Climate Change Response (Removal of Transitional Measure) Amendment Bill

I move, That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a third time. First of all, I want to thank the Government support parties—ACT, United Future, and the Māori Party—for their support of this bill. But I also want to recognise the rest of the House, Labour, New Zealand First, and the Greens—that they are supporting this bill through the House and the removal of the one-for-two model.

It is important that we pass this bill through all stages tonight so that there is business certainty and so that they can get on with it. There was some concern as to what it might do with the markets, but actually I think that has all been fine.

I want to just say that I do not think this is the answer to, certainly, climate change. I do not think this is the one thing that is going to make the biggest difference, if you like. I think there are certainly more steps that we have got to take. We have got to be careful that we do them in a concerted way that is in the best interests of New Zealanders and New Zealand, and that, I think, looks really longer term. Like most members of this House I care about the country that I will leave for my grandchildren’s children. I think quite a lot about the differences that we can be making now that will actually make a huge difference to them. Thank you to the House. Thank you to those businesses out there, to the individuals who make a difference, and to all of those who see the work that we do in protecting this planet as being important.

It is my pleasure to take a short call on the third reading of this bill. It was comforting to hear the Minister say that this is one thing that the Government is going to do to combat climate change. Although Labour is supporting this legislation, we do look forward to a suite of measures that are going to meaningfully address New Zealand’s emission reductions and how it is that we are going to meet the targets that we have set ourselves, especially when we consider that we are going to have to get more ambitious.

One of the features of the Paris Agreement is that ambition is built into it, and the ability to ratchet up each country’s contribution will increase—each meeting on meeting. At the moment New Zealand’s rather timid contribution of 11 percent on 1990 level reductions from 2021 onwards is something that we are going to have to get more ambitious about. We are going to have to front up to the international community and we are, importantly, going to have to show that we are meeting our targets. We are currently not meeting our targets. We are not on the kind of transition pathway to a low-carbon economy where we can or will meet our targets.

This piece of legislation—although it is something we welcome, let us bear in mind the 0.07 percent reduction in our greenhouse gas emissions from this piece of legislation. That is what the Ministry for the Environment has calculated. So let us get real about what this legislation does and does not do. It is a good thing. It needed to happen. But make no mistake: this is not a plan to limit climate change. So when the Minister says that this is over one thing, we look forward, in the coming days and weeks, to hearing the Minister roll out her comprehensive plan for how New Zealand is going to reduce its emissions. We would welcome seeing a real commitment to carbon budgeting, but the fact that the National Government voted against aligning our targets and our emissions trading scheme, just here tonight in the House, does not give me great faith.

But most other countries set carbon budgets. If we think about it as a household—if we want to save money, what do most people do? They set a budget. They write it down. They make a commitment. That is how they meet it. New Zealand does not do that and, guess what? It fails to meet its targets too. It is no great surprise. It is just something that we do have to address, and we have to address it fast.

In the Committee stage of this debate, I thought the Minister, in one of her responses, made a very telling contribution and it is within the regulatory impact statement. The reason for the long phase-in period of this, through to 2019, is to protect dairy. It is to protect dairy—its industrial gases, not its agricultural gases. Dairy is still being protected in terms of agricultural emissions, but in terms of its industrial usage, what we cannot do is address our greenhouse gas emissions while we continue to favour one sector, and subsidise that through other productive areas of our economy. Our economy is out of kilter because this Government has not used the levers that the emissions trading scheme gave it to transform our economy, to diversify our economy, to add more value, and to move to the kind of 21st century economy that New Zealand is going to need to survive in the world. It is a trick that has been missed, and it is a trick that this Government is continuing to miss.

Listening to the Government speakers through the course of this debate tonight just shows how out of step they are when it comes to the issue of climate change. In other countries, politicians are realising the opportunity that transitioning to low-carbon economies gives us. There are the opportunities for us to create higher-value economies, with better-paying and more secure jobs. That is the kind of vision that we, in Labour, have for New Zealand, and climate offers that opportunity.

At the Paris climate talks, one of the standout side events that happened was the international business community getting together and saying that Governments were not doing enough. Business was pushing Governments to do more. So we have here the business community in New Zealand realising that more needs to be done. But the Government is out of step with business. Businesses realise the threat that inaction on climate change poses to New Zealand. It poses the fiscal risk of New Zealand thinking it can just buy its way out by buying credits for evermore. I know that that is not something that Grant Robertson is looking forward to. Business also recognises the real reputational risk of New Zealand failing to meet its climate change targets. New Zealand simply cannot continue to trade on some kind of clean, green image and turn up to climate conference after climate conference and earn itself Fossil of the Day awards, which, make no mistake, New Zealand excelled in in Paris.

This is not the kind of image that we want for New Zealand on the global stage. We want New Zealand to be seen as somewhere where we are doing the right thing and that we are not an international laggard. The legislation we have today, and tonight, in front of us is an important start, but it cannot be a cherry-picked part of the emissions trading scheme (ETS) review. The Minister, when she was in the chair, admitted that the ETS was broken, that the ETS was so broken that it allowed something like the hot air credits to come into play. We are not putting the ultimate legislative protection around that in terms of a price floor to sit alongside a price ceiling, but we have to have a commitment to an ETS to be a mechanism that puts a real, meaningful price on carbon that will work as a lever in our economy to move us on to a low-carbon transitional pathway, because we do not have that at the moment.

We cannot simply continue with business as usual, and we have to see the opportunities that are contained in that transition for us. Labour supports this bill and we would equally support more measures from the Government to finally start addressing New Zealand’s rising greenhouse gas emissions.

It is a pleasure to take a brief call in this third reading of this bill before the House, to transition the emissions trading scheme (ETS) from the one-for-two model that we have had since 2009 to a phased change and through to a new and more sustainable objective for us as a nation and for our ETS system.

This has been a really interesting debate. It has been very useful to hear opinions from across the House and to hear members expressing their views. Although I think it is fair to say that as a House we probably differ about the size of the step, we all agree that this is a step in the right direction. On that basis, I commend the bill to the House.

I was heartened to hear Minister Bennett speak of the failures of the system in an honest way in the Committee stage, and heartened also to hear her speak about the certainty that an emissions trading scheme should provide for business. That was something that the Minister spoke about and it showed an understanding of what needs to happen next. As my colleague Megan Woods has already said, we on this side of the House want to see more action and we want to see it soon. We want to see more than this timid step, which is a U-turn on a policy that National put in place some years ago when it came into Government and gutted the previous emissions trading scheme, which did already give certainty to business. To hear that it is back on that track is heartening, but with my colleague Megan Woods I want to reiterate the concern that things are sped up, and that the action and the plan is put in place.

For a long time we have called for the removal of this one-for-two provision. For years the Labour Party has called for this action that is happening in the House tonight, and now it is happening. We support it—we support it—but we want to see more. We have called for other things that would be sensible steps, like putting in place an independent climate commission to set up a carbon budgeting process so that we can actually achieve significant emissions reductions targets—so that we can have targets and then have a plan to meet those targets. It is not rocket science; it is the logical thing to do if the Government believes the things it is saying in this House. It needs to put a plan of action in place, because we know that New Zealand has per capita emissions that were the fifth-highest of 40 developed nations when they were measured in 2012.

If New Zealand cannot do this, who on earth can? Our electricity sector has the potential to be completely renewable. The last Labour Government put in place a ban on new generation coming from fossil fuels, because we knew that that was quite possible to do. The last Labour Government put in place a biofuels sales obligation, because we knew that it would cost nothing extra but it would give an emerging biofuels industry certainty. And we put in place the first “all sectors, all gases” emissions trading scheme in the world, because we knew that that would be good for New Zealand business long term. We knew that the small extra cost, the few cents extra on a block of butter, would be well worth it in marketing that butter as a premium product from a world-leading country that actually cares about its environment.

Instead, we have had 8 lost years—8 lost years. It has been 8 lost years, until the Government finally agreed that giving business some kind of pathway and certainty is the answer and that actually having some meaningful action in this space is a good idea. Yet it is not really certain yet. We have heard the Minister tonight say that there needs to be more—with no plan, no indication of what that is. How can business plan in an environment where things change from year to year? It claims to be a business-friendly Government, but it changes its plans all the time. It is very hard for any sensible business to plan in that kind of environment. What business can go off—and, unfortunately, what it has been going off—is the kind of tacit nudge that the Government is not really that serious about it. We are reaping the consequences of that as our emissions rise and rise year after year, as foresters choose not to plant because there are disincentives in place, and as people choose to burn fossil fuels because there is a guarantee that there will be no cost above $25 per unit.

This situation that we find ourselves in is one of the Government’s making. We commend it for taking a small step in the right direction, but the problem that we find in front of us is one that the Government could have addressed long ago. It could have outlined a more bold plan. It could have outlined a plan that was in line with the aspirations of ordinary middle New Zealand. Those people out there battling every day, who would like to see a little increase in their take-home pay, who would like to see their education be of a world standard instead of dropping, who would like to get to hospital and know that they do not have to pull out a chequebook—all of those things, of course, we have seen deteriorate in this Budget.

We have seen a Government that does not have priorities aligned with middle New Zealand, and that is, unfortunately, where this Government sits. It seems content to manage New Zealand’s decline. We have heard it talking about paying off debt—it is a Government that has borrowed more than Muldoon. Here in the space of climate change, we know that it is borrowing from future generations. It is a pattern under this Government: borrow and hope, borrow and hope. It has done it with our money. It has borrowed more than Muldoon. Here it is doing it with our future, by borrowing emissions that do not allow for such a gentle transition in the future.

This is getting more and more urgent, and there is no excuse for it. The facts are clear. The latest Intergovernmental Panel on Climate Change report says that without additional mitigation, we are now facing average global temperature rises of 3.7 to 4.9 degrees Celsius—that is, compared with pre-industrial levels—by the end of this century. We know what the issue is. We must have targets that are more ambitious, at least in line with the EU and its overall target of a 40 percent reduction in carbon dioxide emissions by 2030.

We know there is space for ambition. We know there is space to expand New Zealand’s brand as a clean, green country if we just do the right thing. It is not hard. If we just do the right thing, it will be good for our businesses, as they spy the opportunity in becoming high-tech, clean, and future-oriented. If we make polluters pay, rather than every other citizen bearing the costs—if we do what is right, it leads to a more prosperous future for our country. We hope that the Government, after taking this first, tepid step forward, will look more closely at this picture. I take some hope out of what the Minister said, that she intends to do that. I only hope that those words will be followed with action.

We are a Government that is committed to transitioning to a low-carbon economy, and, as such, we are phasing out the 2009 transitional scheme. That was a transitional scheme—we are keeping true to our word on that. As such, I commend this bill to the House.

It is my pleasure to rise in this third and final reading of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. The Green Party is, of course, supporting this bill because it does move us one tiny, timid step closer towards reducing our emissions. When I say “tiny” and “timid”, I am, of course, referring to the Government’s own analysis that this will reduce our emissions by 0.7 percent in the year 2020, 3 years from now. That is against a rise, over the course of the next 15 years, of 96 percent in our emissions over 1990 levels. So it is going to shave a tiny amount off the enormous growth that is projected in our emissions over the course of the coming decade and a half. It really does not slow down the supertanker of New Zealand’s emissions as we head towards, frankly, global catastrophe.

To give you some context, our emissions are projected to increase 96 percent above 1990 levels by the year 2030. They have already risen 24 percent above 1990 levels, and since this Government came to office they have risen 19 percent above 1990 levels. They are now at the highest level that they have been since 1990, which is when we actually started counting. It is also the period of time that the emissions trading scheme has been in place for.

I just want to reiterate the point that the purpose of an emissions trading scheme is to reduce emissions. What has happened has been the precise opposite. Our emissions have increased by 19 percent in the time that we have had the emissions trading scheme, and that is because when this Government came into office it gutted the emissions trading scheme, it changed the settings, and it crashed the price.

One of the things that Government members have said several times tonight is that the reason why they are phasing in this tiny measure over the course of 3 years is the cost to business. Well, they thought nothing of the cost to business when the Government changed the settings on the emissions trading scheme and crashed the price of units. Hundreds of millions of dollars were wiped off the value in the forestry sector overnight by this Government. There were stranded assets up and down the country—hundreds of millions of dollars. The cost to the Māori economy alone was half a billion dollars. You had iwi businesses up and down the country that lost half a billion dollars because this Government changed the settings on the emissions trading scheme and crashed the price.

So when Government members get up and say “Oh well, it is going to take us 3 years to phase in the removal of the two-for-one subsidy because of the cost to business.”, they have got no idea of the catastrophic damage that they caused to the forestry sector and to iwi businesses around New Zealand when they introduced that policy. They say that they are friendly to business, but the cost to business of this bill will go nowhere near the cost to business that they created when they crashed the price in the first place 8 years ago.

During the course of the debate tonight there have been a number of speeches from the Government benches that have not just talked about the cost of implementing this bill but have shown that Government members have no comprehension of the cost of not implementing the bill, no comprehension of the cost of doing nothing, as we have done nothing over the course of the past two and a half decades to arrest climate change.

When you look at the costs to our businesses that are mounting up already, they are staggering. It is millions upon millions of dollars in costs that are already occurring. We have always thought, I think, about climate change as this thing that happens in the future to somebody else—to polar bears in the Arctic, in the future. In fact, the costs are being felt now, by us, here in this country and in our closest Pacific neighbours, where people are already having to relocate to higher ground because rising seas are swallowing up their homes. We will see the same kind of thing in New Zealand—in South Dunedin and in Napier and in Tauranga and on the Kāpiti Coast, and in many, many other low-lying areas around the country.

The idea that trying to do something to reduce our emissions carries with it some kind of unacceptable cost is not stacked up on a business case basis against what is already starting to happen and the costs that are being imposed as our infrastructure gets flooded, as roads go underwater, and as we have extended, longer, deeper and more frequent droughts. The cost to our agricultural sector of that—

I am sorry to interrupt the member, but the time has come for me to leave the Chair. The House will resume tomorrow morning at 9 a.m. Nō reira, good night and good luck.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Friday)