Windfall tax: James Shaw says measure for fossil fuel companies worth considering, but Jacinda Ardern says focus on ending subsidies

Greens co-leader James Shaw believes a windfall tax for fossil fuel companies is something that New Zealand should consider, but the Prime Minister isn't showing a lot of enthusiasm for the idea.

United Nations Secretary-General António Guterres on Wednesday morning called on developed economies to "tax the windfall profits of fossil fuel companies" and send revenue to countries suffering from the climate crisis and those struggling with high food prices. 

A windfall tax is a high tax rate on a certain industry when it suddenly makes large profits due to changing economic conditions. One's been introduced for energy companies in the UK as they profit off rising oil and gas prices due to the disruption caused by Russia's invasion of Ukraine.

But Prime Minister Jacinda Ardern, in New York for the UN General Assembly, suggested there are other ways to crack down on polluters that may be more relevant for New Zealand to consider. 

"You can hear the countries that [Guterres will] be angling those arguments towards," she said. "The relevance for New Zealand is more in the space of fossil fuel subsidies."

Ardern said New Zealand has consistently called for an end to fuel subsidies, such as through free trade agreements and bilaterally between leaders. New Zealand's also fulfilling other expectations of the UN, Ardern said, like through our Nationally Determined Contribution (NDC) target to cut emissions by 50 percent by 2030.

Ardern said fossil fuel company subsidies "totally distort our efforts on climate change" and it would be "game-changing" if the money going towards subsidies for fossil fuel companies was instead diverted to alternative energy. 

Shaw, the Greens co-leader who is also the Climate Change Minister, told reporters at Parliament that a windfall tax was "something we ought to consider" and "shouldn't be dismissed". 

"Inflation isn't just because the cost of production is going up. Inflation is because people are paying more for the same product or service. That means that there are sectors, including the fossil fuel industry, who are making extraordinary profits at this time."

He said fossil fuel companies are "making extraordinary profits at this time as a result of the supply crunch".

National Party leader Christopher Luxon wouldn't support a windfall tax on fossil fuel companies. 

The question of a windfall tax has been prompted by the war in Ukraine, the Prime Minister said.

"I have nothing specific to say from New Zealand's perspective other than our focus has been on costs for consumers. That's where we've been keeping a very close eye via our Minister of Energy on whether or not, for instance, the costs of oil, what that's translating to at the pump."

The Government earlier this year cut the fuel excise duty and road user charges, and also halved public transport fares as petrol prices skyrocketed past $3 across the country. Energy Minister Megan Woods made it clear to fuel companies that those cuts needed to be passed on to consumers.

In his address at the start of the UN General Assembly, Guterres said "polluters must pay" and that it was "high time to put fossil fuel producers, investors and enablers on notice".

The speech painted a dark view of the world, with a warning of a "winter of global discontent" on the horizon. 

"A cost of living crisis is raging, trust is crumbling, inequalities are exploding and our planet is burning," he told the assembly. "We have a duty to act and yet we are gridlocked in colossal global dysfunction. The international community is not ready or willing to tackle the big dramatic challenges of our age."

Ardern said the globe is at a "significant crossroads". 

"We've had persistent challenges like climate change, but we've overlaid on top of that the challenge of managing a pandemic and then a war in Europe. 

"We can't take our eye off the ball of any of these challenges, but it's fair to say when leaders have domestic considerations, it does make it hard. But we need to stay focused because the ramifications of not is dire."