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

This is the most important and worst part of the Energy (Fuels, Levies, and References) Biofuel Obligations Repeal Bill. It repeals the biofuels mandatory obligation, an obligation that was put in place to cause oil companies to start with modest levels of biofuels being blended into the fuel they sell—0.5 percent of the fuel by calorific value had to be biofuel this year, rising to 2.5 percent by 2012. These were not large quantities, but enough to cause the oil industry to develop the blending infrastructure and to take product from those who were willing sellers of the product in order that we start to bring forward biofuels to reduce our greenhouse gas emissions.

It has a number of other benefits, including slowly weaning us off our oil dependency. New Zealand’s biggest import cost is oil products. We spend literally billions of dollars every year on oil imports, and this was a start towards substitution of some of that oil product, primarily for environmental reasons but with economic benefits.

The Minister in the chair, the Hon Gerry Brownlee, has been on national radio and in all of the media claiming that his justification for doing this was sustainability issues. He claimed he was repealing the biofuels legislation because he had concerns about the importation of unsustainably sourced biofuels. It is somewhat ironic that in doing that, his legislation is so ham-fisted, so ill-considered, that he strips out of the law the only protection in law—in any law—against the importation of unsustainably produced biofuels.

There was a view a couple of years ago—a view that I never held—that all biofuels were good. It was arrant nonsense. There are some biofuels that are bad. Some cause the cutting down of rainforests, the loss of habitats for endangered species, degradation of water, and loss of whole ecosystems. We do not want those biofuels. The legislation we currently have in New Zealand creates standards that prevent that outcome. Other biofuels—

💬 Jacqui Dean: But no sustainability standards. That’s the problem.

The legislation includes three sustainability principles that are detailed to a greater degree of specificity than is normally found in primary legislation. And I have to thank the Hon Nick Smith for his involvement in this in the select committee; he made a credible contribution to some of the drafting of that. He seems to be involved in the killing of the whole thing now, but he actually made a credible effort in the select committee, and I thank him for that. Metiria Turei from the Greens made a fundamental contribution to it, and Moana Mackey from Labour was also influential.

As a consequence, we had three sustainability principles in the legislation. The first was the protection against loss of biodiversity because of the logging of rainforests, and that sort of thing. The second was the competition with food production. We do not want to put up the cost of food because of producing a petrol or diesel alternative that competes with food production. So that principle is enshrined in there, as well. The third was that there had to be a substantial reduction in greenhouse gas emissions. The minimum reduction was 35 percent, from memory.

💬 Metiria Turei: It was.

I thank the member for confirming that. Those principles can be articulated only in regulation. The whole detail cannot be put in the Act. So the principles were set out in detail, but the fine detail that sits behind it is in regulation. That regulation was to be promulgated by the middle of next year, and would have been. I know that that was achievable, because I was the relevant Minister at the time, and officials assured me that it could be done. It was a lot of work to do in that time, but it could have been done.

In the meantime, all sellers of biofuels—that is, the major oil companies meeting their mandatory obligation—had to report their source of biofuels. They were not going to put at risk their brand with accusations that they were going to be selling biofuels produced by knocking over rainforests in Indonesia. Of course, they were not going to do that. More important, though, the myth about sustainability is exposed by the fact that those sustainability criteria that sit in the Act, and will still be needed even if one does not have a mandatory biofuel sales obligation, get ditched from the legislation by this one clause in this part of the bill, which takes out all the relevant sections that impose sustainability criteria. So rather than making the problem better, if Mr Brownlee and his Government were really concerned about sustainability issues, it makes it worse. According to what we have heard from some of the interjections from Jacqui Dean, they need more sustainability provisions. By repealing the provisions, they do not have more; they are taking them out and leaving it worse, not making it better.

I have amendments that I will be proposing during the Committee stage, because that can be fixed. One can remove the mandatory sales obligation and still keep protections against the importation of unsustainable sources of biofuels, but this bill does not do it currently, so I am proposing amendments, which I hope the Committee will support, that do achieve that. I would encourage ACT to read those, because I am really trying to convince the Committee that that particular amendment does not run against the provision that repeals the mandatory obligation, but it does keep the sustainability criteria for imports of biofuels.

The second issue that Mr Brownlee says he was worried about during the election was that there was an “un-level playing field”, I think was the phrase used—one of those hackneyed phrases now—to say that somehow because there was a tax break for ethanol and no tax break for bio-diesel it was wrong. Well, the advice was that we needed both bio-diesel and ethanol, and that was the view of the then Government—we wanted a bit of ethanol so that oil companies started updating petrol infrastructure, and bio-diesel so that they update diesel infrastructure; we needed a bit of both. In order to bring ethanol on we actually needed to have that subsidy, but we did not need the subsidy for bio-diesel, because the mandatory obligation would be enough. So why have a subsidy when one does not need it? It seems nonsense that we are now going to talk about a subsidy for bio-diesel. But be that as it may—

💬 Hon Gerry Brownlee: No we’re not.

The Government is now not going to give a subsidy for bio-diesel?

💬 Hon Gerry Brownlee: No, tax equalisation.

Tax equalisation is what? A subsidy for bio-diesel, the same tax break that ethanol currently gets; is that effectively what the Minister wants?

💬 Hon Gerry Brownlee: That’s what is likely to be—

Well, this legislation does not do it. So the Government wants to protect the biofuels industry by giving it that same tax treatment that ethanol gets, but the bill does not do it. Now, I am promoting another Supplementary Order Paper that goes some way to doing that, because I am really worried for those people who have lost their life fortune in appropriate investments in what is the world’s most sustainable source of biofuel, which is tallow. I am worried for the workers who are going to lose their jobs—

💬 Hon Tau Henare: Oh, whatever!

Tau Henare does not care about unemployment. This will be a continuing theme from this Opposition, because the Government is already causing rising unemployment not just in the biofuels industry but also in forests.

💬 Hon Tau Henare: Rubbish.

I have a letter that I am going to table from the former president of the National Party complaining about the injustice that the Government is causing to Mr McNicholl, who is losing his life fortune—more than 46 full-time jobs will be lost from one employer alone, to say nothing of the rest, and Tau Henare and the rest of the National Party say “whatever”. That is absolutely outrageous.

Not only is this bill environmental vandalism but it is economic lunacy, and it is doing an injustice. If the Government wanted to do away with the mandatory obligation and replace it with other policy, it could do so, but it should do it through a select committee. It should not ride roughshod over the rights of people and do this under urgency. It should bring forward the whole of its new policy, not just the dirty little bit that cuts off the mandatory obligation and kills business. It should say what it will do in its place to support biofuels. But the Government is not doing that. This bill is part of an outrageous array of policy that is to the detriment of the environment, to the detriment of our economy, and to the detriment of our reputation of being a good people. That reputation is something that is valuable to me. I do not do these things just for money; money is important and I am not saying we should do silly things in a money sense. This bill certainly is not just about money, but the ethics of it should be brought to head, too.

I seek leave to table a letter from the former president of the National Party, Sue Wood.

The CHAIRPERSON (Hon Rick Barker): Leave is sought to table the letter. Is there any objection to that course of action being followed? There is none. Leave is granted.

Document, by leave, laid on the Table of the House.

Part 1 is the more important part of the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill and is a part about which my colleague David Parker has asked serious questions of the Minister in the chair, the Hon Gerry Brownlee. I acknowledge that the Minister attempted to reply by way of interjection, but it is getting close to the time when he should take a call in order to put the National Party’s view on the record.

A couple of major points have been made. The first regards the timing of this bill versus the timing of the introduction of the tax incentive or subsidy and the extension of the tax exemption from ethanol to biofuels, and what happens in the dead period in between. I accept the Minister’s word that he intends to move in the direction of tax incentives; that could well be a logical move. That approach could well make a difference or, at least, neutralise the situation. What I do not accept is the chilling effect in the interim whereby a biofuel factory that is nearly built will be mothballed. The appropriate approach is to make the two changes together—to put in place the replacement provisions and then take the current provisions out—if that is in fact the direction that people want to go. I do not think that that is good policy by the Government or that it is the right approach, but if the Government is heading down the path of, effectively, a taxpayer subsidy of biofuels for a taxation equalisation scheme, then that is the approach that should be taken.

The second point regards whether the Minister is deliberately taking the sustainability principles out of the Energy (Fuels, Levies, and References) Act. Every now and again Ministers make mistakes, especially when legislation is slightly rushed, as this legislation is. I can see no reason whatsoever to remove the principles, unless it is in order to fulfil the Government’s obligation to the oil companies—or whatever we are doing at the moment. The Government probably has an obligation to the oil companies as a result of commitments made maybe a year or two ago. I am making the point that there is no need, whatsoever, to take the sustainability principles out of the Act in order to fulfil the policy intent of this bill.

The principles were not in the Energy (Fuels, Levies, and References) Amendment Act 2008 when it originally came before the House as a bill from the Labour Government. An enormous amount of multipartisan work was done to get the principles agreed to, and I acknowledge that Dr Nick Smith took a role in that work. I know that members of the Green Party and Moana Mackey were actively involved in it, as well. It was quite a good example of members of Parliament working together positively in a select committee. When that occurs it is good for New Zealand’s international reputation; it was logical and coherent. Even if we go back to the old Ruth Richardson approach, we should still ask what mischief we are trying to fix here. The mischief that we are trying to fix is not the sustainability principles.

The National Party has a different view as to the proper approach to this issue and as to whether there should be regulation as far as quantities of biofuels are concerned. I think it is fair to say that it is not part of a secret agenda. National members were clear about that before the election—they were wrong, but they were clear. They won the election and they have the right to bring in legislation in order to fulfil their election commitments. But as they are doing that, we have to keep considering what the best way of doing it is that does the least harm.

It is becoming increasingly clear that the approach National is taking is not well reasoned. I point to the ACT Party and in particular to Rodney Hide, who has responsibility for regulatory matters. Rodney Hide has responsibility for regulatory impact statements; this bill does not even have a poor excuse for one. There are a couple of explanations for that. One is that it was so rushed that even a vague attempt at an unsatisfactory report could not be made. Last week a couple of bills before the House included very poor regulatory impact statements. They stated that a narrow group of Government departments had been consulted. In a couple of cases they gave their views—I think only where it suited the Government. I think that the Ministry of Economic Development stated that the 90-day legislation did not go far enough; that was included in the regulatory impact statement of the Employment Relations Amendment Bill.

Why is there not a regulatory impact statement in this bill? It is because if there were such a statement, then the National Party would have to put on record in the bill the effect of the legislation on Mr McNicholl. A clear effect of this legislation is the confiscation of Mr McNicholl’s investment. The Government is saying to Mr McNicholl, in a way that is pretty unusual for the National Party, that although he has made a big private investment and he has put a lot of his family money—the vast majority of his family money, I understand—into this investment, it does not care. The Government is saying that that is not important, that it does not respect private investment, and that it does not believe in the principles of regulatory certainty.

I think the New Zealand Parliament has got a lot better at regulatory certainty over the years. There was a period of time with Sir Robert Muldoon—and probably, to be fair, Sir Roger Douglas—when there was not a lot of regulatory certainty. They went off in different directions with their regulation—or lack thereof—but both of them destroyed a lot of wealth in New Zealand as a result of their lack of commitment to regulatory certainty. This bill takes away certainty for people who have made a very big investment.

This bill will do us enormous harm internationally. The suspension of the emissions trading scheme is just an embarrassment. Maybe it is fair to set up the Emissions Trading Scheme Review Committee—a committee that at least some people claim will go into the science of whether climate change exists—because John Key has had two positions: believer and non-believer. Maybe he really does want a committee to tell us whether climate changes exists and whether global warming is important. If that is the case, why can he not be honest about it? If he is really still a doubter about climate change—if the Prime Minister of New Zealand is standing almost alone amongst world leaders in doubting climate change—why can he not front up and say that that is the case? That would be a better explanation for this legislation and for National’s pandering to ACT in the setting up of the Emissions Trading Scheme Review Committee. The Prime Minister says it is a high-level select committee. Is that not embarrassing for every other select committee in Parliament? It is not a high-level committee at all; it is a committee of members of Parliament nominated by their parties in a very normal way. I do not think there is an excess—other than from the Labour and Greens side—of intellectual power on that particular committee.

The point I am trying to make is that that select committee, along with this bill and along with the suspension of the emissions trading scheme, makes New Zealand look like a country that is absolutely in reverse on its climate change policy.

💬 Hon Member: And forestry.

The forestry area is another area.

We had the potential to lead the carbon markets in the world, but John Key has stuffed that. This bill is a sad bill, and we will suffer for it.

I was on the Local Government and Environment Committee, which considered these provisions and worked very closely with Moana Mackey—

💬 Hon Member: And Nick Smith

Yes, and Nick Smith. He was very engaged in the discussion and the debate, particularly on the sustainability clauses. In fact, the Green Party is the architect of the sustainability clauses. There was some provision for them in the original Biofuel Bill, but we redefined those clauses and the sustainability principles significantly in order to meet the growing concerns about the impact of unsustainably grown biofuels, not just in terms of greenhouse gas emissions but in terms of their impacts on indigenous biodiversity, indigenous communities, and starvation around the world. It is certainly true that very large corporations, particularly oil companies and others, are looking at buying up millions and millions of hectares of land in places like Africa, South America, and the Pacific, whether it is indigenous forest cover or other land that is used for food production, in order to grow biofuels to feed the increasing market for alternatives to petrol and oil fuels. Western countries, in particular, are desperate to find ways to fill their gas-guzzling sport utility vehicles, as opposed to developing countries, which are desperate to fill the starving bellies of their people.

The first principle that we fought for, and which was included in the legislation, was around the fact that a sustainable biofuel must emit significantly less greenhouse gas over its life cycle than obligation engine fuel emits. We were very clear to put in a principle that identified both the production of that biofuel as well as a percentage limit. It was a hard-fought-for discussion in the select committee. Many hours were spent on debating the wording of the principles, to make sure that they were practical, achievable, and set an extremely high standard so that New Zealand would not contribute to starvation, would not continue to contribute to greenhouse gas emissions where it was possible to avoid doing that, and would not contribute to the elimination of indigenous biodiversity. So we were very pleased to see that we had a very strong principle around emitting fewer greenhouse gas emissions. There was no problem with that; the committee was OK with that. I do not remember Nick Smith having a big problem with it; maybe he did have one. It certainly seems very odd that he wants to get rid of that principle now.

The second principle was very important to us. It was around food production: that sustainable biofuels should not compete with food production and should not be grown on land of high value for food production. That principle was put in place specifically to meet the concerns that Nick Smith expressed. He had very deeply held concerns about the destruction of indigenous rainforest in Brazil, and he talked a lot at the select committee about how those communities were using food-growing land to make biofuels and then cutting down indigenous forests to feed themselves. He said it was terrible that poor people had to do that in order to sustain themselves in Brazil, when it meant the destruction of the rainforest and that all of the really good food-producing land would be used for biofuels instead of food. I am sure he had a genuinely held concern that that should not happen.

I was happy, and the Green Party was happy, to work through those issues and to find wording that would meet Nick Smith’s deeply held beliefs and concerns about Brazilian rainforests. So we came up with the words stating that the sustainable biofuels were not to “compete with food production” and would not be “grown on land of high value for food production”. That was specifically put in there to address the really deeply held concerns that Nick Smith had about biofuels. In the end the result was a very good one, actually; it turned out that the standard is a very high one. We are talking about very poor communities in those countries. We are talking about indigenous communities in those countries, and often about people who, for example, have the lowest incomes, the highest rates of child mortality, the highest rates of poverty, and the highest rates of homelessness. The communities of those countries really are struggling, and we wanted to make sure that we provided the best protection we could in New Zealand, as far away as we are from them, to make sure we did not contribute to those problems for them.

So that is what we did; we put in the sustainability clause on food production specifically for the sake of Nick Smith. We did that so he would know, when he was driving his car around with a biofuel blend—and I do not know what kind of car he drives—that he was not starving a poor Brazilian child, and that he would know a poor Brazilian family was not having their home and livelihood wiped out because the land on which they were growing food to feed the family for the next 6 months or the next year was now to grow the biofuels that would feed his car while he travelled with his family around the country, perhaps on their Christmas holiday, a nice family trip, or maybe even just a Sunday drive. Nick Smith could then therefore feel secure that he was not contributing to the poverty and the starvation of those poor people.

But it turns out that an ideological gap of some kind, some ideological lacuna in Nick Smith, has driven him to argue—and he must have argued this in Cabinet—that the sustainability clause that he so wanted to see in the legislation, and that he worked so hard to make sure was in it, is now being taken out. His concerns about poor Brazilian children and poor indigenous communities—that they might starve as a result of land being used for biofuel production, and that the indigenous forests from which they might gather their food or take their medicines, or that they might have their cultural expression or engagement with, would be destroyed in an effort to grow the food previously grown on the land now taken to grow biofuels—have all gone now. For some strange ideological reason Nick Smith has decided that when he drives his car around the country, takes his family for a Sunday afternoon drive, or maybe goes away for a weekend or perhaps even for his Christmas holidays, he does not mind if his car is being fuelled by—

💬 Hon Darren Hughes: What changed?

If Nick Smith does not now mind that unsustainable biofuels may be fuelling his car, if he does not mind that a Brazilian child may perhaps starve to death because the land from which that child would otherwise have had food is now being used to grow biofuels, and if he does not now mind that a poor Brazilian family may have lost their home, lost their land, and lost their forest to the large multinational corporations that will buy up indigenous forest and destroy it to grow biofuels on, what did change?

What happened to poor Nick Smith that meant he could feel so strongly about those people in one instance and then completely desert them in the next, just as a result of the election? It is a disgraceful and very sad demise of the principles of Nick Smith that he could change his position so much and actually be, in the end, responsible for public subsidies going to the very international corporations that will buy up food-growing land for biofuel production, and that will buy indigenous forest cover and destroy it—knock it down—in order to either grow more biofuels or provide food sources for those communities, even though they were perfectly fine beforehand. The public subsidies will go towards impoverishing indigenous communities. The public subsidies will go towards destroying indigenous forest, eliminating the habitat of precious, rare, indigenous species, and even destroying the New Zealand industry in biofuels.

I do not know how Nick Smith or even Gerry Brownlee could have possibly thought that it is a good idea to have a sustainable New Zealand biofuel industry taken out and jobs lost right at the time when we are most concerned in this Parliament about the economic insecurity of the community, and when we are most concerned about increasing job losses. There have been massive job losses in the last year or two, just as a result of the slowing down of the economy. Right at the very time when the local industry had a foot in the door and was able to compete with the multinational companies, National now wants to subsidise and pump money into those multinational companies. Just at the time when the local industry had the opportunity to grow and to provide jobs for New Zealand workers, and to support New Zealand families and their children, Nick Smith has decided to take all that away, and to provide public subsidies to cut New Zealand jobs, destroy a New Zealand industry, starve and impoverish indigenous communities, and destroy indigenous forest. This is being done by the National Government, which supposedly has such a commitment to sustainability and environmental principles.

💬 Moana Mackey: That’s right!

Yeah, that is right.

We have had the first and second readings of this legislation and, now, the Committee stage. The second reading was a bit of a repeat of the first reading because, of course, there was no select committee in the interregnum. There was no report back from the select committee because there was no select committee. So we had a somewhat repetitive debate in the first two readings of this legislation, which was characterised by a great deal of sophistry—by a great deal of pretence from the Government speakers.

However, through that pretence or sophistry a couple of threads emerged—for me, anyway. One of them was that the technique of a mandatory sales obligation did not fit with the ideology of the new Government. That is a fair enough position—it is entitled to its ideology even if it does not make sense—but ideology it is. The second was to do with the fact that the Government was concerned—I think those concerns were manufactured—by the fact that there was no regulation in place to secure the sustainability aspects of biofuels.

Let us take a look at these two issues. The first is the Government’s ideological resistance to a sales target. The sales target, or a mandatory sales obligation, is one tool that is used broadly to promote energy change. In the free market of the United States—in that great home of the greatest economy that the world has ever seen—mandatory sales obligations in energy are very widespread; they occur in many, many states. It may even be that they occur in most states; I simply do not know enough detail. But it is common indeed for state Governments in the US to require mandatory sales for this or that—most particularly in renewable energy for the electricity sector. So there is nothing particularly ideologically blinkered about this or that American state, but none the less we find that this Government has decided, all by its little self, that a mandatory sales obligation is somehow an ideologically impure act.

The whole idea of a mandatory sales obligation is to ensure that the wholesalers—that is to say, the oil companies—put in the infrastructure that they need where they want to, in the parts of New Zealand they want to, to begin to build a distribution system that we know this country will need sooner or later. That is what a mandatory sales obligation does; that is its function.

But it is the second issue I want to concentrate on in this contribution. We are in Part 1 of the Committee stage and many speakers before me have pointed out that the Government cried crocodile tears over the fact that we are not fully paid up in terms of getting our regulation written for sustainability—that is correct; it is not due until 30 June next year—and that, therefore, we cannot do anything now.

There are two different ways of approaching that and I would like to invite the Minister in the chair, the Hon Gerry Brownlee, to take a look at these two different ways. The first is to simply delay the legislation by, say, 6 or 12 months. A thing to do would be to come up to this Chamber with an amendment that said that because we do not have lock, stock, and barrel in respect of the sustainability regulations—even though we have more legislation in law than any other country in the world, and even though we have mandatory transparency regulations making oil companies tell us where they get their biofuels from—because the door is still slightly ajar, we could simply delay this legislation by, say, 6 or 12 months until that regulation is promulgated. The Minister may want to take a call and indicate why his Government is going for abolition instead of delay. The second thing, however, is this: the Minister’s position, as I understand it—and again, I would be grateful if he would clarify his position—is that the Government is of a view to promulgate sustainability regulations for the future in respect of biofuels, anyway. I wonder whether the Minister could give some sort of body language indication as to whether that is the case.

💬 Hon Dr Michael Cullen: A wee wobble.

A wee wobble. No, we have wobbling going in all sorts of directions. Why do I not just repeat the question? My understanding is that the Government is of the view that this country will, at some point, need sustainability regulations as they affect biofuels—

💬 Hon Dr Michael Cullen: In the fullness of time.

—in the fullness of time. I ask the Minister whether my understanding is correct. I have an affirmative, ladies and gentlemen. I have an affirmative from the Minister and I thank him for that. That piece of body language tells me that the Government will promulgate sustainability regulations as they affect biofuels. It raises an interesting question: to which part of which primary legislation might these regulations attach? You see, we have before us in Part 3 of the legislation that is being abolished the most advanced progress on defining sustainability for biofuels in Western legislation. And we are about to ditch it. What is sensible about that?

💬 Hon Dr Michael Cullen: We did it—that’s why.

Oh, it is because the previous Government did it—the naughty old Labour nanny State Government! Is that right? The legislation being abolished is really good. It is legislation that is particularly good, and we know that because it was argued by none other than Nick Smith in the select committee. We know it is multiparty; we know the Greens were deeply involved; we know the National Party had its role to play; we know people like Moana Mackey from the Labour Party were actively involved; but it was all done during the time of the dirty, rotten, stinking Labour Government. I ask the Minister whether that might be the reason why we have to ditch this legislation. Oh, we have a negatory response! We have a negatory response from Mr Minister. I am grateful for his forward communication, but I want him to take the stand, if he will, and please give us some indication of when we might be getting some better-than-before regulation concerning the sustainability of biofuels, and to which part of which primary legislation we will attach these regulations when we have them, or whether we have to come back to the House and put back in that which we are today seeking to abolish.

We have a negatory response there, too. I am confused; I am bewildered! I need the assistance of the Minister. I need the assistance of the uber-Minister and the intellectual rigour that he can present to the Committee.

💬 Hon Gerry Brownlee: Read the bill.

I am being told to read the bill. The bill says: “Let’s get rid of what we’ve got. Yours sincerely.” That is what the bill says. That is the beginning and end of it, so one does not need such a long time to read the bill.

I ask these questions seriously. First of all, if the issue is that we have not locked and shuttered all of the regulations, that officials have not got themselves to June 2009, and that therefore we have some sort of chink in the armour, why not go for, say, a 6 or 12-month delay? Secondly, if the Government’s intention is—and I am assured by the Minister’s body language that it is—to come up with very good sustainability regulations for biofuels, then where will those very good sustainability regulations for biofuels sit in the architecture of the statute of the land? I ask whether the Minister would care to take a call and answer either or both of those questions.

I move, That the question be now put.

I point out to the member who just moved a closure motion, Chris Tremain, that Part 1 is the part of the bill that repeals the mandatory obligation for oil companies to provide biofuels. It repeals the sustainability standards. I think it shows the contempt in which National holds this Committee that it would move a closure motion so early on in the Committee stage.

💬 Hon Darren Hughes: Before the energetic Minister even had a chance.

Before the Minister of Energy and Resources, who is in the chair, has even had a chance to get to his feet. I know he wants to respond; he has been itching to get up, and I look forward to his contribution.

I start by thanking the officials who worked on the original biofuels legislation. They worked incredibly hard to provide the select committee with advice under very tight time frames. I apologise to them that we are back in the Chamber undoing a lot of the good work they were involved in.

I would like Mr Brownlee to take a call because he made a very interesting comment in either his first reading speech or his second reading speech—they were about half an hour apart, so it is hard to differentiate between the two—that all the oil companies would come to him to ask to defer their first year’s obligation. I think that claim needs to be explored in the Committee. He did not, of course, mention that there is a 5 percent penalty for any oil company that wants to defer—it would have to add 5 percent on to the following year’s obligation. I genuinely would like the Minister to take a call to explain why he said that all the oil companies would ask to defer their first year’s obligation, because I think that comment, which he made in the House last night, was important.

This bill has not been to a select committee. Many members have made that point, and it is important to make it again. The Minister in the chair does not seem to care about Mr McNicholl, the jobs at that plant that will go, and the loss of the $10 million investment. Mr Tau Henare said “So what?”, I believe, when that was raised.

💬 Hon Darren Hughes: He said “Whatever!”

Oh, “Whatever!”. I am sorry; I would hate to misquote the member.

💬 Hon Darren Hughes: He’s cool.

Quite. I think it is important that the Minister, who did not allow this legislation to go to a select committee, takes some calls in the Committee stage. National should appreciate that the Committee stage is very important when a bill has not been to a select committee, because it is the only opportunity that members on this side of the Chamber—and, through us, members of the public—get to question the Government on what is, in this case, a terrible piece of legislation. I would urge National to think seriously about this bill.

I congratulate the Leader of the House, Gerry Brownlee, on his 100 percent success rate so far in not having bills go to a select committee under his watch—100 percent of bills have gone straight through the House with no select committee process and no public accountability. I am sure Mr Brownlee is very proud of that record. I note that even in the current urgency motion the only bills that he is sending to a select committee are the previous Labour Government’s bills that have been carried over from the previous Parliament. All the bright new ideas that National members have come up with themselves are just being forced through. I think they are a little bit scared of what the public might say if they got to have their say at a select committee.

Labour members of the Local Government and Environment Committee worked very hard on Part 3A of the Energy (Fuels, Levies, and References) Act—the part that is now being repealed. It was at about the time that a lot of information was coming out from the United Nations, from the OECD, and from the Parliamentary Commissioner for the Environment about the dangers of biofuel. We took all that on board, which is why Part 3A as enacted is considerably different from what was in the bill that was referred to the select committee. Members of the select committee worked incredibly hard to develop the sustainability standards that we now find in the legislation. One of the submitters told the select committee that that submitter had joined the United States federation of biofuel producers—or whatever it was called—which is predominantly made up of the oil companies, and in the time that the submitter had been in that group it had spent US$118 million on discrediting biofuels. In comparison, a much smaller amount had been spent by the groups that were trying to promote biofuels. That was something we as a select committee had to consider when we were looking at the information being put before us.

There will always be reasons for not passing environmental legislation. It does not take a brainiac to sit down and work out an argument against doing something. That is the easy part. The harder part is to say we will not throw up our hands and say it is too hard; to say we will work to develop sustainability principles that are more advanced than those anywhere else in the world, and then we will send our Minister away to do some work on those standards. One of the important parts of the part that is being repealed is the obligation for the Minister to go away and develop proper standards and regulations. Repealing Part 3A means that Mr Brownlee can do nothing. Under the current Act, by the middle of next year he would need to report back to Parliament with details on those regulations, or reasons why they had not been developed in the time frame set for developing them. By repealing this part of the Act, the National Government is washing its hands of there being any requirement in law for it to do anything about sustainability standards. We simply have to take those members’ word that that is something they want to do.

Well, I say to members of this House that we should look at their record so far in their first 1.5 weeks in Government. Let us see how much we can trust National members to do what they say they will do on sustainability standards. We have seen a stalling of the emissions trading scheme—although we are not quite sure any more whether it is a stalling.

It would be great if those opposing this Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill actually knew what we were talking about, because quite clearly there is some confusion about the principal Act that this Labour Opposition believes we are dealing with. I will make it very, very clear. Nothing in the bill that we are debating today will prevent the development and promulgation of sustainability standards.

Mr Hodgson asked what will be the principal Act against which those regulations are set. It remains, as it always has, the Energy (Fuels, Levies, and References) Act 1989. Part 4 provides for a number of things. Section 35(1)(c) provides that sustainability standards for all fuels sold in New Zealand should be published. All I can say is that this section is not being repealed, so the obligation, in the sense of sustainability standards, remains in place.

💬 Hon Members: It’s not an obligation.

Well it is, actually. We think it is an obligation. We, as the Government, believe we are obligated to provide sustainability standards for those who want to sell biofuel in New Zealand, and we will do that. The officials have started the work. They have indicated that under the previous Government’s work plan it might have taken them 3 or 4 years to get there. We have said that we want it much, much sooner than that. We do appreciate, though, that no country in the world has developed those standards yet. The European Union has been at it for some 13 years and has not got there yet. But the National-led Government will make it, sometime during next year.

The other thing I would say to Moana Mackey is that section 35(1)(d) of the principal Act provides that there should be a statement at the pump regarding the sustainability of the fuel being sold. That section is also not being repealed today. What we have is simply a bill that takes out the obligation that says biofuel must be sold in New Zealand, at particular percentages, by the fuel companies—the ones that are selling fuel.

It is the compulsion aspect that will kill sustainability in New Zealand: the short showers that New Zealanders were almost restricted to, the types of light bulbs that people have to buy, and also now the blend of fuel that people must put inside their fuel tanks. That is what was wrong with the approach of the previous Government, and that is what is being changed.

I will say it again. At the moment, 20 million - plus litres of biofuel are produced in New Zealand each year. It is being sold somewhere, and the development of further plant to produce biofuels will see those sales increase.

Well, that was the best that the Minister could do, saying that the Government has the power, under old Labour Government legislation from 1989, to make rules about sustainability. The problem with that argument is that the rules are not specific. They are not according to particular criteria, as they are under sections 34G and 34H of the current Act—the Energy (Fuels, Levies, and References) Act—which is why my colleague Mr Parker has put forward an amendment to retain sections 34G and 34H. I suggest that the Minister look carefully at that, because it will help him in the future.

In section 34H there are particular principles around biofuels emitting less greenhouse gas, biofuels not competing with food production or being grown on land of high value for food production, and biodiversity and land with high conservation values being preserved. These are important issues. Under what the Minister is proposing to use, he will not have those kinds of criteria, necessarily, at all, but a very simple statement at the pump, which will be just about as useful as most statements of a commercial variety telling people what is happening in terms of those kinds of things.

The fact is that the real reason the National Government is repealing this legislation is that it is Labour Government legislation from the last year or two and, therefore, it must be wrong. It is a “Yah boo sucks—I get to play with the marbles!” kind of approach to sensible legislation. The legislation we are repealing was extremely carefully thought through, with very considerable output from a wide range of experts who came before the select committee. What we are replacing it with is nothing of the same order of size or quality in that regard, and there can be no reliance upon that.

We then come to this extraordinary argument about the nanny State and this compulsion, which is that if we are somehow compelled to have biofuels, then we will have less biofuels than if we are not compelled to have biofuels. It is a very strange, inverted logic. This is because the Government says it will have a tax incentive, and that is a tax incentive where there will be no excise duty on biofuels. Well, there is no excise duty now on ethanol, the mix for petrol.

Indeed, as the Minister knows—and let us not have one of these “Oh my God, is that what Labour’s secret plan was?” reactions, because it was all publicly announced—the Labour Government was going to increase the excise duty on the petrol portion to keep the excise duty on the total litre of fuel at the same level. The gap between the duty on petrol and the duty on ethanol would have actually increased under what the Labour Government was going to do. So if there was an incentive, then the incentive would have been bigger under the previous regime than it will be under this regime. There was not only a mandated minimum but also a larger incentive to go higher than that mandated minimum. The real problem is that because the National Government of the 1990s repealed excise duty on diesel, there is no excise duty to give relief from for bio-diesel, so what this Government is presumably planning is to give some kind of rebate to bio-diesel producers.

💬 Hon Member: But they’re not doing it.

The Government is not planning to do that, according to what we can find out so far. There are no specifics around that. And if it does that kind of thing, then it has to be paid for from somewhere else in the system. There is no free lunch.

Indeed, Dr Smith’s extraordinary argument, which was so economically illiterate, was that if instead of charging people the full price we give them a subsidy out of taxation, this somehow lowers the cost to them. It lowers only the cost that people see at the petrol pump; it does not lower the cost to them. They are paying the cost somewhere else within the system; they just do not see that specifically. It is just a complete smoke and mirrors trick and it is bad economics, because it gets all the signals in the wrong place. The nanny State is replaced by this kind of au pair State, which is what the National Party wants to have instead in that regard.

In terms of the cost, the argument is that it will cost more, but the cost is only a few cents in any case. Either National wants to have biofuels or it does not. If it does, then biofuels at low oil prices will cost more than oil. Those members cannot have it both ways. They cannot say: “It may cost more and we still want to do it, but because it might have cost more under Labour, that is bad. But if it costs more under National, then somehow that is good, and it will still happen in any case.” The illogicality of the arguments being put forward in this debate is appalling

I would like to celebrate that this Committee is having a huge debate around sustainability, and that the key issue exercising people on both sides of the Chamber is how we can get the most sustainable biofuels in New Zealand and make sure that our fuel-purchasing policy does not contribute to world hunger, does not destroy the rainforests of South-east Asia, and does seriously reduce carbon emissions. But I am afraid that that is only the appearance of what is happening. What has actually happened is that very early on in the debate on biofuels, the National Party found a line of attack, because the bill as introduced did not say anything about sustainability, and the information that was coming out internationally at that stage was about the serious effect that some biofuels were having on food supply and on biodiversity. Having latched on to this line of attack, National members are determined to hold on to it regardless of the fact that the strongest sustainability clause in the world has been drafted by the Greens and the previous Minister, and put in the legislation, but National members are trying to pretend that it is not there.

In fact, what is happening here is that in order to ensure that we have sustainable biofuels, the Government is proposing to remove the quite specific clause that indicates what sustainability standards have to achieve. There is nothing in the old Act the Government is planning to use to indicate what sustainability is or should be. The Minister’s press release that said there was going to be sustainability standards mentioned carbon reduction only; it did not even mention the problems with food security and biodiversity. So the Government is going to take away the quite clear direction that the regulations currently have to meet—that the sustainability standard will ensure that it does not compromise food security and biodiversity, and does reduce carbon—and replace it with nothing but the word “sustainability”. Nobody who sees that could believe that National has any interest, whatsoever, in the sustainability of biofuels; it is simply a convenient line of attack on the previous Government.

The Government is actually doing this because of the ideology that nothing that is mandatory can possibly be good, and that the way to meet policy goals is to always give people choice and freedom but not compulsion. The previous National Government tried that with building standards, with the building code and with the verification that houses were built to spec, but what did we end up with? We ended up with leaky buildings precisely because it did not believe in having mandatory, enforceable standards. So we got a whole lot of greedy developers, poor design, poor construction, and poor local authority oversight, which led to a massive headache that the previous Government never managed to solve, and I suspect that this one will not, either. It will be hanging around members’ necks for quite a while.

The Government says that we cannot write sustainability regulations because the rest of the world has not quite done it yet. Well, I want to know whether the Minister has called in the two very good officials who have been working on the regulations, and whom David Parker and I talked to about just what could and could not be done. When we gave them a bit of a shove, they agreed that, yes, of course they could do it by the middle of next year; it would not be 2011 but it would just have to come up their priority list a bit. They were quite enthusiastic and exercised about how to write those standards, and I was really looking forward to them coming out. Has the Minister called them in and asked them whether they really can do this job, whether they are worried they do not have a lot of international precedents to follow, and how they are getting on with it? I do not believe he has. I think he is just saying that New Zealand bureaucrats are no good, that New Zealand officials cannot do it, and that we are not going to have standards in time. I think that shows a terrible lack of confidence in the people who are advising him.

💬 Hon Gerry Brownlee: What rubbish!

Well, I really hope the Minister is going to take a call and say “Fitzsimons, you are totally wrong. I did call those officials in and here is what they said.”

I move, That the question be now put.