Lies, damned lies, and the Employers and Manufacturers Association (Northern)

by Gareth on August 12, 2009

targetAmongst the many responses to the 2020 emissions “target range” at Scoop I stumbled upon this cracker from Alasdair Thompson, chief executive of the Employers and Manufacturers Association (Northern). It’s such a blatant misuse of statistics that I can’t let it pass unnoticed. Thompson describes the modest target as…

…a challenge for New Zealand is as big, or bigger than when the UK entered the European Common Market (EU).

And why? Because it’s going to cost a lot.

“At an average 15 per cent reduction, the cost of $30 per week per head amounts to $6.7 billion each and every year, said Alasdair Thompson, EMA’s chief executive. “This is more than the total of all our lamb, beef and other meat exports. It represents about 60 per cent of our total dairy exports. […] It’s the price we are being told in effect we need to pay – nearly five per cent of GDP – to retain access to world markets, mostly for our agricultural products.”

It appears Thompson has used the figures Nick Smith used at the announcement of the targets, then added his own gloss. Why is this misleading? First, the NZIER-Infometrics report [PDF] is useless as a guide to the cost of emissions reductions, as I showed here. Second, Smith’s use of figures from the report is itself suspect, as Keith Ng memorably noted at OnPoint. Thompson presents $30 a week as a “cost”, when in fact it’s a measure of foregone growth (ie the difference between two projections of economic growth). He then presents this in terms of GDP — a full 5% cost. This is a complete misrepresentation of the numbers. The NZIER-Infometrics report suggests that GDP will be reduced by 2.4 to 2.6% in 20202 on a scenario where NZ buys emissions units at $100/tonne to cover emissions that have not been subject to any reductions. In other words, even if you make lots of unrealistically expensive assumptions, the cost will be a lot less than Thompson wants us to think.

As baseless economic scaremongering goes, Thompson’s press release takes a very large biscuit. I’ve no doubt the membership of the EMA will insist that Thompson take a course in basic numeracy, and issue a retraction and clarification (but I won’t be holding my breath).

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