Electricity (Renewable Preference) Repeal Bill

I rise to take a call in the debate on clauses 1, 2, and 3. I focus for a start on the date that this legislation comes into force, which is the day after the date on which the bill receives the Royal assent. We can take it from that that the Government intends, having passed this legislation in urgency, to take it as soon as it can to the Governor-General to get its Royal assent, and thereafter it intends this legislation to take effect.

I ask the Minister what the rush is and why the Government thinks there is a need to repeal the existing legislation—which is the effect of this bill—so soon, when it does not yet have the price of carbon in the economy that it says it will rely upon as the alternative in order to discourage thermal-based electricity and instead prefer renewable sources of electricity. We have heard from the National Government that it has adopted the Labour Government target of 90 percent renewable generation by 2025. But in order for there to be a meaningful prospect of that target being achieved, we have to build renewable generation in the future rather than more thermal generation, and that, of course, was what the existing legislation did. It placed restrictions on additional thermal generation, thereby encouraging New Zealand to go for renewable generation.

The great thing about renewable generators, as we all know, is that once we have built them the fuel is free. We do not have to buy more gas and more coal for ever. But when Government members spoke during earlier stages in this debate, they said that they would achieve that effect through having a price on carbon. But, of course, we do not yet have a price on carbon in the electricity sector; we have a price of carbon in the forestry sector only and, indeed, that has already been undermined by the National Government saying that it will suspend the emissions trading scheme.

We have a select committee being set up by a motion and taken through this Parliament by the Leader of the House, who is also the Minister of Energy and Resources. This new select committee has been created to look at, amongst other things, whether we should have something other than an emissions trading scheme or whether we should, perhaps, have a carbon tax.

💬 Hon Shane Jones: Rodney Hide made them do it.

Rodney Hide made them do it; that is right. Amongst other things, those members were weak, and they thought that they should open up the ambit and extend the inquiry into matters relating to whether climate change is real. In the meantime we do not have a price on carbon. We have uncertainty as to when we will have a price on carbon, whether we will have a price on carbon, and whether the price of carbon will be anything near the real market price of carbon or will be at a low figure such as the figure proposed by the Business Roundtable, which would have little environmental effect and would not act to discourage more fossil-fuelled thermal electricity in any meaningful way.

I ask the Minister to take a call and explain why it is necessary to have such an early date for this legislation to come into effect, and to say whether he has considered having an assent date that is after the date when the select committee reports back on whether we should have an emissions trading scheme, or after the date on which we have certainty as to whether we will have a market price on carbon. As the Minister has said in his remarks at an earlier stage, he and his Government are relying on that price of carbon to discourage more fossil fuel - based generation and to instead have renewable generation. I just cannot understand, unless I have some explanation from the Minister, how it can be that we can rely on a price of carbon that does not yet exist.

This also links back to the date on which the Electricity Commission loses its investigatory powers. Allied to those investigatory powers is the public right of participation in these decisions, because under the current law the commission has to publish notice of its intention to do something and to give a reasonable opportunity to let people express their views, and then it must have regard to those views. It seems inappropriate that those rights are being taken away.

Right through this debate there has been one argument that the National Government could have put in favour of the Electricity (Renewable Preference) Repeal Bill, but has not. The idea came up in this stage of the debate: the former Minister of Energy, the Hon David Parker, put his finger on it. One way of describing the argument that the Government should have come up with in support of this legislation, but has failed to, goes like this: why would one bother to have a moratorium on fossil fuel generation when the emissions trading scheme is coming? Why would one do that when the electricity system is to face a marginal charge for carbon dioxide? What would be the point of having a moratorium in addition to that?

Right through this debate the National Government has not adduced that argument; it has simply not thought it through. If I were in the Government I would argue in favour of the legislation that is before members by saying that it is belt and braces. Why would one need both? When it comes to the commencement clause, we need the belt at one point and braces thereafter—or, if you like, braces at one point and the belt thereafter. Sooner or later, the stationary engine sector will come into the emissions trading scheme; it is scheduled to come in on—

💬 Hon David Parker: 2010.

—1 January 2010. That is 12½ months from now. Maybe the commencement date should be 1 January 2010 or—just to be a little more careful, because a high-level select committee is going on and some people in this Chamber think that that means there is a lot of time to do not very much at all—we could have a commencement date of “1 January 2010, or at the inclusion of the stationary engine sector into the emissions trading scheme, whichever comes later”. One could do it that way.

I wonder whether the Minister would like to take a call and pick up the thoroughly good bit of logic put forward by my colleague the Hon David Parker. I wonder whether he would like to take a bit of help from the Opposition—which has finally come up with a good reason why one might want this legislation—and use the belt and braces argument. He could use the commencement clause to ensure that we have one and then the other, but never both. I wonder whether the Minister is tempted to rise from the chair and take a call to explain whether he thinks that logic has any fault in it.

It seems to me that there is no intellectual grunt behind the Government’s position. We are offering it some. I will do so again. One does not need both belt and braces. Let us have the belt for the moment and braces thereafter. Why do we not do that through the commencement clause? Why cannot the commencement clause read: “will come into law on 1 January 2010, or at the arrival of the stationary engine sector into the emissions trading scheme, whichever comes later.”? Then, if the Government needs a bit of extra time with its high-level select committee, nothing is lost—the moratorium remains in place until it is replaced by the marginal cost of electricity generation inclusive of the cost of carbon dioxide.

There is a certain magic to that idea—certainly we think there is—and we wonder whether the Minister, if he can stop yawning long enough, would like to get to his feet and tell us what he thinks might be wrong with it. Did he get it or shall I go though it a third time?

It is appropriate to be debating the title clause of the Electricity (Renewable Preference) Repeal Bill. It is hard to understand how anybody could not have a preference for renewable energy, as opposed to the counterfactual—that is, energy that is not renewable and energy that will not be available for our grandchildren.

I am not a paid-up member of the Green Party, but I agree with its members that we face peak oil prices at some point. Even foreshadowing constraint, we live in a time when oil prices have reached US$150 a barrel. How long will it be before it is US$200 a barrel or US$400 a barrel? The long-run average trend is up, and against that background that will, of course, drag up the price of other fossil fuels, such as coal and other substitutes—

💬 Hon David Parker: Gas.

Gas. In that kind of world, what is really important is that New Zealand, as an energy-dependent country, is well stocked with alternative energy sources. So it is absolutely vital that we create the incentives now, because of the long lead times that are required to bring in this production.

It is also the case that because of the good work of the Hon David Parker and the outgoing Government, there are enough megawatts of capacity and renewable energy in store in the next few years to provide for the growth in baseload and peaking demand. That means that the renewable energy preference policy is working as it was planned and foreseen to do. But it worked only because the Labour Government had the fortitude to send a clear signal to the market, and the market cannot internalise that which the participants do not personally bear. The market cannot internalise the benefit to society of having a long-term plan for energy that is sustainable and protects our security. The market can only take to book the benefits that are relevant to each individual company.

Therefore it follows that clear Government leadership is required, and therefore in a fossil fuel - constrained world it follows that that policy was good, which brings us to the reason why we are here. Why on earth would we do this? Why on earth would we remove a preference that makes all the sense in the world? Nick Smith is smirking. I wonder why Dr Smith is smirking. He has a PhD, and he should be able to work out that this legislation is a giant act of shooting oneself in the fossil fuel foot.

This policy does not actually have any relevance to the language in the explanatory note of the bill, which conveys that the legislation is somehow related to the emissions trading scheme. Let us just stand back and think for a second about why we have an emissions trading scheme. The emissions trading scheme allows our economy to adjust at a least-cost price path for any given level of carbon emission constraint. So at whatever level at which the Government would like to see us pumping soot into the atmosphere—whatever level Rodney Hide thinks would be OK—the cost of adjustment will be lower under tradable emissions. David Carter may laugh. The member represents the agricultural community, I believe.

💬 Hon Steve Chadwick: I raise a point of order, Mr Chairperson. I noted that the Minister in the chair, David Carter, was very keen to take a call as he interjected on the previous speaker. We are very happy for him to take a call. We note that he has not yet done so in the Committee stage.

The CHAIRPERSON (Hon Rick Barker): That is not a point of order; the member knows that. I would remind the Minister that it is accepted practice not to interject from the Minister’s chair, because he or she has access to a live microphone. I ask the Minister to restrain himself.

It is therefore very hard to imagine why the National Party in Government would want to impose change on New Zealand that at any given level of emission reduction would cost our economy more, when tomorrow it will announce significant increases to Government debt, a forecast track for higher unemployment, a forecast track for more difficult—

💬 Hon Dr Nick Smith: That’s your legacy.

No, no. [Interruption] I raise a point of order, Mr Chairperson. You are doing a great job as the Chair. I do not believe that anything the previous Government has done is “your” legacy.

The CHAIRPERSON (Hon Rick Barker): I respond to the member by saying that that is not a point of order, because the interjector does not have the call. It is the speaker with the call who should not bring the Chair into the debate. The only reason that that interjector is now in the debate is that the member has made mention of him. Had the member ignored the interjection, the person would not be in the record. The member has 59 seconds to continue.

Is it not interesting that that member is still smirking? He is smirking about an international environment that is getting worse by the day. I understand the latest projections are for Chinese growth in the coming year to fall as low as 2 percent. And David Carter smirks. That member purports to represent agricultural producers, whose livelihoods will be negatively affected.

I ask Mr Carter whether this is just the arrogance of new-found office—is that what it is about? He is a member from a sector that is characterised by high emissions of methane, of nitrous oxide, and of other greenhouse gases that will be hugely affected if this bill goes through.

💬 Dr Paul Hutchison: Have you got any solutions?

Yes, we have solutions. One of those solutions is to ensure that we are able to have renewable energy flows, which means that we can adjust with the least disruption to our economy.

I move, That the question be now put.

It is somewhat ironic to be rising to speak on the Electricity (Renewable Preference) Repeal Bill when we have had such a lack of energy from the Minister in charge of it, Gerry Brownlee. In fact, I do not think he has taken a single call on this bill, which is in his name—not a single call to speak on this bill. He got an exemption! Do members think he would be eligible for an exemption—

💬 Hon Member: Thermal generation!

—for thermal generation?

I am very happy to rise and speak on the title clause of this bill and to offer other potential titles. I thought maybe we could call it the “Climate Change Denial Bill”. But then I thought maybe we could call it the “Climate Change Denial Bill No. 2”.

💬 Moana Mackey: Or No. 3.

Maybe even No. 3. The bill that we were debating immediately before this one, the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill, would be “Climate Change Denial Bill No. 1”; this bill would be “Climate Change Denial Bill No. 2”.

I am a bit confused as to where Government members stand on climate change. I know that they are taking a balanced approach: on one day they say it is a hoax, and on another day they say that of course they have always believed in climate change. Then they seem to come back again and say that it is a hoax. So I am a bit confused, and I imagine that anybody listening at home would be a little bit confused as to the Government’s actual views on climate change.

I notice that the Minister for the Environment, Nick Smith, is suddenly very quiet. Clearly he has been railroaded by the other members of his party. Maybe that is another potential title for the bill: it could be the “What Happened to the Bluegreens Bill”.

💬 Hon Dr Nick Smith: It was in the Bluegreens policy.

Was it in the Bluegreens policy?

💬 Hon Dr Nick Smith: Yes, it was.

Is that right? So how is that possibly—in any way, shape, or form—green?

💬 Hon Member: It’s blue.

It is blue—it is certainly very blue—but I am not sure where the green bit comes in when those members are saying that they do not really like renewable energy and they do not really think it is all that important. It is certainly not a high priority for this Government to make renewable energy important. This is the second bill in a row where we are debating whether to wind back the clock on renewable energy. That is what National seems to think is one of its most important priorities immediately on becoming the Government. In fact, it thinks it is so important that the public of New Zealand should not have their chance to have a say on its decisions, at all. The Government just rams the bill through under urgency without anybody having a chance to have a say.

We could call this the “Clean Green Image Revocation Bill”, because that is actually what this is all about.

💬 Hon Dr Nick Smith: It was only ever an image.

Dr Smith says that it was only ever an image, so we were never a clean, green country. The people of New Zealand who are very proud of our clean, green image will be very, very disappointed to hear that. They will be very, very disappointed to hear that, according to this new National Government, we are not a clean, green country, at all.

💬 Hon David Parker: Aotearoa—the land of the long white cloud.

That is right—the land of the long white cloud. It is not a clean, green country any more, and according to National it never was anyway. So let us not worry too much about that—let us not worry about that, at all!

We could call this the “Where Has the ACT Party Gone Bill”. This is yet another bill being passed that has no regulatory impact statement. How many bills have been passed that have no regulatory impact statements or very inadequate regulatory impact statements? I wonder whether we have a Minister for Regulatory Reform now, and whether he has a view on the fact that there is no regulatory impact statement on this bill and that there has been a complete absence of any form of regulatory impact assessment on the legislation that is being rammed through. We could call this the “Where Did Think Big Go Bill”. Where did Think Big go? This is the “Think Big Legacy Bill”, perhaps.

Members opposite have been talking about increased power prices, but we know that in most instances thermal generation is actually more expensive than renewable generation. Why on earth does this Government want to promote more thermal generation—

💬 Hon Dr Nick Smith: So why do you need to regulate it if it’s cheaper?

Perhaps the Minister for the Environment needs a little lesson on how the electricity market actually works. Maybe he could talk to the Minister of Energy and Resources, but I am not entirely sure that he understands it, either. I am not entirely sure that he has quite got to grips with that.

💬 Moana Mackey: He hasn’t got to that page in his colouring book.

That is right. The picture book has not quite got up to that part yet. The cartoonists cannot quite draw it fast enough for him to keep up.

There are many other titles for this bill.

💬 Hon Member: Hoax.

It could be the “Climate Change is a Hoax Bill”.

💬 Grant Robertson: A balanced approach.

It could be the “Balanced Approach Bill”. Again, we are coming back to the balanced approach.

I move, That the question be now put.

The CHAIRPERSON (Hon Rick Barker): I will take one more call.

I am happy to take a call on clauses 1, 2, and 3 of the bill. Again, I urge the Minister of Energy and Resources to get on his feet and actually respond to the criticisms and the questions of the Opposition. I hope the Minister is not running on renewable energy, because if he is I am starting to think it ain’t so flash. Instead of sitting there and yawning, looking through his picture book, and doodling on the little bit of paper in front of him, maybe he could take a call.

I remind the Minister that we are in urgency because of his Government. He is giving us looks as though somehow it is our fault that he is forced to sit in the chair and answer questions. He is yawning like nothing else. I remind him that it was his Government that called urgency—

💬 Chris Tremain: And this is the title.

—and is putting this bill through the House under urgency, and that is the reason he is in the chair. Maybe we could call the bill, I say to Mr Tremain, the “Would It Not Be Wonderful If We Had a Minister in the Chair Who Took a Call Bill”. Maybe that would be a good title for this legislation.

Once again, we see legislation being rammed through Parliament under urgency that does not have to be rammed through Parliament under urgency. Maybe another title for this legislation could be the “We Desperately Need to Look Like We Are Doing Something in the 100 Days of Turbocharged Aspirational Action That We Promised the Electorate, So We Are Forcing Through Legislation That Could Have Gone to a Select Committee, Because We Have Decided That the Right of the People of New Zealand to Have Their Say at a Select Committee is Less Important Than Our Image That We Are Doing Something Bill”. I know that it is a long name, but I think it fairly encompasses—

💬 Hon Member: It’s longer than the bill!

—it is longer than the bill—what the bill does. I know that members on this side of the House have been making this point a lot during urgency. That is because 100 percent of the bills passed so far have been rammed through under urgency with no select committee process. That might be a record that the member is proud of, and his little twitchy smile tells me that he is proud of it, but the select committee process is important to this House. It is a way that we can make legislation better. There are concerns—[Interruption]

💬 Hon Member: It protects them from themselves.

It does. The Minister may think he knows everything, but there may be some people out there in the country who know a little bit more about this and who want to have their say. People who are affected by this legislation might want to have their say, and the Minister is denying them that right. I think that is appalling.

Another title for this bill could be “Another Bad Day for the Planet Bill”. My colleague Steve Chadwick in her contribution earlier raised the fact that this bill is part of the trifecta of the urgency last week and this week. Mr Brownlee, in either his first or his second reading speech—I cannot remember which one it was, because they were so close together; they did not have the usual 6-month select committee process in between them, and were about an hour apart—basically said that doing something will make things worse. That is also the argument we heard from Mr Brownlee on the biofuel legislation—that the fact that we had done something would make things worse than if we had done absolutely nothing and left it up to the market to decide everything. Well, I say that it is shameful for a Government to absolve itself from responsibility like that. It may have no ideas on how to do anything, but that does not mean it should be ramming through legislation under urgency to repeal legislation that was developed at a select committee and was passed through this House, when it actually has no idea what it will do.

This is yet another piece of legislation that puts the cart before the horse. The Minister is saying to the people of New Zealand: “Trust me; trust me that I will do what I said I would do, and that I will implement all the things that I am promising to make this better.” Well, why should we trust this Minister? He comes from a Government that in 2 weeks has made New Zealand a laughing stock on the world stage when it comes to climate change.

💬 Hon Dr Nick Smith: Rubbish!

It is true, I say to Dr Smith. The member probably has no concern about New Zealand being a laughing stock. He is probably quite used to it. But the fact is that is how we are now being seen. In 2 weeks the Government has undone a number of years’ worth of good work, and for no reason. Today the Minister, Gerry Brownlee—he might consider this a good day at the office—lost a businessman the $10 million that he had invested, by repealing the biofuel obligation. The Minister in the chair might be proud of that—I do not know; I do not know what drives some of the people in the National Government—but one would think that it would be a bad thing.

We could also describe this bill as incredibly bad for research and development in New Zealand. Last week we had the repeal of the research and development tax credit, which would have helped some of our most innovative businesses, some of which were doing work in this area. Mr Brownlee knocked them out last week. This week he is knocking out renewable energy.

I move, That the question be now put.