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

It is indeed a pleasure to rise and speak in opposition to clauses 1, 2, and 3 of this bill, the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. It is quite misleading—in particular, clause 2, the commencement clause. It has two commencement dates. One is 1 July 2013 and the other one is 1 January 2013. I think that is quite misleading in terms of the big impact that this proposed legislation actually has, because, in fact, the major thing that it does and the big blunder it makes for New Zealand is that it removes the entry of agriculture into the emissions trading scheme. The date that is in the Climate Change Response Act currently for the entry of agriculture into the emissions trading scheme will, in fact, be removed. So the commencement dates are quite misleading, because when it comes to agriculture there is no commencement date for its entry into the emissions trading scheme.

That will mean that on the international stage our country will be seen to not be pulling its fair share. Worse than that, its international reputation will also be damaged. This international reputation has made us world leading in terms of agricultural products. That is why the market place out there wants to buy our goods—in particular, our dairy products. It is not because we are the cheapest, or because we are the largest mass producer. We will never win that race—we will never win that race. We are never going to be the largest producer. We are never going to be the cheapest, but we can be the best, and we can have the best quality.

In particular, we could trade on our clean, green image, if it were not for the stupidity of this Government, which is, via this bill, dumping the biggest trading edge we have when it comes to agricultural products. The biggest trading edge that we have is our reputation—our international reputation. You know, that reputation that the Prime Minister trashes day in and day out by going after David Beckham and annoying everyone in the UK with the stupidity of his comments, and that Gerry Brownlee trashes by annoying Finland and its neighbours with stupid comments with regard to that country. It seems that this Government is hell-bent on ruining our international reputation, rather than enhancing it.

This bill, I am afraid, is yet another example of this. Although the title is indeed the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, I think it should be called the “Climate Change Lack of Response Bill”, because, in fact, that is what this bill is proposing. The largest amount of emissions by any sector is through agriculture. The main thing that this bill does is it removes agriculture from having obligations and from having a financial incentive to actually lift its game when it comes to actually emitting pollution. Agriculture is New Zealand’s largest source of emissions. It generates 47 to 48 percent of our total all by itself—all by itself. That is the sector that the Government has delayed. Well, I say “delayed” in the hope that it will eventually have a commencement date, but, in fact, it is removing the date completely from the Act.

So is the Government telling us that it never intends for agriculture to be brought into the emissions trading scheme? It has not proposed an alternative date; it has just gone silent on it. But is that not what New Zealanders are coming to expect from this Government: that it has no plans? It has no plans in place; it just goes silent. It just sits on its hands and does nothing. That is not the way that it will produce the brighter future—the so-called brighter future—that it actually promised New Zealanders at the last election. This bill, I think, shows exactly how devoid of ideas this Government is for that actual brighter future that it promised, because, far from delivering a brighter future, this bill actually ensures that the Government cannot meet its commitment to reduce emissions by 50 percent by 2050. That is not the brighter future that it promised at the election. It is, in fact, a dirtier future.

I rise to oppose this bill, the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, and clauses 1 to 3. I could be tempted to support a change of name to one that, in my view, more nearly reflects the intentions of the bill. This bill modifies the emissions trading scheme, as we have heard, in a way that weakens it by extending the transitional period for polluters indefinitely, along with not including the agriculture sector in this scheme at all. It also makes various technical changes. The bill is a disappointment. It is fundamentally flawed. We have already heard that the select committee process was rushed in order for the Government to get this through in a time frame that did not actually allow for the concerns of the different sectors to be heard and taken seriously. We have heard that it is destroying the forestry sector in Mr McClay’s electorate, the man who chaired the committee. We have heard that it will not help us reach the Government’s target of a 50 percent emissions reduction by 2050.

This bill reflects National’s delusion that the environment and the economy are contrary forces to be balanced against each other, when they actually are dependent upon one another. It increases the costs to taxpayers. So one suggestion for a name change would be the “Climate Change Response (Additional Costs to Taxpayers) Bill”, because under one calculation it increases the cost to taxpayers by $328 million—which is a conservative cost—and another estimate at the carbon cap price has an additional cost to taxpayers of $1.3 billion. That is what this bill does, for those who are watching at home: it increases the costs to taxpayers by subsidising polluters further.

So it could also be called, I suggest, the “Climate Change Response (Certainty to Polluters) Bill”, because that is what it does. It gives greater certainty to polluters. Those who have invested in the technologies of today and yesterday are given greater certainty over their financial future than those who are investing in the technologies of today and tomorrow. It is a tragedy, because as we prepare our economy for the battles of yesterday, we are not putting ourselves in a good position to fight the economic challenges of tomorrow.

It could also be more accurately called the “Climate Change Response (Weakening of Price Signal in the Market) Bill”. That is the effect that it has. It weakens the signal in the market. It makes those who are doing good things in the market more wary about investing. The forestry sector, as we have heard, will be damaged by the changes in this bill. It is likely that there will be job lay-offs. It is likely that that industry will suffer as a result of these changes. So that weakening price signal has a very real effect, and it would be a good thing to include in the title to be very clear what the Government is trying to achieve here.

Another title change could be the “Climate Change Response (Weakening of New Zealand’s International Standing) Amendment Bill”, because that is one of the other effects that we have heard about. This bill makes New Zealand a laughing stock. Where once we were pioneering an all sectors scheme that sent a very real market signal, here we have a Government running away from market signals. It seems to be a Government that increases red tape on businesses, but is not concerned with letting markets do its bidding where they are actually designed to do so. This weakens the market. It collapses in New Zealand, effectively, the market in the units that would be traded in order to battle emissions worldwide.

A further point here really is that this commencement date, I would suggest, should be pushed out for ever, because this bill is not one that responsible parties in this Parliament can support. This bill is an irresponsible bill that sees New Zealand back-pedalling on its commitments, that sees New Zealand not doing its fair share, and that makes us a target for international ridicule.

So, overall, the “Climate Change Response (Perhaps Emissions Increase) Amendment Bill” would be a far more fitting title. The others that I have suggested could also be picked up by the Government. I will be interested to see whether the Minister in the chair leaps to his feet and adopts any of these title suggestions in order to give a more real reflection of what this bill is achieving; otherwise I leave those thoughts with you.

I am concerned about the title of this bill, the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill, too. There is a series of alternative titles for it, because this bill is really one of those bills, or pieces of paper, that you really feel like chucking over your shoulder—but I dare say that that is inappropriate in this building, in this Chamber. It is the “Kill the New Zealand Brand Bill”. We have our best products going to the best supermarket chains in Europe and other places that value our clean, green “100% Pure New Zealand” image that this Government seems set to destroy. Those people who buy into that and give us the best prices for our best products expect us to be doing our bit. This bill is about us not doing our bit, and it will affect our reputation in a very, very negative way.

It also could be called the “Deforestation Bill”. It very much is the “Deforestation Bill”, because this is all about, it seems, enhancing an urea-based dairy industry in this country for the indefinite future. This is an industry that we should be really looking at and seeing whether we can improve it by getting it into the emissions trading scheme or being appropriately charged for its carbon. We should actually be giving our farmers the opportunity to be sequestering carbon by encouraging diversity on those farms instead of the path of these great green deserts that we seem to be going down, which we then have to fight all the symptoms and the externalities of, including the emissions. There are other very, very positive alternatives that we could be doing in this country, and standing and walking tall while we do it.

Another title for this bill could be the “Future Generations (Climate Change Failure) Bill”, because we are doing nothing—nothing of any substance—in this bill that is going to be looking out for the future generations that we all in here are responsible for. It is appalling. It is the “Climate Change (Fiddle While the Earth Burns) Bill”, because, as my colleague Kennedy Graham has put to this Committee very eloquently, we are in emergency times and this does not go anywhere. It just puts it off to a new Government, which will obviously be including the Greens, to deal with the mess that this current Government is leaving behind.

It fails, as I have said, to bring in agriculture. What an opportunity lost for New Zealand. It is important that New Zealand, at the bottom of the world, gets amongst it and starts to look at the vision for agriculture, the vision for forestry, and the vision for sustainable primary production in any form in New Zealand. There is no vision here, apart from some crude commodities and maybe a couple of flash little items made from some ingredients. Overall, there is no vision. What are we really doing about our soils in this country? What are we doing about erosion? What are we doing about our rivers in this country? We are doing next to nothing, and certainly what is happening is nowhere near fast enough. There is no vision. The Greens have a vision. They have a vision of how we would deal with climate change. They also have a vision of how we will deal with primary production.

The forestry sector is hurting because of this. Is this because the Government concedes that 80 percent of it is foreign-owned at this stage? Is that the reason? Is it because it is a monoculture, and needles are dropping throughout New Zealand, and we have got some serious disease issues? Is there something the Government is not telling us? What is it? Or is it just because you are sold on Fonterra, you are sold on dairy? I think that might be what it is. It seems to be a real shame. Also the emitters, the industrial emitters that you seem to want to look after, there is a cap for them, all right! They know where they are. They are really comfortable, carrying on emitting, while the rest of us pay for it.

I want to talk to the title of this bill, which is the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill. The title implies that this bill is a serious attempt to respond to climate change, and I want to say why, in my opinion, the bill should not proceed with that name. It is a misnomer to suggest that this bill will do anything meaningful to reduce New Zealand’s climate change emissions, which, after all, is the objective of climate change policy.

The main response for New Zealand to the challenges posed by our climbing emissions is to price emissions, and that is intended to give an economic encouragement to the people who consume emissions-intensive products—like petrol or aluminium or steel—or to the people who produce the goods that are consumed by society to change the mix of goods that we consume, in a way that reduces emissions. That, simply put, is what emissions pricing is going to do. Emissions pricing is an alternative to the other way we can reduce emissions, which is to regulate. If you want to do something other than education, the only two ways you can influence behaviour are by pricing something to encourage people to change their behaviour, or by regulating and saying that thou shalt not do this or thou shalt do less of this.

In New Zealand, after quite a period of debate that lasted for more than one Government—National, then Labour—we eventually got to the point in New Zealand where Parliament agreed that we should be trying to do our bit in the world, in part, through pricing emissions. It was never going to be the complete answer, but it was always a very important part of the prescription for New Zealand. It worked in New Zealand in two main ways. First, it was discouraging of increases in emissions-intensive goods, and second, it was effectively giving a price benefit to people who reduced emissions, like those in the forestry sector, because they sequester carbon in the trees, which as they grow take carbon dioxide out of the atmosphere. That was the essential intention of the Act.

For anyone to influence behaviour by price, the price has to be meaningful. Otherwise it is a fig leaf and an excuse for inaction that you would take if you were not doing anything via price. And that is where we have got to in New Zealand now. This is just a fig leaf. This is not having any material effect on behaviour. We know that because the foresters, who are the biggest potential reducers of greenhouse gases emanating from New Zealand, came to us and said that the price now is so low that it does not influence behaviour. It does not allow them to overcome the disadvantage they have, because they are facing the land price being paid in some areas by the dairy sector, which can afford to pay a higher land price than they can in part because the dairy sector is protected from having any obligation to account for its agricultural emissions.

So the forestry sector says that not only is the price very low and not acting as a sufficient incentive to new forests, which are what New Zealand is overly reliant upon in terms of emissions reductions, but also that it suffers this disadvantage of competing for land against a sector that is not facing any cost for its agricultural emissions. This bill, if enacted, puts that inclusion of agriculture on the never-never. It says that under this legislation, it will never happen. Effectively, Parliament would have to come back to legislate again. How does the bill do that? [Bell rung] Mr Chairman—

The CHAIRPERSON (Eric Roy): The Hon David Parker—oh, I might have pressed the bell a minute early. My apologies.

Thank you, Mr Chairman. I do accept your apology.

The CHAIRPERSON (Eric Roy): I do apologise.

No, that is all right. These things happen. What it does is it depresses the price of carbon into the foreseeable future down to such a derisory level that it is ineffective. We heard from the people who are service providers in buying and selling carbon rights, and they said that because of the lack of a floor on the price of carbon and no restriction on some of these units that are washing around the world at a very low price, effectively New Zealand’s price of carbon goes down to a dollar or $2 a tonne—not enough to influence behaviour.

Let us not forget that the Government was worried that the price was going to go over $25 a tonne not so long ago, and so it put a price cap in last time. The price has now gone to about a dollar or two dollars, and the Government does not think that it needs to restrict units or have a price floor. [Interruption] Five minutes from now, is it? Thank you, Mr Chairman.

Well, it just does not make sense, particularly given this Government saying—and I remember the Hon David Carter saying it in earlier contributions on prior legislation—that we ought not to move ahead of Australia; Australia had a carbon price that was going to be later and, the Government said, lower than where New Zealand’s carbon price was heading. So that was the justification for both delay and a cap on price.

The Australian price now is far higher than New Zealand’s price currently. It is about $30 a tonne—A$30 a tonne. It is probably going to come back from that a little bit, but it is still a hell of a lot more—an enormous amount more—than the dollar or two dollars a tonne that we have got in New Zealand. So much for this pretence that this was about coordination with Australia—if that was the intent, the Government has abandoned that. This scheme is so permissive of low prices that we will never be able to link with the European scheme. The Europeans are not going to link with a carbon pricing scheme that is as loose as this one is. So the idea that we can link with other schemes and, therefore, have deeper carbon markets is wrong too.

We have got one-for-two free allocation. Even at a low price of $2 or $3 per tonne, the Government is still saying not only can you have the benefit of that really low price but we will halve it again, because you are going to have to remit only one unit for every two units of your emissions. Why is that necessary? This is just a fig leaf for inaction and, as other speakers have said, it makes a mockery of the Government’s pretence that it is going to reduce emissions by 50 percent by 2050. And I think that is sad. I do think that is sad.

I do not think New Zealand can overcome these problems alone, and I am not someone who says that we should sacrifice the interests of all our industries, so that we are just chasing a pyrrhic victory all on our own. I do not think anyone on this side of the Chamber says that, but I do think we should be doing something meaningful, and I do think that means that we have a responsibility to the world to be actually doing something to try to curb our emissions growth. If it is not going to be through this legislation, then maybe it should be though regulation. I certainly think there should be a floor on the price of carbon, so I was disappointed that the Government voted down Kennedy Graham’s amendment to that effect. There should be a floor if you are going to have a ceiling. You cannot justify that asymmetric interference with what is meant to be a market-based approach to minimise emissions at the lowest and most efficient cost to the economy.

This legislation is a disappointment. This legislation is a shadow of what was originally produced. It can actually be fixed in the future, but at the moment New Zealand’s climate change response is effectively nil.

I feel obliged to take the floor once more because I have just submitted an amendment to the Clerk. Effectively, under clause 1, the title clause, it would change the name of the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill to the Climate Change Response (Emissions Encouragement) Amendment Bill. Although the Minister for Climate Change Issues and his colleagues might be disposed to dismiss that as a bit of light-hearted fun that could be seen as possibly wasting the time of the Committee, I would demur and suggest that he and his colleagues recognise that it is not quite as mischievous as it may seem, because, in fact, the way the amendment bill is crafted, it actually will have the effect of encouraging emissions.

I want to draw the attention of the Minister once more to the Emissions Trading Scheme Review Panel, which was set up with a view to advising the Government of the day as to which way the emissions trading scheme should go, and advanced its recommendations, most of which have not been incorporated. The review panel—and I refer again to figure 2.1 of the report—makes it clear that both gross and net emissions of New Zealand are projected to increase, on the way the emissions trading scheme is currently structured. Any further weakening by this Government of the current structure can only make figure 2.1 worse. It can result only in further increases in gross and net emissions. It cannot reduce them.

If you, as the bill plans, continue the price cap without change, continue the one-for-two surrender obligation indefinitely, refuse to allow any restriction on the trading of units coming in from overseas, and defer agriculture indefinitely, you cannot in logic—

The CHAIRPERSON (Eric Roy): Order!

Sorry, Mr Chair—the Government cannot in logic say that that is strengthening the scheme. It is unavoidably weakening the scheme. If you weaken the scheme, the emissions go up. You are encouraging the emissions. So the title actually has to be the Climate Change Response (Emissions Encouragement) Amendment Bill.

I will finish by just reiterating a request I made before dinner to the Minister to address, before both this title clause and the bill go to the vote, the figures that I quoted earlier—I will not cite them again—and explain to the Committee, to the satisfaction of all New Zealanders, how the amendment bill, as it is structured, can provide a critical path to emissions reduction. Even with the Government’s own figures of 10 to 20 percent, with a mid-point of 15 percent, and setting aside the Green Party’s Supplementary Order Paper 147 figure of the mid-point of 25 to 40 percent—33 percent—take the 15 percent and explain to the Committee in all honesty how this weakening of the principal Act can conceivably do other than encourage emissions and result in increasing gross emissions.

I will put the questions. The amendment in the name of Dr Kennedy Graham is ruled out in accordance with Speaker’s ruling 116/6.

I raise a point of order, Mr Chairperson. I know that proposals to change the title that are not serious are ruled out of order, but given that the effect of the legislation is, as all Opposition parties have said, to encourage the increase in emissions, I would suggest that that is perfectly within the Standing Orders, and it should be put to the vote. It cannot be said to be some capricious attempt to make fun of the legislation. It is trying to describe it as it is, and, as you have heard from many speakers in this Chamber in this debate, we heard a number of submitters at the Finance and Expenditure Committee say exactly the same as Opposition parties are saying, that this will encourage the increase in emissions. So I challenge that ruling.

I am upholding the ruling. Speakers’ rulings 116/6 and 117/1 are quite clear on that. There are a number of examples. I will cite you one comment: “An amendment to the title of the bill must be a serious or objective description of the bill rather than an attempt to criticise its contents.” There are several examples set out in Speaker’s ruling 117/1, so I am upholding my ruling.

I raise a point of order, Mr Chairperson. This does not do any of those things. This does properly describe the bill. It is quite open to the Government to vote the amendment down, but it should not, with respect, be ruled out of order. If that is your ruling, I will ask for the Speaker to be recalled.

The CHAIRPERSON (Eric Roy): Are you moving that?

I will, Mr Chairperson, but it seems a perfectly easy thing for you to do to actually put that to the vote, because that is not a capricious amendment. It is a proper description of the legislation according to the Opposition, and it is our right—

The CHAIRPERSON (Eric Roy): Order! Is the member moving that the Speaker be recalled?

I am actually suggesting a very easy way through this.

No, I have indicated that I am upholding my ruling. The member is entitled to—

I have never done this before, but I am. I am going to ask for the Speaker to be recalled.

Those in favour of the Speaker being recalled will say Aye, to the contrary, No. The Noes have it.

I raise a point of order, Mr Chairperson. It is a convention of the House that motions to recall the Speaker are supported by the Committee, so I ask that you put the question again. I seek leave that you put the question again.

I will put the question again. Those in favour will say Aye, to the contrary, No. The Ayes have it. The Speaker will be recalled.

House resumed.

Speaker Recalled