days. We just can't see how these various things are in the public interest, and we worry that, look let’s be clear, this is one of the biggest and most important policy processes New Zealand has seen in a generation.

Jordan Williams:

Multi-gen-

Matt Burgess:

It's reasonable to expect, in the circumstances, a first class process that's absolutely as transparent as possible. Every effort's made to make sure that we completely understand the logic behind what's going on. That's the prerequisite for being able to support any recommendations and ultimately policies that come out of it, and we're not getting it.

Jordan Williams:

Rod, why didn't you release the general equilibrium model?

Rod Carr:

Let's get a few things fact. Huge amounts of the data that is used to drive these models is and has been on our website. If you can specifically identify information that is in the form of data that you think is available to us that's being withheld, please identify it.

Jordan Williams:

I've got a dozen emails in the last three weeks from economists saying that you haven't been transparent about your data. Are you seriously suggesting-

Rod Carr:

I'm seriously saying, let us know the data sets they think that [crosstalk 00:20:03]-

Jordan Williams:

Your general equilibrium model.

Rod Carr:

No, no, come on back. We've identified data as one of the issues that you're asserted as having data that is not being made available.

Jordan Williams:

Okay we can be clear on-

Rod Carr:

We'll come to the source code for the model, right? The source code for the model is source code that is being built by a contractor alongside our use and development, was originally contracted to be made-

Jordan Williams:

Is it still being built?

Rod Carr:

Listen, was made accessible under a creative commons licence with supportive documentation.

Jordan Williams:

If it's creative commons, we should be able to have it.

Rod Carr:

Yeah, on the 1st of June or thereafter, depending on how long it takes to complete the documentation.

Jordan Williams:

Are you still building it? Is it not finished.

Rod Carr:

That's not the issue.

Jordan Williams:

Is it not finished Rod?

Rod Carr:

It is ready for release under a creative commons licence.

Jordan Williams:

Rod, you've recommended the most transformation public policy changes in multiple generations-

Rod Carr:

We dial back and just [crosstalk 00:20:58]-

Jordan Williams:

Well, no, no, it's a simple question.

Rod Carr:

We are not building the model. We are running the model. It is not in a form to release under a creative commons license, with the documentation to support it.

Jordan Williams:

But creative commons license means, by definition that we're able to get a hold of it.

Rod Carr:

Yeah, yeah, and they-

Jordan Williams:

And you're saying it's not ready, isn't it.

Rod Carr:

It's not ready for release under a creative commons license.

Jordan Williams:

So how could you come to the conclusion, and come back to your word necessary, if you haven't got a functioning general equilibrium model?

Rod Carr:

We have a functioning general equilibrium model. We have run workshops at which people have been invited and turned up and been able to watch the model-

Jordan Williams:

And those people at those workshops are emailing us, saying they don't have the necessary information.

Rod Carr:

The models have been peer reviewed. The workshops have been held. The data is available on the website-

Jordan Williams:

And you won't release the assumptions within it.

Rod Carr:

The assumptions are on our website. Let's not confuse data and assumptions and inputs with the source code for the model, which we will release when it is in a form to meet the requirements of the creative commons license.

Jordan Williams:

Okay, let's part that-

Rod Carr:

And the documentation to that.

Jordan Williams:

Let's part that for a moment, will you allow the economic and legal community in New Zealand to give feedback when that model is ready?

Rod Carr:

I'm sure they will. I'm sure they will.

Jordan Williams:

So you will open another submission process on it?

Rod Carr:

No, I'm sure they will give feedback. We will have presented to the government [crosstalk 00:22:29]-

Jordan Williams:

So you the Commission to the world. I'm sure they will.

Matt Burgess:

Jordan, the enormous risk in all of this is that, as we saw with the zero carbon bill two years ago, when the data arrives very late in the process, it has no impact. So we saw, right at the end of the zero carbon bill, after political parties had taken their position on whether to vote for or against, then we get access to the cost benefit analysis from the Ministry for the Environment that shows we're paying $3,000 a tonne per tonne of carbon to get to net zero. An outrageous figure that would almost bankrupt the country, almost literally. That has no impact when it arrives after decisions are made. So the problem with all of this, the data turning up, is the later that it turns up, the harder it is to stop whatever policy has been put in motion.

Rod Carr:

[crosstalk 00:23:15]-

Matt Burgess:

I'm sorry, there is still data that... There's two things here Rod, just to be fair. It's not reasonable in my opinion to say, tell us what you want, when you haven't provided documentation of the model that doesn't tell... So we don't know-

Rod Carr:

You can't have it both ways.

Matt Burgess:

While I acknowledge that a lot of data has come out, we still don't have wage data. We still don't have the infrastructure costs around electric vehicles. We don't have wellbeing data that we know is in general equilibrium model, and we don't know what else. There is important information that we don't yet have. We haven't had a reason why not.

Jordan Williams:

Rod, you've said publicly, this is quoting from Stuff piece, talking about the government, "They need to be well advised. The advice needs to be transparent. It needs to be evidence based. It needs constructed after due consideration and it needs to put the government of the day in a position to have the courage to make these tough choices and for the country to be carried with them." Do you at least accept it would have been a better process to have had this information out there as part of the consultation process?

Rod Carr:

We have worked with the time frames that we have been given. The team has worked amazingly hard to achieve the deadlines that have been set for the delivery of the work and we are satisfied with the quality of the advice that we will offer.

Jordan Williams:

Do you accept that the reason why so many questions are being asked is that the Commission claims that the cost of your plan is just 1% of GDP? NZIER says that it's between 15 and 25%. Can you name a single-

Rod Carr:

These are not comparing like for like. Lets at least agree on that. NZIER modelling is some years old. It uses a different set of assumptions about costs and technology paths and uptake rates.

Jordan Williams:

Isn't this why it needs to be tested? Can you name a single, not just a commentator, a professional economist, that concurs with your 1% of GDP claim? Well, can you name one?

Rod Carr:

The reality is that the 1% of GDP-

Jordan Williams:

Can you name one?

Rod Carr:

... is in the order of magnitude that the UK Commission and the EU have modelled themselves.

Jordan Williams:

But under an ETS regime you were taking a different plan.

Rod Carr:

On no, that's not entirely true. The ETS is only partial in Europe. It doesn't include agriculture or transport as I understand it. UK is certainly confused about Brexit and whether they do or don't continue to use the European scheme for their emissions pricing.

Jordan Williams:

Look, I'm conscious of time, and you've given us half an hour. You've, when you took on this role, you were quite public that you wanted to take the politics out. You said that. You told Newsroom that you were being careful not to overstate your mandate and that you were in fact seeking a mandate from the public to push harder and faster for climate action. Do you think you'll get that mandate from the majority of submitters?

Rod Carr:

Time will tell. I'm not going to preempt exactly what is in the six and a half thousand and rising number of submissions, so I don't know the answer to that. We will know when we process the submissions.

Jordan Williams:

One of the mandate issues is this idea around gross and net emissions. The legislation is very clear that you were tasked around, and in fact looking back on Hansard, it's clear that it was deliberate that you were to focus at net emissions, and yet in both the plan and in your even clearer public statements, you've gone out on a limb and argued that it is gross emissions that matter. Do you accept that you've gone wider than what your initial-

Rod Carr:

No, not for a minute, because there are three other things among the seven things that we must have regard to. One of them is land use change. Another one is the intergenerational effects.

Jordan Williams:

But isn't that best left to councils? How is land use-

Rod Carr:

No, no, land use changes about as a consequence of signaling through markets the change in land use is-

Jordan Williams:

Your preference.

Rod Carr:

... driven by how we trade off producing [crosstalk 00:27:19]-

Jordan Williams:

Yes, only Greenpeace type... I've only got two more... left wing journalists were picked, you left off Hamish Rutherford, the Wellington business editor at the Herald. You left off interest.co.nz totally. You left off Richard Harman. You've left off the serious end of town and instead given it to Simon Wilson to have for a week in advance. I come back to the question, are you proud of this process, and do you really think you're keeping the politics out of it?

Rod Carr:

Yeah, so let's be clear. We have engaged with a number of journalists over an extensive period of time, as they built-

Jordan Williams:

What was it, eight wasn't it? A select-

Rod Carr:

... their understanding of climate policy and climate action. We were very concerned to make sure that the draught of the advice was not leaked, because of the impact it would have on markets.

Jordan Williams:

But that's ridiculous. Treasury do that every budget. There are always documents from the government that they release under embargo or have a lockup. One, you have a lockup and give it to all under those circumstances.

Rod Carr:

We made a choice and the Commission and I made that choice.

Jordan Williams:

Final question, because I haven't read this OIA but I'm reliably informed that the Commission have provided this to a third party, and I'm mindful that you've told us, or your chief executive has told us that you personally intervened, that part of that release strategy and the media strategy of not giving it to serious journalists to be able to go through it before your launch with the prime minister and James Shaw, is that you consulted with the Office of Prime Minister and James Shaw. I ask you, one whether that's-

Rod Carr:

That is not true.

Jordan Williams:

That's in a written... I've just been informed by a very reliable party, are you saying that your organisation did not-

Rod Carr:

Our choice of who was not consulted with the minister.

Jordan Williams:

So you picked just the lefties.

Rod Carr:

That is not true either. We picked the people who had engaged on this matter with us over months before.

Jordan Williams:

Yeah, your supporters. Thank you Rod Carr.

Speaker 6:

All right, [crosstalk 00:29:26].

Rodd Carr:

Very good, thank you.

Jordan Williams:

Well, we're back from the Climate Change Commission's office. For some reason we were ushered out pretty quickly Matt. What did you make of it?

Matt Burgess:

Look, the big take away for me was just, I guess what we all knew that the Commission isn't particularly interested in cost minimization. What I think we heard was, the Commission isn't obliged to cut at least cost but it could if it wants to. It's allowing-

Jordan Williams:

It's a huge blank check really, isn't it?

Matt Burgess:

It's a blank check, and this is the problem with the legislation. This was our submission two years ago on the zero carbon bill. You can be specific about what you want from the Climate Commission. You can tell it to cut at least cost, while worrying about issues like distribution et cetera. You can put that in legislation, just like you do for the Reserve Bank with inflation et cetera. It wasn't put in the legislation, and now we're seeing the results, which is a Climate Change Commission that feels it can roam across the economy, pick and chose which technologies it wants to stamp on, no particular obligation to demonstrate any of its ideas are going to work, no checks and balances after the fact.

Matt Burgess:

If you're interested in cutting emissions, this is a terrible model. If you're worried about climate change and want to maintain public support, this is a terrible model. There is no public interest and a Climate Change Commission that gets to do whatever it feels like and doesn't have to worry about what the rest of us worry about, which is to get the job done for the lowest possible cost.

Matt Burgess:

We heard Rod Carr say, "We are not interesting in cutting at least cost."

Jordan Williams:

Yeah, I think that was very significant. I didn't really get my head around, and obviously I wanted to go in there, because I think it's just so outrageous and Oliver made this point last week, that why are we making the same mistakes Europe has? When you've got ETS, let it do its job. Don't go and pick and chose and then the emissions... You know, this water beat effect idea.

Well, I didn't really... What he was saying was that their way is better because it better deals with long term gases. Was that-

Matt Burgess:

Well, their way is better because we get to do whatever we feel like worrying about this week. Whether its intergenerational equity or whatever. The problem is, that-

Jordan Williams:

That's not their job.

Matt Burgess:

It's not their job. Every time they worry about other things besides emissions it's at the expense of cutting emissions. On their own modelling, their plan costs between five and 16 times more the least cost approach. This is precisely because they are worrying about everything except getting us to our emissions targets at the least cost.

Jordan Williams:

Take me through just one more time, because Rod was not willing to move. He may well know this ends up in court, but he was not willing to budge one inch on this, that he had not been transparent on the modelling. Take me through, he talked about, oh we've released the data and things like that. I know you guys at the Initiative have been asking lots of questions around this and have been, on the basis of comments that your colleagues have been making, banging head against a brick wall. Just take me through, would he genuinely feel that he is being transparent?

Matt Burgess:

It's genuinely hard to understand. It's absolutely clear that data has been held back and we haven't been given a reason why. Now, he's at the top of a really big organisation with lots of complex data and modelling that's going on. We don't know what he's being told or what he understands. He maybe getting advice that says we have released everything. Our perspective, people we talk to around Wellington all tell us there's absolutely more to come out and it really matters to understanding.

Now, when Rod said, "Well tell us what you want", well look this is the problem. They haven't even released documentation of the model, so we don't know the full set of data that we haven't got yet. For all we know, less than half the data has been released. A lot's come out, and it's no excuse to say, "Well we've published a lot", which is what Rod did. The problem is, all the stuff we're not getting, because actually we still haven't had enough to understand why it's less than 1% of GDP for these sweeping reforms. We still don't really have a good sense of how EV's one and that's because the Commission hasn't really-

Jordan Williams:

When you said EV's one, you mean why the huge focus on-

Why the huge focus on EVs and how does that make sense if you're trying to cut the most emissions for the least cost. So, what we had been told was that whatever the Commission's doing, the way the models work is to reduce emissions at least cost right across the economy. It's not clear that's true.

Jordan Williams:

We were talking on the way that, off tape, that I'd really zoomed in that this model isn't finished. He said, "Well models, you're constantly tinkering with them. That's the way these things work." I just don't see that as an excuse, and this creative commons idea, by definition it should be in the common. That is what that whole model means.

Matt Burgess:

Yeah, I'm struggling with that and also the fact that you get yourself in a position... You write an agreement that stops you from releasing a model when you said from the start, we want to release the model.

Something else that I thought was really striking was, our submission at the Initiative has been focused around the idea that the Commission's model shows that current policies get us to net zero and the Commission's model shows that we can stay there easily. Rod agreed with that. Now that destroys their case for the sweeping transformation of the whole economy that we want.

Jordan Williams:

They want.

Matt Burgess:

That they want. I think Rod essentially confirmed that, that transformation has nothing to do with emissions.

Jordan Williams:

But then he's acknowledged markets are better. We believe in consumer choices and things like that, but it was like he was talking about a different report.

Matt Burgess:

And you see that in the report itself. The Commission acknowledges all of these same sorts of things. The Commission in three places in the report says that if you have a binding Emissions Trading Scheme, other policies don't cut emissions any further. You can only cut emissions once. The Commission acknowledges that in its report in three places, and then proceeds to recommend 25 recommendations that end up giving you more intervention than Muldoon. They never reconcile the fact that they've said these policies can't cut emissions with the fact that they're recommending those policies. Kind of an important issue when you're talking about 10s of billions of dollars of policy in the name of emissions. They're not going to cut emissions.

Jordan Williams:

Matt, you've been in the top level of discussions around the Minister of Finance's office. Overall, how do you think this process has been handled, and looking into your crystal ball, what do you think is going to happen, and how do we at least blunten the sharp edges of this?

Matt Burgess:

The process pretty much couldn't have been worse. I think you've got big stakes combined with an unusually poor quality process. The shambles of just fundamental disagreement about what has or has not been released, for goodness sake.

Jordan Williams:

You've only got Simon Wilson as the expert, the one to work with them. Just ridiculous when your business editors aren't getting the copies of the papers and are expected to question the ministers with an 800 page report that they are given half an hour beforehand.

Matt Burgess:

On the biggest reforms in a generation. For goodness sake. It's not good enough. It's just not, and I wish I'd said that to Rod, because I'm not sure how much negative feedback he's getting. He's got a tough job to be fair to him, under difficult circumstances, but the process has been shot-

Jordan Williams:

These a reason why the process is important, for that error checking.

Matt Burgess:

It should have been belt and braces, and look if that's what it takes, you go back to the governor and say, you need to give us more time, change the leg, then do it, and be seen to do it, right? Do the best you can to be transparent. So within the constraints there still have been choices made around media, around transparency, around decisions about how to interpret the leg, whether you're picking winners or whether you're running a process, those are choices available to them. They've made bad choices on all of those fronts, with real consequences and I just detect a real reluctance to even want to address that in some of the answers we heard today.

Jordan Williams:

Yeah. Matt, two final points. The first is to congratulate the New Zealand Initiative guys, because this is the first time that here at the Taxpayers' Union we are getting, really thanks to I think you guys blowing the whistle on this, a lot of major corporates contact are saying, hey you guys need to be standing up. You need to be telling your people about it. We need to blow the whistle on it. That's really the work, as I've acknowledged on this podcast before, you guys have rightly said, this is something to sit up about.

Matt Burgess:

Yeah, can I just, just very quickly, the key thing is, we can all agree, lets cut emissions et cetera. You can agree with that, and then raise doubts or questions or decline to go alone with a bad plan to get to those targets. What we're getting is a bad plan. In the end, what the Commission is doing will not cut emissions, and they have to be held to account for that.

Jordan Williams:

Finally, we've got 48 hours left. I think midnight Sunday isn't it, we can make submissions until. If you haven't yet made your voice heard, the Taxpayers' Union has made it easy. Go to www.taxpayers.org.nz/climate.

Jordan Williams:

Matt, thanks for joining two special episodes of Taxpayer Talk.

Matt Burgess:

Thanks Jordan.