Hon Dr NICK SMITH (National—Nelson) : What is being done in this Parliament this afternoon is both irresponsible and reckless. The issue of climate change and the introduction in New Zealand of an emissions trading system, as set out in the Climate Change (Emissions Trading and Renewable Preference) Bill, are amongst the most important issues and bills of our time. For the Minister to announce today another 785 amendments, after issuing 1,000 amendments 2 days before the deliberation on the bill at the Finance and Expenditure Committee and assuring the members of the committee that those were all, and that things were all OK, is nothing less than reckless.

We need to understand how big this bill is. It is certainly the biggest bill that has been dealt with in this term of Parliament. It is certainly a bill with huge implications for every household and its cost of living, and for every business out there, whether it be in our important agricultural, forestry, or fishing sectors—right across the board. For the Minister to expect this Parliament to digest and get right 785 amendments is treating this Parliament as a joke. How many members of the Government will have even read these 785 changes? I bet members there are none. How can this Parliament have any confidence that we are going to get the key elements of a complex emissions trading system right, when the Government dumps so many amendments on this Parliament in that sort of way?

The reality of this emissions trading legislation is that the Government itself has deferred its implementation for 2 years. The only reason that Parliament is under some mad rush to pass this bill is simply to try to save this Government’s bacon in respect of its reputation on climate change. It has been in Government for 9 years, and every single one of its climate change initiatives has failed. The tragedy is that the Government has learnt nothing from those failures. It rushed ahead with the carbon tax, and it failed. It rushed ahead with the Projects to Reduce Emissions programme, and that failed. It rushed ahead with its tax on farmers—colloquially known as the “fart tax”—and that failed. It rushed ahead to proclaim that its forestry initiative would result in increased forestry; it resulted in the biggest chainsaw massacre in the history of New Zealand. So I plead with the Government, and with the parties that are supporting this bill, to learn from history. When the Government has rushed these measures it has got them wrong, and the very essence of New Zealand’s reputation around climate change has taken a hit.

The truth is that in every year of this Government, New Zealand’s emissions have grown and, ironically, have grown faster than almost any other country’s. In some blind way, in these last dying gasps of this Government, it is desperate to pass this very complex legislation without getting the essential detail right. The truth is that in an emissions trading system the attention to detail is very important. It is important because if we get the detail wrong, the emissions trading system will be rorted by those who seek to gain from it. And if that occurs, the most important element of New Zealand’s climate change policy will be dead in the water.

So National says to the Government it should not do this to our Parliament and bring New Zealand’s reputation into disrepute with such shonky lawmaking. Why are we looking at hundreds of amendments, without even the basics of an explanatory note as to what the Government seeks to achieve? How can the Minister go around and say he is engaged in good faith with the Opposition in trying to build a consensus, when the Government has not even attempted to provide basic information about the Supplementary Order Papers? The process over this bill is awful. It will result in serious mistakes, and that will cost New Zealanders dearly in terms of both jobs and costs. New Zealand deserves a whole lot better than to have this shabby process.

Hon BILL ENGLISH (Deputy Leader—National) : I support the comments made by our spokesman on climate change, Nick Smith. The emissions trading system is probably the biggest single innovation in public policy for about the last 10 years or so. Parliament is trying to debate the creation of a whole new market in emissions trading permits, essentially, which the public does not understand, and, I venture to suggest, which a good number of politicians do not understand yet, either. Those who have been immersed in this policy-making process for 18 months to 2 years understand it, but other people do not. That is why my colleague drew attention to the fact that there are 750 amendments—in fact, hundreds of pages of amendments—with no description of what they are intended to achieve. That makes a nonsense of this Committee stage.

I am one of those who sat on the Finance and Expenditure Committee and tried to come to grips with the detail of this legislation. At the end of that process, the Government presented us with about a thousand amendments, a number of which it described as technical. I have to say that the select committee members, who sat through a process on which the Government put a great deal of weight, really had no idea what they were doing when, by majority, they voted those amendments into the bill.

The Government having put a thousand amendments into the bill at the last moment, with almost no scrutiny of them by the select committee, the next time that Parliament debates this bill—which is now—the Government introduces 750 further amendments. There are 1,750 amendments and no one in Parliament knows what they achieve. I think we should be straight up about that. No one in Parliament knows what they achieve. Even as knowledgable a colleague of mine as Dr Nick Smith, who from the time we received the amendments has spent as much time today looking at them as he could, is struggling to understand how they all fit together. There is absolutely no doubt that almost everyone else in Parliament, except perhaps the co-leader of the Greens Jeanette Fitzsimons, will struggle to understand how they are put together.

Does that matter? Of course it matters. I draw Parliament’s attention to the history in this Chamber of the only legislation I can think of that was similar to this bill in its innovation, and that was the fishing quota legislation that set up individual transferable quotas and all that. In the whole time that I have been in Parliament, which is 17 years, we have barely gone a year without a fisheries amendment bill. In recent months we have actually been debating yet another one—

Hon David Carter: That’s right.

Hon BILL ENGLISH: —as the Hon David Carter would be able to tell us.

Hon David Carter: Another two.

Hon BILL ENGLISH: We have been debating another two fisheries amendment bills over points of law that are directly related to a Minister’s ability to make decisions. This legislation today puts enormous weight on ministerial decision-making and discretion. In my view, it puts far too much weight on them, and that is one of its weaknesses as a public policy. But there is no doubt that what is being done today, driven by the Government's political interest, is setting this Parliament on a course for an endless procession of amendment bills to try to fix up the mess that Parliament is about to make.

We should be in no doubt about what is driving this process: Helen Clark is concerned that she may lose the election—and she is even more concerned after the events of the last week or so—and she is trying to ram this legislation through the House at the last minute. It is simply not good enough for the Minister to say that we have spent the last 2 years thinking about it. A small group of officials may have done that, but if we thought that officials should do all the legislating, we would not have a Parliament, at all. We would not even bother to have the select committee process. In fact, what often worries Opposition members on select committees is just how much difference a select committee can make to legislation when the committee is made up of part-time legislators dealing with full-time policy makers.

This whole timetable is being driven by the Government’s political needs. The Government has very little to show for its third term in office. Dr Cullen has KiwiSaver to show for it, but that is about it. Not much else has happened of any significance, even though Government members may regard themselves as having been busy. Helen Clark has figured out that, as she faces a potential election loss, she has very little to show for her third term. It is unfortunate for New Zealand that she has decided on the emissions trading system as the thing that she wants to have pushed through before the bell goes.

RODNEY HIDE (Leader—ACT) : I think I will be the only person speaking in this debate who has any qualifications in environmental science. It is not that that should count, but I think it is significant for what I am about to say—that is, that the entire climate change and global warming hypothesis is a hoax, that the data and the hypothesis do not hold together, that Al Gore is a phoney and a fraud on this issue, and that the emissions trading scheme is a worldwide scam and a swindle.

Enacting this legislation will cost New Zealanders dear—that is the point of it—and it will drive up the cost of basic goods and services for New Zealanders, probably by at least $500 or $600 a year. It will put businesses in New Zealand out of business, and it will put farmers off their farms, and it will do all that for no impact on world weather, for no environmental gain, and for no conceivable advantage to New Zealand or to the world. Yes, it is bad that we are rushing this legislation through in the dying days of a teetering regime, propped up by a Minister of Foreign Affairs who is under investigation for serious and complex fraud. That is bad, but it is the impact that this legislation and this policy will have on New Zealanders that is so truly shocking.

All we have in this is a computer model. That is notoriously difficult, because the answers are written in the assumptions. Let me give members just one example. The problem for the first two reports of the Intergovernmental Panel on Climate Change was what was called the medieval warming period, whereby a thousand years ago the Earth was warmer than it is now. Then, magically, an obscure physicist in the US came up with a new bit of analysis—the “hockey stick” model—that showed world temperature to be flat and then rising dramatically as the world became industrialised. The Intergovernmental Panel on Climate Change grabbed this, put it on the front of its document, and repeated it five times.

Researchers all around the world were puzzled by this, because it did not fit any of their data. Eventually they got hold of that computer model and they discovered that any numbers fed into that model would produce the “hockey stick”. We could take the Wellington telephone directory, feed it into the model that the Intergovernmental Panel on Climate Change used in 2001, and we would get the “hockey stick”, which saw the world and policy makers running scared, and which Al Gore based his movie on. The science was rubbish, because a computer model is not science. Science is about theories, hypotheses, and the testing of those against the facts. That is not what has happened in the basic science here.

That is bad enough, but what is worse is the policy rationale underpinning this legislation. The Minister would come before the Finance and Expenditure Committee and talk about a “cap and trade”, but when asked, he would say: “Yes, there is no cap.” We are creating a market in hot air, without any quantified amount.

The CHAIRPERSON (Hon Marian Hobbs): Before I call the next speaker, I just say to members that we have had four speeches and we really have not been talking about the bill. This is the Committee stage. It is not a discussion on climate change per se. It is about Part 1 of the bill.

GORDON COPELAND (Independent) : This bill is called the Climate Change (Emissions Trading and Renewable Preference) Bill. I will not talk about the renewable preference bit, but I will certainly talk about climate change and the emissions trading parts of this bill. Concerning climate change itself, I can say that one thing is now clear: it has always been with us. In Roman times wine was grown in the north of England, and there is plenty of historical evidence to support that conclusion.

There is also significant evidence of what causes climate change. I went to a seminar in the United States in 2006, where I talked to some leading climate change scientists and also to some scientists from the National Aeronautics and Space Administration, who perhaps do not come into that category but nevertheless are some of the best brains in the world. They were of the view that the main driver of climate change is actually solar. Therefore, it is not man-made. If it were man-made, then it would be very difficult to explain—as Rodney Hide alluded to—the medieval warming period and the period in Roman times that I referred to.

Unlike Rodney Hide, I am not a climate change scientist. Therefore, my approach to this issue, as it would be with many others in this Committee, is to get the very best scientific explanation that we can from a number of sources that an increase in global warming is or is not due to increasing levels of emissions. Whether those emissions are carbon-related is, as Rodney Hide has said, only a hypothesis. It is not fact. It has now been discovered that an increase in carbon levels over thousands of years follows a warming in the climate. [Interruption] Yes, Madam Chairperson, I am talking about Part 1. Part 1 is so long and complex that virtually everything I am saying is referred to in it somewhere. I have checked that out, so I am sticking to Part 1.

The CHAIRPERSON (Hon Marian Hobbs): Could the member refer to the clauses, please.

GORDON COPELAND: There are hundreds of them. It would take me 5 minutes to list them. I would just ask for a little bit of leniency, given the complexity of this whole matter. There are definitions and all kinds of things in there.

The conventional wisdom in recent years has been that global warming follows increasing levels of carbon. If that is the case, then we would also expect Mars, for example, not to have had any change at all in its climate over many years because there is no carbon up there to emit. But, in fact, Mars is warming, as is Earth. Therefore, there is a link back to the sun.

This bill raises some very serious issues for New Zealand. If it is fundamentally flawed, then we are indeed imposing on our fellow citizens enormous additional costs, with no clear evidence at all, in my view, that it will make one iota of difference to the warming of the climate we are seeing at the moment. That really is a good reason for us to proceed with a great deal of caution. Personally, I find it difficult to separate the scientific facts from the politics in this matter. When New Zealand initially signed the Kyoto Protocol—which led to this bill in the first place—we thought we were on a $500 million windfall, and that $500 million would be paid across to New Zealand. In fact, we found out later that that was wrong, and now we are in hock to the tune of about $1 billion, potentially. That figure is growing every day as the price of carbon goes up. It seems to me that it is that reality that has driven this bill, rather than the science.

From the scientific advice I have received I think there is a great deal more to be known about this subject before we rush through legislation that we all might live to regret. I think this is a time to be very cautious lest we decide in haste to pass this legislation, only to repent at leisure and, in the meantime, impose unnecessary costs on Kiwi businesses and families at the very time when all of us in this country are already struggling with rising cost levels. Why on earth, in that situation, would we impose extra costs based on dubious outcomes in the future? I hope we are not just chasing the wind and wasting our time and our money—

The CHAIRPERSON (Hon Marian Hobbs): Again I make a plea: this is the Committee stage; it is not the first reading, the second reading, or the third reading. We are dealing with the clauses in Part 1.

Hon DAVID CARTER (National) : I will be speaking specifically to new sections 177A and 177B in “Subpart 4—Agriculture”, of new Part 5, inserted by clause 43 in Part 1. But before I speak specifically to them, I want to make some general comments. This is the most far-reaching piece of legislation we have seen in the House since the reforms of the 1980s, and I think it is totally irresponsible for any members of this Parliament to go through the Ayes lobby and vote for this legislation unless they can put their hands on their hearts and say they actually understand the implications of it.

I sat through most of the process at the Finance and Expenditure Committee, and I have to say that, even as we deliberated, the officials were telling the members of the committee more and more about the detail of how this legislation will ultimately work. What we are seeing today are not the thousand amendments that were presented by the officials at the select committee but an additional 750 amendments that have been put on the Table in the last day or so. We are seeing legislation that no member could say he or she completely understands. If we get it wrong, we put the whole of New Zealand agriculture at risk.

I am talking quite specifically about a relatively small section of Subpart 4, and it has to do with the effect of this legislation on the New Zealand agricultural industry. I do not fully understand the implications, and I defy anybody in the Chamber, including the Minister in the chair, David Parker, to explain it in enough detail for us to understand it. If we get it wrong, we will simply move agricultural production from New Zealand to somewhere offshore. Charles Chauvel laughed about this at the select committee, and he continues to laugh about it today. But I say to that member that the future of New Zealand agriculture is something that certainly worries me.

R Doug Woolerton: No; he’s laughing at you.

Hon DAVID CARTER: He is not laughing at me. If he thinks he is laughing at me, then I am certainly not offended. But if the member gets it wrong, those who will be offended are those who are involved in New Zealand agriculture.

New Zealand farmers are not arguing in the main that they should be exempt. What they are asking for is an emissions trading scheme that is in synchrony with other overseas producers, particularly Australia. They are asking for a scheme that does not simply move production from New Zealand to somewhere else in the world that does not impose the same sorts of impediments and costs. If we get it wrong, then what will happen is that we will simply move production from New Zealand to other countries.

Some tremendously good work has been done by Professor Caroline Saunders, amongst others, at Lincoln University, who categorically proves to me that the systems of production in New Zealand are actually more carbon efficient that most of those in other parts of the world. So if David Parker, as the Minister, and other members of the Labour Government get this wrong, we will simply have moved production out of New Zealand to a country like Uruguay. We will actually do nothing positive for global warming. In fact, we risk doing exactly the opposite.

So I say to the Committee today that this is a very serious issue. It is one that should not have been ignored through the select committee process. It is one that should have been answered to the satisfaction of the members of Parliament who sat on that select committee. In many cases the officials, when we questioned them, were unsure of how this particular section would work. There was huge debate in the committee about the point of obligation. Would it be with the individual farmer? Would it be at the processor level? No one was able to accurately tell me as a member of the select committee what the ultimate financial implications for the farmers of New Zealand would be. We got a range of figures, but suffice it to say that, for the debate at this stage, those figures were scary to the financial viability of particularly our sheep and beef sector. I think the Minister should rise and tell us how much this will cost the New Zealand farmer.

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : I rise to deal with some of the issues raised so far that are general rather than matters particular to any clause. The National Party members Nick Smith and Bill English made reference to the length of the Supplementary Order Papers. The bill as reported back, including the commentary, is 258 pages long. The officials have had a couple of months to polish the bill during the period when negotiations have been afoot with other parties. A track-changes version of the bill is available to members. This goes through the technical amendments made to the bill in Supplementary Order Papers 232 and 238, which comprise 29 and 35 pages respectively. All of those changes are technical. It is not intended that there be any significant policy changes in these Supplementary Order Papers. The changes proposed attempt to clarify and give effect to the changes adopted by the Finance and Expenditure Committee. As I said, for the assistance of members, those are set out in a track-changes version of the bill.

To give an example of the sorts of amendments we are talking about, I refer to Supplementary Order Paper 232. Members will see under the amendments to clause 4, for example, that subsection (4) is amended to omit the word “Parts”—plural—and substitute the word “Part”. A lot of the changes are purely grammatical. In terms of the other Supplementary Order Papers, there is a short two-page one that relates to the GST treatment of emission units. The most significant of the Supplementary Order Papers records the changes to the policies agreed to as a consequence of our agreements with the Greens and New Zealand First. Those have been traversed in terms of principle in the announcements made last week, and they are set out in that Supplementary Order Paper.

The objections of Mr Hide and Mr Copeland are not to do with the emissions trading scheme so much as they are to do with the Kyoto Protocol. They do not accept that climate change is happening. Therefore, they see no need for a response to it. The Government disagrees with that position, as does the National Party, the Greens, and New Zealand First. Every party apart from ACT and Gordon Copeland agrees that climate change is real and requires a response. The purpose of the emissions trading scheme is to create the appropriate economic incentive to reduce emissions rather than increase them.

I refer to the point made by David Carter relating to agriculture. He said that the agriculture sector says that it should not be exempt but that it wants more exemption than is at present provided for in the bill. The agriculture sector is given free allocation for 90 percent of its 2005 agricultural emissions from the time it comes into the scheme, which is not until 1 January 2013. There is no credible evidence that farming will become unprofitable. As a consequence, there is no credible evidence that farm output will reduce. Indeed, I think New Zealand farmers will once again be ahead of the field when it comes to emissions-reducing technologies, and these technologies will improve the competitive efficiency of their industry as against that of their competitors overseas.

JEANETTE FITZSIMONS (Co-Leader—Green) : Anybody listening to David Carter would never guess for a moment that the agricultural sector, which produces 50 percent of New Zealand’s emissions, was being 100 percent protected for a whole 5 years, with its emissions being paid for entirely by the New Zealand taxpayer. The second thing that anyone listening to David Carter would never guess is that when the agricultural sector comes into the scheme in 2013, it is to be awarded free credits equal to 90 percent of its emissions in 2005. Furthermore, that free allocation does not even begin to reduce until 2019. That shows extremely generous treatment towards the agricultural sector. The only thing the National Party could do in its proposed emissions trading scheme to treat the agricultural sector more generously would be to take it out of the scheme altogether, and we suspect that that is what it will want to do.

I will respond to what the Hon Nick Smith said in his speech about the difficulty of figuring out what these huge amendments, given at short notice, actually mean. I am keen to help him with that problem by going through Supplementary Order Paper 239. This Supplementary Order Paper records the effects of the policy agreement that the Greens have reached with the Government, and it enables us to support this bill.

The first provision on Supplementary Order Paper 239 that I draw members’ attention to is new section 18CB, which responds to submissions by many, many submitters that we should not include Russian hot air in the New Zealand registry—in other words, units issued to Russia under the Kyoto Protocol—because Russia’s economy collapsed after 1990 and therefore this does not represent any real effort to reduce emissions. We were very glad to find out during negotiations that bilaterals are going on with Eastern European countries whereby those countries are agreeing that they will be greened when they put their units on the market. In other words, the money spent on them will be invested in carbon reduction programmes. So new section 18CB says that regulations will be drawn up to the effect that Russian hot air and Eastern European assigned amount units—in fact, assigned amount units generally—will not be accepted into the New Zealand register until they meet those conditions of greening. We are very glad to have achieved that. We think that improves the environmental integrity of the scheme.

The second provision I draw members’ attention to is new section 69A, “Establishment of Innovation Fund”. I have been on record about this fund a number of times, and people who were on the Finance and Expenditure Committee with me will have become sick of me harping on about it. As introduced, the bill locked New Zealand into old technologies and made it impossible for the new, exciting, and innovative carbon-reducing technologies to be established in New Zealand. Those technologies would get no credits and they would be competing with companies that were 90 percent grandparented, even though they were much less efficient. So the Government has agreed to my suggestion of establishing a contestable innovation fund equal to 1 percent of the total credits issued for free, within that cap, not on top of it—150,000 credits a year, to be precise. People can bid for those credits if they want to set up a new enterprise in New Zealand or expand an existing enterprise in a way that significantly reduces carbon emissions for a particular industry. I hope that means New Zealand will be able to position itself in the rest of the world as a friendly place for new, innovative technologies, and I hope that will lead us in the direction of an economic transformation towards a low-carbon economy, which is what we need to have.

I point to new section 74—

Hon Dr Nick Smith: What about 69B—

JEANETTE FITZSIMONS: I say to Nick Smith that that is all part of the same thing.

Hon Dr Nick Smith: That’s the fishing section.

JEANETTE FITZSIMONS: I understand that the fishing section was the agreement between New Zealand First and the Government. That was not our proposal, so I will leave that to New Zealand First to discuss. New section 74 simply makes the point that an industry is not necessarily either wholly or not at all trade exposed. An industry may be trade exposed for some of the products it sells and not for others. In that situation it is not exactly fair that the industry should get 90 percent of all of its emissions for free. Instead there ought to be a graduated scale, and new section 74 makes it clear that that must be considered at the time of the development of the allocation plans.

New section 180, “Establishment of Household Fund”, is, as the Minister described in the House last week, the largest energy efficiency programme New Zealand has ever seen, and the Greens are very proud of that. We know that the household sector uses about one-third of New Zealand’s electricity, we know that much of it is used very wastefully, and we know that householders do not always have the information as to how they could reduce their bills. Most of all, we know that when new technology is needed, householders do not have the capital to make it possible for them to reduce their bills, so they are trapped in this cycle of low incomes, high energy use, cold and damp houses, and poor health.

This fund makes it possible to build on the small programmes that the Energy Efficiency and Conservation Authority has been running for some time to insulate, retrofit, and upgrade homes, to provide clean heating devices, and to extend those programmes up through middle-income people, with various rates of subsidy. The fund will be overseen by the authority, which will develop the criteria for ministerial approval. My hope is that particular urgency will be given to homes where people have health problems that are exacerbated by cold and by dampness, that there will be a higher level of subsidy for low-income homes than for high-incomes homes, and that there will be something for everyone.

New section 181, “Gazetting of targets”, inserts in the legislation a requirement for targets. Another member noted earlier that this is not a “cap and trade” scheme because there is no cap—unlike in Australia, which plans to have a cap. That is a matter that has concerned the Greens from the beginning. It simply means that we plan to continue growing our emissions indefinitely, but to buy offsets from the rest of the world. Although we were not able to get a cap, we were able to get targets for the reduction of emissions within New Zealand into the bill. The bill requires the Minister to develop targets and to gazette them, and they are reviewed at the 5-yearly reviews under new section 147. Those targets will initially be the ones that have already been announced in the Energy Efficiency and Conservation Strategy, and we hope they will be strengthened over time.

TIM GROSER (National) : There is an old phrase in negotiations that says: “If you can’t do the deal right, don’t do it tonight.”, and there is a lot of wisdom contained in that phrase. But we are being asked to do this deal now, and I think that people have to understand exactly why we are being asked to do the deal now when it is as plain as a pikestaff that this is not the right time.

You asked, Madam Chair, for people to stick to the purpose of the bill.

The CHAIRPERSON (Hon Marian Hobbs): To the actual clauses.

TIM GROSER: I think it is very important in this context that people understand what the purpose of this bill—in the current political context—is. The purpose of ramming this bill through during what may prove to be the last remaining days of the Clark-Peters Government is overtly political. It is overtly political because it fits an agenda that became quite clear in the Budget speech made by the Prime Minister about two Budgets ago, when she said, I think, the word “sustainability” 26 times and earned herself the title of “Madam Sustainability” in certain quarters. It is perfectly clear that New Zealanders will be expected to decide this election in part because of a phoney debate about which of the two major political parties is or is not prepared for New Zealand to make a serious contribution to the global process of moving towards a decarbonised world economy—a process that will take decades.

The reason why this bill is being rammed through has everything to do with this phase in the political process. If we look at this in the context of where we are on international trade, what we have seen is a very, very successful attempt, frankly, by the two major parties to move that section of New Zealand’s external economic interests into a true bipartisan policy position. I believe that that has served New Zealand’s interests extremely well, by taking it out of the realm of partisan debate. That is exactly what should happen with this issue, because, as sure as eggs, this process of the world coming to terms with the need to move towards a decarbonised economy will outlive this next electoral cycle, the cycle after that, and, no doubt, the cycle after that.

Nobody holds power in a democracy forever, and it is absolutely of central importance that we move towards this in a measured way. But the National Party, having written to the Government in December 2005, proposing exactly that and getting absolutely no response, while still ready to work in a constructive way, has been denied that opportunity at every step along the way. It is important that New Zealanders understand why. This Government had no intention of pursuing this issue on a bipartisan policy position. Quite the contrary; it wanted to make it a point of political separation. If that is not obvious today, it will become stunningly obvious as the election campaign unravels in the next few weeks. There are two separate issues, which have been conflated in this negotiation in a way that, I think, can only be described as grossly dishonest and politically and intellectually polluted.

The first issue is the underlying policy problem. Is there a serious issue of anthropogenic greenhouse gases and should responsible Governments like our own develop a policy response to that? That is issue No. 1. Actually, this debate obscures the underlying reality—that both the major political parties answer that question in the same way. My own favourite way of answering that is to plagiarise Arnold Schwarzenegger's response. He said: “If my son is sick and I have nine doctors saying: ‘Take your son to the hospital and get something done.’, and one doctor saying: ‘No, there’s no problem. This will fix itself; this is a natural phenomenon.’, what do I do? I take my son to the hospital.” On this central issue there is actually a consensus between the two major parties. The second, quite separate, question is this. What, in that event, is the right policy response? The policy response that is required is not this one.

R DOUG WOOLERTON (NZ First) : I will speak to the purpose of the bill, but before I get on to that I want to say, following on from Mr Groser’s speech, that there is a large proportion of consensus on this bill. In fact, Mr Peter Brown has asked me to mention that he was slow in reaching a decision on this bill because he had huge concerns, but the honourable Minister was good enough to give him time, and he has asked me to say that he appreciates that.

Mr Brown has asked me to say to this Chamber that it is a fact that the National Party has said publicly that it will institute an emissions trading scheme within the first 9 months if it comes to power. It has stated, quite clearly, that that scheme would contain 80 percent of what is in this emissions trading scheme, and Mr Brown believes—and we agree—that if that is the case, then he might as well engage in this one and support this bill, and that is what he is doing. He has not done that lightly, because he has concerns, and some of those concerns are outstanding. However, New Zealand First is supporting the bill.

I have to say that, in spite of the protestations to the contrary, National has continually obstructed the progress of this bill at the Finance and Expenditure Committee, and that is well known to anybody who was on the committee. Indeed, I am sure that the chairman, who ably chaired the committee, will endorse that comment. The National Party took its time, to say the least.

This bill is to enable New Zealand to meet its obligations, but those obligations are not of the future, not something to be entered into at some stage in the future—and it concerns me that that thought is being put out there by the National Opposition. The bill gives effect to New Zealand paying its way in a scheme that we have already signed up to—and both the big political parties have done that, so both of them have a consensus on that issue. This bill enables us to go through that payment process in a market-driven way.

As my colleagues in the Green Party would rightly say—and I am sure the Minister would agree with me—the ultimate conclusion for this bill is not to have to buy offsets and not to have to pay for increased emissions; it is to reduce emissions and to change behaviour in this country so that we can meet those obligations worldwide and, in fact, lead the charge, because there is money to be made here.

But, more important, I urge my colleague David Carter—the chairman of the Primary Production Committee—to encourage farmers to see the efficiencies inherent in this bill. I was a farmer, he is a farmer, and we know what farmers do when it comes to measuring fertiliser and things like that. It is rough and ready at best. Fertiliser is becoming an increasingly expensive commodity, so there will be efficiency in the use of fertiliser on the farms henceforth. We know there is no silver bullet as far as livestock emissions are concerned, but also we know that the scientists are working on this problem, and, believe it or not, some breeds of cow emit less gas than others. So it makes sense to breed from the ones that do not emit as much.

CHRIS TREMAIN (National—Napier) : I rise to speak to Part 1 of the Climate Change (Emissions Trading and Renewable Preference) Bill, and specifically to the purpose clause. I will stay pretty close to that part of the bill. The purpose of the legislation, as stated in clause 5(1), is to “enable New Zealand to meet its international obligations under the Convention and the Protocol,”—being the Kyoto Protocol. The fact that this is the purpose of the bill is interesting, particularly given the context within which the Prime Minister has sold her agenda of sustainability, which she has done with much rhetoric and much hyperbole over recent years.

As we debate the purpose clause, it is pretty important to highlight this Government’s record on sustainability over the last 9 years it has been in office, as it has come towards delivering this purpose clause. I want to address three particular areas of the sustainability agenda, and the Government’s record on those. Firstly, I will talk about the Government’s record on greenhouse gas emissions; secondly, I will talk about its record on forestry; and, thirdly, I will talk about its record on renewable energy. These are key issues in this debate, and one would have thought that over the last 9 years we would see advances made towards the purpose of implementing this bill. But, quite frankly, we have not.

I will start with greenhouse gas emissions. Labour came into office in 1999 criticising the Kyoto target as being too modest, and saying that a 20 percent reduction in emissions was required by 2005. Helen Clark upped the ante still further last year by saying that New Zealand would be the first country in the world to be carbon neutral. The huge credibility problem she has is Labour’s record over the past 8 years in this regard. Emissions have ballooned like there is no tomorrow, and New Zealand does not now have a hope in hell of reaching its Kyoto obligations within the set time frame. Labour’s record in reaching towards this purpose clause has been simply terrible. Official United Nations figures were published in November of last year, and they showed an increase in emissions in this country from 69 million tonnes in 1999 to 77 million tonnes in 2005.

If this Government, with its rhetoric, were serious about addressing this issue, one would have thought we would see a reduction in emissions through clear policies in this area. But we have not. We have seen significant increases over that 9-year period, and a complete failure by the Labour-led Government in this area. We have seen a 12 percent increase, compared with Labour’s promise of a 20 percent reduction. I will repeat that. Labour set out to have a 20 percent reduction in emissions by 2005, but we have had a 12 percent increase. That is hard to believe, but it is a fact. That compares internationally with an average increase across the OECD over the same years of just 3 percent—an increase of 8 percent in Australia, 5 percent in the US, and 2 percent in Japan. Here we are, consistently criticising the United States of America for being an economic powerhouse, yet its greenhouse gas emissions have gone up by only 5 percent. Clearly, that nation has a much better policy platform and has achieved better emissions reductions over the last 9 years than this Labour-led Government has. Growth rates also compare poorly with the record of the 1990s, when annual growth was half the rate that it is today.

The part that will hurt most is the degree to which New Zealand will fail to hit its Kyoto target. In 2002 the Government told New Zealanders that we stood to make half a billion dollars from ratifying the Kyoto Protocol—that we were going to make money out of this exercise. The Labour-led Government rubbished those who dared to question those numbers, and it accused as being irresponsible those who suggested New Zealanders might have to pay. Thank you, Madam Chairperson.

CRAIG FOSS (National—Tukituki) : I rise to speak on Part 1, and I acknowledge the excellent speeches and speakers before me. In a minute I would like to speak on clause 7, which covers the Minister’s discretion as to the various directions he can give the registrar. But before that I think it would be healthy for the Committee to note that I was at an environmental forum the other day where a Labour member and a Green candidate were commenting about this particular bill. I was most interested to hear the Green candidate say that the Greens did not agree with the bill, that they did not think it was very good, and that they did not think it went far enough, but that they would vote for it anyway as they have some further changes up their sleeves. I think it would be interesting to see what other changes are up their sleeves, but perhaps that candidate was not quite as informed as his colleagues in the Chamber.

As my colleagues noted earlier, we had 1,000 amendments at the Finance and Expenditure Committee after the first rewrite of the bill, and we have 780-odd in front of us today. I sat on the Finance and Expenditure Committee during its consideration of some of the submissions and during some of the discussion, though not all. As can be seen in the commentary on the bill, I was replaced on the committee by David Carter for a lot of the time.

One of the things I am really interested in, and have talked about, is fungibility. National has released a plan, and it is all about not moving faster than the rest of the world, particularly our trading partners. Clause 7 and the following clauses talk about the Minister’s discretion in and around various units, the transfer of units, the setting up of the registry, etc. As I have often said, New Zealand could create the most gold-plated, best thing in the world around emissions trading, but unless the rest of the world recognises the items, the units, the structure, the measurement, and the fungibility of what we are creating here, and unless the rest of the world thinks that the registry we have set up is acceptable, then what is created here in New Zealand is almost redundant.

As previous speakers have said, this is based on the Kyoto Protocol and the need to measure—which is open to question, as well—our emissions. But when we are going in front of the rest of the world, unless the rest of the world has a system that is almost identical to ours, and at least recognises our system, then what we are talking about here is redundant. The Minister can say whatever he likes about how wonderful his system is, but unless it can be banked against internationally, unless it can be borrowed against internationally, and unless it can be securitised internationally from offshore players, then what we are arguing about here is redundant—unless it is recognised from outside of New Zealand. And how will outside players recognise this in New Zealand? It will be by the measurement of the units, what the units are, and what is on the registry.

I will give an example. Let us say that this scheme goes in place as is, and a few years down the track a farmer wants to hedge himself. He could be a farmer in Europe or a farmer in New Zealand, and he wants to hedge himself. A bank in Australia has given him a loan for a dairy farm in New Zealand, and he is trying to hedge himself against some units somewhere in Europe. Well, unless that registry deals with the proper units that are recognised and are trading overseas, regardless of what New Zealand thinks of the integrity of its own units and measurements, it will not happen. He will have an asset and a liability, regardless of how much is written off over what year. Unless they can be recognised internationally by those three players I mentioned in that example, then it is redundant.

We are about to spend time on this bill under urgency, and we are talking about a 250-odd page bill, as the Minister said earlier. I cannot for the life of me understand why it is not being considered longer, further, deeper, and wider. It is the most lateral, far-reaching, horizontal bill that we have seen in this House for a long time. It is the bill with the most vertical impact across our economy that this House has seen for an awfully long time. I do not knock that fact, but what is missing is the consideration and the buy-in from at least three-quarters of this Parliament. By most accounts, I think, the bill is sneaking in with two or three votes. That is not good. It is not constitutional, and it does not make economic sense. If I were sitting somewhere else in the world, looking at what is being rushed through the New Zealand Parliament right here, and wondering how it is going to work, I would think: “New Zealand, you’ve gone nuts.”

The CHAIRPERSON (Hon Marian Hobbs): Just before I call the member, I apologise to the member, Craig Foss—I had to look up in the dictionary to find out what “fungibility” was.

TE URUROA FLAVELL (Māori Party—Waiariki) : Kia ora, Madam Chair. Thank you very much. Just as a warning, I say that I am looking to try to spin out two calls to talk to our Supplementary Order Paper 240, which has been put in my name, in respect of inserting a new clause 2A after clause 2. It says that the Act is to give effect to the Treaty of Waitangi. As the explanatory note says, “An explicit reference to the Treaty of Waitangi is added to the Climate Change (Emissions Trading and Renewable Preference) Bill to ensure that the Emissions Trading Scheme will be implemented and operated in accordance with the rights guaranteed to Maori under the Treaty of Waitangi.” That is a relatively short statement, but in fact its effects are far-reaching.

Nearly 30 Māori entities apparently made submissions on this bill, including rūnanga, trusts, corporations, and representative bodies including the Federation of Māori Authorities. Many of these submitters raised concerns at their hearing before the Finance and Expenditure Committee that this bill, as introduced, conflicts with the principles and provisions of Te Ture Whenua Maori Act 1993 and breaches Te Tiriti o Waitangi. In particular, it breaches article 2 of the Treaty by posing an encumbrance over Māori land that fails to uphold the Crown’s guarantee to protect rangatiratanga. For this reason, Māori submitters have argued that the bill is in effect an alienation of Māori land and Māori rights and authority over their land.

Submitters have also argued that under this bill the Crown has assumed to itself the ownership, allocation, and management of the carbon allocation resource. They have argued that, instead of wholesale ownership and control, the Crown is meant to consult with its Treaty partner to protect the rangatiratanga of Māori, and compensate if it cannot do that. As a remedy, submitters asked the committee to add a Treaty clause to the bill to ensure that the implementation and operation of the emissions trading scheme shall not be inconsistent with the Treaty of Waitangi. This request was obviously ignored, similar to many other requests to honour and uphold the Treaty. But the Māori Party will not ignore the rights of our people to have the guarantee of rangatiratanga upheld, and we submit this amendment to have a Treaty clause added to this bill.

We seek to include the words: “This Act shall be so interpreted and administered as to give effect to the Treaty of Waitangi.” To give effect to the Treaty “creates more positive and substantive obligations on all bodies covered by the Act … to give effect to the Treaty principles, and so carries a higher likelihood that the Courts will be called on to interpret its application in the sector;”. “If identifiable Maori rights and interests protected by the Treaty would be affected by proposed legislation,”—and here is the catch—“ the question may arise whether there should, as a matter of policy, be some specific recognition or protection of those rights and interests by the inclusion of an appropriate provision in the legislation.” In any event, there will be a question of the effect of the proposed legislation on these rights and interests, whether or not such a provision is included.

For examples of the identifiable Māori rights and interests protected by the Treaty that stand to be threatened by this bill, we need only turn to Ngāi Tahu—I broached some of these issues today in question time. The first day of spring, as we know, was fairly significant for one reason. It was on this day—or at least last night—that a late Waitangi Tribunal claim was filed in response to a large iwi concerned about what they called a significant threat to their 1998 Treaty settlement. According to the Kaiwhakahaere of Te Rūnanga o Ngāi Tahu, Mark Solomon, this emissions trading scheme will undermine their settlement and unwind the very purpose of the settlement that they set out to achieve over the lives of many generations of Ngāi Tahu. This condemnation of the Government’s flagship policy came from none other than Te Rūnanga o Ngāi Tahu, as I said, who boldly stood up and told the nation that the legislation before the House right now would “literally wipe tens of millions of dollars off the value of the forestry assets we received as part of our settlement”.

This was an urgent call from Ngāi Tahu because they were concerned that every effort must be made to safeguard the interests of Ngāi Tahu whānui. In effect, their view is that the Crown continues to threaten the integrity of the Ngāi Tahu settlement. So it is an affront on this iwi that the Minister today might provide—from the Government perspective at least—some rebuttal to some of the questions I put to him. Nevertheless, Ngāi Tahu believe that some serious concerns need to be placed in front of the country and obviously followed through by way of submitting a Treaty claim to the Waitangi Tribunal before the closing-off date yesterday.

That would not have been an easy decision for Ngāi Tahu to take. Mark Solomon has put the case that this emissions trading scheme, as I have said, represents a threat to both the integrity and the finality of their settlement, and the very least that the Government should have done would be to listen to their concerns and at least ask why. This is not the first time this sort of concern has come before the Government. Indeed, as I indicated today, one of its own departments alerted it to the threat that this scheme could cost taxpayers hundreds of millions of dollars in payments to iwi. I talked about a Ministry of Agriculture and Forestry report obtained by media last month, which suggested that the scheme could leave the Crown open to substantial claims because the value of land handed to iwi under Treaty of Waitangi settlements could substantially decrease.

So it is appropriate that Ngāi Tahu have some concerns, because the emissions trading scheme basically jeopardises their settlement, and in their view this amounts to another confiscation. Iwi that have already signed up to agreements many years ago will have to carry the burden of the emissions trading scheme into the future. The problem is that when the door is closed on settlements, we are leaving it for that iwi to carry the burden of the fact that with the passing of this bill, they will have no opportunity to revisit the ramifications of such a bill on earlier settlements. That is what we have seen in the settlement process, time and time again: it creates a new grievance.

The Crown mistakenly believes that one issue has been settled and that it can turn its back on iwi. Well, that is not how it works. For us, the concept of settlement is about bringing iwi together with the Crown to work constructively. Ngāi Tahu want to do that with the Crown, and that is absolutely appropriate. But we do understand their concern that with the passing of this bill we are creating another grievance.

It is a view that others hold also. Tangata whenua have continually maintained that the provisions of the bill relating to pre-1990 forested Māori land are contrary to the provisions of the Treaty, and we say that the emissions trading scheme undermines the principles of both Te Tiriti and Te Ture Whenua Maori Act. The preamble—if members did not know—to Te Ture Whenua Maori Act clearly states, in alliance to other principles of the Treaty, provision for, among other things, the “development, and utilisation of that land for the benefit of its owners, their whanau, and their hapu:”. This right is clearly extinguished when a significant cost is imposed on Māori owners to change their land use from forestry, when benefit to owners would be achieved by making such a change. We have also received advice just this morning from Māori who have let us know that when the first cases go to the Māori Land Court, which they will inevitably do when the Ministry for the Environment chief executive tries to have memorials registered on pre-1990 forested Māori land titles, then they will turn to Labour, the Greens, and New Zealand First to say that this is what happens when important legislation is dealt with in such a shonky, backroom way.

NgāiTahu’s concerns for the land and forestry assets are not the only reason the Māori Party opposes this bill—there are others, of course. We accept that any emissions reduction programme will result in changes to land values and will enable the Government, business, and the public to account for environmental costs on business, including forestry. So that is not the reason why we oppose the bill. The primary reasons are that it is not effective in reducing emissions, it is not transparent, and the polluters do not pay—they receive massive subsidies in the form of corporate welfare. The whole point of economic incentives to cut emissions is defeated.

Our Supplementary Order Paper is the best shot at pulling on to the agenda all of the concerns that Māori hold. It is a short statement but, as I said right from the very start, we hope the ramifications of such a Supplementary Order Paper will be far-reaching.

Hon PETER DUNNE (Leader—United Future) : When the Climate Change (Emissions Trading and Renewable Preference) Bill was introduced to the House last December, United Future gave it conditional support because we recognised that it was important for New Zealand to start to develop a comprehensive approach in its response to the problems caused by global climate change issues. But I recall making the point to the House on that day last December that it was important that this bill attain not only political acceptability but public acceptability—it had to be environmentally sustainable, but it also had to be publicly sustainable—and that the measure of that sustainability in the public mind would come with the question of how the impact on households was going to be addressed.

At the time, there was a lot of to-do from the Government about how an adequate system of compensation would be put in place. Originally, it was going to be for everybody, then it seemed to be softened to “vulnerable households”, that awful phrase, then it came down to the elderly, and then to various other groups. Now we know that $112.50 is a one-off payment in 2010—about $2.15 a week—to cover the cost of perceived electricity increases. That is not enough. It will not get the support of the New Zealand public that this measure deserves. All that means is that we are going to be back here next year, and the year after, amending these provisions to try to make what is now looking like a very hotchpotch emissions trading regime work effectively. That is not good enough, and that is why we have decided not to support the passage of the Climate Change (Emissions Trading and Renewable Preference) Bill at this time.

There is no need to pass this bill in the dying days of this Parliament simply to satisfy the Government’s political agenda. This is actually an agenda that is bigger than any party in this Parliament. This is an agenda that addresses the future of this country. I cannot, for the life of me, see what huge environmental and economic damage we would do to our country, let alone to the world, if we were to defer the passage of this bill for 6 months to ensure that these issues of compensation, the issues my colleague from the Māori Party referred to a moment or two ago, and some of the other issues that have come up in this debate already, could be addressed in a way that was not just a quick fix for today but a sustainable position for the future. [Interruption].

The CHAIRPERSON (Hon Marian Hobbs): It is all right. The member should keep going. Some people are just getting enthusiastic and leaping to their feet.

Hon PETER DUNNE: Yes, I am obviously generating a measure of excitement from those who agree with me.

Hon David Carter: And agreement.

Hon PETER DUNNE: And agreement, yes, and I appreciate that. Members are welcome to agree with me all the time. But I come back to what I was saying—that this is a measure that has been described as one of the most important to come before Parliament in years. Indeed it is, and that is why it deserves far greater attention than it has received to date.

The large number of submitters to the bill, who all made constructive suggestions, and the many groups that are out there lobbying on various aspects of this bill, deserve better than to see it rushed through at this stage simply because an election is looming. The funny thing is that there is broad agreement amongst everybody here, with the possible exception of ACT, that there is an issue that needs to be resolved. Yet we are determined to polarise this Parliament, because, in trying to come to an agreement, it is a case of “my agreement has to be bigger than your agreement.” Frankly, that is silly. It is no way to make sustainable policy in terms of an issue that we all acknowledge goes beyond us and our generation.

I implore the House to consider this measure in a more calm and rational manner. We have the prospect of our major trading partner, Australia, implementing an emissions trading regime in a slightly slower time frame, but one that is not inconsistent with the time frame of this bill, and would not be inconsistent with where we want to go. We talk about a single economic market, and we talk about our trans-Tasman relationship—I cannot, for the life of me, see why we need to be first out of the blocks in terms of getting an emissions trading regime in place, when we are going to have to work with whatever it is the Australians subsequently put in place. Surely, given the close contacts between our Governments and the frequent visits between Ministers, it is possible to work out a scheme that is consistent, to the largest possible extent, and that we can proceed to implement at a similar time. Our economies and our nations are becoming more intertwined; it makes no sense to have this puerile competition maintained simply because we want to score some political advantage. The New Zealand households that are going to benefit by $2.15 a week will simply laugh.

The CHAIRPERSON (Hon Marian Hobbs): Before I call Colin King I again remind members that we are debating Part 1—this is not a general debate—new clause 2A, and the amendments set out on the Supplementary Order Papers.

Hon Dr NICK SMITH (National—Nelson) : I raise a point of order, Madam Chairperson. Can you just confirm for me, because this Climate Change (Emissions Trading and Renewable Preference) Bill is in quite an unusual form, in that a whole series of parts are slipped into it, that as I interpret this debate on Part 1, we are in fact arguing over all of the provisions that are in Part 1: Subpart 4—

The CHAIRPERSON (Hon Marian Hobbs): And Subpart 5.

Hon Dr NICK SMITH: —Subpart 3, and Subpart 2, which take us through all of the provisions dealing with the emissions trading scheme? We are also dealing with all of the 785 amendments that have been tabled by the Minister, such that this part is dealing with all of the features of introducing an emissions trading scheme.

The CHAIRPERSON (Hon Marian Hobbs): Thank you very much, Dr Smith; that is exactly my point. When there are general debates, therefore, about whether climate change exists, that really is not dealing with the detail listed in this very large part, with the amendments that are included. So I am not asking for general speeches; I am very careful about that. Some very good speeches have been made, and I can detail them through, where members have made references to different provisions—to clause 7, to agriculture provisions, and to the different Supplementary Order Papers. But when members tend to go on to a general debate as to why this bill is actually being put before the Committee at this time, I tell them that that really is a debate for the second and third readings.

COLIN KING (National—Kaikoura) : In the time that I have allotted to me I would like to consider developing, in a more specific sense, issues around the comments made by Te Ururoa Flavell of the Māori Party. In doing so, I will consider the purpose clause and the interpretation clause. When we stop and think about it, we can see that that early part of the Climate Change (Emissions Trading and Renewable Preference) Bill talks a lot about forestry. The interpretation clause, clause 6, concerns the definition of “clear” and what that means—it is related to trees, of course—and goes through the definitions to include clear-felling, harvesting, burning, removing mechanically, spraying with herbicides, and so on.

The point I want to make here is that the problem with this bill is its design. There is a massive design fault with this bill. It denies people the ability to use common sense when making decisions. In regard to the comments made by Te Ururoa Flavell, the member from the Māori Party, we can talk about the Balmoral Forest in a very regional sense. It is part of the Ngāi Tahu settlement. If members travel on the highway to the Lewis Pass, they will go through that forest. It is part of the Ngāi Tahu settlement, and Ngāi Tahu are very keen that what their neighbours are doing is also developed there. Just next door is the amazing Āmuri Basin, which has been turned from a dustbowl, as a result of the use and management of water from the Hurunui and Waiau rivers, into one of the engine rooms of the region’s economy with its dairying. Right next door to the Balmoral Forest there is dairy country that is highly productive when water is put on it. However, as I understand it, the problem with the design of this climate change bill is that the owners will be prohibited from doing that because of the punitive charge of $13,000 per hectare that would be placed upon them if they were to clear-fell that land and set it up for dairying.

I would like the Minister to explain to me the common sense behind that logic—that design of this bill—whereby those trees could be planted anywhere else by Ngāi Tahu and meet the needs and scope of this bill’s intention. It does not make sense that there should be such an opportunity as this one, yet as a nation we are walking away from it and saying: “No, if you clear-fell that area, we want $13,000 a hectare.”—if that is what the price is; it could be $20,000. I do not know, so the Minister in the chair, the Hon David Parker, might want to explain how this figure is arrived at, when Ngāi Tahu’s neighbours just over the fence are currently conducting agriculture that is highly productive. When we stop and think about it, we know that this could be pivotal to having a major stakeholder in an irrigation programme emanating within the region that could also irrigate another 30,000 hectares. So just because there is a rule in place, which I see as a design fault of this bill under the interpretation of forestry and how it is meant to be managed, we are limiting ourselves by something potentially in the region of $400 million a year. So I put it to members that I would like to see the Minister on his feet and explaining the common-sense, global logic of denying Ngāi Tahu the right to do that, because that is the very same point that Mark Solomon was making in the question raised by Te Ururoa Flavell in the House today.

I believe that when we go through this bill, with its complexities around forestry and many, many other things, we are not entirely addressing things in the best-practice manner. In actual fact, in many ways New Zealand is conducting itself by means that are far in excess of best practice compared with other nations. Unfortunately, though, we have locked ourselves into a bill that has a dramatic and clear design fault. Now, 780-odd amendments have been thrown at us, and there will be a 2-year delay before the bill is introduced when, clearly, we are looking at a dynamic economy. To illustrate this further, I tell members that locally in the top of the South Island a wine industry in 1999 was using 2 megawatts of power; today it is using 14 megawatts. This bill has a design fault.

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : I would just contrast the position taken by Mr Flavell, who criticised the emissions trading scheme as not requiring polluters to pay enough, and the position taken by Mr King, who said people should have more flexibility to increase their emissions without paying. The reality is that there is a difficult balance to be struck. We think we have got it right. Polluters from all sectors of the economy, once they come in, pay for increases in their emissions and are rewarded for decreases in their emissions. That is the basic effect of the scheme.

In terms of the issue of whether one should allow offset planting, the bill allows offset planting under the rules of this scheme if and when it is allowed under the international agreement. Until such time as it is allowed under the international agreement, the effect of what the National Party proposes would be that the landowner would go forward by, say, $3,000 or $4,000 a hectare, and the taxpayer would be the poorer by about $13,000 per hectare. As a country, we would be the poorer to the tune of $10,000 per hectare overall, and that would be a cost that taxpayers pay through their taxes—and that would not be wise.

I will also deal with Peter Dunne’s interventions. He said that not enough was being done to provide compensation for households, and therefore he would not support the bill. He, of course, made that decision before he knew how much compensation for households there would be. I find it somewhat ironic that he should say we should have some great love-in here, where we all get together and reach agreement, when he would not participate in the negotiation of that compensation package. He did make reference to the $180 million part of the compensation package that relates to adjustments to benefits, superannuation, and Working for Families, and also a universal rebate on everyone’s electricity account—$180 million. He did not make as much reference to the $1 billion energy efficiency fund, which is important to all of the parties that are supporting this legislation—the Greens, New Zealand First, the Progressives, and Labour. That $1 billion energy efficiency fund will help people to moderate their energy use, which will decrease greenhouse gas emissions. People will burn less coal and gas in their own homes, and they will also use less electricity, which would have had to be generated from thermal energy sources. That energy efficiency fund is very important, and it will help people meet their energy needs.

Another point that I would make is that a couple of people have said that this legislation has somehow been through a shonky process. It has been through a very thorough process. The Finance and Expenditure Committee has heard 56 hours of submissions. There have been hundreds of meetings with stakeholders up and down the country. There have been meetings with Māori through hui throughout the country. There have been meetings with the climate change Māori leadership group, and the Māori reference group. There have been meetings with the leadership forum composed of business and non-governmental organisation leaders. There have been technical advisory groups. This scheme has been worked through in great detail, and I am confident that the process has been robust.

SHANE ARDERN (National—Taranaki-King Country) : In following on from a Minister who I know has a legal background, and who was also involved in one of the biggest corporate farms in New Zealand, I say that he does himself and this Parliament no good whatsoever by making comments like that. This has been a shonky process and there is no doubt about it. How the Minister can say that 785 amendments by way of Supplementary Order Paper do not constitute a mess I do not know, given the number of submissions he talked about and the fact that the legislation was the subject of a select committee process. The Minister cannot stand in this House and say that they are only minor amendments, changing a word from plural to singular. Some of them may be, but one cannot have 785 amendments fitting into that category.

I will speak about the forestry sector, because the forestry sector holds the key to New Zealand’s Kyoto Protocol commitments. The forestry sector is the one that has been the most affected. Before Madam Chair tells me that I should speak to Part 1, I refer members to clause 6 in Part 1, which talks about forestry land and about how we define “forest land”. I put this notion to the House tonight. When I stand in the middle of my dairy farm, where I have personally spent thousands of dollars planting riparian margins, which are the trees described in Part 1, I am asked to believe that they are not carbon sinks, but the trees I planted in one-hectare blocks on the same dairy farm are. The Green Party particularly asks me to believe this. I would just ask a simple scientific question: why? Maybe the Minister can answer that.

I challenge the Greens further on this. When I am standing in the middle of that dairy farm, where I have beautiful green dairy pasture as far as I can see, streams with nitrate levels that are the world’s best in developed dairy areas, and soil conditions that are improving, based on science, and where I have no scientific evidence to demonstrate that the methane emissions from the animals represent 50 percent of the country’s greenhouse gas emissions, I am expected to believe that I am standing at the site of a bigger environmental devastation than I am when I am standing on Queen Street. And I do not buy it. I just simply do not buy it. The science does not back it up; it is not a fact. I would like the Greens to explain why that has become such a major polarising debating point in this legislation.

I also say to the Minister that when I go back to the forestry sector and look at the biggest opportunity we have to address this issue, I see that it is one of land change. It is one whereby one area where trees are currently planted is more suitable for one type of land activity than another—for example, dairy farming or any other type of agricultural activity, or viticulture for that matter. Why is it more devastating to the environment to cut down those trees and plant trees somewhere else? In this bill that activity is penalised.

I will also talk about some of the disincentives to the forestry sector in this legislation. For example, there is the inconsistency of treatment between forests planted after 1990 and those planted before then. I am sure that those who planted forests before 1990 had never heard of the Kyoto Protocol—I accept that—and that those who planted forests afterwards probably had some idea that something would happen. I ask the Minister to explain to me, then, the inconsistency of treatment for those who sell or purchase forests post-2002 that are pre-1990 forests.

I ask why Parliament cannot see the amount of uncertainty and disincentive to investment in the forestry sector that this legislation, and all the work that has gone on before it, has brought about. What has it led to? It has led to deforestation in this country on a scale that we have not seen since the 1950s. Instead of planting more trees, instead of having a growing forest sector, we have a declining forest sector, and we have declining carbon sequestration because of that. It is all a result of the mess that this Government has made.

RODNEY HIDE (Leader—ACT) : Madam Chair—

The CHAIRPERSON (Hon Marian Hobbs): It works.

RODNEY HIDE: It works. I will remember that. You are so lovely to me. [Interruption] Doug Woolerton over there knows the Vela cheques went missing; some of them went missing. I say to Doug Woolerton that they did not get all of them. I want to address clause 5—

The CHAIRPERSON (Hon Marian Hobbs): I am delighted to hear it.

RODNEY HIDE: —which covers the purpose of the Act. It sets out the purpose, and it is missing a couple of purposes, in my humble view.

One purpose that is missing is Helen Clark’s purpose. She knows that she is not going to be Prime Minister after this election, and she is wondering where one goes after being the Prime Minister of New Zealand. We know where Winston Peters is going after having been the Minister of Foreign Affairs. But Helen Clark does not want to be wearing a pinstriped suit with wide stripes and a number on it; she wants to be a big wheel on the world stage. So the purpose of this bill—clause 5—

The CHAIRPERSON (Hon Marian Hobbs): Yes, but the member should not trifle. The debate is on the real purpose of the bill. The member should not imagine a purpose. I could have a debate and make up a whole lot of purposes that are missing from the bill. We are talking about the purpose that is here in the bill.

RODNEY HIDE: This is the real purpose of the bill.

The CHAIRPERSON (Hon Marian Hobbs): I think you are trifling, but you may continue. I am listening very carefully.

RODNEY HIDE: Thank you, Madam Chair. I have always listened to you, because you are so good to me. Is it working? Clause 5(1) needs to have inserted in it—

Hon Mark Gosche: The biggest bludger in the place! A complete bludger!

RODNEY HIDE: He could take a few happy pills with you, Madam Chair—“nice” pills.

Hon Mark Gosche: You should have come to work and read the bill, instead of bludging out there for 2 years off the taxpayer, doing nothing! Wasn’t this member on the select committee?

RODNEY HIDE: I have the feeling that Mark Gosche is not happy. I think he must be—

The CHAIRPERSON (Hon Marian Hobbs): Excuse me. Both of you sit down. Well, one of you is up, but I ask Mark Gosche to sit down. Can I have some order from both of you, on both sides, and can I have some concentration on the bill. We have had some excellent debates on this bill. Please do not make up imaginary clauses to this part.

RODNEY HIDE: I would like to add to clause 5(1) a supplementary subclause (c), and I will speak to that. Clause 5(1)(c) would explain that the purpose of this bill is to allow Helen Clark to look good on the world stage and say that she can become a big wheel in the UN because, when she was the Prime Minister, she led the world in producing the most comprehensive, economically destructive emissions trading scheme ever. That is what my amendment would say in clause 5(1)(c).

Helen Clark now does not care about New Zealand; she cares about what is going to happen to her after the election. She certainly does not care about the economic damage this legislation will do to New Zealand; I covered that in my earlier speech. She does not care about the damage that is done to her Government and to this country’s reputation by clutching Winston Peters, and his Tiberius corporation and the money from the Spencer Trust, to her bosom. Clause 5(1)(c) in my amendment would explain that. Helen Clark is kissing goodbye to New Zealand and saying: “Look at me.” Helen Clark knows that she is toast at the election, and I think it is appalling that we are rushing through this legislation, with 785 amendments, in the dying days of a teetering Labour-led Government, with a Minister of Foreign Affairs with no portfolios—all baubles and no work. The real purpose that we are putting through this bill is for Helen Clark to say to the rest of the world and to her lefty mates: “Look what I did. To hell with New Zealand!”.

I think this is a disgrace.

Hon Dr NICK SMITH (National—Nelson) : The arrogance of the Government in the way in which it is dealing with this legislation speaks volumes about why New Zealand desperately needs a change of Government. To have a bill that will have such profound effects on every nook and cranny of New Zealand and to expect this Parliament, in a few hours, to do it justice really makes today a disgraceful day for this New Zealand Parliament.

Let me go through just a few of the significant issues. Everybody in this Parliament should understand that agriculture is at the core, and is the powerhouse, of the New Zealand economy. To include agriculture in an emissions trading system is a very, very major reform. The most basic question—

R Doug Woolerton: I think you’d take it out.

Hon Dr NICK SMITH: —I say to Doug and to New Zealand First, is to ask whether the point of obligation is going to be the farmer or the processor. I say to Mr Parker that if he wants to get the international accolades for having the first emissions trading system in the world to include agriculture, he needs to answer that most basic question. But the Minister and this Government are passing a hospital pass to the next Government. They are saying they do not know the answer to that question and they are just going to kick it into the future. The aim here is for Helen Clark to get herself some job in the United Nations, while selling the people of New Zealand down the tube by not working out the most basic mechanics of an emissions trading system.

Then we come to the forest sector. If people want to look at any area where this Government has made a complete hash of New Zealand climate change policy, it is forestry. I have an amendment that does the most basic thing. You see, flexible land use has been at the core of New Zealand’s wealth creation for 160 years. We do not know what the economics and the future will be for dairying, cropping, or forestry—all those different land uses. What National wants in this bill is something very simple. If people want to deforest an area of land, should they not be able to plant some other area—perhaps some of that million hectares of highly eroding hill country—to absorb the carbon? There is absolutely no loss for the environment. Whether the tree is growing on this acre or that acre makes absolutely no difference to the climate, yet this bill will lock New Zealand in some sort of a time warp around land use. Members on the Opposition side of the Chamber say: “Not good enough, Labour. Not good enough, Mr Parker.”

Then we take another area, like fishing. Why is it that when it comes to the dairy industry, we say we are going to grandparent 90 percent of it, when it comes to the steel industry, or the aluminium industry, or the cement industry, we are going to grandparent 90 percent of them, but when it comes to fishing—oh no—there are a different set of rules. What logic is there for that? Are we somehow saying that the fishing industry is not an important export industry? Three hundred and twenty jobs in my electorate have just gone down the tube. I was briefed recently by Sealord’s, which told me that the other 900 jobs in the biggest fish processing factory in New Zealand teeter on the balance, yet in this bill we are going to dump another $10 million in costs on that industry.

I wonder whether Labour members have gone down to talk to the Service and Food Workers Union about the extra costs, and what that might do for their members’ jobs as a consequence of this bill. When will any Labour member get to his or her feet and explain what the consequences will be for the many voters who are not National voters but who will be adversely affected by the complex provisions in this bill? I say to members opposite—

Hon Maryan Street: Oh, 2 weeks ago.

Hon Dr NICK SMITH: Maryan Street has said to the fishing industry in Nelson, of the extra $10 million, that she does not give a sod.

Hon DAVID CARTER (National) : I will talk again specifically to clauses 177A onwards of “Subpart 4—Agriculture” of Part 5, inserted by clause 43, and I repeat my call to the Minister in the chair, David Parker, when I took an earlier contribution, asking him to stand and tell this Committee how much this legislation will cost individual farmers. The Minister has taken a couple of calls so far, but he has completely ignored my question, probably because he simply does not know the answer.

I refer the Minister to the New Zealand Farmers Weekly that was published yesterday, 1 September 2008. The headline for this particular article is “ETS bill 99% of farm surplus”. A Gisborne farmer by the name of Neil Henderson says he went on to the carbon calculator and put in his current inputs, and it came up as saying that under this emissions trading scheme his farm surplus would be reduced by 99 percent. In other words, that particular farmer would potentially be wiped out by Mr Parker’s legislation. So I ask the Minister to let us try to find out what the cost would be for that farmer. Let us assume that he is an average sheep and beef farmer for that area, and that he runs 5,000 stock units. On the assumption that the carbon cost is $25 a tonne, the farmer has calculated that that will cost him $125,000 per annum. If those are the costs, I tell Mr Parker, that man cannot survive.

In an earlier contribution Mr Parker argued that farmers should not be exempted from the scheme, and I accept that. He then argued that farmers should pay for their increased emissions, and let us for the moment accept that. But if Neil Henderson has consistently farmed 5,000 stock units for the previous 10 years, and if he expects to farm 5,000 stock units for the next 10 years, I tell Mr Parker that he will not be increasing his emissions. Yet at $30 a tonne the Minister will be landing Neil Henderson with a bill of 150 grand, so I ask Mr Parker to tell me how that man can survive. We can talk a little about fertiliser, and about nitrogen fertiliser particularly, but if that farmer is on the type of hill country I suspect that he is on, he will not be using nitrogen fertilisers, at all. So there are certainly no easy answers for him.

What Neil Henderson is dealing with is the expectation that he will have to pay for his methane emissions, so I ask Mr Parker, before he presents that man with a bill of $150,000 a year, to tell me today what that farmer can do to mitigate his methane emissions. The answer today is that he can do nothing. If there is nothing he can do, but he gets a bill of 150 grand a year, he will not survive financially. So the production that that farmer used to give to the New Zealand economy—the money he used to make for New Zealand—will simply be shifted offshore. Those are the facts around this emissions trading scheme, I tell the Minister, and it is time that he rose and answered those questions for me.

Mr Neil Henderson raises some real concerns towards the end of the article, because he says he has read that by 2020 the cost of carbon will not be $25 a tonne, and it will not be $30 a tonne; he has read that the cost of carbon in 2020 will be $200 a tonne. On that basis, he will not have to pay a hundred grand a year; Mr Parker will be asking him to pay $1 million a year.

So I tell the Minister that it is time he got out of his seat and answered some simple questions for those of us on this side of the Chamber. If he proposes to bring agriculture into the scheme, as he has so dictated in this legislation, he or any other member who supports this bill should rise in Parliament today and simply tell us what the annual financial cost will be to Mr Neil Henderson, who farms in Gisborne.

TIM GROSER (National) : I want to address Subpart 1, “Forestry sector” and Subpart 4, “Agriculture”, in new Part 5, inserted by clause 43, in the context of land use, land use change, and forestry, but before doing so I will make just a couple of other small points.

First of all, I note the importance of Peter Dunne’s contribution that sustainability is a word that has many different facets. But anyone who is familiar with the history of climate change policy, not just in this country but in other countries, knows that political sustainability is the most important facet of all. If the public will not support the policy long term, all the environmental policies will collapse and there will be no progress whatsoever on climate change. I think that is a fundamentally important point.

I will put the second point in the form of a question to the Minister in the chair, the Hon David Parker, and I hope that the premise of my question is correct. It may not be, because of the complexity of the amendments and the speed with which this process has moved. Am I correct in understanding, at least in general terms, that as a result of the price of getting the Green Party on board on this legislation, the Minister has in some way qualified the Government’s ability to purchase what are called, in popular jargon, Russian hot air units? If that is the correct assumption underlying my question, and given that although I did not participate in the select committee process, my understanding is that Treasury advised the select committee formally that without access to the so-called Russian hot air units the price of emissions would be significantly—that is my understanding of the word used—higher. Does the Minister have the numbers in front of him to advise the Committee, and indeed the New Zealand public and those who will have to pay for the costs of this bill, what the long-term implications of this deal with the Greens will mean? This question could be very significant, so I would like the Minister in his next intervention to address it.

The third thing I will point out before getting on to land use, land use change, and forestry, is that I myself listened to the Minister explaining in his rather too calm way that we have got it right, in the face of what my colleague, our spokesperson, said: “How could anyone argue seriously that they have got it right after they have just tabled 743 amendments?”, or whatever the figure was. I mean, it just beggars any belief or any plausibility. But one of the strange aspects of this that has always confused me, but that maybe the Minister can explain, relates to the ban particularly on gas as the fossil fuel of choice in balancing the baseload. I am totally confused, you see, as to how the Government could put out a statement in, I think, October 2007, that large 106 or 110-page study called New ZealandEnergy Strategy to 2050, which spelt out—in a very coherent way, if I may say so; I congratulate the officials who wrote it—the still considerable scope for renewables expansion in New Zealand because of the great gifts we have in this country.

The National Party fully supports that, but even so we would still need some thermal to balance the baseload, and there is a perfectly coherent set of arguments of a conventional nature around that. Then, crucially, it stated explicitly—and I am pretty sure that I have this quote from the report almost exactly word for word—“and gas, given its lower emissions, will be the fossil fuel of choice”. Well, that seems quite logical, too. But then, only a matter of weeks later, we got this ban. Is it a ban? Well, that is how the public and investors have interpreted it. So I would be interested in the Minister’s explanation for this complete volte-face within weeks of making what I thought was a sensible way through this issue of balancing the baseload.

Now let me come to the question of “LULUCF”, which, when I first heard it, I thought was the name of some rather discredited pop singer from the 1960s, but I later found out that it was the acronym for land use, land use change, and forestry. This is the heart of the problem for New Zealand. I have heard one of the Government’s most rabid supporters on this—given that it was said under Chatham House Rules, I will not name the person—say that the whole process of negotiating for land use, land use change, and forestry was done as an afterthought, in a complete mess, by countries that were really looking at industrial emissions.

ERIC ROY (National—Invercargill) : I am pretty eager, too, to engage in this whole process of raising some issues around this climate change bill. Firstly I say, as I have said in this Chamber before, that I am not a naysayer. In fact, I have given a number of speeches here in which I have said that I am more than concerned about the issues of climate change. But it is essential that we have something that will be a resolution and not just a placebo. It is also important that we identify the crucial things we have to deal with, so I am drawn firstly to look at the purpose clause, clause 5 in Part 1, and my contribution at this stage will be about that clause.

The new section 3(1) of the Climate Change Response Act, which is to be substituted in clause 5, states: “The purpose of this Act is to—(a) enable New Zealand to meet its international obligations …”. Therein lies a bit of a debate in the first instance as to what our obligations actually are and why we feel more obligated to meet them than many of our trading partners. I have asked various people why it is that I think the Intergovernmental Panel of Climate Change is like some international nudist club, with every nation a member, and the only country taking its clothes off is New Zealand. The reason I make that claim—

Rodney Hide: Could you please get another analogy or metaphor?

ERIC ROY: Well, we are exposed—that is the point. We are seriously exposed, including being exposed through some of the elements in this bill. This is particularly so, as Nick Smith mentioned, with regard to the issues surrounding agriculture; yes, they have been delayed until 2013.

I have also said a number of times in this Chamber that agriculture is important. It is the wealth driver of New Zealand and, yes, it is the industry I have spent most of my time engaged in. The one figure that keeps cropping up in regard to New Zealand’s profile in greenhouse gases is that of 50 percent in relation to agriculture. I have pondered this figure. I ask whether it is because of bad practice or the way we measure it, or because some other factors are involved. I approached an august body, the Parliamentary Library of the New Zealand Parliament, and said I wanted this information. I wanted to know the number of people and the number of livestock in all of the OECD countries. Then I converted all the livestock numbers to cows—I made eight sheep the equivalent of a cow—so that I could divide the number of people by the number of cows in the OECD countries. There are 2.73 cows per person in New Zealand—2.73 cows. The next country with such a high proportion of cows to people is Australia, at 1.9 cows. By the time we get to Europe the proportion is about 0.2 cows. So the reason our profile would stand out and be extraordinarily bad is that we do not have enough people to offset the number of cows.

But we would say that that is one issue, and we would ask whether it is due to bad practice. So the other thing I asked the Parliamentary Library of the New Zealand Parliament was how much nitrogenous fertiliser we used per acre of pastoral land. The library could not give me that information, so I got the overall figure and divided it, tried to work out the profiles of arable versus pastoral use, and found that the ratio is rather similar to that of Europe. But because we have pioneered things like the nitrous ammonis clover fixation of nitrogen, we use a fifth of the nitrogenous fertiliser, so we have not relied on that. I admit that this is only a crude measure, but it gives us an indication that it is not bad practice. If we were seriously concerned about climate change in agriculture, then we would be closing down dairying in Europe and bringing the cows to New Zealand, because our record is not due to bad practice. What we do in New Zealand, by world standards, is good practice, yet under our international obligations—under clause 5, as part of the interpretation of this bill—by 2013 we will have dragged agriculture into some kind of reckoning.

A number of figures have been given here today and I do not know the validity of each of those in question. In reality, if we have a concern about climate change, then I can say that what New Zealand is doing in agriculture is good by world standards. It is not bad; we should not be punished. Yes, we should be conscious about these issues in agriculture and, yes, we should be investing in solutions with regard to nitrogen fixation, the better metabolism of animals, less wastage, and higher energy utilisation into growth—yes, we should be doing all of that—but, in fact, the inclusion by 2013 of that in a punitive cost because of what cows are doing is nuts.

NATHAN GUY (National) : I appreciate having the opportunity to speak in the Committee stage of this very controversial legislation going through Parliament today. I need to acknowledge Dr Nick Smith, because I thought that his motion, which he sought leave for before we went into Committee, was right on the button. Dr Nick Smith stood up in the Chamber, moved the motion, and said that this bill and its 1,000-odd amendments should be referred back to the Finance and Expenditure Committee in order for the public to have their say. Here is the Government and its support parties, including New Zealand First, and what a deal has been done to get this legislation through! This legislation should be back before the select committee and opened up for the public to have a say on. What a shonky deal these 785 amendments amount to! And the Minister in the chair, the Hon David Parker, stood up here in the Chamber this afternoon and said that they were of a very technical nature. Well, why does he not let them be seen by the public in order for them to have their say? I do not think it is very transparent for the Minister to sit there and say that these amendments are of a technical nature.

I will make some contributions this afternoon on Part 1, and in particular on clause 5, “Purpose”. Then I will also make some comments on Subpart 4 in the new Part 5 to be inserted in the Climate Change Response Act by clause 43, which is to do with agriculture. The whole purpose of this legislation, when one thinks about it, is to be Helen Clark’s flagship exit strategy for her CV, is it not? When she leaves Parliament she wants to be able to say that Labour got this legislation through Parliament and that she was a big part of it—in other words, the Prime Minister wants to be a big part of this legislation. We on this side of the Chamber say to the Minister that we should slow this thing down. Let us try to line up with Australia and let the public have some buy-in to this process.

We saw what happened with the Electoral Finance Act, when the blade on the bulldozer just dropped down on the select committee process and Labour rammed that legislation through. As a result of the bulldozing that went on—and it is happening again today—we just have these huge, massive, wide loopholes that we can drive the bulldozer back through. Jim Anderton will find that out, because he has been hauled in front of the police. He is a person who supported the Electoral Finance Act. The Government seems hell-bent on wanting to push this legislation through, and National has some real concerns about that.

Our concern, in particular, is that we want to get this process right. We want to ensure that we get it right for the backbone of this economy—that is, agriculture, our pastoral sector. We still have not heard from either the officials or the Government about where the point of obligation actually lies with agriculture. We still have not heard about how one would measure the amount of carbon absorbed through the pasture. That detail is nowhere to be seen. If this is not going to change behaviour in terms of where the point of obligation sits—whether it is at the farm gate or at the processing end—it will be seen as just another tax. I admit that we need to change behaviour at the farm-gate level, and that will occur through getting the right mechanisms in place, not by dropping the blade on the bulldozer and ramming this legislation through. The answer lies in research and development; and, through time and some decent leadership, that research and development will actually occur.

Sue Moroney: Ha!

NATHAN GUY: Sue Moroney scoffs. She is from a university town in the Waikato surrounded by farmers. I am looking forward to seeing her—and David Bennett is really excited about it—standing up and defending this policy platform when she is on the hustings in Hamilton. She scoffs but she knows she does not have a hope of winning that, because she cannot defend this policy when she gets out on the hustings. The answer lies in research and development.

This legislation in its current form will need to be tidied up. If National is lucky enough to win the election, we will make sure we make the changes to ensure we get the process right. [Interruption] Doug Woolerton scoffs down the end there. We know the deal has been done with New Zealand First to support the legislation, and I look forward to hearing that member’s contribution.

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : Both Nick Smith and Nathan Guy have asked for some clarity as to where the point of obligation lies in respect of emissions in the agricultural sector. It is as set out in the bill as it came back from the Finance and Expenditure Committee. Currently, it is at the processor level. The Government is happy for it to stay at the processor level. None the less, we will allow that to be changed to the individual farmer level if a decision is made by regulation, which must be promulgated by 30 June 2010. There are discussions through technical advisory groups with the agricultural industry to assess whether in their view it should be at the farmer level, but it is clear in the legislation at the moment that the default position is the processor level.

Hon Dr Nick Smith: So you don’t know.

Hon DAVID PARKER: I do know. I have just told the member what it is, and if he wants to read the bill, he will find it in subsections (12) and (13) in section 2A, to be inserted into the Climate Change Response Act, the principal Act, by clause 4.

David Carter rose to his feet and asserted that the cost for a 5,000 stock unit farm not using nitrogenous fertilisers would be around $150,000 per annum. He is out by a factor of 20. He should talk to the National Party members on the select committee. Had he spoken to them he would be aware of the advice given to the select committee by the Ministry of Agriculture and Forestry that showed that for sheep and beef properties with 2,500 stock units the profitability effect would be around $4,000 per annum after 2013, assuming that no measures to absorb carbon, such as planting forests, are taken. So if they do nothing, the effect of a 2,500 stock unit would be $4,000 per annum. A 5,000 stock unit would be twice that. It would be roughly $8,000, whereas the estimate Mr Carter gave was around $150,000 per annum. It is plainly an approximately twentyfold exaggeration. He should check with his members.

I would expect that the agricultural spokesperson for National would do a little bit more homework before making those alarmist statements, which are obviously designed to frighten New Zealand farmers rather than to elucidate the correct position. In respect of what would be the case if there was some planting on the property that stored carbon in trees, perhaps on its marginal lands, only a small percentage of land would have to be planted in order for there to be a profit overall from the effects of the emissions trading scheme on farming.

Dr the Hon LOCKWOOD SMITH (National—Rodney) : I will follow on from the points the Minister in the chair, David Parker, just made in talking about the point of obligation in respect of agricultural emissions and the estimation of those emissions. I accept what the Minister said, which was basically that the bill in its current form has the processor level as being the fall-back position for the point of obligation but with an option open for it to be at farmer level.

What I want to take up with the Minister is this. With the point of obligation as laid out in the bill being at the processor level, during the select committee process I asked the officials whether they could do an estimate for us. I stress “estimate”, because members should all be aware that this bill does not propose we measure methane emissions from ruminant animals on farms; under this legislation we estimate them.

I asked the officials to do a sample estimate for us of a processor, as this bill lays out. I asked them to take a processor, be it Fonterra, AFFCO, Silver Fern Farms, Alliance, or whatever, and do an estimate of the emissions this legislation would require. This is what happened, and I quote directly from the officials—I think I am allowed to, because presumably all these reports have now been released. On 5 June we requested advice on this estimation. The officials came back and said: “The methodologies for accounting for agriculture GHG emissions at the processor level have yet to be developed. Therefore, it is not possible to undertake the necessary emissions calculations and provide a figure for uncertainty at the 95 percent confidence interval.” I hope that people note what I quoted there: they said it was “not possible” currently to do the estimates that this legislation requires.

The officials went on to say: “The major component of uncertainty in the New Zealand methane inventory is the uncertainty around the quantity of methane emitted per unit feed of intake. Similarly in the nitrous oxide inventory the major uncertainty arises from uncertainties in the direct emissions of nitrous oxide per unit of nitrogen deposit on pastures. These key elements of uncertainty”—and what they said here to the committee is important—“will be the same for the national inventory or for specific emission methodologies developed for either a processor level or farm level point of obligation.” The officials were telling us there that those uncertainties around estimation will be the same whether the estimations are made at the processor level or at the farm level point of obligation.

The issue becomes one of how big these uncertainties are. Given the best estimates of estimation of, say, methane emissions from our ruminants—from our sheep and cattle—how big are these uncertainties? Again, I go back to the advice from the officials at the select committee. We were told that the way we estimate these is to take the number of sheep and cattle—the number of ruminant animals—and their dry matter intake, and where there is a methane conversion rate from that dry matter intake, we estimate their methane emissions from that. We cannot measure their dry matter intake. We cannot know how much the sheep and cattle around the farms of New Zealand are each eating. It is not possible. So we estimate how much they are eating from their yield of product—from the meat yield, the meat going through a meatworks, the milk going to the processing plant, and so it goes on. We estimate it that way.

The problem with that, of course, is that the more efficient the ruminant animal—the more efficient the cow is at producing milk, for instance—the more the farmer will be clobbered for methane emissions. Even if the animal is a low methane emitter because of its particular diet, the farmer will be hit more for more methane emissions because it is producing more milk, with the way it is calculated.

But that is not the main point I want to make. The main point I would make is that the officials told us that they could not do a range of estimate at a processor level—and certainly they could not do it at a farm level—but they could do at a national level the total methane emission estimate for New Zealand, taking our total production and our total number of animals. But the crucial thing is how accurate the figure is. I want members of this Committee to realise what we are passing legislation to do. What is the range of estimates of what we call the 95 percent confidence level? In other words, if one comes up with an estimate, what is the chance of that estimate being wrong more than 5 percent of the time?

I will turn it round the other way. It is important for this reason. The officials came up with a figure. Taking New Zealand’s total methane emissions into account, they came up with an estimate. They have done it twice; they did it in 1990, taking a 1990 estimate, and they took a 2001 estimate. In both cases the figure was just over 1,000 gigagrams per annum, and one gigagram is 1,000 tonnes, so we are talking there about just over 1 million tonnes. That was the mid-estimate point.

But the crucial thing is, if one makes an estimate like that, what the range of figures that could be equally accurate is. The officials provided for us what we call the 95 percent minimum confidence figure and the 95 percent maximum confidence figure. In other words, if we come up with a particular figure, we might be wrong more than 5 percent of the time or we might be right more than 95 percent of the time. With that range in figures—and remember the estimate was 1 million tonnes, or 1,000 gigagrams—the minimum estimate at the 95 percent confidence level was exactly half of that, and the maximum figure at the 95 percent confidence level was 1½ times the estimate.

What that means, for the benefit of members of the Committee, is that the range of figures where we have no better accuracy, where we cannot tell that one figure is any more accurate than other, is over a threefold range. I am not talking about one figure being 5 percent, 10 percent, 20 percent, or 30 percent more or less than another figure, but about the range of estimates where we cannot be more certain that the accuracy is any lesser or greater. It goes from 500 to 1,500. This estimate was done for 2 years, 1990 and 2001.

I hope that members can see the issue here. The accuracy of the estimate at the point of obligation will be no more accurate, the officials have told us. The problems around variability in the estimates are just as great, because at the national inventory level we have complete knowledge over the total product—over the number of animals. Some of those variables are actually taken out of the equation, and we average the efficiency of the individual animals. So in some ways one could argue that the national inventory figures are more accurate, yet the officials’ advice to the committee was that we could not tell one figure to be more accurate than another over a range of threefold; from 500 through to 1,500 the accuracy of any figure within that range would be essentially the same.

How do we, in all good conscience, legislate for our agricultural industry to come into a scheme when that is the accuracy of the estimates? I just put it to the Committee that this needs far more analysis before we impose this point of obligation, be it at farmer level, processor level, or whatever level. The variability is so huge.

I have some experience in this area. I was a ruminant physiologist, so I know a little bit about the problems of estimating methane emissions. I would just put in front of the Committee the officials’ own figures on this matter, which show that threefold range in estimation at the same accuracy level. There is no way at any point of obligation that one can run a scheme where a farmer comes up with an individual estimate and no one can be certain that that figure is any more accurate than one that is 50 percent less or 50 percent more. They could be equally accurate. How does one run a scheme that involves the purchase and releasing of carbon units when one cannot actually estimate any more accurately than that?

I put it to the Minister in the chair that he should be up front with the public of New Zealand and this Parliament about the information that was provided to the select committee. When we asked the officials whether they could do an estimate for us to show us how it would work, they said that they simply could not do it.

PHIL HEATLEY (National—Whangarei) : I would like to raise an issue of particular interest to me. It concerns the fishing industry—an industry that is our fifth-largest exporter, and has been for many, many years now. The Government has singled it out. The Government has decided that it will focus on—and penalise—that industry more than it has focused on other industries. I find that very, very surprising indeed.

I do not know whether the Committee is aware that the fishing industry exports over 90 percent of what it catches and processes. In other words, it is a successful industry that is boosting New Zealand in terms of the world economy, and bringing returns back to this country. It exports well over 90 percent of what it catches and processes, and it earns $1.3 billion per annum. As it evolves more and more into an industry of added value, that sum is increasing every single year.

For some reason, the Labour Government has decided to pick on the fishing industry. Initially, it cut that industry no slack at all when it came to the emissions trading scheme, but we have a recent announcement that the Government will cover 50 percent of its carbon credits going forward, up to the 2018 date.

R Doug Woolerton: That’s good.

PHIL HEATLEY: Well, Mr Woolerton might think it is good, and I know that he is a very, very close friend of a few individuals in the fishing industry—we know that, because we read it in the Dominion Post—but we have an issue here—

Rodney Hide: He doesn’t declare it, though!

PHIL HEATLEY: He does not declare his very, very good friendship with them! We in this House are well aware—and Doug Woolerton would be too, if he focused on others—that the steel industry in New Zealand will have 90 percent of its credits grandfathered, covered over, or accounted for by the Government. The aluminium industry, which is overseas owned, will have 90 percent of its credits covered by the Government. The cement industry, which is largely foreign-owned, also will have 90 percent of its credits covered by the Government. But the fishing industry—which is New Zealand - owned and our fifth-largest exporter, and which exports 90 percent of what it catches and processes—will be covered for only 50 percent; not 90 percent like the steel industry, not 90 percent like the aluminium industry, nor 90 percent like the cement industry, but only 50 percent. In fact, agriculture gets a much better deal than the fishing industry does. Agriculture is also covered for 90 percent of its credits. The fishing industry, the fifth-largest exporter, will be covered for only 50 percent. And that came in only in the very late stages of the development of this legislation. I do not know whether Minister Parker had forgotten about the fishing industry and its contribution over many, many years. But the Government came up with 50 percent cover, which falls well short of the 90 percent cover that we see for those other industries.

We understand—and it has not been disputed—that we are looking at a total sum of about $20 million per annum, and that the Government is looking at covering $10 million per annum. If there were a level playing field, if the fishing industry were treated in the same way as agriculture, cement, aluminium, and steel, the Government would cover $18 million, and the cost to the industry would be $2 million. But, no, with no explanation at all, the Government has singled out the fishing industry and decided to penalise it much more than it penalises other industries.

In terms of emissions, the fishing industry is all about fuel consumption, because fishing vessels going to sea churn through an awful lot of diesel. We acknowledge that; there are emissions problems within the industry, and, of course, it is seeking to reduce its emissions, because, obviously, it wants to reduce fuel costs per catch. But the Government is saying to the fishing industry that it is not valued in the same way as the steel, aluminium, cement, or agricultural industries are valued.

Hon Dr NICK SMITH (National—Nelson) : I want to talk about the nonsense provisions in the Climate Change (Emissions Trading and Renewable Preference) Bill as they relate to a couple of very specific issues. My office has been inundated with faxes and messages from specific industries that have expressed very real concerns about detailed provisions of this bill, but given the way that this bill is being rammed through Parliament, I just want to mention two of those concerns.

The first concern is in respect of the million hectares of pre-1990 forests. This bill says that if people want to change an area of land use, they can chop down the trees at their full maturity—28 years—grow little seedlings and take those up to 7 years of age, then bulldoze them over. That is what this bill incentivises. I just plead with members, and I ask why on earth we would want to pass a bill that does that. I ask Harry Duynhoven—there is quite a significant amount of forestry up there in his area—why he would want to vote for a bill that does something as stupid as that.

The reality is that there is a fault in the Kyoto Protocol. It states we can harvest the big trees at 28 years, plant little seedlings, get rid of those seedlings 6 months later, and have to pay the carbon tax only on the tiny seedlings. The Government has said that is a bit of a problem, but I say to Harry Duynhoven it is his Government that is religiously following Kyoto Protocol terms and putting them into New Zealand law, without putting its brain into gear. Members on this side of the Chamber say no, the provisions should make sense; they should make economic sense and environmental sense. But that provision does not make sense, and I am just appalled that members would want to pass provisions with such an obvious fault, which will result in waste and the inefficient use of land.

But I bring another provision to the attention of the Committee. Today I received a fax from Fonterra, which is our biggest export company. We should be concerned that we are doing things right for it. The very important issue for Fonterra is that the provisions are grandparented and are able to become the point of obligation. Every one of us would know that the dairy sector is a big energy user, and Fonterra was assured by the Government that it would be able to opt in with regard to the use of gas and electricity, in terms of managing its obligations under the emissions trading scheme. Fonterra has set out, very effectively, that under clause 57 it will not get that option. Let me explain why that is the case. The bill allows those who use coal or natural gas to be able to take on the point of obligation only if they are directly acquiring the gas or the coal from the producer. The reality in both the gas and coal markets is that there are significant wholesalers and other players in both markets. The details of clause 57, as it stands, mean that those people will not be able to do that.

The Government will say that is a minor detail and will ask why one would bother about it, but, according to its own estimates, that minor detail has a cost associated with it of over $150 million a year. Are members so cavalier about the economic well-being of our country that they would ignore a little clause 57 with that sort of impact? That just shows the arrogance, recklessness, and irresponsibility of a Government that will oversee not just that issue but another 20 issues of that sort that I could roll out, where key industries have raised serious concerns.

I would like to hear from the next Government speaker, first, why it makes sense for New Zealand to allow people to replant trees for 7 years, then put a bulldozer through them. How is that common sense? How does it possibly serve either the environmental or economic interests of New Zealand for us to pass a law that provides that sort of incentive? Secondly, I want the next Government speaker to deal with the very serious concern around clause 57 and the dairy industry.

SHANE ARDERN (National—Taranaki-King Country) : I respect your wisdom in making that call, Mr Chairman. I start by saying that Lockwood Smith put his finger on the issue—that is, we cannot estimate what the damage to this economy will be, because, first of all, we have no science to substantiate what the effect will be. That is the bottom line, and I would be interested to hear from the Minister in the chair, the Hon David Parker. But I say to members that in my herd of dairy cows I see a big variance. One cow can eat 18 kilograms of dry matter per day and produce 1 kilogram of milk solids, and another cow can eat 15 or 16 kilograms of dry matter per day and produce 2 kilograms of milk solids. I would like the Minister to take a call and explain to me how in one herd of cows we can see as big a variance as that, yet according to this legislation something like 50 percent of the nation’s greenhouse gas emissions come from agriculture. I just say to the Minister and to the Committee that it is not correct and cannot be based on science, because the variance is so great.

I say also that no one has explained to us, so far, how changing forest from one area of a dairy farm or from a meat and wool farm to another area has a detrimental effect. How does changing land from forestry to viticulture, from flat, very fertile land that is suitable potentially for viticulture—for example, the area where my colleague Nick Smith comes from—and replanting somewhere else, have a detrimental effect on the environment? I would like to know the answer.

I have another question for the Minister. How does it help the climate if we put a tax of the level that he spoke about, of $8,000 per year on a meat and wool farm of 5,000 stock units, as proposed in this bill, and, therefore, that farm reduces its production, and, because of a world food shortage, that production is picked up in Europe, where three times the carbon emissions from that production will result from that transfer? Certainly, it does not help the international climate one iota. I just say to the Minister that he will have to answer these questions at some stage during this debate, because they certainly have not been answered so far.

How is it that we can have a forestry sector that has been in decline—the single biggest area that would help in this issue of carbon sequestration to meet our carbon commitment under the Kyoto Protocol—during the whole 9 years of this Government? The industry has submitted time and time and time again to this Government and has also submitted extensively on this bill through the select committee process, suggesting ways to turn that industry round and achieve the goals that the Minister is asking for, so how is it that the industry has not had one of its concerns addressed in this substantial legislation? That is another question the Minister can take a call on any time he likes, and give an answer to the House, because I know there is no answer.

It is abundantly clear to National that the forestry provisions under this bill are seriously deficient. That is what the National Party minority report said, and I agree entirely with it. I cannot understand how the Green Party can support something that clearly is likely to have a negative environmental impact, not a positive environmental impact. There is one thing about the Greens. They stick to a series of principles—or they have until now—that are environmentally enshrined. Whether we agree or disagree with them, at least the Greens have that bottom line. On this, the Greens have broken it substantially. They have crossed that line. I listened to the speech of the co-leader Jeanette Fitzsimons and I thought: “You have been severely compromised.” I cannot understand how she would allow herself to be dragged to that area.

There is an urgent need for a fresh process of engagement with the forestry sector to develop a far more sound and practical approach to greenhouse gas emissions and plantation forests. That is what the National members on the select committee said in their minority report, and they are absolutely right.

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : I will respond to some of the issues that have been raised in recent contributions from members.

I refer to Dr Lockwood Smith’s questioning of the methodologies for assessment of methane emissions. It is true that it is costly to measure methane at a per-farm level or, indeed, at a per-animal level, but, none the less, under the Kyoto Protocol every country in the developed world, including New Zealand, is already taking responsibility for methane emissions from its animals. It is important, with half of our emissions coming from the agricultural sector, that those emissions are included in the New Zealand emissions trading scheme; otherwise, the burden of the increase in those emissions is borne by other sectors of the economy—either taxpayers or other participants in other sectors of the economy. If we do not include methane emissions, the agricultural sector will not be appropriately incentivised to try to reduce them.

In respect of the fisheries industry point raised by Phil Heatley, it is a line call. The advice from officials was that we could justify not having a free allocation. The free allocation is in respect of transport fuels. We are not giving other sectors a free allocation in respect of transport fuels, but, none the less, arguably there is justification for some free allocation, and that is why, having talked about these issues with the support parties, we struck an agreement to have some free allocation to the fishing industry.

In respect of Shane Ardern’s point about carbon rights for forestry, this bill does what the forestry industry asked. It wanted devolution of the rights to carbon in forests. The bill devolves the benefits of carbon sequestered in new forests. It creates a liability for carbon released from old forests that are deforested—that is, logged and not replanted—at higher rates than was the case historically. We cannot have devolution of the benefits but not expect devolution of the disbenefits. They are two sides of the same coin. There is an appropriate overall incentive for the forestry industry through this bill.

NICKY WAGNER (National) : I should be feeling really excited about, and very supportive of, this emissions trading scheme bill, because National has always believed that an emissions trading scheme is the best way to deal with climate change. I still believe that New Zealand should pass an emissions trading scheme bill, but not this one.

It is a tragedy that members are sitting in the Chamber today, arguing bitterly over probably the most important legislation that the New Zealand Government will pass in the next few years. This legislation is of such importance that plenty of time should have been taken over it, and the issues should have been dealt with thoroughly at the select committee. This bill is so significant that time should have been taken to iron out all the issues and to get all the parties onside. This bill should have been reconsidered and reworked until all the parties could agree on it. Instead, the whole process has been rushed. The process has been thoroughly flawed and totally inadequate.

There is no doubt that the New Zealand Government must do something about climate change. But, as a small agricultural country at the bottom of the world, we have much to lose if we do not handle this issue intelligently and effectively. We must get it right. The complexity and importance of this bill underpin the need for extensive consultation, creative thinking, and practical ideas. Indeed, numerous groups outside Parliament have put a great deal of time, effort, and resource into research and analysis of the issue, but the Government has turned a deaf ear to their ideas and has totally disregarded all their work. They are bitterly disappointed that their points of view and their ideas have been ignored. The 700 to 800 Supplementary Order Paper amendments to the bill tell their own story. A well-considered, well-thought-out, and fully discussed document would not require nearly 800 amendments.

The bill has the potential to turn our economy upside down. We need to be very sure that we have teased out all possible economic outcomes. Economists have already estimated that an emissions trading scheme could cost anywhere between 22,000 and 50,000 jobs. I repeat: it is expected that anywhere between 22,000 and 50,000 jobs could be lost over this scheme. That would certainly turn the world upside down for a huge number of families. Furthermore, there have been estimates of billions of dollars in GDP being lost. Over the last few weeks I have heard from many constituents in Christchurch whose households are already feeling the pinch of the increased cost of living. I am talking about the cost of food—the absolute basics. I am not sure how these people will manage if we have wholesale job losses in this country. I understand that the Government is talking about subsidising low-income families, but a Government subsidy of, say, $2.50 a week will do nothing for families if there are no jobs available.

I said at the beginning of this speech that National members support having an emissions trading scheme, and we do. We support having an emissions trading scheme that balances the economic issues and the environmental issues. But we are also aware that New Zealand accounts for only 0.2 percent of global emissions, and that the emissions profile, to which agriculture contributes about 50 percent, is a difficult one to change. We need to take effective action on climate change, but to do it in such a way that we do not destroy our economy. After listening to many of the submissions at the select committee, it became clear to me that unless we were very careful about how we designed our scheme, we could easily export many of our businesses, and, with them, New Zealanders’ jobs, to other countries that do not have such a scheme.

JACQUI DEAN (National—Otago) : The only incentive this emissions trading scheme bill provides to the agricultural sector is to go out and shoot the cows. That was said almost a year ago by members of the agricultural sector, when they first learnt of the provisions contained in this bill, and I believe that that sentiment is still true and still holds today. The only way that members of our agricultural sector can deal with the bill is to simply go out and put a bullet in the head of their livestock. Agriculture is New Zealand’s primary export earner. This bill is the most significant legislation to pass through this House in my short time in Parliament. It has huge implications for my own electorate of Otago, and for Waitaki, and I strongly object to the provisions for agriculture.

I believe that the Minister sitting in the chair, David Parker, referred to other emissions trading schemes throughout the world. We know that the European Union excluded agriculture from its first emissions trading scheme. I believe that it is considering placing some form of control on agriculture, but it is in the form of science; it is not in the form of a punitive taxation regime that provides no incentive at all to the agriculture sector. All that the regime does is provide a crushing view of the future.

I bring to the Minister’s attention, with reference to his attacking my colleague David Carter, the National spokesperson on agriculture—perhaps the Minister should have spoken to his colleagues who sat on the select committee—page 67 of the bill’s commentary, where it says: “Hon David Carter replaced Craig Foss for this item of business.” So I tell the Minister to keep up to speed—I think it would be helpful.

National does not believe that the agricultural sector can be—nor should it be—excluded from this emissions trading scheme bill, but it does have a unique place in the world. New Zealand’s greenhouse gas emissions are unique in that 50 percent of them come from agriculture. That is why it is so terribly important that we get this legislation right in terms of agriculture. A scheme that merely crudely imposes average costs on farmers, regardless of their farm management decisions, will achieve nothing other than to encourage farmers to reduce their stock numbers.

The answers lie in the science. I refer to an article written by Mark Aspin, who is the Pastoral Greenhouse Gas Research Consortium manager. This consortium has been put together by Fonterra, Meat and Wool New Zealand, Dairy New Zealand, PGG Wrightson, the Fertiliser Manufacturers Research Association, DEEResearch, AgResearch, and the Ravensdown Fertiliser Cooperative. They are actually doing the work; they are doing the science. They note that “Through the Consortium we aim to develop solutions that will ensure a sustainable future both nationally and internationally. Our programme uses modern science to answer complex biological questions that are at the heart of efficient, sustainable farming systems.” There is the future. There is the answer for agriculture. It lies in the science; it does not lie in the punitive regime outlined in this bill. The consortium goes on to say that “The Consortium’s work programme is necessarily broad as it is not yet clear which areas will provide the necessary breakthroughs that will enable dairy farmers to continue to be competitive in the increasingly carbon conscious world.”

That is the way to go. National commits to working with the agricultural sector, rather than having this absolutely punitive, taxation-based part of the emissions trading scheme. The work contains three broad areas. One is measuring methanogens, which are rumen microbes—and my colleagues have much greater knowledge of this field. None the less, that is the work that is being undertaken, and that is the work that needs to be done. It includes selective breeding.

JO GOODHEW (National—Aoraki) : I rise to make my particular contribution to the Climate Change (Emissions Trading and Renewable Preference) Bill and I do so first of all in a very, very confused state. In the Committee stage of the bill one accepts that there should be debate, and we are largely getting here today a very one-sided debate. Why is that? It is because National members want it on the record that we are not about not having an emissions trading scheme, but we do have significant concerns about this bill. I wonder why just the Minister is defending the stance. Yes, we have heard from the other, smaller parties, but it would be fair to say that we have not had vociferous debate or, in fact, defence from the parties that are pushing this bill through so hastily.

The points I wish to make represent significant uneasiness on the part of the New Zealanders who live in the central South Island, where I live. They are worried about this bill. I have heard their concerns in mid-Canterbury and South Canterbury, and I have heard those concerns because those people rely on primary production for their economic prosperity, and they are very worried. Why? Well, as I have already said, National has said since 1999 that an emissions trading scheme is the way to go, so we are not saying that we are against it. But that confuses the people of mid-Canterbury and South Canterbury because they equate our willingness to go down this path with a willingness to perhaps go down the particular path that is drawn up in this bill.

But then, of course, there are the amendments, as well. I have had to reassure those constituents, and I have asked them to read the 10-page minority report. Never before has a minority report been so long. Never before, perhaps, has it been so important for the Opposition to put down in writing exactly what is wrong with the bill. So I say to Labour, New Zealand First, and the Greens that my constituents are worried about the headlong rush to pass this bill before the looming election. The farcical number of amendments—some 1,700-plus—that have come since the end of the select committee process will, in fact, cause them even greater concern. They wonder how democracy is served by passing the second reading, Committee stage, and third reading of a bill that is so vastly different from the bill that was submitted on in the Finance and Expenditure Committee by the people of New Zealand.

The farmers and the business people for whom primary production is their future see New Zealand rushing headlong into a scheme that threatens their very future. Members should not forget the New Zealand Institute of Economic Research report that indicated a potential loss of 22,000 jobs, and the Government’s own Infometrics report that said possibly up to 50,000 jobs could be lost. Well, my constituents worry about it being in their part of the world, and about it affecting primary production and all of the support industries around them. They also worry about the losses to the economy—the predicted $900 million by 2012; the possible $5.9 billion by 2025.

I challenge the Labour, Green, and New Zealand First MPs to have less haste and more speed, but I am sure my challenge will fall on deaf ears. It would seem that they would rather see the primary production sector of this country—in fact, our whole economy—go down the tubes. They have not thought through what this particular bill will mean.

So what can farmers do to mitigate their emissions? Well, they can destock. My colleague Jacqui Dean put it slightly differently—I think her destocking involved a bullet to the brain. The technologies for reducing emissions are not yet clear. They are limited; they are not yet here. But New Zealand’s reputation for getting technology, knowledge, and research and development around the primary production industry is renowned worldwide. We will get there, but we need time so that we do not go down the economic tubes in the meantime. We are, after all, 0.2 percent of the problem. So why are we—this nation that is very different from other nations, with 50 percent of our emissions coming from primary production—in such a headlong rush to affect our primary production industry? Well, I will tell members why. It is so that on the world stage the current Prime Minister can say “Look what I achieved.” Well, one day she may well be ashamed of what she will achieve with this.

JOHN HAYES (National—Wairarapa) : I rise to oppose the Climate Change (Emissions Trading and Renewable Preference) Bill. Given that we are speaking on Part 1 and the purpose, I would just like to point out to the Committee that the purpose of this Act is to enable New Zealand to meet its international obligations under the convention and the protocol for Kyoto. I draw the hypocrisy of this Government to the attention of this Committee—

The CHAIRPERSON (H V Ross Robertson): Order!

JOHN HAYES: —of this Parliament, and of this country. I say that New Zealand First and Helen Clark are part of this hypocrisy, and they are leading it.

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

JOHN HAYES: In seeking the call, I wish to ask you, Mr Chairperson, if I might have 5 minutes—my original time—reinstated, because to have 20 seconds sloped off is a bit rough.

The CHAIRPERSON (H V Ross Robertson): I will look on that favourably, Mr Hayes.

JOHN HAYES: Thank you very much, Mr Chairperson. This Climate Change (Emissions Trading and Renewable Preference) Bill being promoted by Minister Parker represents politics triumphing over sensible policy development. This evening I want to bring two perspectives to our debate on Part 1. First of all, from a foreign affairs perspective—and here I refer to clause 5 in Part 1, where the bill sets out that we are enacting this legislation to meet our international obligations under the Kyoto Protocol—I point out to this Committee, and to the people of New Zealand, the inconsistencies between the Government’s behaviour and this legislation.

Let me quickly cover three areas. First, we are concerned about constraining carbon emissions here in New Zealand, but we are very happy to export coal to India where it is burnt without any form of sequestration. Second, our troops are keeping peace in the Solomon Islands, while Malaysian loggers are stripping out tropical rainforests that are the very lungs of this planet. I think that this is another area where the Government is being rather remiss in terms of what it is saying as compared with what it is doing.

The third perspective I have is that the first period of the Kyoto Protocol ends in 2012, and the reality is that there is absolutely no consensus on what to do next. There was the meeting in Montreal, and the meeting in Bali, where the G8 said “Let’s go for a 50 percent reduction in carbon emissions by 2050.”—it has picked up our National Party policy—and George Bush was operating in Sydney, where he was promoting an Asia-Pacific group of countries pursuing aspirational goals of a 25 percent reduction by 2030. But it is not clear how any of this will mesh with a broad UN-based approach. There is no consensus about what the time period should be, what commitments should be made, and how we should share the burden of protecting our climate between developed and developing countries, and there is absolutely no consensus about how we can enforce the provisions of the Kyoto Protocol.

I will now move away from the foreign affairs area and speak as the local member of Parliament for the Wairarapa electorate. It is an area that has been really knocked around by droughts over the last couple of seasons, and by low beef and sheep prices, but now we have this absolutely messy, loopy, silly, incomprehensible legislation, complete with 785 amendments, before this Committee. It is just absolutely outrageous. As I have said, it is clear evidence of politics triumphing over common sense. I think it is quite clear that the Government does not want to contemplate, at all, the damage it will do to farmers, fishermen, and foresters in my electorate, which stretches from Ngawī to north of Waipukurau. The Government clearly is not listening; it is making politically driven changes.

I think about a number of areas where we have concerns. The first is that the bill really discriminates against small to medium sized enterprises, and they are in a majority in my electorate. New Zealand is very dependent on small companies, and particularly companies in my electorate, for its foreign exchange. I think it is absolutely unreasonable not to have these companies included in a process that treats all people equally.

Agriculture is our most important industry. It is a mainspring of the Wairarapa economy, but this legislation is going to put that industry at risk because it fails to resolve the issue of how to deal with the estimates of the difference in emissions. If we cannot measure the emissions from individual animals—and there can be variations of plus or minus 50 percent, as my colleague Lockwood Smith mentioned earlier today—a market cannot function effectively with that level of uncertainty. Part 1 fails to resolve the issue of whether the point of obligation should be with the individual farmer or with the processor, at this level. That is a fundamental design issue in the legislation that needs resolution by this Parliament rather than deferral to regulation. It is almost as if the Government wants international accolades for introducing an emissions trading scheme, when the scheme is really just an incomprehensible shell and none of the necessary machinery has been clearly thought through or is in place to function. I do not believe that the agriculture sector can be excluded from the bill, but because it is such an important contributor to our foreign exchange I think it is really important that we do not introduce legislation that will cause a huge problem for our farmers.

Over the last 3 years I have watched as indecision about this legislation has driven foresters in the Wairarapa to destroy a good bit of their plantings. There has been significant deforestation in my electorate over the last 3 years, and the principal reason for this is the confusion imposed by this Government on the people who work and operate in my electorate. I say to Mr Parker that this deforestation underlines a confusion that should have acted as a caution for those who are promoting this legislation, because we will end up with unintended consequences. I have had foresters emailing me today, saying: “John, what does this bill mean for us in the next 3, 5, 10, 20, 50 years?”. This scheme is the first, internationally, that attempts to include forestry in the legislation, and I think that that is a more difficult area than, for example, agriculture. In my electorate we have people who are harvesting mānuka honey. Mānuka is a crop that is now bringing in $45 to $50 a kilogram for bioactive honey, and we are expecting the price to go significantly higher. If we are going to promote mānuka plantings from which to harvest that honey, what are the consequences in this legislation for those farmers? If we are going to convert pasture and hill country back into mānuka honey - producing areas that eventually transfer back into native bush, because that is the inevitability of what will happen, what sort of carbon credits will be available in that situation?

The other area that gives me great concern is that of fishermen in my area. The Wairarapa has a very large section of New Zealand coastline, and this legislation penalises New Zealand fishermen in comparison with those who come from offshore.

R Doug Woolerton: What did you do for fishermen? Nothing!

JOHN HAYES: I say to the member—I think his name is Mr Woolerton—that those people who come from offshore and import their fuel with them will not be penalised by this bill in any way in comparison with people working out of Ngawī or other areas of the coast.

This is appallingly bad legislation. I do not think we have seen the like of it for many years.

ALLAN PEACHEY (National—Tamaki) : It is lovely to see perseverance rewarded eventually. I come to Part 1 of the most significant piece of legislation to be brought before this House in 20-something years from the perspective of a member of Parliament who represents Tamaki, one of the most urban of our electorates. The people of Tāmaki will be reflecting on where this debate has been going. They will have noted members on this side of the Chamber, many with very, very strong rural backgrounds, talking about the clauses in Part 1 that relate to agriculture, to forestry, and to fishing. They are asking two or three questions. Firstly, they want to know what the rush is. Parliament is in its last couple of weeks of sitting, before the general election.

R Doug Woolerton: What about the billion dollars?

ALLAN PEACHEY: If I were a member of the New Zealand First Party at the moment I would be keeping my head down very, very clearly, and I would be watching my telephone very, very carefully for that call that says: “Mr Woolerton, this is the Serious Fraud Office. We want to talk to you.”

The ASSISTANT SPEAKER (H V Ross Robertson): Back to the debate. Mr Woolerton is baiting you.

ALLAN PEACHEY: I come back to the issue here. This legislation as proposed can never be good legislation. In speaking to Part 1, I say that I would have thought the people of Tāmaki would be thinking about those 785 amendments. Their comment and my comment to the Minister is that if one has to amend proposed legislation that many times, one should start again—it is not good lawmaking. Any of the parties in this House that choose to vote for Part 1 are voting for very bad legislation.

I would now like to turn my attention to Subpart 4, “Agriculture”, in new Part 5, inserted by clause 43. The people of Tāmaki are not farmers. There are no farmers in my electorate, there is no forestry, and I do not think there is much in the way of fishing, except for recreation, of course. But many of those people work in industries that come directly from the productive sector, and they are asking why the Government is picking on the farmers, and why the Government is so determined to wipe out 20,000 to 30,000 jobs from this economy, when none of it is necessary.

When I reflect on the quality of the debate before the dinner break—and I am sure the people of New Zealand noted this—the constructive, positive, and reflective tone of the speeches on this side was interesting. One has to compare them to the muddled, confused, and indecisive responses that the Minister in the chair, the Hon David Parker, gave to the issues that members on this side of the Chamber have been raising with regard to Part 1.

It is incumbent on the Minister, and I invite the Minister to take a call to finally clarify and answer the questions of my colleagues, beginning with those matters raised by Dr the Hon Lockwood Smith, who came right to the core of what this issue is about. Why rush?

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : I will begin by responding to one of the issues that was raised by Jacqui Dean. She showed the somewhat inconsistent stance that is being taken by the National Party. She said pricing will not incentivise behaviour in the agricultural sector. Prices seem to incentivise behaviour in every other area in the economy. Why they will not do so in agriculture I do not know. She seems to fail to understand their effectiveness.

Jacqui Dean also said we should be investing in science. Well, the Government does not just say that; we do it—we do it. This year we have invested $2.5 million through the Pastoral Greenhouse Gas Research Consortium. In addition, through the Sustainable Land Management and Climate Change Plan of Action, this year the Government contribution to research has been $5 million. Next year it increases to $10 million. The Fast Forward fund is a $700 million fund for the pastoral industry, some of which is earmarked for climate change research. That is an enormous amount of Government funding, matched by private sector funding, but it is opposed by National, of course. The Livestock Emissions Abatement Research Network, an international collaboration led by New Zealand, is getting $1 million per annum, and that is in additional to Foundation for Research, Science and Technology and Sustainable Farming Fund money. So an enormous amount will go into research.

Allan Peachey stood up and said we should not pick on farmers. We have heard other members from National say that National thinks that farmers should be included in the scheme. Farmers are not being picked on. They are last to go into the scheme, and they go in on the same principle as anyone else. They are to be grandparented for 90 percent of their 2005 emissions.

I think that deals with the points that were raised.

JEANETTE FITZSIMONS (Co-Leader—Green) : I am happy to take a further call on Part 1, in order to complete the analysis of the changes to the bill that the Green Party has achieved. The one thing I did not have a chance to talk about in my earlier contribution was the question of the impact that pine forestry could have on New Zealand’s biodiversity. A number of submissions to the select committee and, in particular, the analysis that was done by the Cawthron Institute of the likely environmental impact of the emissions trading scheme, pointed out that this great monetary incentive to plant pine trees could come at the expense of land that was in rare tussocks in the high country, land that had been regenerating in native forests ever since 1990, and other areas where there were biodiversity and ecosystems we would not want to lose. So the Green Party has always asked for there to be some conditions in the bill before one can get credits for planting pine trees just anywhere.

The strong reply we had, not just from the Government, but also from the Parliamentary Commissioner for the Environment, was that the place to deal with biodiversity is in the Resource Management Act, not the emissions trading scheme. There is no process in the emissions trading scheme whereby one can set criteria that pine forests have to meet. Fine, so we then proceeded to deal with the matter under the Resource Management Act. The problem under the Resource Management Act is that plans vary enormously in the standards they set. Some councils have set some quite good protections for biodiversity in their district plans, and others have none at all. What we need is consistency, and the way one gets consistency under the Resource Management Act is through a national policy statement.

A national policy statement on biodiversity was attempted a few years ago. The Government basically stalled because it got too hard. We had another look at that and we have a commitment now that a national policy statement on biodiversity will proceed under the Resource Management Act; and because, with the best will in the world, promises 10 weeks before an election are not necessarily always implemented, we have a commitment that one of the targets legislated for in the bill, in the amendment we achieved, will be a date by which a national policy statement on biodiversity will be promulgated. Under the Resource Management Act, it takes about 2 years. We are concerned about what might happen in that 2 years until it is out, but it is about the best solution we can arrive at. So there will be a national policy statement under biodiversity, and I think that will be of benefit not just to the areas threatened with pine forest, but to the areas threatened with all kinds of vegetation clearance, with subdivision, with building, and so on.

There is also a provision, now, in new section 166(1)(ba), for a statutory declaration to be made by those planting exotic forests for credits, to show that they have complied with all the provisions of the Resource Management Act so that, where their district council does have rules, they will make a statutory declaration that they have complied with them. That, of course, raises the penalty threshold considerably if they lie, and that, I think, will be a helpful matter.

I will reply to some of the general matters that have been raised all day today, by saying that criticisms of the bill seem to proceed mainly from the view that dealing with climate change is fine, as long as it does not cost anyone anything.

Hon Dr Nick Smith: Never said that!

JEANETTE FITZSIMONS: Nick Smith may have never said that, but a lot of his colleagues did. The problem is that no one should have to pay anything. One would think, listening to members of the Opposition, that farmers were going to be up for a big bill tomorrow. In fact, farmers are completely subsidised by the taxpayer for 5 whole years until the end of the first Kyoto period, and then they are 90 percent subsidised by everybody else for a further 5 years before the subsidy starts to abate. Farmers actually have an exceptionally gentle deal under this legislation, and to some extent there is a reason for that. The technologies and the methods for farming that reduce nitrous oxide and methane are less well developed and less well verifiable under Kyoto than what can be done in an industrial factory.

Dr WAYNE MAPP (National—North Shore) : As the previous speaker, Jeanette Fitzsimons, said, we are now 10 weeks from an election. I guess she has had a discussion with the Prime Minister on that date, so we assume the election will be on 15 November.

The concern I want to raise—and many people have raised it—is that passing the emissions trading scheme at this point is purely politics. It suits the Government, the Green Party, and New Zealand First to divide New Zealand on this issue; that is what they want. They have done that, on this very day, by putting in hundreds of amendments that no one could possibly have had an opportunity to analyse and consider. There has never been any serious consideration of referring this bill back to the select committee, even when hundreds of amendments were put to the select committee, yet we are now faced with hundreds more amendments.

What has been the strategy? The strategy has been to ignore business, and to ignore all the parties affected by this legislation. That is why Mr O’Reilly of Business New Zealand can, quite realistically, issue a press release with the headline: “Cynical politics around emissions trading scheme”. That is exactly what we are faced with—cynical politics intended to divide New Zealand on this issue.

I can tell the Minister that I have had numerous phone calls over the last few weeks from people who would like to know what an emissions trading scheme actually means. One of the reasons those people are making those phone calls is that the Government, and indeed Mr Parker, has chosen to make this a partisan, political issue. In that environment one simply cannot properly explain the situation.

There was another approach. Dr Nick Smith wrote to the Government back in 2005 to ask for a more considered way of doing this. It would have meant dialogue and it inevitably would have meant compromise—by both sides; the Government and the Opposition would have had to compromise, as would the sector groups, as well. That is what would have been required.

In that situation there might have been the possibility of having a proper sustainable emissions trading scheme with public consent, because, as Mr Groser said, this is a bill for not just 1 year or 2 years. Realistically, I guess, it is expected to at least last until 2020—12 years. That is four elections away. No one could possibly imagine that one Government would last four elections from here until then. The truth is that Governments change, so this bill has to embrace the broad views across this Parliament, which is a multiparty Parliament. A consensus approach, as has been practised in other countries, would have been able to forge a decent approach in this country.

Let us look at just one issue: the pre-1990 forests. The Government says—I think quite naively—that it is locked into a commitment that does not enable the owners of pre-1990 forests to plant on equivalent land. That is not the same land that they harvest from, but equivalent land. The Government says that the protocol simply does not allow that; therefore, the legislation bans it.

I would say to the Government that surely, if New Zealand is leading in developing an emissions trading scheme—and I recognise that we are—then we could have told our Kyoto Protocol partners that we would make that change in the interests of implementing this particular legislation in our circumstances. I would be prepared to say that there would have been no protest from our Kyoto Protocol partners. They would have looked at the bigger issue, which is how important it is to get the process of emissions trading schemes implemented, not just in New Zealand but also in Australia, Canada, Europe, and the United States.

Inevitably there is a certain level of adjustment. Everyone knows that an agreement made at the international level back nearly a decade ago could not possibly take into account every detailed circumstance. In truth, in international relations, a certain amount of flexibility is given on that. This Government has ignored that opportunity.

Hon PETER DUNNE (Leader—United Future) : Earlier this afternoon the Minister responsible for Climate Change Issues took umbrage at some comments that I had made about the reasons why United Future was not supporting the emissions trading scheme. He suggested to the Committee that we had made our call not to support the bill without ever seeking to become involved in any of the discussions on the question of household compensation, which we are very concerned about. I want to correct the record this evening. I have checked the number of occasions since the bill was introduced on 11 December last year that I raised this matter in the House. I raised it during my first reading speech, on 11 December. I raised it again during my speech on the Budget Policy Statement, on 12 March, I raised it in questions on 13 May, 17 June, and 26 June. And I spoke about it in my Budget speech on 22 May.

The thing that really annoys me is that my having raised this matter in the House on six occasions, at no point did the Minister or any of his officials—and I ask members to bear in mind that the questions were posed to him—come to us to say: “We understand you have an issue here. Can we sit down and talk about it? Given the fact that we have given a commitment, we are going to make some changes in order to compensate households.” Yet the Minister gets up in the House and says we were not even interested. We were interested. We raised the issue on a number of occasions, and when it became clear to us that we were talking to a brick wall, we decided to withdraw our support. We are confidence and supply partners of this Government, yet at no stage, once this bill was introduced, has its Minister done us the courtesy of coming to us to talk about the bill and some of the steps going forward. That may well be the Government’s call; I respect that. But for the Minister to get up in the Chamber today and imply that our opposition is based on our not wanting to engage is simply wrong in every respect.

I have a great deal of respect for the Minister. We have worked together on a number of issues. I am very disappointed that he chose to take that attitude on this matter. I would have thought that when a colleague, on six separate occasions over a 6-month period, raised a consistent pattern of concern, the Minister would actually talk to him, given that the Minister was touting for votes on a bill. I do not know why the Minister did not do that; that is his call. But the reality is that he has ended up with a flawed system, and then he wonders why we are opposing it.

This bill is an important bill for New Zealand. We have made it clear right from day one that we support the concept of emissions trading, with adequate compensation. That second bit has got lost sight of. I go back to the point I made earlier—and I acknowledge Mr Groser’s comments earlier about it—that if this bill is passed but is not sustainable in the court of public opinion, it will fail. All of the work that has been done—all of the work that has been done by officials on the development of not just this bill but earlier measures that did not get off the ground—and all of the people who made submissions to the select committee will have been let down by this process.

I say to the Minister that it is simply not good enough to be driven by some political agenda that says that the short-term interests of the Government of the day outweigh the long-term interests of New Zealand, and therefore the Government will pass a piece of legislation. Already the Government has had to bring in 700 to 800 amendments. All that we are doing by hurrying is ensuring that we will have to amend this bill again and again. That is legislation that is not good, it is legislation that is not credible, and it is legislation that will not serve this country well.

United Future’s experience is that when challenges are made, the Government simply shuts down on talking to people. If that experience is any guide, we are not going to make progress. None of us, probably, will be here in 20 years’ time; we owe it to those future generations to put in place now legislation that will pass the test of time. The way in which the Minister has behaved in respect of the issues I have raised over the last few months indicates that he has no great commitment to do that.

That is the record, and I wanted to put it on the record of the Committee tonight, because the Minister’s interpretation earlier on was simply wrong.

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : I feel obliged to put on record my account of the events that the previous speaker, the Hon Peter Dunne, referred to. I spoke to Mr Dunne, we had meetings in my office, and I offered him additional briefings—

Hon Peter Dunne: Before the bill was introduced.

Hon DAVID PARKER: —before the bill was introduced. I recall that we met also after the bill was introduced. We met at least twice. I offered additional briefings from officials, if he wanted them. The member chose to withdraw support from the bill at approximately the same time that the National Party did—

Hon Peter Dunne: No, it was actually ahead of them—1 July.

Hon DAVID PARKER: —ahead of it, on 1 July—before we were in negotiations with New Zealand First and the Greens as to the amount of the compensation package. I am surprised that he has managed to take umbrage, because those parties, faced with the same events, did not.

TIM GROSER (National) : I say to the Hon Peter Dunne, who spoke before, and who was clearly very concerned, very upset, about the process with regard to the Climate Change (Emissions Trading and Renewable Preference) Bill, that he may well find rather rapidly that Labour is a political and legislative Government he would have been well designed to miss. I look at a statement just made by Business New Zealand. I would argue that Business New Zealand is fairly measured in its comments, generally. But it has started to use language like “The number of hasty back room deals we’ve seen with minor parties makes a mockery of the Government’s stated desire to consult widely.”, and it has carried on and said: “It’s just self-serving politics. The fact we’ve got literally hundreds of SOPs in the house right now is further evidence of a political circus.” Those are not my words but the words of the head of Business New Zealand. I think, perhaps, that Mr Dunne may be well out of it, I tell him.

I will take up the points made by my colleague Dr Wayne Mapp about forestry, but I will put them in the broader context of land use, land use change, and forestry. I recall a point I was making earlier that this was essentially grafted on to an agreement amongst industrial countries, and there are many, many serious flaws in the treatment of land use change and forestry. In the greater scheme of things—perhaps during the first commitment period—for annex 1 countries, for developed countries, perhaps that does not matter too much. After all, agriculture for the European Union accounts for only around 3.4 or 3.5 percent of its emissions, and the European Union is a very large part of the developed world. So one could argue that, well, for a first effort as an international agreement, perhaps complete accuracy is not important in the scheme of things.

Unfortunately, there is a country that is a sharp exception to that, and that country just happens to be the country called New Zealand. As we all know, although in the case of one other annex 1 country, Australia, agriculture does creep up into very significant figures—18 percent of Australian emissions, from memory, are from agriculture—in the case of New Zealand, it accounts for practically 50 percent of our total emissions. So the very casual rules around land use, land use change, and forestry, although perhaps not major lacunae in the scheme of things on a broader international basis, are a fundamental problem for New Zealand.

One might have thought that a Government that was conscious of New Zealand’s growth problems would want to take that into account when designing the policy response of this one country for which those slack rules are a fundamental problem. The point here is that we are gaining a system that will almost certainly change. There is an enormous degree of naivety in the Government’s slavishly following that one set of rules in the overall framework of the Kyoto Protocol, when that clearly not only will change but must change. The reason it must change is that although it is really only a problem for one small developed country in the first commitment period—that small developed country being none other than our very own dear small country—it will matter hugely to developing countries. Although New Zealand is literally unique in terms of its emissions profile amongst developed countries, New Zealand is not at all unique when we put the broader picture of developing countries into the equation.

One thing is clear: although nobody in this room, nobody in this country, and, frankly, nobody anywhere understands what the next successor agreement will be, we all know that if there is to be a successor agreement, in one way or another it must include the major developing country emitters. If it is to achieve its objective—and I have completely fluid views on what that might be, because I accept the principle of common and differentiated responsibilities, which is derived from the World Trade Organization concept of special and differentiated treatment; we would never expect developing countries to do exactly the same, in exactly the same time frames, as developed countries. But one thing is clear: it is almost inconceivable that we will have an international framework in the second commitment period unless the developing countries do something, and that means the rules on land use, land use change, and forestry not only will change but have to change. We are gaining a system that will not last.

CHARLES CHAUVEL (Labour) : I move, That the question be now put.

LINDSAY TISCH (National—Piako) : It is interesting that the Government wants to move a closure motion, when today we have witnessed an abuse of the parliamentary process by which it has introduced 785 amendments—785 amendments—without the consultation and the scrutiny that we would expect in a select committee. That has been a complete insult to this Parliament, and now the Government at this hour wants to move a closure motion. Well, we will not have a bar of that.

We have some very important points we want to articulate. One of the things that has come out of this is that no calculations have been done about what this scheme will really cost. We have heard various figures mentioned by speakers. The Minister said that if one has a property with 5,000 stock units, then the cost is about $8,000. We have heard other figures floated around, and then the Green member said that agriculture is excluded until 2013. What she did not realise and was not prepared to say was that farms do not run on thin air. One has to put fuel in one’s tractors and one has to have power, and a cost is associated with that.

I will focus on emissions from agriculture, because in my area, in the heart of the Waikato, agriculture is a significant player in our economy. There are a number of possible options for managing emissions. I will just go through and mention them. They could have included project-based trading, regulating controls, levies, voluntary measures, or—as in the case that this bill looks at and supports—the emissions trading scheme.

Let us consider these options in turn, even though some of them are not in the bill. What is project-based trading? Eligible individuals, businesses, or organisations could propose emissions reduction projects to the Government. These projects would be variable. They must be emissions reductions additional to any reductions that would otherwise occur. The key issue in a project like this on a base trading process would be in setting the benchmark. What would be the benchmark against which projects are measured, and how would it be assessed? This would have to be done on a business-as-usual basis.

We heard earlier in the debate before the dinner break that we do not really know how to assess what the projected emissions will be. There is no certainty in it. They will all be set only as an estimate. Dr Lockwood Smith referred to this point earlier in the debate. One can only estimate emissions. There is no certainty, but the bill claims that there is.

The second option for managing emissions could have been regulating measures. These could have included controls on stock densities, on the number of stock units per hectare, on fertiliser usage, and on pasture management. This option could also have referred to the retirement of some land from agriculture.

The third measure for managing emissions could have been levies. This could have provided for the Government to levy farmers to recover the costs of emissions permits if they needed to be purchased. Mind you, that is not to say that in the future this devious Labour Government will not have that one ring-fenced and that it would not bring it in if it needed to.

The fourth measure could have been voluntary measures, relying on voluntary, non-financial measures. However, relying on voluntary measures alone would leave the Government with an open-ended liability for any emissions that exceed the 1990 levels. Research is the key to reducing emissions, and I know that the agricultural sector is receptive to this approach.

But what this Government has embarked on is the emissions trading scheme. Emissions trading brings with it uncertainty for agriculture, because the price of emissions permits cannot be accurately predicted and it can vary from time to time. The question has been asked as to what this will cost. We have not heard the answer to that question. As emissions can be only estimated, the situation creates uncertainty. A major issue—

SU’A WILLIAM SIO (Labour) : Talofa lava, Mr Chairman. I move, That the question be now put.

The CHAIRPERSON (H V Ross Robertson): I am sorry, but I cannot accept the motion. I am just checking my notebook to see who has had a reasonable call and who has not.

Lindsay Tisch: One more minute, Mr Chair?

The CHAIRPERSON (H V Ross Robertson): One more minute, Mr Tisch? In that case, the member gets the call.

LINDSAY TISCH (National—Piako) : A major issue has been the point of obligation. The point of obligation is that businesses and organisations will be required to monitor and report emissions. At the end of each recording period, they will be required to hold a quantity of emission permits that are equal to, or are more than, the emissions. The bill states that the point of obligation is with the processor. It could be with the exporter or some other upstream organisation. Businesses will probably seek to pass the cost of buying the emissions permits to farmers or consumers. The Minister said that the point of obligation could be changed from being in a regulation, and put on to the farmer. My view is that the farmer will pay anyway, whether through regulation or through this legislation. Why should we rush this bill? This is about political expediency—that is what it is about. This afternoon we had 785 amendments that we did not see until they were tabled today. This bill is about political expediency, and it is not good governance.

TIM BARNETT (Senior Whip—Labour) : I move, That the question be now put.

SHANE ARDERN (National—Taranaki-King Country) : I rise in opposition to Part 2 of the Climate Change (Emissions Trading and Renewable Preference) Bill, just as I did to Part 1, and I do so on a number of grounds. First, I want to pick up on the parting comments of the co-leader of the Green Party, when she said the agricultural sector had been excluded from this bill. I just could not believe what I heard. I think what she meant was that it does not take effect on agriculture until 2013. But what she forgets in that discussion and in that debate is that the agricultural sector is one of the biggest users of energy in this country: of electricity, fossil fuels, and many, many other types of energy affected by the passing of this legislation today, if in fact that happens. I am speaking on behalf of those industries now.

The forestry industry, for example, has a huge opportunity to develop co-generation on site at the various processing sites around the country, but it has been denied that opportunity under the leadership of this Government over 9 years, because the kind of development it proposes would never get through the Resource Management Act. Now the Government is to put in place this legislation, which offers another imposition on those industries that want to develop electricity generation. I am talking specifically to Part 2, because I would have thought that in this bill there could be some amendments to take account of that very fact.

The irony is that the forestry sector has the opportunity, like no other industry has, to actually achieve the goals that the Government states are its objectives in this legislation. The first, of course, is growth, because the forestry industry is the third-largest exporting industry in this country, and, secondly, it has a carbon sink value that no other industry has, or has the capability to achieve.

But what have we seen? Let us have a look at what has happened under the term of this Government. We have seen deforestation on a scale that we have not seen for a long time. From 1951 until 2003 New Zealand built up a forestry resource of 1.9 million hectares of trees. That is what happened during that period. Under successive Governments, Labour and National—although if one looks at the figures, one will find that the forestry sector grew much more strongly under National than it did under Labour—the forestry sector grew throughout that time to a massive resource of 1.9 million hectares. In 2006, 12,900 hectares were cleared, with no intention of being replanted. There are no intentions at this stage, unless there is a major change in policy, for that land to be replanted. Clear-felling has peaked at 13,600 hectares, which is the latest figure I have of clear-felled forest that will not be replanted.

I want the Minister in the chair, the Hon David Parker to stand up tonight and tell us how that is going to be addressed in this bill, because the single best thing that could happen in terms of climate change policy in this country would be to reverse that trend and get those trees planted again. The Minister has no answers. We have asked that question over and over tonight, and there is no answer to it.

I notice that the Chairperson is indicating that I should come back to Part 2 of the bill.

The CHAIRPERSON (H V Ross Robertson): Amendments to the Electricity Act.

SHANE ARDERN: Well, in new Part 6A, inserted by clause 67 of the bill, section 62A, “Purpose of this Part”, states: “… to reduce the impact of fossil-fuelled thermal electricity generation on climate change by creating a preference for renewable electricity generation”. I talked tonight about the co-generation plans of the forestry sector that are completely renewable, but this Government has stopped that development from taking place. So why does the Minister not take a call and explain to us why at least five or six major players out there that wish to invest in major processing in New Zealand, and another five or six that have looked at doing so, have been denied that opportunity? When they look at the amount of compliance that they would have to meet—and here is another layer of compliance right here in this bill that they will have to meet—they have said things are just too tough, so they are going to Australia. They do not want to do it here, because things are better for them in Australia than they are in New Zealand.

GERRY BROWNLEE (National—Ilam) : There is little doubt in my mind that this part of the bill was very much an afterthought, and it is interesting to note that the line “10-year moratorium on new” thermal baseload is now altered to read “10-year restriction on new baseload fossil-fuelled thermal electricity generation capacity”. I have no doubt that the harsh reality of our current electricity difficulties have impacted on the Minister and have encouraged him to require this particular change.

This year we have had an extraordinary sort of year as far as reliance on renewable sources is concerned, with the low lake levels, and it has meant that at times up to 50 percent of the electricity consumed by New Zealanders has been generated from thermal plant at various points around the North Island. The likelihood of there being a continuing problem, with lake levels not meeting expectation or, effectively, storage running out too quickly, and of that situation continuing for some years is, I think, very, very high.

The other question that we would have to ask is why we would ban thermal fossil-fuelled generation completely, as was the Government’s first intention, and then have so many out clauses for the possibility of that generation being granted approval by the Government. I think one of the reasons is that it just makes good sense to take the worst of our fossil-fuelled plants out of service and replace them with other plants that can not only fire up very quickly but also make greater use of the energy fed into them in the first place.

If one were to look at the e3p plant at Huntly, which is fed by electricity and is a three-stage electrical generation plant, then it is an extremely good—

Hon Trevor Mallard: It is fed by gas.

GERRY BROWNLEE: That is right, I say to Mr Mallard—well done! It is fed by gas, that is right. And if the member took off the cloth ears, he would know that I said it is much more efficient at using the energy fed into it. I tell Mr Mallard that gas, when it is burnt, is energy. That poor fellow indicates to us why the Labour caucus has been so compliant in allowing the Minister to get away with the sort of nonsense represented in this particular part of the bill.

Let us look for a minute at what would happen if the electricity industry was encouraged to replace the capacity of the Huntly coal-fired plant with gas as a fuel source. Over a very short period of time New Zealand’s emissions from the electricity sector would substantially reduce. It would have the same amount of output, yet it would have a much, much reduced carbon dioxide emission. I see the Minister of Finance over there saying: “Ah, the member has got it.” Because that would be new, that is banned. Replacement is not banned. Oh no, those members are shaking their heads again.

What we are finding is that this is a policy on the hoof type of deal. Those members do not want to tell New Zealanders that, or want to say that if our electricity demand continues to grow at its current rate, if we ban the use of fossil fuels and new plants, and if we rely entirely on the wind always blowing, the rivers always flowing, or the lakes always filling, then we will have more years of the sort we have had just at the moment. Interestingly, I tell Mr Parker that no one in the industry would disagree with that. Everyone says that if we want to have the opportunity to get anywhere near the 90 percent renewable target, then it will have to be backed up by good thermal capacity for those days when the weather lets us down.

So I would like a bit of clarification from the Minister in the chair, the Hon David Parker, as to how, if he were the Minister of Energy, he would exercise his opportunities under section 62F, which is to be inserted in the Electricity Act by clause 67. This part of the bill states that the Minister of Energy can grant an exemption from what is effectively a ban—although in this bill it is now called a moratorium—with all sorts of outs in it. If the Minister is able to indicate to the Committee why he thinks this makes the whole ban, or moratorium, more palatable to the industry, then we would be very interested to know.

Hon Dr NICK SMITH (National—Nelson) : No area of public policy around climate change is as big a mess as what we have in respect of thermal generation. Let us just look at the Government’s own record over the last 9 years. Despite all the talk of increasing the amount of renewable electricity, every year that Labour has been in office we have actually seen a decrease in the amount of renewable electricity. When Labour became the Government it was 72 percent of New Zealand’s electricity. Last year it got down to just 66 percent. The latest prediction for this year is that it will be as low as 56 percent. Why on earth should anybody believe that this Government will get to 90 percent renewables when it has been going backwards for 9 years?

Then there is the absolute contradiction in public policy. The Government came along in 2002 and used public money to build the new Whirinaki diesel power station. This Government is supposedly the carbon neutral world leader on global warming, and it is spending our money building a dirty, great, fat diesel power station. A few years down the track it actually provided a Government guarantee to build the biggest new thermal generator since Huntly was built. Now, is it not extraordinary that it would do that and then, 6 months later, put a ban in place? One minute the Government is intervening in the market to build more thermal electricity, and the next minute it does a backward flip and puts a ban in place. That is the sort of mixed bag of confused public policy that has got the New Zealand electricity sector into the awful mess that it is in, and it has seen greenhouse gas emissions, from that one sector where one actually can do something about it, grow faster than ever.

Then we have the botched provisions of this bill. David Parker talks about the importance of market instruments—getting a price on carbon—and the moment he has got a bill to do it, he says: “Oh, I don’t trust the market. I’ve got to slap some regulations in there, as well.” We say he is mistaken. We say it is confused, and the overwhelming evidence to the Finance and Expenditure Committee was that it is confused. The Minister talks about it being a ban; it is a Clayton’s ban. There are so many outs in this ban that it is exactly what Business New Zealand has today said it is—cynical politics and a political circus. It has said that there has been no listening, and that these latest politically driven changes will mean the scheme and this bill will not work.

This bill is not about what is best for New Zealand. It is not about what is best for the environment or about New Zealand doing the responsible thing. This bill is about crude, simple, Labour Party branding. The branding of the Labour Party is far more important, it seems, than the interests of New Zealand. What National has said—and we said it in our document A Bluegreen Vision for New Zealand over 2 years ago—is that we want to get a market price through an emissions trading scheme and then let that market operate—but it is just nuts, just foolish, to then extra-regulate.

I put it to the Minister in the chair, David Parker, this way. During this Government’s term the amount of electricity produced from coal has trebled. I tell members that during the 1990s the Huntly power station operated for an average of 2 hours and 20 minutes per day, and under this Government it has operated on average for 8 hours and 40 minutes per day. And the Government wonders why New Zealand’s greenhouse gas emissions have gone up by over 26 percent and we are miles away from meeting our Kyoto targets.

I simply say to any New Zealander who is concerned about climate change: “Look at the Government’s record.” It can pass all the silly legislation it likes, and it can build as many diesel or gas generators as it likes; its record is awful. This bill is poor public policy. We do not need all these extra instruments; what we need is a price on carbon. I know there are rumours all around that Dr Cullen has never supported this stupid thermal ban. We know that a large number of other Ministers do not support this policy.

DAVID BENNETT (National—Hamilton East) : Part 2 of the Climate Change (Emissions Trading and Renewable Preference) Billamends the Electricity Act 1992 and inserts new Part 6A, which restricts new fossil-fuelled thermal electricity generating capacity. If we look at new section 62A in Part 6A, we see that the purpose is to create a preference for renewable electricity generation. I do not think anyone would have any problem with that, but it is the matter of how it is done. Section 62A also places a “10-year restriction on new baseload fossil-fuelled thermal electricity generation capacity, except where an exemption is appropriate”. That sounds very much like a New Zealand First reaction to any questions about donors—saying “yes”, then “no”. This legislation creates a number of exemptions to a policy, but I think it can be done in a number of other ways.

Everybody needs and understands the requirement for renewal electricity generation in our country. We have a proud history of being a renewable electricity generator, and previous generations of New Zealanders have invested heavily in hydro-electricity generation. That investment put us in a very good position, leading into this modern time when renewable energy has become such an issue of the day. That investment set New Zealand up in a very good position where we could have that “clean, green” image that we have portrayed around the world. Something that New Zealand probably needs to have a good, hard look at is how we make that renewable capacity in the future, because that is the real answer for our ability to deliver in this area. It is not an issue on which we can change our focus quickly; these are long-term goals, they take long-term investment, and they need to have Government support—not necessarily financially but certainly support in the concept of renewable electricity generation. I think we are seeing that in New Zealand at this time, just as we are seeing it worldwide.

Will Part 2 of this bill actually achieve the goal of achieving that renewable energy capacity? That is the question. National believes it will not. We say there are other ways and other mechanisms that will be more appropriate to achieve that goal. New Zealand definitely has to move in that direction. With such a high percentage of renewable energy available, we have an opportunity to get back to the even higher percentage that we had in many past generations. That is something that would achieve our goals long term as a country. This legislation, which we are debating today under such strict time conditions, does not give New Zealanders the ability to look at those options and discuss them. This legislation is being debated for the reasons of political expediency. It is being passed as part of the scorched earth policy of the Labour Government in its last weeks in office. It is being passed in an attempt to kick the guts of the New Zealand heart of agricultural and industrial growth. It is being passed at a time when New Zealanders are struggling financially, and the implications of this legislation on the budgets of ordinary Kiwis are yet to be seen. Many New Zealanders will pay the consequences of this legislation in the future, and at a time when they can least afford to do so. New Zealanders are in a very dire predicament at the moment. We have a recession, we have a Government that has no intention of lifting us out of recession, we have high interest rates, and we have high fuel costs and high primary costs of production for raw materials and foodstuffs. To put more costs on to New Zealanders at a time when they are struggling is something that is not in their best interests.

However, we must also address the issue of climate change, and we must address the issue of renewable energy and electricity generation. There are better ways of doing that than this bill. This bill is a sort of last-minute reprieve by the Labour Government in its dealings with some of the minor parties. It does not show a lot of confidence in the political system. It does not show a measure of dedication to get the debate going or to have constructive ideas. There is no need to pass the biggest piece of legislation this Parliament will have seen this term, in the last week of the term of the Parliament. There has to be an opportunity for debate, for people to put forward new and constructive ideas. There has to be an opportunity for some compromise in legislation like this, as we move forward and deal with these issues. We cannot have a Government and political party supporting it that are passing legislation just on a whim, just on what they feel will look good on a piece of paper, without actually reflecting on the detail of it or reflecting on what it could mean for New Zealanders in the long term, and also reflecting on what it means to the country as we try to promote renewable electricity generation in the future. So we have some major problems with Part 2. It is something that has not been thought through by this Government.

Hon GEORGINA TE HEUHEU (National) : I appreciate the opportunity to take a call on Part 2. I want to pick up on a comment of my colleague Dr Nick Smith that National certainly supports the 90 percent renewable energy target, but, of course—and it will not be a surprise—we would have a different method of reaching that target. I must say that this is an area in which the Government’s climate change policies have failed.

I ask the Minister in the chair, David Parker, to clarify this particular issue. From our point of view it seems that the Government’s interventions in the electricity industry have been contradictory. I challenge the Minister to stand up and refute that. Far from moving New Zealand towards the goal of 90 percent renewables, which I think was the Government’s aim, the proportion has fallen—

Hon Annette King: An estimation.

Hon GEORGINA TE HEUHEU: It might have been an estimation, as my colleague says, but if I recall correctly, the Government put it forward as a definite aim. Whether it was an aim or estimation, the Government has failed. Far from the Government moving New Zealand towards the goal of 90 percent renewables, the proportion has fallen from 72 percent in 1999 to 66 percent in 2007. That is a long way, after 9 years, from 90 percent. I did not have the opportunity to sit on the select committee considering this bill. I would like the Minister to take a call to explain why, with all the Government’s trumpeting, hurrahing, and what have you over these last three terms, it has failed dismally in that respect.

The Government’s interventions have been contradictory. Renewable developments, like Project Aqua and the Dobson hydro project, were stopped by Government decisions. Thermal projects, like the new oil-powered Whirinaki power station, have been directly funded by a consumer levy, and the massive new 385-megawatt e3p combined-cycle gas turbine built by Genesis was, unusually, underwritten by the Government. Of the new generation built by this Government, 75 percent has been thermal. So the moratorium proposed here represents a radical shift in policy. How long is the moratorium for?

David Bennett: 10 years.

Hon GEORGINA TE HEUHEU: That is an eternity, frankly, given the way that things are moving, particularly in an area where we want to take the lead. We certainly have a record of doing that, on a number of important things. It would seem that, on this issue, we might at least have waited to see what Australia does with its emissions trading scheme, but, no, this Government wants to push us out in front, with no proper structures at all being proposed. Am I right in saying that the Government proposed to put off the scheme for 2 years in order to design it properly? Maybe not. In any event, after 9 years the Government, fewer than 2 months before the end of its third term, is pushing it through. It is not being done under urgency—although I am sure the Government would like to do that—because the Greens, I understand, would not allow it to happen, even though they are supporting the bill. There are 785 amendments. That is nearly unconstitutional, quite frankly, I say to the Minister. He should hang his head in shame. [Interruption] I certainly was a Minister, but I was never as arrogant as that.

National Party members have a concern about security of supply. Many submitters from the industry, I understand, believe that the moratorium will put security of supply in jeopardy. We can see why that would be. If we put a moratorium on something, people do not know where they stand. Things tend to come to a bit of a standstill, the Government hums and ha’s, and those who would make the investment do not know where they stand. The second concern is the effectiveness of the moratorium. It is a very blunt instrument, as most moratoriums are, and it does not seem to be part of any coherent policy.

JEANETTE FITZSIMONS (Co-Leader—Green) : The member says that if we put a moratorium on generation, people do not know where they stand. Actually, the reason we do that is precisely so people do know where they stand and we have some clarity about the future. There are three issues that we need to deal with here, and I want to cover all of them briefly. Firstly, can we maintain security of supply while building only renewable power stations? Secondly, why will just putting a price on carbon not achieve that all by itself, without any further action? Thirdly, if we do want to do it, will this legislation achieve that purpose?

I will start with the question of security. The Energy Efficiency and Conservation Authority and the Ministry for Economic Development modelled very carefully how far we could get with renewable energy before price and security started to be compromised. The clear end point was 90 percent. We could do 90 percent with very little effect on the electricity price, because there are a lot of low-cost renewables available, and we could do 90 percent without compromising security of supply. If we simply look at what is being built at the moment, we see that we have 4,000 megawatts of electricity capacity under construction, consented to and about to start, or in the consenting process. That is a huge amount of new capacity, and all of it is renewable. Large parts of it are geothermal, which are baseload and are more reliable than any of the other technologies, including gas, and a considerable part of it is wind, which is backed up by our very reliable old hydro. Security of supply, once the Cook Strait cable is fully operating again, is simply not an issue. Actually, to the extent that the Cook Strait cable compromises security at the moment, that is not a matter that we can fix by building thermal power stations.

When we look at why we need this part at all, we have heard people say—and I know that Treasury is also of this view—that as long as there is a price on carbon we do not need any restriction. People will simply do what is cost-effective. Let us have a look at this. There are hundreds of millions, if not billions, of dollars of opportunity in the New Zealand economy to reduce energy consumption at less cost than the cost of buying it. But it does not happen. If a price is all we needed to incentivise action, why is it that for the whole of my lifetime—and still—there have been huge opportunities for saving energy that cost nothing, but people still do not take them? In fact, it is well known in the international literature that a price on carbon is part of the equation, and the rest of it is what are called complementary measures, which in my view are the majority of the measures that we need. It is a mixture of information, regulation, codes, standards, and all the rest of it. Clearly, if we have an interest in building gas-fired power stations and we do not have a lot of expertise in geothermal deployment, and we happen also to be involved in drilling for gas, and there is a gas supply and gas consumption issue to resolve, then we are going to build gas-fired power stations, even if they are not the most economical thing to build. It might pay one’s company personally if it has interests in gas, but it will not be the most economical thing for the country. That is the sort of reason why we need a clear policy direction that from now on, until we get to 90 percent, we want to build only renewable electricity.

The real question, though, is whether Part 2 of this bill will achieve that. With that, I must say I have some problems. Part 2 states that we cannot connect a new baseload power station unless we meet one of this very long list of exemptions. I asked three different submitters at the select committee—two of them were power station owners—whether there is anything we could not build, under Part 2. They said: “No, that’s not the issue. The issue is it’s a nuisance to have to go and get consent to do it.” Three different submitters admitted that the exemptions in Part 2 are so great that we can actually build anything we like. So the Green Party tried to get them tightened up a little bit. We did have some success, at least around defining what is baseload and what is a peaking plant. We now have, in the bill as reported back, issues around the amount that a plant would run, its efficiency, and its start-up time, which define a peaking plant.

The section we could not make any progress with, and which is the out clause for Genesis, is new section 62G(1)(e), which says that if one is retiring some other fossil-fuelled plant then one can build a new one. Well, everybody knows that Huntly is a very old plant. Huntly is the biggest greenhouse gas emitter. Huntly will eventually be phased out, probably one unit at a time. It will probably be providing back-up or reserve capacity for quite a while but hardly running, and it will eventually be phased out all together. We have already built two gas-fired plants in this country on the promise that they would replace Huntly. The first one was the Taranaki combined-cycle power station, and everybody said it would improve greenhouse gas emissions because we would run efficient gas in Taranaki instead of coal at Huntly. Of course, we ran both. The next one was e3p on the same Huntly site. We were told that that would reduce emissions from the Huntly site because we would run the gas plant instead of the coal plant. What are we doing? We are running both—and flat out too, I must say. So let us not pretend, if Genesis builds a 500 megawatt plant—which would be the largest gas-fired plant in the country—up on the Kaipara in Rodney, that it will be doing it to back up Huntly on coal. It will only back up Huntly on coal either when it is told to or when coal gets so expensive that we cannot afford to run it any longer.

The section that says that as long as one is retiring some other plant, one can build a new one—new section 62G(1)(e)—will not take us to 90 percent renewable, because to get to 90 percent renewable we actually need to close down both Huntly and another existing gas-fired plant and not replace them, assuming the normal projections of growth and demand up to 2025. We can do it—the renewables are there, the renewables are cost-effective, and the renewables are being built. But if we let people come in and build thermal plants in the meantime, they will crowd those renewables out of the market. If there is a great, big, ugly gas-fired plant just sitting there waiting to run, nobody will build wind power plants and nobody will build geothermal power plants. We need to intervene in the market from time to time to make sure we send it in a direction that is economic for the country—secure for the country—but not necessarily in the private financial interests of whoever wants to build power stations.

The Green Party supports the renewable preference provisions. We are very sad that we were not able to tighten them up a great deal more than what is here now. We are sad that Genesis, when it came to the select committee, expressed an obvious intention to just go ahead and build the thing and run it anyway, and we hope that its shareholding Ministers will put the brakes on when it gets to that point.

SANDRA GOUDIE (National—Coromandel) : I am pleased to speak to Part 2 of the Climate Change (Emissions Trading and Renewable Preference) Bill, which includes the moratorium—what is now being called a restriction. Last winter I urged many people to go out and get back-up energy systems because of a potential shortage of energy going to their households. I suggested they get gas back-up and lighting back-up, and make sure they were prepared. I thought it was hugely important that, particularly, our over-65s were ready for an energy shortage. We are concerned about a potential lack of energy for domestic users in this country—not taking into account a lack of the energy required for business use.

Let us look at what is happening with the moratorium. The Government’s climate change policies have failed the electricity sector. Far from the Government moving New Zealand towards the goal of 90 percent renewables, the proportion has fallen from 72 percent in 1999 to 66 percent in 2007. That is an incredible indictment on the current Government, and particularly on a Minister in the front row, Michael Cullen. The Government’s interventions in the electricity industry have been contradictory. Oh, I am getting a little moue of the lips from him! Renewable developments like Project Aqua and the Dobson hydro project were stopped by Government decisions. The Dobson decision was an appalling decision on the part of the Government. That project was an absolutely viable concept, and it was well supported by all the community leaders and all of the community right across the board—but, no, not by this particular Government. A golden opportunity was lost for the sake of a bit of scrubby, gorse-covered Department of Conservation estate that the Government, incredibly, felt was worth protecting. The Government made the decision to can a project that everybody wanted, because it thought it knew best. That is pretty typical of the current Government.

Thermal projects like the new oil-powered Whirinaki power station have been directly funded by a consumer levy, and the massive new 385-megawatt e3p combined-cycle gas turbine built by Genesis was, unusually, underwritten by the Government. Of course, the current Minister of Finance, Dr Michael Cullen, thinks that is incredibly amusing. Of the new generation built by this Government, 75 percent has been thermal. So the moratorium proposed here actually represents a radical shift in policy.

National’s first concern is, of course, security of supply, and it was very much at risk over the last winter; hence the need to highlight to our over-65s the need for them to have back-up. I can tell members that I find quite astounding the number of over-65s at Grey Power meetings who tell me they had back-up systems and were prepared. That sent a signal that they do not have confidence in the current Government to provide for their energy needs, and feel they have to be prepared to provide their own energy. They took the initiative and they were resourceful. They had gas cookers and gas heaters, they stayed with relatives, and they had back-up lights so that they could see in the dark. They were well prepared. I was very, very impressed with our over-65s; they were not placing any confidence at all in the current Government to address their needs. When one sees the likes of this legislation with its moratorium on non-renewable energy resources, one can understand why.

The distinction in the bill between new power stations being either baseload or peak-load is nonsensical. Ironically, New Zealand’s biggest greenhouse gas emitter, the Huntly power station, was built as a peak-load station in 1987, and, technically, another could be built under the exemptions in this bill. National sees no place in New Zealand for any new coal-fired generation until such time as carbon sequestration technology becomes viable.

The smart way to provide an incentive for renewable energy over thermal generation is through the price signal of an emissions trading scheme. That is why we have consistently advocated that electricity be the first sector to be introduced to an emissions trading scheme. That would provide a signal every day to the electricity sector to favour renewables over thermal energy—and not just when building. It would avoid the artificial distinctions between peak-load and baseload stations. The emissions trading scheme would encourage substitution for more efficient thermal generation, where possible, and the earlier retirement of old, dirty technology.

It is worth noting that renewables generator Meridian Energy and the Parliamentary Commissioner for the Environment also rejected the moratorium. Perhaps the Minister should take note. National supports the target of 90 percent renewable energy.

Hon DARREN HUGHES (Deputy Leader of the House) : I move, That the question be now put.

JOHN HAYES (National—Wairarapa) : Mr Chairperson—

Hon Member: This’ll be good!

JOHN HAYES: Well, it will be good. I would like to comment on Jeanette Fitzsimons’ comments about the exemptions that are able to be made by the Minister of Energy. The fact is that this legislation, which was drafted by the Minister—at least, he is responsible for it—is incomprehensible. I refer members to new section 62G(1)(b) and (c) in new Part 6A, which is in clause 67: “(b) the specified generation plant, or the increased capacity referred to in section 62C(4), will be necessary for the purpose of mitigating the effects of an emergency (whether present or future); or c) the specified generation plant will be necessary for the purpose of forming”. What does that mean, I ask the Minister.

I now refer the Minister to new section 62G(1)(i): “in respect of which fossil fuels will provide less than a prescribed proportion of the total fuel energy input for the generator or generators constituting the plant in any”. This stuff is nonsensical. I do not believe that the Minister understands what that subparagraph means, or paragraph (e) below it, or new subsections (1A), (1B), and (2) below that. This is a long way from comprehensible plain language, which should apply to any legislation being passed in this House.

I suggest to the Minister that far from the Government moving New Zealand towards the goal of 90 percent renewables, the proportion has actually fallen from 72 percent in 1999 to 66 percent in 2007. The Government’s interventions in the electricity industry have surely, I say to the Minister, been contradictory. Renewable energy developments like Project Aqua and the Dobson hydro project were stopped by Government decisions.

Hon Darren Hughes: Sandra’s just squawked that out already.

JOHN HAYES: That is dead right—she has—and I am repeating it. I am asking the member to understand that we are very, very unhappy about the Climate Change (Emissions Trading and Renewable Preference) Bill.

Of the new energy generation being built by this Government, 75 percent has been thermal. So the Government is suggesting here, theoretically, a radical change in policy.

The distinction in this bill between new power stations being either baseload or peak-load is nonsensical. Ironically, New Zealand’s biggest greenhouse gas emitter, the Huntly power station, was built as a peak-load station, as my colleagues have pointed out, and it was built in 1987.

Hon Trevor Mallard: Seven of them.

JOHN HAYES: The member has pointed out that we have another six of them, and the Government could build another one without any difficulty at all. The smart way to provide an incentive-based system for renewable energy over thermal generation is through the price signal of an emissions trading scheme. That is why National members have consistently advocated that the electricity sector should be the first sector to be introduced to an emissions trading scheme—not our farmers in the Wairarapa, not our foresters in the Wairarapa, and not our fishing people in the Wairarapa. The point of putting the electricity sector into an emissions trading scheme straight up is that it would provide a price signal to consumers and to the industry every day, every minute of the day. That would provide an incentive against further thermal electricity production, and would avoid the distinction between baseload stations and peak-load stations. The emissions trading scheme will encourage substitution for the more efficient thermal generation, and earlier retirement of old, dirty technology. I think it is noteworthy that renewable generator Meridian Energy and the Parliamentary Commissioner for the Environment have rejected the Government’s concept of a moratorium.

We in the National Party support the 90 percent renewable energy target. We have confidence that the pricing signal of the emissions trading scheme, as well as our proposed reforms of the Resource Management Act, will give impetus to new renewable energy generation, without any arbitrary or inefficient moratorium as proposed in this bill.

I think new section 62F, which enables the Minister to grant exemptions to this policy, is basically a down payment on future corruption, and I do not want to see it. I think a lot of work needs to be done on this legislation to turn it from gobbledegook into plain language so that ordinary people can understand it.

RUSSELL FAIRBROTHER (Labour) : I move, That the question be now put.

Hon Dr NICK SMITH (National—Nelson) : I raise a point of order, Mr Chairperson. The Opposition has shown considerable tolerance. The Climate Change (Emissions Trading and Renewable Preference) Bill is the most important bill of the term of this Parliament. Today we have had over 785 amendments tabled by the Government—785 amendments—and it seems extraordinary to me that the Government is attempting closure motions on such a critical bill in the term of this Parliament. I ask you, in considering whether to allow this debate to continue, to consider both the importance of this bill and the fact that only this morning we received the amendments the Government has proposed.

Hon Dr MICHAEL CULLEN (Leader of the House) : Yet again we see the National Party misusing the point of order process. This is a non-debatable motion. You and you alone, Mr Chairperson, make the decision, and this side of the Chamber will be happy to abide by it whatever it may be.

The CHAIRPERSON (Hon Clem Simich): I thank the member for that. I myself could not quite see the connection with the quality of tolerance. But I will call one senior member, Dr Paul Hutchison.

Dr PAUL HUTCHISON (National—Port Waikato) : It gives me considerable concern to speak on new Part 6A, inserted by clause 67, of the Climate Change (Emissions Trading and Renewable Preference) Bill, which has clearly been amended from its title of “Limitation on new fossil-fuelled thermal electricity generating capacity” to “Restriction on new fossil-fuelled thermal electricity generating capacity”. As my colleague the Hon Nick Smith pointed out just this afternoon in a motion to the House, it would have been sensible and responsible of this Government to send this bill back to the Finance and Expenditure Committee to undergo in-depth analysis and then a final return to Parliament.

I spoke on the first reading of this bill last year. I remember that it was the time prior to the Beijing Olympics. I totally remember something on the TV showing the spectre of Beijing immersed in smog, fog, and fossil fuel - generated particles, causing the workers on the “Bird’s Nest” stadium to have to wear breathing apparatus, and to be hardly able to go about their ordinary business. It was a spectre that demonstrated just how serious the whole issue of climate change and the response to it is.

It was with considerable hope that the National Party supported in its first reading the legislation we have before us, but it was with huge concern that I learnt that 1,000 amendments were put before the select committee by the Government. That demonstrates just how wrong the Government had it to start with. This afternoon, when the Government presented another 750 amendments, it showed how pathetically badly it has managed the process of this bill so far. How can it expect anyone in this Parliament to treat it, or this very important legislation, seriously when it treats the parliamentary process so lightly, recklessly, and irresponsibly.

New Part 6A refers to fossil-fuelled thermal electricity generating capacity. In my electorate of Port Waikato, which I am proud to represent, is the New Zealand Steel mill. It is directly responsible for about 1,200 jobs in the area, at an average of $90,000 each; and around New Zealand about 5,000 to 6,000 jobs are highly dependent on that steel mill. The thing about it is that it is world best practice, and in terms of its co-generation capacity it is also world best practice. Yet here we have a Labour Government trying to put every hurdle in the book in the way of the efficient, effective continuation of one of the best steel mills in the world—a steel mill where there is commitment to investing a further $2 billion over the next 10 years, including into a vanadium and titanium extraction component that will be very helpful for New Zealand.

We look at what is going on around the rest of the world. For instance, in Europe there is an exemption for steel mills. But this Labour Government’s hurried and pathetically poorly processed legislation may well mean that key strategic infrastructure for New Zealand, like our steel mill, will be forced to go offshore. What will that mean to emissions, greenhouse gases, on the world scene? It will only mean that they will go to places like China and India, where they will be increased.

TIM BARNETT (Senior Whip—Labour) : I move, That the question be now put.

Hon Dr MICHAEL CULLEN (Leader of the House) : I move, That it be an instruction to the Committee of the whole House on the Employment Relations (Breaks and Infant Feeding) Amendment Bill that it have the power to consider and, if it thinks fit, adopt the amendments set out on Supplementary Order Paper 229.

• Motion agreed to.