Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill

It will come as no surprise to this House that the Labour Party will be opposing this legislation, vociferously. We think the decision of the Government to wind back biofuels is simply wrong. We think that it is unjust. We think the process that is being used by the Government is particularly unjust. We think that it is wrong for a Government to pass legislation that takes away the productive capacity of this or that individual enterprise without the enterprise having an ability to submit its case. We think that is wrong. We think that is unjust. We think that it is economically damaging. Quite apart from the fact that this company or that company will have to close, and that there will be a loss of jobs—and in the case of one such company the loss of 46 jobs—it is economically damaging. Quite apart from that, it is also economically damaging in the sense that it does not allow New Zealand to make slow and early steps—and let us make it clear that the progress of biofuels is in its infancy—towards a biofuels future. That has now been stopped by this legislation.

💬 Hon Gerry Brownlee: No, no!

The Minister is deluding himself. It is environmentally damaging in the sense that our ability to replace the fossil fuels used in our transport sector will now be reduced.

💬 Hon Gerry Brownlee: No, it is not.

It will be reduced, and that will be environmentally damaging.

Most important, it seems to me that this legislation will go through the House this week without a rationale, and it is that absence of a rationale that I want to concentrate on. The rationale, of course, was what the Minister in his first reading speech attempted to lay out. I listened to the speech very carefully and I have taken notes from it. I find that the argumentation of the Minister’s first reading speech is dishonest. I find that the argumentation is dishonest, and I am saying that it is dishonest in order to stay well within the Standing Orders. I now want to lay out, step by step, why I think the argumentation is dishonest.

The Minister began—I thought quite correctly—by pointing out that biofuels can cause enormous damage. They can displace an awful lot of arable agricultural space, for example, and they can also cause a great deal of deforestation. That is known; that is accepted. The Minister made the point correctly. However, he failed to point out two other things. The first is that the legislation this bill seeks to repeal does not allow for that type of biofuel to come into New Zealand. Secondly, by the repeal of that legislation, such biofuels will now be able to come into New Zealand—

💬 Hon Gerry Brownlee: Rubbish!

—unless there is some regulation that the Minister has forthcoming that we do not know about. He sits there and says “Rubbish!”; he is wrong. It is a matter of fact that the biofuels legislation that was passed by this House earlier this year contains a significant number of sustainability safeguards. Furthermore, it is a matter of fact that the Ministry for the Environment and other agencies had indicated to the Government of the day—and would have indicated to this Government, too, I have no doubt—that their final regulatory regime would be ready by about July 2009. Yet we are getting rid of this legislation. We are getting rid of the sustainability parts of it that are in the primary legislation. The Government is squealing that somehow that is a good thing, but it is clearly something that will take our country backwards.

The Minister says there are not enough biofuels now to supply the sales obligation. What should be a surprise about that? The Government would lay out a sales obligation, give the industry notice, put up the obligation by a little bit each year, and then the industry would invest to meet that target. Those targets will no longer exist if this legislation is repealed—those sales obligations will no longer exist—and most, if not all, of the biofuel industry in this country will shut down. Mark my words!

The Minister said that the standards were not in place; I say that if he had waited 7 months they would have been in place. The Minister said that the standards could not be put in place, but that is contrary to the advice that officials gave to this Government, and to the select committee, on the original bill, etc.

But the thing I disliked most was the Minister saying that the Parliamentary Commissioner for the Environment opposed the bill and said that it was wrong.

💬 Hon Dr Nick Smith: That’s right.

It is right.

💬 Hon Dr Nick Smith: Absolutely right.

It is right, but what is wrong is that the bill was changed, and the Parliamentary Commissioner for the Environment then said that the legislation was in satisfactory form. The legislation was passed with her blessing, but the Minister has failed to acknowledge to the House that that parliamentary officer did her job. The Parliamentary Commissioner for the Environment went into the select committee process with the bill as introduced and said it was not good enough, and it was not. The select committee fixed it up so that it was, and she said then that it was satisfactory, but the Minister in his first reading speech failed to advise Parliament of the views of one of Parliament’s own officers on the bill as it came out of the select committee—failed to advise Parliament. That is what I think is dishonest argument. I think the Government is bewildered on this; I think it is bewildered, illogical, and wrong.

Let us now go to the next point that the Minister raised, which is to do with money. The Minister said that the price of biofuels would cost somewhere between 2c and 8c a litre additionally. Well, that was the advice received by the select committee from the oil companies—that is what Chevron Oil said, or BP said. If the Minister is to become some sort of spokesperson for the “seven sisters”, that is fine and dandy, but why did the Minister not also advise the House what the official advice would have been on that cost differential? Why did he not do that? It seems to me that he did not do it because it did not suit his argument. Here—unfortunately for the Minister—are the official advice figures: the cost would not be from plus 2c to plus 8c per litre; the cost would be from minus 4c to plus 1.3c per litre. That was the advice that was given to the select committee—

💬 Hon Gerry Brownlee: Just like the climate change—Kyoto credit analysis.

—and whether the Minister believes that advice, or not, it is really pertinent that he did not put those figures into the public arena when he was trying to give this lovely measured example of why he has to undertake this act of environmental vandalism. The member has made a botch of this. He has done it for substantially political reasons. It will mean loss of jobs. It will mean that our ability to progress biofuels will not be able to proceed.

There is the whole case of Mr McNicholl and his investments, but I will leave that for other speakers to talk about, because that is an example of someone who invested on the basis of certainty and law, and who found that that certainly did not carry through to the next Parliament, and that the incoming Government was going to roll back that law. That is an example, I think, of where the Government has decided to take a series of steps for political reasons rather than for reasons of good policy. All I can say is that in the entire first reading speech, which is when we would expect the rationale to come out, there is a Minister who is using dishonest argument, who is using figures that are selective, and who is in fact totally befuddled when it comes to the logic of sustainability because this legislation sweeps away the sustainability criteria that are now in the primary legislation. At the end of this week there will be none of that, and then anything will be able to flood into this country.

So here we are, in only the second week of Parliament, and the list so far is that the emissions trading scheme will be put to a so-called high-level select committee, that biofuels will be wound back, that somehow or another it is really bad to have halogen or fluorescent lamps around this country, and that the country will have other forms of environmental vandalism—all of which add up, in total, to this country moving into reverse. Later this week we will even be saying that it is OK to have gas-fired power stations all over again.

Does the member not know that climate change is now up front of, and central to, global politics? Does the member not realise that there have been elections in recent times in Australia and in the US? Does the member not realise that far from being a leader around the place on a response to climate change, this country is now becoming a follower? It has lost its way, it is a slow follower—it is not a fast follower, by any means—and it is illogical, out of date, heading in the wrong direction, and completely befuddled. That is a disgrace, in my view, to this country.

I want to make a number of important points in commending Gerry Brownlee on this Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill, but I will not let pass the lectures from the Labour Party on climate change. The only things New Zealand led in the 9 years of a Labour Government were increased emissions and deforestation. They are the only areas in which Labour, in 9 years of Government, was able to lead on climate change policy. I say to members opposite that before they get on their feet and start lecturing us, they should make some apologies for their appalling record. I am advised by officials that the figures we will report to the United Nations next year and the year after that will be the legacy of the previous Government’s appalling record around deforestation and the increase in emissions.

The second point I make is that the Leader of the Opposition, in opening this session of Parliament, said he would hold the Government to account for its promises. What did the National Party promise on biofuels? It promised that it would repeal this stupid compulsion and replace it with a tax incentive. Why is it that now that we are trying to fulfil our promises, we get these sorts of arguments from members opposite?

The fundamental difference between members opposite and those on the Government side of the House is that Labour members believe in compulsion. They believe in the nanny State. Members on this side of the House believe in incentives, and let me go through the reasons why such incentives make very good sense. Firstly, I will deal with sustainability issues. I am yet to hear any Labour member provide some logic as to why the compulsory obligation for biofuels came into effect on 1 October even though the sustainability standard is at least 12 months away. What a loopy policy! Fancy saying to people: “You’ve got to have biofuels, but we haven’t worked out what the rules are about sustainability.” How can people make sensible decisions about investment when they do not know what the rules are? It was a classic case of putting the cart before the horse, and that is why we need to repeal the legislation.

The second thing I want to raise is that members opposite have claimed that with this legislation there is no sustainability standard for importing biofuels. The honest truth is that if someone wants to import ethanol made from palm oil from Brazil or Indonesia, there is absolutely nothing to stop him or her from doing so under the old legislation that was passed by the previous Government. I say to members opposite that they are misleading the House in saying otherwise. It is true that the compulsory requirement is not met, but it is not true to say that any control at all is imposed on the importation of sustainable biofuels.

I come to the next really important point. The median range estimate on the cost of this biofuel obligation is 4c per litre. Officials say that each cent per litre represents $60 million. In other words, the biofuel obligation amounts to a cost obligation of $240 million per year.

💬 Moana Mackey: They did not tell us that it was 4c per litre. That is not what the officials said.

I ask Ms Mackey how many members in this House believe that we have proportionality correct when the cost obligation is $240 million on biofuels, despite all of the questions asked internationally about their advocacy, and when we are spending $4 million a year on the greenhouse gas consortium looking at agricultural emissions. I think members of Parliament instinctively know that those proportions were all wrong.

Then we hear the ultimate in economic lunacy from those members. They claimed that the biofuels bill was actually going to save 5c a litre. Well, hang on a moment—

💬 Nikki Kaye: Yeah, right!

Exactly. Would we need to have compulsion if the legislation was actually going to cost less than existing fuels? Not on your Nelly! I say to those dreamers on the other side of the House that they should connect with the economic reality. The only reason for compulsion was that the cost was greater.

That is why the approach of the new Government makes such good sense. We are giving a kick-start to biofuel technology. Let us provide a consistent tax advantage of an exemption from excise as currently applies to ethanol. It is far better, as we face this challenge of climate change, not to go in the nanny State direction where we compel people to do things, but rather to provide a financial incentive—

💬 Hon Dr Michael Cullen: Oh, dear.

Well, I am not surprised that Dr Cullen likes compulsion. He spent 9 years on the Government benches telling ordinary New Zealanders how to live every part of their lives—how much water they could have in a shower, what sort of light bulbs they could use, and how much biofuel to use. I ask the House what the wisdom is in believing we can define, down to the narrow part of a percentage point, the exact, perfect amount of biofuel that should be used.

Pete Hodgson is wrong. He claimed that the Parliamentary Commissioner for the Environment supports a retention of a compulsory obligation on biofuels. That is wrong. The Parliamentary Commissioner for the Environment said, and this is absolutely right, that if we narrowly define the criteria for what sustainable biofuels are—and we do not know what they are yet, because it has not been worked out—and we then use compulsion, we provide a wonderful cash cow for those in the biofuel industry. It is all very well for members opposite to talk about the odd job that might be created as a cash cow when there is compulsion, but what about the number of jobs that will be lost by the cost imposition of $240 million a year across the economy? Of course if I was a biofuel manufacturer I would want this law to stay as it is. It is a cash cow, but the real question for this Parliament is whether that approach is sensible. In the Government’s view, a financial incentive that is provided by way of the excise is a more sensible way to go.

I commend the Minister for dealing with this issue prior to Christmas.

💬 Moana Mackey: Why is it not going to select committee?

That is a very good question, and I will tell the member why that is. It is because the previous Government’s policy has oil companies floundering around right now as they try to work out how to meet this obligation. Those companies do not know whether Brazilian ethanol will qualify. They are scrambling around, and that industry needs certainty. I say that this Parliament needs to move quickly. It needs to deal with the absolute mess that the previous Government’s biofuel policy was in, and that was a compulsory standard with no biofuel standard in place.

I hope the next speaker might possibly explain to the House why we should ignore the Secretary-General of the United Nations, who has made a plea for Governments not to introduce mandatory biofuels obligations. Have members opposite not read the House of Commons’ report in the United Kingdom that makes absolutely plain that such mandatory obligations are both economic and environmental lunacy? Have members opposite not read the report of the OECD that makes plain that these biofuels obligations are doing more harm in the world than good?

I say to members opposite that a tax incentive is the right way forward, and I will tell the House why that is the case. The truth is that we do not know how much biofuels will cost. My view is that if they are relatively inexpensive, to provide a tax incentive may see them go to 10 or 15 percent. I do not have, and this Government does not have, some magical number. But we say that a financial incentive will put pressure on the biofuels industry to make its products as cost-competitive as possible, rather than providing the blank cheque of compulsion.

My very last point is that, yes, this bill does philosophically divide the House, because members on this side take an approach of having financial incentives in respect of supporting biofuels, as opposed to the nanny-State politicians who have been thrown out of Government.

If that member opposite, the Hon Nick Smith, keeps mentioning the words “nanny State” long enough, he convinces himself that he has some kind of argument in these matters. I can only assume that some of the people opposite must have had nannies when they were young whom they did not like, so somehow the word “nanny” keeps them going in some kind of big way.

💬 Hon Dr Nick Smith: Tell us about the showers, Michael.

I wish the member would have a cold shower from time to time, and I am happy for him to have a 100-litre-a-second cold shower whenever he wants one. This is a man who gave a speech about economic lunacy. He talked about half of that in his speech, actually, because that was lunacy more than economic lunacy.

Let me just take him through the illogicality of his argument. He claims to want to see biofuels used; I think he said that. I think the Bluegreen manifesto said National wanted biofuels. He claims he wants to see certainty for those in the industry, and then he says he does not have a clue how much biofuels there may be if we go to a tax-incentive system. Where is the certainty and where is the guarantee that we will move to biofuels? He says that he wants to make sure that biofuels come from renewable sources. So do we all. That is why the legislation, as revised by the select committee, provides a process to ensure that sustainability. The member is still attacking the Biofuel Bill as it was introduced. He did not even read the legislation that came out of the select committee. We have certainty for the companies, which consists of basically saying “We do not care what you do. We do not care if you have any biofuels.” So what message will they take from that? They will take the message “Don’t have any biofuels.” What about those companies that have already started putting in tanks to cope with the higher proportion than the present 0.5 percent? Where has their certainty gone? Where has their return on investment gone?

Let me take the member through the economic arguments. He somehow seems to think that if we have a tax incentive, then that will solve the problem. Actually, it is not really a tax incentive. It is not taxing biofuels; it is continuing the regime where biofuels have no excise duty on them. Has that produced a rash of investment in biofuels? The regime that the National Government is suggesting is the regime before the biofuel legislation came into force, minus the requirements in the legislation for some kind of sustainability, certification, and reporting. That is what Gerry Brownlee’s bill actually states: it removes the requirement, it removes the provisions around sustainability. That is where we have been for years and we do not have any significant usage of biofuels in New Zealand. The member wants that, but he is not going to get it.

But if we have no tax on biofuels, then what does that do? Firstly, it reduces the Government’s revenue from road usage. We have hypothecation now on road-user taxes so if there is a reduction in revenue the Greens and I will not see more money for public transport, and the National Government and I will not see more money for roads. We will have less investment in roading, and less investment in public transport—

💬 Hon Dr Nick Smith: Rubbish!

—unless—wait for it—there is a further transfer out of the Crown account into the land transport account, which must come from one of three sources. It must come, first, from increased taxation elsewhere, such as personal taxes, company taxes, or GST; secondly, from cutting spending on services elsewhere; or, thirdly, from borrowing, which means for future generations, firstly, higher personal taxes or GST; secondly, a reduction in services; or, thirdly, more borrowing for their grandchildren, which will lead to even bigger personal taxes, or cuts in services. There is no free lunch in fiscal policy. The member has been there long enough now to have learnt that very, very simple fact. He is asking for the Government to be able to tax elsewhere or to be able to cut social services. We have had a voluntary regime up until the passage of this Act and it has done nothing to produce biofuel usage in New Zealand. You see, what the member is arguing is basically the big old Dick Cheney position. He is kind of the Dick Cheney of the National Party these days—he wants to do what big oil companies tell us to do. He does not want to do what some poor little New Zealander with only a few million dollars to invest has been trying to do to help this country, because that person does not count. When it comes to the interests of Shell, BP, Mobil Oil, and all the rest of them, that poor little New Zealander does not count as far as National is concerned. National members get up in this House and make speech after speech, with tears pouring down their faces, as they talk about small business and all the rest of it. What is this bill about? It is about the interests of major international corporations versus the interests of New Zealand and New Zealand business. That is what this bill is about.

Goodness me, the main criticism that can be made of the current Act is not that it is the nanny State; it is basically leaving the kids at home with directions about where to find the food in the fridge. I think people could say that the problem with the current legislation is that it does not go far enough, not that it goes too far. I hope that Ms Fitzsimons does not criticise us too much for that when she gets up and speaks, because I think we are probably basically of one mind in that respect. There were jobs in this for New Zealand, there was certainty moving forward as higher levels of biofuels began to be phased in, there was a regime around sustainability—

💬 Hon Dr Nick Smith: What about the cost?

The cost, as the member well knows, depends upon what the future cost of oil is. Ah, suddenly there is silence. The penny drops. Oil, at the moment, is under US$50 a barrel. Less than a year ago—6 or 7 months ago—it was US$153 a barrel. If any member in this House thinks seriously that he or she knows what the cost of oil will be in 5 years’ time, I would tell them: “Do not waste your time in here, mate. Go out and make yourself a few billion dollars on the international market.”, because if a member has that knowledge, it is knowledge that nobody else in the world has. It is very precious and it is worth vast amounts of money. Why would one spend one’s time in Parliament beating one’s gums about the nanny State if one knows what the future price of oil will be? The member does not know that. None of us know that. We know—and I occasionally chip at the Green Party about this—that it will go up and down. We know there is huge volatility about oil prices, but we also know one simple thing: the long-term trend of oil prices will be up. The trend may have been downwards recently over the last few months, but it will be up over the long term. Why? Because at the end of the day it has to be a shrinking resource in relation to demand. If we really want to see people in the Third World increasing their living standards, then whatever we do, the chances are that it will increase their demand for fossil fuels such as oil—a pity, but it is true. However much we manage to do in the next 10 years that is almost a certainty in that regard.

So there will be pressure upon a finite resource. We do not know how big that finite resource is because we do not know what has yet to be discovered, but one thing we do know, utterly, logically, completely, and obviously, is that at some point the resource is finite and, therefore, it will cost more to extract. Therefore, it will be demanded more and it will cost more. The cost argument is actually a particularly weak argument in this respect. What of the cost on the other side? The less we use biofuels the greater the liability under the Kyoto Protocol, or under any likely subsequent agreement, in terms of a charge to the Government because, in the first instance, that is a charge upon the Government, it becomes a liability on the Government accounts, and, therefore, it has to be met in some form or another. Again, there is no free lunch here. This can be met in effect by saying to the public that we are sending price signals that are designed to encourage them to use more efficient vehicles, and to drive their cars more carefully in terms of how they accelerate, etc., all of which have very significant impacts upon fuel consumption and can save people far more money than the impact of 4c a litre, or whatever it was the member was claiming in that regard. We have seen petrol prices at the pump vary by something like 70-odd cents a litre within the last year or so, and the member’s heart bleeds—bleeds—for 4c a litre when that is a tiny fraction of almost day-to-day trends. We have seen petrol prices go up or down by 5c a litre in a day as a consequence of market movements over the last year.

So the member has to get with the programme in that regard. He simply does not seem to grasp the point that this denial, this endless series of moves to deny, to put off the emissions trading scheme, to cancel the biofuels obligation, to try to set up new thermal power stations for no particular reason, to add to baseload capacity when there is a huge amount of potential renewable capacity for baseload generation—all of that suggests that in National we have a party that stupidly opposes what the previous Government did for the sake of opposing it, and is now stuck with the stupidity of its position.

This tragic little Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill, which is being rushed through all its stages under urgency by a Minister of Energy and Resources who is ignorant of most aspects of his portfolio—apart from perhaps sexy coal—will do exactly the opposite of what the Minister says it will do. It will replace a potentially sustainable local industry—stable, secure, and well known—with intermittent imports of biofuels from unknown sources, which are likely to include palm oil from South-east Asia grown where the tropical forests, the last refuge of the orang-utan, used to grow, and corn ethanol with a higher carbon footprint than petroleum, subsidised by the US Government. That is what this bill will do.

Let me tell members about who is already investing, or is poised to invest, in biofuels in New Zealand. Although there are many companies doing little bits, there are three major companies involved. The company that people have heard most about is BioDiesel Oils (NZ) Ltd. Its managing director is Tom McNicholl, and it has a plant already operating in East Tāmaki that makes small quantities of bio-diesel from tallow, as well as a large plant under construction in Waharoa to make 60 million litres a year. That plant has now been mothballed because there will be no market for the fuel under this plan—and I will tell members why that is so in a minute—and that has caused the loss of 46 jobs. The point Mr McNicholl makes is that unless the oil companies are required to set up blending facilities, there will be no possibility of selling biofuels for blending, but only the possibility of selling it for use in 100 percent biofuel vehicles, which is a much more difficult market. In his letter to me, Mr McNicholl states “Exempting excise and road-user charges from biofuels act only as a subsidy to fuel consumers. They do not compel the use of biodiesel, unlike the biofuel obligation.”

Secondly, there is Ecodiesel Ltd in South Auckland, which is producing small quantities of bio-diesel from tallow. It was planning an expansion of its production to 40 million litres, but that has been delayed for at least 6 months because of the uncertainty created by this bill.

Thirdly, there is Biodiesel New Zealand Ltd, which uses rapeseed oil grown as a rotational crop with other food crops, so that the green material is ploughed back in as a green soil conditioner. The oil is extracted from the seeds, and the seed cake is used as an animal feed. That is a sustainable biofuel, and that company was planning to produce 70 million litres, but that is now under review.

That is what this bill has done. Those are three significant entrepreneurial companies in New Zealand that want to do the right thing by sustainability, and that are all undoubtedly sustainable by any definition of the term, but now their investment is seriously under threat.

💬 Hon Gerry Brownlee: Why?

Perhaps if the member listens, he will find out why.

The intention of the bill is to set up a stable local market. It would have actually been better for sustainability to say that we will not allow the import of any biofuels, and that we will have them made only in New Zealand, so that we know where they come from and that they are sustainable. The Greens could have supported that, but unfortunately people got nervous about the World Trade Organization and so forth, and did not think that was an option.

Mr Brownlee says the Parliamentary Commissioner for the Environment recommended against the passing of the Biofuel Bill, and that is true. She came to the Local Government and Environment Committee when the bill was in its form as introduced to the House, and she said “the bill currently before Parliament should not proceed in its current form”. That bill was not proceeded with in the form it had then, because that was before the Green Party negotiated with the Government a sustainability provision. We made it clear that without that sustainability provision we would not support the bill at all. That provision was drafted—and I had a large hand in that—it went through the select committee, and it was adopted. As far as I can make out, that sustainability provision is the most stringent sustainability provision in the world, yet it is being abolished by the Government today. It says that to be sustainable a fuel has to reduce by at least 35 percent the carbon it produces relative to petroleum, it must not be grown on land suitable for food production—it must not compete with food—and it must not be grown on land of high conservation or biodiversity value. Those are the three criteria—they are in section 34H(3) of the principal Act—and those have now gone.

Members opposite have been making a big feature of the fact that the regulations to give effect to that section are not yet drafted. They are partly drafted. The Minister and I met with the officials and said the idea that they could not do that until 2011 was rubbish. We asked whether they could do it by the middle of 2009. They said yes, so they were directed to do that by the middle of 2009. The amount of biofuel that is required under the legislation to be used in New Zealand by the middle of 2009 is so infinitesimally minute that there was no reason not to proceed without the regulations. But the fact is that because the section is in the Act, there is still a conceptual standard against which to measure biofuels that come into the country. It was always the intention that there would be a reporting obligation for those biofuels.

In her advice to the committee, the parliamentary commissioner provided a table of carbon emissions for a wide range of different biofuels around the world, showing that some of them—like the US corn-to-ethanol programme—have higher carbon emissions on a life cycle basis than petroleum, and others, particularly those made from wastes like tallow, have very low carbon emissions. Not all biofuels are equal. That is the thing the National Party has never been able to grasp.

The Minister said that the work on drafting the regulations will continue. Well, I ask what he will do with those regulations, because now there will be no primary legislation under which they can exist. We cannot have regulations that just hang in the air.

The Minister also says biofuels will cost up to 8c a litre more than petrol. That figure comes from the oil companies. I remember back to the days when we had a big campaign to get lead out of petrol, because it poisoned children’s brains. The oil companies told us repeatedly that petrol would be massively more expensive—I think they said 10c a litre more expensive at the time—if the lead was taken out. Eventually we forced them to take the lead out, and nobody even noticed any change to the price. The oil companies are absolutely the last people we should trust if we want to know what biofuels will cost.

The fact is that whether biofuels cost more or less than petrol will depend on the price of petroleum. The Ministry of Economic Development gave advice that whether biofuels would increase fuel prices will depend, firstly, on the amount of infrastructure investment required by oil companies. Currently, that is estimated to add 0.2c to 0.4c per litre to the price. Secondly, it will depend on what the price of petroleum is at the time. When oil actually reached $157 a barrel, biofuels were cheaper than petroleum. But it cannot be left just to the market, because if we do not have the infrastructure, if we do not have the industry, all that the market will do is to produce a fluctuating import—or not—of fuels, depending on what the price is. So we will get the worst stuff going. We will have no stability in the market, we will have no blending, and we will have no New Zealand industry. All we will have is ad hoc imports from wherever biofuels might be available in order to make up the difference.

The Minister says he wants to give a tax subsidy instead of a mandatory obligation. I will pick that issue up in my second reading speech. There is plenty more to say.

I rise to support the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill, which is no big surprise, I suppose. But what might be a bit of a surprise is that I agree with much of what has been said, both on the Labour side of the House and amongst the Greens. No one can argue that there is a decreasing supply of petroleum. No one can argue that at some point it will become very scarce and very expensive, and will eventually run out. We should not actually use petroleum as a transport fuel if we can avoid it, for one very good reason, which is that it is a unique substance with many unique properties that allow it to be used for many other far more important things. So I agree with members on the other side of the House that the idea would be that we use 100 percent biofuel—tomorrow. The problem is that, like lots of ideas, it is great in theory.

In my view, this whole case is an example of the folly of going into things as the world leader, as we were going to be on climate change—or, as some still say, we should be. The theory regarding the need to use biofuels is great, but let us look at what has happened. The United Nations, which is not known for Draconian pronouncements, has said that biofuels are a crime against humanity. That point was completely ignored by members on the other side of the House. We should not use them for at least 5 years, said the World Food Programme, an agency of the United Nations. Why? The reason is that the whole idea is flawed. Although sustainability, the buzzword of recent years, sounds good, biofuel production has led to side effects, unintended consequences if you like, such as deforestation in Brazil and increasing the price of food for poor people, who would have eaten rapeseed that is now being made into biofuel. It has increased the price of food because land that would have been used for food is now being used to grow crops. The use of biofuel is just not a good idea, because we have launched into it too soon.

The speaker from the Greens said the biofuel would have to be produced locally, so we know where it is grown. Well, the problem with that is that in order to meet the target set by the outgoing Government, we do not have enough land here. We do not have enough available land on which to grow biofuel crops. The European Union target for biofuel uptake—one that is not dissimilar from ours—would involve the use of up to one-quarter of the agricultural land. So the European Union will have to import it, too.

As I have said, biofuel crops have increased the price of food, distorted land use, and led to the UN food agency calling them a crime against humanity. Not a great idea! The European Union apparently would require 14 percent of the world’s oilseed production just for itself. Leaving aside the food-price distortions and the other problems, that 14 percent of the world’s oilseed production is double what is grown in the European Union now. Where will all that biofuel come from? As my colleague the Hon Heather Roy said in this House during the passage of the legislation, Brazil is currently the second-largest biofuel producer in the world. That is great, one might say, except that when we scratch beneath the surface we see that Brazil has embarked on a massive deforestation campaign and is turning grasslands into sugar cane production areas for biofuel. Increased demand for biofuels would put further pressure on those areas, leading to the slash-and-burn clearing of rainforests.

So if the Green Party is serious about its environmentalist credentials, and if it is serious about saving the planet—it is a bit like the nuclear argument, which it goes very quiet about; the Europeans say nuclear power the way to go and is the cleanest fuel, although I do not know whether I agree with that—then it should support this bill and vote against the use of unsustainably produced biofuels.

I am proud to come to this House to share the excellent news from Te Tai Tonga about the global success emerging from Blenheim. The Marlborough biofuel company, Aquaflow Bionomic Corporation, has created bio-diesel, which has been saluted as the eleventh best invention in the world for 2008 by none other than Time magazine. The bio-diesel, formed from wild algae at Blenheim’s waste treatment oxidation ponds, is branded as green crude. The international profile is not just great for business; it also demonstrates to the world that Aotearoa is serious about its commitment to reduce the rate of carbon emissions.

Our entrepreneurial enterprise in advancing alternative sources of energy is well-known. One of my own iwi, Ngāti Kōata, is currently in the process of establishing a biofuel plant to supply users of static machinery such as school boilers. This particular initiative was going to focus on tallow, but we were also investigating other sources to ensure we had a guaranteed supply. The ultimate example of home-grown, New Zealand - made industry was the McDonald’s vege car—a car powered 100 percent by used vegetable oil. The McDonald family drove from Cape Reinga to Bluff, gathering support from mayors, who blessed the bonnet with their signatures. Today, this Parliament is voting to overturn the decision made in the 48th Parliament to implement a biofuels sale obligation policy. What, then, do we tell local mayors who were prepared to sign up to the concept of biofuels, and who welcomed any initiatives to promote sustainability, security of energy supply, and the reduction of greenhouse gas emissions? How, then, does the bill on the Order Paper for today affect our international reputation with regard to our capacity to contribute to climate change initiatives?

The Parliamentary Commissioner for the Environment, Dr Jan Wright, told the select committee last year that there are two key issues we must uphold when considering biofuel legislation. We need to be able to assess how well the biofuel initiative will reduce carbon dioxide emissions, and we need to be able to ensure that we can increase the security of our supply of transport energy. These are critical issues for any discussion on sustainable biofuels.

But other issues are at play. We need to be able to determine the energy return on energy invested. This is the concept of a life-cycle assessment of emissions determining the nature of the cultivation and processing of material inter-fuel. Although biofuels are carbon neutral when burnt, we need to be clear about the carbon emissions released in the process of production. We need to be able to identify the ecological effects of biofuel production. Effects such as soil depletion, or the reduction of indigenous biodiversity adversely affecting land with high conservation values, have to be weighed up to ensure that sustainability remains of the highest order.

Another priority is to determine the effects on the food supply. This was a key issue for the Local Government and Environment Committee when the debate around biofuels proceeded last year. The committee recommended that biofuels must not compete with food production or be produced using land of high value for food production. We must also be able to assess objectively what difference the legislation will make to small producers versus agri-business. The situation for those fledging industries that have gone full steam ahead into producing sustainable biofuels is particularly precarious. Nowhere is this more apparent than in the case of BioDiesel Oils New Zealand. This company has invested some $10 million in research and development in the construction of a processing plant in East Tāmaki and in the process of building a 60-million litre facility in Waharoa.

But it is not just money we are talking about; it is about meaningful work—real jobs. The strategic plan for BioDiesel Oils is to employ 22 staff on three shifts at the Waharoa plant, and 24 staff on three shifts at East Tāmaki. All in all, that will be a total of 46 full-time jobs when both plants are in full production. And it is about time. Tom McNicholl, the managing director of BioDiesel Oils, has invested 9 years of his life into developing bio-diesel from the most difficult raw material available—tallow. This company took up the challenge of converting tallow as part of the commitment to increase renewable energy through the National Energy Efficiency and Conservation Strategy.

The Minister of Energy and Resources earlier today raised some of the difficulties that we, too, have been concerned about—in particular, the impacts that biofuel production contributes to deforestation, or the way in which biofuel production competes with food production. But the point that we cannot ignore is the fact that so many of these concerns made it through to the select committee stage and were treated with due responsibility. Those issues included taking into account the social, economic, and environmental impacts of biofuel production alongside investment in standards of qualifying biofuels. It was because of the thorough and comprehensive way in which the biofuel debate was managed that the Māori Party determined that it would support the Biofuel Bill to introduce the biofuels sales obligation policy. We heeded the warning from Dr Wright about the need for caution before rushing into the biofuel industry, and I want to distinguish here between the relative effects of biofuels derived from waste as opposed to biofuels made from ethanol from corn. The former emits up to 80 percent less carbon dioxide than fossil fuels, while ethanol from corn emits about the same amount as diesel.

The Māori Party has always spoken about the need for sustainable, environmental management. It has promoted the concept of a genuine progress index. We must aspire to make the economy great but not at the expense of the environment. The commitment to renewable energy resources, including geothermal, hydro, wave, wind, and solar resources, is a commitment that we look to support through every avenue we can. We must pull out all the stops to protect and preserve limited resources such as oil, gas, and coal. We must create incentives to promote the use of biofuels and have a mandatory obligation as a key part of this. We know that many groups, including iwi, have invested in the manufacturing infrastructure of biofuels. We believe that this bill will disadvantage us and, indeed, detract from the promise of prosperity and innovation that the blossoming biofuel industry has demonstrated. We cannot support this bill.

I do not intend to repeat all the arguments stated by the Minister of Energy and Resources, the Hon Gerry Brownlee. I intend to take a short call, because the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill is very focused, concise legislation. It is a very good demonstration of why Labour ended up on the Opposition benches and will remain there for a very, very long time. We are once again repealing a piece of mandatory, compulsory, “Government knows best and does not trust the public to make choices” regulation.

Not only did the Minister make a sensible move to fulfil one of the promises that National has campaigned on but he has also included the viable alternative of introducing tax incentives. That, I think, is a sensible way to embrace the biofuel sector, because a lot of the science, research, and standards are still in the process of being developed. How can anybody in New Zealand embrace the concept of requiring, by 1 October 2008, a mandatory level of biofuel to be sold through the petrol pump, when the standards to test whether biofuels are sustainably sourced are still being drafted? How can one reasonably stand in this House to defend a requirement before the standards have been drafted and put out there? How do we know that those biofuels would not repeat the previous mistakes? We have seen some members jump right into wanting to lead the world, only to then see the first wave of biofuels cause problems with regard to food shortages and deforestation. Why should we continue to repeat those mistakes? The European Union, after 2 years, has not developed the standards to ensure that biofuels are, in fact, obtained from sustainable sources.

I think the Minister, the Hon Gerry Brownlee, should be congratulated on putting a stop to the mandatory, compulsory requirement, while at the same time bringing in a very sensible scheme of introducing tax incentives. I think that will send a better pricing signal that a mandatory, “Government knows best” signal would. The Minister also sensibly pointed out that there is a need to develop a process for proving the sustainability of biofuel production. This National-led Government believes that New Zealanders understand and care about the environment. New Zealanders are being given the right information and tax incentives in order to actually make the right choices under this biofuels regime. While I am on my feet I also want to congratulate the Minister on being consistent in showing our belief in New Zealanders. He has also put a ban on the regulations brought in by the previous Labour Government to try to tell people how long they can take hot showers for and what sorts of light bulbs they are allowed to use.

It is a real pleasure to stand up and support sensible legislation that shows our confidence in those New Zealanders who got rid of the Labour Government, which used to tell people how to run their lives.

After that speech by Ms Pansy Wong, it is hard to know where to start. As someone who said she wants to listen to New Zealanders, maybe Ms Pansy Wong might want to explain why the only quotes the National Party has used have been from the chief executives of big oil companies, none of whom are New Zealanders, none of whom are going to support small businesses here that create biofuel. For all the talk about New Zealanders, it is New Zealanders who are going to suffer because of the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill.

I also want to challenge what the Hon Pansy Wong said—that we should not have mandatory requirements because we do not know what the standards are. Apparently that did not apply when it forced through an education amendment bill last week that gave the Minister of Education complete power to do whatever she wants—a blank cheque saying that she is going to develop what will be gazetted, but without telling the House. It is not one law for all with this new National-led Government; it uses an argument when it suits it, and when it does not it will completely abandon it. I would also like to know how the Hon Pansy Wong reconciles her position on this bill with the fact that that education amendment bill passed last week is a bill about compulsion. It is about forcing the education sector to do something that it is horribly opposed to, was opposed to during the election campaign, and which, despite being watered down, is going to force our schools to merely replicate what they are already doing just so that the National Government can save face, because without that bill it has no education policy.

This is yet another huge environmental backtrack from this new Government, which has been in place only a week. Within a week we have gone from a country that people admired to a country that people can now ridicule for the position that we have taken on the emissions trading scheme—with a select committee to revisit the science of climate change. That is humiliating on the global scale, especially for a country that campaigns on being clean and green, and relies on being clean and green as a marketing advantage and also for tourism. I am getting a sense that the argument we will get on every piece of legislation dealing with the environment is that because some biofuels are bad, we should do nothing. Because carbon dioxide is a gas that has a useful purpose in the atmosphere, apparently we should do nothing, despite the fact that in excessive amounts it severely alters our climate. The argument we are getting is that unless we can be convinced that every single biofuel ever produced in the world never does any environmental damage, we will never do anything about it. If that is the position that this Government takes, we will never do anything. Of course some biofuels are worse than others—we know that. That is why the Labour-led Government changed the bill and put in sustainability principles.

Let us not forget that the National Party declared its hand on this bill very early in the select committee process. In fact, very early in the select committee process, before submissions had finished being heard, before the bill had been changed, National members declared that they would oppose it on principle. I think that needs to be put into the mix. This bill—like every bill last week—is not going to a select committee. This is another bill that is being rammed through, despite the fact that this bill means people will lose jobs. We have already heard the case of a gentleman from Waharoa who has invested $10 million in two biofuel plants because of the Energy (Fuels, Levies, and References) Act, and now he is going to lose that money.

💬 Hon Gerry Brownlee: Rubbish!

Mr Brownlee says “Rubbish!”. Do members know whom I am going to listen to? It is to the man who spent $10 million investing in biofuel, rather than to the Minister who is embarrassed about the fact that we are going into a global recession and who has cut research and development tax credits for our innovative companies. He is now cutting out the biofuels obligations, which also provide research and development opportunities and jobs. This is at a time when we would expect our Government might be trying to create jobs and to save jobs. No, Mr Brownlee has decided that because apparently he has something against compulsion, those jobs should be lost and that $10 million invested by that company should be gone. I think that is shameful. At the very least this bill should have gone to a select committee so that that small-businessman—and those members talk a lot about small business when it suits them, but they have been very quiet tonight—could have come to the select committee and told us exactly what the bill meant and what he needed to stay in place so that his business could keep going. I do not think that is too much to ask, given that that is the normal practice of this House.

The Act was incredibly important because it supported the development of the domestic biofuel industry. Many of the concerns that we all have about sustainability could be eliminated largely by having a domestic industry, which means we would not have to import a lot of the biofuels that we all have a number of questions about. That was what the Act wanted to achieve. It was very reasonable and it was very modest in that respect. But the other thing it did was provide certainty to the sector. Everyone who came along, including representatives from the oil companies, said: “We just want to know what you’re going to do. Just tell us. If there’s going to be principles, try to spell them out as simply and as clearly as you possibly can so that we can see the path you are going to go down, so that we get the best idea possible.” The select committee worked incredibly hard. The officials worked incredibly hard on getting the principles in the legislation, so that even though they are not legally binding at the moment, the legislation is very clear.

I have worked for an oil company. I know that oil companies do not make short-term investment decisions. They make long-term investment decisions. They looked at what we put in the legislation, and saw a very clear steer that there was no point going to a long-term contract for biofuel production to import into New Zealand from a company that would eventually be ruled out when the sustainability criteria were put into place, because they would lose money. Those contracts are long term; they are not short term. They wanted to know, up front, what they could import and what they could not import, so that they could make business decisions based on that.

Dr Smith, who was on the select committee—but from his speech one would never guess because he obviously did not listen to a single thing that was said there—wanted to know why we passed the bill before the principles came into force. I think Jeanette Fitzsimons has largely answered that question. We did it because we wanted to provide certainty to the sector, we wanted to provide a clear steer on sustainability, and because the biofuel sales obligation for oil companies in the first year is 0.5 percent. This is about getting a sustainable biofuels domestic industry in New Zealand. We are not demanding 30 percent in the first year. It is 0.5 percent and going up half a percent every year. That can be done from our biofuels now. Dr Smith also wanted to know whether we had read—[Interruption] Yes, I do. I have read the officials reports, I say to Mr Brownlee, and he obviously has not. Dr Smith wanted to know whether we read the UK, the UN, and the OECD reports. Of course we did. That is why we changed the legislation. It was on steer from the Parliamentary Commissioner for the Environment and those reports that made us realise we could not simply put through a bill that had no sustainability steer whatsoever.

Dr Smith, remarkably, also made the argument that we do not need to do anything because the market will provide this. The market has been fantastic for the environment so far. What an absolute success the free market has been for the environment. The fact is, as Jeanette Fitzsimons pointed out, these biofuel companies are going to rely on the oil companies to provide the blending capacity for biofuel. Does anyone really think they will do that voluntarily? Think back to when we had new players coming into the oil industry. I remember reading all the reports in the newspapers about how the existing oil companies were trying to shut the new players out. They were using the power that they had as the incumbents. These are companies in direct competition to oil. They are providing a product that makes the oil companies’ product less valuable. Does anyone think the blending facilities will be provided voluntarily when there is no compulsion under the law to do so? Dr Smith said that we were living in dreamland. I have to say I think the opposite is true. From working in that industry I can say that unless there is an obligation in the law, I do not believe the cooperation will occur to allow that supply to happen. Dr Smith said that of course biofuel producers will say that, because they have a vested interest. But he does not extend that same argument to the oil companies that he extensively quoted throughout his entire speech. Of course the oil companies have a vested interest, so do the biofuel producers. The select committee weighed all this up, considered all the submissions from all of them, and moved forward on a bill that we thought met the needs of most, as far as we possibly could.

I want to talk a bit about the Parliamentary Commissioner for the Environment’s report on the original bill that was introduced to Parliament. It was presented before the select committee had reported back, so significant changes were made to the bill. I read the report of the Parliamentary Commissioner for the Environment, and I think she did a good job. She extensively used a paper that was published in Science: “Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change”; she relied heavily on that. But what has not been said is that a week later Science had to publish a critique from the company that had developed the model that was used extensively in that scientific research, saying that it had not been used properly. The study is called the Searchinger study, because it has become quite infamous. A lot of people who oppose biofuels quote this study extensively and I think it is time to put on record that there is a lot uncertainty about it. The critique came from the folks at the Argonne National Laboratory, which developed the model used in that research. They said that the research does not stack up and that the model was not used correctly. There is a good scientific principle that people might want to remember when they read research, which is “garbage in, garbage out”. We have to be very careful. I would be interested in seeing a critique of the bill done using that model correctly.

The biofuel sales obligation was going to be 3.4 percent by 2012 in the original bill. The select committee reduced it to 2.5 percent, because we had a look at what the capacity out in the sector would be.

As I have sat here listening to the debate this evening I have been struck by a remarkable sense of déjà vu. In September we debated a biofuels bill, and many of the arguments that have been run this evening were put back and forward across the House at that time. As I listen to the debate this evening, I think that nothing much seems to have moved on from that point. Those who favoured the bill in September continue to favour its retention. Those who opposed that legislation then, continue to oppose it tonight by supporting the repeal. I was one who supported the bill in September and I do not support its repeal tonight, for the reasons that I will state.

I think it is important to put this whole issue into some sense of perspective. Whatever happens in the short term at least, there is not going to be a major biofuels industry in New Zealand. We are talking about a fledgling move. We are talking about meeting a need that will develop when we start to think about how we are going to use tallow, for instance. We have three or four market players who are interested in developing an industry. They need some certainty, and they need a framework within which they can make the investment decisions they will require to make their industry a viable one long term. When we think about it, we know that that was all the original legislation sought to do. It was to set up the framework for the development of a domestic industry.

Along the way, some issues were given thorough consideration. There was the question of the source of the biofuel itself, and there was the legitimate concern raised about using product that might be available for food development but instead might be used for fuel development. The original select committee dealt with that issue by putting in a sustainability clause. There was the debate we have heard a lot of reference to this evening—about the position of the Parliamentary Commissioner for the Environment—but, again, the original select committee in its report back dealt with the concerns that the parliamentary commissioner had been expressing.

So I suppose we come back to the one unresolved issue, as it were, that has featured prominently in tonight’s debate—that is, the question about whether the Government imposes, by legislation, a requirement or adopts an incentive-based approach through a tax adjustment. The reason why the original proposition was developed was, as the previous speaker so correctly said, to give a fledging industry a sense of certainty, so it could commit to the investment that was going to be needed to develop what might become a larger industry in due course. It was as simple and straightforward as that, and when members talk about “the market should decide”, they should remember that ultimately, whatever system is put in place, the market will decide, and it will decide by virtue of consumers determining what it is they are going to purchase. So I do not have a great deal of sympathy with the argument that says that by imposing a requirement, we are in effect removing an element of market choice, an element that would be preserved if we were to go down a tax incentive path. I do not think we are talking about an industry at this stage that is in any shape or form to be so determined.

So we end up with a bill this evening that overturns what was an essential first step in the development of an industry. I think there is a red herring about the time that the legislation was to take effect and the time that the standards were being developed, because, again, that is part of the ongoing work in progress. The negotiation and the discussion that would occur between those industry players and the regulators in terms of the development of those standards are part and parcel of the normal process. By going back to square one tonight, we are effectively saying to those who have an interest in developing a domestic biofuels industry “Not yet. Go away.” And we know that giving that signal means most of them will go away. So when the time comes that we decide that maybe it is right that we should now start to make a much greater emphasis on the use of biofuels domestically, those potential investors and those technologies will not be available to us. I think that is the big loss here. It is not as though we have got ourselves into a situation where the changes that were made just 3 short months ago have proved unworkable; they have not even had a chance yet to be proven that they are going to be able to work.

It is not as though we had a rushed piece of legislation originally. I cannot recall how long the bill was at the select committee, but it was a considerable period of time. I recall having a number of discussions with the then Minister about some of the issues that have been canvassed in the debate this evening, and I do recall a sense emerging at the end of that process that many of the issues that have been raised were satisfactorily addressed in the original legislation.

So I have some difficulty this evening when I see a bill put forward to repeal a piece of legislation that was very much in its infancy. I think that is a mistake. I think that is something we will regret. I do not buy entirely into the argument that the whole world is watching and will see this as a retrograde step on New Zealand’s part. There is an element of that, but I think that is being over-exaggerated. I just think that in terms of an opportunity that was available to New Zealand to start to give some credibility to those who wanted to develop a domestic industry to use a product effectively that we had available here as a by-product of our agricultural production, this legislation stymies that opportunity. I think that is a sad mistake, and for that reason United Future will not be supporting this bill through its passage tonight.

As this is my first speech in this forty-ninth Parliament, I would like to congratulate you, Mr Assistant Speaker, on your elevation to that position and your colleagues likewise.

What the Luddites were to the industrial revolution, the New Zealand National Party is to this sustainability revolution. The Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill is nonsense. To repeal a biofuel obligation in legislation that has not yet had a chance to work is nonsense. The National Government will go down in history as the Luddites of sustainability, because sustainability has taken off in a revolutionary way internationally, and it would seem that the New Zealand National Government is the only Government on the planet that will not accept that truth. I wonder whether this is what the fine crop of new National MPs knew they were signing up to. It seems to me that this legislation is a fast step backwards.

I want to put this bill into context. First of all, the National Government has done a number of things in the very short time that it has been in power. Dr Nick Smith frequently likes to refer to the blue-green credentials of the New Zealand National Party. I have to say, in respect of this measure and several others, which I will enumerate in a moment, that those blue-green credentials are completely in tatters. The National Government went into a confidence and supply agreement with the only climate change deniers in New Zealand, and that is enough, on its own, to turn us from being a leader into a laughing stock, internationally.

Second, the Government removed the research and development tax credit, which has an immediate impact on biofuel industry development. More than that, the research and development tax credit completely stymies innovation and business development, particularly where we need it most, and where we need it most is in all of the industries that can capitalise on and progress sustainable initiatives, whether it is sustainable food production, sustainable fuel production, or alternative fuel production.

Third, this National-led Government slowed down the emissions trading scheme and turned us from a leader in this area to what it likes to call “a fast follower”. The previous speaker from United Future, Peter Dunne, said he did not quite go along with all the rhetoric around the damage being done to New Zealand’s reputation. I advise this House that I have been to an Asia-Pacific conference on climate change and the effects on population development. Having just got back from that conference today, I can report, in quite fresh and stark terms, that it was simply embarrassing to say that we were from New Zealand and that the New Zealand Government and its confidence and supply partner ACT had been reviewing and questioning the science around climate change. When one hears the stories from the countries—developed and developing—around the Asia-Pacific region, and the impact that climate change is having already, not only on their food security but on health and the struggles against poverty, then it seems absolutely clear that this National Government is in a Luddite frame of mind.

The fourth thing National has done, which contextualises this legislation, is lift the ban on thermal generation. So the answer to all our electricity generation difficulties and constraints, in National’s view, is that we need to build more thermal generation plants, and pollute the atmosphere even more in the course of doing so. There are no aspirations from this National-led Government for renewable energy. There are no aspirations for developing renewable energy sources, and for promoting those things and developing the kinds of energy supply that we are good at—in particular, geothermal energy. A new plant has just come on stream to demonstrate that capacity most starkly.

The fifth thing is that this National-led Government has moved away from, and will not consider, any standards for energy-efficient households in order to enable people to save money on their energy usage and to become energy conservation - conscious. The sixth thing, in this complete litany of damnation in respect of the National-led Government’s proposals, is the scrapping of the home insulation scheme. That in itself is something this Government needs to be ashamed of, because the absolute pay-off in that fund and that scheme will come back to haunt it.

We have heard already, but it bears repeating, that this Government, which purports to be business-friendly, has already with this measure, plus the rescinding of the research and development tax credit, brought development in this essential area of biofuels to a halt. The Waharoa example is but one example. Of course, there has been anxiety—and it was widely canvassed at the select committee—about the production of biofuels from food crops. For that very reason the sustainability principles were written into the legislation. From this National-led Government we have a backwards step—something that will not only damage New Zealand’s reputation but, as if that were not enough, absolutely damage our capacity to produce alternative biofuels.

In the first 2 weeks of its existence in this House, this National-led Government has brought in legislation under urgency, so that there can be no debate, no referral to a select committee, and no re-examination of issues. I will not go into the other pieces of legislation that do not immediately relate to this bill—about which the same things can be said—but I will say that the Government’s approach absolutely demonstrates a completely disrespectful attitude to the processes that this Parliament is meant to uphold. I cannot believe that this new intake of the new generation of National MPs are feeling very happy about this kind of legislation and these kinds of hallmarks, which are going to live with this National-led Government for some time to come. Those members will regret not having been able to discuss these things more fully within their own caucus.

One of the purposes of the mandatory biofuels obligation was to encourage oil companies to develop the infrastructure needed to deliver sustainable biofuels. It was simply an initial step, but an essential one, in order to create the backdrop required in order for a sustainable biofuels industry to be able to work in New Zealand.

Like previous speakers, as this is the first occasion on which I have had to speak during this term, I take the opportunity to congratulate the Speaker, the Deputy Speaker, your colleague Eric Roy as Assistant Speaker and yourself, Mr Assistant Speaker Barker, on your elevation to the position of Speaker. I think it is appropriate to say the people of Rūnanga, where I understand, Mr Assistant Speaker, you were brought up as a boy, particularly with your grandparents, are very proud of the occasion. Although your ascension is from the West Coast and I now represent the coast, I do not expect any special privilege to be afforded to me while you are in the Chair.

I can understand the disappointment in the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill of some people who have an intense feeling over carbon emissions; I can understand their initial disappointment in the bill. But the fact is that the more serious that people are about that subject, the better pleased they should be that this bill is being brought in. If this bill had not been introduced, there would be a very real risk that New Zealand would be contributing to the global food crisis.

💬 Moana Mackey: Oh, for God’s sake—

There are those, like the member opposite, Moana Mackey, who will frown, scrunch up their faces, and say our requirements are so small they could not possibly affect the world food crisis. But the argument is like that with regard to carbon production: the production is very small, but nonetheless it has an impact—the same thing applies.

I well remember that when I first came into Parliament, I was appointed as associate spokesperson on energy. That entitled me to one of the great things about being in Parliament, which is access to people from all walks of life and from all sorts of industries. We had the opportunity to speak with a large oil company executive—he was a large gentleman, but it was a large oil company—and he was talking about his company’s move into the use of biofuels. He made it very plain the purpose was to make money; it was not to save the planet. Indeed, he did say in conversation that the production of biofuels, in the way that his company was doing it, would in fact create more carbon than it would save. Reducing carbon was not the issue.

💬 Hon Gerry Brownlee: That’s right.

I thank the Minister of Energy and Resources for remembering that occasion.

The oil company executive spoke about the displacement of food crops—the corn wars in Mexico, where suddenly corn for tortillas and those sorts of things was going into biofuel and not into food, with the consequence that Mexico’s natural foodstuff, which was generally a lower-cost foodstuff, was going up in price to a point where it could not be afforded. He spoke about the benefits of using equatorial lands and sub-equatorial lands. He thought, from the point of view of ensuring that crops were used to maximum advantage, that perhaps genetically modified crops would be the best way to go.

Far more has to be done in terms of ensuring we have standards for sustainable production of biofuels before we move too quickly into this area. A quick calculation shows we would need 60 million - plus litres per year. We have heard people speak about enterprises that were planning to have those sorts of figures; they certainly would not have them straight away. There would be a need to import biofuel, and there would be no guarantee at all that the products we imported would be sustainably produced. Naturally, many first-generation products like those made from soy, rapeseed, and sugar compete for food production, and I am amazed to hear people say “No, we wouldn’t grow it where you could grow food.” Well, how can we have that classification—

💬 Hon Dr Michael Cullen: We’d just get it from overseas; don’t worry.

Say it again?

💬 Hon Dr Michael Cullen: Jacqui Dean—we’d just get it from overseas.

But how could we have that classification—that it will not be grown where food could be grown? If a biomass can be grown to produce biofuel, I presume from that that unless it is on land that is vertical or overhanging, the same land could be used for food production. It is incontestable that the sudden rush into biofuels is causing a huge destruction of rainforests. That is hardly going for growth and benefits in terms of the world biosecurity situation. The cost of production and the amount of carbon released nullifies the potential benefits of biofuel.

We have heard the speeches this evening; they have been very intense and they have been very sincere from members from all sides of the House who have spoken. I was particularly taken with the points made by Rahui Katene, albeit that she voted against the bill; I thought she argued the situation very well. Peter Dunne also brought up good points. But the reality is that there was going to be a cost obligation of $240 million per year; we heard that from Dr Smith.

We use a sustainability standard, we need a sustainability standard, and we need to know that the biofuels that are produced are measured against that standard before there can be any compulsion in their use, or a mandatory obligation. It is the mandatory obligation here that is the problem.

💬 Hon Dr Michael Cullen: Aha!

Yes, it is! This is a Government of commitment, not of regulating blindly for the sake of regulating. This bill is a good instance of a commitment to sensible and well-reasoned legislation. Thank you, Mr Assistant Speaker.