Biofuel Bill

It is indeed interesting to have been part of the audience during the first part of the biofuels debate. It is worthwhile to connect Part 1 and Part 2 together, because this bill really comes from the basis that we are endeavouring here to set up a framework whereby we can grow an industry that will eventually give certainty for investors, and that framework is part of a tax regime. We know that that in itself should not only give certainty but allay a lot of fears for those people who would be strong-spirited enough to consider setting up a biofuels industry in New Zealand.

There is just one thing I want to draw the Chairman’s attention to. We had a speech from the chairperson of the Local Government and Environment Committee, and it made very little sense around the urgency of why we have to implement this bill. My mind went back to a number of the other bills that have been pushed through under urgency, and it worries me terribly to think about the regulations that will be worked out under this bill, should it ever be passed into law.

When we look back on the track record of this particular Government, we see that we have had the Electoral Finance Act, and the debate on the emissions trading system the other night in the Committee of the whole House. It really worries me that we have seen a lot of work done in this Chamber on bills such as this Biofuel Bill—we are on Part 2 here—that really, when the work mutates into its application on the ground, is quite untenable and unworkable, and has to be brought back to Parliament for a number of rewrites.

With regard to our science around biofuels, I suppose that it could be quite clearly said that this bill has had a very quick gestation period. It went to the select committee in 2007—I think it was in October—and it has come back now. Yet that is probably an indication of how quickly this science is moving. The conversations and the science have clearly shown that the perverse effects of biofuels have become very clear. We know clearly now that Government incentives to stimulate biofuels within the economy—whether as a tax incentive or tax write-offs in whatever way is referred to in Part 2—have created such perverse effects as those we have seen in the mid-west of America: less food being produced to be available for sale on the world market, and the subsequent rise and hike in fuel prices.

I imagine, too, in listening to a comment before about what Dr Norman the Green member was saying, that if we went far enough back in Hansard we would find that the very gestation of this bill would have emanated from the Greens, with a plea very similar to what the Minister said originally—that this was a panacea to many of our problems. However, with the quick passing of time and the perverse effects of taxation incentives, we find that we are confronted with harsh realities. This bill is headed in much the same way. It has unintended consequences, bearing in mind the comments made by Dr Cullen when he came to the Chamber to rescue his chairperson, Moana Mackey, who was unable to rebut the scientific arguments.

Sitting suspended from 6 p.m. to 7 p.m.

Mr Chair, I seek your indulgence to raise one question to the Minister.

The CHAIRPERSON (H V Ross Robertson): You have 32 seconds—go.

I draw attention to a further mess in this policy—the incentive that gives ethanol an advantage over biofuels. I ask the Minister to explain to me the logic of why, in schedule 2, “Amendments to Schedule 3 of Customs and Excise Act 1996”, ethanol is given a 42.524c advantage over bio-diesel. I would welcome hearing the Minister explain why to the Committee.

In the debate on Part 1 of the Biofuel Bill, a number of questions were put to the Minister of Energy that he chose more or less to slip over and not answer. That is fine, but one thing I wanted to know applies equally to Part 2—although when I look at Part 2 I see some of the answer. What political imperative of the disintegrating Clark-Peters coalition is driving this sort of legislation through the House in the dying days of this Parliament? That question is as valid in the debate on Part 2 as it was in the debate on Part 1. What is the political imperative? What is the urgency? What emergency is this country facing that means that Part 2 has to be driven through Parliament tonight under urgency? What is the imperative?

Let us look at Part 2. We see definitions of gasoline, petrol, and goodness knows what else. Then there it is, straight in front of us: tax. We see clause 27, “Powers of component authorities to levy petroleum tax”, and reference within it to local authorities’ fuel tax. We see clauses headed: “Assessment of tax”, “Tax recoverable as a debt”, “Penalty for late payment of tax”, and “Effect on agreements of imposition or alteration of tax”. We first heard the answer in this Chamber when the Deputy Prime Minister—the Minister of Finance in the disintegrating Clark-Peters coalition—said that this legislation would cost New Zealanders money. At the end of the day, is that not what it is all about? It is all about the rush of a Government that has taxed New Zealanders for 9 years to take the opportunity to throw some more taxes at the hard-working people of New Zealand.

The Deputy Prime Minister did not even have the good grace—nor has the Minister—at least to acknowledge that the impact of Part 2, if passed in its current form, will be no more than to steal food from the poor of the world.

💬 Hon Members: Ah!

The socialist members of the failing Clark-Peters Government can sneer and shout. [Interruption] The Minister for whatever from Christchurch can bellow out, but it makes no difference. Part 2 will have two impacts. One will be to gather revenue for the Government—tax, tax, tax. I would have thought that members opposite, rather than sneer and bellow across the Chamber, would at least be respectful of the impact that this sort of legislation will have on the poor of the world. Some respect, at least, needs to be shown.

Let us think about how much Part 2 will cost New Zealand. Officials have told us that an additional $60 million a year will be imposed on New Zealanders through the 1c per litre levy on fuel.

💬 John Carter: That’s just 1c. What about when it goes up to 4c?

That is right, I say to Mr Carter. This Labour Government and its coalition partners need to be very, very sure that these additional costs are justified, and I ask the Minister to address that question.

One of the interesting things about this debate is finding out whether people genuinely believe in and support the Biofuel Bill or whether they oppose it. It is fair to say that the National Party has made it quite clear that it opposes the bill for a whole number of reasons, which my colleagues have already communicated. It is probably fair to say that the Greens are genuine in their belief that the introduction of a bill of this nature may well have some benefit to New Zealand and, from their perspective, to the world. It is also fair to say that Peter Dunne probably thinks that Part 2 will have some positive impact from a New Zealand perspective and maybe even make a positive contribution to the world. Even New Zealand First members—although their arguments were pretty spurious, I have to say—probably have genuinely reflected on the bill and think that it is worthy of support, although I must say I was disturbed by Peter Brown’s explanation. But I cannot accept that the Government’s reason for supporting this bill is genuine. If the Government were genuine, then we could have expected it to bring forward this bill 2, 5, or a number of years ago. We might have thought that that was fair enough—that the Government had taken some time to study the topic. If the Government were 5 years or 3 years into its term of office, maybe it would be reasonable to say that it was genuine in what it was doing. But when the Government is bringing forward this bill 9 years after it came to power, just before the finish of this session, and is asking Parliament to pass the bill under urgency, we just cannot accept that it is genuine. We cannot believe that it is doing this for the right reasons.

It is obvious that the Government is pushing this bill through for political reasons. The Prime Minister said to New Zealanders that she would pour some fuel into the tank—she did not quite know how to do that properly, but it was a photo opportunity for her—and then the officials—

💬 Jill Pettis: What about Don Brash walking the plank or trying to get into that stock car?

The member over there, who lost her seat and will soon go out of Parliament, goes on about a lot of things.

💬 Allan Peachey: Is this her farewell speech?

Well, that may well be so. [Interruption] I am not denying that, of course. Parliamentarians all take photo opportunities. But the member has just accepted and acknowledged that this bill is being passed for the photo opportunity for the Prime Minister and not for genuine reasons, at all. She has just confirmed my argument. Sadly, what this means is that when we look at Part 2 and talk about taxes, it will just put more cost on to the people of this country, and the reason is that it gives the Prime Minister and the Clark-Peters Government another photo opportunity.

💬 Jill Pettis: Doesn’t that word “Government” have a lovely ring to it?

I have to say to the member over there who keeps interjecting that that is not accepted—

💬 Allan Peachey: Her farewell speech.

That was her valedictory—the interjection. The fact is that, whether or not we like it, not even the Minister in the chair, the Hon David Parker, has come up tonight and put forward any lucid argument about which we could say that we might reflect on it and have to accept that the Minister has a valid argument.

You know, it is all very well for all the parties to say that we have to start somewhere. We accept that. No one is arguing that there should not be a debate and an argument around biofuels. What we are saying, which is the opposite of what the Government and its supporters are saying and have not yet put forward lucid arguments for, is that we should question whether this bill will achieve what should be achieved by introducing biofuels to New Zealand. That is the unfortunate thing about this debate—it has become hollow. All that has happened all night, throughout this whole debate, is that the National Party has been attacked for the fact that we do not support the bill. No Government members have argued that they do not accept the National Party’s arguments but that, nevertheless, they will consider this point, this point, and this point because those are the valid reasons for this bill.

I have not yet heard the Minister, the chairman of the Local Government and Environment Committee, or anyone from New Zealand First put forward a lucid argument that we could sit here, as the National Party in Opposition, and say there may be a valid argument in it. The Minister could take a call, and stand up and say: “Listen, John Carter. You need to understand that you have missed the point. You need to understand that there are valid reasons why we are doing this. You need to understand that this will bring this benefit to New Zealand. It will have this benefit for households and car-owners in this country. It will mean this much, from a New Zealand perspective, on the world stage.” If the Minister had put forward those arguments, then maybe we would have had to sit back and think about it. But I am afraid that the Minister has never put forward those arguments. He has never done that in the select committee. Indeed, if you have looked, Mr Chairman—and I am sure you have, because you are a very erstwhile member of this Parliament—you would have read—

💬 Jill Pettis: “Erstwhile”?

He is. He is a very earnest member of our—

💬 Jill Pettis: But you said “erstwhile”.

Well, he is both. I mean, that is a double compliment. The point is that at least he is coming back to this Parliament. Anyway, we should not bring the Chairman into the debate.

💬 Jill Pettis: But erstwhile means former.

Oh well, then it is that member whom I am referring to. I am sorry; I got the direction wrong. I beg the member’s pardon. The point is this. If the members of Parliament had read this statement from the Ministry of Economic Development, then they would see that it is against this legislation. Ministry officials make it quite clear. They are saying that this legislation will not work and that it will put costs on to this country. They know it will increase taxes, and they know it will increase costs for motorists. The Parliamentary Commissioner for the Environment, a person whom one would think would want to support this sort of legislation, has said in her statement that she opposes this legislation for the way it is drafted. She does not oppose the concept; she supports the concept. So does the National Party. No one is arguing against the concept of biofuels; what we are arguing against is the way in which this Government is implementing their use. The timing of it is bad, and on top of that, the bill itself is flawed. It does not allow sufficient time for the whole issue around standards to be established before people have to compulsorily get on and implement it. That is seriously bad.

The fact is that this Minister has failed this Parliament. Mind you, he has done it before in many other things. He has not done anything with regard to energy. We have serious problems with regard to a whole number of issues in areas where he has been the Minister, and this is just another example of where this Minister has been found to be deficient in his ability to contribute to this Parliament and to this country.

Nick Smith put forward a very good amendment—which, unfortunately, was defeated, I assume—and the point now is that we should be considering this bill and opposing it. I would like to think that the Minister would stand up, take a call, and explain to members why this Opposition should be supporting this bill, because he has not done so yet. I say to the likes of Dail Jones, who is here on behalf of New Zealand First, and I say even to the member from the Greens that maybe they need to reconsider. They were opposed to this bill in its original form.

💬 Sue Bradford: You didn’t mention Jeanette Fitzsimons speaking before.

Yes, I did; I mentioned Jeanette. She made a contribution. I made the very point earlier that when I listened to her contribution, it was all about the fact that we were putting borders round New Zealand. We were not worried what was happening worldwide. Well, I say that that is the problem. This Minister has now tried to shut us out from the rest of the world. He is saying that this legislation will all be New Zealand - focused, it will be all about our country, and it will be all about us. The sad fact is that this legislation will be to the detriment of New Zealand, and it will certainly be to the detriment of the people in this country, and all because this Minister has not done his homework. He has not set some standards that we can all apply. This legislation certainly has not allowed us a convincing argument.

Speaking to Part 2 of the Biofuel Bill, I say that it is quite appropriate that we direct attention to schedule 1, which contains the new schedule 5, “Biofuel percentage”, to be added to the Energy, (Fuels, Levies, and References) Act by clause 16 of this bill. I make the point that when we look at when this legislation would become law—should it pass—we see that it is 1 October 2008. There is an indication, based on that date, that there is an anomaly and that there will be a perverse effect. I would like the Minister in the chair, the Hon David Parker, to explain why it was acceptable to wait until 1 July 2009 before a standard would be put in place to fulfil the requirement put in at the very beginning of the bill that it was to be sustainable. That is why we on this side of the Chamber are saying that the bill in its present state is perverse, in the sense that it is following the notion that biofuels are a panacea for all our global warming problems. However, time has moved on so quickly that we now understand the full extent of the issue. Forests are being cut down, and the equivalent percentage on which our biofuels are produced is far and away outweighed by the carbon footprint, so there is quite a perverse effect. Yet we have set this standard that is coming in on 1 July 2009, and National members are saying, effectively, that doing that is no better than everybody else’s perverse effects, which are driving Third World countries towards poverty and starvation.

I just draw the Minister’s attention to the fact that a lot of the international commentary is saying that countries will not be able to arrive at a standard until 2011, so this Clark-Peters Government, in its last, dying days, is to introduce that type of legislation into this House. I seek the indulgence of the chair of the Local Government and Environment Committee to allow me to mention what we were saying when we had a very brief discussion about this matter before the dinner break. We were talking about creating a biofuel industry in New Zealand, and about using some of the growth within the dairy industry and using the whey to produce biofuels, or maybe tallow and things like that. Of course, in Marlborough some people have been working on sewage, so from that point of view, some very, very creative thinking is going on.

May I put it to members in the context of where biofuels have replaced a lot of the food basket, would it not have been far better to, in actual fact, have thought beyond just the confines of biofuel, and looked at ways of incentivising research, because in my view that would have been a far more effective way than picking winners with ethanol over bio-diesel? I am still waiting for the answer to my questions that I raised earlier as to the logic of that 42.5c preference of ethanol over bio-diesel.

So when we stop and look at it all here we have this bill in front of us, and we do not have a sustainable standard. We are actually seeing the perverse effects of a bill for virtually the next 12 months whereby continued burning and cutting down of forests, and Government incentivised tax-benefited biofuels, will be produced, and we know even from the Green member, if my memory serves me right, that 20 percent of the carbon emissions at the moment are coming from the perverse effects of cutting down forests, planting crops, and endeavouring to produce biofuels. I would like that question answered, because schedule 1 talks about the percentages of biofuel. In the first year it will be 0.5 percent, year 2 will be 1 percent, year 3 will be 1.5 percent, year 4 will be 2 percent, and year 5 onwards will be 2.5 percent. To me it all looks rather strained—very much just a structure and a framework with very, very little substance. This Government has a track record of this sort of thought to containing global climate change as part of a suite of actions taken by a Government that is in desperation.

💬 Hon Maurice Williamson: In the dying throes of the Government.

In the dying throes of the Government, as my colleague here mentions. Part 2 talks very much about the taxation, and when one thinks of the tax, one thinks about a pretty structured regime with a well-fleshed up body to it. Unfortunately, the debate being put forward on this side of the Chamber indicates that we are so light on substance. This bill is all about form, and it is a tragedy to see that it is all form without substance when we look at the sustainability standards. Schedule 1A, “Consequential amendments to other enactments”, talks about the far-reaching effects, and it may be interesting from that point of view. Could the Minister also take a call, because I am finding these schedules incredibly complex, and I think they need to be explained. It is fascinating to me that it has an implication on such Acts as the Building Act 2004, and the Injury Prevention, Rehabilitation, and Compensation Act 2001. It also affects international agreements: the International Energy Agreement Act 1976—that is going back to last century—international energy agreements, land transport rules, and the Local Government Acts. [Interruption] It is all written down here in black and white. It will be so very, very difficult for the members on the opposite side to make head or tail of that, let alone from this side of the Chamber.

I would like to take the opportunity to get some answers on those two questions—the one I asked first about why the advantage of 42.5c for ethanol, and, secondly, why it is so urgent to put this Act in place that the Minister will not even wait until July 2009 when, officials are saying, there will be a standard put forward, as referred to in Part 2. I ask the Minister why he has not deferred this bill until such a time as there is the possibility of a sustainable standard. Is it because they know that this Clark-Peters Government is in its last days? Is there another reason for it? In the form it is in today, it is not a very positive bill. It is just one of those other bills that will be following in the footsteps of the Electoral Finance Act, and the emissions trading scheme that we are still debating at the moment. Basically, as I hear it, this Government has stopped listening to the nation—the citizens of New Zealand.

We have so many unintended consequences that emanate out of this bill. Sadly, this bill appears to me to be born out of a notion that biofuels would be the panacea to all our problems going forward. In actual fact, the substance of this bill when it materialises into regulations will not do one thing to stimulate the development of biofuels in a sustainable way or any other way. It will just be a very, very complex morass of regulations—a spaghetti bowl of regulations—that will be just as purposeful as this Government in its last dying days.

Thank you, Mr Chair, for allowing me to speak on this bill. It is rather complex. It is certainly a very new area. I would encourage the Government, though, to think outside the square, because if we have a global issue in finding alternative fuels, I would have thought that it would be very important to be able to identify those people who are doing like research, and get alongside those so we multiply the effect of the dollar that we have here, and in that multiplier effect find some true solutions going forward. At the moment with the bill the way it is, it will not stimulate, sustain, or promote the production of biofuels.

I wish to make a contribution to the debate this evening on the Biofuel Bill. I tell those who are listening that we are sitting in urgency—13 hours of urgency today, right through to midnight. This bill is, obviously, a priority for this Government. It is in its urgency motion. It obviously wants to get it through the House. When reading the bill—some 100 pages; no, it is 97 pages; I knew that it was close to 100 pages—one realises that it is all about the Government’s political survival.

Those listening and those in the House will recall that the Prime Minister’s statement to the nation last year was all about sustainability. In her speech she mentioned it 17 times. Then she said that the Government will sell all the Ford Fairlane Crown cars, because it wants to have less of a carbon footprint. Well, lo and behold, they have been replaced by BMW 7 Series cars, and the former Ford Fairlane Crown cars are now being driven around Auckland. In terms of the Government reducing our carbon footprint, and in terms of the Prime Minister’s statement about the Government wanting New Zealand to be more sustainable, well, it has not happened at all. It was yet another political stunt.

I am interested to see that the legislators are still struggling to define what sustainability really means. The important point about Part 2 is that it is all about taxes and regulations. We have seen that over the last 9 years—more and more taxes and regulations. They affect hard-working people and families in New Zealand. There have been 2,000 regulations passed in the last 9 years, under this Government. This Biofuel Bill requires only 0.5 percent of biofuels in the first year. The environmental benefits of this legislation can be debated until the cows come home. Members should just think about it. The figure I hold in my head is 230 kilograms of corn to produce enough ethanol to fill up the family car for one trip, but 236 kilograms of corn produces enough bread on the table to feed mum and dad and two kids for the whole year. How can ethanol be sustainable, when we analyse those facts? That is the important thing. This is a case of the Government wanting more regulation.

On this side of the Chamber we say that, yes, we want a more sustainable environment, and, yes, the public will determine where they want to go with biofuels, but they do not need the Government and nanny State legislation to tell them they shall have biofuels—but, by the way, they are only half a percent. It is a bit like telling mum and dad and the kids in the morning, after they wake up and go to spread butter on their toast: “Oh, by the way, half a percent has to be margarine.” We have some real concerns about these regulations and the costs they will impose on hard-working families that are currently struggling with mortgage rates. Fuel is actually starting to come down in price, in terms of the price per barrel in US dollars. That is a positive sign.

I think New Zealanders now, as we go into the election, will think hard about this Labour Government and all the legislation it has passed. We are in the dying days of this Clark-Peters Government. It is starting to be incredibly fragile. Today we are sitting for 13 hours under urgency, we are sitting until midnight tonight, to pass a bill, and even those on the other side of the Chamber do not know how it will be implemented.

The important point about this bill that I also want to take particular note of is that the standards will not have been set, so the fuel companies will have to invest considerable amounts of money before they actually know the rules about specific biofuels. Will it be bio-diesel? Will it be ethanol? The list goes on and on. Tallow is another example. National has some concerns about this bill in its current form, and that is why we are opposing it.

I move, That the question be now put.

I have had to break an important occasion to get back here to take part in this debate. [Interruption] Yes, it is commendable. I was involved in a carbon-neutral activity to get here—I walked.

Part 2 deals with miscellaneous amendments. National members aired a number of issues that are of concern to us during the debate on Part 1, and, similarly, this part raises a huge number of questions for us.

The first issue is that I have never seen a bill before Parliament with so many delegated responsibilities in it. There will be more than one Order in Council; there will be Orders in Council to change, set, amend, and modify issue after issue. That in itself might not be bad, except that there is a vagueness around a whole lot of these issues—the setting of levies, the setting of taxes, and deeming whether something is sustainable. Being a member of the august Regulations Review Committee, I have to say that I see troubled times ahead when it has to determine, for example, whether an ethanol-based biofuel has come from sustainably harvested sugar cane. Those are the sorts of decisions that are delegated responsibilities. As I said in a previous debate on this bill, the focus is in the wrong place. The focus should be on finding alternative fuels that are sustainable and will solve the issue of our significant consumption of fossil fuels, and this bill simply will not do that. The delegated responsibilities are a significant issue.

Another issue that National members have a number of concerns about is what the cost will be. We are principally an exporting nation. That is where we earn the wealth that drives this economy. If we are imposing upon ourselves a series of levies, taxes, and costs that our competitors do not have, the impact is that we will not have investment in that part of our industry, and significant sections of our industrial base will head off overseas. Already, a number of people who have been investing on a continuing basis in the dairy industry are now heading to South America. They are doing that because opportunities exist over there, but also because they will not be bound by the various regimes that are incorporated in this bill.

One need only read clause after clause. There is clause 29, “Assessment of tax”; clause 30, “Assessment presumed to be correct”; clause 31, “Tax recoverable as a debt”; clause 32, “Penalty for late payment of tax”; clause 33, “Separate bank account to be kept by distribution authority”—for storing the money—and on it goes. Those provisions would not be in this bill if there were not significant costs associated with the implementation of it. We want a quantification of those costs. We are not saying we want to abrogate our responsibilities in terms of dealing with climate change; we need to know some of the specifics of the costs, but all we have are the words “set by Order in Council”, which are embraced within the bill time after time. Having spent some time on the Regulations Review Committee, which has the responsibility of reviewing such orders, I can see inquiry after inquiry. I can see a dearth of knowledge of how to make the astute decisions that will have to be made about issues of sustainability and where to strike those taxes. That will be the responsibility of the Regulations Review Committee. It will have to make sure that those impositions of cost stand where they fit.

The other issue I want to raise—and no other member has raised this issue that I know of—is we talk about sustainability in terms of the supply of fuel—

I move, That the question be now put.