Hon Dr NICK SMITH (Minister for Climate Change Issues) : I move, That the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Emissions Trading Scheme Review Committee, with an instruction that the committee report finally to the House on or before 26 June 2009, 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 187 and 190(1)(b) and (c).

I will speak on the detail of the bill and why it is necessary, and then I will give a broader perspective around the very important issue of climate change and the Government’s approach to it. But first I thank other parties for their consideration of the bill, and I thank the Business Committee for its agreement to allow it to progress quickly.

The bill has three parts around the reporting and the process issues for the forest sector under the Climate Change Response Act 2002. The first issue that the bill addresses is the requirement in the existing law that any deforestation during calendar year 2008 be reported and declared by 31 January 2009. This bill does not change the legal requirements that go with deforestation under the emissions trading scheme; it changes only the required reporting times by extending that date to 31 January 2010. The dates remain the same for reporting deforestation that occurs in this calendar year. We also made changes to the requirements to surrender units associated with that 2008 deforestation. This date has been put forward by 1 year, from the end of April 2010 to the end of April 2011.

The second change in this amendment bill is in respect of the application for exemptions for small forest lots of less than 50 hectares. The current Act requires that applications for exemptions be made to the Ministry of Agriculture and Forestry by 30 June 2009. The bill amends that with a provision that allows an Order in Council to set the date in future, relative to the progress in the report of the Emissions Trading Scheme Review Committee.

The third element of this bill is in respect of the publication of the forest allocation plan for pre-1990 forest owners. This allocation plan is a compensatory mechanism for forest owners who will be subject to deforestation liabilities under the emissions trading scheme. This has been quite a contentious area, and it was subject to many submissions at the review select committee. The bill defers the requirement for this forestry allocation plan from 30 June this year—again, the date will be set by an Order in Council—to a date that is appropriate after the select committee review has been completed and subsequent amendments to the emissions trading scheme have been brought back to the House.

Part 2 contains some corrections to minor technical drafting errors that arose when the original legislation went through this Parliament under quite pressing time frames. The reason for changing time lines is quite straightforward to justify. The current review committee inquiry and the examination of the emissions trading scheme have absorbed a huge amount of energy and effort by many of those affected by the emissions trading scheme. There has been a particular focus on the forestry provisions of the scheme, and it is noteworthy that New Zealand is the first country in the world that is attempting to include forestry in such an emissions trading scheme. If the Government pressed participants to meet the compliance requirements of the existing law at the very time those instruments are being reviewed by the review committee, it would be unfair and it would send mixed signals.

I have found that even Government agencies were not completely on time in reporting deforestation by 31 January this year. I am sure that many other forest owners—thousands, I suspect—will also be in non-compliance. The particular issue around the forestry allocation plan is that it would be nonsensical for the Government to continue to develop and consult on the detail of an allocation plan when such key issues as offset and other provisions around forestry participation in the emissions trading scheme are being openly debated. It would create confusion, and that is why the Government has not gone down that path.

It is highly unlikely that the thousands—if not tens of thousands—of small lot forest landowners are aware of their obligation to apply for an exemption by the end of this month. It would be unfair on foresters for this oversight to result in them being adversely affected, and that is why this bill sensibly provides for that date to be pushed out.

In bringing this bill to Parliament, I have consulted other parties. The Labour spokesperson on climate change, Charles Chauvel, has raised with me a preference that the two dates regarding forestry exemptions and the forestry allocation plan be firmly fixed at the end of June 2010 rather than be subject to an Order in Council. I understand and accept that that is quite a legitimate point, and the Government has agreed to support an amendment by Mr Chauvel to this effect. In exchange for the Government’s support of that amendment the Opposition will support the timely passage of the bill.

Similar concerns were raised by the Green Party. It also indicated a preference for fixed reporting and allocation plan dates. It is a pretty even toss as to whether a fixed date or a more flexible Order in Council mechanism is required, albeit I openly acknowledge that it puts more pressure on the Government to get on and resolve the details of a modified emissions trading scheme, and that is why the Government is happy to accept those. My expectation is that this change will be considered at the time this bill is referred to the special select committee.

The Māori Party has fairly raised with the Government the very substantive issue in respect of the interaction of forestry and the emissions trading scheme with the central North Island Treaty settlement, and with other Treaty settlement negotiations. The concern is that any changes in climate change policy in respect of forestry could adversely impact on the central North Island settlement.

On behalf of the Government I would like to make it plain that we are determined to see that settlement and other settlements progressed and implemented. We will ensure that such settlements are not disadvantaged by any substantive changes to the emissions trading scheme. In many respects the concerns that have been raised with me by the Māori Party reflect the growing economic muscle of Māori and their strong interest in the success of the New Zealand agricultural, forestry, and fishing industries. This in many ways connects with concerns that National has, and it requires a very careful balancing of New Zealand’s economic and environmental interests.

I also acknowledge that there are other Treaty settlements—not just that of the central North Island—where this issue needs to be managed carefully, and I am working closely with my colleague the Minister for Treaty of Waitangi Negotiations, Chris Finlayson, to work those through.

I emphasise that this is a relatively minor, technical bill. It simply deals with the reporting requirements and the allocation plan in the forestry sector, which is particularly important for New Zealand in respect of climate change. I thank other parties for their cooperative attitude on this issue. It bodes well for our being able to build a broader consensus around the bigger challenge of climate change policy and the emissions trading scheme. I acknowledge that the process for the advancement of the bill is a short process. The special select committee needs to ensure that the bill covers only those matters that I have raised, and that is why the shortened process is appropriate.

In terms of the broader issue of climate change, this Parliament will need to deal with a more substantive emissions trading scheme amendment bill at the appropriate time when the select committee has completed its review. My expectation in terms of the time line is that the select committee will be able to report back to Parliament in August, and there will then be a substantive responsibility on the Government and on Parliament to progress a more substantive bill. I commend the bill to the House.

CHARLES CHAUVEL (Labour) : As the Minister for Climate Change Issues has said, the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill seeks to do five things. First, it will amend the Climate Change Response Act 2002 to delay certain requirements applicable to the forestry sector under the existing emissions trading scheme. Secondly, it will amend section 168 of the Climate Change Response Act concerning the making of regulations so as to allow for dates for applications for exemption for landholdings of less than 50 hectares of pre-1990 forest land to be made by Order in Council. Thirdly, it will amend section 183(3) of the principal Act to remove the requirement for applications for exemption for landholdings of less than 50 hectares of pre-1990 forests to be made before 30 June 2009, and replace it with a requirement for such applications to be lodged by a date to be made by Order in Council. Fourthly, it will amend section 196 to defer the date by which 2008 deforestation must be notified, and alter the timing of the obligation to surrender the relevant New Zealand units. Finally, it will amend section 196 by inserting new section 196A, which will give the Minister the power to withdraw or suspend certain draft allocation plans.

As the Minister for Climate Change Issues, the Hon Nick Smith, advised the House, he approached Opposition parties to consult over this amendment. Labour’s reaction was that it would be less than desirable to allow the second and third changes that I referred to just now—that is, the exemption for land holdings of less than 50 hectares of pre-1990 forest, and the requirement for lodgment to be dealt with by Order in Council. Our position is that it would be far better to have those matters dealt with by substantive legislation, with the amendment itself specifying dates by which these events must occur. If there has to be a delay, our preference is for a short delay, and we have suggested that it would be sensible for the date to be the end of June 2010.

The Minister also advised me that it would be entirely feasible for the Government, relying on its support party and coalition arrangements, to simply pass the amendment bill through all stages in the House, but he was amenable to a request that there be a brief referral to a select committee. As a result, the bill will be the subject of some advice from officials before the select committee, at lunchtime on Thursday, I believe, prior to its coming back to the House for passage through its final stages next Tuesday, in time for the 30 June deadline up against which the Government has run. I will suggest the amendments I have outlined—omitting the references to an Order in Council and replacing them with fixed dates—at the select committee meeting. I have advised other parties, including the Greens, of this intention, and I understand that there is general support for following that approach. So that will be the Labour Party’s approach to the amendment legislation.

Just as the Minister took an opportunity to say a few words on the wider question of emissions trading, I will take a brief opportunity to do that as well. Labour members have said that we will support this legislation because the forestry sector has probably been one of the worst affected by the delays in the implementation of the emissions trading scheme. The House will know that the sector was effectively brought into the emissions trading scheme retrospectively when it came into force last year.

Obviously, with the staged bringing into force of the emissions trading scheme to all sectors and all gases—which is the uniquely New Zealand approach to emissions trading—the forestry sector was looking to be able to trade with other sectors as soon as they were brought into the scheme, notably the stationary energy sector on 1 January of next year. Unfortunately, Government policy has caused delay and doubt in the emissions trading and climate policy area. The decision to set up the Emissions Trading Review Committee and the conflicting statements made by Ministers about the future of climate change policy have cast that area into doubt and caused real difficulties, both internally and externally.

The forestry sector has probably suffered more than any other from this doubt. There has been deforestation. We hear reports of 8 million seedlings rotting in the ground. It is unfortunate to have to subject the forestry sector to yet more delay, but if there has to be a delay—and clearly there does, given the uncertainty around emissions trading and climate policy, and given that the select committee process will, as the Minister noted, possibly drag on into August, as far as a report-back date is concerned—we might as well try to achieve some certainty for the sector as to date.

We urgently need, in my view, to have agreement as to emissions trading policy. It is a shame that we could not have had that agreement under the previous administration, but, as is a matter of public record, the Labour Party has offered to have talks with the Government about whether we can achieve bipartisan certainty on the wider questions concerned.

As I said to the Minister, Labour will approach that task in good faith, and I hope he acknowledges that so far we have done so. We do so with a desire to achieve a system that will be durable and in the best interests of not only New Zealand industry but also the New Zealand environment. We do not see the interests of industry and the environment as competing with each other. We see the future for New Zealand as one that really lives the “100% Pure New Zealand” brand. We see a future where we have an environment that not only has integrity but uses integrity in a meaningful way concerning the products we sell overseas, particularly in terms of food products and the tourism destinations we market overseas.

When we talk about the “100% Pure New Zealand” brand, it should be something that people overseas can have some real reassurance about. Those people will know that we really mean it, rather than just paying lip service to it. If we are to do that, then we need to put a price on carbon at the margin. That is the only way, as everybody recognises, we will get meaningful behaviour change. It is the only way, for example, we will avoid continued conversions of marginal land to dairying as opposed to forestry or other uses that are much more in the national interest, and it is the only way we will be able to restore our international credibility as a country that takes these matters seriously.

Although we are a small emitter by global standards, our per capita emissions are high, and growing, and we are seen as a country that ought not to follow other countries but should show a bit of a lead on this issue. In fact, even if we act now internationally, it would not be as if we were taking a huge lead, given the positions of Europe, the positions that are developing in Australia, and the positions that are developing in the United States. By the time we get to Copenhagen at the end of the year, we will, hopefully, have armed our delegation with meaningful legislation, and, hopefully, an emissions trading scheme will be in force, with some good complementary measures and with a good target for emissions reductions, not only by 2050 but also by 2020.

The world will then be able to see that the last few months in New Zealand were just a hiccup, an unfortunate little pause for a cup of tea, and we will be able to really get on and give some certainty not only to business but also to other stakeholders. We will be able to tell them that we really mean what we say when it comes to climate change policy. Certainly, that is the aim of the Opposition in offering the opportunity for talks to the National Government. We regret the need to do it. We regret that it could not have been done 12 months ago, but we hope that we can reach a durable settlement and have an emissions trading scheme that has credibility. That will be our aim. Thank you, Mr Assistant Speaker.

CHRIS AUCHINVOLE (National—West Coast - Tasman) : It is a pleasure to follow the Hon Dr Nick Smith, who introduced the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, and my parliamentary colleague Charles Chauvel, who spoke with, I thought, a most balanced approach, and spoke about having talks between the parties to get this particular situation right.

National believes that New Zealand is a responsible international citizen that, as a country that values its clean, green environment, must act to reduce its greenhouse gas emissions. I do not think that there is argument over that point. This bill amends the Climate Change Response Act 2002 to delay certain requirements applicable to the forestry sector under the New Zealand emissions trading scheme.

To background the bill, I say that National, as part of its supply and confidence agreement with the ACT Party, established a special select committee, the Emissions Trading Scheme Review Committee, to review aspects of the existing climate change policy. The review has taken longer than planned because, I understand, the committee has been so thorough in its approach. The committee has now indicated that it will report back at the end of July or in early August. As a result, the sector with pre-1990 forest land would have to meet legal obligations before the completion of the final allocation plan for the sector.

To those who are not familiar with the minutiae of this particular legislation, it probably sounds a little bit complex, but it is not really. Under the Climate Change Response Act 2002, the Minister has a duty to issue a final allocation plan for the pre-1990 forest land before 30 June 2009. The Government wishes to consider introducing offsetting or another mechanism for the pre-1990 forest land. To finalise this policy and ensure compliance, the 30 June 2009 date in the Act has to be changed. So this is really a technical bill to keep everything in sync. The 30 June 2009 date is intended to be replaced by an Order in Council, with 1 July 2010 a likely date. But in introducing the bill, of course, the Minister for Climate Change Issues spoke of different means of achieving that change.

Of the roughly 1.8 million hectares of forest in New Zealand about 650,000 hectares were planted pre-1990. Under Kyoto, forests planted from 1 January 1990 accrue carbon credits, which have a value. Forests planted before 1990 do not accrue carbon credits, but there are liabilities when the trees are cut down. Those liabilities will fall on the landowner. A lot of this land is Crown land—public land—and some of it is part of the settlement under the Treaty of Waitangi. Landowners of pre-1990 forests that are less than 50 hectares can apply for an extension under the emissions trading scheme, but there is a risk that these landowners will not meet the 30 June 2009 deadline. This amending legislation will ensure adequate levels of compliance. That is the purpose of the bill. Thank you, Mr Deputy Speaker.

Hon DAVID PARKER (Labour) : I rise to speak to the first reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I think it behoves me to record a little bit of the history of why we have got to where we are. You know, there has been ongoing debate round the world for a couple of decades now as to whether climate change is real. We in the Labour Government, supported by the Greens, made up our minds some time ago that there was enough compelling evidence to require us as policymakers to no longer sit on the fence but to actually do something to reduce emissions. Scientists are telling us that unless we do something to reduce emissions the future of our world is pretty dire. The consequences are not just modest changes to the way we live; they are dramatic and catastrophic changes for many species. They include the mass extinction of plants, of animals, and of aquatic communities as a consequence of the changing acidification of the oceans; changes in the places where food can be grown; and the increasing desertification of parts of Africa, Asia, including food-producing parts of China, and, of course, closer to home, Australia.

In addition, a number of people will be made homeless by rising sea levels. I do not know whether members have ever seen photos of the capital of the Maldives, which sits on an island just 1 metre above sea level. The whole capital city of high-rise buildings would be wiped out by a 1 metre rise in the sea level. Thirty million people in Bangladesh would have to move if the sea level rose by 1 metre.

Hon Sir Roger Douglas: I was there 20 years ago and it was like that.

Hon DAVID PARKER: I say to Sir Roger that since World War II more people have died as a consequence of flooding of Bangladesh at current sea levels than as a consequence of the bombings of Nagasaki and Hiroshima in Japan. Thirty million people on the move in Bangladesh would have very real consequences. It could cause war, it could cause civil conflict throughout Asia, and it could well have knock-on effects through our own region. These are very, very serious consequences.

It is easy to talk about these issues then do nothing about them. In this country we have had a long debate on how we should get the right economic signals into our economy in order to reduce emissions. We have to encourage businesses to go in the right direction rather than increase their emissions. New Zealand has an obligation under the UN agreement, the Kyoto Protocol, to take financial responsibility for emissions above 1990 levels. That already costs our country. How do we improve the environment by reducing emissions, and also minimise the costs of the bill under that international treaty? Well, a central part of doing that is the pricing of emissions.

There are three ways that we can price emissions. We can force a cost upon people through regulatory action—try to regulate every little area where emissions occur. That is quite an inefficient way to do it, but it is better than doing nothing. Alternatively, we can price emissions in one of two ways: we can have a carbon tax, which is what the Labour Government, supported by the Greens, originally proposed, or we can proceed with an emissions trading scheme. In reality, those instruments are not very different; they both cause industry to pay for the cost of increases in emissions, and they both reward it for any conduct that reduces its emissions. They change behaviour by changing prices. Sir Roger Douglas is always saying to Parliament that we should price things in order for people to value them, not to waste them, and not to do the wrong thing. There is something in that argument, especially around the environment. If we do not price environmental externalities into the commercial contract, they are largely ignored by those who are making the commercial decision. Therefore, they build another gas-fired power station rather than a renewable power station, and they increase emissions.

What happens with emissions pricing is that throughout the economy we are changing the relative price of goods and services to make low emissions goods cheaper, and higher emissions goods more expensive. It is as simple as that; it really is that simple. At the margin, someone buys a wooden ladder because it is relatively cheaper than an aluminium ladder. Conversely, somewhere else in the economy, it becomes cheaper to run an aluminium car, because it is lighter than a steel car, which is heavier and uses more fuel. All of those little changes of behaviour make a difference and the world’s emissions go down instead of up. It is not the only thing that needs to be done, but it is a very important thing to do.

We already have legislation in New Zealand to that effect. We have the emissions trading Act, which is already in law. After a number of false starts on the carbon tax and very, very difficult politics around the emissions trading scheme, Parliament finally passed legislation last year that is essentially sound. No doubt there are line calls in it where the National Government might have a different view from the Green Party, which might have a different view from the Labour Party, but, essentially, it is sound legislation.

The National Government came to power with a promise to change it. It said it was not going to delay things; it was going to be a quick change. Well, history already shows that that was wrong; the select committee process continues, and here we are now with legislation delaying the implementation of the emissions trading scheme in the forestry sector. We in Labour want to, if possible, reach consensus with National on this without sacrificing our bottom line principles as to what is needed for an effective scheme, but it saddens us that we have to delay some of these dates, and that cannot go without comment. On the positive side, I thank the Minister for Climate Change Issues for agreeing to the amendments suggested by Charles Chauvel. Rather than leaving open what the future dates are, he is specifying an end date. With that amendment, we can support this legislation as we try to find common ground—if we are able to—with National on amendments to the scheme that will not change its fundamental efficacy but might make it more durable for the future. No doubt there are some things that can be done better; everything can be second-guessed.

One point I would also make is that during the debate on the primary legislation—the emissions trading scheme legislation—we had National members saying it was rushed legislation, it was shonky legislation, and lots of technical amendments were required. Well, I have the original Act here. It is 224 pages long; it is long and technical legislation on which the select committee, officials, the Government, and support parties laboured long and hard. The technical amendments to the existing legislation—the 224 pages of the original legislation—that the Government has so far identified are in Part 2 of this bill, under the title “Miscellaneous technical amendments”. How long do members think those amendments are? They are less than a page long; they comprise clauses 8, 9, 10, and 11. The legislation is already in good shape. It was not fundamentally flawed as the Opposition in the last Parliament pretended it was, and it remains a very good starting point for the debate that we are now having.

I cannot say it is with pleasure that Labour members consider this amendment bill, but I do think that some progress has been made towards finding consensus. I think it is nonsense when people say New Zealand is leading the world in its response to emissions management. We are not. A lot of countries are doing better than us. We have turned the corner on renewable electricity. Last quarter we had 74 percent renewable electricity. That is the highest percentage of renewables that we have had for about a decade. We have turned the corner with more wind and geothermal generation being built. We do not need much more hydro generation, but wind and geothermal generation will push the percentage climb towards the target set by the previous Government of 90 percent renewable energy by 2025.

We have also made progress on public transport. It saddens me to see that under the current Government we are starting to go back, with the reprioritisation of roads, away from public transport. None the less, we are still in a better position than we were previously. There is some unfinished business with complementary measures, and I urge the Minister to look at the issue of efficiency rules for cars coming into the country. Once a car comes into the country it is used till the end of its useful life. It is a valuable commodity, and someone will run it. If an inefficient vehicle is brought into the country, it not only costs the world in terms of greenhouse gas emissions but it causes the country a cost in respect of wasted energy. It is an area where I think the Treasury modelling is flawed. It focuses only on the cost of emissions and does not look at the efficiency benefits for the economy of an improved, more efficient fleet. It is an area where New Zealand could improve its own wealth by reducing waste on its roads whilst at the same times reducing its greenhouse gas emissions.

In agriculture some good work is being done, but there needs to be more work. Most members on both sides of the House agree that science will play an important part, but a change in mindset amongst many in the agricultural community is needed to implement change in their practices in order to minimise their emissions. The Climate Change Response (Emissions Trading) Amendment Act 2008 is a good foundation.

JEANETTE FITZSIMONS (Green) : The Government has come to Parliament tonight to ask Parliament for a “get out of jail free” card. Some might call it a technical “get out of jail free” card, as Chris Auchinvole did, but nevertheless that is what it is. The Government has done that because unless Parliament agrees to suspend the Standing Orders on the amount of time it takes to put a bill through Parliament, next Tuesday the Government will be in breach of the law.

The Climate Change Response Act that we are referring to was passed in August last year. Since then there have been 10 months for officials to get things right. It is an Act that relies on allocation plans and regulations to have any substance. That was one of my main criticisms of it last year—that we were, essentially, passing a bit of a shell that left a lot of the really tricky stuff to the officials to do through regulations and not through Parliament. Without those regulations, without those allocation plans, the law can have no effect. But the obligations and the entitlements for forestry began in January 2008. Forestry has been in the emissions trading scheme for 18 months. One would think that in 17 months the foresters could have got their act together and reported their deforestation, as the Act requires them to do, except that calculating deforestation carbon losses is a fiendishly difficult, technical thing to do, and it does not sound as though the officials have been particularly active in helping them so far, because climate change policy has been in a complete mess. Moreover, there have been 10 months since the Act was passed for the Government to develop its allocation plans for forestry, and it does not appear that anything has been done there yet, either, and that is where the Government will be in breach on Tuesday, if we do not pass this law.

In December last year the new Prime Minister came in and said he was putting the emissions trading scheme on hold. I asked a number of questions in Parliament about how the Prime Minister could do that, when it is the law, without passing legislation. It then became apparent that it was not being put on hold, because forestry would stay in the emissions trading scheme and nothing else would come in until next year. So the Government set up a special committee to review the emissions trading scheme, except, in this rather Kafkaesque way, the committee was given very detailed terms of reference, which asked it to do virtually everything one could think of except review the emissions trading scheme. It was given a wide range of issues to inquire into, but the Act that it was meant to be reviewing was never mentioned and the task of reviewing it was never mentioned. Nevertheless, everybody assumes that we are reviewing the emissions trading scheme, and, no doubt, we will do some of that, but not because we have been asked to; we will do it just because it appears to be the most useful job at hand at the moment. I have often suspected that the committee that we are all working very hard on is actually a bit of an excuse to park the issue until the Government has decided what it wants to do next.

During all of this time foresters have been subjected to extreme uncertainty. Last year, with the Act in place and apparent certainty, they ordered some 7 million seedlings, enough to plant some 7,000 hectares, and they are being ploughed in this winter because nobody is planting them, because nobody knows what the rules are going to be. When the Prime Minister made his initial announcement they started to wonder whether they would even get credits for the last year. The answer eventually came that, yes, they would get credits for carbon sequestered since January 2008, but actually they will not be worth anything for a while yet, because nobody has any obligations to buy any carbon credits, nobody is buying any carbon credits, so the foresters cannot, with one or two minor exceptions, sell their credits to anyone at the moment.

After 7 months the Government is about to be in breach of the law, and 1 week before that breach it recognises that and brings us amending legislation. Forestry is in breach of the law already over its reporting of deforestation, and everybody is in a mess because the rules are still in complete flux and there is masses of doubt about what is going to happen. It would be somewhat tempting, as a small Opposition party, to say to the Government “Well, stew in your own juice.” But, actually, forestry needs certainty, so we will not do that. We will support this legislation. Last week I met with the Minister for Climate Change Issues, Nick Smith, and pointed out that we could not support completely open-ended replacement dates. It turns out that that was the same thing that the Labour Party had told the Minister, so we all have an agreement that that will be remedied at the select committee on Thursday. On that basis we will support the leave that the Minister is seeking and we will support the legislation.

In my last few minutes I want to point out that there is worse coming up on the issue of the emissions trading scheme. This is only the first “get out of jail free” card, because on 1 January next year the stationary energy sector comes into the emissions trading scheme. That sector includes the big industrials like cement, steel, and aluminium, which are totally relying on free credits for up to some 90 percent of their emissions in order to cope with the fact that their overseas trading competitors do not face a price on carbon. There is no allocation plan for how they get their free credits or how many they should get. Without that allocation plan they will, on 1 January, be liable for 100 percent of their carbon emissions, and if that state of affairs were to persist, a number of them would fall over and close down.

So why do we not have an allocation plan for the stationary energy sector? Because the Government has not decided yet what obligations the stationary energy sector will have, how they will mesh with all of the other rules they have, and on what basis they will be allocated. That is not something that can be done in a hurry, because, under the law as it stands, those allocation plans have to come to Parliament. It is not something that can be done over a weekend. They are fiendishly complicated. In fact, the most politically divisive and difficult part of the whole emissions trading scheme system is developing those allocation plans. We know the retinue of lobby groups that will be besieging the Minister and the officials once it is known that those allocation plans are under construction, because it is the same retinue of lobbyists that the select committee saw all of last year, that the select committee has just seen all over again this year, and that we will no doubt see for the third time when the Government brings amending legislation to the House later this year—if in fact it does.

The Government has a huge conundrum on its hands there, because I predict that before 1 January next year the Minister will be back with another little amending bill to delay the coming into force of the energy sector. I have to remind folks that by the middle of next year we will be halfway through the Kyoto period. We are already 1½ years into that 5-year period, and, so far, nobody other than poor deforesting foresters faces any obligation at all to pay for any part of their emissions. So for this period, 2008-12, the taxpayer will still carry the main bulk of the liability—and this is a Government that wants to bring down taxes.

It has been indicated a number of times that the Government would really like to align New Zealand with Australia. Well, tonight I want to celebrate one hero in Australia, who is a climate change denier. Members probably did not expect to hear me say that, but I tell them there is one independent senator who does not believe in climate change; he thinks the effects are all caused by solar flares, or whatever—

Charles Chauvel: That’s this week.

JEANETTE FITZSIMONS: —well, all right; this week—and who is not going to vote for the Rudd Government’s proposed carbon reduction plan. Therefore the Government will be a vote short and the plan will not go through. Even the Green Party over there, which strongly supports carbon reduction, and which supports emissions trading if they can get the rules right, does not support the pathetically weak scheme that the Australians have. So there will be no Australia scheme for New Zealand to align to. We need to get on and make our own, and make it work.

Hon RODNEY HIDE (Leader—ACT) : I rise on behalf of the ACT Party to support this legislation, but I guess that my position could not be further away from where Jeanette Fitzsimons left the debate.

Jeanette Fitzsimons: Proud to be different.

Hon RODNEY HIDE: Yes, we are proudly different. I think that John Key is providing good leadership on this issue by saying that we should be aligning with Australia, and I would like to see the Minister for Climate Change Issues provide the road map for New Zealand, by stating how he intends to align New Zealand’s response to climate change with that of Australia.

Jeanette Fitzsimons: There isn’t one.

Hon RODNEY HIDE: Well, that is why we in the ACT Party are somewhat confused. It seems to me that we are in a situation of some considerable adhockery, where we have a statement from the Government saying that it wants to halve greenhouse gas emissions by 2050, from what they were in 1990, which I think Jeanette Fitzsimons would agree with me is a very ambitious goal and would probably flatten the New Zealand economy, but we do not see a plan to achieve it. Then we have the proposal that we are going to align with Australia and not get ahead of Australia. Yet we have the legislation that was left to us by the previous Government, and the previous Government’s ambition was to lead the world on this issue.

In order to provide some certitude for people in New Zealand, whatever side of the argument they are on, we need to know where the policy is on climate change. What is this Government’s policy, and what is its plan? It seems to me that what we have now is not satisfactory, according to the Government, because the present legislation does nothing to align us with Australia. We are having now a series of ad hoc decisions, whereby as sector groups line up to come up, we are rushing a bit of legislation through in order to push actions out into the future. Well, where is the certainty or certitude in that?

I suggest that, yes, we have the select committee process reporting back, and that, yes, we have a cost benefit under way, but we need to be providing some certainty and certitude, and this legislation does nothing to provide that. I suggest that we should be putting the introduction of the emissions trading scheme on hold until we actually work out what the policy of this Government and this country on climate change will be. Otherwise, we will be left either with the mess the Labour Government left us or with a series of ad hoc reversals, which I have to say are better than the status quo. But surely the Government can do better than that.

I look to the Minister in charge of the bill and tell him that the ACT Party stands here to welcome anything, and is willing to work on anything, that will stop the nonsense of the huge cost of the emissions trading scheme to the New Zealand people and the New Zealand economy, and especially anything that will stop the devastating impact it will have on our agriculture, for no good reason.

The idea that New Zealand rushing ahead of the rest of the world is somehow good policy or good for the world is, frankly, nuts. The idea that that is good for New Zealand is nuts. The idea that we should line up with Australia has some logic to it, but I ask where the plan is. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) : Tēnā koe, Mr Deputy Speaker. Kia ora tātou katoa e te Whare, ā, kia ora tātou kua tae mai i tēnei pō. I te āhuatanga o ngā kōrero i runga i ō tātou marae, ko tāku i te tuatahi he tuku poroporoaki ki a koe e Wīha, ki a koe Maxine. Kōrua tahi kua ngaro atu i te tirohanga kanohi, ngā pou o te reo Māori i te wā i a kōrua. Ko tētahi i eke ki te āhuatanga o te kuia, ko tētahi he tamariki tonu. Hoi anō, ahakoa pēhea, kōrua tahi haere. Whakangaro atu i te tirohanga kanohi me te mōhio anō hoki, kua tutuki pai ngā āhuatanga i te wā i a koutou, mō te aha? Mō te painga o tō tātou reo.

• [An interpretation in English was given to the House.]

[Thank you, Mr Deputy Speaker. Greetings to us all, the House, and to those present tonight. With due respect to speeches on our marae, the first thing for me to do is to farewell you, Wīha, and you as well, Maxine, both of you pillars of the Māori language in your time. One lived to an advanced age, the other was still in the prime of life. And so, regardless, I say to you both, farewell. Disappear from view, knowing full well that what you set out to do in your time has been achieved. And for what purpose? To advance our language.]

This last week, Māoridom lost two key figures who advanced te reo Māori: Wīha Malcolm—I think that was her name at the time of her passing—and Maxine Tamihōri, who was well on in age. Both were doyennes of Māori language, and that has some influence in respect of discussion about the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill in the sense that the context of the Māori world around us is something they knew in their time. They were promoters of the notion that we as tangata whenua use te reo Māori to express our world view. Our environment, our weather system, and our natural world are woven throughout all the waiata they used in order to teach about our stories, and those elements help to guide our daily lives.

To help the House understand that, one example of how we use te reo Māori to express that notion of the environment being intertwined with us as a people is to look at this whakataukī: “Nāu i whakatakoto i tō hīnaki i te wai tāwawarua, anei te waituhi ka taha.” Loosely interpreted, the message is that the eel pot should be set during the main flood after all of the smaller eels have passed through, leaving the bigger ones to follow. That whakataukī is saying that to be effective, timing is everything. I have been thinking about that simple message as we have looked into the forestry sector amendments as they apply to the New Zealand emissions trading scheme. In essence, the key issue in this slim little bill is to delay requirements relevant to the forestry sector under the emissions trading scheme, as other speakers have alluded to.

The Māori Party has been well served on the Emissions Trading Scheme Review Committee by our member for Te Tai Tokerau, Rahui Katene. Ms Katene, in turn, appreciated the excellent advice that came forward from nearly 30 submissions from Māori trusts, corporations, and rūnanga. It goes without saying that we are mindful of the advice from the Climate Change Iwi Leadership Group people, including Api Māhuika of Ngāti Porou, Timi te Heuheu of Ngāti Tūwharetoa, Mark Solomon of Ngāi Tahu, and other iwi actively engaged in the emissions trading scheme. The group supported the delay. Ngāi Tahu are comfortable with the delay, and I understand that the Central North Island Iwi Collective have also passed a resolution supporting the delay on the basis that they have been given assurances that their position would be no worse. This is an excellent and important qualifier, with the support being conditional on the basis that iwi will not be in a worse position.

As other speakers have mentioned, the current law under the Climate Change Response Act requires foresters to have reported any deforestation during the 2008 year by 31 January 2009, and to apply for exemptions for small forest blocks by 30 June 2009. Without putting too fine a point on it, that is next Tuesday. Those dates are unreasonable given the process still in train of the committee review and the associated lack of public awareness of these requirements. Therefore, we recognise that without this bill, many forest owners would unknowingly find themselves in breach of the law or adversely affected by it.

Although it is a very complex picture, it seems that iwi with forest interests support the delay. We respect their views. Some of the inherent complexity can be understood by looking at the Central North Island Iwi Collective in a little bit more detail. We know that there is likely to be a split view across different iwi with forestry interests depending on whether they supported the emissions trading scheme in the first place, but there are other layers to the complexity. Reaction to this bill may depend on whether an iwi is a part of the Central North Island settlement group, whether they want to settle or not, or whether, like Ngāti Tūwharetoa, they have forest lands included in the Central North Island settlement and extensive forest estates outside of it. It is a complex picture and it is vital that we get it right, not hurry for the sake of political expediency. We must take care to consider how we meet the Kyoto obligations and how we can protect the climatic systems from excess carbon emissions, while also considering the adjustments required specifically to achieve fair and equitable provisions for the forest sector.

The House has the benefit of some very strongly expressed views from Māori to assist it in how we can improve upon the legislation. There was the consistent recommendation that there should be a clause included in the bill that establishes a bottom-line position, namely: “Nothing in this Act shall be inconsistent with Te Tiriti o Waitangi.” The Federation of Māori Authorities went so far as to say that the bill breaches the Treaty in failing to uphold rangatiratanga, while Morikaunui Incorporation said that the bill as drafted conflicts with the principles and provisions of Te Ture Whenua Maori Act 1993. The sticking point is the bill imposes an encumbrance over Māori land that is, effectively, an alienation.

Perhaps one of the clearest explanations of the issues related to this bill comes from the submission from Te Rūnanga o Ngāi Tahu. Their concern was chiefly to do with their land; they considered it to be the most suitable for conversion to another commercial use. Ngāi Tahu purchased this land before 2002, when the Government announced its intention to introduce some form of deforestation controls. Ngāi Tahu were therefore unable to take advantage of the 2002-08 period to deforest key areas of land, as many owners of the pre-1990 forests have done. In fact, they concluded that Ngāi Tahu would suffer a disproportionate and significant liability as a result. The financial costs for Ngāi Tahu would be huge in scope. It was the thinking of Te Rūnanga o Ngāi Tahu that land returned as a part of a Treaty settlement that falls into those categories should be excluded. Ngāti Awa of the Whakatāne area, meanwhile, believed that those iwi in the same position as them should be eligible for a one-off adjustment to choose how they wish to use their lands in the future, without reference to the emissions trading scheme. Such an option would have meant that they can make the choice that they originally envisaged they would have when they purchased the forest, and therefore be required to comply with the emissions trading scheme.

I described the context of this bill as complex. The more one reads through the submissions and appreciates the range of issues emerging from it, it becomes all the more evident that there is a great deal more to this bill than the five pages initially indicate. Wairongomai Incorporation put it bluntly: “The bill is inequitable and has disproportionate negative effects on Māori.” It was their position that the Crown had assumed to itself the ownership, allocation, and management of the carbon allocation resource.

I return to the advice from the Federation of Māori Authorities. The federation told the select committee that Māori know full well the need for climate change policy, that tangata whenua are fully in support of the focus on behaviour change to mitigate human impacts on the climate, and that that was in line with their kaupapa of kaitiakitanga—the capacity to nurture the spiritual, cultural, and environmental protection of Te Ao Mārama. That is taken for granted. But when we get to this bill, what we see is significant inequality of treatment of Māori. By locking Māori lands into this regime and legislating how Māori are to use their lands, the bill perpetrates a system of inequalities that I am sure the Minister for Climate Change Issues will consider as the bill moves through its various stages.

Finally, the Māori Party has supported the call from many rūnanga, iwi, and incorporations for the Treaty of Waitangi clause to be added to the bill, and the call for amendments to protect the integrity and durability of the settlement. Now we listen again to the views of Māori, who are saying that they should support the call to delay, and, therefore, that will be our vote for this first reading of the bill. Tēnā tātou.

NICKY WAGNER (National) : I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. The Government is introducing this bill to deal with technical aspects of the timing of the emissions trading scheme, as it relates to forestry. The reason we are proposing this bill is that the special Emissions Trading Scheme Review Committee is still debating the issues, and the process will not be completed before 30 June. The committee will report back in late July or early August, so unless we amend the law now, before 30 June, many forest owners may find themselves acting in breach of the law and they may be adversely affected.

It does not make sense for the Government to publish an allocation plan by 30 June, when issues surrounding forestry are still in debate. The review committee has heard many and detailed submissions from the forestry sector, and is still considering the final shape of the emissions trading scheme for forestry. It is also considering the introduction of offsetting, or another mechanism, for pre-1990 forests. Getting the inclusion of forestry into an emissions trading scheme is a complex process. New Zealand is the first country to attempt it, so we must take our time and we must do the work to get it right. We are well aware of the enormous financial and environmental importance of forestry to New Zealand and to our economy, and we understand that these decisions are critical for foresters. Of course, we are working towards the substantive climate change amendment legislation later in the year, and this is where the final shape of the forestry scheme will be spelt out.

New Zealand is a country that values its clean, green brand. Most New Zealanders identify closely with the natural environment, and understand that we must be responsible international citizens when it comes to dealing with climate change and reducing our greenhouse gas emissions. Our two biggest industries, agriculture and tourism, rely heavily on the quality of our natural environment. Tourists come to see our beautiful clean, green country and when we sell our agricultural products overseas, food safety is of the utmost importance. In doing good for the environment, we do good for our economy as well.

So the Government and New Zealanders are committed to making emissions reductions, but we want to reduce emissions in ways that result in the least cost to society and the economy. The Bluegreens, the environmentalists in the National Party, have developed a series of values that help us make decisions on environmental matters. The overriding principle is that we must use our resources in a sustainable manner, and we believe that economic growth and improving the environment can and must go hand in hand, and I was very interested to hear Charles Chauvel saying something very similar earlier this evening.

It is important that all environmental decision-making is based on good science. It is the only way to get quality decisions. We also believe that people respond best to change when they are engaged or given incentives, and that is why we generally support financial instruments rather than just adding another tax. Philosophically, we prefer the flexibility and choices available within an emissions trading scheme to a carbon tax. We believe that financial instruments, when used effectively, can provide incentives for businesses and organisations to do the right thing environmentally by choice, rather than by rules and Draconian legislation.

We want to harness the innovation of New Zealanders and New Zealand companies to develop ways to manage their greenhouse gases and protect the environment. Of course, the profile of New Zealand’s greenhouse gases is heavily influenced by our agricultural emissions. Over 50 percent come from our farms, whereas, in most developed countries, agricultural emissions are nearer 12 or 15 percent. We have an unusual profile of emissions, and one that is particularly difficult to manage, but New Zealand is recognised for its expertise and research and development in the agricultural and forestry sectors, and that is why we are leading the development of an international research centre focused on greenhouse gas emissions from the agricultural sector. The Centre for Agricultural Greenhouse Gas Research will be a great opportunity for us to use our unique knowledge and expertise to tackle the issue, both in New Zealand and internationally. Of course, we will be doing anything we can to tackle the other major areas that produce greenhouse gas emissions: energy use and transport.

As I said, New Zealand is a country that values its clean, green brand. New Zealanders identify closely with the natural environment, and want to be responsible when it comes to dealing with climate change. Forestry is an important part of our environment, our economy, and our response to climate change. The Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill will ensure that we take our time to do the work and understand the international conditions so that we can create an effective, long-lasting, and sustainable emissions trading scheme for forestry and for New Zealand.

MOANA MACKEY (Labour) : I am very happy to stand and take a call on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. First of all, I thank the Minister in charge of the bill, the Hon Dr Nick Smith, for his engagement with other parties on this legislation. Certainly, all members of this House see some benefit in as many parties as possible coming together to find a solution to climate change, and ultimately to support an emissions trading scheme that is environmentally credible and has the support of as many parties as possible. That is needed to ensure its longevity and provide certainty for those sectors that, at the moment, are finding themselves in a very uncertain position. It is from that perspective that Labour will support this bill’s referral to the Emissions Trading Scheme Review Committee this week. Of course, we have indicated that we will seek to make changes to the bill, and the Minister has already indicated that he is happy to accept them, and we appreciate that engagement with him as well.

It has been really interesting to listen to the debate on a number of issues raised in speeches on this bill tonight, because many of them do not have anything to do with this particular bill. This is a relatively technical bill that extends deadlines, ensures the Crown is not deemed to be liable, and ensures the forestry sector knows where it stands. In that regard it is technical legislation, but it has been interesting to listen to the speeches and hear about the issues that are coming up. Members wish to raise those issues even though they are not covered by this bill. We assume they will be covered by a much larger and more substantial bill to amend the emissions trading scheme. As a member of the Emissions Trading Scheme Review Committee, I can assure members that in respect of the issues that have been raised in speeches—with the exception of Mr Hide’s perhaps, although not entirely—the committee has not really been interested in reviewing the science of climate change at all. We decided that that issue should be put aside, that the debate has been had on it, and that we need to get on with designing the best scheme possible.

I want to talk about the delay in the emissions trading scheme, because that is really why we are here to pass this bill. It is a technical bill and we accept it, provided that we have the changes we want to see in it. This bill has come about because of a delay in the emissions trading scheme, and Labour has been very critical of that delay in the process. Although I think it would be fair to say the Labour members have been engaging really constructively with other members at the select committee and working very hard to try to tease out some of the issues, that has not been easy. A lot of the submissions that we heard were the same submissions we heard last year; they concentrated more on the legislation rather than the terms of reference that were before the select committee. It is not always easy to guide submitters towards the terms of reference, when they want to talk about the legislation that they know, and that they spoke about the year before. It has been interesting to try to get broad overview opinions on all the issues, when people wanted to talk about this section and that section, about taking a bit out of the legislation, and about their wish to be exempted because they say they are completely different cases from those intended to be included and can make arguments for that. The committee has worked in very good faith to do that work, because we decided that rather than play politics on an issue that is so important to our country, our economy, and our environment, we want to be part of finding the solution. Although some element of politics is always inevitable in such situations, we certainly do not want to be obstructive during that process.

It is interesting to note some of the reasons that we have been going through the delay. One of the reasons is that we have been looking at harmonisation with Australia. The Australians are going through their own process now with their own version of an emissions trading scheme. But tonight we have heard that whereas on 4 June the House of Representatives passed the Carbon Pollution Reduction Scheme, which is the Australian version of our emissions trading scheme, within the last few hours the Upper House in Australia has voted to suspend all further consideration of that scheme until 11 August.

Hon Rodney Hide: Great!

MOANA MACKEY: I thought Mr Hide would be very happy about that. The Upper House has demanded that the Australian Government remodel the scheme, and the Minister for Climate Change and Water in Australia has come out and said that will not happen. We are seeing an impasse on the Australian scheme, and it will be interesting to see who blinks first, or whether we are looking at some kind of double dissolution of the Australian Parliament. I am sure the Minister for Climate Change Issues will be watching the situation very carefully.

The situation in Australia shows the reason why we need to set our own timetable for our emissions trading scheme. Although a level of harmonisation will always be desirable where it is possible, New Zealand really cannot wait for the Parliaments of other countries to decide on their path before we move ahead on ours. It has to be in our best interest, and Labour does not believe that it is in our best interest to delay the emissions trading scheme further and further. We want to see changes happen, and we want to see them happen as soon as is practicable. Although we did not vote for the special select committee process, we wanted to engage with it at that level and be constructive. I think we feel we would like to get on and do something.

Part of the reason why we have to change the time frames today is that the Government did not suspend the existing emissions trading scheme passed by the previous Labour Government. That scheme is still in place; it is still active. I am sure all parties in this House want to be able to give all the industries that are due to come into that scheme, including forestry, which is already in the scheme and is looking for sectors it can trade its credits with, as much certainty as possible. We want to be able to tell industries as soon as possible the time frames they will have to work to. Already, some of those time frames have shifted. I am sure the Minister will make a statement about what has happened in Australia. Labour and the members of the select committee will be interested in knowing exactly what it means for our emissions trading scheme, in light of the Minister’s strong desire for as much harmonisation with Australia as possible. As I have said, that is not undesirable, but, given what has happened tonight, obviously we cannot control it. As much as I would like to be able to blame the Minister for what has happened in Australia tonight, I am not going to do that—I cannot do that. But we need to know exactly what it means in terms of the process here in New Zealand.

I want to pick up on a couple of things that the previous speaker said. We very much look forward to getting a bit more information about the greenhouse gas centre of research excellence—I think that is its name—and about what exactly it means and how it will work, because at the moment we are not quite sure. I know it will be a virtual centre rather than an actual physical one in a building somewhere. But given that our Crown research institutes already work very well together and we are seeing that on this cause, I think some more detail around whether it will be like one of the centres of research excellence that have already been set up would be extremely helpful.

Nicky Wagner gave a really nice speech. It was a very nice speech, but I say sometimes the rhetoric just does not live up to the reality. National MPs can give lots of really nice speeches that say really good things, but at the end of the day they have to deliver. Although a lot of what she said was true, the fact is that it is very difficult for her to get up and talk about the importance of innovation and of science and research in this area, given what happened in the recent Budget. I do not say that in order to be deliberately negative; I just say I was astounded that she actually made those points, given the canning of the research and development tax credits—the fact is that other countries around the world are bolstering their research and development tax credits, but we entirely got rid of ours—and given the fact that despite all the spin around the replacement for the Fast Forward fund, it is a poor, poor cousin to what Labour had put in place. It is significantly less money, for a start.

But as I have said time and time again, what is more important than the amount is that the Budget took away stable funding. The Minister of Research, Science and Technology still does not get just how important that is. Researchers have to go cap in hand to the Government every year for an appropriation, not knowing from year to year whether that money will continue. We were promised tax cuts, and now they have gone. We had tax cuts in last year’s Budget, and now they have gone. Who knows whether the money for phases two and three of the replacement for the Fast Forward fund will be there? Again, that was going to be an important factor for our pastoral and food research areas.

All I would say to the National members is that they should all get a copy of Nicky Wagner’s speech, pin it up on their noticeboards, and then try to live up to it. I think if the National members lived up to the rhetoric that was in that speech, then our environment and economy would be in a much better state. But unfortunately at the moment we are not there. As I said, the select committee is working very hard—

Chris Tremain: Moana, what about the rhetoric over the last 9 years?

MOANA MACKEY: I can tell Mr Tremain that we actually delivered a research and development tax credit and the Fast Forward fund. We put in place the emissions trading scheme—[Interruption] I was going so well. I was being very nice and conciliatory, then I got to about 9 minutes and 30 seconds, and it all fell apart.

LOUISE UPSTON (National—Taupō) : I rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. The bill delays the reporting requirements under the emissions trading scheme and the publication of the allocation plan by the Government, because the Emissions Trading Scheme Review Committee process is yet to be completed. It is a hard-working committee. It has been considering a lot of submissions, but its work is not yet complete.

The current law under the Climate Change Response Act requires foresters to report any deforestation during 2008 by 31 January 2009. They need to apply for exemptions for small forest blocks by 30 June 2009. Those dates are unreasonable, given the committee review and the lack of public awareness of the requirements. Without this bill, which is a technical bill that amends a date, many forest owners would unknowingly find themselves in breach of the law or adversely affected. It does not make sense for the Government to publish an allocation plan by 30 June this year for pre-1990 forest owners, when issues around offsetting and the underlying approach to the emissions trading scheme are still being considered by the review committee.

I would add that New Zealand is the first country in the world to attempt to introduce forestry into an emissions trading scheme. These extensions are about having the time to get this right. It is critical that the details are accurate. This industry is of significant financial and environmental importance to New Zealand. In the Taupō electorate, over 1,000 people are employed in forestry, so I, like many others in the House, am particularly aware of the need to get this right.

Let us have a look at this industry. We are talking about a date change in this amendment bill. New Zealand has one of the largest areas of protected natural forest in the world—nearly 6 million hectares. It is also home to the world’s biggest and most intensively managed tree plantations, which cover nearly 1.8 million hectares. Of those 1.8 million hectares, we are talking about 650,000 hectares that are pre-1990 forest.

As I said before, the forestry industry is vitally important in the Taupō electorate. It is very important that we get this right. I, along with the Minister of Forestry, David Carter, recently met with companies involved in forestry in Tokoroa and Taupō. They expressed their grave concerns about the proposed time frames. Tonight they will breathe a sigh of relief, knowing that the Government is taking a pragmatic and cautious approach.

I am delighted to support the first reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, which is in the name of the Hon Nick Smith. I commend the bill to the House.

STUART NASH (Labour) : I too rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I do so for several reasons, but the main reason is that the country needs to be given a level of certainty around climate change and the Government’s response to the major global issue around greenhouse gas emissions. We all know that under Helen Clark’s leadership this country used to lead the world in terms of climate change policy. However, the rhetoric of Key and English at the last election tried to divide economic sustainability and success from prudent environmental management. In a country like New Zealand that need not be so. First and foremost, we absolutely need to understand where New Zealand’s competitive advantage lies, and that is especially so in this day and age of globalisation, where increasingly countries market themselves and develop a series of brand attributes that companies can then go out and leverage themselves off when marketing themselves in the international market.

What is our competitive advantage? It is our clean, green image, based partially on the perception that we live in a country that cares about the environment and cares about a future when carbon neutrality is a reality, and in a country where achieving zero emissions is a policy that is aspirational and something that all New Zealanders should buy into. That image will provide us with a competitive advantage, given that brands are vital not only to success but also, I would argue, to the survival of small economies like ours. Actually, that is more so in a country like ours than elsewhere. We face the tyranny of distance, and we must be great at creating markets that are built upon a perception of real excellence in the areas where we wish to differentiate ourselves.

What is the clean, green image worth? Let me quote from a report that the Ministry for the Environment wrote on this very point: “New Zealand’s clean green image does have a value. Environmental image is a substantial driver to the value New Zealand can derive from goods and services in the international market place. The study suggests this image is worth at least hundreds of millions, possibly billions, of dollars—aggregating value elements from dairy, tourism”—Kelvin Davis spoke about that earlier—“and organic produce, and extrapolating to other sectors such as meat. New Zealand is relatively clean and green. This is mainly attributable to our low population density resulting in relatively benign environmental pressures.”

The emissions trading scheme put forward by the previous Government, a Labour Government, was a real, positive step in the right direction. The National Government’s dilly-dallying on this very important legislation, I contend, shows a lack of leadership. Also, it potentially inflicts serious harm on the country’s ability to successfully show global leadership. As those members who are in the House will know, many countries around the world have used this recession to start the transition for the citizens of their country from a fossil fuel - dependent economy to one known as a green economy. But since taking office last November, the National Government has walked away from a strategy for long-term, low-pollution economic growth. Instead of the plan that we had hoped to see in the Budget, National has simply caused uncertainty. Uncertainty causes a loss of jobs, loss of credibility, and loss of investment in key New Zealand industries.

As for forestry, I ask whether the Minister understands anything about the forest industry and its underlying dynamics. It does not sound as though he does, at all. This industry is one of the largest earners of export dollars, yet again it is being treated very poorly, due to a lack of decisive leadership, vision, economic development, and an understanding of the key employer of New Zealanders. Forestry demands a rotation of between 24 and 30 years. With a crop that takes that length of time to reach an economically viable age, legislative certainty is a must, policy certainty is imperative, and sound direction is vital. This was Labour legislation that we had consulted the forestry industry on widely. We listened to the industry’s requirements and changed the bill accordingly, in response to the industry’s input. We were pretty far down the path towards creating an environment that would allow the forestry industry to completely rebrand itself and refocus its attention towards the best land-use options.

When I lived in Taranaki, I used to write forestry plans for farmers, in the belief that optimising land use was the best way to be a responsible steward of the land. The plans I would write now would differ significantly from the plans I used to write 10 years ago, because there are forestry programmes in place that allow forests to be farmed for carbon. Forestry has the ability to act as a very important carbon sink; we all know that. The economic possibilities are endless. The time is now right for forestry to move to the next level of economic development and market itself to a whole new sector of non-traditional forest owners. There are possibilities where, for example, Māori landowners who demand an economic rent from their land, but who do not wish to own the assets resident upon their own land, can manage a forestry resource on behalf of an owner who is searching for carbon credits. That is the way forward for this industry, as it allows land to be used in a truly optimal way. That is the way forward for New Zealand, because it allows us to make the most of our competitive advantage.

Forestry and the associated industries employ around 32,000 people. Export earnings from the forestry sector bring in about $3.4 billion annually. This is a serious industry that contributes significantly to the country’s economic well-being. The sector not only requires but demands certainty in order to be able to invest, grow, and market itself internationally. I say to Dr Smith that this bill, and its proposal to delay the implementation of the emissions trading scheme, delays the establishment of certainty once again. He heard the guys from the Institute of Forestry talk about this, saying they are dismayed about the delay again. The benefits of the forestry sector are not only economic. We all know that planting trees sustains marginal land, purifies water, and helps water tables. Trees rejuvenate degraded land and promote the regeneration of native wildlife. There are numerous non-economic benefits of forestry. We all know that the cultural significance of trees goes back well over 1,000 years. The image of New Zealand as a forested landscape is iconic.

But forestry is in a state of flux yet again, due to the uncertainty created by the Government’s inaction, and due to the Minister’s inaction. The forestry industry is ready and willing to embrace the current emissions trading scheme—it is ready. Nearly every consultant, forestry executive, and regional or local council person understands the opportunity created by the possibility of carbon farming. Those people want it to be introduced now, and Nick Smith is not able to deliver it now. Goodness me! The opportunity is there; we should just get on with doing it. Here we are again, with National annoying the hell out of one of our major industry and business groups. National has no idea what makes the forestry industry tick or what it needs in order to realign itself. Although I do support this bill, I ask members to believe me when I say the delay is no friend of the forestry industry, of those who must make the emissions trading scheme happen, or of the New Zealand economy.

NIKKI KAYE (National—Auckland Central) : I am delighted to rise to speak on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill this evening. I was very fortunate to be in Ethiopia with the member opposite Mr Nash. When I was in Ethiopia I had the opportunity to chair a climate change committee. One thing I was very clear on is that many nations around the world are trying to do something about reducing their emissions. But one thing that has been made very apparent to members on this side of the House tonight by members opposite—and Moana Mackey said this quite clearly—is that those members are concerned about the issue of the rhetoric versus the reality. I want to make one point this evening: if we continue to talk about being world leaders in climate change policy, then we will fail. At the end of the day, nations should be judged on their record, and the record of the members opposite in terms of the environment and in terms of climate change is pretty appalling. As a nation our aim should actually be to be judged on our record.

The reason we are here this evening is to amend the Climate Change Response Act by delaying certain requirements applicable to the forestry sector under the New Zealand emissions trading scheme. This was part of our confidence and supply agreement with the ACT Party, whereby we established a special select committee to review aspects of existing climate change policy.

We in the National Party have very clear principles in the area of reducing emissions, and one of them that I want to talk about this evening—it is relevant to my background; I did a Bachelor of Science in genetics—is that good science is essential to quality environmental decision-making. Some really exciting stuff is happening in New Zealand in that area at the moment. I know that this Government is very committed to making sure that good science is behind any decisions that are made in terms of reducing emissions.

I would like to talk further about that point, but the other point that I would like to make this evening is that, as the Minister has said, without this bill many forest owners would unknowingly find themselves in breach of the law. That is why it is essential that we proceed with this legislation this evening. You know, New Zealand is the first country in the world to attempt to introduce forestry into an emissions trading scheme, and these extensions are about taking the time to get critical details right.

I am pleased to stand this evening and support this bill, because it is really important that we get the details right, and that we make sure that we have good science behind our environmental decision-making. I commend this bill to the House. Thank you.

• Bill read a first time.

Hon Dr NICK SMITH (Minister for Climate Change Issues) : I move, That the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill be considered by the Emissions Trading Scheme Review Committee with an instruction that the committee report finally to the House on or before 26 June 2009, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, during an 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 187 and 190(1)(b) and (c).

• Motion agreed to.