Climate Change Response (Emissions Trading and Other Matters) Amendment Bill

In an eagerly anticipated move, I seek leave to table a letter on behalf of my colleague Moana Mackey that she wrote to the Hon Peter Dunne on 31 October, making clear Labour’s position on the points that I dealt with in my earlier speech.

The CHAIRPERSON (Eric Roy): Leave is sought for that purpose. Is there anyone opposed to that course of action? It appears not. Leave is granted.

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

I seek leave to correct a vote on behalf of the Māori Party.

The CHAIRPERSON (Eric Roy): On Part 1?

Yes, to correct two votes. First, the Māori Party voted three votes in favour of Supplementary Order Paper 144; that should have been three votes opposed. Correcting the vote on Supplementary Order Paper 142, it should be three votes in favour.

The CHAIRPERSON (Eric Roy): Does that change the outcome?

No, it does not.

The CHAIRPERSON (Eric Roy): No, it does not. Leave is sought to amend the vote. Is there anyone opposed to that course of action? It appears not. Leave is granted.

Is some member seeking the call on Part 2, a very small part?

It is a very small part, but if the Chairman had read the part, he would see that there is a change to the definition of “layer hens”. Layer hens are addressed in this part of the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, and it is that issue that I wish to address. This is yet another example of where in this bill the Minister for Climate Change Issues has got it wrong and the Government has got it wrong, because what the legislation proper does is remove layer hens from the ambit of the emissions trading scheme. It is another area where this “all sectors, all gases” legislation has been narrowed by the current Government in a way that is inconsistent with its original purpose.

The logic that the Government gave us in respect of removing layer hens from the emissions trading scheme legislation was that it was over-regulation. It said that layer hens should not be included in the emissions trading legislation. We pressed them a little bit at the Finance and Expenditure Committee on this. I was sitting on the select committee. When the organisation, the Egg Producers Federation, came along in support of this amendment to remove layer hens, it said “Oh, we’re all little ma and pa businesses, and, therefore, this is a big burden for us.”—or it did not say “all”, but it said that it was made up of lots of small hen houses. And so I asked them whether the big corporates in this, Mainland Poultry and the probably half-dozen firms—the old 80-20 rule probably applies, as probably 80 percent of the layer hens are owned and the eggs come from a small number of corporates. And so the idea that this is somehow a large compliance cost for the largest egg producers is fiction. If the Minister wanted to remove the smaller egg producers from having some obligation to account for their greenhouse gas emissions, why did he not do that? Why did you not just exclude the little ones, and leave the big ones in? I cannot understand that.

I asked the Egg Producers Federation that when it came in, because it said “Look, we’re not big greenhouse gas producers anyway, and, in fact, per unit of output and per unit of protein that is produced, hens produce lower levels of greenhouse gases than ruminants.” So the obvious thing here would be that if you wanted to get a rational response here where people were actually reducing the pressure on the environment, you would actually have a price signal here, and somewhere someone would be buying and eating eggs instead of a lamb chop. That is what this is meant to do. You cannot regulate for this sort of thing. That is why you use prices.

💬 Clare Curran: That’s very rural of you.

Very?

💬 Clare Curran: Rural.

That is very rural of me, is it? Well, no, this is actually why we have a price on emissions, so that you do not have to regulate everything. This is why we are meant to have a price. What this does is because they are now taking layer hens completely out of the emissions trading scheme, which is what this Part 2 does; it revokes the definition of “layer hens”. So I am asking the Minister to take a call and say what sense this makes, removing a more greenhouse gas - efficient industry from the scheme, particularly the major players, and whether it would not be better to have a rational, economy-wide, “all sectors, all gases” scheme.

If the agriculture sector started to face a marginal cost for its emissions, the relative economics of low - greenhouse gas food, i.e. layer hens and the eggs that they produce, would be improved. That is exactly the same theory as we are applying in other parts of the economy. We are still keeping a price on petrol. We are still keeping a price on emissions from steel and aluminium, so that the cost of an aluminium ladder, somewhere in the economy, is slightly more expensive than a wooden ladder, and somewhere someone is building a wooden ladder instead of an aluminium ladder, or a wooden product of some kind compared with an aluminium product. That is what emissions pricing is meant to do. It is meant to change the behaviour of consumers, and, therefore, the behaviour of the people in our society who produce greenhouse gases. That is the whole theory behind emissions prices.

So this is yet another example of where the Government’s recognition of the underlying principle is shown to be wanting. Again, you ask why it is doing this. We know from the evidence at the select committee that eggs are low - greenhouse gas goods relative to other sources of protein, so why is the Government having to exempt eggs? Because it has effectively exempted agriculture. That is the underlying reason. If you put agriculture on the never-never in respect of agricultural emissions and you do not deal with eggs, you would effectively be prejudicing the egg industry, which has lower greenhouse gas emissions than the ruminants, and is the lower greenhouse gas industry—the egg industry and the layer hen industry—compared with the agricultural sector. So these are the knots that the Government is starting to tie itself up in, because of the idiocy of its original proposition, which is that there should be no emissions price in agriculture.

So not only do we still have a cross-subsidy in these other sectors, not only are consumers who are paying for our petrol, our electricity emissions, and the industries that consume a lot of electricity or use a lot of fuel effectively paying a cross-subsidy to the agriculture sector, which is getting no price on any of its agriculture emissions, but we are also creating all of these second-round inconsistencies and complexities. We are getting this sort of maze of regulation and consequential amendments that are necessary as a consequence of the Government getting it wrong, because it has gone away from the fundamental principles of the original legislation, which were that the lowest way to reduce your emissions in a country is to have a price on all emissions and to let the market sort out what is the most efficient way of reducing emissions. If that means that somewhere the cost of eggs is lower relative to the cost of a lamb chop, well, that is what should happen, because that is what the price signal is meant to do. As a consequence, because somewhere someone would be eating an extra egg instead of a lamb chop, New Zealand’s emissions would be lower, and that would be—I know it sounds a very arcane argument—the cheapest way to meet our environmental obligation and reduce emissions.

I look forward to the Minister in the chair taking a call to defend why it is that we have got to this position where we have got exemptions for agriculture, and now we have got these flow-on effects with layer hens.