By Andrew McMartin
Labour has dealt a blow to the Green Party's carbon tax proposal, saying it prefers the Emissions Trading Scheme.
Labour introduced the ETS in 2008 and finance spokesman David Parker says the party still favours it over other carbon pricing policies.
"We prefer the ETS route but we're willing to consider the Greens' proposal," he told NZ Newswire.
"We're not describing the Greens' policy as rubbish: it's a credible alternative."
The policy, announced on Saturday, would see the ETS scrapped and replaced with a carbon tax of $25 a tonne on industries that emit greenhouse gases.
Agriculture would be exempt, although the dairy industry would be taxed at $12.50 a tonne.
Earlier today, Finance Minister Bill English said the "extreme" policy "means nothing" without Labour support.
"The big issue here is what the Labour Party think about it, because the Green's policy means nothing if Labour don't agree with it."
Greens co-leader Russel Norman says the policy would drive up the price of dairy products, petrol and power; however, the increases would be offset by income tax cuts.
The first $2000 of income would be tax-free, and after price increases had been taken into account, the average household would be $319 a year better off, Dr Norman says.
For the change to be made, the Greens would have to persuade Labour to accept it under a coalition agreement.
Dr Norman says it would be a priority issue, but has stopped short of describing it as a deal-breaker.
The Greens estimate 10 percent of dairy farms would be vulnerable under the policy but don't think any would go out of business.
Mr English says the tax will further burden taxpayers.
"It would impose a big extra cost on households regardless of what you think of farmers and industrial emitters – a lot of those costs are passed back to households and it becomes an extra tax on households on top of GST."
He says the ETS is already working efficiently and "strikes the right balance between the environment and economic growth".
"We're pretty happy with it," says Mr English.