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Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill — Second Reading, In Committee, Third Reading

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Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill

Second Reading

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 second time. I first thank the special select committee, the Emissions Trading Scheme Review Committee, chaired by the Hon Peter Dunne, for at short notice giving consideration to this bill. I also thank the members of the select committee, who have made constructive changes to the bill, and also members of the House for agreeing to allow this bill to progress through the House today, 30 June.

I want to quickly recite what this bill does in respect of the broader debate around emissions trading, the forestry sector, and the huge issue of climate change. There are three particular provisions in this bill. The first amends the date on which foresters are able to report deforestation and to surrender units. The intent of this bill is to put forward the dates by which that reporting and the surrendering of the relevant units are required. In the original Act, it was required on 31 January this year. It is intended to push that out to 31 January next year because the level of awareness of the obligation is not high—I am embarrassed to say that even some Government agencies did not meet their requirements to do so by 31 January, and I am sure that many other New Zealanders who own forests that may have been removed last year did not meet that reporting requirement. To give another year, given the complexity of emissions trading, makes good sense.

Two further substantive dates are changed as a result of this bill. The first is the date by which the Government is required to provide for an allocation plan of units under the emissions trading scheme for owners of forests that were planted before 1990. The reasons that it would be unwise to publish an allocation plan at this time are that there has been a formal review of the emissions trading scheme, there have been many topical issues around forestry before the Emissions Trading Scheme Review Committee, and it would be somewhat contradictory and confusing for the Government, at the very time when those key provisions are being reviewed, to proceed with an allocation plan. The bill that I introduced provided for that date to be extended by Order in Council. I note that an amendment for the date to be 1 July, which was advanced by Labour and Mr Charles Chauvel, has been included in the bill as it has come back from the select committee. I think that is a reasonable timetable. I also think it is good to have the flexibility whereby it could be done earlier than that. In my view, the timetable will provide a sensible transition for the issues around the allocation plan.

The third issue that is developed and addressed in this bill is in respect of the timing by which owners of forests of a smaller area—fewer than 50 hectares—apply to have them exempted under the emissions trading scheme. It was to be a requirement that all applications for an exemption be lodged by today. Again, it is the view of the Government that, given the review that has taken place in the select committee and the low level of public awareness of that obligation, it makes sense for that date to be put out into the future. Members opposite propose that the deadline for applications for exemptions be extended to 1 July 2010. Again, that is a sensible change, and one that I am happy to support. We will bring that amendment through into the final bill.

I stress to the House that none of these three changes being made affects any requirements and obligations that foresters have under the emissions trading scheme. It is only a shifting of the dates by which they are required to report, and a shifting of the dates by which the Government is required to provide for an allocation plan. It is the Government’s view that introducing forestry into an emissions trading scheme is a very complex and challenging task. We are the first country in the world to attempt to bring forestry into an emissions trading scheme, and it needs to be done in a considered and careful way.

We should note that in recent years the loss of significant areas of forestry has contributed to quite negative numbers for New Zealand around the issue of climate change. We should acknowledge that the emissions trading scheme has proved successful in stopping a large increase of deforestation since the scheme came into effect on 1 January 2008, but we need to work through these detailed issues in a considered way to ensure that it works.

This is a minor bill. The House will need to consider later this year a more substantive emissions trading amendment bill, to make it into a scheme that is workable and that can carefully balance New Zealand’s environmental and economic interests. The Government awaits with great interest the work being done by the Emissions Trading Scheme Review Committee. When that work is complete, our intent is to bring in a bill that will enable New Zealand to introduce and to get up and running the other parts of the emissions trading scheme.

Again, I thank members of the House. I thank the select committee for its work, and the officials who have supported that select committee work. I commend the bill to the House for its second reading.

CHARLES CHAUVEL (Labour) : As noted by the Minister for Climate Change Issues, the Hon Dr Nick Smith, the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, as reported back from the Emissions Trading Scheme Review Committee, includes two changes recommended by the select committee. The first change is to new section 168(1)(ca), which is to be inserted in the Climate Change Response Act by clause 4 of the bill. This provision deals with the forestry sector. The committee has recommended that rather than having a final date for the deadline under that section to be set by Order in Council, there ought to be a firm date set by legislation as to when the actions required under the clause should be taken. Those actions cannot be taken any later than that date.

There is a similar amendment to new section 183(3)(a), which is to be substituted in the Act by clause 5(2), where the plan put in place in the original bill to allow a deadline to be set administratively is replaced by the firm deadline of 1 July 2010. This amendment is an appropriate exercise in parliamentary oversight. Rather than allowing these sorts of things to run on at the pleasure of the Minister, Parliament is asserting its right to set a final deadline in the legislation. I think members of the select committee were unanimous in agreeing to that amendment, so the bill has been reported back on that basis.

As the Minister said, the bill, by agreement of the parties in the House, will be advanced through its stages today to meet the deadline of 30 June. I will address a few comments on the Minister’s assertion that there are deadlines in the Climate Change Response Act that could not have been met in any event, and that this bill would have been necessary no matter what had happened, whether or not we were having an emissions trading review. Unfortunately, I do not think that the facts bear out what the Minister has said. The industry’s reaction is quite telling. When those in the forestry sector were asked about this legislation last week, they said they were not surprised by the delay, because of the state in which climate change policy currently sits in New Zealand. However, they were disappointed. The Forest Owners Association chief executive, David Rhodes, said: “The market depends on supply and demand and if we don’t have demand, we don’t have a market, and that follows on into forest investment.” That comment has been echoed by the forestry sector throughout the history of the emissions trading scheme.

It is as well to remember that forestry, as the Minister said, was bound by this scheme right from the beginning. Yes, we were the first country to bring forestry in, but we have not done well by the foresters in this Parliament. That is why we have 8 million seedlings rotting in the ground. There may well be a halt to deforestation, as the Minister has suggested, but we need to look to whether that is as a result of the recession we are currently in, rather than because of any benign effect of Government policy. The truth probably is that because of the uncertainty in the sector, with the lack of incentives to plant and the lack of profitability—because there is no ability to trade carbon credits, which the foresters all hold—there is no incentive for those foresters to be able to maximise the value of their plantings.

We might have had an end to drastic deforestation. We always expected there would be a bit of deforestation before the coming into force of the emissions trading scheme legislation. Hopefully, that is over, but let us not suggest that that is anything to do with anything other than economic conditions. Let us not suggest that it is a legislative consequence or a consequence of the actions of Parliament.

I will now say a word about the wider state of climate change policy. The Minister rightly says that we can probably look forward to further legislation in this area. I said on the introduction of this legislation that we were trying to assist the Government to get to a position where it could go to Copenhagen at the end of the year with an emissions trading scheme bill intact, with proper targets in place not only for the longer term but for 2020, and with the ability to look forward with confidence to a scheme that would have integrity and would internally hold together well for the sectors to be included—all sectors and all gases. That is still the aim of members on this side of the House, but we must avoid making excuses for not complying with the law.

If officials had been told back in November, when the Minister took office, that they were to get on with the requirements of the law—because it is open-textured legislation; it is an Act that says the Minister and his officials are to get on and make rules for the various sectors that are bound by the legislation—I do not think we would be in the position we are in now; I think we would be in a position where departments would have been compliant with the law and the sectors would have been doing what they should have been doing under the legislation. But, of course, they have had this false sense of security—insecurity, perhaps—about the reality of the forestry sector. They believed that because there was a review by the select committee, somehow there would not be a requirement to comply with the law. This has been a top-down belief; it has come right down from the Minister’s office and through into the industry, and of course it is wrong. When the legislation says that administrative action is required, then administrative action has to be taken. It is a completely unnecessary exercise for this Parliament to now be stepping in and rescuing the Minister, his Government, and the departments involved, let alone the forestry sector, for non-compliance with the legislation. The legislation should have been complied with from day one. Had it been complied with, we would not be spending time in Parliament applying this fix.

The lesson that has to be taken from the situation we are in now is that we cannot let this happen to the further sectors that are to come under the legislation. We have the stationary energy and industrial processes sector due to come into the emissions trading scheme on 1 January next year. It is well known that no allocation plans are being put in place in that sector. No work is being done on the thresholds at which the members of those sectors are to come into the scheme and have units allocated to them. Those sectors have to plan their businesses on the basis that they will be bound by the law on 1 January next year, because that is what the law says, but continual statements by the Minister and others are leading them to believe that we are going to have to pass some sort of legislation to give them some comfort that that will not be the deadline. That puts industries in an impossible situation, as submitters told the Emissions Trading Scheme Review Committee. They cannot plan their businesses on this basis, they cannot make decisions about whether to build new generation plants, and that is very serious for the country.

We have been in situations of electricity shortage before, we have planned assets in the pipeline in the generation sector, and we want those assets to continue to be built so that we can keep the lights on. But in the climate that those in the industry are in at the moment, they do not know whether they are going to be bound by the emissions trading scheme on 1 January or 1 July next year. The Minister cannot give them that certainty, because there is not the political agreement that he thought there was. They are in a real bind.

It is interesting that New Zealand Steel, when it heard of today’s delay, said that it was surprised to hear about it. It has been proceeding on the basis that the scheme would come into force on 1 January, and although there is this uncertainty it is just getting on and doing the best it can. I know that members around the Chamber will reflect on the fact that although the ACT Party supposedly stands for certainty and private property, its contribution to policy in this area is the Emissions Trading Scheme Review Committee, which has destroyed property rights for the forestry sector and created huge uncertainty elsewhere. There is a huge irony there. But here we are: we are where we are, and the legislation is what it is. We will do our best to get on and make a good job of it.

CRAIG FOSS (National—Tukituki) : I rise for a short speech on the second reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I agree with the point the previous speaker, Charles Chauvel, noted regarding deforestation. I agree wholeheartedly and totally, and I hope that deforestation has, in fact, ended. There are many reasons why it may have ended—the member alluded to some of the possibilities, it is true—and the consequences of deforestation for New Zealand, our obligations, and the larger economy are very, very serious indeed. So I acknowledge and agree with that particular point from the previous speaker.

I am a member of the Emissions Trading Scheme Review Committee, and I take this moment to thank all the members of that committee, who I believe will be participating in the debate in its various stages tonight, assuming the bill passes each stage. I was also on the Finance and Expenditure Committee last year when the various emissions trading scheme bills came through, and I think that it is fair to acknowledge that all participants have moved on a fair bit, from some of the debates of last year to the point we are now at. We are here discussing an amendment to some detail of existing legislation and not actually debating the need for the legislation, full stop. Many submitters who submitted a second time around—admittedly not on this bill but on the emissions trading scheme bills themselves—have also moved quite a long way, and are debating and submitting on implementation and execution of the scheme rather than on whether we should have it. Of course, there are some exceptions, and I am sure I will be receiving emails from many of the submitters as I speak, but I am very encouraged that across Parliament the debate is, I think, down to the details. Yes, there may be some political points to be made, as the previous speaker did a little, but there is a very good focus on the greater good. So I acknowledge the genuine effort and cooperation in getting to where we are now, with regard to all things in this Parliament to do with emissions trading and climate change.

I acknowledge that in relation to the bill we have before us, much discussion was had leading up to the time the bill came into the House, and before it went to the select committee. I also acknowledge the initiative of the Opposition and Mr Chauvel in regard to the Supplementary Order Paper he brought in, which the committee discussed and accepted without amendment. The bill we have before us is slightly different to the one that arrived before the select committee, which is a credit to the work of the committee and an acknowledgment of the Supplementary Order Paper from Mr Chauvel.

This is the first piece of legislation to go through the Emissions Trading Scheme Review Committee, albeit a somewhat small piece of legislation about moving some dates out, as the Minister for Climate Change Issues alluded to. But it gives worth and value to the work of the committee. We have heard from many, many submitters on all things to do with emissions trading, but particularly, as both the Minister and the previous speaker noted, on very, very contentious issues on and around forestry: pre-1990 and post-1990 forest land; land less than 50 hectares, or 50 hectares or more; and the issues that many Māori landowners, forestry owners, and managers have raised. I note also that the Minister has signalled there may well be a more substantive piece of legislation towards the end of the year. I am hopeful of a continuation of the cooperation across Parliament that we have seen thus far.

To pick up on one point of the previous speaker, I note that the National-led Government put before the electorate last year its intentions and principles on the emissions trading scheme. There was nothing too controversial about those. They provided some certainty as to where a National Government would go, and about the framework with which the National Government might review or have a look at issues around climate change and emissions trading. Again, I celebrate and acknowledge that point. I just cannot say enough about the buy-in and cooperation across the parties.

I make one final point before I close. The previous speaker also noted that some things have changed, and that there is existing legislation, of which this bill amends a small part—although a very important part, of course. But we are moving towards the Copenhagen conference, and there is a need for New Zealand to confront and really address some of the harder issues and to supply some certainty where there is uncertainty, which is not just around forestry but also on where the Crown and all the other participants such as liquid fuels and stationary energy—you name it—sit in relation to the emissions trading scheme, as the previous speaker alluded to. It is very important that by the time we get to Copenhagen and appear on the international stage we can hold our heads high and stand proud because we are making substantive, sensible, and pragmatic solutions and doing our bit for the world and for climate change, and we are doing it right here in New Zealand, with a constant look at what our competitors are doing. We compete with our friends just across the Ditch in Australia, but on many things we can sit together and, perhaps, start to align as to where we will end up, and where we will be by 2020.

Much information came out of question time today. There was even a new discussion arising from a question from the Greens, which again points to the fact that we are now taking the debate much further than the question of whether we should have an emissions trading scheme. There has been some quite sensible, considered, and pragmatic thought as to how New Zealand can do its bit, have an emissions trading scheme, and fit with the unique features of our economy. I look forward to the Committee stage and to hearing other speakers on this bill, and I acknowledge again the cooperation of all parties so far. Thank you.

Hon PETE HODGSON (Labour—Dunedin North) : I will give just a wee reaffirmation that Labour members will be supporting the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. We consider it to be minor, we consider it to be sensible, and we consider that the firm deadlines that the Emissions Trading Scheme Review Committee has put into the legislation are the appropriate things to have. And we signal the obvious—that this legislation represents for part of the emissions trading scheme a delay of 12 months, or thereabouts.

I say a little acerbically that it needs to be put on the record that had there been the necessary cooperation during the 9 years of the Labour Government—cooperation that we think we might be starting to see now—we would not be in this position. We would not be in this position if we had matured earlier. But we did not. We got off to a great start even before then, in the days of Simon Upton, who, by the very nature of the man, was inclined to want to reach out across divides and to have chats about this and that. And those were the days when we signed the Kyoto Protocol. We did not ratify it in that time, of course, but we signed it and got started. Simon Upton never did get to make a lot of progress, because of his own Cabinet and its opposition to the things he was seeking to do. But under the 9 years of the previous Labour Government—and I remember some of these matters well—the National Party routinely opposed everything. It opposed every piece of legislation, and it engendered opposition in society as a whole. It declined to promote alternative plans with any detail. It even had one of its idiot members of caucus ride a tractor up the steps of Parliament. It was only 3 years ago that the Prime Minister—today’s Prime Minister—said he was not sure of the value of the Kyoto Protocol, and, indeed, he was not sure whether climate change was a real matter.

But, you see, in 2002 the Kyoto Protocol was ratified, and at that point an environmental issue became an economic one. That is what the Kyoto Protocol does to climate change. It takes it from being an environmental issue and turns it into an economic issue—at least, for those countries that have targets. If we look a little further along, we see that it immediately becomes a fiscal interest, and, therefore, at the point of ratification, as soon as Treasury has woken up to that in whatever jurisdiction one is in, then the Minister of Finance wakes up to that, and a bit of go-forward is created because of that. But we did not get it right even then. People did not like the carbon charge, and after the 2005 election that was voted down and we went straight to an emissions trading scheme, not via a carbon charge but directly. My predecessor, David Parker, put in place an emissions trading scheme, with support from many parties in this House but not including the National Party.

National could have supported the emissions trading scheme, and then gone and amended it later on, but it did not.

Hon Dr Nick Smith: We voted for the first reading.

Hon PETE HODGSON: It did, at the first reading—I do apologise. But the fact of the matter is that the National Party, in my view, wasted those 9 years in Opposition. That is not to say that all of its members did; there would have been some members within the National caucus who were busy on that, and maybe the current Minister was one of them. But, generally speaking, we are looking at lost opportunities there. None the less, that is where we are at.

At the last election, we had a change back to a National Government, along with the “4 percent environmental vandals” in the form of the ACT Party. Its members basically said “We are 4 percent; you’ll listen to us. We’re off to a select committee to find out yet again whether the issue of climate change is a real one, or whether it isn’t.” So the months have gone by. But National, I would think, can no longer rely on the ACT Party for any reliable support on an emissions trading scheme, even though the Minister of Finance knows that until the allocations are done, and until the obligations are farmed out, there is an impost on the accounts to be paid by the taxpayer, not by the polluter. The ACT Party—the party that stands firmly, as my colleague Charles Chauvel has said, for business certainty—came into this House, helped to form a Government, and immediately created huge uncertainty around a huge issue. In my mind, those ACT members stand condemned for that, because they are truly the Luddites of the land when it comes to this issue.

None the less, this the point at which we find ourselves. We have made hesitant progress, three steps forward and two steps back—some would say two and a half steps back—but, none the less, we have made progress. Now we come to a point where we run the risk of there being an outbreak of peace, at least between the two major parties, on climate change legislation, and I certainly reaffirm our support for this bill. I think this is necessary legislation; it is good legislation in the sense that it has had something forced upon it, and it should proceed through the House without too much further delay.

JEANETTE FITZSIMONS (Green) : By tonight the Government will be in breach of the law, and so will some foresters, unless we pass the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. As I indicated in my first reading speech, the Greens will help get the Government off the hook here. We will support this bill. That was conditional, initially, on the Government agreeing to put firm dates for the obligations in the bill, rather than open-ended opportunities to pass dates by Order in Council. The select committee has done that and the Minister responsible for Climate Change Issues has agreed, so we are supporting this bill, and we are also offering our support to the process of giving leave for the bill to go through all stages today.

We had an interesting debate at the select committee about the “no later than 1 July” clause. Some of us wanted to know why we did not just set a firm date of 1 July and reduce uncertainty even further. It was pointed out to us that if in fact that date can be moved forward, then the allocation plans can get under way earlier as well, and that is entirely a good thing. We are comfortable with the degree of flexibility that “up to 1 July 2010” gives us.

However, the forestry industry is still not very impressed with what is happening under the emissions trading scheme. Foresters have no one to sell their credits to and many of them are not convinced that they ever will have. Charles Chauvel and Craig Foss have expressed the hope that deforestation has now ended, but I do not think we can guarantee that. Those who own forests but are interested only in dairying are pushing extremely hard for rules that make it as easy as possible to deforest and convert their land to dairying. They are expecting to get the ability to offset on to different land from this Government, even if it is not accepted under Kyoto. Many people hope that the whole thing will just fall over and go away, because it is not clear how the Government will proceed in terms of getting a majority in the House for whatever it wants to do.

In Opposition, National attacked Labour—justly, in my view—for taking 9 long years to get any economic instrument in place. Now, the National Government itself has delayed and created new uncertainty for 7 months and counting, and we may be counting for a while yet. As the previous speaker said, this has been going on since the mid-1990s, when the Cabinet of the day first tried to get an in principle decision about an emissions trading scheme or a carbon charge, and, for God’s sake, either would have been better than neither, by a very long way. But the fact is that nothing happened for a very long time. If this Government goes to Copenhagen at the end of the year with no clear plan or agreed majority of the House for a way forward, New Zealand will be a laughing stock. It would be extremely bad for our trade and our international relationships.

These last 7 months, when officials should have been able to get busy writing the rules and the allocation plans for the emissions trading scheme, they have instead been spending countless hours servicing a select committee going over old ground and writing yet another summary of the science for the disbelievers showing that, yes, climate change is real, yes, the Intergovernmental Panel on Climate Change has done its job properly, and, yes, climate change is a real and present danger. I think that is a huge waste of the valuable time of our skilled officials, and of many of us on the committee, as well.

Meanwhile, just today, my colleague Metiria Turei tabled in the House the summary report that will be used by many countries as the latest authoritative statement on the science, even if it is not an official Intergovernmental Panel on Climate Change document, during the Copenhagen conference, showing that on many measures we are already above the worst scenario ever put forward by the Intergovernmental Panel on Climate Change. It put forward a range of scenarios showing that it could be this bad, or this much worse, or even, if things are really bad, this much worse, and we are already worse than that, particularly on predictions of sea level rise and predictions of the rate at which Arctic sea ice is melting.

There is no sign so far that the Government actually intends to reduce New Zealand’s emissions by very much, and I find that a tragedy for us and for our descendants. First of all, the Government would like to align with Australia. Of course it makes some sense if we could have similar rules with the country with which we trade so much across the Tasman Sea, but the Australians have just failed to get a majority in their Senate for a scheme that was so weak it was worse than useless. The Australian proposal was worse than useless and that is why the Green members of the Senate did not support it; not because they are against emissions trading, but because they are against a scheme that gave billions of dollars to the worst polluters and was going to have very little effect on emissions. There may never be anything to align with in Australia, so we need to develop our own scheme.

We know that the Government is looking seriously at softer rules than the existing emissions trading scheme, which was only just strong enough for the Greens to agree to its support last year. We know that the Minister said this afternoon that we do not really need complementary measures like standards because we will have a pricing signal instead. We know that transport behaviour is extremely sticky when it comes to following pricing signals because it takes an awfully big increase in the price to induce a little bit of change in transport behaviour. By far the most cost-effective measure for the whole economy for transport is to set some standards, as other countries have done.

Although fuel efficiency standards for the average of the vehicles coming into the country from now on is part of the Energy Efficiency and Conservation Strategy, I cannot see any sign that the Government intends to proceed with it. I hope the Government will think again about that, because our vehicles use on average about twice as much fuel to go 100 kilometres as the European fleet will use when it moves to the new standard already announced. US cars will not meet the fuel economy standards in China, because China has set its horizons higher than what the US is doing. We are left taking what every other country wants to dump because they no longer meet their standards, and it is not the old vehicles that are the problem; it is the new ones because they are bigger, thirstier, and release more carbon than the old ones. There are many areas where a price on carbon will not be enough to solve the problem. It is an important first step and it is a vital first step, but we have to have complementary measures as well.

Returning to this bill, it deals with the timing of coming into force of various parts of the emissions trading scheme but it deals only with forestry. A number of people are now pointing, as I did myself in the first reading debate, to the fact that the coming into effect of the rules for the energy sector, on 1 January, poses some difficulties because there are no allocation plans, and there will not be by 1 January. The sector is just automatically assuming that the Government will legislate a big delay in that, and I am concerned that Labour appears very willing to help it do that. That is not the only way of doing it, and I urge people to think about the fact that companies should have been preparing for the 1 January date for a long time, and that there is no reason why the scheme cannot still come into force on 1 January, provided that by that time the Government is in a position to announce its intentions in terms of allocation plans, and the companies do not become liable to pay for those units until well into the following year. So it would be possible to start without an allocation plan, provided the Government can make its intentions clear by 1 January, and those companies can still comply with the law when the time comes. Let us not fall over backwards to delay even longer doing something about climate change.

Hon TARIANA TURIA (Co-Leader—Māori Party) : Tēnā tātou katoa. In December last year the Government told the United Nations climate change conference in Poznań that far from stepping back from the Kyoto Protocol, the emissions trading review was “a means to find a more politically durable way of moving forward by building a wider policy consensus.” This bill, then, is the first stage of building that wider policy consensus.

Consensus was never a given. For Māori, there are two key issues at hand. The first is related to the emissions trading scheme. We know that many iwi wanted a Treaty provision to be included in order to protect the value of their settlements, and that they were happy for the introduction of the scheme to be delayed in order to achieve that. The second issue is related to the forestry sector. Settlement of the “Treelords” claim has meant that the iwi involved have settled on a price value for their carbon trading units. Delay, through the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, will mean there will be a delay in those credits being transferred to them, which means they cannot commence trading, and that by the time they do, the market value of those units may well have decreased. This bill therefore potentially penalises them, but there has been agreement given to it because there has been an assurance from the Crown that they will be no worse off.

We always supported the need to review the emissions trading scheme, while, at the same time, supporting the need to address climate change. But we are also mindful of the views of iwi, who, from all accounts, supported this decision to delay the implementation date. Although the emissions trading scheme was passed into legislation in September 2008, its application was effectively backdated to 1 January 2008. The forestry sector, which is already a significant store of carbon, was the first sector to enter the scheme, effective as of 1 January 2008. So for iwi with forestry interests it became a complex picture, as they faced the challenge of emissions trading scheme compliance. For some iwi, the bottom line was to achieve an undertaking that whatever the reason for the delay, they would not be worse off. So in the context of uncertainty for those directly and immediately affected by the emissions trading scheme, we held on to that commitment.

This bill, in its most basic form, delays the reporting requirements and the publication of an allocation plan while the review process in the Emissions Trading Scheme Review Committee is still under way. As the current law stands, foresters would have been required to report any deforestation during 2008 by 31 January 2009, and to apply for exemptions for small forest blocks by today, 30 June 2009. During the process of the select committee hearings, the iwi leaders group told the committee that the bulk of Māori forest land is pre-1990 forest and is subject to significant deforestation liabilities. To give an idea of the scale of those, they suggested that Kāi Tahu could face deforestation liabilities of between $40 million to $120 million, while Morikaunui Incorporation, in my electorate, would be faced with a liability of $16 million for 11,000 hectares. The major milestone in this bill, therefore, is that it delays the timing of the Government’s obligation to transfer carbon trading units to pre-1990 forest owners, who include iwi. Although we are aware that many iwi are comfortable with the delay, because it comes so late in the piece groups such as Ngāi Tahu have already invested considerably in preparing for the 30 June compliance date.

I return to the focus from iwi: that nothing should be included in this bill that would make them worse off, in relation to setting the eventual date of the first emissions returns. Morikaunui Incorporation, established over 50 years ago near Rānana on the Whanganui River road, spoke on behalf of its 5,500 shareholders about the impact of the emissions trading scheme on their holding, which includes 2,000 hectares of native bush and two small blocks of exotic forest. Morikaunui Incorporation submitted that Māori land should be excluded from the bill, and that a timetable should be set to consult with Māori in order to develop a robust framework within which Māori land can fit without transgressing the basic principles set out in Te Ture Whenua Maori Act 1993. The incorporation stated that whatever was proposed in the bill should require no greater contribution or sacrifices from the owners of Māori land than from the owners of privately owned non-Māori land. That would, after all, represent justice being seen to be done in legislation that will have significant impacts for Māori.

The Wairongomai Incorporation from Ruatōria took the “no worse off” concept to its natural conclusion, and suggested that there needs to be a clause included in the bill that confirms that nothing in the legislation is to be inconsistent with the Treaty of Waitangi. That recommendation was endorsed by the full support of the Federation of Māori Authorities.

Te Rūnanga o Ngāti Awa devoted considerable thought to how the expression of due justice would be demonstrated for those iwi who have already signed Treaty settlements without the impacts of the emissions trading scheme being taken into account. Te Rūnanga o Ngāti Awa acknowledges that there was no consideration of any impacts of an emissions trading scheme during its settlement negotiations, because the scheme did not exist then, nor was it contemplated. The rūnanga’s submission advised the select committee that back in 2001 the worst assumption one could have made would be based on general knowledge at that time, which was that forests absorb carbon dioxide, and therefore any impact would be positive. Based on those instructions, Ngāti Awa therefore paid full market value, in the expectation of an unfettered property right.

If the bill is passed in its current form, restrictions will be placed on the choices that Ngāti Awa can currently make, thereby resulting in significant devaluation in that iwi’s asset value. It was Ngāti Awa’s guidance that those iwi that are in the same position as Ngāti Awa should be eligible for a one-off adjustment to choose how they wish to use their land in the future without reference to the emissions trading scheme. Such an option would mean that they can make the choice that they originally envisaged they would have when they purchased the forest, and thereafter they would be required to comply with the emissions trading scheme.

The process of guaranteeing stability and allaying the concerns of iwi will be critical in assuring iwi that they will be no worse off as a result of this delay. We were pleased to see the range of iwi that made submissions and representations to the select committee, and to see the advice put forward by both the iwi leaders group and the Central North Island Iwi Collective. We continue to believe that the liability for emissions should be shared fairly across all contributing sectors at each stage, with all starting at the same time and with free carbon credits being allocated to sectors on the basis of need. We will continue to support these important dual goals: to advocate for a Treaty clause to be included in the bill, and to protect the integrity and the durability of settlements for iwi affected by the emissions trading scheme. It is never too late for change to occur, and it is on that basis that we will continue to support this bill.

NICKY WAGNER (National) : I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill at its second reading. As we have all heard today, this bill is mostly a technical bill to deal with the timing of emissions trading scheme provisions as they relate to forestry. At the first reading I was extremely heartened to see the support across the House for this bill. All members of Parliament appreciate the need to get the climate change emissions trading scheme right, and the reason to postpone the dates for these forestry requirements. We all know that the cross-party special Emissions Trading Scheme Review Committee is still debating the issues, and that the process is not yet complete. We have heard much debate from foresters and about forestry in that committee. We look forward to presenting that report in the coming few weeks.

It would not make sense for foresters with pre-1990 forest land to have to meet legal obligations before the completion of the final allocation plan for the sector. As today is 30 June, the requirement is unreasonable, considering that the Emissions Trading Scheme Review Committee is still in session. We do not want forest owners to find themselves acting in breach of the law, nor will the Minister, so we are passing this bill today.

I acknowledge also the Supplementary Order Paper from Charles Chauvel that sets the date for foresters to register deforestation and to apply for exemptions, and the requirement for the Minister to produce an allocation plan by, as 1 July 2010. It is an absolute date, and it is now set, rather than as in the original bill, which allowed the date to be set by Order in Council. This date will give more certainty to foresters, although it is an end date and it is possible for the chief executive to bring it forward.

Including forestry in an emissions trading scheme is an interesting challenge. New Zealand is the first country in the world to attempt it, and it is a very complex process. We must take the time and do the work to get it right. We are all well aware of the enormous financial and environmental importance of forestry to New Zealand and our economy, and we must understand that these decisions are critical.

There are roughly 1.8 million hectares of plantation forest in New Zealand, and about 650,000 hectares were planted post-1987. We know from looking around us that the vast majority of those forests, about 90 percent, are Pinus radiata, but we also have increasing amounts of other varieties, the most common being Douglas fir. Foresters are becoming even more innovative in their choice of species. I was surprised to see recently in North Canterbury just south of Kaikōura that a redwood forest is being planted. It is good to see trees being planted again, after years of dramatic deforestation, and it is important for the industry that we get some certainty around emissions trading scheme policy so that more planting can get under way. Of course, we are working towards a substantive climate change amendment bill later in the year, and that is where the final shape of the forestry scheme will be spelt out in detail.

It was very interesting to listen to speakers on the bill last week. There is a strong understanding of, and commitment to, New Zealand’s “clean, green” brand. Like most New Zealanders, parliamentarians are enormously proud of our beautiful natural environment, and we want to make sure that New Zealand does its bit when it comes to dealing with climate change and reducing our greenhouse gas emissions. We understand the importance to our economy and environment of getting this right. We want to be good international citizens, and to make a valuable contribution to the global response to this issue. We want to work closely with other developed countries so that we can all deliver for the environment.

New Zealand’s most important industries are agriculture and tourism, and the success of both is predicated on a clean, green, and beautiful natural environment. Tourists come to see our “100% pure” country, and overseas buyers of our food want to be very sure it is grown in a safe, clean environment. So it is clear to all of us that environmental and economic health go hand in hand. Forestry contributes significantly to the health of our economy, and to the well-being of our environment. It is a significant part of our response to climate change. This bill will ensure that we have time to get the forestry policy right so that it becomes an integral part of an effective, long-lasting, and sustainable emissions trading scheme.

Hon MITA RIRINUI (Labour) : It is my intention to take only a brief call on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, and to reiterate the position of the Labour Opposition by saying that we will support this bill. I listened very carefully to the previous speakers, and I heard the Minister for Climate Change Issues describe this bill as being a minor bill and one of his Government colleagues describe it as being a technical bill that deals with time frames. That is, essentially, the case. But it is also important to point out that although the Government is discussing issues around amendments and is describing the bill as being minor and technical in nature, this bill has the potential to create considerable uncertainty for the forestry sector, given that for a number of weeks there has been considerable to-ing and fro-ing on the future of the emissions trading scheme. I put that down, perhaps, to a lack of information being circulated throughout various communities.

I want to talk about the issues for Māori foresters and, particularly, Māori landowners. Māori Party co-leader the Hon Tariana Turia highlighted a number of key concerns for Māori who are already involved in forestry or considering the utilisation of multiple-owned Māori land for forestry. As the Emissions Trading Scheme Review Committee works its way through the review and considers the wider issues, on which I am sure the Minister will report back to the House, it will be interesting to see just how much certainty there is around the emissions trading scheme. As the House is aware, a number of Treaty settlements have included vast areas of forestry, particularly in the central North Island, and we will see the same in Northland, on the East Coast, and in other areas of the country. The issue for many of those settlement groups that are looking at forestry really is the balance between economic opportunity and environmental protection, as they invest in forestry.

As the House is aware, Māori have assets of somewhere around $16.5 billion, and about 52 percent of that is in the primary sector. I do not think it will take much of a calculation to determine the percentage of forestry in the primary sector that is under Māori control. So there are issues around certainty, and whether Māori are satisfied that investment in forestry in the future will be a worthwhile investment, particularly as there are issues around Māori land. I picked up on Tariana Turia’s comments around Te Ture Whenua Maori Act, but there are issues around unlocking the potential of Māori land so that it could be developed in a number of ways, whether it be for forestry, farming, horticulture, or agriculture. There is a smorgasbord of options.

This leads me to the point regarding the barriers to Māori land development. Although forestry might be one potential avenue for development, in my view and in my experience most of the main barriers are in the Te Ture Whenua Maori Act itself: in attempting to comply with the Act’s requirements, in terms of reaching consensus and agreements on investment in Māori land—in other words, in unlocking that land. We have seen that in many parts of the Bay of Plenty, of Northland, and of the East Coast—and, I am sure, many of other areas—large areas of Māori land are underutilised. I look forward to the debate on the wider issue of unlocking Māori land for future development.

As I said earlier on, I really do not intend to take a long call on this particular matter. This bill, described as being minor or technical in nature, has created quite a high level of uncertainty as to where the Government is heading in terms of the emissions trading scheme. I have some questions that I would like to put to the Minister, and I will do so during the Committee stage. His responses to those questions will be very important.

I was in the Taranaki region on the weekend, and I spoke to one particular group about Māori land development and suggested the issue of forestry. I was surprised at the quick response to my suggestion. The group said there is too much uncertainty around the future of forestry and the emissions trading scheme, and, that being the case, there is too high a risk in terms of investing in forestry where Māori land is concerned. As the Minister said, a wider review is taking place, and in time there will be a report back to the House. I, along with a lot of Māori landowners and forest owners, will be looking forward to what the select committee reports back to the House.

That is all I have to contribute to this particular part of the discussion, but I will certainly put some questions to the Minister during the Committee stage of the bill. Thank you.

NIKKI KAYE (National—Auckland Central) : I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Climate change is very important to many young New Zealanders. In terms of the numbers of letters and emails I have had from young people, one of the highest-priority issues that comes through is the environment. A lot of young people have written to me regarding the environment, and I acknowledge them in the House this afternoon.

Our Government is very committed to reducing our greenhouse gas emissions and to coming up with sensible climate change policy. Many members today have noted that this legislation is a technical change, and it is supported by most members in the House today. I acknowledge some of the comments made from members on the opposite side of the House that, hopefully, this is a new era for New Zealand in terms of climate change policy and that we will be able to work across different sides of the House on the issue. Many people are watching this debate—both young and old—who are very keen for us to work in a cross-party way on climate change.

The key purpose of this bill is to amend the Climate Change Response Act 2002 in order to delay a number of requirements, including reporting requirements for foresters, allowing applications for exemptions for certain land holdings, and the publication by the Government of an allocation plan for pre-1990 forest owners. The requirements are applicable to the forestry sector under the New Zealand emissions trading scheme. As a result, the sector with pre-1990 forest land would have had to meet legal obligations before the completion of the final allocation plan for the sector. It is very positive that we are here today introducing these three amendments, because it would not have been right to allow a situation to occur whereby the final allocation plan for the pre-1990 forest land would have had to be passed by 30 June 2009.

I acknowledge the work at this point in time of the Emissions Trading Scheme Review Committee, which has been reviewing climate change in this area. Some good work has happened, but part of the reason we are here today is that the work has taken longer than expected. I think part of the reason for the work taking longer than expected is that there is quite a bit of complexity in terms of some of the issues around the forestry sector. But if we look at some of the issues we have had around calculating our Kyoto liability, then we start to see some of the complexity in terms of determining some of the issues on climate change.

The review has taken longer than we expected, and the committee is likely to report back to Parliament in early August, but one thing we have made very clear is that the use of a financial instrument to introduce a price on carbon is central to our climate change policy. The adoption of an amended emissions trading scheme is our preferred financial instrument. We believe that it will be important for our future efforts to ensure as far as possible that any amended emissions trading scheme is harmonised with the Australasian Carbon Pollution Reduction Scheme. It is really important to make that point. There has been a lot of debate recently, particularly in the media, about what our target will be in the future. We should ensure that we are not moving at a pace that is out of step with other nations, but we should also ensure that when we have a discussion around what our targets may be, we first consult with the public. That is exactly what we are doing. I am pleased we are holding nine public meetings on our target.

The second thing that is quite crucial, in my view, about that target is being very clear about how we will get there. It is all very well to talk of having ambitious targets, but if we do not have a plan about how we will get there, then, in my view, it is just hot air.

I am very pleased that we are here today to pass very sensible legislation. Some people are calling the bill a technical bill, but from my point of view I think it is an opportunity to raise the issue of climate change and recognise that many New Zealanders out there care about our environment and about our target in this area. It is important to realise that unless we have a plan as to how we will achieve that target, then it is hot air.

We should also recognise that for any target we must make sure that we are very clear on the impact on our economy. I think it was my colleague Nicky Wagner who made the point that our economic health and environmental health are very closely aligned.

The final point I will make regarding climate change is that we, as a country, are recognised for our expertise and research and development ability in the agriculture and forestry sectors. In my view, apart from the discussion about targets, one of the key areas of focus we need to get right is on agricultural emissions. I know that our Government has moved forward and I am very pleased that we have established a Centre for Agricultural Greenhouse Gas Research. We are leading the development of an international research centre that will be focused on greenhouse gas emissions from the agricultural sector. I believe that it will be crucial for us in making headway in the area of climate change, moving forward.

I will just touch on a couple of other things we are doing, because I think we can get a little bit lost in some of the academic debate around things like targets. It really is important to recognise what we are doing now to reduce emissions in New Zealand. In the Budget we announced the home insulation fund, for which we have allocated $323 million. That will assist us in terms of moving to reduce emissions, particularly in our homes, and making sure those homes are the most energy efficient.

We have also allocated $36 million to a biodiesel grants programme. We are introducing changes to streamline the Resource Management Act processes, including the renewable energy consent process. We are working on a national policy statement for renewable electricity generation. And also, in terms of transport, which is another key area where are emissions are high, we will be introducing legislation to exempt light electric vehicles from road-user charges.

I support this legislation. It is technical legislation but it has given me the opportunity to recognise the many New Zealanders, particularly young New Zealanders, who care about this issue, and to really send a message to them that we want to have a target, we want it to be achievable, and we want to make sure we have a good plan behind it. But at the moment, at this time, we will have to delay some of these provisions because we cannot move forward until we get good, sound policy right. That will be partly through the Emissions Trading Scheme Review Committee, but it should also be recognised that we are doing a number of things to reduce emissions. I am grateful for the opportunity to speak on the bill.

STUART NASH (Labour) : I rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I speak in favour of the bill because there absolutely needs to be some certainty in the forestry sector. This industry requires 30 years of certainty in order to get anything done. Without that certainty, we will have no investment. That is what this bill provides.

I heard the Minister stand up and say this amendment to the principal Act needed to happen because the forestry industry was not ready for the emissions trading scheme to come into place when it was scheduled to this year. I do not agree with that. I think the Minister undervalues and underestimates the professionalism of the industry and the people who are involved in it. Those people have been ready for a long time. The Minister heard them speak about that at their annual conference, which I attended. The theme of the annual conference of the New Zealand Institute of Forestry, which is the premium professional body for foresters, was forestry in a climate of change. It dealt with the issues and questions that are salient to this very issue. For example, the institute had a 1-day workshop on the emissions trading scheme, and it included things like “Procedures for Applying and Registering for the ETS”; “Applying for an NZEUR Holding Account”; “ETS Mapping Standard and Mapping Guide”; and “Use of Carbon Look-up Tables and Filing Emissions Returns.”

There was a very large attendance at the conference. The Minister was there, and he spoke to the attendees. The people at the conference were the consultants, the investors, and the people who know the forestry industry. They were industry leaders, and they were students—a whole range of people. The institute is the professional body that represents foresters right across New Zealand. Its members are ready for the emissions trading scheme. When the Minister announced that the scheme was going to be delayed for another year, there were howls and cries of “Oh my God! Here we are again.” I personally think the industry was well ready for it. I think the Minister and the ministry were not ready for it, because they had not done the work. The forestry industry wanted the scheme, and all the people in the industry understood it. The questions and the discussion at the 1-day workshop were informed. It was an intelligent debate, and intelligent questions were asked. The people whom I spoke to all walked away, saying “We want the emissions trading scheme. Thank goodness for this scheme, because it will allow the forestry industry to refocus and revalue its value proposition for the whole of the country.”

Now, as a consequence of the delay, and as my colleague Mr Chauvel noted, 8 million seedlings are rotting in the ground at the moment—8 million seedlings that have had to be ploughed in. The nurseries are in huge trouble. It will be interesting to see what Mr Key and Mr English will do for those companies, because they will be very, very important going forward. This delay is a huge disservice to the forestry industry. This bill may be technical in terms of the legislative change that it makes, but its impact on the industry is significant.

We all know that Labour developed a programme of global leadership on climate change, and we did that for a number of reasons. First and foremost, as Nikki Kaye mentioned, climate change is vitally important to the people of New Zealand. But the reason Labour developed the emissions trading scheme and the reason Labour took a global overview of, and a leadership role on, climate change is that we were aspirational. Instead of just talking about the issue, we decided to do something about it, I say to Nikki. We decided to go out there, lead the world, and promote our clean, green image. We went out there and told people what we wanted to do. The Labour Party tells New Zealanders what it wants to do, and it does it—it goes and does it. We were in the process of doing that when we were in Government. Labour was acknowledged as a global leader on this issue, I say to Nikki—and she knows that.

I completely agree with Nikki Kaye when she says there has to be a plan. That is why I am standing here with a sense of disappointment, because there was a plan in place. The forestry industry had a plan in place. It was ready to go. Come June 2009, the industry was ready to be off: its marketing plans were in place, and New Zealand was going to become the carbon-farming nation of the world. The plan was there and it was ready to go. All it required was sign-off. But the Government has delayed the emissions trading scheme for a year. The industry is saying “Oh my God! Why didn’t we vote for Labour? We need Labour back to implement a very strong forestry sector.” Finally the industry has realised that Labour is the party of the agricultural sector. It has taken a while, but finally people have opened their eyes and are saying “We need Labour back. Labour had a plan, and the Nats haven’t got a plan. There is no plan.”

Nick Smith was asked a question at the institute’s conference about why he had cut the East Coast reforestation scheme. He said it was because it was undersubscribed. About 50 people jumped up and said it was oversubscribed. Labour knows about forestry, the foresters know about the forest industry, and the foresters were ready for the emissions trading scheme. I can say that is true, without a question of doubt.

Let me look at some of the initiatives Labour put in place, such as carbon neutrality. What a fantastic programme that was. I heard the head of a Kiwi wine company, a really innovative company, say it had gone carbon neutral. The company’s products were sold overseas, in Marks and Spencer, and were gaining a huge competitive advantage because the European market loved the fact that the wine was carbon neutral. This is an example of New Zealand leading the world. Why do we lead the world? We need to understand where our competitive advantages lie in the 21st century. I will tell members where one of them lies.

Nikki Kaye: 13 percent increase in emissions. Is that leading the world?

STUART NASH: It is in international tourism. Every time that member opens her mouth the emissions go way up, because a lot of hot air comes out. Let me tell members about international tourism. I know that Kelvin Davis is the Opposition spokesperson on tourism; I know that and the whole of the tourism industry knows that. I keep forgetting who the Minister of Tourism is. Do any of my colleagues know? I ask Pete Hodgson whether he knows who it is.

Charles Chauvel: Jonathan Coleman?

STUART NASH: Is it Jonathan Coleman? Jonathan Coleman, the Minister of Tourism—[Interruption] It is John Key, is it not? I cannot remember who it is. I would have thought that the Ministry of Tourism and the Minister of Tourism, with this amazing portfolio, had a real opportunity to bank on the great work that the previous Labour Government did on promoting our “100% Pure New Zealand” campaign, and growing tourism to become our highest export earner. Do members know that tourism makes up 20 percent of the economy? Do members know that one in 10 New Zealanders have jobs related to tourism? This is where our competitive advantage lies. It lies in tourism.

I will tell members the basis of the tourism industry. It is our wonderful clean, green image, and the whole emissions trading thing was building on that. We were on our way. The flow-down effects of this scheme were just fantastic, yet here we are, delaying it again and again. The delay not only erodes the confidence that the forestry sector has in the National Government but it erodes the international perspective—the way that people overseas view our country. The flow-down effects are dreadful; I find this delay difficult to believe in. I ask Nick Smith whether it is a joke. Is he really doing this? Is he going to pull something out of the hat and say “No, I made a mistake. The forestry industry is ready for this. Let’s go with it now.”? I suspect not.

The other point is that in this time of recession we need to do everything we possibly can to promote New Zealand overseas. Carbon neutrality is fantastic. The emissions trading scheme is fantastic. Getting the forestry sector on board is fantastic. Growing an industry for carbon farming—how 21st century is that? That is the way forward for this country; it is one of our amazing competitive advantages. But one of the paradoxes of New Zealand’s competitive advantage is agriculture. As we all know, agriculture is one of the largest emitters of greenhouse gases. We have agriculture emitting gases, and we have forestry soaking them up. It is a fantastic way to best use our land. It is about sustainable land use. It is about the best use of land, and we had it all there. The forestry industry was ready, and set. It has been told to wait—to hold it a second. It has been told to take 12 months, delay the investment, delay the marketing, and maybe the scheme will be ready to go next year. Who knows, I say to Nick Smith, maybe it will be.

Let me tell members a little about the forestry industry. Foresters grow trees—funny, that; they grow trees. In the past, the forestry industry has cut down those trees. Fantastic! The industry grows them, then cuts them down and turns them into timber, pulp, or whatever else the product may be. But here is something new: we can grow trees for carbon. Fantastic! We do not have to cut them down, because, of course, every time we cut down a tree, it releases carbon into the atmosphere. If we have carbon credits, then every time we cut down the trees and do not replant them, we have to pay back the money we have earned on those carbon credits. But now there is a fantastic opportunity to grow trees for carbon. The forestry industry is worth $3.2 billion, and in 10 years’ time it will be worth $6.4 billion, if not more than that. It employs 32,000 people. Carbon farming is now an option for forestry. It now provides an option for the industry to plant trees in areas where, in the past, forestry would not have been considered. This is a new way forward for New Zealand. It is a new way forward for the forestry industry, and the Government has set that back for a year.

I do support this bill; I really do. The forestry industry does need to have certainty—it is a good thing—but that needed to happen a year earlier than this. Investment in forestry—goodness me! How do I know about this? Because I have a master’s degree in forestry science, around investment in forestry. When I read about this—planting trees, and farming them for carbon credits—I know it is to New Zealand’s competitive advantage.

CHRIS AUCHINVOLE (National—West Coast - Tasman) : Following the previous speaker in speaking to the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, I say that I am not sure we will be able to manage the same degree of commercial expertise in terms of promoting the aspirations of the previous Government. I am afraid it did stay just at the aspirational level. I cannot match that member in his master’s degree in forestry science, but I used to plant a hang of a lot of trees. I think the most significant point he made was that we are talking about an industry with a 30-year economic turnover. That is very, very significant, because what happens today will not have an effect for some considerable time. I understand that this is the first piece of legislation that has gone through the Emissions Trading Scheme Review Committee. I congratulate the committee on it.

There is something here that I gain great confidence from. When I prepared for this speech I read through all the first reading speeches that were given on this particular piece of legislation, and I sensed something that is very important. It is a technical bill; it is not a bill of huge consequence, people say, but it is part of something—

Stuart Nash: Huge consequences!

CHRIS AUCHINVOLE: —it is very, very important, and it has huge consequences—Stuart has not let me finish. Come, come, we did not interrupt that member when he spoke, so he should give us a fair go.

Let me get to the point. This bill is inextricably interwoven with a huge piece of legislation, the emissions trading or carbon control legislation—whatever one likes to call it. It is about the whole prospect of climate change. The great confidence that I gain from it, having read the first reading speeches, is that there is a real sense that people recognise its importance. People recognise its significance and are preparing to work together on this issue. That might be nice for us in the House, but it is particularly significant for the rest of the people of New Zealand. I welcome the speeches that I have heard today, particularly those that talked about all the parties. I think, without any exception, every representative has said that their party is supporting this bill, and that is significant. I think it is very significant that the two major parties are preparing discussions and moving towards working in harmony on this. That does not mean that the views or beliefs of individual parties will be compromised; it is just a matter of getting the best that we can out of this legislation.

The purpose of this bill is very important. It amends the Climate Change Response Act 2002 to delay a number of requirements, including reporting requirements for foresters, allowing applications for exemptions for certain landholdings, and the publication by the Government of an allocation plan for pre-1990 forest owners. To give a little bit of background, the Emissions Trading Scheme Review Committee was set up as a consequence of the confidence and supply agreement between the National Party and the ACT Party. Due to the thoroughness of the work that has been done and the significance of the current work, this committee has now indicated it will report back by the end of July or early August, which is a little later than anticipated. Without this bill the unfortunate consequence would be that a business with pre-1990 forest land would have to meet the legal obligations before the completion of the final allocation plan for the sector.

Hence I consider this to be an uncontroversial bill. Its primary purpose is one that I cannot imagine a sensible person being against. It is simply allowing the law to continue smoothly. The Government, sensibly, in my view, wishes to consider introducing offsetting or another mechanism for pre-1990 forest land. To finalise this policy and ensure that there is compliance, the 30 June 2009 date in the Climate Change Response Act has to be changed. This bill passed its first reading on 23 June and went to the select committee. As a result, the recommendation was made that 1 July 2010 would be the new deadline date for applications to be made for exceptions for landholdings with less than 50 acres of pre-1990 forest land. This particular date, or the setting of it, was a subject of discussion in the first reading speeches. It has now been established that it is the latest possible date by which applications may be made. I understand that the committee has agreed that the chief executive of the Ministry of Agriculture and Forestry should have flexibility to set the date earlier than the 1 July 2010 deadline, if that is suitable. Good law needs a little flexibility, so this is a very positive development indeed.

I say, as other speakers have, that New Zealand is a country that identifies closely with a clean, green image. I include myself when I say that some of us are fortunate enough to live in parts of the country where we are indeed very, very close to the natural environment. It is important that we work hard to reduce greenhouse gas emissions. That is why we are doing so much work to cut our emissions, and that is why, in principle, we support the idea and intentions of an emissions trading scheme. We have a large amount of work to do. Emissions are increasing on a high percentage basis in spite of the aspirations of the previous Government. In early August the Emissions Trading Scheme Review Committee will produce its report for the Government, from which the Government can make substantive decisions around the emissions trading scheme. That will enable us to move forward in a very positive way towards producing the kind of high-quality legislation that one comes to expect from this Government.

To conclude, I say that I am very confident that we will pursue sound, practical, environmental policies to achieve emissions reduction. We want to reduce emissions in balanced ways that result in the least cost to society and to the economy. The final legislation will be based around good incentives and improving the environment and the economy in combination with each other and through good science based on sustainability. I am very happy to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill and the long-term goals and efforts of this Government in the area of climate change. Thank you.

  • Bill read a second time.

In Committee

Hon Dr NICK SMITH (Minister for Climate Change Issues) : I seek leave of the House for the first and second parts and the title of the bill to be taken as one question.

The CHAIRPERSON (Eric Roy): Leave is sought for that purpose. Is there anyone opposed to that course of action? There is no opposition. Leave is granted.

Parts 1 and 2 and clauses 1 to 3

STUART NASH (Labour) : The title of the bill is the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I suggest that it should perhaps be the “Climate Change Lack of Response (Emissions Trading Forestry Sector) Amendment Bill”. The one thing about this bill, and I alluded to this in my speech on the second reading, is that the forestry industry was ready for this bill. The only party that was not ready for this was the National Government. If I look through the bill, I see that the major changes have been made, as we all know, to the dates. The thing about this bill is the Labour Party had sat down and consulted the industry. There were changes that the forestry industry wanted; there were changes that the previous Labour Government wanted. They sat around a table, which was made of wood, to talk about the changes. The table was probably native wood, it could have been radiata pine, but it does not really matter. It was New Zealand - grown wood that had not been farmed for carbon, because it had been cut down. There were many of these meetings because one of the things the previous Labour Government did the whole time was consult back and forth with the industry. It came up with a bill that was perfect. It fitted the expectations and the aspirations of the forest industry, and it fitted the expectations and the aspirations of the previous Labour Government’s emissions trading scheme. It was going brilliantly. It was ready. The forest industry was ready to get out there and start marketing this. The forest industry had all these seedlings ready to plant. We had international investors.

But let us get back to the bill. If we look at Part 1, clause 4, we see that it says that we are changing the date to 1 July 2010—2010! That is a delay of 365 days. For those who do not know much about forestry, I say that 365 days is a growing year. There are four seasons in a growing year, and that constitutes one growth ring. In fact, when we are talking about a cycle of 30 years, every year is important because one does not know what is going to happen in the industry. But the most important thing that this bill does is delay the potential investment in this industry.

As I have said, I support this bill. The reason I support it is that it provides certainty. I support the recommendations based on the fact that it provides certainty. Let us look at some of the other clauses. Clause 5 is called “Applications for exemption of land holdings of less than 50 hectares of pre-1990 forest land”. Where does “50 hectares” come from? I mean, it is an arbitrary amount. It is a good amount, but it takes it out to July 2010 again. What is it with 2010? Why could we not just go ahead with it straight away? This is the really disappointing thing for me as a past forester, for the forest industry, for the investment community—in fact, for everyone who is passionate about emissions trading.

Nikki Kaye, I heard you wax on in Ethiopia, where you gave a very impassioned speech about the importance of climate change. It was a wonderful speech, and we all sat up and applauded. I come back and stand in this Chamber, which is an amazing, wood-lined hall—members should look at this fantastic wood—and I hear you speak about delaying this bill. It says here it will be delayed until 2010. You are delaying it!

Nikki Kaye: You support it!

STUART NASH: Of course you support it; of course I support it.

The CHAIRPERSON (Hon Rick Barker): The Chair is not delaying it; the Chair is not supporting it.

STUART NASH: Sorry, Mr Chairperson. I did not mean you were delaying it. In fact, I know you would not delay it—you have a lot more sense than that. What I mean is that when I look at all these clauses, I see that all the amendments are about dates. We have such an important industry here that cannot afford to wait another week, let alone another year.

Let us look at Part 2, “Miscellaneous technical amendments”. Goodness me! I am astounded. Nick Smith is a Minister who, coming from Nelson, I would have thought knew a lot about emissions trading and a lot about forestry, and about the importance of the forest industry. He must have known what this was going to do to the forest industry. What it has actually done is not provide certainty; it has taken away certainty. When we look at new section 183(3)(a)(ii) in clause 5(2), there is again another date: 1 July 2010. It is another delay, and another potential delay of $700 million for this industry. So although this bill provides a level of certainty, it is not the sort of certainty the forest industry was after.

There is a misconception out there that, in fact, the emissions trading scheme had been put on hold. It had not been put on hold, at all; there was just no certainty. The industry was out there, it was waiting for certainty, and it knew it was going to get that certainty on 1 July 2009, until this amendment bill. We talk about this as a technical bill. I hear members on the other side of the Chamber say it is a technical bill. It is not technical; it is very, very important.

CRAIG FOSS (National—Tukituki) : Before I speak on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill I acknowledge the officials who have been part of it. It is a small bill, but, of course, they have been part of the greater review of all things emissions trading. I pick up from the previous speaker, Stuart Nash, who has a master’s degree in forestry or something, and shared with us that foresters plant trees. I thought it was very interesting that it took 4 years of studying to learn that, whereas one of my colleagues here actually planted trees, so perhaps he may know a fair bit more. I note that the bill had its first reading on Tuesday, 23 June, and went to the Emissions Trading Scheme Review Committee on 25 June. I acknowledge the fact that members considered and deliberated on the bill on the same day, which needed a lot of cooperation and leave applied for and granted from the members of the select committee, to allow it to report back to the House to get us to this stage. As I noted previously—it is right in the Committee stage to acknowledge all those who have helped get us to this point—we may well go through all stages of the bill tonight, or perhaps this afternoon.

The bill is a good model. The previous member was talking of various clauses about delaying dates, changing dates, and things like that. That is the whole point of the bill: to provide certainty. It is not providing uncertainty. As I noted earlier, prior to the election National put out its expectations of the emissions trading scheme, which were to provide certainty and not put New Zealand’s economy at risk. This is actually part of those expectations. When we look at the clauses in the bill, we see that, quite simply, the rules are not changing. Yes, dates are changing, but the rules of afforestation and deforestation are not changing. The need to measure is not changing. The problem, as identified by the Minister for Climate Change Issues in his second reading speech earlier—and he acknowledged that even some ministries and Government agencies actually had not done their job as well as they could have—is to let those that are directly impacted by the existing legislation know what their obligations are, how they should be measured, when they should report, and how they should report. Of course, from that would come any allocation decisions, etc. But we have to do this bit first. The clauses in this bill that change dates, far from providing uncertainty and delay, actually provide a much more robust framework for not only forestry but also all of the other facets of the emissions trading scheme and the various climate change bills that have come through the House over the last year.

The preparation, I suppose, is everything. I want to talk to that uncertainty that the other member was talking about. There is so much uncertainty in and around implementation in other countries, where New Zealand is, where our friends and competitors in Australia are going to be, where the rest of the world is, as we march towards the Copenhagen conference. Well, this actually starts—with, I fully acknowledge, cross-party support so far—to get New Zealand as a country to be able to speak when we are at Copenhagen. We have been able to measure our smaller holdings. We have a facility in place and it is preparation for the emissions trading scheme, however it is finally implemented in this country, subject to the select committee review and where the Minister ends up with the various facets. This bill starts to put things through—not in a rush; it is pragmatic—and it takes a reality check. Right now not only is all the measurement not available quite yet, but also those who are financially and economically impacted, those who are doing the various measurements, for many reasons are not quite up to speed. So, quite simply, the clauses in this bill—yes, it is a small bill—simply change reporting dates, subject to the amendments from Mr Charles Chauvel, which, I acknowledge, were made at the select committee. Certainty is provided so that we can move on to at least put the larger discussions about how and when our climate change response and emissions trading scheme are implemented. This bill can sit with those discussions.

CHARLES CHAUVEL (Labour) : I take just a brief call in this compressed Committee stage. I comment first on some of what we have just heard from the previous speaker, Craig Foss. I think it is a long bow to draw to suggest that this amending bill is somehow the result of the design principles that were set out by the National Party in objection to the emissions trading scheme that was passed by the previous Government.

It is interesting to have a quick look at those design principles. The first one is that an emissions trading scheme “must strike a balance between New Zealand’s environmental and economic interests. It should not attempt to make New Zealand a world leader on climate change.” Well, the world has moved on. The latest news from the Australians today is the Liberal Party saying that it will propose constructive amendments in the Senate rather than simply trying to block the legislation, as it has done to date.

Legislation is about to go through some crucial stages in the United States Congress to set up a “cap and trade” scheme—the mirror image of the sort of scheme that was passed in our last Parliament. We have the European response mirrored in domestic legislation of member nations of the European Union, such as the UK, most notably for our purposes. There are also countries like Japan. No way could we be described as a world leader any more, even if that was an accurate description back in September last year, which I do not think it was.

We have the principle that the scheme should be fiscally neutral. Well, it was always Labour’s intention to recycle revenues gained from, for example, the auctioning of permits, to pay for the vital complementary measures that are the other equation in dealing with climate change. We have the emissions trading mechanism—the financial mechanism that puts a price on carbon at the margins, so that we do things like disincentivise people who put an inappropriate dairy development on a marginal land, and we incentivise them instead to afforest that land, which is much more in the national interest and is the logical consequence of putting a price on their pollution and their emissions, rather than having the taxpayer bear it. But we need those complementary measures as well, and it was certainly always going to be the case under Labour’s scheme that they would have been paid for from revenue from the scheme.

Then there is the principle that there should be close alignment with the Australian Carbon Pollution Reduction Scheme, with, where possible, common compliance regimes and tradability. Well, that outcome is entirely feasible as far as technical harmonisation is concerned, without waiting for Australia to develop every last detail of its scheme. It is feasible under the legislation as it is designed at the moment. In respect of the principle that technology should be encouraged to improve efficiency and reduce emissions’ intensity, nobody could argue with that; it is the motherhood and apple-pie principle that, again, is consistent with the scheme as it currently exists.

Then there are the final two principles. First, with regard to the principle that we need to recognise the importance of small and medium enterprise to New Zealand, again, no one would argue with that, but the Minister needs to get on and decide issues like thresholds, so that small and medium sized businesses know where they sit in the scheme and what their allocation regimes will be. Second, in respect of the need to have flexibility to respond to progress in international negotiations, the scheme is designed to do exactly that. It is basically a set of broad legislative principles that allow the Minister and his officials to get on and fill out the detail. As far as the international developments are concerned, it is a ground for review under the existing scheme. Those principles have to be treated with a great degree of caution, and I would remind the previous speaker, Craig Foss, of that.

The other thing I will say is that there was a comment in the second reading speech made by the Green member Jeanette Fitzsimons. I think she made some assumptions about what Labour might or might not be willing to do in respect of dates and compromise for other sectors coming into this scheme. All I would say in response is that we have been scrupulous about not discussing in public our talks with the Minister, and I intend to continue that course. The member should not speculate—neither should anybody else—on what we might or might not be willing to agree with the Minister.

I wonder, in the time remaining, whether I could ask the Minister in the chair, the Hon Dr Nick Smith, to respond to two quick questions: one relates to clause 4; the other relates to clause 5(2). The amendments to the clauses are recommended in the committee’s report to the House. The questions are simply these: given that the committee has recommended firm deadlines, as opposed to dates, to be set by Order in Council for the doing of things that are required under those paragraphs, I ask whether there is a prospect, in his view, that those things might be done sooner than the statutory deadlines, which are set out in both cases on 1 July 2010. If so, I ask whether he has a view as to when those things might be done on an earlier date than 1 July 2010, and I ask what the conditions are under which those things might occur. These are my questions, and I would be very grateful if the Minister took the opportunity to address them. Those are my comments at this point.

Hon Dr NICK SMITH (Minister for Climate Change Issues) : Firstly, I thank both sides of the House for their contributions to, and consideration of, the bill. I will quickly respond to the fair question raised by the Labour spokesperson on climate change, Charles Chauvel, in respect of clauses 4 and 5, and on whether there are any potential scenarios where we might bring forward dates prior to the deadline that has been set at 1 July 2010. I acknowledge the initiative Mr Chauvel has taken in putting that firm date of 1 July 2010 into clauses 4 and 5 to require the two actions to be taken by then. I think that is a reasonable time frame, I think the debate is moving on, and I think a mood is developing across Parliament that, for New Zealand’s sake, we need to resolve the key features of the emissions trading scheme in a practical way that can move forward.

I think the key question here is firstly in respect of the allocation plan, and whether there is a process by which the date for that could conceivably be brought forward. One of the factors we would want to take into account is the fact that these units are expected to be traded, but, as a number of speakers have noted, we cannot have a market unless we have buyers and sellers. At the moment we have only sellers, and there is not much of a market. In relation to the point of obligation for those sectors that have liabilities, I note in passing—and I am sure previous Ministers found this—that there is a great deal of enthusiasm from those people who are to receive credits to get a market up and going, but there is not quite the same level of enthusiasm from those people who are paying. Even in the forestry sector where there are both payers and sellers, I know that that view applies. I think it would be helpful—and I particularly note this in respect of the central North Island forestry settlement, in which there is a very substantive allocation for the allocation plan—there may be merits in bringing that date forward to provide some liquidity to the market. So, yes, I do see a scenario where that would be conceivable.

In respect of the exemption provision, I want to be quite upfront with Parliament in saying that there is a huge number of small forest owners in New Zealand, and that the exemption provision is really, in my view, aimed at those thousands of forest owners who own small blocks. I think—and it was in the Budget—that substantial funds were provided for the implementation of the emissions trading scheme. To bring forward that date prior to 1 July 2010, in my view, we would have to run quite a substantive information and advertising campaign to inform people out there to do that. There will be left just the pragmatic question for me as to what is a good timetable to do that.

Given the fact that we will be dealing with a substantial emissions trading scheme amendment bill, my hope would be that we can have that completed prior to the Copenhagen negotiations. That would, in my view, be a credit for this Parliament and for New Zealand. But it would keep the systems of Government pretty busy, and I do not see any advantage in running an advertising campaign around the exemptions, or that campaign resolving that long-term issue. Perhaps 1 March next year might be a possibility, and I think that having the flexibility of the special select committee that considered the bill was a worthwhile provision.

So, yes, there are scenarios where those dates could be brought forward; there are issues of liquidity and issues of getting an advertising campaign up and running. I will want to work with officials, and I will be happy to consult with the Opposition, around what is the shortest conceivable but practical time frame in which we can get on with that important work.

NIKKI KAYE (National—Auckland Central) : I am a little bit gutted that Mr Nash has left the Chamber, because I wanted to respond to a number of things that he said.

Hon Steve Chadwick: I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Hon Rick Barker): I can anticipate what the point of order is. The member should not refer to the absence of another member from the Chamber. It is a quaint custom we have here, but it is for good reason.

NIKKI KAYE: Thank you, Mr Chair. I think it is very important that whilst we are talking about this legislation, we also touch on the point of New Zealand being a world leader in climate change response. In order for us to really look at that statement, we have to look at New Zealand’s record in that area. In particular, it is very interesting to note that under 5 years of Labour we lost 50,000 hectares of forest. Under 9 years of National, there were 600,000 more hectares of forest. It is important to acknowledge that when Labour members talk about being world leaders in climate change, their record is appalling. Labour holds the New Zealand record for the worst record since forestry records began in 1921. When members on the other side of the Chamber start talking about being world leaders in climate change, it is important that they look at Labour’s record.

Another emissions record we should look at is that during Labour’s term of Government, emissions grew by 14 percent. In fact, of 38 countries—the annex 1 countries—New Zealand did not lead the world. We were not even halfway down the list; we were the worst out of 38 countries. When we talk about emissions, it is important that we do not caught up in Labour’s hot air in this area because it does not have a good record in terms of forests, emissions, and also consultation. We are about to move forward with consultation for the target, and we are holding a number of public meetings on that. But we should ask how much consultation Labour did when it decided that New Zealand would become a carbon-neutral country. In my view, it was totally unrealistic and totally unplanned. That is why there was an appalling climate change record over the period of the Labour Government.

I am very pleased that, although we are here this evening delaying some provisions relating to the forestry sector, we have a climate change policy. We are not trying to say that we are world leaders, because ultimately one’s record matters, and the record of the last Labour Government was appalling in terms of climate change. I am all for moving forward with cross-party cooperation in this area, and I would welcome Labour members to stand up and defend Labour’s record in that area. We have to look at our history because other nations will be looking at us and our history in terms of climate change. This can be a new era, but members opposite have to be very careful when they start talking about being world leaders because our climate change record is, unfortunately, not good. I look forward to a new era in climate change in New Zealand, but I hope that we have a more realistic way forward with planning around climate change.

Hon PETE HODGSON (Labour—Dunedin North) : I was not going to take part in this debate but I do not think that that contribution can go unanswered. I am going to do so gently, but I am going to do so firmly. Nikki Kaye got up and told us how, during the Labour Government, emissions went up, and she is right. She told us how Labour was not very effective on climate change, and she is wrong. The member is a new member; the member does not understand, I do not think, the history of climate change policy in this country. She does not understand it. For the last 15 or 16 years—

Nikki Kaye: What have you done?

Hon PETE HODGSON: She is going to interrupt now. I sat in silence while listening to that insolent, ignorant, abusive speech and that member is now going to get a towelling because she has invited it. Normally one says of a young member, a new member: “That’s fair enough. They are still learning the ropes.” We have all done that before. But I am not about to put up with that.

The Labour Government ratified the Kyoto Protocol, against the wishes of the National Party. That Government not only ratified the protocol but before ratification it had put in place a policy that was consulted in a draft form and was then announced in its final form over months, and months, and months. In fact, it did not come out until about September 2002, as I recall. That is something like 2½ years of activity and 2½ years of consultation. That is the beginning.

Under a Labour Government wind energy got going because of the projects to reduce emissions. Under Labour, when we became the Government, there were no insulation standards in this country except for some temporary ones that had been put in, in 1978, by—guess who—Sir Robert Muldoon. They had not been improved during the course of the fourth Labour Government, they had not been improved during the 9 years of the Bolger-Shipley Government, and they were put in place by me, as Minister of Energy. They were then improved twice, and are about to go through their third improvement.

All of the foundation policies were put in place by that Labour Government, with support from the Greens. The Energy Efficiency and Conservation Authority, which everyone now thinks is great because it is about warm homes and all of that, was sitting surrounded by cobwebs in the Ministry of Commerce in 1999; it was completely demoralised. It was taken out, given special legislation, and put in with the Ministry for the Environment, etc. Now everyone knows what “EECA” means; it is all very, very ragey.

We had a biofuels target under the Labour Government. Unfortunately—and I still think it is a sad mistake, but we will not go on about it—one of the first actions of this Government was to get rid of it. A lot of the research and development effort that is now, we hope, starting to come to fruition was begun under Labour, although much of it was begun before then. You see, there is some history here, there is some effort here, and some people have done some hard yards. The member who has just resumed her seat ought to become a student of history before she takes a call again.

HEKIA PARATA (National) : Tēnā koe e te Heamana. Huri noa i tō tātou Whare i tēnei pō, tēnā koutou, kia ora tātou katoa.

[Greetings to you, Mr Chairman, and to you throughout our House this evening, greetings to us all.]

I am delighted to seek a call to speak in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I am a new member of this House; I am, therefore, a new member on the special Emissions Trading Scheme Review Committee that has been put together to look at the wider issues on climate change and the emissions trading scheme.

I acknowledge the extreme complexity of this area and the very steep learning curve that has probably been vertical, if not backwards, for me in getting to grips with the vast range of issues that bear on this topic and the numerous organisations and people who maintain a very strong interest in this area. I acknowledge that our present is built on the past and on those who have contributed to it in order that we can have a strong future. I am delighted to be a part of that select committee and to acknowledge the hard work of the people on it and the learning that I have received from many of them who have been engaged in this area of work for some time, and certainly for a lot longer than I have been. I have become very sensitive to how sensitive the range of factors and variables are that need to be balanced in order for us, as a small country, to navigate our way forward from this point, knowing that what we do impacts not only on those of us here today but also on the generations that come after us, and knowing that we are a part player in the greater global community and that what we do and what they do will form the history and herstory of what we confronted and what we did about it.

I acknowledge the colleagues from whom I have learnt in the select committee. In considering the bill that is here before us here today, I acknowledge my colleague Mr Chauvel for the amendment he brought to the committee.

The forestry sector is an extremely important part of the New Zealand economy. It is important that we provide certainty to it while acknowledging that its role is part of a greater picture. This bill, which is a technical bill, allows us to defer the time line by which considerations occur, and Mr Chauvel’s amendment has established the date of 1 July 2010. But decisions have to be made by that date, and we have heard our Minister in the chair, the Hon Dr Nick Smith, respond to the question put to him in the Committee tonight on whether there might be an opportunity for these decisions to be made somewhat earlier. In his response he has indicated that that might be possible but that a number of factors would need to be considered before it was finalised.

This bill gives to the forestry sector not only certainty of the date by which these considerations will occur but also an indication that it might be possible for them to occur earlier. It has also indicated to those many thousands, or perhaps hundreds, of small forest owners that they will have the opportunity to hear in more detail the information that will be necessary for them to be able to play their part in this very complicated chess game, I suppose, that New Zealand is engaged in not only within our own country and the number of sectors that contribute to it but also in terms of what we need to be balancing in terms of our contribution to the wider world.

It is very technical. As we have learnt, not only is there a number of different kinds of forests but also there are different kinds of plantings, different times at which those plantings have occurred, and, therefore, different impacts upon them. We have heard about the aspiration for there to be a market established in which carbon credits can be traded, and we have heard that there is a preponderance of sellers and a very minimal number of buyers. Thus the notion of a market has been rendered—a notion at its best at the moment, although we hope that it will achieve some reality over time. In the meantime, we are looking to ensure that while the select committee continues its considerations, we are able to give some certainty to those members of the forestry sector.

LOUISE UPSTON (National—Taupō) : I rise to speak in the Committee stage of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, and I firstly acknowledge the work done by the members of the Emissions Trading Scheme Review Committee. I was not involved directly but I am aware of the hours that have been put in by the members of that select committee, so I start by acknowledging the hard work done by that committee.

In speaking to this bill, I reiterate the importance of forestry to the Taupō electorate. Over 1,000 people are employed in forestry in my electorate, and one of the concerns they have been speaking to me about for many months is the ongoing uncertainty around the emissions trading scheme and, in particular, around the date in the legislation. I know that foresters are very pleased that the Minister has taken a pragmatic approach, and that the select committee has been working hard to ensure a workable solution for them, because that date has been causing them a lot of angst.

One of the impacts of that, which I will spend a moment talking about, is the fact that there is wonderful fertile land in my electorate but it is doing nothing right now, because forestry owners have been unsure about what would happen and have not known whether to plant on it or put it into dairying. So it is sitting there doing nothing. As we are in a country that is in the grips of a recession, we cannot afford to have wonderful fertile land sitting doing nothing. So that is why I am really pleased that there has been a great deal of cooperation across the House on this particular bill, to make sure we provide some certainty for the forestry sector in making this technical change—of changing the dates on which requirements are made of the sector—so that it is able to get some certainty without things being rushed, or without having ongoing concerns about the future. We have been able to change what the current requirement is in terms of reporting deforestation, so small-block owners will get an extension. It is not a case of today being D-Day, and I know the sector will be extremely relieved about that.

What is really important, in terms of looking at this legislation, is having a pragmatic approach to something that is achievable. I know that I want to be part of a New Zealand that has ambitious environmental goals, but at the same time I do not want to set up my children and grandchildren to fail. I think that it is really important, on an issue like climate change, that we collectively as a Parliament come up with something that is achievable—not just for our generation but for our children and grandchildren. I sure as hell do not want to leave them with a debt, in terms of the environment, that they will not be proud of. What I think has to be at the heart of this debate is making sure that the changes we make in this legislation are enduring. We do not want to have a situation where we throw these changes out all of a sudden and put the industry into turmoil again because there is a change of Government. That is why it is really important that the work that has been done in the select committee has some consistency about it.

I know that the forestry companies in my electorate that I have been dealing with—and that the Minister and I have met with—want certainty. They want something that is workable; they want something that is achievable. They have great aspirations in terms of what they see they are able to do in forestry. I was excited this morning to meet with members of the Central North Island Iwi Collective, who of course have their agreement coming into effect tomorrow, 1 July. There are fantastic possibilities for forestry in that particular area, and we want to make sure there is certainty for those members in going forward, so that in terms of their setting big goals, they can get out there and achieve them. I do not see that as a Government we want to be getting in the way of organisations that see great potential in forestry, and that have great ambitions in terms of nurturing the environment so that it is there for generations to come. When we talk to iwi, we find that that is what they say time and time again. They want to protect their assets, they want to make sure they are there for their children and mokopuna, and that is what members on this side of the Chamber are interested in, as well. So it is really important that we provide that certainty.

  • Parts 1 and 2 and clauses 1 to 3 agreed to.
  • Bill reported without amendment.
  • Report adopted.

Third Reading

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 third time. I firstly acknowledge the thoughtful contributions that were made by members during the Committee stage on this bill and the inevitable commentary about the broader issues that we face around the huge issue of climate change and, more specifically, the complex issues of implementing an emissions trading scheme.

I note that New Zealand is attempting to be the very first country in the world to include forestry within an emissions trading scheme. That is a very challenging exercise. Things that are man-made technologies—such as the burning of fossil fuels—or non-natural processes are relatively easy to measure. It is a lot more challenging, in the area of climate change, to be including natural processes—like the growth of trees, agricultural emissions, or many other elements of the natural sector—in an emissions trading scheme. To some degree, the complexities we found around issues in respect of forestry are some of the underlying reasons for this delayed bill.

The first thing I emphasise, and I will emphasise it again, is that this bill does not change the time frame by which any of the different parts of forestry will come into the emissions trading scheme. The bill is a technical bill that tries to provide some greater time frames in which the various requirements of bringing forestry into the scheme are able to be met.

I will note specifically the different provisions. First up is the issue of the allocation plan for pre-1990 forest owners. The truth is that the forestry sector is not of a single mind. The truth is that there are different parts of the forestry sector that are impacted upon in different ways. On the part of pre-1990 forest owners, there is actually not a huge amount of enthusiasm for the emissions trading provisions in respect of forestry, because those provisions will put limits on their capacity to change the land use, and that would have a substantive impact on land value. The previous Government responded quite pragmatically to that and said “Look, we’re going to allocate some units to you to compensate you in some way for the way in which you are disadvantaged by those provisions.”

At the core of this bill is the time frame in which that allocation plan is set out. Given that there is a select committee review, it is proper that that be delayed for some time. Members opposite have said “Yeah, that might be fair enough, but not for too long.” They have introduced amendments that have resulted in the date being changed to 1 July next year. I think that is a pretty fair date, and I am confident that we can resolve that issue by then.

The second issue operates at the other end of the spectrum; that is, rather than some of the very big forest owners, there are some very small ones. The compliance costs of including very small forest holdings within the emissions trading scheme exceeds the benefit of doing so. The original emissions trading scheme provided for an exemption for blocks of trees that are fewer than 50 hectares in size. The issue is that unless quite a bit of money is spent on publicising those provisions, a whole lot of people will not comply with them. We have made provisions in the Budget this year for money to advertise and to make sure that people are able to meet that requirement. If we insisted on it being required today, a whole lot of New Zealanders out there would be disadvantaged. We have quite pragmatically taken a view that we will give people another year to apply for that 50-hectare exemption.

The third part of this bill deals with the issue of where people have deforested and have obligations. Technically, by 31 January this year they were required to report any deforestation that occurred during 2008. I know of public and private sector organisations that did not do that. Given that that legislation came into effect only late last year and it is quite an onerous obligation, I am not completely surprised about that. I do not believe that anybody’s rights are adversely affected by extending that date for a year. The legislation further extends for a year the period in which those forest owners or those owners of land, where there has been deforestation, have to surrender the units associated with that deforestation. Again, I do not think any party will be disadvantaged by that. If anything, it will provide for a smoother transition of the entry of forestry into the scheme.

I want to briefly touch on the history of the debate between carbon taxes and emissions trading schemes, because it is relevant as we move forward. If we go back to the mid-1990s, during Simon Upton’s time as Minister for the Environment, we see that he said we should go ahead with a low-level carbon charge, so we went along that track for about 3 or 4 years. It was almost said in this way: “Industry, tidy your act up and get emissions under control. If you do, we will not touch you, but if you don’t we’ll put a low-level carbon charge on you.” When emissions did not move an iota, the crunch came and it was time to implement a carbon tax. However, the decision was made that, theoretically, an emissions trading scheme would be the better option. In March of 1999 the National Cabinet made a decision in principle to set officials in train to work on an emissions trading scheme. When the new Labour administration came into office, it said that it was a bit suspicious of emissions trading and it did not want to proceed down that road. So for 5 or 6 years it worked on a carbon tax. After the 2005 election, Labour abandoned its work on a carbon tax and went on with an emissions trading scheme.

I am not trying to be precious here; I do not think parties on either side of the House come out of this shining with a great glow. There is a bit of a chequered record on both sides, but that is also a commentary on how difficult this stuff actually is. In the debate on this bill, I have welcomed the growing consensus that an emissions trading scheme is the right way forward. There is a pretty good consensus that it should include all sectors and all gases. We have a really important job to do over the next few months of this year to nail down the detail of what an amendment will require. An amendment bill is needed. The reality is that in this bill we picked up three of the main little mistakes that were made in the main emissions trading legislation, and officials tell me that there are probably about another 20 errors that were made in that legislation that will need to be fixed up in a substantive amendment bill.

From here, we need to carefully consider the work of the Emissions Trading Scheme Review Committee, and we then need to get a further amendment bill before the House. If we can build on the spirit of cooperation that we have developed on this minor bill, there is a little twinkle of hope that we may be able to move New Zealand forward and have an emissions trading scheme that gets that right balance between this very challenging environmental issue and the huge issue of our economy, our jobs, and our certainty.

I again thank members for their contributions to the debate on this bill. It is a bill that is required in order to be able to provide for a sensible transition of the forestry sector into the emissions trading scheme, and I commend the bill to the House.

CHARLES CHAUVEL (Labour) : The Minister for Climate Change Issues has given a very fair summary of the provisions of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, and I do not intend to repeat what he said. I will take a few moments of the House’s time to follow his lead and speak on some of the wider questions in this area that face the House and the country going forward.

I will start with the science, because it is, after all—ironically, perhaps—one of the first terms of reference the special select committee the Minister referred to, the Emissions Trading Scheme Review Committee, has had to contend with. I was interested in the gracious remarks made by Hekia Parata on the select committee’s deliberations. It was refreshing to hear that it was an educative experience for new members of the select committee. I do not know whether those of us for whom it was at least the second time round could go quite that far. Certainly, the three or four members of the committee who participated last time in the Finance and Expenditure Committee’s deliberations on the current legislation I think take the view that, by and large, most of the submissions we heard were fairly reiterative of what was heard last time. It was interesting, however, to learn that most of the larger emitters have moved from what was generally an implacable opposition to the idea of emissions trading in New Zealand to an acceptance that it is the best way to go, given our current circumstances and world developments. The submissions they made to the Emissions Trading Scheme Review Committee tended to concentrate much more on trying to contend for amendments to the scheme that would be in their individual best interests.

Perhaps one great advantage of the current select committee process is the fact that the science is on the table. One of the good things about the select committee is that we heard from reputable scientists, including representatives of the Intergovernmental Panel on Climate Change, and we have been able to form a view—pretty much around the table, perhaps with one exception—that that science is reputable. The fact that the Intergovernmental Panel on Climate Change reports its concerns and its finding that sea levels will rise between 18 and 59 centimetres by 2100 is something we should be concerned about. The fact that its findings are endorsed by reputable academics and scientific organisations the world over is something that will be useful to see likely recorded in the committee’s report back to the House.

Earlier today during question time in the Chamber we heard reference to the International Scientific Conference on Climate Change. Given its report, if anything it is clear that the Intergovernmental Panel on Climate Change has been conservative in its findings. Rather than sea level rises of between 18 and 59 centimetres, we might be looking at something like rises of between 50 and 100 centimetres. There was also World Health Organization research in the International Scientific Conference on Climate Change report about 150,000 extra deaths, 85 percent of which will be of young children, occurring in low-income tropical countries as a result of the effects of climate change. Some of those countries are in our neighbourhood in the Pacific, an area we have always expressed concern for. That is something we should be very worried about.

Some of the members present in the Chamber today were also present at a recent science forum. I think the Assistant Speaker Mr Roy was there. We heard a presentation from an eminent academic at Otago University who talked about a phenomenon that was new to me: the increasing acidification of the oceans thanks to human-related climate change. Obviously, it is a good thing that the oceans absorb carbon dioxide. They have acted as an effective sink to date, and global warming would be a much worse phenomenon were it not for that propensity. But no system is closed, and one of the results, as we heard, of the ability of the oceans to absorb carbon dioxide is that their pH has been decreasing. From 1751, about the time of the Industrial Revolution and also, coincidentally, about the time when records started to be kept, to 1994 the pH of the ocean is estimated to have decreased from about 8.179 to 8.104. We heard that in about 30 years we might reach a tipping point. It is not a uniform tipping point, because different parts of the ocean acidify at different rates, but the concern is that those organisms that require calcium carbonate to construct their cell coverings or skeletons will not be able to do that any more in an acidified ocean, meaning that a cascade effect up the food chain seems inevitable.

I will respond to the observations that have been made about the special select committee by saying that a lot of the material that we heard was the relitigation of line call judgments. Perhaps it would be interesting to recall the Minister’s recount of history over the last 15 years on this matter. We have relitigated a lot of that history. It is now down to a number of line calls. I really hope, at least for selfish, personal reasons, but also in the national interest, that we do not have another select committee where we rehash these questions, because I think it is becoming clear what we need to do. It has also become very clear that the science has to be treated as being beyond dispute.

Looking forward we have to get over the problems we have with climate change policy at the moment. The ACT Party and the National Party in their coalition agreement—or their support agreement or whatever the correct term is these days for such agreements—said they would put the emissions trading scheme on hold, then there would be a special select committee, and then perhaps there would be legislation, depending on the findings of that exercise. Well, as one of the ACT members at the select committee remarked, ironically, one day—in terms that I will not repeat in the Chamber—that is not quite what happened. The bit about putting the emissions trading scheme on hold did not happen, so what we have is the problem that we now face in the House whereby the legislation has been allowed to run on as it is, unamended, yet we have the select committee looking at broad questions as to the design of an emissions trading scheme, not, as it happens, at the detail of the substantive legislation.

For some reason that is not a term of reference of the select committee. But the broad questions around design, as well as the science, and whether to have a carbon tax or an emissions trading scheme are the things we have been debating in Parliament while, at the same time, the foresters truck on with no one to trade their credits with. The stationary energy sector and the industrial processes people have no allocation plans and no certainty about how they will be affected by the scheme, except for the fact that the law tells them they will come into the scheme on 1 January. They are having to try to plan their businesses on that basis.

We cannot go on like this. It is absolutely clear that this is a policy fiasco. It is up there with, in my view, the tax breaks that have been put in place for offshore minerals exploration; the repeal of the moratorium on future construction of baseload thermal generation plants; the rescinding of the phase-out of the energy-inefficient incandescent light bulbs; the failure to promote the allocation plans that I have referred to, as required by law; and the scrapping of the Fast Forward fund and the research and development tax credit. That, after all, was how the country was going to pay for the technological adaptations that everybody knows that agriculture needs to undergo in order to get into the scheme and get its emissions down after 2013. It will be through the technological advances that we need to fund that farmers will be in a position to do what we all know they need to do. The fiasco is also up there with the repeal of the biofuels obligation.

Labour has made an offer, as is now public knowledge, to try to get on, reach some common ground, and get out of this policy fiasco that has become climate change and energy policy in New Zealand. I am very optimistic that, with goodwill on all sides, we will be able to get out of this mess. Certainly, Labour will be devoting its efforts to that end.

LOUISE UPSTON (National—Taupō) : I rise in support of the Climate Change (Response Emissions Trading Forestry Sector) Amendment Bill in its third reading. We have heard from Minister Nick Smith and Charles Chauvel, who have had a conversation looking at the wider issues of climate change, but I want to take the discussion back to the bill and what it will mean to have it passed. Having forestry in the emissions trading scheme is a world first, so it is critical that we get it right.

The bill delays the reporting requirements under the emissions trading scheme and publication of the allocation plan by the Government because the Emissions Trading Scheme Review Committee process is yet to be completed. As previous speakers have said, it is critical that we get it right. It is really important that the select committee completes its important work and does not rush it, and the bill allows the industry to take a breath. The current law under the Climate Change Response Act requires foresters to have reported any deforestation during 2008 by 31 January 2009, and for those owners who have small forestry blocks to apply for exemptions by today—30 June. We have spoken about the fact that those dates are unreasonable, given that the select committee review has not been completed and there is a lack of public awareness of what they are required to do. It is important that we protect the public from being in breach of the law or being adversely affected. That is why it is really important that this bill is passed to change the date so that those forest owners are not breaking the law, and it is great to see widespread support in the House for this bill.

I want to recap the three main elements. First, the existing law requires any deforestation to be reported by 31 January 2009, and we are extending that to 31 January next year. Second, the select committee has recommended 1 July 2010 as the last possible date that can be set as a deadline for applications for exemptions. That is for the small forestry blocks of fewer than 50 hectares of pre-1990 forest land. Of course, if the date could be achieved earlier, then there will be intentions to see whether that can be achieved prior to 1 July. Third, the forestry allocation plan for owners of pre-1990 forest land is the compensatory mechanism for the forest land owners who will be subject to liabilities for deforestation under the emissions trading scheme.

I want to highlight that New Zealand punches well above its weight in what we achieve in the forestry industry, and it is really important that we remind ourselves about that. The New Zealand forest industry supplies 1.1 percent of the world’s forest product trade but we have only 0.5 percent of the world’s forest resource, and it is really important that we allow our forest owners to do the best they can. They are already doing better than most countries in terms of forestry. It is really important that we protect that competitive advantage that New Zealand forest owners are already delivering. The forestry sector contribution to GDP is 4 percent, and forestry makes up 12 percent of all New Zealand’s export earnings. It is, of course, a large employer in many areas across New Zealand. We have to make sure that we change the bill in the context of how important the forestry industry is. Proportionately, New Zealand has one of the largest areas of protected natural forest in the world, with nearly 6 million hectares. The forestry industry also contributes significantly to Māori employment and economic advancement. Ten percent of the Māori economic asset base is in the forestry sector, so it is important that the forestry sector is on board with these changes.

National believes that New Zealand, as a responsible international citizen and as a country that values its clean, green environment, must act to reduce its greenhouse gas emissions. I want to talk for a moment about the actions that this Government has been taking. We have allocated $323 million to the home insulation fund and $36 million to the bio-diesel grants programme. We will be introducing legislation to exempt light electric vehicles from road-user charges. I am involved with the Local Government and Environment Committee that is making changes to the Resource Management Act, including the renewable energy consent process, as well as working on the national policy statement for renewable electricity generation. So we can see that this Government is working hard to forward what we need to do in terms of protecting our clean, green environment for our generation and for those to come. I am delighted to support the third reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. It is important that we get it right and get it done well. I commend this bill to the House.

Hon MITA RIRINUI (Labour) : I rise to take, once again, a short call on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, and to reiterate the Labour Opposition’s support for the bill. However, Labour is supporting this bill provided the Government replaces the provisions with the dates set by Order in Council with the dates specified in the legislation.

This bill will provide some certainty for the forestry sector, which is quickly losing confidence in the National Government because of its lack of direction on the emissions trading scheme. The future of the scheme is still uncertain. The legislation is still before the Emissions Trading Scheme Review Committee, and the Government has failed to outline a clear plan of how it will amend the emissions trading scheme legislation. We need to ensure that the scheme has real integrity.

Labour has taken the responsible approach and sought to find common ground with the Government. Labour is taking this responsible stance because it recognises the importance of consensus around the emissions trading scheme. It is a crucial part of ensuring New Zealand moves towards a path of long-term low carbon economic growth, and uncertainty cannot be allowed to continue. The Labour Party has offered to have talks with the Government about whether we can achieve bipartisan certainty on the wider questions around the emissions trading policy, and Labour will approach this task in good faith. We do so with the 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. The National Government’s policy has been to stall and delay, and it has cost New Zealand, certainly in terms of confidence. This complete lack of direction and inability to provide any form of credible leadership is costing New Zealand dearly in terms of its reputation.

The Government has made New Zealand the laughing stock internationally for its constant hand-wringing and flip-flops on the emissions trading scheme. Just the other day Minister Nick Smith came up with another excuse to further delay any progress on climate change policy. The Government negotiator told representatives at the Bonn Climate Change Talks that New Zealand would not confirm any 2020 pollution reduction target until it had undertaken public consultation. This announcement continues the parade of other excuses that he has used for not setting a target, and amongst those excuses have been that the Government is awaiting new data, harmonisation with Australia, and investigation of a carbon tax. The list goes on, and it becomes less credible and less consistent.

New Zealand needs certainty over how the Government will respond to the threat of climate change and greenhouse gas emissions. There is no economy-wide plan to deal with climate change and the challenges it presents. Instead, the National Government has caused haemorrhaging of jobs and investments, and uncertainty. The Government’s policies have brought the emerging carbon market to a halt. A major opportunity for our country to maximise our geographic skills base, and our language and time-zone advantages were thrown away when the emissions trading scheme was put on hold. The same policy has cost us enormous international investment in the forestry sector, along with hundreds of new jobs, while 8 million seedlings rot into the ground, as stated by previous speakers.

Thanks to the Prime Minister’s failure to lead and his surrender to climate change extremists—in this case, the ACT Party—there is no prospect that National’s promise of passing the amended emissions trading scheme within 9 months of taking office will be kept. Due to the National Government’s failure on climate change policy, Labour has offered to assist to make some responsible amendments to the scheme. There needs to be certainty around the timing of the scheme, instead of the current situation of confusion caused by the Government.

I have heard previous speakers in the House today make reference to the interests of Māori, foresters, and landowners in general. A major event will take place this weekend when a number of Ministers and Labour MPs attend the hand-over ceremony in Tūrangi of the CNI Iwi Holdings assets. I am sure that part of the discussions that will take place on the day will be on the uncertainty around the emissions trading scheme. While in Government, Labour provided a high level of confidence that it had a clear pathway ahead on the scheme. That is no longer the case, and I am sure that question will be put to Ministers of the Crown when they attend the hand-over ceremony this weekend.

That is my contribution to the third reading of this bill. The fact that there is a high level of uncertainty amongst our foresters and landowners, particularly Māori, needs to be made clear in this House. Thank you.

NICKY WAGNER (National) : I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill in its third reading. It is great to see so much support for this bill. It is extremely positive to have support right across the House, and this consensus is a really important step towards a new, reshaped emissions trading scheme bill that will be introduced into the House later this year.

The cross-party Emissions Trading Scheme Review Committee is working hard, and tonight we have heard my colleague Hekia Parata tell us how complex the discussions have been. We are all very well aware that this work is taking time, but we believe that it is time well spent if it means we get an intelligently-thought-out and well-supported, sustainable emissions trading system.

Climate change is a pressing, complex global issue, and the cost of getting the legislation wrong is high. Governments around the world are struggling to find the best way to cope with greenhouse gases and global warming without crippling their economies. In a time of international recession, finding workable solutions is even more difficult. We want to make sure we get a good emissions trading scheme, but we do not want to get it at the expense of our economy. New Zealand is committed to making emissions reductions, but we want to reduce those emissions in ways that result in the least cost to our society and the least cost to our economy. We need to capitalise on the Kiwi can-do attitude, and to focus on New Zealand’s creativity and innovation in order to develop new ways to manage our lives, our organisations, and our businesses so that we can reduce our greenhouse gas emissions and we can protect our environment.

As we know, New Zealand has a very unusual greenhouse gas profile. For a developed country, it has a uniquely high percentage of agricultural emissions. Almost 50 percent of our greenhouse gases come from the farm, in comparison with other developed countries, which usually have only 12 to 15 percent of their emissions from agriculture. Unfortunately, our emissions profile is particularly difficult to manage. We will, of course, be using all our expertise, and New Zealand has a good deal of expertise in research and development in the agricultural and forestry sectors. We will use this expertise to try to reduce these levels. New Zealand will lead the development of an international research centre focused on greenhouse gas emissions from the agricultural sector. This will be a great contribution from our country to the global issue.

We will also be doing everything we can to tackle the other major areas that produce greenhouse gas emissions in our society: energy use and transport. One of the most vital things we need to do is cut back on our use of fossil fuel energy generation, and we can do that; we can do it in several ways.

Last week the Prime Minister announced the new home insulation fund Warm Up New Zealand: Heat Smart. I have to say that it has been particularly enthusiastically received in my home town of Christchurch. The combination of a cold climate, old housing, and an air pollution problem makes Christchurch a prime suspect for more insulation. Christchurch people will enthusiastically support the insulation fund and its clean-heating capacity. It is lucky that the Government has announced in the Budget that it is spending $323 million over 4 years to retrofit 180,000 homes with insulating and clean-heating devices. The amazing thing is that over half a million New Zealanders will benefit from the scheme. They will benefit by using less energy and by keeping themselves warmer and drier. Insulation and clean heat will also cut greenhouse gas emissions from those homes and improve the carbon footprint of our cities.

The Government is also focusing on renewable energy by working on the national policy statement for renewable energy generation and by streamlining the Resource Management Act processes. I have been working hard on that committee, the Local Government and Environment Committee, and we are convinced that the new processes will also improve the renewable energy consent process. Increasing renewable energy will allow a decrease in the use of fossil fuels to generate power, which will cut our emissions. The bigger the percentage of renewable energy the smaller our greenhouse gas footprint.

To help curb greenhouse gas emissions from transport, the Government is supporting alternative fuels and transport options by allocating $36 million to a bio-diesel grant programme. We are also introducing legislation to exempt light electric vehicles from road-user charges. Electric vehicles are becoming increasingly more common and much more cost-effective. Their exemption should make them even more attractive. I have to say that my blue electric scooter is a fabulous vehicle for an inner-city electorate.

Hon Steve Chadwick: It’s not a mobility car?

NICKY WAGNER: It is an electric scooter. It is fun to drive, it is almost silent in a noisy city, and I never have any problem finding a park.

New Zealand is a country that values its “clean, green” brand. Our two major industries are predicated on having a quality environment. Tourism and agriculture lean heavily on our natural environment, and we must understand that tourists are the first to appreciate clean, green, beautiful New Zealand. If one is buying food from a country, one wants to make sure that the country is a safe place in which to produce food.

New Zealanders identify closely with the natural environment and want to be responsible when it comes to climate change. Managing climate change and creating an emissions trading scheme is a complex, difficult task. New Zealand has had a chequered past in trying to develop a successful response to managing greenhouse gases. The consensus that is developing in the House augurs well for the development of a long-term, sustainable, and successful emissions trading scheme.

Getting back to the bill, forestry is an important part of our environment, our economy, and our response to climate change. Thank you, Mr Assistant Speaker Roy.

STUART NASH (Labour) : I rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I agree with the previous speaker, Nicky Wagner: we all value the “clean, green” image of New Zealand. It is part of our competitive advantage. I spoke a little bit about that in my previous speech. But I remember standing here about 6 months ago debating legislation to build thermal power plants. Am I wrong? Have I forgotten something? Have National members forgotten that legislation? We talk about clean, green New Zealand, and an emissions trading scheme is a very important part of that. Forestry is a very important part of it, but this bill delays the scheme so I am not too sure whether that was a speech from us or from National.

Mr Foss was right when he stood up and said that this bill provides certainty. No one doubts that. This bill does provide certainty, which is what any industry, especially an industry with a 30-year growing cycle, requires. The forestry industry requires certainty. Is that not right? The people of Tauranga require certainty, and I am sure they will get it in another 2½ years. But what is certainty when the industry believed it already had certainty? The message the forestry industry formerly had was that the deadline was 1 July 2009. That was the reality. That was the industry’s certainty, but suddenly National blew it out of the water with this bill. Certainty is good; members should not get me wrong. At least now the industry can take a deep sigh, and, as I said before, it can say “At least now we know that Labour is the true friend of the forestry sector and they will give us certainty. They had given us certainty, but I suppose we have got to make do with these characters for another 2½ years.”

One thing I will comment on is the fact that Nikki Kaye stood up and said that emissions had grown by 14 percent. But she did not talk about the fact that the economy had grown by 50 percent. Amazing! I like Nikki Kaye. Nikki and I went to Ethiopia together. We were both very privileged to visit a country and an economy that was so far away from New Zealand in every single aspect. We went with Mr Bridges, as well. It was a great trip, a wonderful trip. I almost converted them to cross the House and join us in Labour, actually. In fact, I thought I had. Nikki Kaye stood in front of parliamentarians from about 170 countries and gave an impassioned speech about the wonderful things we were doing in New Zealand about climate change. She stood up there and said what global leaders we were in terms of climate change, what a fantastic country she came from, how she represented the younger generation, and how climate change was going to be part of our competitive advantage. It was inspiring. It was not quite a Lange speech, because she is a Tory and she will never reach that stage. No Tory can speak like Lange, with the passion he delivered about nuclear ships. But hers was a speech from which one might have stood there listening and thinking that there was a future leader. In fact, when Richard Worth went south I went down to the TAB and put on a sly ten bucks that Nikki would make it into Cabinet. She is good. The new guys should watch out; she is on her way up. Her speech was fantastic.

After Nikki’s impassioned speech in Ethiopia about what we are doing for climate change in New Zealand, I thought she was right onside. I do not know whether Nikki is on the Emissions Trading Scheme Review Committee, but I am sure that when Dr Smith said to Nikki—he would have consulted her on this matter, I have no doubt, because she is a global spokesperson on it—that National was going to delay the scheme by 1 year, I am sure she would have said “You cannot do this, because I stood up in front of 170 members of Parliament from around the world and said we are global leaders.” But Dr Smith would have said “Nikki, I am sorry. I am going to have to overrule you on this one.” I would not have liked to be in that room. Nikki Kaye had said we were global leaders, but then I heard her say that we cannot take a global leadership position on global change. I almost fell down, because I recalled Nikki’s speech about global leadership—

The ASSISTANT SPEAKER (Eric Roy): Use the member’s full name.

STUART NASH: —and, with regard to Nikki Kaye, the emissions trading scheme, forestry, and the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, I tell members that it played into Nikki Kaye’s hands. Nikki talked about global leadership, and then stood here and said we cannot take a global leadership position. I was very disappointed in Nikki Kaye—very disappointed.

I will tell members what Labour did. We prioritised. Nikki Kaye—let me say Ms Kaye—said that emissions had grown, but I will tell members what Labour did. Labour came in and prioritised, and said we had inherited a shattered economy. We had inherited an economy in the doldrums. It was diabolical to the point where we raised taxes, and people said “Thank goodness! We will have a decent health system and a decent education system.” Well, of course the economy was shattered, because Bill English had been the Minister of Finance. It is like history being repeated, is it not? It is like déjà vu. Oh, my goodness me! But Labour took our economy, which was in a state of disrepair, and rebuilt it.

Then we stepped back and asked what was important for New Zealand. How did we define ourselves? We had done it for nuclear ships, because Labour is always the party that raises identity questions. We stood up and said that on emissions trading, greenhouse gases, and carbon zero, we could be world leaders. Once again, we grabbed that mantle with both hands and took it forward to the world stage. We rose above everyone else and we were leaders. We were global leaders and people knew that. People looked at Helen Clark and said she was a woman destined for global leadership. What happened? She has fulfilled her ambition; we were on our way to fulfilling our potential.

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

STUART NASH: It is good to come back after dinner and get straight back into this debate. I was saying how disappointed I was, because I had been overseas with Nikki Kaye and she had stood up in front of MPs from all around the world and said how great it was that New Zealand was leading climate change. She had said that we were global leaders. Yet about an hour and a half ago, as I sat here, I heard Nikki Kaye say that we cannot lead global climate change, that we are not leaders in emissions trading, and that we cannot do that. I was so disappointed. I had thought that here was a young National MP who was a person of her word, but, true to form, she could not say what she had said earlier.

But the worst thing was when Louise Upston stood up and said that there were people in Taupō who did not know what to do with their land because of this legislation. She said they did not know whether to put their land into dairying or forestry. Goodness me, with all due respect to Louise—

Amy Adams: Ms Upston!

STUART NASH: —I am sorry, Ms Upston—I think that she should go and talk to the landowners in Taupō, because I have no doubt that they know what to do with their land. In fact, if the emissions trading scheme had been introduced when it was supposed to be introduced, those landowners would have had a lot more certainty, and they would have been doing what they are supposed to be doing now, which is making the best use of their land. It was all a shame, really; she showed about as much energy as everyone else over that side, quite frankly, but that is OK.

But I would like to say what forestry can do for New Zealand. I am a huge fan of forestry. Forestry is the way forward for this country because it is so innovative.

Amy Adams: Because it is so wooden!

STUART NASH: I say to Ms Adams, from the The Addams Family, that we can actually farm for carbon. Gone are the days when we planted trees to cut them down for timber or pulp—we farm for carbon. In fact, every time that member opens her mouth, the emissions trading scheme goes through the roof because so much hot air comes out, as I think Mr Hughes would agree. I fully support this bill; I just wish we had been a lot bolder in doing what we said we would do—in fact, not “we”, but what those guys opposite said they would do but did not.

I used to write forestry plans for farmers in Taranaki. I used to advise them on the best use of their land, because that is what it is about in our country. We have to optimise the use of our land. I can tell members that the plans I would write today would be completely different from the ones I wrote 10 years ago, because there are so many different uses for forestry these days. Not only do we plant for timber, which is what we have done for 140 years, but now we can also plant in order to farm for carbon. It is absolutely fantastic. That is a viable part of the industry, and in a way it could be the saviour of the industry, because with marginal land in the past—

Amy Adams: How many people does it feed?

STUART NASH: —as Ms Adams would know—we would plant forestry out in the backblocks, but now we can plant for carbon. I tell members that if this bill had gone through when it was supposed to, then people could have started to plant for carbon in a month’s time. It will now be in 13 months’ time, and that is a shame. This is a Government of inaction, but that is OK because it has only 2½ more years.

One of the great things we can now do, as well, is get an economic rent for marginal land. It is a wonderful opportunity. I personally believe that forestry will undergo significant growth due to the emissions trading scheme. I for one, as Labour’s associate spokesperson on forestry, will be looking at that in partnership with the industry. Labour is a party that goes out and talks to industry groups. We find out what they want and we work closely together so that we can come up with schemes that work. There are some great innovative schemes, when thinking outside the square, in which we can really drive forestry growth.

So I say “Well done!” to the Labour Government for getting the emissions trading scheme up and running, in spite of ACT and Mr Hide. Can members imagine Helen Clark going into coalition with someone who is a global-warming doubter? I just wish that this Government had been bolder. As Mr Chauvel said, there is another broken promise, but I do support the bill because at least now the forestry industry will have a little bit of certainty. It is a pity this certainty will not arrive next month, it is a pity that it will arrive only in 13 months’ time, but I support the bill and so I commend it to the House. Thank you.

Dr KENNEDY GRAHAM (Green) : I rise to address the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, which pertains to forestry. I begin by reaffirming that the Green Party will vote for the bill, but let our vote not in any way mask our dissatisfaction with the Government’s climate change policy and this country’s recent record on climate change. Last week, and again this afternoon, my colleague Jeanette Fitzsimons critiqued the proposed bill for what it was. For over a year now the foresters of this country have cried out for predictability to assist them in their business decision-making. For the past 8 months the Government—this party of business—has failed to provide that. Tonight, with barely 2 hours of parliamentary time remaining, the Government seeks a “get out of jail free” pass. It has pressured itself into passing a hasty amendment to narrowly avoid being in breach of the current emissions trading scheme law that was enacted last year. This simply reflects the disarray the Government has worked up for itself in climate change policy, and the resulting shameful mess that passes for New Zealand policy on climate change in 2009. In fact, it is a tough call to apportion relative weight of liability between Labour and National Governments in this respect. Each gets the “Fossil of the Year” award.

The purpose of my intervention tonight is to place our broader climate change policy in the context of the latest scientific findings of the International Alliance of Research Universities. The alliance’s report is not just the work of the University of Copenhagen, as the Minister seemed to believe; it represents the combined work of the Australian National University, Yale, and the universities of Oxford, Cambridge, California, Peking, Tokyo, and Singapore. It involves the contribution of Dr Pachauri, Director-General of the Intergovernmental Panel on Climate Change, of Lord Nicholas Stern, whose economic report of 2007 gained global attention, and of the Prime Minister of Denmark, which will be hosting the Copenhagen conference in December this year. It is as a result of the work of 2,500 researchers from 80 countries, many of whom are part of the Intergovernmental Panel on Climate Change. And, contrary to the assumption of the Minister, it has been properly peer reviewed by the Earth System Science Partnership. The Minister tended to be slightly dismissive of the report in question time this afternoon, but he was gracious enough to say that the report would be “taken into account” in the Government’s future deliberations. This is just as well, as the report is destined to form the basis on which the Copenhagen meeting will rest its decisions.

So let me highlight the main points in that report, which my colleague Metiria Turei tabled this afternoon, for the benefit of the Minister, his Government, this House, and our country. Let me cover excerpts from the executive summary and the conclusion. In the executive summary, the report states: “Recent observations show that the greenhouse gas emissions and many aspects of the climate are changing near the upper boundary of the IPCC range of projections. Many key climate indicators are already moving beyond the patterns of natural variability within which contemporary society and economy have developed and thrived. These indicators include global mean surface temperature, sea-level rise, global ocean temperature, Arctic sea ice extent, ocean acidification, and extreme climatic events. With unabated emissions, many trends in climate will likely accelerate, leading to an increasing risk of abrupt or irreversible climatic shifts.” The report states: “Temperature rises above 2oC will be difficult for contemporary societies to cope with, and are likely to cause major societal and environmental disruptions through the rest of the century and beyond.” In its conclusions the report states: “Climate change is fundamentally different from the environmental problems humanity has dealt with until now. The risks, scales, and uncertainties associated with climate change are enormous and there is a significant probability of a devastating outcome at the global level. The nature of the climate change challenge demands visionary and innovative thinking. The planetary boundaries concept, which aims to define the ‘safe operating space’ for humanity, draws on the earlier experience of societies that regulated their own behaviour when knowledge of undesirable consequences became available. Planetary boundaries are defined with respect to biophysical thresholds of the Earth, the crossing of which would lead to catastrophic outcomes for societies … The scientific evidence strongly suggests that there is an upper limit to the concentration of greenhouse gases in the atmosphere, or a ‘climate change boundary’, within which humanity should operate to reduce the risks of catastrophic outcomes. Although the precise position is not yet known, current evidence indicates that humanity is fast approaching or may have even succeeded the boundary. Thus, the need for rapid and drastic reductions in the emissions of greenhouse gases is urgent if serious climatic impacts are to be avoided.”

It is clear from this report that humanity is facing the greatest challenge of all time. It is not a matter of simply balancing our economic opportunities with our environmental responsibilities, as the Government reiterates in a trance-like fashion. This afternoon Craig Foss and Nicky Wagner spoke of New Zealand doing its bit, playing our part, and being a responsible global citizen. Nikki Kaye identified the concerns of our young people, but cautioned that we should not get out of step with other nations. Alas, our worst fears are confirmed. We are not leading the field; we are lagging behind. In answer to our questions this afternoon, the Minister for Climate Change Issues effectively said that Scotland, the United Kingdom, and Germany, all of which have identified targets from 34 percent to 42 percent, simply had it easy. By switching from coal to gas, New Zealand, in contrast, had it tough because of our 48 percent methane component and, incredibly, because our GDP per capita was relatively low in the OECD. He failed to cite the most relevant statistic of all, so let me do it for him. For greenhouse gas emissions per capita Australia had 26 US tons per capita per year, the United States had 23 US tons per capita, New Zealand had 19 US tons per capita, the United Kingdom had 11 US tons per capital, and Germany had 9 US tons per capita. The Minister said those countries had it easy and that we had it tough. That is ridiculous. We are the ones that are polluting disproportionately per capita. We are the ones that have the obligation to reduce our emissions.

Let the Minister’s lament simply be set aside. Let his Government take the lead by getting up to speed with where the rest of the Governments are in setting targets within the next month at, at least, 40 percent carbon dioxide emissions and 30 percent carbon dioxide equivalent emissions, in time for the climate conference at Copenhagen. Thank you.

HEKIA PARATA (National) : Tēnā koe e te Mana Whakawā. Huri noa i te Whare, tēnā koutou katoa.

[Greetings to you, Mr Assistant Speaker, and to you all throughout the House.]

I rise to speak on the third reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I would like to reiterate some of the points that I made earlier this evening about the complexity by which this issue is characterised, and the opportunity afforded me as a member of the Emissions Trading Scheme Review Committee, which has a number of members who have dealt with these issues one time before, and have brought that experience to the table this time.

One of the abiding features of the process this time round, as mentioned by Mr Chauvel, was the fact that the select committee agreed, by and large, on the science. That allowed us to move forward to the set of policy responses that this Government might settle upon in dealing with an emissions trading scheme for New Zealand. A lot of hard work has been done in the select committee, and more has yet to be done before that work is finally reported back.

In the meantime, a number of issues have to be dealt with prior to the conclusion of that work. One of those issues relates to technical matters that are the substance of the bill before us tonight. It is noteworthy that New Zealand is the first country in the world to attempt to bring the forestry sector into an emissions trading scheme. Therefore, it is important that we provide certainty to a very big player in our economy. The bill provides for a deferral of up to 1 year. This amendment was brought to the select committee by Charles Chauvel, and it was supported by the select committee. It allows the allocation plan for pre-1990 forests to be made by 1 July 2010. This allows the forestry sector the opportunity to be more certain about the kinds of proposals that it wants to have considered as part of the allocation plan.

A second element of the bill is that the tens of thousands of small forest owners, people who own forests of 50 hectares or less, are required to put their proposals before the Minister for Climate Change Issues. In the Budget this year, we made provision for moneys to allow for advice and information to be made available to those small forest owners so that they are able to comply with the bill. The bill before us this evening provides for those two technicalities of timing. None of the rules have changed, but the time in which these rules can be met has been extended, and it has been done in a way that provides certainty for all those players.

I do not have a lot to say this evening, because much has been said already. But I want to comment a little on some of the concerns that have been raised in the House this evening, and to say that I am confident that our Minister is seized of both the science and the range of policy responses that are available to us. He is aware of the many variables that must be weighed and balanced. Contrary to the previous speaker’s view, we have to find some balance between our environmental challenges and our economic challenges. This Government is set upon a course of finding that balance. Our Minister is navigating us through the complexities that characterise this area. However, it is a challenge that confronts us all, whatever side of the House we sit on. In the end we all need to sit on the same side to ensure that what happens is best for New Zealand, as a responsible global player.

This bill is but one small facet. It is one that comes before us now because of timing issues. We are concerned to see that players in the market are able to comply with the law. This bill gives them greater time in which to do that. I am pleased to rise to speak on the third reading of this bill. I commend to the House the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Kia ora tātou.

Dr PAUL HUTCHISON (National—Hunua) : Thank you for the opportunity to speak on the third reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Unfortunately I was not able to partake in the first or second reading—

Chris Hipkins: Why?

Hon Clayton Cosgrove: Partake?

Dr PAUL HUTCHISON: I detect chicken-like eructations coming from Clayton Cosgrove. Has he got something wrong with him? Or was it from Chris Hipkins?

Hon Member: Call a doctor!

Dr PAUL HUTCHISON: Perhaps we should. He undoubtedly needs help. As I was saying, I was not able to partake in the first and second readings of this bill, but it is excellent to notice the history of this legislation. The bill was introduced on 18 June. It had its first reading on 23 June, then on 25 June it had its select committee deliberations. Today, on 30 June, we have had the second reading, the Committee of the whole House, and we are now speaking on the third reading debate. This shows two things: firstly, it shows that there has been collaboration between the parties, which is obviously good and augurs well for the future of the emissions trading scheme legislation; and, secondly, it shows the excellent efficiency of the new National Government in getting on with the job.

I want to refer to one of the points that Dr Nick Smith, Minister for the Environment, made in his first reading speech. It was that 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 offsets and other provisions around forestry participation in the emissions trading scheme are being openly debated. It would just create confusion, and that is why the Government has gone down this 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, so it would be unfair on foresters for this oversight to result in their being adversely affected. This is why the bill sensibly provides for that date to be pushed out.

I also draw the attention of members to some of the comments the Hon David Parker made in the first reading. In my view, the previous Labour Government was overdramatic both in 2002 and later in 2008. I recall that in 2002 the Hon Pete Hodgson, in the first reading of the Climate Change Response Bill, introduced the now infamous carbon police that were described by Professor Joseph of Canterbury University as State-sanctioned trespass. That is just how over the top the members of the previous Labour Government were. They were almost like Templar knights, charging out into the semi-darkness, trying to save the world.

Again, in 2008, a bill fraught with problems, which we all know had many thousands of amendments to it, was introduced. They just did not get the balance right. But I note with regard to this bill that Jeanette Fitzsimons, in her first reading contribution, openly declared that “calculating deforestation carbon losses is a fiendishly difficult … thing to do.” There is no doubt in my mind that from both a scientific and an economic point of view the National Government has done the right thing in reviewing Labour’s emissions trading scheme. The forestry sector is absolutely no exception in that respect.

Earlier today I gave the opening address at the New Zealand Institute of Agricultural and Horticultural Science forum, on behalf of the Hon Wayne Mapp. I mentioned National’s commitment to a centre of excellence on greenhouse gas mitigation research and the development of technology to reduce emissions and improve on-farm efficiency and productivity. If ever there is an area of the climate change issue that New Zealand should lead in, it is in on-farm reduction of greenhouse gases. Our potential to both contribute and benefit is enormous in that respect.

To end, I say that this is a technical bill. There has been inter-party collaboration over this bill. Hopefully this collaboration will augur well for agreement on the fuller emissions trading scheme legislation when it is ready for debate later this year. I commend this bill to the House. Thank you.

  • Bill read a third time.