Low-income households are set to bear the brunt of the transition to a low emissions economy, according to a discussion document released today.
Climate Change Minister James Shaw today released the 'Our Climate Your Say' document, inviting New Zealanders to help decide new climate change law and how we can transition smoothly.
The document lays out three possible pathways to a lower-emissions economy, including net zero carbon by 2050, net zero long-lived gases and stabilised short-lived gases by 2050 (reducing emissions of long-lived gases like carbon dioxide and nitrous oxide while stabilising gases like methane) and net zero emissions by 2050, which covers all gases.
It says under any of the three targets there will be significant increases in new forest planting and emissions reductions in transport and energy, as well as changes in how we use our land.
Mr Shaw says the Zero Carbon Bill is designed to create certainty, with a clear emissions target and pathway to get there, which he hopes will drive investment in new industries and create new jobs.
But the transition will not affect all Kiwis equally.
The document reveals that the transition will be felt more strongly by lower-income households because a higher proportion of their spending is on products and services that are likely to increase as we reduce emissions.
That's because businesses could pass on the transition costs to consumers, such as the price of petrol that will increase as the carbon price increases.
"Households that are in the lowest 20 percent bracket for income may be more than twice as affected, on a relative basis, than those households with an average income.
"The Government has a number of tools it could choose to use to compensate affected households for higher costs, such as tax or welfare measures," it says.
Mr Shaw says this could be avoided by Government being proactive.
He says policies like the home insulation scheme, funding for public transport and the families package will help offset the impact on low-income families.
The document issues the reminder that the costs of transition must be considered alongside things like New Zealand's international reputation and the brand our businesses want to project globally.
There are other costs New Zealand is already feeling from climate change, for example in the past 10 years the cost of weather events to our transport network has increased from about $20 million per year to over $90 million per year.
Reports from the Parliamentary Commissioner for the Environment show the cost of replacing every building within half a metre of the average high tide mark could be $3 billion and within 1.5 metres as much as $19 to $20 billion.
Public consultation to the discussion document will run for six weeks.