Climate Change Response (Moderated Emissions Trading) Amendment Bill

It gives me no pleasure to rise after we have just voted through those terrible amendments to the emissions trading scheme. Effectively, they have rendered largely ineffective New Zealand’s main response to our growing emissions.

💬 Hon Steve Chadwick: A sad day.

It is a terribly sad day. The effect of that decision on future generations is that our children and their children will have visited upon them many billions of dollars, and emissions will grow more than they would otherwise have done. I think it is timely to record the fact that if a country like New Zealand, with our comparative wealth—we are one of the richest countries in the world on a world scale; we are not as rich as Australia, but we are still very wealthy—with our good environmental ethic, which is not held by the National Party or the Māori Party but generally held by most New Zealanders, who think we should do our bit for the environment; with the benefit of the rule of law; and with our wonderful scientists and our understanding of these things, cannot do this right, what hope is there that the world will do it right in time? What hope is there that the world will get on top of these problems in time for them not to be catastrophic? I am not a man of hyperbole—I do not use the word “catastrophic” often in this Chamber—but scientists warn us that if the world does not reduce its emissions very soon, then the climate change effects will see millions of people displaced by rising sea levels, changing patterns of food production caused by drought, and, conversely, terrible storm events, meaning that millions of people will not have enough food to eat, and that thousands of species that currently exist on our planet will be lost. I think that is very sad.

I will move on to why I disagree with something that the ACT Party contributed at the end of the last part of the debate on the Climate Change Response (Moderated Emissions Trading) Amendment Bill. An ACT member said that we had to protect property rights. That member was saying what Business New Zealand said in its submission to the Finance and Expenditure Committee, which was that there is a property right to pollute. I might not agree with much that the Minister in the chair, Dr Nick Smith, has done on this amendment bill, but I hope that he agrees that there is no property right to pollute. We have to stand down that notion in this country. There is no property right to pollute—whether it be the right to pollute a river; whether it be the right to pollute with ozone gases, destroying the ozone layer; or whether it be the right to put lead in petrol because it was cheaper for oil companies. There was no property right to do that. There is no property right to pollute in any area.

It is not a private property right to pollute. That is where the business lobby has made a fundamental error in its logic. I correct myself: not all of the business lobby is wrong, but the Business New Zealand business lobby is fundamentally wrong. I think it is such a lazy error; it is so patently wrong. There is no property right to pollute. We did not have to compensate oil companies when we took lead out of petrol. We did not have to compensate refrigeration companies when we took out ozone-damaging substances from their refrigerants. We do not have to compensate farmers when they are told not to pollute rivers. We did not have to compensate councils when we stopped them pouring raw sewage into harbours. We did not have to compensate factories when they stopped polluting rivers with the freezing works blood and guts that they used to just dump in them. We do not have to compensate businesses to do what this country and the world needs to be done when it comes to reducing carbon emissions into the atmosphere.

This principle needs to be reiterated. I ask the Minister in the chair to state clearly that he disagrees with Business New Zealand, and that he disagrees with the ACT Party’s notion that there is a property right to pollute. That is what lies behind the right-wing agenda of those who say that we should protect property rights in this bill. That is what they mean. They say it should protect their property right to pollute. I disagree with that in principle, but even if Dr Smith disagrees with it in principle, he is doing it in practice with this bill.

Some of the amendments that I have put up change the name of this bill to more properly reflect what it is. It could be the “Greenhouse Gas Emissions (Property Rights Creation) Bill”. It creates that property right. It entrenches those rights to create, and persist in creating, carbon pollution well past 2050. In fact, the emission abatement curve is so slow that it does not abate fully for 80 years. We will all be dead and gone. Actually, most of our children will be dead and gone by the time the free emissions rights completely abate under this bill. It effectively creates such a long period of tradability of that pollution right that one could not but say that in practice it creates a property right to pollute.

In doing so, we know that it increases Government debt. It increases Government debt because the free emissions rights that are given to major emitters long after they had a fair adjustment period are so enormous that Government gives away an extra $50 billion worth of emissions right. We can argue with the Minister as to whether it is proper to include the interest on that increased Government debt, as Treasury did, to get the figure of a $110 billion increase in Government debt, but there is no doubt that it substantially increases Government debt. So an alternative name is the “Climate Change Response (Increased Government Debt) Amendment Bill”.

At question time yesterday the Minister wriggled and wriggled and tried not to answer the question about Brian Fallow’s statement in the New Zealand Herald that the effect of this bill is to delay the date when New Zealand’s emissions peak, and to have a higher peak before they go down. We now know, on the record, that even the Minister agrees that the effect of this bill is to increase New Zealand’s emissions. So the “Climate Change Response (Increased Emissions) Amendment Bill” might be a more proper name for it. We could give various other names to the bill. The “Permanent Pollution Payments Entrenchment Bill” would be a fair name for this bill.

Members can choose between those names, but the sad effect of this bill is to severely undermine the environmental effectiveness of the scheme. It causes irresponsible fiscal cost to be put on the taxpayer and on future generations, who will have to repay that cost. It does nothing to improve New Zealand’s contribution to fixing this problem. Editorials up and down the country, commentators, Treasury, the Ministry of Economic Development, and the specialist adviser to the Finance and Expenditure Committee, Dr Suzi Kerr, all say the same thing. But according to the Government they are all wrong. Dr Smith is wrong. This bill is fatally flawed and it should not have the name that it masquerades under currently.

The first thing I point out to Labour and Green members is that Labour was entrusted with this issue for 9 years, and in every one of those years emissions went up. They did not just go up; they went up by ever-increasing amounts. I will give members some of those areas. The first is with regard to the electricity sector. During the term of the previous Labour Government, emissions from the electricity sector increased threefold. We all accept that forests are an important part of the Climate Change Response (Moderated Emissions Trading) Amendment Bill, but the last 9 years were the worst since World War II in terms of deforestation. That is the first point I wish to make.

The second point I make is on whether I accept that business has a right to pollute. No, I do not. What is behind the changes to make the emissions trading scheme affordable and workable is a really difficult problem. We want to make progress on climate change in New Zealand—we do—but, equally, we do not want to implement policy in New Zealand that exports industries, jobs, and emissions offshore. All the analysis says—

💬 Charles Chauvel: Show us the evidence!

I will show members the evidence. The report that was commissioned by the New Zealand Institute of Economic Research made plain that the approach of a production-based method was the best way in which to respond to climate change without simply increasing emissions offshore. I tell members opposite that they might feel good if the cement, steel, and aluminium industries in New Zealand closed down and those goods were manufactured in China or some other part of Asia, but it makes no practical difference to the environment, and it costs an awful lot of New Zealanders jobs. That is the dichotomy that we have been working through.

Mr Parker again used the figure of $110 billion. It is nonsense. I challenge David Cunliffe, Labour’s spokesperson on finance, on this basis. I tell members what sort of outcome there would be if we took the approach of adding every single year’s cost—and remember it is a loss of revenue, not a cost—and then adding the compound interest on the basis that we would have invested that lost revenue. Labour’s policy is to reinstate a research and development tax credit. That would result in a loss of income of $260 million per year. Most of us in the Chamber would say that that policy costs $260 million. But if the members applied the approach that they are taking to their criticisms of this bill, it would be correct to say that that research and development policy costs $43 billion—if we add it up each year and apply exactly the same approach. I challenge Phil Goff and David Cunliffe. If they are not going to be in the business of misleading New Zealanders on an issue as important as climate change, and they want to adopt that approach to the assessment of numbers, then they should be consistent. They should talk about their research and development policy costing $43 billion, installing a huge debt of $43 billion on our children, and increasing Government debt into the future by $43 billion. That is for a policy that in any one year would cost $260 million.

The further point I make is on the controversy over the phase-out rate. We campaigned on a policy and we said that we would phase out industry support in line with our major trading partners. Australia has chosen a rate of 1.3 percent; we have set that rate for a period of 5 years through till 2018. A large amount of the argument is about what occurs beyond 2018. This bill will reduce emissions over its first 10 years, according to the advice I have received, very little—about 10 million tonnes is the reduction in emissions that it will cause over that first 10 years of the scheme. I say to the members opposite that making a big deal about what that phase-out rate will be into the future is pretty slippery ground to stand on. Every member of this House knows that there will be negotiations in Copenhagen, that legislation is going through the United States Senate, that legislation is going through Australia, and, most important, that this bill will have a review in 2011, which is only 2 years away, and another review in 2016. Even if we take the shorter phase-in and start the phase-out period a little earlier, it is not until 2021 that there is any key difference in the approach. We all know that things will be reviewed and debated further down the track, so for this Committee to be ripping its guts out and for us to have all of these quite personal and derogatory statements around a debate that is as far out as that undermines a pretty broad consensus about the way forward.

💬 Charles Chauvel: Why did you put it in?

Mr Chauvel asks why we would put the 1.3 percent rate in. We have said we will put 1.3 percent into the law. We will review it in 2011; we will review it again in 2016.

💬 Charles Chauvel: How are businesses supposed to plan?

I say to the member Charles Chauvel that this is a key difference. Let us say where it is at. We are saying to business that the phase-out rate will be in line with our major trading partners. I have to say that I have given notice in many business speeches that if our major trading partners give a stronger phase-out than other countries, it is our intention to increase the phase-out rate. Equally, I have to say—

💬 Charles Chauvel: Nonsense!

Charles says this policy is nonsense. I ask him to ring Senator Penny Wong, the Australian Minister in charge of their climate change legislation. Australia has exactly the same provision in its law—

💬 Hon Darren Hughes: They don’t have a law!

Well, neither do we have a law yet. We will be a few days ahead of them. In my view, Mr Chauvel needs to get on the phone and make all the derogatory comments he has made of me to her. He will not, and that shows the duplicity.

💬 Moana Mackey: Why? You’re the Minister in our country!

I say to Moana Mackey and Charles Chauvel that they may not have noticed, but climate change is a global issue, so what other countries are doing is relevant.

I have really enjoyed the Committee stage of this bill because we have been able to pop, one after another, the fragile balloons that Labour has put up as excuses for opposing this bill. I think those Labour members know in their heart of hearts that we are doing the right thing. I think they secretly admire the Māori Party because it was able to achieve what Labour could not—that is, a sensible agreement on the way forward on climate change.

The last point I make is that all the behaviour I see from Labour members is like that of a spurned bride. They get awfully bitter and twisted, and that is because—

💬 Hon Darren Hughes: Have you looked in a mirror lately?

I have to say that we wanted to get an agreement with Labour. That was my first preference. Time got tight and—unlike my discussions with the Labour Party, which leaked all over the place—our discussions with the Māori Party were totally confidential. The key difference was that Labour assumed there was only one deal, and that it was with Labour.

💬 Moana Mackey: No, we didn’t!

Labour did. After we did the deal with the Māori Party, we said that we had introduced the bill only to the select committee. We wanted to build as broad a consensus as possible for this legislation, and Labour walked out. This issue deserves better than that, and I again say to Mr Cunliffe and Labour members that my door is open any day, any week, and any month to do what we should always have done—that is, build a broader consensus of policy around this important issue for New Zealand and for the world.

I appreciate the opportunity to correct for the record some of the gross—I am trying to find a parliamentary word—untruths that have been contained in the comments of the Minister for Climate Change Issues, the Hon Dr Nick Smith, from the floor. I begin with the last one he made: that Labour somehow walked out of good-faith negotiations with the Government. Let me remind the public of what actually happened. The negotiations were proceeding well. We were down to three sticking points, and the major one was around the use or not of a global emissions cap. We had indicated that we would accept a variant of intensity-based emission charges, and that was a major concession for the Labour Opposition. The nature of our offer is set out on the public record in the Finance and Expenditure Committee report.

But something happened, and it was not the deal with the Māori Party; it was the Labour Party conference in Rotorua. That is relevant because a source close to the National Party has told us that the polling indicated that Labour support grew by 5 percent and our leader’s popularity grew by the same amount in that week. The pollsters said to John Key: “Thou shalt not allow a deal with the Labour Party on climate, lest they be seen as statesmen.” So the word went out to the Climate Change Iwi Leadership Group and the financial backers, few in number though they be, of the Māori Party. And Hone Harawira, who had opposed the previous bill because it did not go far enough, was reined in. It is ironic—it is silly—for the Minister to raise that in the Chamber because today that has come full circle.

This morning we heard from the media that the Māori Party council would be called together later today in an emergency meeting to discuss the issues and to raise their concerns about the costs on ordinary Māori. Māori Party sources calculate that Māori would have to pay $500 million to $1 billion a year through cutting services, increased taxes, or the sale of assets. On the other hand, under the deal with the Government five iwi would get $2 billion, but some in the Māori Party insist it does not offset the money all Māori will have to repay over 40 years, which they calculate at between $21 billion and $42 billion. We see full circle today the Māori Party being sacrificed on the altar of Business New Zealand and Fonterra.

That brings me to Fonterra, because word has reached me that Fonterra is none too happy because its deal implied an allocation being made in Australia for agriculture. Although the scheme in Australia is uncertain, I understand that agriculture is being left out, and there is no free allocation to the competitors of Fonterra across the Tasman. So there has been some late-night work in the Beehive to determine whether late amendments could be submitted or whether the Minister will use his discretionary powers under this bill to cut a subsequent deal for some of our largest industries over and above the shabby, tawdry deal that has been brought to this House already.

That brings me back to process. I do not need to be lectured by Nick Smith on financial rectitude, thank you very much, when that Minister has refused the public a right by withholding under the Official Information Act critical pieces of the analysis that go to the financial estimates around this bill, and when the Minister has officials who have, through no fault of their own, had to admit to the Finance and Expenditure Committee that they had not done sensitivity testing around the financial costs of this bill. They could not produce for the committee a range of scenarios and tell the committee the assumptions on which they were based. Treasury’s own regulatory impact assessment unit therefore had to conclude that the analytic base of this bill was insufficient for a matter of this importance. So we do not need to be lectured by National members on fiscal prudence. From now until the next election National members will never be able to look New Zealanders in the eye and say that they are the custodians of fiscal responsibility, because today they have sold our children, and their children, down the creek.

I do not need National members trotting out the old refrain of “You had 9 years; what did you do about it?”. They were 9 years of the longest post-war economic expansion in New Zealand’s history, years when we saw an enormous boom in the dairy sector, and forestry conversions came into that. But, of course, we recognised that the matter of putting an overall global cap on emissions was essential. It was because of the difficulty we experienced—and I give due credit to the former Minister responsible for Climate Change Issues, David Parker, who spoke so eloquently just a few moments ago—that we understand the difficulties of this problem. We have been there before. That is precisely why we know that a global cap is essential. It is precisely why we are very hesitant to embrace any form of intensity-based “control”. It is precisely why we know that industry will take everything that the Minister for Climate Change Issues has so generously given it in this deal, and then tomorrow he will wake up and it will want more—it will want more and more.

That is also why I want to acknowledge a PhD thesis by Dr Rick Boven, who is now the director of the New Zealand Institute. He is a very eminent economist. He modelled the political economy of climate change against the Intergovernmental Panel on Climate Change’s projections of global warming. He looked at the political economy of when democracies are likely to adjust. The problem is that 50 years after we limit emissions, the planet stops warming as a result of the emissions we let go a generation before. There is a real risk that if the planet warms by more than 2 or 3 degrees Celsius, we could set up self-reinforcing processes that mean that it is virtually impossible to stop global warming. The outcome of the econometric modelling by Dr Boven showed, essentially, that the planet is going to fry, and that fundamental disruption to human civilisation is likely, because of the 50-year lag time, combined with the reluctance of democratic governments to take the steps required to rein in industry. That means that our children face horrific consequences. They will look back on us, as David Parker so eloquently said, and they will ask us why we looked over the brink. Did we not know? Were we not informed? Did we not understand the problem of the lags? Were we not prepared to have the courage to look at the future and say “Now we must start to turn it round.”?

I am sad today for our children, because I know that they will face tougher decisions than those we have not faced up to in this Chamber today. It will not be just about climate, because the Government is making a habit of passing our hard problems on to our children. They will have the burden of superannuation to catch up on, because the Government has cancelled pre-funding so there will be fewer than half the taxpayers per retiree paying to catch up. [Interruption] I hear a member opposite ask why that is relevant to the bill. I will tell the member why. The Minister for Climate Change Issues has had the gall to say that the fiscal liabilities, the $50 billion to $110 billion in this bill, are not real money. Well, of course they are real money. They are an offset that could have been used in part to cover the costs of superannuation, or the costs of adaptation to catastrophic climate change, or the costs of educating our children how to live in a future that we would not dare live in, or the costs of sending them to some other planet because this one is ruined. So please do not tell us that somehow the $100 billion does not matter because we are not sending all of it to the United Nations. Of course we are not sending all of it to the United Nations. But it is a real liability, and it is a real offset that must be met against expenditure, or increases in taxes, or debt. It is not appropriate to ascribe to one piece of expenditure one item of revenue and square it off. It all goes in the same pot, and the write-offs go to the country’s largest polluters, the multinationals that own part of our energy sector, as well as the Crown—and the Crown ought to be ashamed. Those debits will come back to haunt our children.

I do not want to export jobs, but the Minister for Climate Change Issues has made no evidence available to the Finance and Expenditure Committee that that prospect is substantial; nor has any logic been demonstrated as to why, if it was a real issue, the bill has been designed as it is. Let me give several examples. If we wanted to stop exporting jobs, why would we not impose the carbon liabilities on the actual fishermen burning the fuel, or the actual farmers who could change their crops or their herds to a lower-emitting standard? Why would we not have a demonstrable logic related to carbon intensity between sectors?

In this debate today—and I know it is the title debate—I am wondering whether we should call this bill the “Brown Wash Bill”. Although I think the Māori Party has been engaging in “greenwash”, I suspect and will accuse the National Government of engaging in a “brown wash” over the Climate Change Response (Moderated Emissions Trading) Amendment Bill. Like my colleagues, I have been very disappointed in the Māori Party’s support for this legislation, especially given that it is so contrary to the Māori Party’s original view in the Emissions Trading Scheme Review Committee. How it could shift its view so radically from one side to the other is very difficult to understand.

I am also disappointed in the Māori Party, at the way it has allowed the National Government to skew the public debate against Māori, against whānau and hapū, by its use of this legislation and the deal it has done with National. The justification for supporting this bill is supposedly that Māori have obtained some benefit as a result of the negotiations. Let us have a look at the bundle of supposed gains that Māori have made through the deal done by the Māori Party. None of them are new, and none of them are innovative.

The forestry deal, which has been such a major distraction, should have happened anyway. In fact, the Green Party was working with Ngāi Tahu last year on the same issue, to try to get some support from the previous Labour Government about dealing with this Treaty settlement question. It is a Treaty settlement issue around forestry; it is not an emissions trading scheme issue. It should have been resolved in any event. At some point this Government, like any Government, would have been required to deal with the issue, whether it was because of the threat of legal action or for whatever reason, but it has nothing to do with this business. It is neither new nor innovative.

The 6 months’ reprieve that Enviroschools have for their funding cut is meaningless. It gives the 210,000 schoolchildren who are involved in the Enviroschools programme no security at all. The Minister of Education has confessed that the programme will be reviewed in 6 months’ time, anyway. What is the point? Where is the gain for those 210,000 children if the programme gets 6 months’ reprieve? How could the Māori Party give over those children’s future and lumber them with a $24,000 debt for the rest of their lives, in exchange for 6 months of a school programme that should have continued, anyway.

Enviroschools is the one programme in this country that has had major success in teaching children not only numeracy and literacy, but also environmental sustainability, and the economics of that environmental sustainability. That programme deserves support, anyway. The Māori Party should have been supporting Enviroschools and the continued funding for it, not giving it a 6 months’ reprieve from the axe. Those children do not want to be lumbered with a $24,000 debt, in exchange for 6 months of the programme.

I turn to the little extra that has been provided for home insulation. We know that two-thirds of the people who are already accessing the home insulation fund—the Green Party home insulation fund, I must say—are community services card holders. We know that those low-income families are already getting access to the scheme. That $24 million is a good amount of money but in 4 years’ time who knows what will happen. There is no guarantee, at the end of the day, because 4 years is a very long time in politics. The Māori Party has nothing extra for the people today who need access to the home insulation fund, because they are already accessing it. There is no added benefit to the Māori community.

The Māori Party has promoted a Treaty clause in the legislation. The Greens will support a Treaty clause because we think it is good to have recognition of the Treaty in legislation. But let us be real about what this Treaty clause actually does. It is simply an arrangement between the Government and Māori business. If we look at it in detail it is a very complicated clause. It is very narrow in its approach, and essentially provides a means by which—it should happen, anyway—Māori leaders of iwi and Māori organisations, which are large business organisations, can talk to the Government about the things that they are doing. It is a consultation agreement, but that is all it is. It does nothing for hapū. The Treaty is about respecting whānau and hapū, and the Treaty clause does nothing to do that. I have an objection to even calling it a Treaty clause, quite frankly. It is a business agreement between the National Government and some Māori businesses. And as for sending negotiators to the Copenhagen Climate Change Conference, I mean please! We knew months ago that National was taking them. Everybody knew that National was taking them. There is nothing new. They have been given nothing.

💬 Hon Darren Hughes: They are constantly being tricked.

I wonder whether it is a trick or whether there is some other need for maybe the Māori Party to feel that it needs to make some gains. It has been shafted continually by this National Government over the Māori seats. I understand there was something of a gentleman’s agreement by John Key that Māori seats would occur, but that was shafted pretty quickly. Nowhere has the Māori Party made any substantive gains into serious political issues that it has been trying to pursue. So maybe that is what is behind it. But none of the gains that it has supposedly made here can justify the wealth transfer from the poorest families, many of whom are our own whānau, to the richest international corporates from around the globe.

National has managed to cobble together a whole series of little bits and pieces—nothing new, nothing innovative, nothing that we did not already know about—to get the Māori Party on board for this legislation. I want to know what Māori get out of it. What do Māori whānau get out of it? They get nothing but the blame, supported by the Māori Party. The forestry deal has been a distraction. National has played up the forestry deal in order to distract attention from the wealth transfer from the poorest to the richest.

In effect, National can say that it has given Māori lots, and that is what it is saying in the public realm; that it is able to deliver all of this benefit to the Māori community through the Māori Party, and that thereby justifies the environmental degradation and wealth transfer under this legislation. The public rightly understand and object to that massive public subsidy to corporates, and rightly object to the environmental degradation that this legislation will incentivise, and they need somebody to be angry at. National has delivered them the Māori Party, and the Māori Party has delivered Māori communities to the public, who are angry at the bill and the Māori community. That is what we are seeing outside this Chamber. The public are angry at this legislation. Who are they blaming? They are not blaming National—National has managed to divert it—but they are blaming the Māori Party and Māori whānau.

Maori will bear the burden of the stink of the wealth transfer of public funds to these international corporations. Māori communities will bear the stink of the environmental degradation inherent in this legislation.

💬 Hon Darren Hughes: They were tricked again.

Well, I ask whether it is a trick or is it just the Māori Party being prepared to put the interests of the few ahead of the interests of the many, even its own communities. I suspect that is more likely what the decision is about.

The legislation is a tragedy for Māori communities. It is a tragedy for Māori whānau. Perhaps, if it was just about the business, if it was just about the wealth transfer, if it was just about supporting Māori business, it would not have such an impact. In fact, it has turned into a public debate about why Māori are getting heaps of stuff and why everybody else has to pay. That is creating in the minds of the community an anti-Māori sentiment that is promoted by the Māori Party’s support for this bill. That is what is happening outside this Chamber.

That is the risk the Māori Party has been prepared to take with its own communities and with its own people, backed by National, because National can avoid all of the distraction and all of the blame. National can just get on with its interest groups that have always been about business, and we all know that. National can justify what it is doing because it is supporting the Māori Party and it needs those votes. The Māori Party has allowed itself to be used in this way.

Debate interrupted.

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