Hon DAVID PARKER (Minister responsible for Climate Change Issues) : I move, That the Climate Change (Emissions Trading and Renewable Preference) Bill be now read a second time. New Zealand has a proud history of rational and effective economic and environmental policy. Our history shows that most of the important reforms have been led by Labour Governments, as is also the case with social policy. We are proud to be doing so again today.

There is a global movement; developed countries are adopting emissions trading schemes to reduce emissions. Our scheme is advanced in that it includes all greenhouse gases covered by the Kyoto Protocol, and over time encompasses every sector of the economy. This is important, given the mix of emission sources in New Zealand, and in order to reduce emissions at the least cost.

Today I will outline the changes to this bill, made as a consequence of the select committee consultation process and of discussions with support parties. I will not focus on the billion-dollar household energy efficiency fund, which will give the biggest boost to energy efficiency that New Zealand has ever seen, and which will help New Zealanders to reduce their energy costs and their environmental footprints.

I thank the members of the Finance and Expenditure Committee; the changes they recommended have improved the bill in ways that will enhance its ability to help New Zealand to reduce greenhouse gas emissions and to meet our international obligations while protecting the competitiveness of our businesses. I also thank the support parties, whose contributions over the last few weeks have further strengthened the bill in a number of areas.

The bill as reported back by the Finance and Expenditure Committee has not changed the core design principles of the emissions trading scheme. It still provides for the inclusion of all sectors and of all greenhouse gases by 2013. It is important that all major greenhouse gas emitters face the full cost of their emissions, at the margin, from the outset. Assistance for industry remains at 90 percent of 2005 emissions, and no free allocation of emission units will be given to firms that can pass on the costs to consumers of accounting for their emissions. These core principles are vital for producing an economy that is resilient to a low-carbon future.

The emissions trading scheme has been designed to minimise compliance costs, and currently only 200 or so of the firms in the industry and energy sectors will participate directly, in addition to those in the forest sector. However, the scheme has also been designed to have the flexibility to evolve over time. It does not preclude individuals from taking personal responsibility for their emissions in the future.

Three major changes have been made to the bill by the Finance and Expenditure Committee. First, it defers the entry of transport fuels to the emissions trading scheme until 2011—2 years later than originally proposed. The change is expected to reduce inflation pressures and also to reduce the pressure on household finances, given the large increases in fuel prices over the last 2 years.

Secondly, the bill extends the start of the phase-out of freely allocated emission units by 5 years. Phase-out will start in 2019 and end in 2029, although the level and rate of phase-out is one of the issues to be considered in the regular reviews of the emissions trading scheme. The change to phase-out will, I believe, help businesses to maintain their competitiveness, create greater certainty for business, and reduce the prospect of economic regrets.

Thirdly, owners of forests bought before late 2002, which qualify as pre-1990 forests, will be allocated more emission units than originally proposed. The number has been increased from approximately 39 units, to an estimated 60 units, per hectare. In addition, 18 units per hectare have been set aside for future Treaty claimants who receive Crown forest land. Both these changes better help forest owners, who face the greatest costs from the emissions trading scheme. The Finance and Expenditure Committee considered submissions calling for offset planting to be recognised, but rightly noted that to provide this in our domestic scheme now, when it is not provided for internationally, would result in significant liabilities that the taxpayer would bear. However, recognising that international rules may evolve, the bill now includes the ability to make rules allowing pre-1990 foresters to offset the emissions caused from deforesting, by planting new trees on another piece of such land, if such offsetting is provided for in future international agreements.

The bill has been amended to include a more specific purpose statement, detailing what the emissions trading scheme is aiming to achieve—namely, the support of global efforts to reduce greenhouse gas emissions by helping New Zealand meet its obligations under international agreements, and by reducing our net emissions below business-as-usual levels. Some sectors now have an on-ramp into the scheme. This involves voluntary reporting of emissions starting 2 years before the sector begins surrendering emission units, followed by mandatory reporting a year later, then full compliance and obligations to surrender units a year after that. This approach will ensure that sectors are well prepared for their entry to the scheme and will provide incentives for emission reductions before participants start surrendering units.

Fugitive emissions from coal-seam gas are now included in the scheme, to provide coal companies with the right incentive to convert the gas into carbon dioxide rather than allow emissions of methane into the atmosphere.

The concerns of industry having been listened to, the bill has been amended to delay the entry of imported hydrofluorocarbons and perfluorocarbons into the scheme until 2013, to include hydrofluorocarbons and perfluorocarbons imported in products from 2013, and to provide for entitlements to units for those who export or collect and destroy hydrofluorocarbons and perfluorocarbons. These changes recognise that it is a small sector and a complex one to bring into the scheme.

Changes have also been made to criteria governing how New Zealand units are allocated in order to provide more certainty to business and incentives to develop emission-reducing technology. This includes enabling allocation plans to create a reserve of New Zealand units for new business within the cap of overall units available for allocation. The review process for the emissions trading scheme is being strengthened, so that reviews happen every commitment period or, otherwise, every 5 years. They must be completed 12 months before the end of the commitment period rather than before the original 9 months. The review, which must now be conducted by an independent panel, needs to consider additional factors, like the potential for linking our emissions trading scheme to similar schemes. It must also consider any social and environmental effects of the scheme. A significant change from the original bill is that a restriction has been placed on using assigned amount units—or AAUs—imported into New Zealand during commitment period 1 of the Kyoto Protocol to cover emissions that occur after this commitment period under the emissions trading scheme. These changes reflect the Government’s desire to keep open options for linking our scheme to other emissions trading schemes in the future.

Also, the bill now includes compulsory consultation on regulations concerning limitations on types and volumes of units in the emissions trading scheme, and concerning measuring and calculating emissions in the removal of emissions. It establishes a lead-in time for these regulations. These changes recognise the impact that regulations affecting units could have on market participants and give more certainty to forward contracts for purchasing units.

Discussions with support parties over the last few weeks have led to further beneficial amendments to the bill, which are to be introduced in a Supplementary Order Paper. An innovation fund of 150,000 emission units will be established from within the overall industrial allocation pool, which represents about 1 percent of that pool. This will be a contestable fund, used to encourage the development and uptake of technology that will significantly reduce emissions. The fund will be available to trade-exposed companies that have not received a free allocation of units. Another fund, the household efficiency fund, will be set up to encourage household investment of energy-efficient products, such as insulation. It will be targeted to households according to income or energy need, it will operate for 15 years, and it will have a total budget of $1 billion.

The bill will also provide for a one-off payment to all households and a cash payment for beneficiaries, superannuitants, and Working for Families recipients, as close to 1 January 2010 as feasible, to assist with the impacts of electricity price increases made as a result of emissions trading.

The approval process for allocation plans has been strengthened, so that allocation plans for agriculture and industry will be scrutinised by the select committee and Parliament. Clear deadlines are included and parliamentary approval will occur under a negative resolution. We are developing allocation plans that the responsible Minister must consider—a new principle that when people are eligible to receive emissions units, it is preferable that they receive units for only their products that are trade exposed. Assigned amount units being surrendered under the emissions trading scheme will need to meet criteria. Approved source countries will be those that New Zealand has bilateral agreements with. Criteria will ensure the steps they are taking to ensure the environmental integrity of their assigned amount units. This change reverses the presumption in the earlier version of the bill.

Those in the fishing sector will be supported with an allocation of free emission units to 50 percent of the impact of their fuel costs, and there are other targets relating to agriculture biodiversity. There are various other non-legislative changes that have also been announced, and we really are committed to encouraging the early uptake of emissions-reducing technology in the likes of the agriculture sector. Part 2 of the bill, relating to renewable preference, remains largely unchanged. I commend the provisions of this bill to the House.

Hon Dr NICK SMITH (National—Nelson) : This Climate Change (Emissions Trading and Renewable Preference) Bill is the most complex and important bill that Parliament has seen for a long time. It will have far-reaching implications for every New Zealand business and household for many decades to come. It deserves better than the current shoddy deal with Winston Peters, where he can keep his ministerial portfolio in indefensible circumstances, so that this bill can be passed by a wafer-thin majority amidst the dying gasps of this Government.

Peter Brown: I raise a point of order, Mr Speaker. The member is distorting the truth to the degree that it is unethical. By implication he is alleging corruption by either individuals or political parties. I take strong exception to that.

The ASSISTANT SPEAKER (H V Ross Robertson): I was listening very carefully to the member and I do not think he strayed too far, but I would just ask the member to be very careful in his speech.

Hon Dr NICK SMITH: Speaking to the point of order, I say that this is a very important bill. It is the most important bill of this Parliament. I will not have my speech broken up by spurious points of order, and I ask that you allow my time to begin from now.

The ASSISTANT SPEAKER (H V Ross Robertson): I will be the judge of that, Dr Smith.

Hon Dr NICK SMITH: So you will allow my speech to be repeatedly broken up?

The ASSISTANT SPEAKER (H V Ross Robertson): No, I will not allow it, because frivolous interjections lead to disorder, and I will not allow that. If it happens too much, then the member may well be invited to start again.

Hon Dr NICK SMITH: The pre-election passage of this bill is not about making some great contribution to the global challenge of climate change but about saving Helen Clark’s ego. She wants the international accolades for passing the most ambitious “all sectors, all gases” emissions trading scheme in the world, knowing that some other poor sod will actually have the job of implementing it. A simple example showing that is the fact that this is the first emissions trading scheme to include agricultural emissions, yet it does not answer the most basic of questions—that is, whether the obligation will rest with the farmer or with the processor.

National takes the issue of climate change deadly seriously. We also believe that emissions trading is the least costly and most efficient way for the Government to constrain emissions and change human behaviour. That is why, in Cabinet in 1999, National agreed that emissions trading was where the work was to take place. That is why, in 2000, we expressed concern when this Government stopped that work. That is why, in our own A Bluegreen Vision for New Zealand document of 2 years ago, we said emissions trading was the right way forward. When the Government dropped its carbon tax in December 2005, we wrote specifically to the Minister, stating we were prepared to work on a bipartisan basis towards developing a balanced and workable emissions trading scheme for New Zealand. It is disappointing that that letter never even had a response.

When this bill was introduced at its first reading we in good faith voted for its introduction. I also note that there were several times during the select committee proceedings where the Government did not maintain a quorum, and if National had wanted to be destructive, we could have brought proceedings to a close.

But just because we support an emissions trading system, that does not translate to our supporting any old bill. We need to be sure that the proposed bill is balanced and workable. We need to get the detail right. We are not satisfied of that, and nor is a majority of this Parliament as reflected by the minority reports. It is irresponsible for this Parliament to be passing law when we know that it has very clear flaws.

National has outlined six principal areas where we think this bill is deficient. First, it is not balanced. The bill reflects the idealistic, carbon-neutral mantra of the Prime Minister. The bill should reflect National’s more modest goal of a 50 percent reduction in emissions by 2050, which would be in line with the goals of our major trading partners. The Government needs to be honest: if New Zealand is to be a world leader in reducing emissions, and is going to be carbon neutral under an emissions trading scheme, it will mean world-leading costs for consumers. I do not think that is something New Zealanders will bear.

This bill is a massive cash cow for the Government. Officials advised the select committee that the Government is set to profit by $21 billion from the sale of emission permits. That figure is double that given out in tax reductions by this Government, and it is proof that what it giveth it taketh more than double. We are yet to see the Government’s assistance package to consumers, and we will judge it on its merits. National’s policy, like the Australian approach, is that there should not be a net profit for the Crown. Climate change is not an excuse for Dr Cullen to get his fingers deeper into the pockets of New Zealanders.

The third issue is alignment with Australia. There are important differences between this bill and the Australian proposal. The Australian proposal has rejected Eastern European hot air. It has included a price cap. It has excluded forestry pre-1990. It has included the fishing industry in its grandparenting. It has deferred agriculture until significantly later. National is not of the view that we should blindly follow Australia, but we should try to align the schemes as closely as possible at the beginning. The closeness of our economies will create investment distortions where we unnecessarily take a different approach in our legislation.

The next issue is the incentive in this bill to export jobs and emissions. The bill fails to recognise that while New Zealand has an emissions trading scheme but others do not, there will be an incentive to relocate investment, jobs, and emissions offshore, to no advantage at all to the global climate. There is no gain for the climate if Rio Tinto departs New Zealand and manufactures its aluminium in the Philippines, or if Holcim Cement closes its works and imports cement from China to New Zealand. In both cases the climate would lose, because the electricity used is more likely to be generated by coal and is therefore not renewable, and because of the extra emissions created by shipping the cement to New Zealand. This problem can be resolved by taking an intensity approach to the allocations for trade-exposed sectors in the interim period.

Our fifth concern relates to the way that this bill discriminates against small and medium-sized enterprises. We have hundreds of trade-exposed businesses—which we heard from during the select committee hearings—that are to be excluded from receiving any allocation, and will face significant extra costs. That is not the case with the Australian scheme. The bill will undermine those businesses’ competitiveness, and New Zealand jobs and growth will pay the price.

It also unfairly discriminates against particular sectors. Why does this bill provide for 90 percent grandparenting for the steel, aluminium, dairying, and cement industries, but make no grandparenting provision at all for our $2 billion fishing industry? This bill will impose extra costs of $20 million a year. We have just lost 320 jobs in the Nelson seafood industry, and we risk losing more if we dump these extra costs. That is why National has said that that important export industry needs to be treated the same as others.

We also have concerns about the rigid phase-out in this bill from 2018 to 2030. It is very brave to predict today where international negotiations on climate change will go for the next 20-odd years. We want a more flexible approach that phases out allocations in line with the policies of our major trading partners.

I also must put on record our serious misgivings about the all-important application of the emissions trading scheme to the forestry sector. The provisions in this bill have triggered the greatest deforestation that we have ever seen in New Zealand history, to the loss of both our economy and the environment. This is the one sector that can help New Zealand with climate change, yet the Government has completely alienated it. We are not satisfied that the provisions in this bill will work for forestry. They will not restore confidence in the sector and get the badly needed new planting started again. There are perverse incentives in the bill to harvest 7-year-old trees, and that is disastrous for both the environment and the economy.

It is not surprising that there are so many flaws in this bill, given the flawed select committee process. We had 1,000 amendments dumped on us 3 days before deliberation, and I will bet that not a single member of the Government has read every one of those amendments, let alone understood them. That is no way for Parliament to advance this sort of legislation. There is ample time for New Zealand to get an emissions trading system right. National says we should take the time. This issue is too important to be playing politics with.

CHARLES CHAUVEL (Labour) :It is true that climate change has emerged as one of the greatest environmental challenges that we face in our time. It is truly a global issue. It does not discriminate. It affects all countries, all economies, and all people. The human race cannot just sit back and take the time to continue to pollute the world. New Zealanders, Australians, and residents of all other countries that are major emitting economies in the world must respond to climate change. I am very proud that today the New Zealand Parliament takes another step in the direction of doing so, because by adapting our actions now we can help to mitigate the effects of climate change in the future. It is not only the right thing to do but also the cost-effective and smart thing to do.

An emissions trading scheme such as the one that this bill will eventually enact into law is particularly essential to a small country, like New Zealand, that is reliant on international trade for its prosperity. Not having one would make us look out of sync with the rest of the world. It was interesting to hear Dr Smith talk about Holcim Cement and Rio Tinto. Does he think that if they went overseas tomorrow, moved to developing countries, then became greater emitters, that would be some sort of long-term solution? How long does he think it will be until other countries have emission trading schemes and are bound by carbon limits? It would at best be a short-term fix. National members know that and that is why those companies will not be doing that.

As the entire planet moves to address climate change, it is imperative that we claim our place in the world as a world leader and not simply as a follower, because in a world facing carbon constraints as well as rising fuel, energy, and food prices, sustainability and prosperity become increasingly intertwined. I do not want to see New Zealand agriculture locked out of Europe in 5 years’ time because we do not have an emissions trading scheme and they do and they think that our products are dirty and carbon intensive. [Interruption] We have anecdotal evidence of the danger of that happening if we do not move on this urgently.

I say that to members opposite, and they should listen carefully because that is the evidence that we heard in the select committee. We were there and we heard it fair and square and loud and clear, and that is why it is important to act today. A comprehensive and ambitious approach to climate change is an important investment in our future, and emissions trading will allow New Zealand to play a full part in the global solution to climate change at least cost to our economy in the long term.

I was interested to hear Dr Smith’s comments about flexibility, because, in fact, an emissions trading scheme is the most flexible way to reduce our carbon footprint at minimum cost and help put New Zealand on the path to a sustainable future. There is every chance that international circumstances will change, new technologies will develop, and understandings about what will and will not work will become clearer. This flexibility is vital, and it is built into the bill. The review provisions that allow the Minister to review international developments and ensure that our scheme is keeping pace with what is happening in the rest of the world are excellent ones. They are open textured, and they allow the sort of flexibility that Dr Smith has called for.

It is clear that Dr Smith is simply making excuses with his list of six factors that are the supposed reasons why the National Party will not be supporting this legislation, just as he is with the spurious line about the scheme being a windfall for the Government. This scheme does not even break even until 2020, in 12 years’ time. That is how long it will take to break even, so it is a lot of nonsense to talk about windfall profits for the Government. The member did not even know that fisheries is in this scheme, as far as the Supplementary Order Paper that has been foreshadowed by the Minister is concerned. So much for his in-depth knowledge of this legislation.

It is clear that the decision to implement an emissions trading scheme in New Zealand was not undertaken lightly, and I reject the spurious criticisms of the select committee process that we heard from the previous speaker. This bill was the subject of broad consultation. It was important, and that fact was reflected through a rigorous and comprehensive select committee process, which I was honoured to chair.

The Finance and Expenditure Committee received 259 written submissions and heard 96 oral submissions on the bill. The majority of submitters were in favour of the introduction of an emissions trading scheme, and that is why some 1,000 amendments to the original bill have been recommended in the report back and yet further improvements have been foreshadowed by the Minister. The committee listened to the people who came before it. The committee granted them the courtesy of polite hearings, and it took account of the points that they made and reflected many of those points in the bill that has been reported back to the House.

I want to conclude my brief contribution by thanking the members of the Emissions Trading Group—the officials who advised the committee. They provided excellent assistance on a very timely basis. They were extraordinarily responsive to the requests from all members from all sides of the committee, and I pay tribute to them. They are public servants in the best traditions of New Zealand’s Public Service—fearless, unbiased, but responsive to requests from elected officials—and it was a real pleasure to have been able to work with them and record our tribute to them.

I also thank the members of the Finance and Expenditure Committee for their efforts in giving courteous hearings to all submitters, and I especially acknowledge the support provided to me as chair by Jeanette Fitzsimons and Doug Woolerton, from the Green Party and the New Zealand First Party respectively, during the process. That assistance, along with the support of Government members, allowed us to ensure that we provided the appropriate scrutiny of this legislation and reported the best bill that we could back to the House. It is excellent legislation, and I commend it.

HEATHER ROY (Deputy Leader—ACT) : I rise to speak to the second reading of the Climate Change (Emissions Trading and Renewable Preference) Bill on behalf of ACT New Zealand. ACT will be opposing this bill. In fact, we were the only party to oppose it at its first reading. We did so because we think, quite frankly, that this is dopey legislation. Why is it that New Zealand has to be a world leader, rushing forward at the pace of knots, at the forefront of world opinion, on a matter where the science certainly is not complete, where there is not general agreement amongst the scientific community, and where we are in danger of disadvantaging those New Zealanders who are least able to afford to be disadvantaged, given already rising electricity costs and rising fuel costs? But it is not only New Zealanders we are disadvantaging; we are also disadvantaging New Zealand in terms of trade. For this reason we will be opposing the bill.

It is not often that members will hear the ACT party saying we should perhaps have a tax, but if there are issues that need to be considered, we should have taken into consideration the fact that a carbon tax would have been a much fairer way to provide the right incentives, to put in place the initiatives to tackle carbon dioxide emissions, and to charge the polluters. That is by far the fairest way of tackling this sort of problem.

The shame of the matter is not the measures I have just mentioned; the shame of the matter is that Parliament is sitting today and hearing the second reading of this bill for one reason and one reason only: it has bought Winston Peters more political time. The agreement of New Zealand First to support this bill has bought the New Zealand First leader, Winston Peters, more time in his rapidly dwindling political career. That is a sad indictment not just on the New Zealand First MPs and the leader of that party but also on the Labour Government, which was desperate to get this legislation through in order to show that we are world leaders in something and going where angels fear to tread. The Prime Minister has been prepared to enter into a deal of this nature with somebody who cannot even stand up in this Parliament and answer very simple and very real questions that should be answered on matters where he is not prepared to go. It is a sad indictment on our Parliament that we have got to this situation.

I am quite surprised at the Green Party. The Green Party is a great proponent of MMP, and it wants to make sure that this political system is seen to run Parliament in a fair and honest way, yet it too has been prepared to make a deal of its own. More important, the Green Party has been prepared to support the deal between New Zealand First and the minority Labour Government on this particular matter, and that is shameful. I am not prepared to support this legislation, for the very sound scientific reasons that I have outlined, and ACT is certainly not prepared to support legislation that is being put before this House and is being supported today by a party that should be spending its time looking very closely at how it operates and answering the very simple questions that the Privileges Committee and certain members of this House have put before it. But that party will not do so.

There has been a lot of debate around the science of this issue, and it certainly is inconclusive. In fact, the whole issue of climate change has reached a kind of religious fervour, not just here in New Zealand but around the world. This is not a good basis on which to be making any sorts of decisions, certainly not political decisions. I worry about those who are least able in our society to afford the electricity prices they have to pay at the moment—who struggle to pay their bills at the end of the week because food prices have skyrocketed—and about how they manage to fill their petrol tanks with fuel when prices have increased hugely. I do not know how they cope.

Moana Mackey: Fossil fuels!

HEATHER ROY: That is part of the problem. Has the member not noticed what has happened now that all the grain in the world has been diverted towards biofuels? What do members opposite think is happening in the United States? Why do they think that our food production will not find its way there eventually? Demand will dictate that it does. They are living in a cloud-cuckoo world. That is very, very sad.

It is interesting too that New Zealand First supports the amended emissions trading scheme bill, and claims that it has won a $1 billion energy efficiency fund. It is strange that the Green Party claims exactly the same thing. What is the truth? Will both parties go around the country campaigning at election time that they have both won the same thing?

R Doug Woolerton: Absolutely—cross-party support!

HEATHER ROY: I do not think so. I do not think the MMP debate would stand that. This bill is a shambles and a sham, the political process we are going through today is a sham, and ACT New Zealand is not prepared to tolerate either. It wants sensible policy-making based on scientific evidence and good, sound economics that make sense. It also wants to see a political process in this country that is open and honest, not deals—deals that are not even made on the principles of the bill but are made to save one politician who should be able to stand up in this House and answer some questions but for various obvious reasons is not prepared to do so. ACT stands here today opposing this bill for those two reasons and it applauds the other parties in this House that are doing so for exactly the same reasons. Thank you.

R DOUG WOOLERTON (NZ First) : New Zealand First enthusiastically supports the Climate Change (Emissions Trading and Renewable Preference) Bill. I will say just a couple of things about the National Party and the ACT party in that respect. National is on record as saying that it would introduce an emissions trading scheme within the first 9 months if it is elected, and the Hon Dr Nick Smith is on record as saying that 80 percent of such a bill would be what is in this bill. Heather Roy said that ACT would prefer a carbon tax, but in case she has forgotten, I would remind her that a carbon tax was, in fact, proposed and that the leading opponent, along with—

Hon Dr Nick Smith: New Zealand First killed it.

R DOUG WOOLERTON: Oh, the member realises that; I am pleased he is awake. The leading proponent of the opposition to that tax was one Gerry Eckhoff, who raised a campaign amongst farmers right around the country. Nick Smith is right to say that New Zealand First also opposed that tax, but we do support the market scheme called the emissions trading scheme—unlike ACT, which obviously opposes everything.

The Kyoto Protocol was signed, in the first instance, by the previous National Government. It was ratified by the Labour Government. The commitment period began on 1 January 2008. A lot of people are talking about when these carbon charges will begin and saying that it will happen in the future. The charges began on 1 January 2008—this very year.

Then it becomes a question of who will pay these emission charges. We get down to basically three questions: first, is it to be the Government on behalf of all of our citizens; second, is it to be the emitters on behalf of themselves; or, third, is it to be a combination of the two—the Government and the emitters? Labour and National, the two major parties, both agree, and New Zealand First agrees also, that it should be a combination of the two.

That is what this bill is about. It is not about the science any more; that has gone before. It is not about the argument of whether climate change is induced by humans or is a natural phenomenon. We all agree that there are changes and we all agree that we should do something about it—except the ACT party, it seems. We have to deal with an issue, and we have to get on with doing that immediately. That is what drove New Zealand First to this decision. It is not something that will happen in the future. The two major parties in the House intend to bring in an emissions trading scheme, and New Zealand First says that the sooner we get on with it the better, because the clock is ticking and the costs are mounting.

This bill is about changing the behaviour of New Zealanders. Since World War II we have been a profligate society. I do not know of anybody, especially people who lived through the Depression and a world war, who thinks we have not been a profligate society since World War II. When we talk to those people and explain the emissions trading scheme, they applaud it. They know we can no longer go whacking through the Earth’s resources, putting on fertilisers as though there were no tomorrow, and putting coal and gas through the generators as though there were no tomorrow.

The countries that we sell our products to may say they have joined the global economy in this modern world, but we know they still believe in their village, and they will be the ones that slap carbon stamps on the products we sell to them. This is not just about the food miles that we have heard about; we can no longer sell our products just on our clean, green image without walking the talk. Those countries will want to check the sort of carbon emissions that are happening here. Those people will come here to check our greenhouse emissions. Those people are not naive. The wealthier economies in the world where we get our best prices will, quite naturally, be looking for every reason and any excuse they can find to hold our products out or to put some sort of tariff upon them.

New Zealand First believes that this country lives by exporting and that it is the best exporter of dairy products. We are the most efficient producers of dairy products and meat products—in fact, of agricultural products in total. This Government has no intention of making farming unprofitable or of having people not being able to afford to turn on the heater in their homes. Those things have been taken care of in this bill, and we are proud to be associated with those things.

If National members do not believe that farmers should be issued credits, that they should have a long and productive discussion before their industry enters the emissions trading scheme, or that householders should be not promised but guaranteed not to have increased electricity costs because of this bill, then let them say so, and let them say so at this election. We do believe that these things should happen. We are comforted by the fact that those provisions are in this bill.

I do not think I have to convince anybody in this House that I am not a details person, and I do not tend to involve myself with which gases are being emitted here and there, their names, and the science and technicalities, but I have sat through many, many hours under the very, very excellent chairmanship of Charles Chauvel at the Finance and Expenditure Committee. I watched and I listened. What came out of this for me, and what has also brought New Zealand First to this decision, is one word that will change New Zealand. It is a word we have been proud of for many, many years—that is, “efficiency”.

We will get greater efficiencies in our exporters because of this bill. We will be more efficient in our transport because of this bill. We will look for alternative solutions because of this bill. If I am any judge—and I have great admiration for entrepreneurs in this country—we will lead the world in innovation because of this bill. Why? Because we should no longer be paying charges for greenhouse gases; we need to lower our emissions.

This bill is about changing our country’s behaviour, and it will. This bill is about making our country more efficient, and it will. This bill is about making our exporters even more efficient than they are now, and it will. It will not—as the bill’s opponents are saying—put up costs and put exporters out of business. To assume that is to assume absolutely that there will be no change, and I say that that will not happen. We in New Zealand First are looking to a bright future because of this bill, and we will support it wholeheartedly.

JEANETTE FITZSIMONS (Co-Leader—Green) : The Climate Change (Emissions Trading and Renewable Preference) Bill had its first reading 8½ months ago, on 12 December last year. During those 8 months that we have been considering it, the mass of Arctic sea ice has shrunk still further, and this year looks like being a record low. Climate change does not wait while we dither. The Stern report shows that climate change is the most serious threat to the world economy—let alone our societies—and it will cost us far more money than action to limit it would cost. New Zealand stands to lose more than most as we are more dependent on agriculture, and therefore on climate, than other developed economies, and more of our population and infrastructure is by the sea. The head of the Intergovernmental Panel on Climate Change, Rajendra Pachauri, says we have only 2 to 3 years to turn the situation around and to start to put our emissions into decline. This bill does not reflect that urgency.

I called in my first reading speech for the Government to sign up to keeping within the 2 degrees warming target that is widely recognised as being the limit to climate change that we can tolerate. It has not done so. I called for targets for greenhouse gas reductions within New Zealand to be put in the bill, and that is something the Greens have achieved. We now have an amendment coming whereby the Minister must set targets for emissions reductions and gazette them. Initially, these will be the targets already announced as part of the Energy Efficiency and Conservation Strategy, such as 90 percent renewable electricity and halving per capita transport emissions by 2040. The 5-yearly reviews of the emissions trading scheme will measure our progress against these targets, and no doubt further, more stringent ones will be set as the problem gets even worse.

The Greens have always assessed this bill against the two criteria of effectiveness and fairness. Both effectiveness and fairness were further compromised by the Prime Minister’s announcement in May that phase-out of free allocations would be delayed for a further 5 years, and the entry of transport by 2 years. We have been unable to reverse those changes, but we have secured others that improve both effectiveness and fairness, and the slow phase-out that is now in the bill can be reviewed at the 5-yearly reviews.

I said in my first reading speech that we need to help people adapt to higher electricity prices with compensation payments and by insulating homes and providing clean heaters, so that when prices go up their bills can still go down. We are very proud that we have secured a fund of $1 billion to provide varying levels of subsidy, depending on income, for insulation, draught-stopping, pipe and cylinder lagging, efficient shower heads and lights, and clean heaters such as log and pellet stoves and heat pumps. The Minister has said that this is the largest energy efficiency programme the country has ever seen, and he is right. The detailed implications of this policy will be overseen by the board of the Energy Efficiency and Conservation Authority, which has many years of experience in running these programmes. My hope is that priority will be given in the early years to families with health problems that are exacerbated by cold and damp, to families where there are preschool children at home all day, and to families where there are elderly people at home all day. This will not just be fairer, to help families cope with their power bills and keep them healthier and happier, but it will also reduce emissions and make the emissions trading scheme a lot more effective than it might otherwise have been.

I also said in my first reading speech that the Green Party is not of a mind to support legislation that leaves all the most critical decisions to regulation over which Parliament has no scrutiny, and we have addressed that issue, too. An amendment is coming whereby the allocation plans, following public consultation and their finalisation, will come to Parliament for scrutiny by a select committee for a month or so, at which stage anyone in the House can move a resolution, and the House can vote on whether the allocation plans should be rejected or approved. In case anybody thinks that industry will have a reason to lobby for delay, I say it is actually the other way around, because under the dates set in the Climate Change (Emissions Trading and Renewable Preference) Bill, emitters from industry will become liable for 100 percent of their emissions on the due date and, if they play games through the allocation process, their free allocation will not come in when it should. I think that is a strong reason for everybody to cooperate on getting fair and transparent allocation plans.

I have also said many times that we do not want to let this grandparenting of free credits lock the New Zealand economy into old technology. As the bill was introduced, if a business had come along with a new process that could make steel with only half as much carbon emissions per tonne, that business could never be established in New Zealand, because it would have been competing with another business that was less efficient and 90 percent grandparented. We have fixed that with a special contestable innovation pool of credits, which comes out of the 90 percent cap, and where businesses can bid to show that they have innovative technology that will set New Zealand on a downward emissions path—a course of economic transformation towards a low carbon economy. I am proud of that change, and I believe that will do a lot to encourage people with new technology to set up their businesses in New Zealand.

There are some more changes that we have achieved to improve the integrity of the allocations system. One is the old question of Russian hot air. As the bill was introduced, credits owned by Eastern European countries, because their economy collapsed after 1990, are legitimate currency under the Kyoto Protocol. But they are likely to crash the price of carbon if they are widely available. The Government has agreed that, as bilateral deals are going on with a number of these countries to green their assigned amount units—in other words, to ensure the price they get for them is invested in genuine carbon reduction—Russian hot air is outside the scheme until it is greened, and then it can be brought in. I think that is a significant improvement.

We have also made it clear that although the pool of free credits is equal to 90 percent of 2005 emissions for trade-exposed industries, there is no requirement for all of it to be allocated, if that is not all necessary. In a further amendment, the Minister must consider the extent to which firms are trade exposed, so that, if a firm is trade exposed for only part of its production, it will not be grandparented free credits for the whole of its production.

I said in the first reading debate that I would work to get coal-seam methane included, because that was a completely unacceptable subsidy to the coal industry and officials were proposing that it would never be remedied. We did that in the Finance and Expenditure Committee, and that is now in the reported-back version of the bill. Like the Parliamentary Commissioner for the Environment, the Cawthron Institute’s report, and many environmentalists, we were concerned that the incentive to plant pines for credits might be at the expense of important New Zealand biodiversity, such as regenerating native forest or tussock land. We wanted there to be conditions in the Act, and we were told that this was a matter for the Resource Management Act. So the Resource Management Act will fix it! The Government has committed to a national policy statement on biodiversity under the Resource Management Act, with a gazetted timetable to achieve that. That will give needed protection to important areas of biodiversity in New Zealand.

We still believe that the free credits to agriculture represent a huge subsidy, given that they are completely exempt up until 2013. The Government will not shift on the 2013 date but we have achieved a gazetted target for reductions in emissions before 2013, which the Government commits to. The most important thing for agriculture will be where the research money goes in the meantime. We do not think it should all be poured down the single chemical channel of nitrification inhibitors. There is agreement that the other sustainable solutions that can reduce nitrous oxide from soils will be pursued at least equally.

One of the emails we received when we called for public input on our decision was from someone saying: “I’ve been working for some time to set up a business where I’m going to produce fuels from waste wood to replace coal. If there is no price on carbon, this business will fail.” We need a price on carbon so that innovative solutions like this can be adopted throughout the country.

The biggest risk is that we may think this bill has fixed climate change. It has not. There is a great deal more we need to do, and the Green Party is committed to doing it. Thank you.

Hon TARIANA TURIA (Co-Leader—Māori Party) : Tēnā koe, Mr Assistant Speaker. Tēnā tātou katoa. First of all, the Māori Party would like to thank the Hon David Parker for the briefings he has provided to us. Although we are not supporting the bill today, we look forward to learning more about this matter.

Three months ago two executives of Genesis Energy flew to Europe on a shopping trip to buy carbon credits. The writing was on the wall. How will Genesis respond to the challenge of paying for up to $100 million every year for fossil fuel burnt at the Huntly power station? How will the company address the environmental problem of producing around 3 to 6 million tonnes of carbon emissions per annum? The answer lies in the power of the purse.

The crux of the Climate Change (Emissions Trading and Renewable Preference) Bill rests in its name. Fundamentally, the emissions trading scheme is limited by being nothing more than an emissions trading scheme, when what we really require is an emissions reduction programme. The Māori Party knows that how this nation curbs greenhouse gas emissions will define this moment in our history. Meeting our obligations under the Kyoto Protocol to reduce greenhouse gases is vitally important, but this issue is much more than one of compliance with United Nations goals to cut emissions and to stabilise the climate system. It is far more simple than that. Reducing our emissions is about honouring our commitment to those who have passed on that we will leave this planet in a better state than it is now for those who come after us. The Government acknowledges that this scheme will make almost no difference. It will cut emissions by 2 percent over 10 years, and that will be far short of even our Kyoto commitments. To make the world a better place we need to live differently, and we all need to live differently.

One of the fundamental issues that has troubled us in the passage of this bill has been the issue of inequity. The inequity exists at several levels. We suggest that the emissions trading scheme is politically sustainable only if it seen to share the Kyoto burden fairly across all sectors at each stage, and all starting at the same time. The New Zealand Business Council for Sustainable Development has highlighted the inconsistency of business agreeing to forgo compensation for electricity price spikes while accepting the vast bulk of the free credits it is offered. The Māori Party has suggested that the free credits to assist export-exposed industries would be better allocated on the basis of need.

The New Zealand Institute of Economic Research predicts that the real cost of this scheme for New Zealanders will be about $58 a week. For the 13 percent of our population living in poverty, the loss of another $58 a week will shave even more off the weekly grocery budget. The costs of this scheme will fall heavily on householders, with low-income families being hardest hit by consequentially rising living costs. Although the Greens and New Zealand First will no doubt jostle to lay claim to the unspecified one-off payment that households will receive to adjust to the high energy costs of the emissions trading scheme, it is unlikely that such a concession will soften the long-term impacts on the family budget.

The ShapeNZ poll, taken just over a month ago of 3,000 New Zealanders, recommended that rebates on monthly household electricity bills were favoured. We think it is an excellent idea to spend $1 billion to make homes more energy-efficient, but why did this concession have to be wrung from a reluctant Government? I thought the Government supported energy efficiency and conservation, anyway. A billion dollars was the price of the Green Party support for a scheme that will achieve almost nothing. We predict that that $1 billion will seem like 30 pieces of silver once the full impacts of climate change start to be felt.

No such concessions appear to address what the Wairongomai Incorporation described as the disproportionately negative effects on Māori, and that view is endorsed by one of the large corporations in my electorate, the Morikaunui Incorporation, which stated that while the scheme is inequitable generally, it is even more so for Māori landowners. The incorporation believes that the bill as drafted conflicts with the principles and provisions of Te Ture Whenua Māori Act 1993, and breaches the Treaty of Waitangi by imposing an encumbrance over Māori land that is effectively an alienation. Their recommendation to the select committee was that Māori land should be excluded from the bill at this stage, and that a timetable should be set to consult with Māori on how to include Māori land without transgressing the basic principles set out in Te Ture Whenua Māori Act 1993. In their view, the emissions trading scheme bill must require no greater contribution or sacrifices from the owners of Māori land than from the owners of privately owned non-Māori land. Indeed, that is a view that Māori Party members endorse with all our hearts. The Federation of Māori Authorities believes that locking Māori land into this regime compares to the actions of the Crown in the 1880s, of converting Māori land to perpetual leases and leaving Māori with peppercorn rentals. In 2008 this regime is going even further by legislating how tangata whenua are to use our lands.

Another fundamental failing of this bill, as Te Rūnanga o Ngāi Tahu advises, is that the provisions for the forest sector are so flawed that they need to be totally redrafted to be fair and equitable. Ngāi Tahu have stated that as a result of this bill they will suffer a disproportionate and significant liability, amounting to overwhelming financial cost and opportunities lost. Indeed, their submission contended that the reduction in future asset value will possibly exceed their entire Treaty settlement.

The Māori Party is profoundly in accord with the global concern of needing to prepare for an emerging post-carbon world. The last thing we want to suggest is that we are the authority on the emissions trading scheme, because clearly we are not. But we do care passionately about leaving this world in a better state for the generations that follow us. We must halt the relentless pursuit of unsustainable growth. Allowing big business to continue its polluting practices via carbon credits is not the solution. The market model creates a new currency of carbon credits, a currency disproportionately dispensed to business elites; it will deliver economic benefit but it will not save the world.

The submission from the Federation of Māori Authorities revealed that Māori have constantly recognised and demonstrated the need for climate change policy and the importance of changing our behaviour to mitigate human impacts on the climate. This acknowledgment is manifest in our belief in kaitiakitanga, the nurturing of our spiritual, cultural, and environmental protection of te ao mārama.

The Māori Party does not support the bill. We are of the view that what is needed is a radical rethink of the whole approach. We are opposed to the concept of paying the polluters, of rewarding the corporate lobbyists with huge exemptions, and of the very nature of trading, rather than reducing, emissions. But we will take forward the concerns of so many submitters, who believe that this bill, once more, breaches the Treaty of Waitangi in failing to uphold our rangatiratanga; in the Committee stage we will be presenting an amendment to include a clause requiring the Act to be consistent with Te Tiriti o Waitangi. Nā reira, tēnā koutou katoa.

Hon BILL ENGLISH (Deputy Leader—National) : As National’s climate change spokesman, I state that as outlined we will not be supporting this legislation. I want to run through some of the reasons why that is and how an emissions trading system should be organised, because our leader has made a public undertaking that if National is elected as the Government we will ensure there is an emissions trading system in place within 9 months of that election.

We have had a number of problems on the road to getting here, particularly in the Finance and Expenditure Committee. This is probably the most complex and innovative public policy that Parliament has dealt with in a long, long time, and it deserved due consideration, which it did not actually get. There were a large number of submissions, and the Government spent too much time characterising submissioners into deniers, and whingers—for and against—instead of listening very carefully to the issues they raised. But when all the submissions had been heard, officials then turned up at the select committee with a raft of changes—some of which were consequential technical changes, which one trusts the officials on—but the committee had almost no opportunity to check and to go through what was a substantial rewrite of important parts of the legislation. That is a shame because the lesson for anyone in this Parliament is that if complex legislation is not dealt with thoroughly it ends up back in Parliament—every time.

It is difficult enough with such a new concept as an emissions trading system to get it right the first time—I suppose we will not get it right the first time, but we should have taken the opportunity to do so. The reason the opportunity was taken from the Finance and Expenditure Committee was that the Government was on a timetable dictated purely by the political needs of the Labour Party and the Prime Minister, not by the need of this country with its unusual mix of climate change gases, and not by the need of the country to get it as right as we possibly can, as we start up the emissions trading system.

The other uncertainty that became clear at the select committee was that many of the practical issues raised by submissioners will, in fact, be dealt with by regulation, not by legislation. Some of the reasons for that are that we need flexibility; a lot of these issues are sufficiently technical not to be in legislation, because they will need to be changed. But the select committee hearing did raise the issue of trust. It was pretty clear to me that many of the submissioners were aware of the political compulsion behind the Government’s timetable, and that they did not trust a dying Government to make sensible regulation, particularly when its members characterised any critics of their policy positions as climate change deniers. That was the wrong environment to create trust in the Government to deal with all the regulation making that needs to go on, because that regulation making is largely beyond the scrutiny of Parliament, and certainly beyond the scrutiny of the people who made submissions.

Now this unsatisfactory legislation has arrived back in the House and, of course, the House in recent days has come to an even lower level of trust and confidence in the current Government than it might have had as recently as a month or so ago when this legislation came out of select committee. The way it is being dealt with here has the same kinds of shortcomings in two respects. First, we are being told that there is a substantial Supplementary Order Paper coming. Of course one does not have a Supplementary Order Paper before the Committee stage, but, as Her Majesty’s loyal Opposition, we have no idea what is in it. What we do know is that it will be substantial, that it will bear out the criticisms I have just made, that there are a number of problems arising out of the way the select committee had to sign off all the changes without going through them and without settling outstanding issues that were in front of the committee for weeks on end.

Now we are meant to take the legislation on trust—on the trust of a party led by a Prime Minister who has misled the public for the last 6 months over a critical political issue and who will pay for that. We are meant to trust these people to turn up with a Supplementary Order Paper that they think we should support! We do not trust them; it is as simple as that. We do not trust them, and that is unfortunate. It is unfortunate because this is such vital legislation for New Zealand, and by far the majority of Parliament—all except, I think, a couple of members of Parliament—supports having an emissions trading system, but we have been deprived by Labour’s now desperate political needs from doing a proper job of it. That is only the Supplementary Order Paper—

Hon Dr Nick Smith: Where’s your SOP?

Hon BILL ENGLISH: Where is it? What are the matters that are going to be set out on the Supplementary Order Paper? We know what will happen. Under Dr Cullen’s manipulative leadership of this House, we have a one-part bill, so there is only one debate in Committee. We will be presented with a large and complex Supplementary Order Paper, the desperate, dying Labour Government will try to move closures as quickly as it can on any debate within that part, and it will use the procedure to shorten this up, because its members are desperate to get out of Parliament so their Prime Minister will not have to face weeks of scrutiny over her astonishing revelation today. That is what is driving this process, and this nation deserves better. The emissions trading system will be with us for decades to come, but because Helen Clark is in trouble we will not get the chance to deal with it properly.

That is just about the Supplementary Order Paper. There are also the other matters: the deals made with the Greens and New Zealand First to get the numbers for this bill. We need to know—to have a sensible debate here—what those deals are. The deal with the Greens has been accompanied by much conscientious thought and concern about whether the Greens should vote for an emissions trading system it does not support—because the Greens do not believe that the emissions trading system will do what the Government claims it will do. That is a position of principle, and they have maintained that position right through this legislation. However, a deal has been done with Greens, and apparently it is a billion-dollar deal. That is not our number; that is the Government’s number. The Government has done a billion-dollar deal with the Greens to secure their votes. Interestingly, from what we know of the deal—which is only a few lines in a press release—it is not to do with reducing carbon emissions; it is to do with a large-scale programme to insulate houses. It does not actually do anything to the emissions trading system itself. Well, we would like the opportunity to debate that.

Then there is the other deal—the grubby deal with New Zealand First. Winston Peters and Helen Clark have both misled the public for the last 6 months over large donations from a foreign donor, and in the dying weeks of this Parliament they have put together a deal they will not tell us about, which, for all we know, could be committing hundreds of millions of dollars to buying votes. So when are they going to tell us? How can we debate this bill when that rotten leadership is hiding the deal—hiding what will surely be a rotten political deal—of spending hundreds of millions of dollars to buy votes in the next 8 weeks? That is no way to debate the passage of the most important environmental and economic legislation that this country will deal with in the next 10 years. The legislation deserves proper scrutiny, and it deserves more consensus than this Government could bother trying to pull together. So instead of the bill taking its time, it has been crunched up by the election timetable and now by a developing and enveloping political scandal. That is the wrong way to do this legislation. The Government should have paid more attention to the six principles National laid out in its minority report. [Interruption] Well, no, there are six, and they are very sound principles. The Government has made no effort whatsoever to deal with those principles, then has expected National to support its emissions trading scheme. Well, we could not support it if the Government paid no attention to these principles. They are pretty straightforward: the scheme should be fiscally neutral.

MOANA MACKEY (Labour) : What a telling speech from the National member! I am not sure that the Hon Bill English mentioned climate change once in that entire speech on an emissions trading scheme. He did not mention climate change once, and I can only imagine that he is in the Chamber debating this because, as with the Working for Families package, he does not believe that his leader, John Key, could possibly understand a system as complex as this. I say to National members that we are again seeing classic Crosby/Textor—if National members cannot debate the issue, they attack the process. It is telling that we have just heard a 10-minute speech that did not even mention climate change.

As a member of the Finance and Expenditure Committee, which worked on this legislation, I thank the officials. They did an enormous amount of work. They worked incredibly hard to meet the requests of the committee, and I think they did the public sector and their various ministries proud. I acknowledge all the submitters who came along and submitted on this very important legislation. We had very robust debate with a number of them, but all of them were very, very appreciated.

I acknowledge the chair of the select committee, Charles Chauvel, because it was not an easy process for him to go through. He faced filibustering and delay tactics the entire way through. I was not going to raise this matter, because the important issue is the emissions trading scheme, but National members would spend an hour and a half at the beginning of every meeting complaining about things, then, after wasting all that time, they would complain that we had to cut down time for submitters. Charles Chauvel did a fantastic job of chairing that committee.

I also point out that the select committee heard from 161 submitters during 58 hours of hearings. We spent 58 hours in hearings on this bill, yet National members say the process was rushed. We all spent 58 hours listening and taking on board what was said. Before that, more than 100 public meetings and hundreds of stakeholder meetings were held. It has been a thorough process. We have been working on emissions pricing for 9 years, and it is completely ridiculous for National members to stand up this House and try to invent some excuse and say the process was rushed.

Hon Darren Hughes: From a party with a secret agenda.

MOANA MACKEY: As my colleague says, that is from a party with a secret agenda. Bill English got up and said that the Government is not telling people things. This is the man who is going to sell Kiwibank eventually but does not want the public to know. I think he has a cheek.

We have to say again and again that the cost to taxpayers comes from the Kyoto Protocol, not from an emissions trading scheme, and that cost will remain whether or not we have an emissions trading scheme. The difference is that if we have an emissions trading scheme, we will be able to put the responsibility for reducing emissions on to the people who can make a difference. The average taxpayers can do a lot of things. They can try to be more energy efficient and do all the things we are going to do through this $1 billion fund for energy efficiency. But when it comes to our big emitters, it is those people—those big emitters—who have the power to make a change, and this legislation will give them the incentive to do so. The Government will help them to do it, and if we do not do it the cost will still be there—and who will pay? The taxpayer will pay. The taxpayer will pay $400 million out of general taxation.

National members are going all around the country promising to spend more money. They are promising not to cut any services, but they are promising to cut taxes. They will need a lot of tolls on the Auckland Harbour Bridge to pay for $400 million worth of Kyoto deficit emissions.

David Bennett: Talk about the legislation.

MOANA MACKEY: I tell Mr Bennett that I am talking about the legislation.

That just goes to show that National members do not take this issue seriously. They need to tell the people of New Zealand where the cuts will come from in that $400 million if they do not support an emissions trading scheme that makes us able to reduce our emissions and put the costs where they can be dealt with. If National does not tell people, then I can tell people where the cuts will come from. They will come from the sale of Kiwibank, more cuts to the pension, cuts to health, and the privatising of our education system. The people of New Zealand do not want that.

National’s agenda was secret, but it is not secret any more. That is how National members will pay for the Kyoto deficit, because of their complete inability to support any legislation in this House that does anything to reduce our greenhouse gas emissions. We have heard a lot of emissions from that side of the House about how those members think it is really important, but they are not prepared to do anything.

David Bennett: You’ll be the only omission from this House, girl.

MOANA MACKEY: David Bennett thinks it is funny. I am certain that David Bennett does not understand this legislation—I look forward to hearing his speech next.

It is a bit galling to be lectured by National members, who called the Kyoto Protocol a hoax, said they were suspicious of climate change, and are now expecting us to believe that, somehow, they will be the saviours of the country when they have become only recent converts to the science themselves.

I acknowledge what the member from ACT says. At least those members are honest about the fact that they do not believe that climate change is an issue. One of the National members at the select committee was very, very keen on all the submitters who came along and said that climate change is not real. But the fact is that it makes good economic sense to do this anyway. Even if one does not support the environmental reasons for doing this, it just makes good economic sense.

We have been lectured by the National Party about this legislation being really bad because power prices and oil prices have gone up. That is right—fossil fuel prices and thermal generation prices have increased. They have gone up while we do not have an emissions trading scheme, so it makes good economic sense to take our economy away from its dependency on fossil fuels and to provide an incentive for renewables, which we are able to do in this country—we have the ability to do that. It makes good economic sense as well as environmental sense. Why the National Party would not want to do that is absolutely beyond me. I suspect that, maybe, some of the money that is being channelled through its secret trust comes from people who have interests in this area and do not want National to do that. Maybe those members might want to tell us a little bit more about that matter in their coming speeches.

This bill is very important and complex legislation. But if we do nothing, then the implications for our country are far, far worse. This legislation is ambitious—it covers all sectors, all gases—but one of the things that came out during the submissions was that that was what submitters wanted. They wanted an all-sectors, all-gases approach. They felt that that was a level playing field and that if we are to go down this route, then we need to do that. We are working with our Australian counterparts as they develop their scheme. I believe Australian Treasurer Wayne Swann, who said that the two systems could work together and are heading in the same direction, more than I believe the scaremongering from the National Party, which is looking for any excuse not to support this legislation.

We need to point out that we are not Australia. Our emissions profile is completely different from that of Australia. Therefore, the scheme we set up needs to be based around New Zealand’s needs and New Zealand’s challenges, not Australia’s challenges. I know that National members never want to be leaders on anything and that they just want to blindly follow whatever Australia does, even if it is not in New Zealand’s best interests.

The reality is that agriculture makes up nearly 50 percent of our emissions profile. If we ignore that, as the Parliamentary Commissioner for the Environment told us at the select committee, we will be the target of import taxes against our products from other countries and other areas that have included their large areas of emissions while New Zealand excludes its own. What we have done is transition all our industries in. We are transitioning them into this scheme, and that was the subject of a lot of debate, because a number of submitters wanted us to go a lot further, a lot faster. We in the Government felt that we needed to transition through into this. We need to make sure that our economy goes in without the huge shocks that we have seen when we have gone through other major changes, and the fact is that we have done that through the allocation process with the free credits and through working with the agricultural sector.

I finish by pointing out that only Labour-led Governments face up to the big issues that face this country. These are not easy issues to deal with. These are major, major issues. National Governments never do anything. They come up with their excuses and their reasons—in this case, six excuses—why they should not have to do a single thing. National leaves it up to Labour-led Governments to make the hard choices, and then, if National gets into Government, it tries to take the credit for what Labour has done.

We in the Labour Government are not scared of the challenges facing our country. We are not scared of facing up to the reality of climate change and the reality of being a small, open economy in the global market. The Labour-led Government will continue to lead this country in the area of climate change, along with those other parties in this Parliament that care about this issue. I would say to National members that if they were to spend half as much time and energy on actually working to find solutions as they do on working to find excuses not to do anything, then this country would be a much better place.

CHRIS TREMAIN (National—Napier) : Two facts: firstly, our planet has a finite level of natural resources; the second fact is that we have an exploding global population, especially in Third World countries. I doubt that few people would now argue that unless we move towards a sustainable future, then our Earth’s ecosystem will not be able to cope with the increasing pressures exerted by human endeavour and human progress. The arguments about how we do this will centre around how quickly we change, what impact we are prepared to accept on our current standard of living, and what role technology will play in that transition. There is little debate, I think, that we as human beings continue to take more from the environment than we replenish and that we have done so now for many, many years. I am just in the middle of reading a book called Plan B, third edition, written by Lester Brown. It is a fascinating take on what human activity has managed to achieve in terms of environmental degradation.

Let me firstly focus on water, because it is one of the things that we can easily compare from country to country. Africa’s Lake Chad, which was once a landmark for astronauts circling the Earth, is now difficult for them to locate. It is surrounded by Cameroon, Chad, Niger, and Nigeria—all countries with fast-growing populations that are dependent on this water supply. The lake has shrunk by 96 percent in the last 40 years. The Nile now barely makes it to the sea. Before the Aswan dam was built, some 32 billion cubic metres of water made it to the Mediterranean Sea each year. After the dam was completed, however, increasing irrigation, evaporation, and other demands reduced its discharge to less than 2 billion cubic metres. It went from 32 billion to 2 billion in 50 years. And it is not just a problem for Asian and African countries. The Colorado now rarely makes it to the sea, and in Australia the Murray River is not much better. It is not just water that is of concern. Soils, forests, fisheries, plants and animals, air quality, and the world’s fossil fuels are under pressure from human activity.

Make no mistake, New Zealand is somewhat fortunate in this respect. We have not moved to a point that is nearly as severe as many of the instances that I have quoted above. However, we are no shining light. At home we now regularly hear of water shortages on the Canterbury Plains, or of the degradation of Lake Ellesmere and Lake Rotorua. And in my home province of Hawke’s Bay, Lake Tūtira, the Tukituki River, and the Mōhaka are regularly in the news for the wrong reasons. Algal blooms in Lake Tūtira make it unswimmable, partially treated sewage pumped into the Tukituki River increases the phosphorous levels beyond acceptable levels, and dairy farming in the upper reaches of the Mōhaka is starting to have a small impact on the water quality of that river. Despite these problems, global population continues to grow, thereby putting more pressure on these finite resources. Quite clearly we are living in difficult, unsustainable times.

Right at the centre of the debate around the sustainability of natural resources is the sustainability of fossil fuels and the emissions that accompany the use of them. There is an undoubted need to transition to more sustainable forms of energy. I am ever the optimist about human endeavour being able to solve many of our problems, and just a few weeks ago presidential candidate John McCain announced a $300 million prize to the inventor of the next generation of battery-powered vehicles. I am extremely conscious, still, of the global trends that currently threaten the globe.

I believe New Zealand is uniquely placed to transition our economy, our businesses, and our people into a much more sustainable position. But we must achieve this in a sustainable way, where we do not drive our businesses and our people to the wall in the process. This means being extremely diligent in terms of the tools we put in place to achieve these changes. Change toward a truly sustainable environment must start locally. In my humble opinion we should first get our own house in order—our own rivers, our own lakes, our own fisheries—before we go preaching to the world about sustainability. For instance, right now we have spent more years than are necessary to consent to a $12 million project investing in the Waipukurau sewerage scheme, to provide an alternative way of treating its sewage and to look after the Tukituki River. But, on the other hand, we are trying to lead the world with the only all-sectors, all-gases emissions trading system.

From my point of view, the Labour Government has got its priorities wrong, and this is highlighted by its record on sustainability. Despite a lot of impressive-sounding rhetoric—which we have heard particularly in the last 9 months—about sustainability and carbon neutrality, the current Government’s record on environmental issues is poor. Labour has presided over a chainsaw massacre of New Zealand forests—the past 4 years have seen 46,000 hectares of trees being felled. For the first time since 1952 New Zealand is actually undergoing deforestation. If there is anything that would make a difference to our Kyoto Protocol obligations, it is our ability to sequester carbon from the atmosphere, but in this regard the current Government has totally failed. We have also seen a decrease in the proportion of renewable energy generated in New Zealand, from 72 percent of total energy generated in 1999 to 66 percent in 2007. This is an abysmal result.

Labour is also supposedly leading the way in the fight against greenhouse gas emissions. Under Labour we have seen emissions grow faster than ever before. Carbon emissions under this Government have risen by 14 percent since it has been in power—this is the 38th-worst figure out of 43 developed countries. Let me repeat that: this is the 38th-worst figure out of 43 developed countries. This result has contributed significantly to the blowout in the net emissions deficit we now face for the first Kyoto period of 2008 to 2012.

National appreciates that carbon emissions are one of the most important environmental issues of our time. National advocates a well-designed and carefully balanced emissions trading scheme as the best tool for reducing net carbon emissions, and reducing the globe’s reliance on fossil fuels. In saying this, National is not supporting the current emissions trading scheme bill that is proposed here today. It is our opinion that this bill has been through a reckless and rushed select committee process. We believe that there has not been enough consultation, and that the Government has refused to take the necessary time to fully consider such important legislation.

Today, with one of the most important pieces of economic legislation in the House—the highlight of the Government’s sustainability transformation policy—we have just three Ministers and very few members of the Labour Party in the Chamber. In our opinion, the public—

Hon Darren Hughes: I raise a point of order, Madam Speaker. There is a longstanding tradition—and it is in the Standing Orders—that members do not refer to the absences of members, otherwise we would get into the ridiculous situation of starting to name everybody who is not here. Members have a large number of responsibilities outside the Chamber. Parties are required to keep a certain number of people in the complex for their vote—that will be reflected in the party vote—and I think it is just cheap to undermine parliamentarians like that.

The ASSISTANT SPEAKER (Hon Marian Hobbs): Point taken. The member is not meant to refer to the absence of particular members.

CHRIS TREMAIN: In our opinion, the public was not given adequate time to examine and make submissions on the bill, nor did the Government adequately consult with other parties. Concerns over the rushed submissions have been consistently disregarded, important questions about critical details of the bill were ignored, and major changes were made by the Government in the middle of the select committee process without any kind of consultation. As a clear example of this, more than 1,000 changes to the bill were presented to the committee in the last few sitting days. The result is botched legislation that will need major amendments if it is to fulfil the goal of reducing carbon emissions at the least possible cost. It is vital to get this scheme right. The emissions trading scheme represents a fundamental economic reform, and the costs of a badly thought out scheme could be huge to New Zealanders.

As my front-benchers have outlined this evening, we have six major concerns around the current legislation. First, we believe the current bill will bring a huge, unnecessary cost to New Zealand families and businesses. Our Kyoto obligation for the period 2008 to 2012 is to be emitting carbon at the levels we were in 1990. National has set a goal, similar to that of other nations, of reducing our 1990 net emission levels by 50 percent by 2050. Labour has set a much bigger and unrealistic goal to be carbon neutral. We believe that this is unrealistic.