The opposition Green Party has fleshed out a proposal to set up a government-backed investment bank backing 'green capital' projects, which it would fund by hiking tax rates on oil companies by more than half.
Co-leader Russel Norman today announced his party's green investment bank policy, which would look to drive greater investment in the clean-tech sector, at a cost of about $120 million in its first three years of operation. The bank would initially invest the bulk of its capital in priority areas such as carbon reduction and energy and resource efficiency involving firms at a late stage of development.
The Greens, likely to be a junior partner if Labour wins this year's elections, anticipates up to $100 million could be invested within the bank's first year of operation, with investments rising to as much as $1 billion by 2020.
The party would raise the overall tax take on oil companies to 70 percent from 46 percent, something it says will bring New Zealand in line with the international average. The bank would be expected to cover operational costs from investment returns. The bank will have to be financially self-sufficient, achieving a target rate of return at or above the government's bond rate, the paper said.
"Without the right policies, price signals and supportive partner institutions in place, private capital has continued to fund carbon and resource intense investments in New Zealand while starving the emerging clean-tech sector of the capital it needs to take off," the policy document said. "This is not a smart of sustainable way to run our economy for the long-term."
The announcement comes ahead of the National-led administration's sixth budget on Thursday, which will affirm the trajectory towards fiscal surpluses as the nation's economy continues to accelerate.
Norman floated the proposal in an interview with TV3's The Nation programme in March, saying he had been looking at the UK's Green Investment Bank and Australia's Clean Energy Finance Corp as models to help fund the clean-tech sector.
The policy document said an independent working group would be set up to determine the final shape and size of the bank, with the second years devoted to establishing the entity. A government line of credit would be opened in the third year.
The bank would be run on a for-profit basis, seeking private sector partners until a time when clean-tech investments become commercially viable for mainstream investors.
The policy paper also said one of the Green Party's priorities in government will be to establish a fair price carbon to support green investment, without indicating what that price is.