Climate Change (New Zealand Superannuation Fund) Bill

I move, That the Climate Change (New Zealand Superannuation Fund) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. This relatively simple bill has a relatively simple purpose, and that is to ensure that the New Zealand Superannuation Fund invests its money, taxpayers’ money, in a way that both is sustainable but also, in particular, takes into account climate change. It does this by amending the Act that governs the New Zealand Superannuation Fund, which is the New Zealand Superannuation and Retirement Income Act 2001, by essentially adding another guiding principle, if you like, to the investments of the fund. Currently the fund has three guiding principles, the third of which is about avoiding prejudice to New Zealand’s reputation as a responsible member of the world community, and essentially we add a fourth guiding principle to that, which is that the fund would need to consider sustainability and, in particular, climate change when making its investments.

Now is a particularly apposite time to be considering a bill around climate change. Even as we sit here tonight, in Doha the world is assembled at the Conference of the Parties to the United Nations Framework Convention on Climate Change to consider what kinds of actions we can take as a global community to deal with climate change. I do not think anyone is particularly optimistic about the outcomes of those meetings, unfortunately, but it certainly does not prevent us in New Zealand and elsewhere from taking the actions that we can in order to address climate change. This bill is one part of doing that.

The science around climate change continues to get more alarming as time progresses, and I want to touch on a little bit of that science and a little bit of what is happening globally at the moment, because what we are now experiencing are the early stages of human-caused climate change. Of course, the Earth has warmed and cooled many times over past millennia, but the warming that we are experiencing now is warming that has been caused by the release of greenhouse gases, which we as a human species have been responsible for. It is, I think, remarkable to live in a time when the Arctic ice sheet is disappearing. We now have opened up the sea routes across the North Pole because the Arctic ice has reached its lowest level on record. As the planet has warmed, the Arctic ice is melting further and further each summer—not only in its area but also in its thickness. We are seeing sea level rise of about 2 to 3 millimetres a year, but the projections are for the rate of sea level rise to increase quite dramatically. As we have seen the melting of glaciers, now we are starting to see very significant melting on the Greenland ice sheet, and, of course, melting in Antarctica. Those great ice sheets in Greenland and Antarctica, as they melt, will change, literally, the maps of the world as they cause very large levels of sea level rise.

Beyond that, we have seen the very graphic example of what more extreme weather events look like, with “Superstorm Sandy”—or Hurricane Sandy, however you want to describe it—which happened, of course, in the lead-up to the US presidential elections. That storm alone is estimated to have cost around US$50 billion. We probably will not know for some time the real cause of that storm. The scientific community has come out very clearly to say that storms of this nature are more likely, and will increase in their intensity and their frequency, as a result of climate change. That is the kind of thing that we have loosed upon the world. It is one of the reasons why the global reinsurance industry—the people who insure the insurance companies—is so deeply alarmed about the current science and evidence around climate change.

We are also seeing the beginnings of the acidification of the oceans. As the level of carbon dioxide builds up in the atmosphere it increases the level of carbonic acid in the oceans, and we are seeing the acidification of those oceans, with the result that we are seeing the early stages whereby sea animals and crustaceans—and particularly snails, which cannot form their shells in such an acidic environment—are struggling to form shells. So we are seeing a fundamental change in the nature of the oceans themselves as we start to make those oceans more acidic.

The World Bank recently released a report in the lead-up to the conference on climate change, where it basically said that as a result of the existing projection on greenhouse emissions we are heading for 4 degrees of warming within a generation by 2100. There are people born today who will live to 2100. The people in this Chamber are very unlikely to live to 2100, but people are being born today who will live to 2100. The World Bank is very clear that as a result of our current trajectory we are looking at 4 degrees or more of warming by 2100. What that means is a very radical change in the world as we know it. It means we will have far more extreme weather events like “Superstorm Sandy”. It means we will have far more floods and extreme weather events and more droughts. We will have very significant sea level rise. Sea level rise is very important for a civilisation like ours, which has built its major centres within a few metres of the existing sea level. Of course, we never imagined when we built those great cities and civilisations that we would see significant sea level rise in the near future, yet that is exactly what we are giving ourselves as a result of uncontrolled climate change. And that is, of course, exactly where we are heading.

The World Bank also raised the alarm around food shortages. As climate change gets under way and the climate is destabilised, what we are seeing is that the existing agricultural production systems, which are designed to cope with the relatively stable climate we have had for 12,000 years since the last Ice Age, and the food production systems that we have developed, which are adapted to that relatively stable climate, will no longer function as well. So we are expecting very significant food shortages, because, of course, this climate disruption is coming alongside a very large increase in human population. The World Meteorological Organization has also issued its own report and made its own warnings about climate change, and I just want to quote it. The World Meteorological Organization said “Climate change is taking place before our eyes and will continue to do so as a result of the concentrations of greenhouse gases in the atmosphere, which have risen constantly and again reached new records,”. We are living in extraordinary times, when all of our leading international and scientific bodies are telling us that we need to take action to reduce greenhouse emissions. Carbon dioxide levels have hit new records—around 390 parts per million—and we have seen methane levels start to increase again, for reasons that are actually a little bit uncertain. Nitrous oxide levels are growing again as well. Nitrous oxide, of course, has a warming potential 300 times that of carbon dioxide.

This bill aims to address that, to some small degree, by implementing responsible investment provisions around climate change on the Superannuation Fund. It will ensure that our taxes are invested in a way that does not damage our environment or prejudice our future through climate change. It says to the Superannuation Fund “Invest our taxes responsibly.” It is also about a broader principle of trying to make capital more expensive for those businesses causing harm, and to make capital cheaper and more available for those that are doing good.

There has been a very interesting move internationally amongst responsible investors. The Alliance of Institutional Investors, representing US$22.5 trillion in assets, has called on Governments to take action on climate change. We have also seen that the International Energy Agency has said that renewables could be the second-biggest power source by 2015. Last year renewable energy investments reached US$257 billion, a rise of 17 percent on the years before. So we are seeing some change in investment in renewables and to save ourselves. But we know that the science is very clear that we are not doing enough.

We have the ability, through this bill, to have a small influence on our own future and the future of Planet Earth by directing the New Zealand Superannuation Fund to invest our taxes in a way that actually supports our future, rather than a way that undermines our future. The Superannuation Fund already does this to a small degree, under its current Act, but we believe that it could do more than that. The purpose of this bill is to accelerate the Superannuation Fund’s current slow moves to invest in a much more responsible way. I commend this bill to the House.

This bill, the Climate Change (New Zealand Superannuation Fund) Bill, is one of those typical Green bills that sounds very worthy on the surface, but the moment you stop and think about it, you realise that it is actually pretty daft and silly. You see, it is going to be a bill that is bad for investment policy, but it is also bad climate change policy, and I want to work through those issues. You see, what this bill would do is say to the Guardians of New Zealand Superannuation that it has to invest its billions of dollars in a climate change - friendly way, and the big question that it leaves wide open is, what in the heck that actually means.

Is it going to be proper for the New Zealand Superannuation Fund to invest in New Zealand’s all-important dairy industry? We all know that 48 percent of New Zealand’s emissions actually come from farm animals. We also know from a recent report that has come out in the United Kingdom that it is far more efficient to produce meat and dairy products in New Zealand than to do it overseas, from a climate change point of view. So what real signal do we actually give to the New Zealand Superannuation Fund as to whether it should or whether it should not invest in major industries in New Zealand like the meat and dairy industry? And I ask whether the member in charge of this bill, Dr Russel Norman, is really saying that any climate change impact on any industry should prohibit the New Zealand Superannuation Fund from investing, because every single human activity does have some impact. It could be eliminating investment in infrastructure and in the transport sector. It could eliminate investment in the fertiliser business. Even many industries that we think might be, on the surface, green might have some climate change impact. For instance, it is very true that New Zealand’s all-important tourism industry actually depends on overseas travellers coming a great distance, which does impact on climate change. So all it does is create a great deal of fuzziness and confusion about the Superannuation Fund.

The second challenge I have got for the Greens is this: if you really believe that the Guardians of New Zealand Superannuation should have to take into account worthiness, why do we not go into other areas? For instance, I think most members of this House would say that it is good for business to invest in research and development. So why do we not put it to the guardians of the fund that it should invest only in companies that are meeting the Government’s targets of increasing research and development expenditure? Or, for instance, I think most of us here would accept that we need to improve the number of women who are directors of businesses and who hold senior roles. So why do we not put it to the Superannuation Fund that it invest only in businesses where there is a certain proportion of women directors and women involved in senior positions? What about in terms of workplace safety? Why do we not put extra requirements on the Superannuation Fund to say that it should invest only in funds that have got extraordinarily good records around workplace safety?

That too would be worthy, but all of those measures would be flawed for this very reason. The objective of the Superannuation Fund is for those guardians to do the very best with those investment funds to secure superannuation for future New Zealanders, and the standards that the New Zealand Superannuation Fund should meet should be no different than the standard that applies to any private superannuation fund or any other investment. If the Government wants tougher workplace safety standards, it should apply it not just to investments from the Superannuation Fund but to investments across the board. If the Government wants to pass some rules about increased research and development expenditure, about more women participating as directors, or about any of those other worthy goals, there is no justification for saying that investments from the Superannuation Fund should have to meet some sort of different standard to any other investment, and that is where the bill is flawed.

But I also want to say, around climate change policy, that this Government is very proud of its record in the area of climate change policy, because we are making real progress. The member is a Green, and I respect those members’ view that the Government needs to put a greater weight on reducing emissions. If they want to run an argument that we should have a higher price for carbon, there would be a trade-off. There would be a cost in jobs and in terms of the cost of living for New Zealand families of that measure, but that would be a rational approach to reducing emissions. A higher carbon price would not just impact on the decisions that are made by the New Zealand Superannuation Fund but would, of course, apply across the board. That would be a rational perspective, rather than the piecemeal and silly approach in this bill.

I do want to put on record the many initiatives that this Government has taken around climate change, because they are so often overlooked by members opposite. Let us look in terms of renewables. Everybody accepts that one of the areas where New Zealand has gone backwards has been that too much of our electricity has been produced by thermal electricity. In fact, in the period from 1990 to 2008 we saw a consistent increase in the amount of electricity that was being produced in New Zealand thermally.

💬 Hon Trevor Mallard: Nothing wrong with renewable geothermal.

There is a previous Minister of Energy, Mr Mallard. In each and every year since we have been the Government, the proportion of renewable power that New Zealand has produced has increased, and that is a trend of which we are proud.

In the course of this Government we have had 180,000 homes insulated. Is that not a sensible climate change policy, which this Government has adopted and advanced?

Let us look at an area like trees. We all accept that trees have an impact on climate change—it is actually about 30 percent of the global impacts. During the course of the last term of the previous Government we saw New Zealand lose 40,000 hectares of trees. Contrast that with the record of this Government. In our first 3 years in Government we have actually seen the forest estate grow by 30,000 trees.

💬 Charles Chauvel: What’s going to happen now, Nick, that you’ve taken the credits away?

Let us take the overall numbers—I say to Mr Charles Chauvel—and when it comes to climate change, should the test not be what New Zealand’s net emissions are doing? Have we have met our Kyoto Protocol obligations? I am proud of the fact, and we are only a few weeks out from the end, that New Zealand has met its climate change obligations. Actually, we have exceeded them by a significant mark, and that is something of which this Government is proud.

I would also note that in contrast to the years under Labour—remember that Labour campaigned on New Zealand being the first carbon-neutral country in the world? Look, I acknowledge that the Green Party and the Labour Party are better on climate change rhetoric than anybody I know. They are really good on the promise; the problem is that they are hopeless on the delivery. They promised a carbon-neutral New Zealand, and emissions went up by 26 percent. They went up every single year under the Clark Government. And do you know what the latest reports tabled in this Parliament last month show? They show that in the years 2009-10, the last 2 years that we have got figures for, New Zealand’s net emissions have been coming down. How many congratulations messages have you heard the Green Party give this Government on being the first Government in more than a decade that has actually had New Zealand’s net emissions come down?

Finally, I want to conclude on the superb job in the international negotiations that the Minister for Climate Change Issues, Tim Groser, is doing, not just in Doha but consistently. He has had more influence over international negotiations than any New Zealander in the last 20 years. I have been party to some of those and have seen Tim Groser do his work. Tim Groser’s basic message is right on the money, and it is this: all of the growth in emissions over the next 20 to 50 years is in developing countries. That is where the big growth is. So for members opposite to be preoccupied on the 15 percent of emissions coming from developed countries is to completely miss the challenge.

If we are to get on top of this problem of climate change, the really big challenge is to get those fast-growing, developing countries to move to new technologies. That is the message that Tim Groser is vigorously arguing in Doha. It is the only long-term answer to this challenging issue, and that is why New Zealand says, and says absolutely correctly, that the successor agreement to Kyoto has got to be one that includes not just 15 percent of emissions but all those emissions, including those from countries where emissions are growing so strongly—the likes of China, the likes of India, and the likes of Brazil—because we will not get on top of this problem unless those countries are part of the picture.

This Government has a very credible record on climate change. This is a warm fuzzy bill that will do nothing. It will send only confused signals to the New Zealand Superannuation Fund, and the House should reject this bill.

Rising after Dr Nick Smith, I have to put on record some of what I would think would be misrepresentations of history as to where New Zealand has got to in respect of its climate change response. It is true that New Zealand’s percentage of renewable electricity decreased following the discovery of gas in the Māui gasfield—

💬 Hon Dr Nick Smith: That was 76.

—in 1976. From then forward the percentage of New Zealand’s renewables decreased over time as New Zealand thought that gas was the answer. It was not until the last Labour Government actually removed the price cap on Māui gas that renewables became cost competitive. The price of gas had been set under the original Māui development agreement to increase every year at half the price of inflation. So for 20 years the price of gas went down at half the rate of inflation and, effectively, closed out just about all renewables development during that period. Removing the price cap on gas, which caused the price of gas to move to the marginal cost of new gas discoveries, was probably the most significant thing that was done to bring forward renewables.

The second thing that the Labour Government did was that we then actually set a strategy in place to get New Zealand back to 90 percent renewables, and we did that through the New Zealand Energy Strategy to 2050. We had about 100—not 100, about 20—different initiatives that pushed in that direction, including emissions pricing, including calling in consents, including telling the State-owned enterprises to consent and build renewables, including changing the Government policy statement from the Electricity Commission, and including building grid capacity to get renewables from distant sites to market, etc., and that is actually what caused the change back towards renewables going up as a percentage. So for Dr Smith to claim credit for that is wrong.

In respect of house insulation good ideas have many parents, and I think just about every party in this House has claimed credit for that. Actually, some credit should go to all parties in the House for that, because it is something that this country has done for a long time. In respect of the insulation of State houses it did stick in my craw recently that we had the Prime Minister claiming credit for the fact that State houses were being insulated, when I recall being part of the Budget rounds when that was an initiative of Jeannette Fitzsimons, who was providing confidence and supply to the Labour Government. Her price for that, or, you know, her contribution, was that she said: “I want the money spent on the insulation of State houses, because once the State does that, the State will be in the position to introduce a regulatory rule to make everyone do it.” Jeanette was right. It was her initiative. It was backed by the Labour Government, and National had nothing to do with it, except that it inherited the programme.

In respect of trees, we did have deforestation before we had a price on carbon. Deforestation increased before that price of carbon came. The only way that we were going to stop that was through the emissions trading scheme, and that is what stopped deforestation, and also gave an incentive towards further planting of trees.

The problem with Dr Smith’s analysis is, first, he ignores that reality; second, he ignores the fact that he voted against the emissions trading scheme legislation that the Greens, the Labour Party, and New Zealand First, between them, brought into effect; and, third, he ignores the fact that, as Brian Fallow now says, the emissions trading scheme has been put into an “induced coma” because of the National Party’s tinkering with the scheme: putting a price cap on it without putting in a floor, a two-for-one obligation, and refusing to restrict, in a proper way, the infiltration of low-cost units from overseas, which have then seen a collapse in the price of carbon. So the revisionist view of Dr Smith as to who is doing what in climate change policy is somewhat galling.

Then we heard the Minister for Primary Industries, and sometimes we hear the Prime Minister, claiming credit for the research that is being done in respect of pastoral livestock emissions, and even that is not actually an initiative of the current Government. All it has done is take things backward, including in transport, where the last Government increased public transport funding twelvefold, and this Government instead pours ever more money into highways and relatively less into public transport.

Dr Smith also says that you can have a tax switch that puts taxes on low-income people through GST to fund a tax cut for high-income people, but you cannot have a tax switch towards the environment. That is what an increase in the price of carbon would be. It would be a tax switch, not an increase in total taxes. We will be supporting this bill going to select committee. One final point—the existing Act says already that the—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. His time has expired.

It is my pleasure to draw this debate back a little bit in the direction of the bill itself, the Climate Change (New Zealand Superannuation Fund) Bill, which is what we are talking about. If you look at the general policy statement, it is quite interesting. It singles out Exxon Mobil as the cause for this bill because, apparently, the New Zealand Superannuation Fund has invested $43 million in Exxon Mobil, and this, apparently, is a bad thing. Well, I do not know about other members in the House, but I do not necessarily regard Exxon Mobil as evil—nor Shell, BP, Todd Energy, or any of the other oil companies around the world. In fact, I quite like the fact that I can turn up at the petrol station, buy oil, and put it in my car. It serves me quite well. I like to be able to drive into town. I like to be able to go on to the motorway, and I quite like to go across the Newmarket Viaduct and swoop down Grafton Gully into town. It is magnificent. It is fantastic to be able to get around like that. I think cars are quite a good thing, and the fact that you need petrol to make a car go is one of the great inventions of our time. I do not necessarily think it is an evil thing, and I cannot see why it would be regarded as a terrible thing, somehow, to invest in a company that provides something that makes the world go round.

This bill also strikes me as somewhat sinister. When you look at the reasons, it quotes Exxon Mobil saying a couple of things, including that it is “very difficult to determine objectively the extent to which recent climate changes might be the result of human actions.” That, apparently, is a reason why the New Zealand Superannuation Fund should not be investing in that company. Somehow you stop trading with people because you do not like what they say. Well, that is an interesting principle, and a rather strange one. I probably do not like what some of the fishermen who go and catch the snapper that I eat say to each other, and I probably do not like some of their opinions, but I quite like the fish. I do not use that approach when I am buying things, and I do not quite see why the Superannuation Fund should follow the same approach. I wonder—it is almost that you muzzle anybody who does not say what you like, as seems to be the approach of the Green Party. I do not agree with that policy at all, and I will not be supporting this bill, on that basis.

What does it mean, precisely, when we talk about investing only in a firm that follows “environmental sustainability”? By whose definition? I imagine that, if it was by Mr Norman’s definition, there probably would not be any companies at all that would measure up. Nothing would be quite sustainable enough for Mr Norman. So I do not support this bill.

But it is worth noting, and Mr Smith, an earlier speaker, spoke very well on the National—

💬 Hon Shane Jones: Dr Smith.

Dr Smith spoke very well on the National Government’s contribution to climate change policy. I will not reiterate all of that here, but I would say that when it comes to the investment policies of the New Zealand Superannuation Fund, we are already practising responsible investment criteria. This bill intends only to formalise more red tape and more bureaucracy, and we do not support creating bureaucratic hurdles to investment, beyond some certain basic measures that we have put in place already. Our responsible investment framework, which is integrated into all our investment activities, I think serves us well already. This bill would take us backwards, and I do not support it, on that basis. Thank you very much.

I take a call on behalf of New Zealand First on the Climate Change (New Zealand Superannuation Fund) Bill. New Zealand First will support this bill through the first reading, to give it an opportunity in the light of day to see what can be drawn from it. We do have some reservations, but we do feel that at least it would be an opportunity to flesh out what the sponsor of this bill is trying to achieve in terms of climate change, the effects of climate change, and New Zealand’s investments.

However, we do have some concerns in that, obviously, we do want to maximise our returns to the New Zealand Superannuation Fund. I myself am certainly aware of comments that were made to me a year or so ago by a person who said that New Zealand already had some significant constraints on its investments around the world, because, for instance, it is not permitted to invest in any organisation that in any shape or form has any connections to the nuclear industry.

Sometimes you can have very large organisations involved in all sorts of commercial activities, but the mere fact that one very minor, very small, part of an organisation’s business—it could be infinitesimal—might be doing some nuclear science research or nuclear investigations of some manner, rules it completely out in terms of being eligible to be invested in with New Zealand superannuation funds.

I can recall this particular gentleman saying to me that New Zealand, as a result, often did not maximise its investments, because it had to avoid putting money in some areas where there was even a sniff of any connection with nuclear development, nuclear sciences, nuclear research, or anything of that nature. Sometimes that is not necessarily a bad thing, because, as we all know, in many areas of medicine and many areas of science there is nuclear research required within the nuclear sciences for the particular purposes of medicines and medical research.

But in this regard there are concerns about climate change, and everyone is increasingly concerned about what is happening. However, we have said in this Parliament that we do not support some of the radical notions surrounding climate change that would see New Zealand taxpayers and New Zealand companies paying a lot more money, and a lot more in terms of taxes or levies, to fund schemes to do with climate change, environmental effects, carbon taxes, and all these sorts of things, as a result of pollution.

We feel that that is, again, a negative way of handling the situation, and that New Zealand should be investing its money in actually solving the problems, solving the pollution issues, and solving any problems in our own backyard first. We should be taking levies or any taxes to actually put them back into coming up with the remedies here within New Zealand, whether it be in our dairy industry, in our manufacturing industries, in our forestry industries, or in our other polluting-type industries. We believe that funding should be going into that work, not going into international money-go-rounds that end up with people basically making money in foreign markets out of the hard-earned earnings of New Zealand people and New Zealand companies.

In this regard there are some questions here about climate change in terms of, as was mentioned, Exxon Mobil and all these other organisations that do have an effect, but equally, you know, the list would go on and on and on and on, and where do you stop? Every major corporate around the world might have an aspect of its business that is having an effect, but, at the same time, we are seeing more and more of these corporations acting as good, socially responsible corporate organisations that are addressing the issues and trying to reduce their effects on climate change and their effects on pollution.

So we are prepared to let this bill go through for its first reading. We will hear what the member in charge of the bill has to say, hear what research the member has done, and find out what the officials can put forward, and then we will take it from there.

The Government will be voting against this legislation, the Climate Change (New Zealand Superannuation Fund) Bill, because we believe it would be irresponsible to allow it to pass into law. We are already practising the responsible investment criteria that the bill seeks to formalise and, therefore, this bill would mean more red tape and more bureaucracy, and that would be irresponsible for New Zealanders. You see, we do not support creating red tape and bureaucracy around investment or in any other area where it is unnecessary in New Zealand. Actually, this Government has a very good record over the last 4 years of working through bureaucracy, so that New Zealanders and New Zealand businesses can get on doing the job that they need to, rather than having unnecessary Government intervention and interference. We also have responsible investment work integrated into our investment activities, and I believe very clearly that responsible asset owners will exercise best practice when it comes to portfolio management across a number of sectors and areas of interest—environment, social, governance issues, and so on.

See, the purpose of the New Zealand Superannuation Fund is to meet the future requirements of New Zealanders when they retire, and this bill will do nothing but tinker with that objective. What it means at the moment is no Government interference, and I understand that this is a foreign concept to many members opposite. Indeed, Russel Norman is the current Opposition finance spokesman. He wants to get his hands on every single part of the pie that he can. We have already heard from Mr Norman that he intends, when he becomes Minister of Finance in a Green-Labour coalition, to print billions of dollars—magic them out of thin air—to solve some of the challenges that we have in New Zealand at the moment around meeting our debts and balancing the economy.

Well, indeed, the Governor of the Reserve Bank came before the Finance and Expenditure Committee not so many—

💬 Dr Russel Norman: I raise a point of order, Mr Speaker. This has absolutely nothing to do with the bill.

The ASSISTANT SPEAKER (Lindsay Tisch): It has been a pretty wide debate, I would have to say, so I know the member will come back to the point.

Thank you, Mr Speaker, and I am going to continue, because it has absolutely everything to do with his bill—the credibility of the member who has brought it forward and the devastating effect that legislation like this and other things that that member has been spouting up and down the country will have upon New Zealand and the New Zealand economy. So I continue.

Mr Norman said that he wants to print billions of dollars to solve some of our problems—magic them out of thin air. Quantitative easing, of course. The Governor of the Reserve Bank came before the Finance and Expenditure Committee and said that this was a desperate policy, and I agree with him wholeheartedly. We have heard from Mr Norman, in line with what this bill would seek to do in New Zealand, that he wants to tax the most productive businesses in New Zealand out of existence. You know, he hates rural New Zealand. He would love to see farmers give up—

💬 Dr Russel Norman: I raise a point of order, Mr Speaker. I take offence at the comments by that member that I hate rural New Zealand. It is completely untrue and I take offence at it.

The ASSISTANT SPEAKER (Lindsay Tisch): No, look, these are debating points.

Good. Thank you, Mr Speaker. Most of the policies that that party of Mr Norman portrays to New Zealanders would lead a reasonable person to believe that he hates rural New Zealand and wants to see farmers—

💬 Dr Russel Norman: I raise a point of order, Mr Speaker. The member’s opinion that someone might hate rural New Zealand has nothing to do with this bill. I would ask that you keep him on the topic.

The ASSISTANT SPEAKER (Lindsay Tisch): I am the judge of that, and this has been a pretty wide debate. It has been a fair debate, pretty equitable—

💬 Dr Russel Norman: No, it hasn’t.

The ASSISTANT SPEAKER (Lindsay Tisch): I am on my feet, and do not interrupt when I am on my feet. I am asking the member—the member has 1 minute to go.

Thank you very much, Mr Speaker. So what this member who has brought this bill before the House wants is to see the most productive part of New Zealand, our farmers and our dairy farmers, on welfare. Well, that is not good enough for the Government.

Finally, with his bill he wants to get his hands on the New Zealand Superannuation Fund and put the future of all New Zealanders at risk. That is irresponsible and this is a very bad piece of legislation. When it comes actually to the detail of what he thinks needs to happen in this area, and indeed what the Superannuation Fund is already doing, it has signed up to a wide number of codes of conduct and international bodies that put integrity, including environmental integrity, at the heart of the way it makes decisions about their investments. A most important part of this is that it is up to it to decide what it is it does with New Zealand funds. Members opposite, in coalition with the Green Party, where those Green Party members will take on extremely important roles in Government in finance, should keep their hands off these funds. I am very happy to say we will be voting against this legislation, because it would do great harm to the New Zealand Superannuation Fund and to New Zealand businesses—

I am sorry to interrupt the honourable member, but his time has expired. [Interruption] Order! I call—[Interruption] Order! I am calling the Hon Shane Jones.

Before I opened my mouth, Mr Speaker, you were screaming “Order!”. Please assure me that it is directed to that side of the House and not to this, sort of, very modest individual who is about to share a thought or three.

The ASSISTANT SPEAKER (Lindsay Tisch): I am giving you the call.

In the spirit of fraternal relations, I stand with my colleagues to support Russel Norman’s member’s bill, the Climate Change (New Zealand Superannuation Fund) Bill, this afternoon. Let there be no doubt about that.

💬 Hon Trevor Mallard: Notwithstanding the crap that he writes about you.

Well, one has to suffer the slings and arrows of coalition-building into the future—I am talking possibly about Winston Peters there, but that is another matter. But I want to actually begin by directing the attention of our colleagues on the other side of the House to something that is already in the New Zealand Superannuation and Retirement Income Act—section 58(2)(c)—which, actually, requires a level of transparency in decision making to avoid a prejudicial view about our reputation internationally taking root.

For that side of the House to insist that Mr Norman’s contribution is, No. 1, ultra vires the Act and, No. 2, likely to undermine the viability of the fund or its profitability shows the characteristically showy but shallow level of information that those members actually use when talking about the Cullen fund. We had a figure from Madame Tussaud’s wax museum, Dr Nick Smith, coming and lecturing us about this bill being designed to ruin the country’s reputation in terms of climate change. On that point I have to agree with the colleagues from the Green Party. That is not being done by this bill. That level of opprobrium settling upon the fine reputation of Aotearoa has been manufactured by that side of the House and worsened by the behaviour of the Government’s officials overseas who are so embarrassed that they cannot even look straight in the eye of their confrères from other negotiating teams. So it has got nothing to do with this bill. The worsening of our reputation in relation to climate change is a deliberate policy direction being pursued by the current Government, which it is entitled to do as a part of what it thinks is the optimum mix of policies for the country, but we know that, as a consequence of those policies, the costs will fall on the most vulnerable.

So let me come back to the bill. It is not unreasonable that the Cullen fund focuses on those areas that are not, actually, going to worsen the country’s reputation or create negative externalities that will not be picked up by the businesses that are running the enterprises that the Cullen fund is investing in. It may actually overrun slightly. I understand that Annette King, the redoubtable member for out at Miramar way—closely related to certain other members on the other side of the House—today opened a gas station owned by the Cullen fund. So there has to be some balance.

The Cullen fund currently does have investments in areas where perhaps—

💬 Chris Hipkins: Half of it.

Fifty percent. Fifty percent—not unlike the vote capture we will enjoy in 2 years’ time. I like that figure—I like that figure. I am not talking about my biological make up of 50-20-25—no. We are talking about why this piece of legislation will actually enhance the reputation of the Cullen fund. It is not going to throttle and undermine the work of the guardians. It is just going to direct them to ensure that the investments do not reward those kinds of industries that are slowly but surely choking the transition of not only the fund and the nation, but also, in many respects, many of the developed countries. The Cullen fund guardians were encouraged by the Government to move towards 50 percent of the capital being invested in domestic industries—indigenous industries. That has been an abject failure. It could be that that is what the Government fears. It says one thing, but actually delivers another.

I think the alarmist rhetoric coming from the other side of the House, which is reflective, unfortunately, of the loud but vacuous minds that are conceiving it, should not worry about Mr Norman being the Minister of Finance. That decision will be made by higher forces—higher forces. No, those decisions will be made by the colleagues here and that lies well after the next election. Coming back to the Cullen fund, it is a fine fund and is reflective of the very innovative approach that this side of the House took to the art of government. Thank you very much.

Tēnā koe, Mr Speaker. It is a great pleasure to speak on this excellent member’s bill, the Climate Change (New Zealand Superannuation Fund) Bill, introduced by my colleague Dr Russel Norman. Climate change is, as we all know, the greatest challenge facing human well-being. That is our well-being. That is the well-being of New Zealand families and of New Zealand businesses, as well as the well-being of people across the world. Climate change is real. We know it is caused by certain activities that humans have engaged in just over the past few centuries. Bloomberg Businessweek—not well-known for its extreme environmentalism—had on its cover page the week after Hurricane Sandy: “It’s Global Warming, Stupid.” It is not a left-wing conspiracy. It is a well-understood result of digging up millions of years of stored fossil energy and burning it in a short period of time.

We in the Green Party live in the real world, unlike the Government members. We understand that the world is changing, and we understand that we have to deal with this change. Climate change is not only a challenge; it is also an opportunity. It is an opportunity to do things smarter, and this bill is a good example of doing things smarter. As we heard from my colleague, this bill is going to, in a very small way, support investment in clean industries, which are the growth industries of this century, by directing the New Zealand Superannuation Fund to consider environmental sustainability and climate change when making its investments. But it is not only that that is the right thing to do if we want to preserve human well-being; it is also a smarter financial bet. If you accept that climate change is real, then it is obvious that humans are going to have to do something about it and that sooner or later fossil fuel industries will be in decline. It is clean industries that will replace them. It makes more sense, if one is investing for the long term, for the future, to put our money in those industries that are going to be successful in our lifetimes.

💬 Hon Steven Joyce: If the member is right, of course it will happen.

I know that the member the Hon Steven Joyce does not live in the real world, and is not really aware of what is happening. The thing is that climate change is arguably the biggest market failure. Because markets can only consider short-term profitability, it is the role of Governments—democratically elected Governments—to step in and give some long-term playing rules, rules of engagement, so that we can make smarter investments. Smarter investments will allow us to thrive in the future and are actually not only better for the planet, but better for humans, better for our economic activity, and better for those who are going to be drawing down from the New Zealand Superannuation Fund in the future.

According to the Government, we cannot afford to prepare for climate change. We cannot afford to take the steps through rational economic instruments like a meaningful price on carbon, which would help our economy transition to a smart green footing. But the reality is that we cannot afford not to prepare for climate change. It is the reality. It does not matter whether there are a number of developing countries that have not yet signed up to reduction targets, because the reality is that New Zealand’s per capita emissions are the fifth worst in the world. If we are going to survive and thrive in the clean green economy of the future, we need to start taking steps now, and that requires Government leadership. Unfortunately, we do not see any leadership of this sort from the Government. We see just a denial of reality and a continuation of the same failed policies of the last century, which will not help us to be successful in the future. It is a real shame that the Government is not going to support what is actually quite a logical bill, introduced by my colleague tonight. I am really sorry to see that. I commend this bill to the House. Thank you.

I think the comments of the last speaker, Julie Anne Genter, and her predecessor Dr Norman make it quite clear that this Climate Change (New Zealand Superannuation Fund) Bill, comprising essentially one page with an operative paragraph, is an exercise in theatre, not substance. The last speaker did not issue one word in the way of comment on the bill.

The point of the bill is this: it is brought to this House by that economic wizard who would have us engage in qualitative easing.

💬 Hon Members: Quantitative.

Quantitative easing. What a nonsense that is for this economy when we have an interest rate of 2.6 percent. If the Reserve Bank wants to kick the economy along, the governor has got room to move. You would bring in quantitative easing, as the Americans are doing, only when your discount rate is zero, when your interest rate is zero. We are not in that space. So the ideas that were brought to Parliament by the co-leader of the Green Party on quantitative easing and on this bill are both thoroughly misguided.

We are already practising the responsible investment criteria that this bill would like to see formalised. What this bill would do is give us more red tape and more bureaucracy, and it would stymie the job that is clearly spelt out for directors of companies and institutions. We do not, as a party, believe at all in supporting or creating bureaucratic hurdles to investment, which this bill would do.

Our responsible investment work is integrated into all investment activities. For example, understanding social and governance issues is a really important part of our risk assessment and is a due diligence that is required by directors and trustees on prospective individual investments. On this side of the House we are inclined to think that responsible asset owners who exercise best-practice portfolio management will already have a concern for environmental, social, and governance issues.

As Nick Smith pointed out earlier, this Government has introduced a huge number of things to support climate change. Contrary to what I heard the co-leader of the Green Party saying the other day, New Zealand has not left the Kyoto Protocol. We are still a full member. We are simply aligning ourselves with the developed economies in terms of pursuing future climate change measures that the whole world will come to accept—that 193 countries of the globe will sign up to.

If we go to the purpose of this fund, we can see that its obligation or purpose is to meet future New Zealand superannuation payments. In fulfilling this purpose, the board has to invest the fund in a manner consistent with two objectives. The first is prudent commercial management of the fund, and that is a primary objective because it influences the ability of the fund to fulfil its purpose: to pay money to superannuitants. The second purpose that the directors have to follow, or the second objective for directors, is recognition that the fund is owned by the Crown, and the Crown bears the financial and reputational risks resulting from the activities of the fund. This is a secondary objective related to the manner in which the first objective, paying money to superannuitants, is achieved.

Our responsible investment work programme is closely aligned to the United Nations Principles for Responsible Investment. This is an internationally accepted benchmark for how institutional investors should manage environmental, social, and governance issues.

As I said at the outset, this is an exercise in Green theatre. It is not an exercise in substance. It is not even a smart idea. I intend personally to vote against this bill along with colleagues here in the National Government. Thank you.

Members opposite might be sort of slightly surprised to learn that there are parts of the comments that have been made by John Hayes that I actually agree with. My view is that although I will support the Climate Change (New Zealand Superannuation Fund) Bill, it is one of those 60:40 things because I think, as the member said, it is a matter of theatre rather than having a bill that has real substance to it. It is opportunistic. It is worth having the discussion, but, actually, if we are doing ethical investment, if we are going to extend ethical investment, I think it is worth looking at a lot more issues than just climate change. I think the bill would have got more support if, in fact, it had been more extensive.

Section 58(2)(c) of the New Zealand Superannuation and Retirement Income Act 2001, the governing legislation, already requires the fund to manage its investments so as to avoid “prejudice to New Zealand’s reputation as a responsible member of the world community.” So for members opposite to say “Forget about ethical investment.”, as they have been saying, is absolutely wrong. We already have some criteria. My view is that those criteria are not tight enough. I think those criteria, along with some of the questions as to the shape of the investments, the balance in New Zealand, and the balance towards New Zealand - owned and some of the higher-risk businesses, could be given more of an opportunity. Certainly, New Zealanders deserve to see the very good analysis that has been done by the Superannuation Fund. My view is that that should be shared much more widely than it currently is, and that would help us get some depth—some better depth—in our investment.

National promised in 2008 that 40 percent of the Superannuation Fund would be invested in New Zealand. That is another one of its broken promises. Four years later I think it has just got over the 20 percent mark. It has made almost no progress at all.

I am very proud of the Cullen fund. I think it has been something that has had very good returns and a very good investment policy. The teams that have sat behind it—along with ACC, actually—have done some of the best investment analysis work that has been done in New Zealand. But, as I say, I think it is a pity that that work is not more widely shared. There are a lot of other funds—smaller funds—that would be able to follow the teams’ direction, especially in regard to, in New Zealand, normally unlisted investments. And even in some of the smaller investment companies, the quality of the analysis that is publicly available is not very good.

In conclusion, I say to Russel Norman that we support this bill, but it is a pity that a bit more work was not done on it to make it something that really went to the question of ethical investment.

Dr Russel Norman, 5 minutes in reply.

It was clear during this debate that there is not a lot of knowledge about responsible investment, particularly on the Government side of the House. The Norwegian pension fund, which is one of the biggest sovereign wealth funds in the world—over US$500 billion under management—has some of the strongest responsible investment guidelines of any of the sovereign wealth funds by far, actually, and has been a very successful fund. So when the Government says “Oh, well, we cannot have responsible investment guidelines; it’ll destroy the New Zealand Superannuation Fund.”, that is just because it does not really know what is going on in the world, and there are a lot of things happening in the world.

The National Government, which on the one hand is arguing that responsible investment will destroy the Cullen fund, on the other hand argues that it already has responsible investment guidelines, so we do not really need this bill. But it cannot have it both ways. So it is not a consistent position that the Government has taken, because there is not really a logical argument there, which I think is pretty sad.

The Government also argues that we cannot have standards, or red tape as it calls it. This, of course, is the National Party that brought us the leaky homes disaster—a $20 billion leaky homes disaster because National weakened the rules around housing. It is also National that has brought us a lot of dead miners, because it wanted to weaken the rules around the regulation of health and safety legislation at work. So it seems to me that although the National Party consistently opposes standards—consistently opposes standards—none the less standards are important.

The Green Party believes that standards matter, so for that reason we have no problem with adding a fourth dimension to the current guidelines that are in the bill. I think Shane Jones actually hit the nail on the head, because Shane Jones, in what I thought was a very good speech, said that the investment fund already has a kind of responsible investment guideline when it talks about avoiding prejudice to New Zealand’s reputation as a responsible member of the world community. So there is already a relatively weak responsible investment guideline, and what we are trying to do is strengthen it up, particularly around sustainability and climate change. I think that is a worthwhile thing to achieve, and I thank Labour, New Zealand First, and, of course, the Greens, and Mana for supporting this proposal.

I think, really, when it comes down to it, climate change is one of the most difficult issues that we have to deal with as a species. It is difficult because it requires action now for future gain. Most of the gain is not going to be for us here now; it is going to be for those in the future. It requires collective global action and that is a very difficult thing to coordinate, and those two things make it extremely difficult for our species to deal with climate change and to make the kinds of changes we need. It requires challenging existing vested interests—vested interests that can have a very strong voice today—in order to advance the interests of those who are yet to be born. So it is a really difficult problem because we have very powerful vested interests and we have heard them speak one after another from the National Party today. We have those powerful vested interests who have a one-vote majority in this Parliament and who are against taking action on climate change, and that makes it very difficult when you have those powerful vested interests today.

It also requires an understanding of science. I think that clearly—and we have seen it again tonight and we have seen it often from the National Party members, who have opposed taking action on climate change over a very long time—they think it is very difficult. It is very difficult for a lot of people to get their heads around the science. So when you put all of those problems together, you can see why as a species we have had so much trouble dealing with this problem of climate change. But the reality is that if we read the science and if we read the reports from the international organisations, what comes through very clearly is that we need to take action today in order to avoid out-of-control climate change, which will have a dramatic impact on people who are being born today. We are seeing just the very beginning of it today.

So although I think it very likely this bill will not get the numbers in this House today, there are enough of us who are determined to do something so that over time we will make progress, because if we do not make progress on this critical issue, it will be our children and our children’s children, and to some degree even us, who will suffer as a result. I commend this bill to the House.