Reports — Review of the Emissions Trading Scheme and Related Matters—Consideration of Report of Emissions Trading Scheme Review Committee

I move, That the report of the Emissions Trading Scheme Review Committee on the review of the emissions trading scheme and related matters be noted. The select committee that was appointed at the beginning of this year and which sat for many months to review the emissions trading scheme was one of the greatest wastes of Parliament’s time and resources that I have seen in my 13 years in this House. The budget for select committees was exceeded several times, and further resources had to be sought for three very good specialist advisers, who worked very hard to advise the committee. But the committee, in the end, had no real time in which to discuss their advice or to reach any conclusions on it.

The special committee was set up from the start as a sop to the ACT Party, which did not believe the climate science and was trying to slow down any action on climate change. The terms of reference were written by the ACT Party as part of its election campaign, and they were simply adopted by the Government. The special committee was constantly called the committee to review the emissions trading scheme, yet its terms of reference never included the instruction to review the emissions trading scheme. Instead it meandered all over the place, with questions about whether we should have a carbon tax or emissions trading, questions about whether we should just adapt to climate change instead of trying to mitigate it, questions about trade, and questions about whether the science was real. All the way through we had to pretend that we were reviewing the emissions trading scheme, but at no point in all of those months that the committee sat did we ever have a copy of the emissions trading law in front of us, and at no point did we ever debate any of the provisions of the existing law. This was Alice-in-Wonderland stuff, and the House should be ashamed that it allowed such a thing to occur.

We heard a succession of submitters, the same submitters whom some of us had heard in the previous year, saying exactly the same things that they had said when they submitted on the legislation that led to the emissions trading scheme that is currently in our law. There was a lot of special pleading. Submitters tended to start off by saying they accepted that climate change is important but they should not have to pay anything. They said as long as they did not have to pay anything, then it was fine to have an emissions trading scheme, but they should be exempt from it—or, if they could not be made exempt, then they said emissions trading should not happen for a long time. Their attitude was “not us, not now, not really, and maybe not ever”. So it was a rather onerous duty for those of us who had put a great deal of work into the emissions trading law the year before to hear the same special pleading all over again from a lot of people whose position had not changed, and who had nothing new to offer.

But we did submitters the courtesy of holding hearings for, I think, some 60 hours and of taking their comments seriously, unlike the Finance and Expenditure Committee, which has just finished hearing submissions on the Climate Change Response (Moderated Emissions Trading) Amendment Bill, and which dispatched the lot of them in, I think, 3 days of hearings—or was it 5?

💬 Dr Russel Norman: Barely.

Barely that, and with so little notice that submitters did not even have time to prepare before coming to speak to the committee. If it had not been for the motion that I moved in the committee, which was supported by all other parties except for National, we would not have heard even as many submitters as we did. We would have done the whole thing in 1 day.

💬 Charles Chauvel: Who seconded that motion?

Of course, my friend Charles Chauvel very nobly supported the motion, and that was very much appreciated.

Since 1992, when the then Government first signed an international commitment to reduce emissions and protect forest sinks, successive Governments have dithered and done nothing about climate change. Right through the 1990s, the National Government anguished over whether to have a carbon charge or emissions trading, and ended up doing neither. In the 2000s Labour worked up a policy on a carbon charge—not a bad policy; it would have been a great deal better than nothing—and set it for 5 years into the future. It announced the policy in 2002, with the carbon charge to come into effect in 2007. Then that policy was abolished after the election in 2005, supposedly because there was not a majority in the House for it. But actually the Māori Party was never even asked for its support. We believe there could have been a majority in the House for it. Certainly during 2005 I tried to persuade the Minister of the time that he should pass the legislation then, when there was clearly a good majority for it, but that did not happen either.

Then a lot of work was put into the emissions trading scheme, and that legislation was passed last year. It is in force now, and it is the law now. The provisions on energy are supposed to come into effect on 1 January, but the new Government came in and decided to review the whole thing. But it was not a review. It was a holding pattern, a time-wasting measure while the Government made up its mind what it wanted to do. The Minister for Climate Change Issues, Nick Smith, did not seem to have a plan after the election. All he knew was that he wanted to change things, so obviously he had to do a lot of work with officials on just how he wanted to change things. The Prime Minister announced that he was putting the emissions trading scheme on hold. It was only during question time in the House that I managed to get him to confess that he had no power to put an existing law on hold without going to Parliament. One cannot unilaterally abolish legislation, even if one is the Prime Minister. So it sat there on the books as law while this committee pretended it was doing something.

The committee often sat for only 2 hours a week—I am talking now about the Emissions Trading Scheme Review Committee, which this motion is about—and in some weeks it did not sit at all for quite long periods, especially when the officials were not ready to bring us their departmental report. We all know why they were not ready to bring us their departmental report: because the Minister had not yet decided what he wanted to do. Finally the departmental report did appear, and suddenly it became extremely urgent that the committee finish its business, and there was no time to discuss what was in the departmental report. There were a number of important issues of principle that we needed to debate, but the committee did not ever get the chance to properly engage with them. On the day of deliberation on this select committee report, we started with 50 percent of the draft report still not dealt with in any way by the committee. So on the day of deliberation we discussed the last 50 percent of this very long report and deliberated on it. It was a shocking experience. I hope I never have to go through one like it again in this House.

But the really tragic thing about this is that we still do not have a proper climate change policy. The one we have is about to be changed, and it is to be replaced by something that will do absolutely nothing to reduce New Zealand’s emissions at all. It became clear only on the last day of deliberation that the Government was totally committed to an intensity-based approach to reallocations, which means that the more that emitters increase their pollution, the more free credits they will get. That is the worst thing we can do with regard to climate change policy, and that is what is about to come to the House next week.

Parliament is an interesting place. I came down to the House at 20 to 8 this evening to do 50 minutes in the House before taking leave of the House at 8.30 to walk across the road and appear on the Back Benches television programme.

💬 Hon Simon Power: Name-dropper!

In demand, I say to Mr Justice Minister. I have appeared on it three times in about 7 weeks. No sooner had I arrived in the House than I was told that it would not be rising early but would be going on to debate the report of the Commerce Committee on finance company failures. I sat down to start to prepare a speech on the inquiry into finance company failures. I am a new person in this House and I understood that the Government was going to move a motion that the House defer the debate on the finance company collapses until a later time. That motion was not moved and I missed my chance to speak—and there is much that I could have said.

However, I was then informed that if we did not debate the finance company failures, we would debate the emissions trading scheme. That is also an issue of real concern to the ACT Party. I intend to use my remaining time to debate that issue and to respond to some of the comments that have just been made by Jeanette Fitzsimons. Unfortunately, because of my other commitments I will not be able to stay in the House to hear the continuation of that debate, and to those speakers who follow me, I apologise.

But let us come to the comments made by Jeanette Fitzsimons. She quite correctly said that the Government had reviewed the emissions trading scheme. She said that the review had been instigated by the ACT Party. Well, why was that? There are several reasons. First of all, the National Party campaigned on amending the emissions trading scheme, which was passed into law late last year. The ACT Party—very much a minor party compared with National, a smaller party in terms of the confidence and supply agreement—campaigned on scrapping the emissions trading scheme. One of the concessions that we negotiated in our confidence and supply agreement was for a full review of the emissions trading scheme. The Government agreed to a review and it established the Emissions Trading Scheme Review Committee, which Jeanette Fitzsimons referred to.

But why was it necessary to review the scheme? Let us look at the reasons. It was necessary because the emissions trading scheme was a massive tax on all consumers, all businesses, and all taxpayers in New Zealand. It was a massive tax, and I will explain that. When the New Zealand Government signed the Kyoto Protocol it agreed to limit our emissions during the period 2008 to 2012 to the levels that prevailed in 1990. It is called the “first commitment period”. For that 5-year period between 2008 and 2012, it agreed that we New Zealanders would emit no more than our 1990 level of carbon dioxide or carbon dioxide equivalents. It further agreed that if we exceeded that level, it would be prepared to pay some money to those who managed to limit their emissions. In actual fact, in the calculation of that figure we were allowed to take into account what we call the extra absorption of carbon dioxide—the absorption of carbon dioxide by plants and forests. At this stage it looks as though New Zealand will have no net liability for the period up until 2012.

The question then becomes what we will have to pay after 2012. Well, we do not know, because we have not signed a commitment to do so. It would seem that National is hell-bent on recklessly pushing ahead with its amendments to the scheme, with the intention that its proposal should be made law before the Copenhagen conference next month. It has become very obvious in recent weeks that no agreement will be reached in Copenhagen—not next December, not next year, and probably not even before the Kyoto Protocol expires at the end of 2012.

But let us say that we did reach agreement, and we reached agreement to reduce our emissions to this theoretical, mystical figure of a 50 percent reduction by 2050—a 50 percent reduction. Let us assume that we were to commit to that; there are many reasons why we should not, and I will come back to those shortly, but let us say that we do. It would mean that New Zealand would essentially have to pay for its excess emissions on a sliding scale. So we start in 2013 and in the following 37 to 38 years—by 2050—we would have to reduce our emissions by 50 percent.

What did the Labour scheme state? The Labour scheme stated that Labour would give industry a short time to adapt, but it would expect industry to then achieve massive reductions such that it would reduce its carbon emissions to zero by 2030—to zero. That means that once industry’s allowance was reduced to zero by 2030, it would have to pay for extra emissions above zero, even though the Government would not have to pay that money offshore. If we agree to that target of a 50 percent reduction by 2050, we will still be allowed half of that carbon discharge. That means the reductions that companies, industries, and emitters are required to achieve are very excessive. They will be paying huge amounts for those emissions despite the fact that New Zealand is not liable for them. It has been calculated by Treasury that on the basis of Labour’s existing scheme, those businesses will be paying in excess of $2 billion a year extra every year from 2030 onwards.

National wishes to reduce that massive overtaxation. Labour has made much of the fact that Treasury acknowledged to the select committee last Wednesday that the cost of what is being given back is $105 billion. That is a massive figure. The reason it is being given back is that Labour’s scheme took it in the first place. What National is trying to achieve—I would imagine—with its legislation is to make the costs on higher-intensity emitters and medium-intensity emitters more akin to what the taxpayer has to pay.

I would like to come back to that 50 percent target. Jeannette Fitzsimons said that New Zealand was the fourth-highest emitter in the world on a per capita basis. Shock, horror! We are the fourth-highest emitter. One would think that is pretty bad. Jeanette Fitzsimons did not tell the House that half of those emissions result from agriculture. Half of those emissions result from growing food for the rest of the world. So they are not emissions that are generated by New Zealanders for New Zealanders’ use. It is not as though they are generated by New Zealanders driving around in Hummers and 5-litre cars, or using coal-fired power stations that puff emissions and soot into the air. We have some very efficient industry; we have some very efficient agriculture. Our emissions profile is unique, because half of our emissions are generated as we feed the world. And we feed the world very efficiently. If we close down our agriculture or we substantially reduce the output of our farmers, that food will have to be grown somewhere else in the world, and I suspect that the carbon emissions of those outputs or that production will be far greater than they would have been if the food had been grown in New Zealand.

That has a big bearing on that 50 percent target. The reality is that if our farmers, on the basis of current science, were to do everything humanly possible—nitrogen fixation, and schemes that are available right now—they could reduce their emissions by just 13 percent. To achieve that 50 percent target by 2050 means the other half of the economy has to reduce its emissions by 87 percent. That shows us what an unrealistic target it is for New Zealand to try to achieve a 50 percent reduction by 2050.

It is all very well having targets of 2015, 2020, 2030, if our scientists can develop technology, if they can breed grasses, if they can genetically re-engineer sheep and cattle so that they do not burp and discharge methane. If they can do that, well, fair enough. But in my view our country would be very, very foolish to sign up to a commitment that we know we cannot meet, and to incur huge costs for all New Zealand taxpayers. Thank you.

Motion agreed to.

Report from the Controller and Auditor-General on Local Government: Results of the 2007-08 Audits—Consideration of Report of Local Government and Environment Committee

No member having risen, members’ order of the day No. 6 for consideration of the report of the Local Government and Environment Committee on the report from the Controller and Auditor-General on local government: results of the 2007-08 audits was discharged.

Report from the Controller and Auditor-General on Inland Revenue Department: Managing Tax Debts—Consideration of Report of Finance and Expenditure Committee

No member having risen, members’ order of the day No. 7 for consideration of the report of the Finance and Expenditure Committee on the report from the Controller and Auditor-General on the Inland Revenue Department: managing tax debts was discharged.

Reserve Bank of New Zealand’s Monetary Policy Statement, September 2009—Consideration of Report of Finance and Expenditure Committee

No member having risen, members’ order of the day No. 8 for consideration of the report of the Finance and Expenditure Committee on the Reserve Bank of New Zealand’s Monetary Policy Statement, September 2009 was discharged.