Hon PETE HODGSON (Convenor, Ministerial Group on Climate Change) : I move, That the Climate Change Response Amendment Bill be now read a first time. At the appropriate time I will move that the bill be referred to the Commerce Committee for consideration, that the committee present its final report on or before Thursday, 28 July 2005, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).

This bill deals with two issues. Firstly, it amends the Climate Change Response Act of 2002 in respect of the function of New Zealand’s Kyoto Protocol registry. Under the Kyoto Protocol, New Zealand is required to develop and maintain a registry to ensure the accurate accounting of emissions units. Emissions units are defined as the various types of units specified under the Kyoto Protocol that the Crown may offset against New Zealand’s greenhouse gas emissions during the first commitment period of 2008-12. Several domestic climate change policies, and the clean development and joint implementation mechanisms under the Kyoto Protocol, will require the Crown to transfer emissions units to New Zealand businesses and individuals. Units are awarded in recognition of activities undertaken by individuals to mitigate climate change. This bill will allow individuals to hold accounts in the registry and to trade in emissions units.

Under the Projects to Reduce Emissions policy, the Government has already offered contracts that are expected to result in the provision of 10 million units for around 40 projects that will reduce the emission of greenhouse gases beyond “business as usual”. Further, by allowing individuals to hold accounts and trade, the Government is providing the opportunity for individuals to participate in the international market for emissions units for speculative or other reasons. Allowing broad participation is consistent with supporting the development of the international market and encouraging the creation of opportunities for new business activities, such as brokering. The bill also provides for the accounting of two new types of emissions units in the registry, which were created by international decisions taken in 2003, and makes several amendments to provide for the official administration of the registry.

Secondly, the bill enables the establishment of the Permanent Forest Sink Initiative. Forests absorb carbon dioxide, one of the major greenhouse gases associated with climate change. The Kyoto Protocol recognises that by allocating forest sink credits for forests planted since its benchmark year of 1990. Permanent reforestation creates forest sinks of enduring value. Part 2 extends the regulation-making powers of the Forests Act of 1949 in order to enable the establishment of a mechanism to allow landholders to access the value of carbon sequestration created under the Kyoto Protocol. Regulations will establish the policy details of the Permanent Forest Sink Initiative and will provide for contracts between the Crown and landowners. There is no compulsion on either party to enter those agreements. To enter the sink initiative, the land must be eligible to earn emissions units under the Kyoto Protocol. That means the land must not have been covered in forest as at 31 December 1989, and that the new forest must be “direct human induced”.

The Permanent Forest Sink Initiative is a business opportunity that has been created by the Government’s ratification of the Kyoto Protocol. The initiative has the potential to attract many millions of dollars of investment into the New Zealand economy. The initiative would allow landowners to make better economic use of their land, particularly of isolated and erodible land not suitable for agriculture or commercial clear-fell forestry. The initiative is likely to produce positive environmental outcomes in terms of biodiversity, soil and water conservation, water quality and flood protection, funds for natural forest restoration, diversification of forest timber species, the development of a special-purpose timber supply, and the reduction in agricultural emissions through displacing some marginal pastoral agriculture. As a further incentive for reforestation, owners will be able to harvest some timber from their forests, but only after 35 years and only on a continuous canopy basis. Earlier harvesting or clear-felling of the forests would incur penalty payments.

Under current law, the tax treatment of the Permanent Forest Sink Initiative income and expenditure is uncertain. In order to remove that uncertainty, the Government proposes to amend the tax legislation to deem any business that primarily involves earning forest sink credits under the Permanent Forest Sink Initiative to be a forestry business. That will ensure that the existing forestry tax provisions also apply in that situation. Those amendments are expected to be included in the first tax bill following the tax bill scheduled for introduction in May 2005.

I commend the bill to the House.

Hon Dr NICK SMITH (National—Nelson) : This bill illustrates the serious pickle the Labour Government has got New Zealand into, with its premature ratification of the Kyoto Protocol. It is piecemeal law that will create some quite perverse incentives in terms of the proposed carbon-trading market. What is particularly bizarre about this bill is that if people go out and create productive forestry, if they plant a new area of Pinus radiata for commerce, despite the fact that that will have equally a gain in terms of the protocol, they will be able to register their credits only if it is unproductive forestry. It seems somewhat bizarre but when I really think about it, not unusual from Labour—that it would want us to encourage unproductive activity but discourage productive activity.

Russell Fairbrother: We don’t encourage unproductivity.

Hon Dr NICK SMITH: I would like the member opposite to explain it to me. Why is it that if people go out and plant trees for non-commercial purposes, they will be able to register it and get credits from this Government, but if they do this to create wealth, to earn income for this nation, the Government says no? It is truly bizarre. It really does illustrate the muddled mind of the Government, with respect to this whole issue of climate change. It is part of the folly of this Government’s desperate bid to be cleaner and greener than anybody else on the planet—without rational thought as to the implications for New Zealand, for our economy, and for our environment, of going ahead of the pace.

Just last week the Government announced a new carbon tax that will impose an extra $300 million or $400 million on New Zealand homeowners, on New Zealand businesses, and on New Zealand farms. It is interesting to note what the United Kingdom’s Guardian newspaper said last week about the Government’s announcement. It said it was going to be an interesting experiment for New Zealand. Well, an experiment is something with high risk. While the rest of the world will be watching New Zealand with great interest, this Labour Government has no right to play games of experiments with the livelihoods of the key industries and the families of New Zealand. It should be an embarrassment that the Government is experimenting with the New Zealand economy.

It is interesting that the Europeans, the ones whom Pete Hodgson and the Government are so keen to trot out after, in the 1990s abandoned any idea of a Europe-wide carbon tax. It is high risk, it will have a negative impact on the New Zealand economy, and it will be for negligible environmental gain. How many members of this House really believe that the 4c a litre carbon tax will result in any less petrol or diesel being used in New Zealand?

Hon Ken Shirley: None at all.

Hon Dr NICK SMITH: Ken Shirley, quite properly, says “None at all.” Labour members are silent because they know in their heart of hearts that it will make not a dot’s worth of difference. They know. They have twice already put up the petrol tax. When they put up the petrol tax in 2002, was there any reduction in the amount of petrol used?

Lindsay Tisch: No.

Hon Dr NICK SMITH: Not at all. Will there be any reduction since 1 April this year, when Labour again put the petrol tax up? So why is it that Pete Hodgson and the Labour Party want to impose this extra carbon tax on New Zealand business and on New Zealand households, when they know that it will not work? I say to Pete Hodgson that the carbon tax will be as successful as the “fart tax”, and it will not be long before this Government is scurrying off into its hole and apologising for getting this one wrong, as well.

The real difficulty the Government has got itself into with the Kyoto Protocol is going so far ahead of our major trading partners. It is National’s view that New Zealand needs to move in parallel with our most important trading partners, and it was a mistake in 2002 for this Government to ratify the Kyoto Protocol, when neither Australia nor the United States was part of it.

I point out to Darren Hughes, who is trying to interject, that New Zealand’s emissions amount to less than 0.5 percent internationally, and per head of population our emissions are about half that of Australia’s and the United States’ emissions. So why are we going to impose costs, and impose controls, and impose red tape on New Zealanders when countries like China, India, Singapore, Australia, the United States, and Canada do not have restrictions on them?

The devil of this bill will actually be in the detail. Because in that continuum—from a national park forest that is fully protected, all the way through to the production forest—where does this bill strike? The answer is that we do not know. We do not know, because, in fact, it is the regulations that will flow from this law that will sort out who is in and who is out. But I can bet one thing: this Government has no intention of providing the credits for those forest planters since 1990, who are eligible for Kyoto credits. Why will it not do that? Is there some great ideological reason? Is there some reason why, if it is indigenous forests, the Government will provide the credits, but not if it is plantation forests? Is there some rationale for the distinction that the Government is making in this bill, to give out credits to some but not to others?

It is very simple. The reason is that without the forest credits, this Government’s policy is absolutely naked. Without confiscating those forest rights from those thousands of Kyoto forest owners, unless the Government has those, it is seriously in the pickle. I ask Government members opposite, why should those who have this forest mechanism get credits, but not plantation forest owners? Why do those who use the cleaner development mechanism—say a wind farm—get the credits but not those that plant pine forests? Why are those who meet the requirements of the joint implementation mechanism of the Kyoto Protocol able to get their credits and to trade with them, but not the forest owner? Why is it that the forest owner who has planted Pinus radiata, in good faith, is out but these guys are in? I say that it will provide some very crude and wrongful incentives for all the wrong sort of behaviour.

This is all part of Helen Clark’s rushing in to get the cute photo opportunity without thinking through all the implications of New Zealand’s ratification of the Kyoto Protocol. It is National’s view that when we move to a point of this agreement being truly international—that is, when we move to a tradable emissions permit system, and this is a very big “but”, we need to move with everyone. We cannot pick just some. We cannot say to those plantation forest owners: “We’re going to grab your credits and nationalise them.”, and say to those who have an indigenous forest that has been newly created, or even, I understand, an exotic forest: “Your forest is not to be harvested; it is to be put into canopy.”, or that somehow they will be treated differently, and that if they have a cleaner development mechanism they will be treated differently.

National’s view is that we must treat all of those equally, we must move to a comprehensive emissions trading permit system—or none at all. We say that it is either all or none. Picking only some will cause all sorts of distortions. The Government’s Kyoto policies are in a mess. This bill will not work. It will only create more problems. The correct thing for the Government to have done was to hold back, wait until Kyoto becomes truly international, and then move all players into a tradable emissions permit system.

Hon MARIAN HOBBS (Minister for the Environment) : I rise to support the Climate Change Response Amendment Bill, and I am very much aware that the previous speaker has just said that the Government is in a pickle. No, the Government is not in a pickle; the earth is in a pickle. For too long we have had people like Don Brash actually saying in October last year: “I am one who thinks the science is still debatable on this issue.” That really concerns me, because I have just been over in New York listening while scientists, going up in the lift in the same hotel that I was in, brought out even newer, more recent evidence about how serious the situation is with regard to climate change and the fact that the issue is man-made climate change.

The member asked what the bill will do. The bill will allow individuals to hold registry accounts, and to trade in emission units. Several domestic climate change policies award emission units to individuals in recognition of activities undertaken to mitigate climate change. Yes, that is creative. Yes, we are out there leading, but is that wrong? I suggest that members of the House would be well advised to take up the most recent—probably 2 weeks’ old—copy of The Economist. I was reading it on the plane, and it actually discussed the fact that several party leaders—and I apologise to one of the other parties in this House—of Green parties throughout the world were relooking at how they actually managed behavioural change and change of attitude on things like nitrates, as well as on carbon. raised the question in the article that it had been the line of most parties to talk about rules and regulations to change people’s way of behaviour, when in actual fact there are market policies, as we are looking at around Lake Taupō, where one actually sets nitrate caps and says that one trades in the use of nitrate within that cap. That is what this bill is about. It is a creative way of trying to change people’s behaviour. I think that if members read article on that, they will find it is a very worthwhile way of thinking. That is what this bill is about.

I think this bill is a way forward for us, as a country. It is clever; it is innovative. However, I do not think there is terribly much innovation in saying we should wait until others do things. That has not been the New Zealand way. It is not the New Zealand way on things like nuclear policy, and it has not been the New Zealand way on disarmament policies. It has not been the New Zealand way on many issues, when we have gone out there and stated quite clearly where it is that we want to be. But the trouble is that the National Party must be a very broad church party, because there is Dr Brash saying: “I am one who thinks the science is still debatable …”, and then we have Guy Salmon saying: “Pete Hodgson remains on track with a consistent vision of a sustainable energy future. His Kyoto policy is being implemented. King coal has been held at bay. Electricity crises have been effectively managed without a loss of credibility, and wind farms are going ahead at an encouraging pace.” That is what we are about. We are actually trying to manage the process, not standing there without any leadership at all and trying to say the issue does not matter, so we will wait to see what the Europeans or somebody else do.

This bill is about trying to change behaviour in our own country, and for that reason I strongly support it.

DAIL JONES (NZ First) : In considering this bill, one must ask the question: will this bill, or, for that matter, a carbon tax, improve our climate in New Zealand? The answer is no. There is nothing in this bill that will improve our climate. There is nothing in a carbon tax that will improve the climate in New Zealand, or, for that matter, the rest of the world. As we know, the major emission problem we have is the flatulence that comes from cows and sheep. They are responsible for more than half of our total greenhouse gas emissions.

If we bear in mind that our proportion of all of this is 0.2 percent, and if the rest makes up more than half, then we are less than 0.1 percent in world standing. Whereas it could be said that a country could lose 0.2 percent in some countries’ roundings, most countries would not even recognise a loss of less than 0.1 percent. As far as this particular legislation and that concern affect New Zealand, those facts are absolutely irrelevant to us. This bill does nothing to reduce the flatulence of cows and sheep. I ask the next member who stands to speak in support of the bill to tell me how it does just that, because that is our problem. It does nothing to affect that.

As far as New Zealand First is concerned, we made it clear we would proceed with the implementation policies for the Kyoto Protocol that are aimed at reducing certain greenhouse gas emissions only in order to ensure they are in harmony with those of our major trading partners and once a coherent plan has been formulated to allow the appropriate targets to be reached. Well, this bill is no coherent plan. As we all know, our major trading partners do not support the Kyoto Protocol, and they have not finally ratified it. In referring to our major trading partners, I am referring to the United States, China, and Australia. They are not bound by the protocol. China is not affected by it at all, and the United States and Australia have not given their final ratification.

The Guardian stated—and I take issue with the headline; it had better be more careful—“New Zealand first to levy carbon tax”. New Zealand First is not levying any carbon tax, but I take the point—“New Zealand first to levy carbon tax.” The makes it clear that it is an experiment and that the rest of the world will observe us as we experiment our way through that particular solution at great cost to the New Zealand taxpayer, damaging small business, and suchlike. As the correctly states, we produce about 29 percent of our electricity from gas or coal-fired power stations. What will that do to the cost of electricity when these things are introduced?

Just where in this world is New Zealand situated, and just what effect does anything we do have in so far as gas emissions are concerned? If we look at our little globe, we see that New Zealand is at the top of the world. Some people call it the Southern Hemisphere, but we are at the top of the world. I ask my colleague to hold up for members a map of the world. How many countries south of the equator are bound by the reduction of emissions in line with the provisions in the protocol? How many countries south of the equator are bound by the protocol? Only New Zealand is. How many countries in Africa are bound by it?

Hon Ken Shirley: None.

DAIL JONES: Which country in the entire Americas is bound by it?

Hon Ken Shirley: Canada.

DAIL JONES: Only Canada. Mr Shirley can move to the top of the class. Which country in Asia is bound by this particular protocol?

Hon Ken Shirley: Japan.

DAIL JONES: Only Japan. Those are the only countries. No country in Africa is, or in the Americas, except Canada. No country in Asia is, except Japan, and, of course, one might add the Asian part of the Russian Federation. That is all. And we are binding ourselves into something like that! What effect does our less than 0.1 percent have on the rest of the world, after one takes out the flatulence aspect of it? Absolutely none whatsoever.

Here we are again, wasting time on legislation that the Minister obviously cannot understand. She is losing her cool once again. We are wasting the time of the House on something that will have no effect at all on the world’s climate. It will, of course, help Prime Minister Helen Clark’s standing in relation to her next job at the United Nations. It will move her up in standing, and when the Labour Ministers go overseas and have their cups of tea, etc. with other people, and when job applications are on the way, they will say: “Yes, we’ve really signed up to the Kyoto Protocol, and down there in little old New Zealand our efforts will reduce emissions right throughout the world.” Our emissions will have absolutely no effect whatsoever on the rest of the world. We have less than the roundings of other countries, which would not even take into account the amount we have to offer in that respect. We should, of course, try to reduce our emissions, and New Zealand First is concerned that any action taken should ensure an improvement. But this bill gives no example of how anything can be improved for the benefit of the environment. Of course, we must not forget that we live in the roaring forties, that New Zealand is one of the windiest countries in the world, and that our various emissions tend to get blown away into the ocean, where I am sure they cause no particular damage.

It was interesting to read the recent report from the Pew Centre on Global Climate Change that stated: “A relatively small number of countries produce a large majority of global greenhouse gas emissions. Not surprisingly, these countries tend to also have large economies, or large populations, or both. Indeed, most of the largest greenhouse gas emitters also rank amongst the most populous countries and those with the highest gross domestic products. An analysis of emissions change over time underscores the importance of population and GDP drivers of emission growth. The significant diversity among the major emitters is to be noted, and the group includes almost an equal number of developed and developing countries, as well as economies in transition. There are 25 countries with the largest of GHG emissions, which account for approximately 83 percent of global emissions. They range from the United States, with 20.6 percent of global emissions, to Pakistan, with 0.8 percent. If the European Union is counted as a single entity, it and four other largest emitters, the United States, China, Russia, and India contribute 61 percent of global emissions.” I shall just pause at that point.

So the European Union, the United States, China, Russia, and India contribute 61 percent of global emissions. Which of those five are part of the Kyoto Protocol treaty? Only the European Union and Russia are. The United States, China, and India are not. China is now very close to being the second most polluted country on our planet, just a short way behind the United States. China is one of our major trading partners, as is the United States. Here we are giving more and more opportunities to those other countries to out-trade us. India is not far behind. As the Vegetable and Potato Growers Federation stated just the other day: “This type of legislation, and the tax, is likely to see some growers forced out of business, particularly those within the greenhouse industry. The overall legislation, and especially the carbon tax, will do considerable harm to small business.”

The legislation achieves absolutely nothing in so far as the forestry sector is concerned. Looking at it from a Māori viewpoint, it is a contemporary Treaty of Waitangi claim. That is what this Government has created. It is taking away Kyoto interests of Māori incorporations in forests, selling them off, and doing what it cares to do with them, just as a typically socialist Government would do. We have covered that in the first reading. So here is a contemporary Treaty of Waitangi claim coming up in this type of legislation.

We cannot possibly support legislation that has no benefit to our environment. It damages our economy and, in the long run, it damages small business. New Zealand First opposes this bill.

Hon KEN SHIRLEY (ACT) : It is beyond doubt that climate change is a reality. The point is that the planet has always been undergoing climate change—sometimes quietly, sometimes very dramatically; periods of change in climate tend to be quite dramatic. We have had huge variations through the ages, and evidence is overwhelming for that. So to say that it is climate change is not the point; the issue is what is the anthropogenic impact—that is, the human-induced climate change—and that debate is very much alive and unproven. The Minister for the Environment said she is just back from New York where she spoke to a few scientists, but there are thousands and thousands of scientists who fiercely debate that the anthropogenic effect is minimal. The overwhelming evidence would suggest that solar variations, principally caused by varying orbital patterns, with the Milankovitch cycle and others that we could go into in depth, are the real drivers of periods of climate change.

Be that as it may—we can debate that—we then come to the Kyoto Protocol, which is the UN kind of response mechanism. The ACT party’s position on the Kyoto Protocol is this: it is fundamentally flawed. It is unfair; it will not achieve its stated objective; and even the proponents of it, and the key scientists, say that after 100 years of full implementation it would make only a 5 percent difference. So it is an instrument that does not achieve its stated objective, and is grossly unfair for the reasons we have just heard, with only a very few countries having any obligation whatsoever. And here is New Zealand, thanks to this Labour Government, putting on the thickest hair shirt, and saying: “We’re going to save the planet!”. What absolute and utter nonsense!

Of course, last week we had the new carbon tax that Labour has trotted out, and it is another round of retro-socialism. I would like to go through some of the aspects of that, because we have heard in this debate that it will put an additional burden of $300 million to $400 million of costs on New Zealand and New Zealand businesses. But the Minister dressed it up as a market instrument. Unfortunately, retro-socialists do not really understand the market. She referred to The Economist—I am pleased that she is at least reading —but the article was actually on global environmentalism. It virtually stated that Rachel Carson, the author of a few decades back—the 1960s, I think—has to meet Adam Smith, and I could not agree more. Rachel Carson does indeed have to meet up with Adam Smith.

I support market instruments. In fact, I was a member of the Government’s Working Group on Carbon Dioxide Policy back in the 1990s, with Bill Falconer, Keith Turner, and Guy Salmon, which wrote the durable response report on how to set up a tradable carbon regime—and I actually believe in it. But the purpose of a market instrument is to put out incentives and disincentives to change behaviour. Let us examine this retro-socialist Labour Government’s market instrument. It thought: “Oh yes, carbon credits in forestry! The sequestration of carbon! Fast-growing trees sequester carbon.” If one believed that, one would leave the credit there to encourage the behaviour—that is, the planting of more pine trees to sequester more carbon. What did the Labour Government members do? As good socialists, they nationalised it. They said: “We’ll take that.” So there is no incentive to plant more trees.

At 6 o’clock I am going to the farewell function for Rob McLagan, who is retiring tonight as the Chief Executive of the New Zealand Forest Owners Association. He, of course, took my former job—the job I had before I came back to Parliament. I will be reporting back to the executives of the forest industry there just how bad it is. They know they have had their property right stolen by this retro-socialist Labour Government. It has nationalised the carbon credits and destroyed the market instrument.

Let us look at the other side of the ledger. It then imposed a carbon tax. But it will have these negotiated greenhouse gas agreements. Having confiscated the property right, the Government will dish out largesse to selected industries. If one lobbies, politicises, and comes knocking on the door of the Government, the Government—at its pleasure—will dish out dispensations, shall we say. Again, the market instrument is destroyed. Neutrality is destroyed. The energy-inefficient will be subsiding the energy-efficient. How smart is that, if one truly wants an economic instrument to work? It is pretty dumb. It is not Rachel Carson meeting Adam Smith. No, it is Rachel Carson meeting Stalin, or Karl Marx. It does not work. It fails. It will not work at all.

Let us look at the electricity market. The Government is going to slap a big tax on electricity based on the carbon component. But how does the electricity market work in New Zealand? We have 200 nodal offtakes, and every half-hour we run an auction, and the highest bidder sets the price for everyone else. Contact Energy runs the Huntly power station, which is based on coal. A lot of the time, particularly when our lake storage is low, it will bid the highest, and will set the carbon tax, and all the hydro operators—the non-carbon emitters—will pay the same price. So all consumers will be hit with this tax, irrespective of how much carbon is emitted. Of course, the non-carbon emitters, the hydro operators, will then get a super-profit by that amount. Let me think who the main hydro producers are in this country. There is Meridian Energy, there is Mighty River Power, and there is Genesis Power.

Hon Dr Nick Smith: Who owns them?

Hon KEN SHIRLEY: Who owns them? The Government of New Zealand. So they get big fat dividend payments back on super-profits that have been gouged out of poor, struggling New Zealand businesses and poor, struggling New Zealand households. I ask the Minister how smart that is. It sounds pretty stupid, does it not? But that is her Government’s policy. It is not a market instrument, and how dare this Government come to this House masquerading it as a market instrument. It is a complete failure. All that it is is nationalisation of the economy and an excuse for the Government to get its hands on the levers of control. Industries now have to lobby and politicise to get dispensation. The Government is taking hold of the levers of the economy. We know that energy drives the economy, and under this Government’s application of what it calls a market instrument it is taking control of all of the market instruments and all the levers of the economy. It is doomed to failure.

The position of the ACT party is quite clear: we should scrap the Kyoto Protocol. It does not achieve its stated objective. It is grossly unfair. The National Government should not have signed it in 1997. Simon Upton was just as eager to sign it, and wanted to rush to ratify it just as keenly, although he might have understood the market instrument a wee bit better. But it was fundamentally flawed from the outset. I attended several of the working-group preparatory committees leading up to Kyoto in 1997 and I was aghast at the politicisation of the process. It is a UN process out of control. It is all about bureaucracy. There are thousands of the so-called scientists that the Minister spoke to in New York last year. All of their funding is dependent on their perpetuating this story. They swan off around the planet, flying in jets, depleting the ozone and using up great amounts of energy, to attend conferences every other month that are just hot air and garbage, where they reinforce their views. They ask: “Where is it spring next month? We’ll move there for our conference next month.”

The Minister tags along like a little patsy lamb, and they wind her up and tell her that it is humans who are causing all of these problems. It is utter nonsense. The Minister should go back to the basic science. There is 50,000 times more carbon dioxide in the oceans; if we take total carbon, there is 50,000 times more. We know that temperature changes the solubility of carbon. It is change in temperature that is driving carbon out of solution and into the atmosphere, as it has done for millennia. It is change in temperature—because of changes in orbital pattern, and changing solar radiation—that is increasing atmospheric carbon; it is not atmospheric carbon increasing temperature. Thousands of scientists around the world have come to that conclusion. This Labour Government has missed that basic point because it is so wound up in its UN committees. In a way, it is just an excuse to apply this control, to apply this movement towards a command economy.

JEANETTE FITZSIMONS (Co-Leader—Green) : We have heard the knockers, as we always do when the Kyoto Protocol comes up in this House. It is not surprising that ACT is challenging this, because ACT does not believe that climate change is real. [Interruption] Except, it has changed its position. It has changed its view over a very short time. []

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

Hon Ken Shirley: I raise a point of order, Mr Speaker. The Standing Orders are quite clear. When a member in his or her speech deliberately misrepresents what a member has said—which, through implication, Jeanette Fitzsimons has done—then a member has a right of reply, and certainly a right of interjection.

The ASSISTANT SPEAKER (H V Ross Robertson): No, if the member considers that he has been misrepresented, then he should look at Speaker’s ruling 35/3. I also point out to him Speaker’s ruling 57/5. When a member is speaking and other members sitting close by on the cross benches interject, it muffles the microphone. Members know that it is a longstanding convention that that is out of order.

JEANETTE FITZSIMONS: I have sat in the House many times and heard ACT party members argue that the climate is not warming. They base this stance on satellite records that state the temperature is not warming 1 kilometre above the Earth, therefore we can discount what is happening on the surface of the Earth. They state that the science is all wrong. But ACT cannot carry on that line any longer, because the evidence is becoming incontrovertible. So now, all of a sudden, its members say that the climate is warming after all, but it is not humans who are causing it. I wonder how long ACT will be able to sustain that argument. However, we cannot expect a Plan B from ACT, because it is not prepared to engage with the issue, at all.

The National Party, however, does not claim that climate change is not real, but once again it has opposed the Kyoto Protocol and opposed, as it always does, any measures that anyone has ever suggested. Whether it be energy efficiency, renewable energy, low-energy transport, or any other measure for tackling climate change other than the protocol, the National Party says no. We have not seen it come up with any positive alternative to do something about the problem.

New Zealand First does not believe in collective action. If reducing our emissions or absorbing more carbon here will not help our climate in New Zealand, it does not believe that we should be part of any collective, international action to do something about it on a global scale. Of course, nobody’s emissions affect just their country’s climate; it is only if we all act together that there will be an effect. The Kyoto Protocol is a very flawed instrument but it is the only one on the table.

We had a nice geography lesson from New Zealand First with a map of the world. But the member neglected to say that it is quite simple: countries that are part of the OECD have the highest emissions over history and have caused the problem, and therefore they are required to take action first; those countries that have developed more recently or are still developing, and do not have a long historical record of changing the climate, will join in later. So we have had denial of the problem, denial of any alternatives, and denial of collective action.

The indications that climate change is proceeding faster than anybody predicted have been accumulating over the last year. Arctic sea ice has melted at a rate that has staggered the scientists working on the models. There is the risk that the exposure of dark ocean instead of pale ice will increase heat absorption and accelerate warming, even if we were to miraculously stop emissions. Huge shelves are carving off the Antarctic ice sheet into the sea at a faster rate than anyone predicted. Glaciers are in retreat around the world. The incidence of unusual floods, storms, droughts, and heat waves has increased—none of which can be proven to be directly attributed to global warming, but the pattern is consistent with that predicted by the climate change models.

Carbon credits in this country have got wind power going. The Government’s policy on carbon credits has got the best new source of clean and renewable electricity off the ground. We have several wind farms up and running, and quite a lot more being built. This is a new industry that needed some help to get going, but that can now stand on its feet. It will not continue to need carbon credits. I think that is a victory. Although there is much I disagree with in the Government’s energy policy, I congratulate it strongly on that move.

The Greens support the provisions for reforestation that this bill makes possible. We need permanent forest sinks. It is too risky to allow people to claim carbon credits for planting a forest that they intend to clear-fell in 25 years, when nobody will be able to force them to take responsibility for the emissions caused when the forests are clear-felled if they are not replanted. We need to encourage permanent forests, and this bill does that. There are so many reasons why we need to establish more permanent forests, particularly of indigenous species, although that is not the only thing that this bill allows. These reasons include soil conservation, water conservation, flood control and protection, erosion prevention, biodiversity, and landscape. We have ranges and ranges of bare hills around New Zealand that have lost their forest cover. The farmland that has been provided through that loss of forest is in many cases of very low value, but it is too expensive to replant the forest. This bill is a mechanism by which that can happen.

We need a regular supply of New Zealand indigenous timbers from forest that is planted, because we have so little of the original forest cover left that we cannot afford to hack into old-growth indigenous forests to supply timber. But it will be a shame if future generations have to get all their furniture just from pine or, worse still, from imported old-growth timbers from other countries, which is what is happening at the moment and which the Greens very strongly oppose. The provisions in the bill for the forests that get the credits not to be logged for 35 years, and then only to be logged selectively under a closed canopy system, gives us the opportunity to recreate what we could once have had in this country if we had stopped logging soon enough—that is, some sustainably managed indigenous forests for timber.

The Minister for the Environment said that the bill is about markets and not regulation. Then ACT told us that markets are all good and regulation is all bad. That is a totally false dichotomy. Therefore economic instruments cannot achieve environmental goals without putting them in a regulatory framework. That is what the Kyoto Protocol does. It is a “cap and trade” system. The trading is the market bit; the cap is the regulatory bit. The trading of emissions that the National Party suggests will not achieve anything at all without a regulation setting a ceiling to those emissions. This system is supposed to work in the fishing industry, where everyone talks about individual transferable quotas being the great thing. They are the trade part of the system, and are of no use at all in sustaining fish stocks unless there is also a total allowable catch, which is the regulatory bit of the system. So we should stop getting hung up on ridiculous arguments about regulation or market and accept that we are a mixed society and that a mixed system works best. Regulation is used to ensure the environmental goals are met, and markets are used to ensure the goals are met in the most efficient way by those who can most easily meet those goals.

LARRY BALDOCK (United Future) : I rise on behalf of United Future to speak on the first reading of the Climate Change Response Amendment Bill. It gives us an opportunity to outline United Future’s position on climate change and the Kyoto Protocol, and to list the reasons for which we oppose, as we have always opposed, the ratification of the Kyoto Protocol. It is a flawed instrument—even the leader of the Green Party admitted that it is far from perfect. Why on earth would we sign up to something that we know to be flawed? The idea that the world will be able to work, through that instrument, to achieve its ends is ridiculous.

I will outline the reasons why United Future has taken that position. The first one, as has been mentioned earlier, is that to join up with something that our major trading partners have not joined is ridiculous. It is unwise and places a greater burden upon our own industries than they would otherwise have as they try to compete in a global market. That is the first reason that we have considered it unwise to ratify the Kyoto Protocol.

• Sitting suspended from 6 p.m. to 7.30 p.m.

LARRY BALDOCK: Before the break I was outlining the reasons why United Future has been opposing the ratification of the Kyoto Protocol. I had covered point one, which was that our major trading partners have not joined it. Point two is that despite the plethora of media articles that we encounter about the scientific evidence for global warning—and, in fact, for the human-induced cause of global warning—there is still considerable uncertainty amongst many well-informed, credible scientists and meteorologists, who cannot seem to get their view presented in the media. We can ask questions about why that is, and about the influence of the environmentalists’ lobby in the media, but that point is clearly made. Many scientists are not convinced of the science as yet, and have opposing views.

Point three is that even if the theory were correct, the chances of achieving worldwide targets are questionable, to say the least. The ability of the Third World and the developing countries to come up with any commitments into the second commitment period is very questionable. I lived in the Third World for 15 years—in the Philippines—and I spent a considerable amount of time travelling throughout Asia. The idea that Asian countries will be able to meet the targets imposed upon them by 2012—or begin to meet those targets—is absolutely ridiculous. Those nations need a lot more in terms of basic infrastructure before they will be able to think about the effects of carbon dioxide emissions. Point four is that even if the targets were met, the effect on so-called human-induced climate change is very debatable—it is negligible. The figures of the UN itself state that if all targets are met, by 2100 the reduction in temperature that could be achieved by meeting those targets would be only 0.14 percent of the warming effect. So even if we are successful, the chances of us making any lasting change to global warming—if it is actually coming from human-induced effects—are negligible.

It makes no sense to impose a carbon tax on our businesses and economy, in the light of the points that I have just made. The money could be much better spent on things that will benefit not just our country, regardless of the protocol, but also the Third World, instead of pursuing the ideology that is behind the protocol. Research and development investment is to be welcomed in our nation and around the world, in order to find alternative sources of energy and to find energy efficiency. We could do a lot more by spending money on improving the age of our vehicle fleet in New Zealand, and shifting, as soon as possible, to hybrid cars. That would help to reduce emissions—if those emissions have an effect on our climate. Because we do not know for certain what is causing climate change or how long it will last, it would make a lot more sense to spend money on mitigating any effects of climate change, than to try to play God and stop it.

The Climate Change Response Act was bad legislation, and United Future opposed it. This Climate Change Response Amendment Bill makes that bad legislation a little better and a little more business friendly, so in United Future we have had to ask ourselves what we should do about this bill. If, in the future, a new Government was to come into the House that wished to withdraw New Zealand from the protocol, United Future would be prepared to support that move. But at the moment New Zealand is committed to the protocol. We have ratified the treaty, and it is not an easy process to extract ourselves from treaties once we have committed to them. It is important to United Future to make sure that, at least in the first commitment period, the commitment to the protocol does not end up costing New Zealand a whole lot of unnecessary money, resulting in New Zealand having to buy carbon credits from nations like Russia, for example, that are not doing any more about addressing carbon dioxide emissions than we are, but that have simply benefited from certain historical circumstances. It would be ludicrous if we had to buy carbon credits from Russia.

We have had to ask ourselves what we will do about this bill. It makes bad legislation a little better, and we have therefore concluded that we will support the first reading of the bill and send it to the select committee, in the hope that more discussion and more debate in the select committee will lead to a better response in the end. I believe that this bill is an indication that the Government does not believe in the protocol as much as it says it does, and that it is beginning to have some serious doubts about whether it has been the right course of action. Hopefully, as further submissions from the public come to the select committee and as the legislation is debated further in the House, we may be able to see a further change in the Government’s policy.

We welcome the provision in this bill to extend the regulation-making powers of the Forests Act in order to enable the establishment of a mechanism to allow landowners to access any value the protocol creates for carbon from newly-established permanent forest sinks. That will be achieved via a contract between the Crown and a landowner, and will encourage the planting of new forests by landowners. The one thing we know we could do in New Zealand in order to address the concerns about carbon dioxide emissions is to plant trees. One of the ways to encourage that is to give people the benefit of the carbon credit and the carbon trading mechanism that is to emerge from planting trees.

There are other reasons, not just for the sake of carbon credits—because anybody who invests money on that basis would be shooting in the breeze somewhat, particularly with the potential for Governments to flip-flop around on their policy—to plant trees. It is good for us to reforest areas in New Zealand. We face incredible challenges to do with our water quality, and it would make a lot of sense to plant riparian strips around every river and lake in New Zealand, so that we could filter a lot of the nutrient runoff that comes off our land, goes into our waterways, and causes us so much difficulty. One of the best things we could do would be to plant a 10 to 20 metre riparian strip of native bush around our waterways wherever possible, and to provide nature’s best solution to that problem. Also, as a by-product of that, we would achieve further carbon credits from the planting of that new forest. We will pursue the issue at the select committee to make sure that the bill enables some benefit from that planting to pass to the landowner, so that there is an incentive to pursue that course of action.

We will support the bill through its first reading and its referral to the select committee, but we make very clear United Future’s position on the protocol and on the principal Act, which we consider took New Zealand in the wrong direction.

DIANNE YATES (Labour—Hamilton East) : I rise to support the Climate Change Response Amendment Bill. I point out, as the Minister has done, that it deals with two issues. The first one is the amendment of the Climate Change Response Act in respect of the function of New Zealand’s Kyoto Protocol registry. I am sure that Simon Upton, a former Minister for the Environment, would be very pleased with this legislation. His work on it is coming to fruition. The second thing the bill does is to enable the establishment of the Permanent Forest Sink Initiative. I would like to reiterate a very good part of the Minister’s speech. He said that under the current law, the tax treatment of Permanent Forest Sink Initiative income and expenditure is uncertain. To remove that uncertainty, the Government proposes to amend the tax legislation to deem any business, which includes farms, that primarily involves earning forest sink credits under the Permanent Forest Sink Initiative to be a forestry business. That is what Federated Farmers have been lobbying for, and I am pleased to see that the Minister has acknowledged that. It will ensure that the existing forestry tax provisions also apply in that situation. Those amendments, as the Minister said, are expected to be included in the first tax bill following the tax bill scheduled for introduction in May.

I commend this legislation to the House. I think it is forward-thinking, and it does show what New Zealand is all about. I also commend farmers who, as has been mentioned, are planting riparian strips and who are responding to measures such as the ones Environment Waikato has encouraged through the sustainable farming awards—the carrots rather than the sticks that are working in that regard. There is also the amount of money that the Minister of Local Government has allocated for clean water. Those matters are linked, as the previous speaker mentioned. In particular, I think the initiative around the Permanent Forest Sink Initiative is a good one, and I look forward to farmers being involved in that area.

JOHN KEY (National—Helensville) : I rise on behalf of the National Party to give the good news to the people of New Zealand—that is, the Climate Change Response Amendment Bill is a load of rubbish and the National Party will not be supporting it, for very, very good reasons indeed.

I want to start off with a broad-ranging discussion, if I may, around the Kyoto Protocol and the absolutely nonsensical road that this Government is taking New Zealand down. I know we have a Prime Minister who is very confident, and all the rest of it, but maybe she would like to step out of her office on the 9th floor and realise which planet she is on. She is on the same planet, she may be surprised to learn, as India, China—

Hon Ken Shirley: And Mugabe.

JOHN KEY: And Mugabe, yes—and a lot of other countries out there that have ratified the Kyoto Protocol. And why would they not, because they have absolutely no requirements on them, whatsoever. Yet here we are down in New Zealand, a very little country with about 0.2 percent of the world’s emissions, putting a self-imposed straitjacket on our businesses, and waving a huge flag that says: “Foreign investment, don’t come anywhere near us. Australia is over there—the West Island. Go over there to pour your dollars in.” To the Chinese we are saying: “Come in and buy as much coal as you like from our West Coast. We’ll sell it to you and you can burn it without a carbon charge—but, by the way, to those back here in Aotearoa New Zealand we will be slapping on a carbon charge and you won’t be able to operate.”

This is a complete and utter hoax, if I may say so. The impact of the Kyoto Protocol, even if one believes in global warming—and I am somewhat suspicious of it—is that we will see billions and billions of dollars poured into fixing something that we are not even sure is a problem. Even if it is a problem, it will be delayed for about 6 years. Then it will hit the world in 2096 instead of 2102, or something like that. It will not work.

Let us have a look at the Government’s response to the Kyoto Protocol. Our friends in Australia said they do not want a bar of it. They do not want to know anything about it; neither do our friends in America. I saw George W Bush, the President of the United States of America, talking about the Kyoto Protocol on CNN one night. George Bush is not necessarily known as the most eloquent speaker in US history. He is a fairly straight shooter, but he is not necessarily seen as being one of the great orators of all time. I plugged in the TV set, turned it on, and what did I see? There, on CNN, late at night, at about 11.30, was George Bush saying that America would not be ratifying the Kyoto Protocol, because it is not good for jobs and it is not good for the American economy. I understood that. I got it. Then I saw John Howard, the Prime Minister of Australia, addressing the Australian people and saying the same thing—that it is not good for jobs and it is not good for the economy. So when I turned to New Zealand TV and found out that we not only would be ratifying the Kyoto Protocol but in fact would be the first country in the world—that is right—to be blazing a trail to put on a carbon tax, I was somewhat astounded.

Now, I should not have been quite so worried, because when we questioned the Convenor, Ministerial Group on Climate Change last week, he said not to worry. He said that the carbon charge was not a tax increase; it was a tax shift. I was beside myself, as members can imagine, because I just could not understand it. So the next day I asked the Minister of Finance to point out to me what the discernable difference to the average New Zealand worker would be when they received about $400 less from an average, run-of-the-mill tax increase. I might add that this Government has had about 35 of those in the last 6 years, but that is another debate that we will come back to. I asked him what the difference would be between the $400 less they will get because of a tax increase and what they will get from a negative tax shift. Dr Cullen is no slouch in the House, is he? He is no slouch in the House, but he gave a sort of garbled response. We raised a point of order and he had another bit of a go at it, but that was a complete and utter failure. Then he came out with the real doozy. I said to him: “You know the carbon charge that you’re telling us will cost the people of New Zealand $200 a year, based on carbon prices of $15 per tonne of carbon dioxide emissions, or whatever? Well, actually, you have given yourself provision for it to be $25 per tonne. That will actually double the cost to about $400 per household, especially when you add in all the second-order effects, because supermarkets are going to have higher prices for its electricity, and more for a sink.” “No!”, said Dr Cullen. “You’re wrong!”, he said to me. I asked the Minister of Finance, Dr Cullen, what role he played in devising the carbon charge. He replied that he was responsible, along with the convenor. Well, that is very good. I thought to myself that a new member like me could possibly be wrong—I mean, I do not want to question the Minister of Finance, after 30 years—

Jill Pettis: Yes.

JOHN KEY: Exactly! I tell the senior Government whip that that is what I thought the case was. So I scurried up to my office, got the transcript of the questions and answers, came back to the House, and took a point of order. Questions and answers are a sort of fancy term for “small print”. I read out what he said: “Oh, well. Actually we may allow the carbon charge to go to $25, because we are not quite sure what rate it will hit at internationally.” I said that it happened to be trading at about €17 that day, which, with the New Zealand exchange rate, was about $30 to $35, and that would mean the price would double. Dr Cullen looked at me, smiled, and acknowledged the fact that I had understood that. He sort of nodded quietly, and away we went. That is a tax shift. So if any New Zealanders are feeling in any way better off today, it is because of that tax shift.

That sort of tax shift, recycling—all that sort of stuff—would not be quite so bad, I suppose, except for what we are doing to the public of New Zealand. What are we doing to the consumers and businesses of New Zealand? We are putting a tax on them. I could understand that if the Convenor, Ministerial Group on Climate Change was coming to the Chamber and saying that every single dollar would be spent on reducing emissions in New Zealand—every single dollar. But no, that is not the case. At the International Fiscal Association conference, where the Minister of Finance was speaking on the previous Friday, he said that his fringe benefit tax cuts—yes, he wanted some business tax cuts, because business confidence was collapsing around his ears, and he therefore needed to prop up that vote a little bit—would be partly funded by the carbon charge. Very good—that is a good one, is it not?

So the consumers of New Zealand are now paying an additional tax shift—it might be negative in their case—to prop up the failing business confidence that has been caused by the Government making such an atrocious job of managing the economy. All of that is actually happening while the Government has a $7 billion surplus. Now, excuse me, but George W Bush, at 11 30 at night on CNN, is starting to make a hang of a lot more sense than the Convenor, Ministerial Group on Climate Change when he tries to tell me the difference between a tax shift and a tax increase. So my prediction is that that will be the straw that breaks the camel’s back. The public are sick and tired of paying additional taxes for all sorts of crazy ideas. They have heard the message from that promising Opposition spokesperson on finance, when he told the public—

Simon Power: Who is that?

JOHN KEY:—John Key, apparently—that $50 billion worth of additional taxes have been imposed in the last 5 years. And on top of all that—and with a $7 billion surplus—they have to pay a carbon charge. It will be paid for by consumers so that other businesses, which have absolutely nothing to do with emissions, can have a tax cut.

I want to make one last point before I sit down. I remember that about a year or so ago Pete Hodgson said on radio that this first commitment period would be free money for New Zealand—worth $500 million. What sort of idiot, he asked Larry Williams, would rip up a cheque for $500 million, as the National Party would do? What sort of idiot would do that? Well—hello, Minister! I do not know whether he has noticed, but forests are being chopped down around his ears. In fact, the first commitment period will, at best, probably be very close to flat, and could even be negative. So the $500 million is a typical Labour Party cheque, if I may say so—it is bouncing all the way back to the bank.

This is not a good idea for the people of New Zealand. This is not the best thing for the planet. If the Prime Minister of New Zealand wants to get out there and convince the Prime Ministers of India and Australia, and the Presidents of China and America, to sign up, then I will be with them all the way to the bank. But the last time I looked, we were part of the same planet. New Zealand going it alone has not worked in the past; it will not work on this issue, either.

JILL PETTIS (Labour—Whanganui) : That was Mr John Key. He used to be good, but he is not any more, and it is a sad misfortune that has befallen such a young and promising man. He talked about George Bush at 11.30 at night. George Bush is not awake at 11.30 at night, and we have that on authority from his wife, Laura Bush, who described herself as a “desperate housewife” because George retired at 9 p.m. at night. So I think Mr Key is a bit mistaken.

His views, while almost Neanderthal in their approach, are sad coming from a young man who showed such promise when he first came into this House. I am proud to say that this Government’s position is based on environmental integrity, whereas the Opposition’s position is opportunistic, and inconsistent with its earlier stance. We have flip-flops all over the place. The jandal award is being dusted off yet again, because Nick Smith—that “blue-green” spokesperson—said at one stage that National would opt out of the Kyoto agreement at the first chance if countries like the US and Australia did not sign up. Well, we know that our good friends in Australia mine uranium in a national park, which is something that we would never do in New Zealand.

Nick Smith went on to say that eventually climate change and issues associated with it would—in his words, not mine—“…stuff life on earth. New Zealand can’t ignore the problem. New Zealanders must do their bit.” That is representative of National’s position on this issue, or rather its total lack of position, because those members change their views. They do not give leadership. They do not send a very clear and unequivocal message to the public of New Zealand, who are incredibly interested in this issue.

Guy Salmon has spoken positively about this Government’s environmental policy in this particular regard. So I am pleased to say that this bill actually extends the regulation-making powers of the Forests Act to enable the establishment of a mechanism to allow landowners to access the value of carbon sequestration that is created under the Kyoto Protocol.

Hon Ken Shirley: Absolute rubbish!

JILL PETTIS: That is absolutely a fact, and this Government is sending a very clear and unequivocal message to the people of New Zealand. We are a country that has a proud record on the environment. New Zealanders from all walks of life want to look out for the environment, and this Government is very happy to be a partner in doing that.

SHANE ARDERN (National—Taranaki-King Country) : Those who were listening on the radio to the soon-to-be former member for Whanganui must have been absolutely amazed at that speech.

I want to pick up on a number of areas in the bill. Firstly, it does absolutely nothing—sum total zero—in terms of the environment. Secondly, it does nothing to enhance the economy of New Zealand or the welfare of its people with regard to jobs and suchlike.

John Key: It makes it worse.

SHANE ARDERN: It makes it worse. It imposes yet another tax. I do not know whether it is new tax No. 36. My colleague John Key said that we were up to No. 35, so I suspect that this is tax No. 36. Guess what? Dr Cullen is supporting this bill, only because it increases taxes. He does not believe in the concept, at all. In fact, he does not believe in the notion of global warming. I have seen evidence of that in his body language in this House when there have been questions from the Green Party. I have watched Dr Cullen crouch down at the thought that he may have to cuddle up to those members at some time in the future for the numbers. He ducks down behind his seat and pulls his papers up. I do not believe they are saying this in an open democracy like New Zealand, but they are.

But it gets worse. Our good friends in United Future are supporting this bill tonight, even though they have campaigned up and down the country saying there are too many taxes. Those members have parroted on about the McLeod report on taxation, yet tonight they will roll over. They will agree to send this bill to the select committee. There is only one possible reason—that is, they signed up on confidence and supply with this socialist Labour Government, so they have no option but to follow along because they have been whipped into line. I ask United Future and the Minister to show us the evidence that New Zealand has a carbon deficit.

I have looked at some figures that I received from the Parliamentary Library. They say that agriculture has had an increase in carbon emission of 15 percent—from 31.9 percent to 36.8 percent. But the question that has not been answered, and there certainly is no science around this matter, is how much of an increase have we had in plantations on areas that would traditionally be described as farming areas—that is, riparian margins that are carbon sinks. That is the increase in pasture growth, which is an activity of photosynthesis—some members will understand that well—and a carbon sink.

I cite the example of my own farm. Some 20 years ago it grew 8,000 kilograms of dry matter per hectare per year. Last year it grew 14,000 kilograms of dry matter per hectare. It increased from 8,000 to 14,000 in 20 years. That is a massive increase in carbon sink. I put this question to the Minister. He said that it is cyclical and that it happens very quickly, so therefore I have a negative sum gain. I do not believe that, because when we grow trees we cut them down. Exotic forests are cut down. I say to the Minister that if we put that wood into leaky homes, the homes are rotten within 5 years, the emission is back in the environment, and we have a zero sum gain. It is just that the cycle is quicker. That is the only difference. It is every 30 days instead of every 5 years, or it might be every 40 days instead of every 5 years. What is the difference? There is no science yet that I have been able to study or that anybody has been able to explain to me as to where that difference lies.

The third point, which certainly has not been raised to any great extent as far as I can tell, is that the bill actually picks on forest owners. It isolates them and says that they will give up their property right and their carbon sink, and the State will take it from them and there will be no compensation for that, but then it turns round and puts a tax on all other industry. I say to Government members that if I am wrong, they should take a call and explain to me why I am wrong.

Further, when we look at our good friend Tony Blair in the UK, who has just become Prime Minister for the third time, we see that the Brits are saying—this is what the papers there have reported—that the Kiwi carbon tax is an experiment. That is what those papers are saying. It was reported in the Guardian this week that the carbon tax is an experiment that will be watched by the bigger countries around the world to see how it works out, because they cannot believe that a small trading country like New Zealand would enter into such a mind-numbing, brain-dead tax before its major trading partners the US and Australia, and a range of other countries as well, and before the science is robust and before there was a proper reason to do so.

I say to the previous speaker, the member for Whanganui, that she should go back to Whanganui and tell people that the Government is slapping yet another 4c per litre on their petrol because it will save the environment from all those rural people who have to travel up and down the Whanganui electorate all the time to go about their business. She should tell them that another 4c on their petrol will not hurt them and that it will somehow or other save the good folk of Whanganui from disappearing under the sea. They will not buy that explanation, and I remind her that Chester Borrows is knocking on the doors as we speak. This issue will be the final nail in the coffin for that member.

I say to the Labour members and to the Minister in the chair that if I am wrong, they should take a call and tell me why I am wrong. I have seen no science at all that can demonstrate to me why Dr Cullen should be able to introduce yet another substantial tax increase and put it on to every hard-working Joe Bloggs, yet be selective in what he takes from forest owners and from other parts of the community. How can he explain to those people that, at the end of the day, this will be in any way helpful in reducing greenhouse gas emissions? It is just another socialist tax grab.

The other question that has to be asked is where the Hon Pete Hodgson got his information from, because nobody has been able to trace that, either. There is a substantial amount of evidence that Peter has been making it up on the hoof. Dr Cullen has been saying to him: “Look, we’ve only got a $7 billion surplus. We need to get some more tax from somewhere else. Pete, we need you to come up with another innovative idea on how we can get more tax.”

The ASSISTANT SPEAKER (H V Ross Robertson): The member will use the Minister’s full name.

SHANE ARDERN: The Hon Pete Hodgson—I thought I had said that. I am pretty sure that the Hon Pete Hodgson is the name I used. I will check the Hansard afterwards, but I am confident that that is what I said. The Hon Pete Hodgson has no evidence at all to back his argument. I ask that Minister why he believes that placing another tax on energy users—on our household power bills—will save the environment, when the Resource Management Act is stopping the development of major hydro activity and a range of other power-generating activities in this country, which somehow will be beneficial to the environment. Coal-fired power stations are being built, because hydroelectricity cannot get consent. There is a simple piece of logic that has not been answered in any of the debate tonight.

Why was the first step not to shift the roadblocks in terms of developing renewable energy and removing the need to use non-renewable energy sources such as coal as the back-up in the case of an energy shortage, when we could thereby have achieved as much carbon emission saving as we could potentially get from anything we might do in the short term? Why does the Minister not answer that question? Why does New Zealand, a small island nation at the bottom of the South Pacific that represents 0.2 percent of the world’s carbon emissions, feel the need to blaze a trail and be the first in the world to introduce yet another tax—a tax that has no science to back it up and on which a whole lot of questions need to be answered and none have been answered—when the Government could do so many other things to reduce the amount of carbon being used?

Hon JUDITH TIZARD (Associate Minister of Transport), on behalf of the Convenor, Ministerial Group on Climate Change: I move, That the Climate Change Response Amendment Bill be referred to the Commerce Committeereferred to Commerce Committee.