How Will National Improve the Environment Without Making Polluters Pay?

Simon Bridges has hit out at the Green Party for their lack of progress on environmental issues, claiming National made more progress in Government. But they have also hit out at the recommendations of the Tax Working Group report's proposed new environmental taxes. This begs the question of exactly how National plans to tackle environmental issues without making polluters pay? 

Was the Last Government Really Better Than This One on Environmental Issues?

National is trying to buff up its own environmental credentials by rewriting the history books of their last term in Government. To do this they are picking on the one area where they did better than the current lot are - the marine space. While he may be right on that count, the fact is that across the other big environmental areas - climate, fresh water, conservation and waste - National were behind the 8 ball. The Blue Green arm of the party have released a new discussion document but there are few concrete ideas in there as yet to claim they have real environmental credentials. 

Of course he does have a point about the Green Party. This term has shown the problem of being shackled to the side of Labour. They have no bargaining power compared to NZ First, and so are unable to get any real wins. As a result we have seen little progress on substantive environmental issues other than those that were already in Labour's election manifesto. 

Polluters Should Pay

What is more worrying is that National have come out swinging against the environmental taxes proposed in the Tax Working Group report. 

Now there is plenty to debate in the detail of these proposals. Ideally they shouldn't be taxes, but rather 'prices' on our scarce resources. Where water or the right to pollute is scarce, we should use prices to decide how those scarce resources are allocated. This is basic economics that National shouldn't disagree with, except of course that it applies to their farming voter base. 

There are also big questions over where the money goes. Ideally it should be used to repair the environment and reward businesses that are acting in an environmentally friendly way. That way the money raised stays in the industry and region. Environmentally friendlier businesses will also have higher profits to show for their efforts. These are "corrective taxes" or prices, and again they are pretty standard economic theory that National shouldn't be able to disagree with. 

Those are all things to debate. However what we can't do is pretend that we can improve the environment without someone paying. Under the previous National Government it was the taxpayer that picked up the bill. The Opportunities Party believes that it is the polluter that should pay. 

All environmental issues involve activities that impose costs on others. Unless we take account of those costs then we will have too many of those activities than is ideal. So the basic question is who is going to pay for these costs? If the polluter pays, then they have an incentive to reduce the activities that create the costs in the first place. Ideally they can do those activities in another way that creates fewer costs.

If the polluter doesn't pay, someone else has to. That someone else usually ends up being the taxpayer, or the environment. This is a worse outcome because there is no incentive to do things better. 

Many other OECD countries have much higher levels of environmental taxes. They have shown that they can have successful economies by making polluters pay. If it is done well it encourages innovation, and that innovation can ultimately be sold and profited from. In short we have nothing to fear from making polluters pay. 

It is a real shame that the debate about the Tax Working Group has focussed on the problematic Capital Gains Tax. The environmental proposals are worth looking at in a lot more detail.