8. Dr RUSSEL NORMAN (Co-Leader—Green) to the Prime Minister: Does he stand by his comment that palm kernel extract was a waste product and not leading to deforestation; if so, does he believe that the $317 million that New Zealand paid for palm kernel in 2008 made no contribution to profitability of the oil palm industry?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes; I am advised that what drives the expansion of the industry and deforestation in places in South-east Asia is the demand for palm oil, which is used in a whole range of consumer products. The supplementary feed being imported into this country is a very low-value by-product of the industry that is otherwise burnt or left to rot on the ground.

Dr Russel Norman: Why will he not admit the obvious, which is that because palm kernel extract contributes up to 15 percent of the income stream of the palm oil industry, it significantly adds to the profitability of that industry and helps fuel its expansion into virgin rainforest across South-east Asia?

Hon BILL ENGLISH: There seems to be some dispute about the proportion of value that is added. The member may have different information, but the information the Prime Minister has been given is that it is about 1.5 percent rather than 15 percent. We can no doubt resolve that matter. Palm oil - based products include margarine, processed foods, soap, and washing powder. I am keen to see whether Greenpeace intends to picket our supermarkets, if it really wants to stop deforestation in South-east Asia.

Dr Russel Norman: Is the Prime Minister aware of comments made by Daniel Cheow, the managing director of a Malaysian palm kernel exporter called Palmbase, who said that palm kernel prices “have shot up as demand is coming in much faster than expected”, which in part is a result of the dramatic increase in demand coming from New Zealand?

Hon BILL ENGLISH: I am not familiar with those comments but I will repeat for the member that the primary driver of value in the palm oil industry is consumer products that are bought every day by New Zealanders in our supermarkets. I look forward to the Greens and Greenpeace picketing those supermarkets, if they really want to stop deforestation.

Dr Russel Norman: We certainly will be campaigning. Given that diesel could be considered a by-product of the petrol industry, a by-product that generates only a proportion of the profits of oil companies, will he now argue that greenhouse emissions coming from the burning of diesel should not be taken into account, because it is only a by-product of the petrol industry?

Hon BILL ENGLISH: There may be a range of by-products from the palm oil industry. I simply repeat that the palm kernel part of the industry is small. Of course, it has some impact; the Government does not deny that. But the real driver of the environmental impacts, which concern, I think, every New Zealander, is actually the consumer products that we buy every day.