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

I move, That the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill be now read a third time. Hearing this debate, one would think that this bill was about shutting down the biofuels industry in New Zealand. That has to be the most hysterical reaction to this particular bill that I could possibly imagine. I am staggered at the claim that the 20,000 litres of biofuel produced in New Zealand right now will not, apparently, be produced the moment that this bill passes its third reading. I do not believe that. I think that, in fact, the biofuels industry in New Zealand has a very bright future indeed. What I, my party, and others who support this bill do not accept is that the only way New Zealanders will embrace biofuels is if the Government insists they become the compulsory customers of certain companies inside New Zealand. That is not a reasonable way to progress a move that is designed to improve New Zealand’s carbon footprint.

In the Committee stage the Opposition kept on talking about the prospect of biofuels reducing our dependence on foreign oil. Well, there is a prospect that that might happen, but let us be very clear: to meet even the one-half percentage obligation would require some 60 million litres of bio-diesel. To get up to the full extent of the obligation in 4 years’ time would take over 300 million litres of bio-diesel. At the moment, this country produces 20 million litres, so it would be decades—decades—before we reached the position that would see us, through biofuel, non-dependent on foreign oil. Of course, oil discovery in New Zealand may advance that position much more quickly.

What we need is a programme in this country that encourages the development of biofuels, and that ensures that the development of that industry is met by a market willing to take that fuel, and I am confident we can have that situation in New Zealand. Interestingly, we have it now, but I think we could expand it quite considerably.

The Opposition has also said that we are doing away with the option of producing standards for the sustainable production of biofuels. That is simply a total red herring. In fact, the principal Act, the Energy (Fuels, Levies, and References) Act 1989, requires that those sustainable standards are put in place.

💬 Hon David Parker: No, it does not.

Mr Parker, I am reliably informed, is a guy who has always had his own view on these things.

It also means that the work now being done by New Zealand Government officials to develop those standards will continue, and those standards will be promulgated as soon as they are available. That has got to be a good thing, because it will mean that New Zealanders can be sure that when they are pouring this new fuel into their tanks they are doing something to reduce the nation’s carbon footprint.

There is a huge amount of international condemnation of biofuel produced in other parts of the world. As I said before, we would need 60 million litres in the current year to meet the obligation put on the oil companies. We cannot do it from inside this country.

💬 Hon David Parker: Read the letter.

There are those who say we can do it; well, where is the production now? It is no good saying that if the provision goes ahead we can do it, because the obligation is there right now. It has been there from 1 October 2008.

💬 Moana Mackey: It’s 0.5 percent this year, 1 percent next year. And this guy is doing it, and you’re putting him out of business.

The member has made a lot of fun and games about the letter sent by the gentleman who has the plant in Tāmaki and is proposing to build more plant. I have read that letter. He has put his case very succinctly, but from his perspective. I have made the offer, through Sue Wood, to talk to him. It has been rejected. I cannot do much more than that. I cannot be fairer than that. The fact is that the biofuel obligation cannot be met in New Zealand without the importation of biofuels. I know that under the current law the opportunity for the big oil companies to have their obligation pushed out exists, and that request would have come over my desk in no time at all.

Also, it is a little bit staggering that those in the industry who say that it is being destroyed, and that they could have produced enough biofuel inside New Zealand, actually did not have watertight, non-breakable contracts with the oil companies. If they could not get that sorted out in the period that the obligation has been in place, then what was the chance it might have been sorted out any time soon?

I have said that I think biofuels do have a big future. I quite like the idea that a cleaner fuel would be available for many of the activities in New Zealand that require the burning of diesel. I point to Solid Energy’s approach. It has an experiment involving a fishing fleet in Wellington. That fishing fleet is 100 percent fuelled by bio-diesel, and that is a great use of that fuel. Those on the boats like it. The fuel has proved to be very, very reliable. If something goes wrong, if the tank leaks or the boat spills some of the fuel, then, because it is biofuel, it simply becomes fish food and does not do any environmental damage. That is a great use of it. Those sorts of things will develop.

I note also that the company that Mr Leay heads up has had a product tested by Boeing. It announced that in the market just recently. The fuel is an algal-based biofuel. Quite interestingly, a barrel of that particular biofuel has about a 33 percent jet-fuel capacity. That is fantastic, and I am sure that technology will develop as time goes on.

One can go through all of the biofuel companies, look at what they are doing, and see a clear picture of how they might progress their industry. But their coming to the Government and saying that they can make the progress they want to make only if Parliament chooses to give them customers by compulsion is not a particularly good way to go about it.

Then there is the issue that has been advanced by our opponents that if this bill passes, the country will be flooded by unsustainably produced biofuels. Well, hang on, let us work that out. They are saying that without this bill there will be no biofuel industry, which would tend to mean there are no users, but they say that somehow the country will be flooded with imported biofuel. I do not accept that for one moment. Some of the arguments mounted on the other side of the House have been, to say the least, very, very inconsistent.

What we will do is ensure that there is a sustainable standard for the import of biofuels to be used in the production of biofuels in New Zealand. And I will say this: when this bill passes later this afternoon, the 20 million litres a year of biofuel produced in this country right now will still have markets and will still be sold, and there will be more people looking for more of it as time goes by. We most certainly encourage that.

The Minister of Energy and Resources, the Hon Gerry Brownlee, did not take one call of substance during the whole of the Committee stage of the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill. He was exposed this morning as not having read the very important correspondence from BioDiesel Oils (NZ) Ltd—a company that this legislation may put out of business with the loss of 46 full-time jobs and the loss of $10 million of capital investment and research and development expenditure.

As he gave his third reading speech he made another error that really disturbed me. He said that the Energy (Fuels, Levies, and References) Act already requires sustainability standards, even when the detailed sustainability provisions have been taken out of it by this bill. He is wrong—he is just wrong, and he does not understand the legislation. An empowering provision in the Act allows sustainability regulations to be developed to ban the importation of unsustainable biofuels, but the provision is a power, not an obligation. The obligation arose in the provisions that will be taken out by this very bill, and it disturbs me that the Minister does not understand that fundamental point. This is Mr Brownlee, who has been on Radio New Zealand National saying that National’s real reason for introducing this repeal legislation was that it did not want to see unsustainable biofuels imported into New Zealand. This bill makes a nonsense of that argument. He does not understand his legislation.

I want to return to a higher level in this debate. I will not now traverse the issues of the terrible injustice that has been done to some biofuel producers in New Zealand, but I will restate the reality that if biofuels were going to happen by themselves, they would have happened by now. It is easier for oil companies not to incorporate biofuels in their fuel stream, and that is why they do not. They have ample capacity to deploy 100 percent mineral oil and mineral oil - based petrol and diesel. They do not need to include biofuels, and it is a bit of a hassle for them to do so. That is partly because they have to buy product from some other company. They like to have vertical integration of all parts of the supply chain and to have the profit stream that flows through to them as a consequence, so they will not deliver biofuels unless they have to. That is why the mandatory obligation was necessary.

The approach is similar to that taken in a lot of other countries. The approach being taken in New Zealand was a very moderate one—0.5 percent biofuel required in the first year. Again, Mr Brownlee has it quite wrong. He pretended only 20,000 litres of biofuel per annum would be available in New Zealand, yet evidence has been read into this Parliament’s record that a factory in Auckland is already capable of producing 10 million litres per annum, and an additional factory under construction in Waharoa is capable of producing 60 million litres per annum of bio-diesel from tallow, which is the most environmentally prudent source of biofuel in the world according to the UN and most of the ecologists who follow these issues. Again, it is a misnomer to suggest that if the mandatory obligation had stayed in place unsustainable biofuels would have come into the country. They would not have. From now—from 1 October this year—companies have to report the source of their biofuels. No fuel company will put its reputation at risk by importing unsustainable biofuels in the short period prior to the implementation of the detailed regulations that were to be promoted under the sustainability provisions and that are already quite detailed in the legislation.

What was the import of the biofuels obligation? Most people in the world—as well as the National Government—say that they are convinced that human-induced climate change is real and that we need to reduce emissions. It is very hard for New Zealand to reduce emissions in agriculture. It can be done, but there are no substantial ground-breaking alternatives to cows that do not produce methane. We can reduce the rate of emission but we cannot avoid emissions altogether. Some substitutionary technologies in energy can avoid greenhouse gas emissions, and one of them is biofuels.

Sitting suspended from 1 p.m. to 2 p.m.

Before lunchtime I briefly recounted how the Hon Gerry Brownlee is still mistaken as to the effect of this legislation, as shown in his third reading speech. He said that after the repeal of the sustainability clauses in the current legislation there will still be a requirement for biofuels coming into the country to meet sustainability standards, when that plainly is not the case. He further said that there will be a requirement for the new Government to develop sustainability standards. That is not the case, either. The legislation is permissive and allows standards to be developed, but there is no guarantee that there will be a requirement to do so, and there is no prohibition on unsustainable biofuels being imported in the meantime.

I also highlighted that the Minister, when sitting in the chair, acknowledged that he had not read the statements that came from one of the major producers of bio-diesel from tallow. Correspondence that had been sent to his ministry on 2 December was copied to his office on two further occasions, yet on no occasion did he read it. Indeed, it appeared obvious that until we provided him with a copy of it this morning he had not read the correspondence. The reason I highlight that is that I think it is tragic that the effects of this legislation on that industry are going completely over his head.

He did not read the important correspondence, which showed that as a consequence of this legislation the $10 million investment made by Mr McNicholl’s company in production of bio-diesel from tallow is likely to fail, the plant will be mothballed, and the people who would be employed at the East Tāmaki factory and the Waharoa factory will presumably be either laid off or not employed. A total of 46 full-time employees were intended to be in place by the early part of next year, to operate on a 24-hour basis this very large facility that was going to be producing, between the two sites, a total of 70 million litres per annum of bio-diesel from tallow—a by-product of the livestock processing industry. The amount produced by that company alone during the first 2 years would have been more than enough to meet the mandatory prescription in the legislation. It was achievable.

Mr McNicholl’s letter describes how giving biofuels a tax break equivalent to the tax break that we have given ethanol—relieving ethanol from excise duty is equivalent to a 42c per litre tax advantage for ethanol—is not the answer. We did not think it was necessary to bring the tax break forward for tallow if there was a mandatory obligation. But in the absence of a mandatory obligation, it is obvious that the oil companies will do just as much as they have in the past—very little—to introduce biofuels. Gull Petroleum has produced a little, but the major oil companies have not done much to incorporate it in their fuel streams.

We tried to pass an amendment that would have made good the National Party promise that it would give equivalent relief or assistance to the bio-diesel industry. I proposed an amendment to that effect. This very simple amendment gave to sellers of bio-diesel relief of 42c per litre of bio-diesel sold, and credited it against the levies that were payable under the Act. Again, both the National Party and the ACT Party opposed that.

It is interesting that this bill is opposed by Peter Dunne, by the Māori Party, by the Greens, and by the Labour Party. We all see the injustice that is being done, in addition to the environmental back step—one of many that are being taken by the Government at the moment, be they on biofuels or on something else. For instance, the next piece of legislation to be considered, the Electricity (Renewable Preference) Repeal Bill, makes it easier to build coal-fired power plants, amends the Resource Management Act, and abandons efforts to hasten insulation and other improvements—such as efficient light bulbs—to energy efficiency in homes, which should be encouraged. This is to say nothing of the suspension of the emissions trading scheme and the job losses that have already occurred in the forestry industry and the carbon service industry as a consequence.

However, those consequences stand small in comparison with the environmental damage that is being done. The economic consequences of this bill are bad enough, but I hang my head in despair that this Government is far from building on our fine traditions as a country of doing the right thing in respect of these issues and of taking sensible, but not costly, decisions that improve the environment and also create new jobs. The Government is ruining all that through the repeal of the biofuel obligation. Thank you.

It seems to me that over the last 2 weeks the economic direction in this country has been set, and it has changed from where it was in previous years. Generally speaking, it seems to me that our approach to economic development and to progress as a nation is starting to regress. We are going backwards, not forwards. We are becoming dumber, not smarter. We are becoming unsustainable, not sustainable. We are becoming antagonistic to new technology instead of embracing new technology. We are in denial of the global mega-trends instead of mindful of them.

It is almost as though climate change is some sort of grand intellectual global plot that this Government feels it needs to pay some homage to, because it is a vote maximiser. Actually, to do as little as possible is the mindset that the Government is in. That appears to me to be what has happened in recent weeks. It started last week with the repeal of tax credits for all research and development in New Zealand. That in itself has set the scene for an economic direction that will be based on volume, not value, and based on making sure we are technology followers, not technology leaders. That is hard enough, and difficult enough, to swallow.

Then what happened was that the climate change policy of the new Government altered between election day and the formation of the Government, and it altered very substantially. It altered in the sense that the Government’s position when it was trying to win an election was that it would amend the existing emissions trading scheme. Now we have this so-called high-level select committee that is taking us back to the drawing board to see whether we think climate change is of much consequence. This committee will look at what everyone else thinks about it, what the big global take on it is, what we think about the science, and whether we are to have a carbon tax or an emissions trading scheme. As a result there has been a whole lot of lost investment in this country, and the economic consequences of that are measurable and have come to book.

As a result of the delay in emissions trading—if we ever get emissions trading back under this Government—we have also seen a delay in the retrofitting of all of our pre-1977 houses. This country is full of very, very cold dogboxes. It is a country in which the graphs for admissions to hospitals in the winter months for various bronchitic diseases are much, much more severe than they are in, say, Britain or Sweden, where there is not a seasonal rash of admissions or a seasonal death pattern. There is a seasonal death pattern that exists in New Zealand that does not exist in those parts of the northern hemisphere. Even though the climate in those areas is colder than ours, those countries none the less have much better building stock and pay much better attention to housing standards. We had an opportunity to fix that, and it has gone out the window. That is a very, very significant change indeed.

We have had some other changes, and one that we are debating right now is how we are going to put an end to biofuels. Right through the debate on the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill, the Minister of Energy and Resources, Gerry Brownlee, has clung tight to the sophistry that he is not doing biofuels in the eye and that they will be able to proceed, even though the requirement for a sales mandate is being abolished as a result of this legislation. Evidence has been adduced by the Opposition to show that the Minister is wrong. The evidence is really clear, and it comes from the industry itself. It comes in the form of letters, and one of those letters in particular has been read out in full during the Committee stage of this debate. It stated without any hesitation that the industry could not go ahead without this sales mandate.

The Government’s reason for not proceeding with biofuels legislation that uses a sales mandate is that it is ideologically opposed to it. The Government is ideologically opposed to a sales mandate because it thinks it is coercive. Of course it is coercive. If we want to start something that has resistance from some of the largest multinationals in the world, then we have to put our foot down, just as we have to coerce oil companies to take sulphur out of petrol, too much benzene out of petrol, or lead out of petrol. We have to show them we mean it; if we do not, they will continue to colonise us. That is what will now happen: those companies will sell mineral oil in this country, pure and simple, for the foreseeable future. There will be no beginning of the switch to an alternative, even though we know that oil is a finite resource, that sooner or later it will run out, that before it runs out its price will go up, and that it will then go up in price again. These things are now being ignored, and newly so. I do not think I can recall a Western nation that has taken a step against biofuels. A number have failed to take any steps towards biofuels, but I cannot think of a Western nation that has got up and said: “We are going to axe progress on biofuels.” I do not know of one, and that it is a shameful position for us to be in.

The real problem is that the Government’s arguments against biofuels are so weak. They have no balance to them, they have no substance to them, they have no logic to them, and they hold together badly—so much so that the Government was forced, in order to fill its speaking time, to come up with a bunch of stuff that were red herrings. The debate that we have had in the last day has shown them to be red herrings. I guess the one that comes to mind, and it will do as an example, is the Parliamentary Commissioner for the Environment’s assertion that the Biofuel Bill, as introduced, was a bad bill. Well, at the end of the day, no one in the House disagreed with the commissioner. Certainly, no one on the Local Government and Environment Committee disagreed with the commissioner. As that bill went through the House there was awareness that the price of food and the price of oil ran the risk of becoming linked, and that that would be a bad thing because a person’s Sunday drive would be responsible for someone else not eating. So the members of the select committee, and a few others who were advising from the outside, moved to address that and to put sustainability descriptions into our primary legislation that are the most advanced in the world. Underneath that primary legislation, further regulation was to be developed.

The next bit of sophistry that came from the Minister was the claim that the regulations were too hard. Is it not interesting that official advice has apparently flip-flopped in the space of one general election campaign? We were in Government not so long ago, and when we were in Government the advice was: “We will be ready by July.” Now, it seems, it will take far too long, so the country most advanced in putting in legislative policy involving biofuels for such a future is the one country that is about to back off and say: “Square one is good for us. Going back to the point of zero is where we want to be.” So we now have a Government that has already started to show a pattern. The Government is only a few weeks old, but the pattern is to go back to the future. The pattern is to say: “Let us find the reverse gear and depress the accelerator as far as we dare.”

This is dreadful legislation. It is dreadful because it does damage to this, that, or the other company; it is dreadful because of job losses; it is dreadful because it takes us backwards; and it is dreadful because it leaves us ill-prepared for the future.

If we think of the first charge on any Government, we know that it is to defend the realm. In this country we do not have big threats of marauding hordes coming from Indonesia. Our threats are the external shocks of climate change and oil depletion, and we have decided in this House today to see whether we can ignore those as possible threats. That is shameful—it is shameful. The biofuels legislation that is about to be ditched was modest enough, but it was a start. It was a good start. There was an industrial development response to that start, and there was a capital investment response to that start, but now it is going up in smoke. It is going up in the smoke generated by mineral oil, and that is not the future; it is the past.

It amazed me that the member Pete Hodgson talked about shameful policy. I will begin my contribution on this biofuels bill by reciting for members opposite their actual record on climate change. When they came to Government in 1999 New Zealand’s emissions were 68 million tonnes of carbon dioxide equivalent. In 2000 that figure went up by 1.9 million tonnes. If we go a further few years forward, we see that in 2003 that figure went up by 2.5 million tonnes. If we look in terms of the most recent data, we see that the figure went up by 2.9 million tonnes. For all the talk of members opposite about carbon neutrality, their climate change record was one not just of increasing emissions but also of an increasing rate of an increase in emissions. In fact, during the previous Labour Government’s period in office of 9 years the rate of growth of greenhouse gas emissions was almost double what it had been in the preceding 9 years under a National administration. So when I hear a former climate change Minister like Pete Hodgson saying that we, who have been in Government for not yet 5 weeks, should be ashamed, I say that he should reflect on his own record.

This biofuels amendment bill does exactly what National went to the electorate on in the 2008 election and said we would do. We have a mandate for this change, and I tell the House that it is appropriate we pass this bill under urgency because there is the real risk of a waste of public money being invested in infrastructure, which will not apply if we get on and get the law straight in respect of biofuels.

The first point that is critical in any debate around biofuels is whether it will do good. I could quote Time magazine, the United Nations, the OECD, and the world food organisation, which this year have all expressed real concern that biofuels are doing more harm than good.

💬 Hon Pete Hodgson: What is the world food organisation? Where is its headquarters?

Well, the member opposite wants to quibble about what those organisations are. Let me go through them again. The United Nations Secretary-General has urged member countries not to impose mandatory requirements for biofuels. Our very own Parliamentary Commissioner for the Environment has said that a compulsory biofuels requirement will do harm to New Zealand’s clean and green reputation, and members on this side of the House agree with that caution.

I also want to pop the balloon that has been put forward that says that somehow the previous Government provided for a sustainability standard. It did no such thing. The select committee was asked to develop a sustainability standard, and when the officials said that it was pretty difficult and that the European Community had been trying to do this for 5 years and it could not get there, do members know what the Government members decided to do?

💬 Chris Auchinvole: What did they do?

They said: “Let us kick it to the officials. Let us get the officials to sort it out. It is too hard.”, and the officials came up with some highbrow principles. I say to this Parliament that it is so easy to have highbrow principles, but what is needed is the pragmatic ability to have regulations that work. They do not exist, and it is an indictment on the previous Government that it introduced a compulsion for biofuels without actually having a sustainability standard in place. It was one of those classic examples of putting the cart before the horse.

Members opposite have said the problem is that some biofuel companies would like the compulsory requirement. I bet they would! I would love it if this Parliament were to pass a bill to compel people to use my particular product. I brew a drop of home brew and it is an excellent organic drop. I would love it if this Parliament were to pass a bill to deal to those big corporate beer companies and require them to include a blend of 0.5 percent of “Nick Smith’s Home Brew Beer”. I would love to see such a bill passed. I could justify it, because my beer is particularly good, and I think it should be better valued by Parliament. But does Parliament really think that such a law would be good law? It would be a nonsense. For members opposite to simply say that because some biofuel company would like a compulsion to buy its product and that that somehow is good law, is a very pathetic advance.

The real difference in approach around the issue of biofuels is this. The first thing is that this Government is open about the fact that this House of Representatives will not be the one that finds the answer to the challenge around climate change and new fuels. I honestly do not know whether the answer will be hydrogen vehicles, electric vehicles, biofuels, or some other technology that has not yet been invented. I do say to this Parliament that when we try to pre-guess what that answer is, we are pretending we have a level of knowledge that we do not have. We should not try to pick winners—like biofuels.

I would love it if the next speaker explained why we would compel biofuels but not electric cars. I personally believe that electric cars will be a bigger part of the future than biofuels. I think that Parliament should say that we have a transition to make to new renewable technologies and that we need to provide a kick-start and some incentives for them. The answer is not to compel any one of those technologies but to provide a consistent financial incentive to move to them. The idea that Parliament could prescribe that the exact answer is for New Zealand to have 2.5 percent biofuels by 2012, in my view, was quite ridiculous. The proposal from the Minister to look at an excise tax advantage that would then allow that to flow through does make a lot more sense.

The second point I will deal with is the issue of cost. Officials have made a prediction, but nobody knows the proper price. It depends on the sustainability standard, but we do not know what it is yet. If the sustainability standard is very narrow and tight, then the price will be quite high. If the sustainability standard is very loose and very open, then the price will be quite inexpensive. But if we take a moderate view of it, it is about 4c a litre. Each cent on a litre of gas costs $60 million, so we are talking about a $240 million cost being put on to consumers for this biofuels incentive of a teeny-weeny little percentage.

As the Minister responsible for Climate Change Issues, I put it to this House that the biggest contribution New Zealand can make to this huge challenge of climate change is around the technology to reduce the methane from agricultural emissions. Do members know that we are spending just $4 million on research and technology to solve that problem? How many members in this House can put hand on heart and say that putting a cost of $240 million on to the economy for biofuels, while we spend just $4 million on agricultural emissions from farm animals—the real elephant in the room around climate change—is a sensible programme? In my view it is completely disproportionate and out of order with what is logical.

The last challenge I would have for members opposite is simply to go back to their record on climate change. Can any member opposite name for me a country that has had a larger increase in emissions than New Zealand has had over the last 9 years? Can they name any country—any? The reality is that the previous Government had the very worst record, and the few countries that may have had a worse record most of us have never heard of. I think it is about time that members opposite made some apologies for their appalling record on climate change, before they lecture this Government about its sensible programme.

I have to begin with that last point from Dr Nick Smith. As he well knows, New Zealand’s greenhouse emissions rose fast under the National Government of the 1990s and they rose faster under the Labour Government of the 2000s, for one simple reason—that is, the economy grew faster under Labour than it did under National. I make no excuses on the grounds of economic growth; the climate does not care how fast the economy grows. And it did take the Labour Government a long time to realise it had to take some action. But finally the Labour Government took some action. It put in place some provisions to reduce our greenhouse emissions—very late, nevertheless it did it. But what is the first thing the National Government has done? It has repealed the lot of them. Well, maybe that is a lesson to Labour—that a Government has to do things early in the term if it wants them to stick. But the fact is that we did get some good policy, and now it has gone.

I begin my third reading speech on the bill to abolish the biofuel obligation by reading a little bit from the briefing to the incoming Minister of Transport. This is what the Minister was told by the Ministry of Transport: “Reliance on fossil fuels to power transport leaves New Zealand exposed to the expected rises in oil prices due to increased demand, and a supply that many forecasts suggest will peak between 2010 and 2020.” The Ministry of Transport has finally got on board with peak oil! “To help our society and economy adjust to the true cost of using oil and emitting carbon dioxide, the transport sector must improve energy efficiency and shift to energy sources and modes of transport that are more sustainable and over which we have more control. New Zealand is relatively well placed to generate electricity from renewable sources, has good sources of first-generation biofuels in limited volumes, and is developing sources of environmentally friendly second-generation biofuels. Making the most of our opportunities will be an important focus of the ministry’s activity over the coming decade.” Well, it looks as though the ministry will not have that opportunity.

I note that despite that briefing from officials, the new Minister of Transport has not spoken once in this debate. Would we not think that an incoming Minister of Transport would be interested in a debate about what vehicles in New Zealand will be running on in the future? But he has not contributed one thing to this debate, and I find that sad. No one in Government, in fact, has spoken up for our need to reduce dependence on imported oil. No one has spoken up on our need for fuel security at least in an emergency—to have enough fuel to get food to the supermarkets and to maintain emergency services. I have to say to Dr Smith that electric cars will not do that. No one from the Government has spoken up on the need to encourage science, innovation, and entrepreneurship, which will lead to second-generation sustainable biofuels in New Zealand. That is an area where New Zealand has a big competitive advantage. Nobody over there has recognised the importance to business confidence of being able to rely on a law. Those issues have been left to the Greens.

Biofuels are not the saviour of the world. They are not the whole answer to climate change, and nobody has ever pretended that they are, but they are part of it. New Zealand is particularly well placed because of our large land area and good growing climate, and because of the wastes that occur from our agricultural industry. There are good biofuels and bad biofuels, and the way to distinguish them is with a sustainability standard, but the Government is repealing detailed instructions for writing that sustainability standard. Nick Smith, in all his speeches, and the Minister as well, insists on conflating the United Nations’ concern about the effects of ethanol grown from subsidised corn in the US with the effects of bio-diesel made from tallow in New Zealand, but they are as different as chalk and cheese. To be for one does not mean that one is for the other.

The Government position is based on an aversion to mandatory means, but we already mandate the composition of motor fuel. We already mandate sulphur levels, the lack of lead, and a whole lot of specifications around volatility and combustibility. What is so different in mandating 2.5 percent of renewable composition? Nick Smith again knowingly misrepresented the situation by saying that it was equivalent to compelling oil companies to buy Tom McNicholl’s product. Well, he knows that is not true. It is equivalent to requiring oil companies to buy some renewable fuel. Tom McNicholl has to compete with everybody else on whether his product is the one that makes it.

I thought that one benefit of this debate was that the Minister, Gerry Brownlee, was learning some stuff from all the contributions in the House. But I heard his third reading speech and I am afraid I was wrong, because he still does not grasp the most important point of this whole debate. He is taking an economics 101 approach that says if the demand is there, the market will provide. If we are talking baked beans or shoes, that is correct, but in this case the market will not provide, and here is why. First of all, oil companies will never demand biofuels. Why should they? They have their own product. They are not the consumer. As oil prices rise, they will just put up the price of what they sell. So there will never be demand from oil companies for biofuels until oil wells are physically incapable of delivering enough oil.

Members should remember that the briefing to the incoming Minister of Transport—and a very conservative briefing at that—says that that time will be from 2010 to 2020. If it is 2010, we need to have infrastructure in place now, but we are not going to have that. As well, when oil wells are incapable of delivering enough oil it will be very hard to import biofuels, because everyone will want them. We may not even have our own tallow at that stage in order to set up an industry, because it may well be under long-term contracts for export to China, where the Chinese will be making biofuels out of it for their people, because tallow will be a valuable ingredient.

Gerry Brownlee thinks that because Fonterra and Gull Petroleum have a contract to sell 22,000 litres of ethanol, that shows that it can be done. Well, they had a bit of surplus feedstock, they were already making ethanol, and Gull Petroleum was expecting a legal obligation, so it got in first. It was a marketing strategy; it was a one-off, drop in the bucket, little bit of ethanol blended with petrol, and it will be the last of that kind because the company did it expecting an obligation. If a company is building a biofuels plant, will it invest under the law as the law is going to be in a few minutes? Well, it will not if it is making ethanol, because ethanol cannot be sold here as a fuel unless it is blended, and oil companies will not be providing blending facilities. Most vehicles cannot run on pure ethanol, so companies will not be proceeding with trying to make ethanol from waste wood for the same reason, and that research will go overseas. If a company is making bio-diesel, it may focus on whether it can make direct sales, such as to the fishing fleet we have heard a lot about. When oil is $150 a barrel, companies will get orders, and when oil is $49 a barrel, as it is now, they will not get orders, and nobody will build a plant when there is a stop-go market that depends on the fluctuation of international oil prices. So when oil hits $200 a barrel, there will be no industry, and maybe no feed stocks.

The Minister even says that oil discovery in New Zealand may reduce our dependence on foreign oil faster. Well, I am sorry, but I tell him that oil discovered in New Zealand will not belong to us. It will not necessarily be refined here, and it will be sold on the world market. We will have as much ability to buy it here as we have to buy any other oil in the world. It is frightening that as we get so close to peak oil we have a Minister of Energy and Resources who does not know that. He says we cannot meet our obligations within New Zealand without imports, so let us look at the arithmetic. The first company has 10 million litres now, with 60 million litres under construction, making 70 million litres in all. If we add eco-diesel, we have 20 million litres now, with 20 million litres coming online next year. When we add BioDiesel Oils (NZ), 70 million litres are planned and under way. I tell Mr Brownlee that a total of 280 million litres a year by 2010 is already in the pipeline, and that is almost the 300 million litres the Minister said we would need in 2012. That is without any wood or any algal biofuels. Clearly we can do it within New Zealand. The quantities in the Act are designed to keep pace with what we can do in New Zealand, but all of that careful thought to give just enough encouragement to a New Zealand industry is being wiped away by this legislation.

I rise to speak on the third reading of the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill. As members of the House clearly know, ACT is committed to supporting National’s first 100-day plan as laid out in the document My key commitments to you. The caucus and I intend to honour that pledge. Having said that, I say I have listened to the contributions from the Opposition members with interest. As a new member of the House I was not involved in the debate surrounding biofuels last year. During the debate over this last day, I have personally come to see some considerable sense in what has been said by members on the opposite side of the House. I stress that that is my personal position and view, and that the ACT Party is committed to supporting the Government.

I am glad to hear that Labour members recognise that some biofuels would dramatically increase fuel prices worldwide, particularly hurting the 1 billion people who survive on less than $1 a day. I hear Ms Fitzsimons’ distinction—and I hear it loud and clear—between various biofuels, and I hear her point that not all biofuels are alike. I am pleased to hear that both Labour and the Greens recognise the negative impacts of some biofuels—in particular, those produced from corn and rapeseed, which have been shown to contribute higher levels of greenhouse gases than fossil fuels. Certainly from my personal perspective, bio-diesel produced from tallow in New Zealand appears to provide a number of benefits over the use of fossil fuels or fuels produced from what were once food crops.

It is clear to me from listening to the debate that biofuels warrant further investigation, and my hope is that over the next 3 years the Government, with help from its support partners, my party and the Māori Party, can come up with a common-sense approach to this issue: a common-sense approach that will allow the development of biofuels that contribute to lower levels of pollutants in our environment but do not cause unintended consequences. It should be an approach that will allow the development of biofuels that will not lead to further price rises being imposed on those who can least afford that, and, most important, an approach that will allow the development of a biofuels industry in New Zealand based on good science and good economic sense. That, I am afraid, is where I and my colleagues opposite diverge. Their feeling, and it seems to be shared wholeheartedly by the Greens, is that biofuels, in order to be viable, require regulation and compulsion. ACT agrees with the Government view that using compulsion to create a captive pool of customers is a bad idea.

With regard to the letter from Mr McNicholl, I read it with considerable interest and I noticed a couple of things. I think that maybe it was not very well expressed. He says that without the biofuel obligation, the business case for BioDiesel Oils (NZ) would have been weak from the start. But BioDiesel Oils (NZ) appears to have been set up in 1998, so I assume he means the project to produce bio-diesel from tallow. The other point is that Mr McNicholl—understandably—has some concerns. He has relied on a captive market being delivered to him, which is now going to be removed. Well, I am afraid that is business.

Mr Brownlee has made the point very well that the bio-diesel that is produced now is being sold somewhere, and that it has been sold for some time. And we are not talking about a couple of truckloads; 10 million litres is a huge amount. ACT does not agree that mandatory limits need to be put in place. One point that has not been made is that if bio-diesel is a sustainable product at a good price, all the supporters of the Green Party will flock to buy it. They have sincerely held philosophical beliefs in sustainability, so if bio-diesel is available they will buy it. I am prepared to admit that I have learnt something and have refined my knowledge, which was limited, in this area. I would hope that the members opposite might learn something and see that mandatory levels are not a particularly good way to go. Clearly there is merit in tallow-based biofuels, and that is an option that New Zealand companies should be taking seriously.

One point that Ms Fitzsimons made, your Honour—I am sorry, Mr Assistant Speaker; it is a long habit and is hard to break—was that oil companies will not develop this industry because they do not need to. In the short term that is right, of course; they have a vested interest in protecting their mineral oil market. But one crucial thing is that oil companies are not stupid. I heard Ms Mackey say she had worked for one. Well, I worked for 10 years of my life in the oil industry, and I think she would probably agree with me that the one thing the oil companies are not, is stupid. They all know that we will eventually run short of oil. It is becoming more and more expensive. Peak oil is not going to happen in 2010 or 2020, but it will happen. And if the oil companies do not go down the route of supplying biofuels, their competitors will. We have already seen—and it is a minor marketing point perhaps—that BP changed its identity some years ago from British Petroleum to Beyond Petroleum. All right, that is a marketing ploy, but it illustrates that the company recognises that diversity will have to happen and it will have to source liquid fuels from sources other than 10,000 feet below the ground.

Having said all of that, as I said, my personal view is that work needs to be done on biofuels. I think much of merit has been said by members on the other side of the House, but ACT remains in support of this bill. Thank you.

I am pleased to take a call in the third reading of this Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill. The bill is intended to repeal the compulsion part of the biofuel legislation that was passed by the previous Labour Government, which continued to show its distrust of New Zealanders’ ability to make an informed choice. We all know that biofuels are already available for sale. National has made the point that we support the development of the biofuel industry, but we also trust New Zealanders to be able to make an informed choice. Instead of making it mandatory to force the various distribution chains to sell “x” quantity of biofuel, our approach is to implement viable alternatives such as tax incentives and, at the same time—which is most important—to develop a sustainable standard.

The Hon David Parker sat there and did nothing for 9 years and then, in the last minute of a dying Labour Government, those members brought in legislation that talked of compulsion and mandatory actions. I think that those members should have got the message from the New Zealand public that they have been voted out of office. On this side of the House, the Government side, we show that we have confidence in New Zealanders. Before anybody thinks about mandating anything, a credible standard has to be developed to judge what a sustainable biofuel standard is.

I ask members to think about this. It is incredible to think that the previous Labour Government—and this is why it lost office—would mandate an action without even developing some standards. What is a sustainable biofuel? We have all learnt now, on looking back, that the first wave of biofuel was disastrous for food crops and that the second wave led to deforestation. Now, once again, with the technology still in development, some people want to rush headlong into mandating something.

I am very, very proud to be on the Government side. We are able to provide a viable alternative of tax incentives for the development of the biofuel industry and, at the same time, we are able to show our confidence in letting our people—New Zealanders—make those informed choices.

I rise to speak to the third reading of the Energy (Fuels, Levies, and references) Biofuel Obligation Repeal Bill. It is one of the few times I regret I have only 10 minutes to speak on the third reading. There are some points that I think are important to make.

The first is that I welcome the comment made by Mr Garrett from the ACT Party that he had a personal view that was not consistent with the ACT position—

💬 David Garrett: I didn’t say that—“differed slightly from”.

—was slightly different from the ACT position—after listening to the arguments from the Opposition. I welcome his frankness in saying that—and saying it even before, I understand, he has had his maiden speech in the House. It is good to hear that someone was listening to the debate, and some of the points were well made.

I also want to say to Nick Smith that his work in the select committee—it was relatively unusual—on the development of the legislation now being repealed was valued by members from the Green Party and the Labour Party. It was good. What I think he fails to understand—maybe he did not look carefully at the detail of this bill—is that the very sustainability requirements in that legislation are being repealed by this bill. He seemed to indicate that the work would continue anyway, but, of course, it will not be required by legislation, because those standards are being repealed.

I want to make some general comments about climate change. As a relatively small country New Zealand has the possibility of doing some pretty wonderful things. We are over-reliant on motor vehicles compared with the majority of OECD countries, we have a poor public transport system, and, therefore, having a go at transport fuels is a very good way for us to reduce emissions. I agree with Nick Smith: I think that in the longer term it is likely that battery-powered cars will make progress.

💬 Hon David Parker: The Government’s ambition.

That was the ambition of David Parker, and a lot of work has gone on—including by State-owned enterprises—in this particular area in order to make sure we stay at the front of the world. But that is a longer-term situation, and it may well be that some electric cars will have to be dual-fuel, and that we will still have to rely on a normal combustion engine type of arrangement, at least for some of the longer routes. Therefore, we have to think about the use of fossil fuels, the use of ethanol, bio-ethanol, and bio-diesel.

I was lucky as Minister of Energy and Minister for Economic Development to see quite a few projects around the country. People have been looking at making fuel from gas from the smokestacks at New Zealand Steel—Stephen Tindall and his team have been working in that area. People have been looking at using algae, and they are likely to make progress. But we have only one world-leading biofuel technology in New Zealand that is ready to go now, and that is fuel from tallow. It has been 10 years in the making, a lot of very good research has gone into it, and its economic viability is essentially proven. Most important, it competes really well against international biofuels, most of which are not sustainable. So it is win-win: we have something sustainable—it uses what is pretty close to a waste product in New Zealand; something we have a very high proportion of per head compared with most countries—and it works price-wise vis-à-vis international prices for biofuels.

But there is a problem, and that is that the oil companies do not like it. They do not like the investment in mixing that they have to do to ensure that it can be used, and if there is not an element of regulation or compulsion, they will not do it. They are big economic organisations and they make decisions in their interests as individual companies. It is right that they should do that. That is the way it goes and we accept that that is the way the world works. Over the years, we have made lots of decisions that have hurt oil companies. They fought like hell when we took lead out of petrol. They hated it—they absolutely hated the idea of it being taken out. A whole pile of standards have been set, and I think none of us would now want to go backwards. This situation is similar. This is about the setting of a standard that is important for the planet. Shifting towards biofuels is an important part of that.

We are really lucky in New Zealand that a man—a pioneer and, I understand, a 75-year-old—Mr McNicholl—has decided essentially to shift the emphasis of his company, which had been involved in recycling in a number of areas; over the last 10 years his major focus and his major investment have been on research and development on, and then the building of, what is essentially a pilot plant, and then on the building of a major plant in Waharoa for the conversion of tallow to bio-diesel. I compliment him. He was a long way ahead of the pack and he got some endorsement internationally—the product is proven. He got some support. It was not that anyone was told that Mr McNicholl’s bio-diesel had to be used rather than the imported stuff; no one said that. No one said that people at the moment have to use sustainable stuff—although people have to declare if they are not, which is quite an incentive to use it. But there was no compulsion to use Mr McNicholl’s product; it would compete with the overseas products.

Mr Assistant Speaker Roy, I regret to inform you that during the Committee stage of the bill we had an admission and an interchange that I would describe as unseemly at best. It became very, very clear that Gerry Brownlee, who is only 5 or 6 weeks into his term as Minister of Energy and Resources, is behind in his correspondence. In fact, that became clear 2 weeks ago, so 3 weeks into his time as Minister he was behind in his correspondence. Mr McNicholl, through the Ministry of Economic Development on the 2nd, and directly to Mr Brownlee on the 4th, sent a letter that outlined the issues for that company, and the fact that this bill would result in the mothballing of his plants. It was again sent to his office on the 12th by Sue Wood, a former president of the National Party. Unfortunately, Mr Brownlee did not read that letter until 17 December—today.

💬 Hon Gerry Brownlee: Rubbish!

No, he made it absolutely clear in the Chamber that he had not read that letter until today.

💬 Hon Member: Ask him directly.

I ask the Minister whether he had read it before. Again he refuses to deny it. But he made it clear in the Committee stage that he had not read that letter until today.

He made some other comments. He said that his office had offered Mr McNicholl a meeting. As of Friday last week that was being vehemently denied by Sue Wood, a former president of the National Party, who said that his office gave her the brush-off when she tried to set up a meeting. It may be that, as this legislation was falling down around his ears, he offered a meeting after the fact.

But the point is that Gerry Brownlee, by not reading his correspondence, misled the Cabinet committee that approved this bill. It is absolutely incumbent on a Minister, especially one proposing to take to the House legislation without a regulatory impact statement—such as this bill—to brief his Cabinet colleagues on the effects. He has told us that he did not tell either the Cabinet committee or Cabinet that a company in which $10 million had been invested would be mothballed and 46 jobs would not be available. This is from a Government that says it cares about jobs and cares about investment. He has told us that despite having the letter in his office, he did not tell his Cabinet colleagues about it. Well, if that occurred two or three times under a Labour Government, the Minister would get the sack. If it occurred once, the Minister would get a very serious reprimand. I want to know from the Prime Minister what he is going to do about his incompetent, lazy, behind-in-his-correspondence Minister, Gerry Brownlee.

I am happy to take a call in the third reading of this very, very bad and damaging bill—the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill. I note, once again, that this bill did not go to a select committee. Those affected by this terrible legislation were given no chance to come and have their say. Those National members who say that Mr McNicholl is lying when he says that he will lose his business if the Act is repealed—

💬 Hon Gerry Brownlee: No one said that.

So is he telling the truth in his letter when he says that his plant will go under?

💬 Hon Trevor Mallard: He doesn’t know. Even that’s a very bad admission.

That is right. He does not know, because he read the letter only just before the lunch break. The National members who say that Mr McNicholl was not telling the truth in his letter when he said that his plant will go out of business if this bill is passed would have had the opportunity at select committee to have that discussion with Mr McNicholl face to face.

💬 Hon Darren Hughes: And Sue Wood from Ōtaki knows that.

That is right—Sue Wood, from Ōtaki, the former president of the National Party, knows that. The least the people of New Zealand should expect is that when their Government plans to pass legislation that is not only environmentally damaging but economically damaging, legislation affecting someone who has invested $10 million of his own hard-earned money and employed 22 people in Waharoa, which, as my colleague Jacinda Ardern—who campaigned very hard in that electorate told us—had over—

💬 Hon Trevor Mallard: 23 percent unemployment in 2006.

—over 23 percent unemployment, plus another 20 people in East Tāmaki, that person has at the very least the right to come along to a select committee and put his case. He has the right to have National members, who are like lions in the House today, actually face up to this person who will be put out of business and tell him why they are passing the legislation.

There is no good reason for this repeal bill other than revenge on the Labour Government—National does not like it because we put it into place.

💬 Chris Auchinvole: Oh!

I am sure Mr Auchinvole’s call will elaborate on this in great detail, but we also know that Mr Brownlee tried to claim in the Chamber today—I do not know whether it is true—that he was trying to get a meeting with Mr McNicholl to talk about the issue with him. According to Sue Wood, as of Friday last week that was not the case. Again, I come back to the fact that we would not need to be having this discussion if this bill had gone to a select committee, and Sue Wood and Mr McNicholl had had the opportunity—which most in this country would think would be their right—to come along to a select committee and face up to those who are planning to put them out of business with this legislation.

💬 Hon Darren Hughes: Sue Wood was campaigning for the Nats at the election.

That is right. She campaigned for the Nats at the election. The National Party campaigned on this policy. What it did not say is that the bill would be rammed through under urgency in the first 2 weeks of Parliament with no select committee process for the public of New Zealand to have their say.

Mr Brownlee has talked a lot about how unhappy he is about compulsion. This is a very fundamental philosophical opposition on his part, so I went back and had a look at his first reading speech on the Biofuel Bill. I know that National supported this bill to select committee, but Mr Brownlee raised a number of issues and concerns that he had about the bill as it stood going to select committee. He seemed to actually know a little bit about it. I read through his first reading speech; there was not a single mention of compulsion at all. I remind members that at the time the bill went through its first reading the mandatory target obligation was 3.4 percent, not 2.5 percent as it came out of the select committee. At the first reading Mr Brownlee, apparently, had no problem with compulsion. In fact, he went on to say: “we support the bill—with considerable goodwill—going to a select committee, recognising the importance of all of this for New Zealand’s future. It has to be said that as an agricultural producing country with a huge emission problem from our agriculture sector, and not wanting to penalise ourselves unduly in the future, getting this part of the emissions profile in better shape is in all of our interests.” I do not know what has changed between now and then—who knows?

💬 Hon Gerry Brownlee: The select committee led me to change my mind.

It is the select committee process that made the bill better. The select committee process that addressed every other issue he raised in his first reading speech apparently made it so that National could not support the legislation.

But there was another very good first reading speech from a member of this House who is held in high regard, Mr Eric Roy. I would like to read from his speech because I think it also raised a number of issues that we agree with here. He pointed out that there were a number of complex issues when it came to biofuels, but that that they were part of the solution in terms of our response to the whole issue of climate change. He believed it was important that they formed part of the debate. He also said: “I also believe that New Zealand has to be in there at developmental and experimental stages, because we will gain credibility in terms of the products we sell.” I agree with this entirely. He said: “we sit at 19.5 tonnes of greenhouse gas emissions per head of population, and the rest of the world is at 5.5 percent. I happen to believe that there is something immoral in First World countries saying yes, that the planet is in crisis, but they will hold just where they are, and everybody should hold where they are, which means that underdeveloped countries stay underdeveloped. So we need to look for solutions.” I agree with that sentiment. He then explained the situation that we were in with the amount of fossil fuels that we were producing. He pointed out—quite rightly—that the transport sector was an enormous part of that area and that we needed to do it. He went on to say: “Biofuels are actually something we can engage in almost immediately. Both our diesel engines and our internal combustion engines can get straight into utilising these fuels. So we have an advantage there, and while not neglecting other things,”—like electric cars—“we are off first base in terms of working with biofuel solutions.” That just about says it all.

One of the issues that consistently came up at select committee was that of low-hanging fruit. New Zealand is very different from most other developed nations. We need only to look at our greenhouse gas emissions profile compared to other developed nations to see just how different we are. New Zealand’s greenhouse gas emissions profile is nearly 50 percent agriculture, which more closely resembles the emissions profile of a developing country than a developed country. It means that when we come to look at solutions for climate change we have enormous amounts of waste by-product, from the production of meat and dairy, which can be used for the production of biofuels, and which other developed countries do not necessarily have in similar proportions at their disposal.

We are, for example, talking about tallow. The research on tallow has been world leading. There were times when the cold flow properties of tallow were in question, and people were worried. We saw a lot of evidence at select committee that this stuff is being used in Edinburgh. If bio-diesel from tallow can be used in Edinburgh at the temperatures it gets down to, then, certainly, bio-diesel can be used all over New Zealand—otherwise, not sold in the parts of the country where it may be too cold to be used. There is also the production of whey from our dairy production using ethanol. Ethanol is also a high-energy option, and as we know, the legislation was about energy, not volume.

Our dairy industry gives us huge advantages over other countries. It is not simply to say that we are the same as every other developed country—we are not. We have low-hanging fruit at our disposal that we can use now. The only reason that this legislation will be repealed is that the National Party does not like it. Mr Brownlee asked people to trust him to develop sustainability standards according to the principles already in the law. The legislation he is repealing had a requirement to do that. We proposed an amendment to leave the sustainability standards in the requirement. If he was genuine in what he said about those standards he would have supported that amendment because the principles that we worked on very hard at select committee were a good guidance. We were told at select committee that people wanted a clear steer on what those sustainable principles would say—what they could and could not do. These are long-term investments that both the producers and the oil companies are taking, and they do not want to enter into a contract to find that 1 year down the track they are in breach of that contract because they can no longer sell that biofuel in New Zealand.

If Mr Brownlee was serious about sustainability standards he would have supported the Hon David Parker’s amendment, which left the requirement for him to develop those standards in the law. I suspect that it will be a very, very long time before we see anything come out of this. A lot has been made of this obligation. It was an issue that we took seriously, but what has become clear in this debate and at select committee, and if we read the letter from Mr McNicholl, is that the obligation made a difference. Mr McNicholl stated as much in his letter. He said: “Around August 2005 when the company became aware that the government had in principle agreed to a Biofuel Sales Obligation it took further steps to invest in ramping up production output of its R&D plant in East Tamaki.” He goes on to say: “When it became evident that the government was going to legislate the compulsory use of biofuel the company went ahead with its plans to construct a new 60,000,000 litres plant at Waharoa which is well under way.” So to say that a biofuels obligation does nothing flies in the face of the evidence that has been presented to the select committee and, indeed, to this House.

It is appalling that the Minister in charge of the bill did not bother to read Mr McNicholl’s letter; he admitted as much in the House today. He finally read it when Labour members tabled it. I do not understand why this legislation needs to be rammed through under urgency. It provides no certainty as the Minister has just told us that he will go ahead and develop sustainability standards anyway. The sector out there is still wondering what the standards will say and do. At least if he had supported the Hon David Parker’s amendment to keep the sustainability principles in the bill people in the sector would have had some kind of clear steer on what those standards would be. They are now in no man’s land—they do not know. They do not know whether there will be any kind of sustainability principles produced at all. If there are, people now have no idea what they might be because the Minister has taken them out of the legislation where they already were. This creates more uncertainty for the biofuels sector, more uncertainty for oil companies, and thoroughly dreadful legislation.

I want to take a reasonably short call on the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill. My colleague Jeanette Fitzsimons has described in some detail the facts about this issue, the extent to which the Minister has got the issue completely wrong, and why this bill is such a bad thing for the National Government to pursue. I want to talk about the international concern about biofuels, and, particularly, unsustainable biofuels. There is a range of different kinds of unsustainable biofuels, and I want to describe some of them.

Unsustainable biofuels are those where the greenhouse gas emissions from the production of the biofuels are high. There is simply no means by which a biofuel is a viable alternative to the use of fossil fuels where, in the production of that biofuel, the greenhouse gas emissions are equivalent to those of fossil fuels themselves. It was very important in the setting of the sustainability standards that we made it very clear that a sustainable biofuel was only one that had a reduced level of greenhouse gas emissions over the life cycle of that fuel—a 35 percent reduction as a minimum, so that it was a real reduction.

But now that the National Government is repealing that legislation, there will be absolutely no requirement in law that the biofuels used in this country emit less greenhouse gas than oil-based fuels. Taking that as one example, we will shortly have biofuels imported by large fuel companies and being used in this country—mostly because the New Zealand industry is being slaughtered by this legislation—that are likely to emit over their life cycle the same greenhouse gas emissions as, or possibly even more than, oil-based fuels. So the repeal of the legislation by the National Government is likely to maintain greenhouse gas emissions at the same rate as at present for transport fuels, or possibly even increase them. Certainly, it will make no contribution at all to New Zealand’s obligation to reduce its greenhouse gas emissions.

The door will be open even further in terms of unsustainable biofuels, in that the biofuels that the National Government is allowing to be brought into the country are unsustainable in terms of food production. Biofuels will be imported that are produced on land that people would otherwise have used to produce food for themselves, their families, and their communities, or would have used in further trade around their communities to support themselves. A significant amount of writing has been done on this issue around the globe by people like Vandana Shiva. She has written a great deal about the impact of unsustainable biofuels on the poorest communities around the world, in terms of the displacement of people and the theft of land. There has been a significant theft of land managed or owned by very poor communities; it has been taken off them by large international corporations. Some people have reported having land taken off them at the point of a gun; they have been forced off their land by the employees of mining companies and palm oil companies, particularly in areas like the Solomon Islands.

I have been to the Solomon Islands and visited with people there who were campaigning against unsustainable biofuels, particularly those produced from palm oil. Much of the land those communities were living on, and the forests those communities were living in, were being used as a food source. People were also using those resources to build their homes and care for their children, and they were using the forests as the source of medicines. Those communities were engaged in ancient knowledge, ancient cultures, and ancient traditions. Their lands were being stolen from them at the point of a gun because of the drive for unsustainable biofuels. International companies wanted the land in order to produce unsustainable biofuels that they could then sell on to Western countries like New Zealand, because there is a demand for biofuels here.

So what did we just make sure of? The Green Party, along with Labour and even with a bit of agreement from Nick Smith, agreed that we should have sustainability standards in New Zealand law that would say a sustainable biofuel was one that was not produced in competition with food production, and was not grown on land that was used for food production, and that would not impact on indigenous biodiversity. That standard is currently in the law that is soon to be repealed by National. It would have made sure that no biofuels imported into this country came from the end of a gun, at the cost of indigenous communities losing their forests and watching their homes be bulldozed by international fuel companies who wanted their land to grow biofuels on. Under the existing law, we would have made sure that biofuels produced in such circumstances did not come into New Zealand. New Zealanders would have felt absolutely assured that—

💬 Hon Gerry Brownlee: Where are the standards?

The standards are in the law. The Minister of Energy and Resources does not know where they are, because he has not bothered to read the legislation. He has no idea what he is talking about. He has not seen the standards, so obviously he has not looked at the legislation that is in place at this very moment, which he is repealing. He obviously does not even know what he is repealing.

Those standards are in place right now, and New Zealanders would have been assured that they were not responsible for the destruction of homes, the theft of land, and the destruction of indigenous rainforests around the world, particularly in the Pacific. Those rainforests are very important, not only for biodiversity reasons but also as food sources and medical sources for the people who depend on them. The poorest people on this earth rely on those natural resources for their lives, but those resources are being taken off them by multinational corporations that want to grow biofuels to feed greedy Westerners who just want cheap and easy biofuels. The National Government is making sure it is possible now to import such biofuels into this country.

It is also worthwhile to remember that not only is National opening the door for unsustainable biofuels to come into New Zealand but also it is providing public money to the companies that are part of the process of stealing land off poor people, threatening them with a gun, and destroying the indigenous forestry and rainforests. National is to give those companies subsidies to do all of those things. Not only will the subsidies go to those companies but also the same process of subsidising international companies will mean that our New Zealand domestic industry, involving sustainable biofuels made from waste products, will be killed off. The public purse is being used to fund the theft of land by multinational corporations, and the destruction of New Zealanders’ jobs and New Zealand’s domestic biofuels industry. That is the National Government’s recipe for the economic—I do not know what it is; it is certainly not economic growth or development—degradation of this country.

It is a tragedy for New Zealand to see that in just this one little piece of legislation, which is only a few clauses and a couple of pages long. This bill is just a tiny little thing, but inside it we can see the whole of the National Government’s policy and programme for this country, which is to be as unsustainable as possible, in the interests of both greed and international companies, to destroy New Zealand industry, to encourage job losses rather than job growth, and to make it as hard as possible for the international community to look on us with anything but disgust and distaste.

This legislation, along no doubt with other legislation that is to pass sometime in the future and certainly a bundle that passed last week, just goes to show the extent to which the National Government will drive this country into the dark ages. It will drive New Zealand back to a time when unsustainable growth and a very large pool of unemployed workers were created, to the benefit of wealthier companies, and particularly international companies; and back to a time when public money is funnelled either into private schools—we see almost a doubling of funding for private schools by the National Government—or into private companies, so that more and more money is taken out of the public purse and given to private, profit-making enterprises, all in the name of greed and the National Government. So much for a brighter future! Indeed, this National Government will drive New Zealand back into the dark ages, and we will be ashamed to face up to the international scrutiny that will no doubt come as a result of that. In the context of indigenous communities that have relied on Western countries, like our own country, to put their interests at least a little into our consideration, we might at least acknowledge the fact that their homes and livelihoods are to be destroyed. This National Government has no concern for them or for the interests of New Zealand.

This is a sad, sad day, and this bill is a disgraceful act on National’s part.

This has been a very interesting debate to listen to, and I really have enjoyed the beginning of each speech that has come from the Opposition side of the House. Sadly, towards the end of all of those speeches we have heard a more partisan tone, and they have turned into diatribes against the National Government. We even had Mr Parker talking about energy-efficient light bulbs and saying they should be back in there. Actually, we have just had an election, and the people have indicated what they want. There has been such a waste of energy in the discussion of the details of this, but the thrust of the original discussions was good.

I have a few questions to ask. Where is the mountain of surplus tallow at the moment? There cannot be a big surplus without displacing the production of other products by taking the tallow away. Opposition members say we will make more money out of tallow. Yes, but this is the whole argument about biofuels. Corn was a low-value product that the Mexicans used as a base food supply, and now it is beyond their reach.

💬 Hon David Parker: People don’t eat tallow.

Well, no, they do not, but they make a lot of things from tallow that keep them healthy and clean, and that they can afford. And Labour members talk about capturing it and legislating by compulsion so that it has to be used in biofuels.

Mr Parker talked about an environmental backwards step, and about the use of compulsion in order to introduce changes of that nature being the environmental backwards step. I was interested in what Mr Mallard said. We nearly got there, and I thought his speech was going to be good, because he was talking about the need to use new technology. The biofuel legislation restricts the use of new technology because it puts a ring-fence around a particular biofuel and says that people must use that one.

💬 Moana Mackey: No, it doesn’t.

It does. It is not a mandate for change. Internationally, the United Nations and the New Zealand Parliamentary Commissioner for the Environment both say that compulsion for biofuels is a disaster.

Like Moana Mackey, I shared an involvement in an oil company. We had a little oil company; there were about four of us in it. We used to import fuel.

💬 Hon Darren Hughes: Just like the Clampetts!

Ha, ha! We changed it. It was a small business, but there was enough technical knowledge amongst the partners to know that New Zealand had never had much of a go with decent petrol. We have not talked about standards that are really good for the country. That is why we have been badly served.

💬 Moana Mackey: So why didn’t it go to a select committee, and all your questions would have been answered?

Well—

💬 Hon Gerry Brownlee: Moana went to forecourt school.

There we go. But even forecourt school people know that New Zealand’s petrol has never been the very best in the world. A lot of improvement can be made without having this sort of regulated procedure.

To conclude, I say the biggest problem coming in the arguments from members on the other side of the House seems to concern the loss of the compulsory nature of the legislation.

💬 Moana Mackey: The Minister didn’t care about the compulsory nature in his first reading speech. He didn’t even mention it.

But that is the only bit that seems to have objections to it. This is worthwhile legislation. It will set the clock straight. It will not stop the production of biofuels. It will not stop the encouragement of new technology. It will stop us walking into a backwater. Thank you, Mr Deputy Speaker.

The Labour Party in Opposition joins with five other parties in opposing the third reading of the Energy (Fuels, Levies, and References) Biofuel Obligation Repeal Bill in Parliament today, because we believe this is very bad law and we believe this is a backward step for New Zealand. We do not believe there is any upside for New Zealand in this bill going through. We do not believe there is any upside for the environment, we do not believe there is any upside for New Zealand industry, and we certainly do not believe there is any upside for New Zealand jobs, which will take an active step backwards when this bill receives its third reading, if indeed that is what happens at the end of this debate.

I would have thought that the National Government would reflect on the fact that five of Parliament’s seven parties are strongly opposed to this bill, including its support party the Māori Party, which is standing up for its beliefs and voting against this bill. We also heard from the ACT member who spoke, David Garrett, that he is against the bill, as well, but he will vote for it on the basis that it is part of the Government’s programme. That is not the position, of course, of the other support party, the Māori Party, which is not doing that, but ACT has decided to support a bill that its individual members do not support. I acknowledge that United Future, the Progressive Party, the Labour Party, and the Green Party are also not supporting the bill. That leaves National with only 62 votes against 59. That is a majority. It is a simple majority—a simple majority from a simple Minister. It means that the National Government will win on this, but it should show those members that people are very upset about this bill going through, because this is not good law for New Zealand. This is not a step forward for New Zealand industry.

That fact is really compounded by the fact that this bill did not get a chance to go to a select committee. It is yet another bill, from the inclusive Government that John Key told us he would run, on which the public have not had a say. We heard from Mr Auchinvole that the reason the public did not get to have a say on this bill is that we had an election and there was a change of Government. I am sure that National’s decision to repeal the biofuel legislation was what drove tens of thousands of New Zealanders to the ballot box on 8 November! It is as though somehow anything that was ever in the National Party manifesto need never go to a select committee again because it is National Party policy. There is an arrogance in that stance that I think National will live to regret, particularly when these bills cause long-term damage to our country.

💬 Hon Gerry Brownlee: No, it doesn’t.

This bill does, because this bill denies an opportunity. This bill is costing one man, who has been mentioned several times during the debate—he has been the poster boy for it, in a way—millions and millions of dollars in losses, as a direct result of the decision this Parliament will make in 10 minutes’ time. That goes alongside other bills passed through their third readings that have also made an impact on people, right down through to last week’s KiwiSaver changes, which change people’s savings during their working lives. That makes a big change for people for ever. This bill makes a change that is negative, and its consequences are more far-reaching than I think the Government is prepared to give us credit for discussing, today in Parliament.

My colleague Moana Mackey quoted extensively from the Minister’s speech that was given when he was the shadow Minister in this area, and, really, I felt he was hung, drawn and quartered on his own words with the bluster we have heard from him today, and yesterday, about why he feels the need to repeal this biofuel obligation. We know that his colleagues have not read a lot of the legislation that the Government has put before the House this week and last week; I suspect that they would not even have had a cursory debate on it in their caucus room. But what has been clear from a lot of the Government’s speakers is their total lack of understanding and failure to appreciate the fact that the obligation we are talking about is a tiny obligation out of all the oil sales in New Zealand. National is acting as if the former Government had on the books a compulsory measure by which absolutely everything had to be fuelled by biofuels; we would not even be able to spark up the lawnmower this weekend without pouring biofuel into it, because the evil Labour Government, in that nanny State way, had insisted that only biofuel could be used.

💬 Paul Quinn: You agree—at last!

I want to say to the Government that if this bill did not pass, then 99.5 percent of our oil would still be coming from the current sources we have—99.5 percent. In our law we had 0.5 percent as a target, in order to get an industry going for biofuels. I do not know what bright ideas Mr Quinn has about climate change; I suspect that his bright ideas do not stretch all that far past dawn. But for those of us who have been trying to think about what things New Zealand can do in order to make sure that we can respond to climate change, we can say we have not seen any ideas come from National.

What has come from those members are things that have actively undermined New Zealand’s response to climate change, and this bill has to be one of them. Gerry Brownlee has said that one of his first priorities as Minister of Energy and Resources in New Zealand is to take away choice from New Zealand consumers, because he is taking away the ability for us to develop a proper industry in this country. He is happy to cut across private property rights, and that relates to all those slogans and all that language that National members always use. But when those slogans do not suit National’s argument, we never hear of them. National used to be the party of private property rights. I can see why ACT Party members privately have their views on these things, but they are tottering along behind National in this respect. National is going to cancel the private property rights of somebody who has put in millions and millions of dollars of his own money into that property—his life savings.

💬 Paul Quinn: Like economic transformation, closing the gaps, knowledge wave? They’re slogans.

Mr Quinn in his rant yesterday told us that he would be behind the ordinary person in Parliament because he was a bloke’s bloke, and that he would stand up for people, yet today he is putting his vote behind a measure that will destroy millions of dollars belonging to a 75-year-old man who wanted to take the entrepreneurship—

💬 Paul Quinn: Rubbish!

Paul Quinn says “Rubbish!”, but we know that he does not have a clue about it, because he started shouting out “Rubbish!” only when Gerry Brownlee said “Rubbish!”. If the member is taking his cue on research from Gerry Brownlee, then that would be a very strange way to spend his parliamentary career, because one of the things that came out in this debate—for a bill that did not go to a select committee—was the fact that Gerry Brownlee was so far behind on his paperwork that he had not even read a letter from Sue Wood, the former president of the National Party. I know that the National Party was very—

💬 Mr DEPUTY SPEAKER: Order!

It is fine by me, Mr Deputy Speaker; if the man wants to make a fool of himself, then he can do it for 2 years, 10 months, and 3 weeks, and his little time in Parliament can be known for that. It is fine by me.

But Sue Wood, the former president of the National Party, was very active in the National Party campaign at the last election. She was busy helping Mr Guy in Ōtaki during that election, and she would have been thinking to herself that she would have a party in Government that would listen to what she had to say. I think she has put up some good arguments in her letter. But we now know that it is not her arguments that have been dismissed by the Government; it is her envelope that has been dismissed by the Government, because Gerry Brownlee has not even had the energy to do his paperwork or to read his correspondence. He now has staff who can open his envelopes for him. Of course, previously Gerry Brownlee used to go to any function that involved the opening of an envelope, but now he has people to do his envelopes for him and he cannot even do that.

💬 Hon Dr Michael Cullen: What about a crusade on reading?

A crusade on literacy—that is right. If Sue Wood is listening on the airwaves now I would say for her benefit that the problem with her letter, where she does deserve to have absolute criticism levelled at her, is that she wrote a 1½ page letter to Gerry Brownlee. Everybody knows that one does not go over a page with Gerry Brownlee, if one wants to have one’s views taken seriously. And if one really wants to convince Mr Brownlee, one should double-space the page, because the amount of biofuel he spits out when work comes over the desk could have actually met our sales obligations without our needing to pass this repeal bill, which is being rammed through the House under urgency by a Minister who is not on top of his portfolio.

💬 Hon Annette King: Or even under it.

Well, I do not want to pursue that line of inquiry all that far. But I say that the Labour Party is strongly opposed to this bill, first and foremost, because of its climate change measures. We are worried about that. We are worried about our country slipping from the position we have had as an honest broker on these matters, a position of being a country that is respected and listened to on a challenge that will not go away just because there was a change of Government in New Zealand on 8 November. I will tell members one other thing: that challenge will not go away just because the ACT Party has decided to have a high-level, parliamentary select committee inquiry into it. As loyal as we all are to New Zealand, if any member in this House honestly believes that the world is waiting for the entire debate on human-induced global warming to shift, all because our Parliament has a select committee hearing on it, then that member is more deluded than many who currently sit opposite.

The other thing we are very concerned about is the fact that we are shutting the door on the opportunity to develop an industry here, which means that jobs will be lost as a result of the Government’s measures. We are heading into a recession, when the Government will see lots of job losses. It is already promoting that as one of its policies; it will go back to its policy of 6 percent as the natural rate of unemployment. All the right-wing language is already coming through, in that respect. The Government is determined to close the door on jobs here, but I think that is a crying shame. At 0.5 percent, the existing legislation still left 99.5 percent for the Government’s big oil company mates that got to National, as Sue Wood herself suggests. That is one of the issues here. National’s links have not been able to be explored during this debate because we have not had submissions from the oil companies, but I can guarantee that had the oil companies made submissions, those submissions would have very closely reflected the Minister’s arguments; I am sure.

💬 Hon Annette King: Have they been to your office, Gerry?

The Minister would have met with them before the election and made promises to them. He nods his head at that, because he has made big promises to big oil. That is absolutely fine—that is what he has done. But even if the Government had left the requirement at 0.5 percent, it would not be wiping out the oil industry; it would be opening opportunities for jobs and the industry, and for making sure New Zealand was still playing a role in shifting our dependence away from non-renewable sources of oil, which members must agree is something we have to do.

So, as always in these matters, National is showing all its imagination and flair. It is getting rid of legislation, yet has nothing to replace it with. This is a whole lot of hot air and bluster from the Minister in charge of the legislation. At the end, when Ministers have the privilege of representing New Zealand abroad, they will have a very sad and sorry story to tell.