2 Dec 2015

PM accused of fossil fuel double standards

10:51 am on 2 December 2015

The Prime Minister is being labelled a hypocrite for calling on the world to phase out fossil fuel subsidies at the United Nations climate change talks in Paris.

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Photo: 123RF

The Green Party said Mr Key's government was funnelling many millions to the oil industry and was not being upfront about the full extent of it.

New Zealand is one of 40 nations at the Paris climate change talks arguing for fossil fuel subsidies to be phased out.

Mr Key said that could reduce greenhouse gas emissions by as much as 10 percent.

Greens co-leader Metiria Turei said Mr Key's position was a bit rich.

Metiria Turei responds to Budget 2015.

Metiria Turei says the government is hypocritical. Photo: RNZ / Alexander Robertson

"It's hypocritical for the government to make the call for other countries to do something they're not prepared to do here.

"There is money being used to subsidise oil companies in New Zealand, the government won't tell us how much it is while they're grandstanding on the international stage."

During Question Time yesterday Mrs Turei asked Revenue Minister Todd McClay how much the oil industry had received in tax breaks since 2013, and how much revenue the government had forgone.

Mr McClay responded that Inland Revenue did not collect data on tax deductions for petroleum, mining or any other industry.

But Mr McClay's ministerial predecessor Peter Dunne said in 2013 that the government had forgone about $35 million in tax revenue that year.

Mr McClay later told reporters there was just one specific tax exemption for the oil industry.

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Todd McClay Photo: RNZ / Alexander Robertson

"There is an exception that says when they bring in a rig, and keep it here for more than 183 days, they would have to pay tax on it in New Zealand," Mr McClay said.

"We found what they were doing, many years ago, was exporting it, bringing it back in - the deductions are allowed to be claimed.

"So the previous government put in place a regime which means they can keep it in New Zealand after 183 days and don't have to pay tax on it - it's actually tax neutral."

In September the government announced it would give $12 million to Waikato University and GNS Science to carry out research that would assist petroleum companies.

And last month Greenpeace activists boarded a ship owned by another crown research institute, NIWA, to highlight that it had had a $24 million upgrade so it could explore for oil.

Catherine Cheung, spokeswoman for Climate Justice Taranaki said a 2013 World Wide Fund for Nature report showed there was another major way fossil fuel extraction is encouraged in New Zealand.

"To put it simply New zealand has one of the lowest overall tax takes from the oil industry - the oil companies," she said.

"It's at 46 percent when the world average is actually nearly 70 percent, so we're somewhere about half of the world average."

The WWF estimated the government gave subsidies of about $46 million a year to the oil industry.

The New Zealand Petroleum Exploration and Production Association declined to be interviewed for this story.

"NZ targets are fair and ambitious"

Negotiators are now taking over from world leaders at the United Nations Climate Change talks in Paris.

New Zealand's climate change ambassador said there was a rocky road ahead for climate change talks but the political will to make change was strong.

Jo Tyndall rejected the Green party's claim that John Key's call to axe fossil fuel subsidies was hypocritical when the Government is funnelling millions of dollars to the oil industry through tax breaks and research and development funding, saying that was the same in many of the countries which pledged to more more on climate change.

She said New Zealand wanted to phase out the world's reliance on fossil fuels and its own targets were fair and ambitious.