Crown Minerals (Petroleum) Amendment Bill

Members, we now come to Part 2, the debate on clause 9 and the schedule.

Thank you, Madam Chair. Like I did with Part 1, just with Part 2 of this bill I want to go through some of the changes that were made to this legislation by the select committee. In this part, which is a new clause 22 being inserted into schedule 1 of the Crown Minerals Act—if we look at that first, it is new clause 22, “Interpretation”, new clause 23, “Existing permits unaffected”, new clause 23A, “Applications for subsequent permits unaffected”, and new clause 23B, “Subsequent permits unaffected”.

The Environment Committee made a number of very technical changes to the new clauses 22 and 23, and these changes were to further clarify the Government’s policy position that the changes in the bill are only intended to apply to new petroleum permits and not existing permits. The policy intention of the bill, as we traversed in the debate on the last part of the bill, is to ensure that those with existing petroleum permits, with subsequent permits to their existing permits, and with applications relating to either, are unaffected by this bill. I think that’s something really important that we spelt out as explicitly as possible in these provisions in the bill. As such, new clause 23 was amended and new clauses 23A and 23B were inserted to make that even clearer, and I thank the committee for that work.

This is incredibly important, because what we have to realise is that this bill does not signal an abrupt end to petroleum exploration in New Zealand. What it does is signal a managed and long-term transition to the end of petroleum exploration in New Zealand, and when we say “managed and long-term”, we are talking 20, 30, 40 years down the track. Indeed, there are a number of exploration wells that are to be drilled in the coming years, and one is currently being drilled. If these are successful, permit holders will have the same rights and privileges as they do now, before this legislation has passed.

The other change that was made here was new clause 24, where existing applications for permits for petroleum were determined in accordance with the Act as amended. Some submitters raised a very valid issue around the retrospective application of this new provision, and I think it is important to be clear about what this provision does and why. The provision does not affect existing rights, but, rather, affects the outcome of any application process that might already be under way. I’m advised by my officials that there are currently no such applications, but there is always potential for an application to be lodged at any time. Should an application for a new permit be made today, for example, it would have been made with awareness of this bill, and, as such, it would be considered under the Crown Minerals Act as amended by this bill. The provision reduces the potential for the policy intent and objectives of this bill to be undermined by people rushing before the new provisions commence to make applications on the basis that the old law would apply to those applications.

New clause 26 is a very specific provision, and this clause allows current proceedings in the High Court between Greymouth Gas Turangi Ltd and the Minister of Energy and Resources to continue as if the amended Act had not been enacted. The bill as introduced included an incorrect reference to these proceedings, which was, helpfully, corrected by the Environment Committee—so thank you very much for that.

New clause 27, “Changes to the minerals programme”—the minerals programme set out, of course, how a Government will exercise specific powers or discretions and will interpret and apply specific provisions in the Crown Minerals Act and the associated regulations. They are intended to provide guidance and support the implementation of the Act. The intention of this new provision is to enable a minerals programme to be updated with only those changes necessary to give effect to the bill without triggering the obligation to provide the notice and consult provisions under sections 17 and 18 of the Act. It was never intended to enable the introduction of new policy; it is simply around the provisions in this legislation.

However, some submitters raised issues with the way the provision was worded and whether the word “Consequential” might lead to new policy changes being made as a consequence of the bill. The Environment Committee tightened the wording around this provision to ensure that it can be used only in the way that was originally intended—that is, around the provisions of this bill and not further policies. Under the revised bill, the only changes affected by this provisions are those that insert information into the programme to explain the effects of the amendments made to the Act by this bill.

So I thank the committee for the work that they did around these very technical clauses that we’re going through—very technical and very specific clauses—in Part 2 of the bill. Thank you, Madam Chair.

Thank you, Madam Chair, and thank you, Minister, for your comments in terms of managing long-term transition. Before I just come to some substantive comments around Part 2, can I say that this transition has been taking place for a considerable period of time, and the hydrocarbon industry certainly engaged in that and have been for some time. So while I appreciate that the Minister is saying 20, 30, or 40 years down the track, there has always been a commitment—especially in latter years—to consider the issues around climate change and to reduce emissions, particularly in the exploration and the production sector, which is what we’re looking at, who currently generate about 2 percent of New Zealand’s emissions.

Coming to new section 23, “Existing permits unaffected”, and subsection (2): “Existing permits (including any conditions to which the permits are subject immediately before the commencement of the Amendment Act) continue to have effect according to their terms (unless and until those conditions are amended, or those terms are changed, in accordance with this Act as if the Amendment Act had not been enacted).” Yes, that may give assurance to current permit holders. Can I ask the question, therefore, that, as I raised under Part 1, an existing permit holder who applies for an extension of area for their permit because the discovery, the reserve, the resource that they have discovered is beyond their permit area—that that will be considered under the current conditions upon which they gained the permit in the first place, where in section 12.4 of the Petroleum Programme, if they have had a discovery and apply for it, the Minister will grant them, under some obvious conditions, and that that would take place. Is the Minister saying that, yes, she would, because this is what this provision says in Part 2—that she would honour existing conditions to permits? Is she saying that she will curtail that to within onshore Taranaki region, so there will be, in fact, a limitation of those conditions? I think just some clarity would be appreciated, because we’re not talking about new permits; we’re talking about existing permits which she and, of course, the Prime Minister have made those commitments to—that they would be unaffected. “Existing privileges unaffected”—that is the heading of new section 25. So I do think that it’s important and opportune for us to have some clarity around that specifically.

Can I also say that as we look down the track, it’s—as the Minister said—a managed and a long-term transition: 20 to 30 to 40 years down the track. At present, we have 100,000 square miles of offshore opportunity for existing permits that have already been permitted for that exploration to take place. We were informed by the officials and informed through the regulatory impact analysis that in their assessment, based on past information and how it has occurred, in that 100,000 square kilometres they would expect—how many wells would you expect in 100,000 square kilometres? It could be 100,000; it could be one well per square kilometre. But Ministry of Business, Innovation and Employment officials stated that they expect, on past experience, a total of four—one per 25,000. Of those four, I’m assuming that we’re looking at the Barque and the Carvell prospects offshore, Timaru, where Andrew Jefferies has been quite clear and quite pronounced in his comments in the public media that because of this bill—they previously had some interested parties who would go into a joint venture with them, but now they’ve all turned away, and it is looking increasingly difficult for them to proceed.

Thank you, Madam Chair. I rise to take a call on Part 2, which actually, I think, should be better renamed “Speaking out of both sides of your mouth”, because for Part 1, what we’ve heard from Minister Woods is a justification of why her Government wants to take the lead in climate change and the lead in banning and constraining our opportunity with respect to oil and gas, and we’ve had a significant number of times where she has got to her feet and talked to the opportunity that must be grabbed by New Zealand to show leadership. Then, of course, she stands up in Part 2 and says, “Oh, but, actually, we still want to continue with some exploration—particularly those who have existing rights.” It talks to the dichotomy that exists, actually, within this bill.

As we’ve discussed previously, this is an optics symbol bill. On the one hand, depending on the audience, they will talk up the constraints that they are putting on our export opportunity with respect to oil and gas, and this is the section in which they say,

“Oh yes, but onshore Taranaki, your existing rights are unaffected, and so don’t really worry about it.” On the one hand, we have a conversation around “Well, the oil and gas is heading to be a sunset industry, anyway. You already had a thousand jobs lost off it when the price dropped.”, but then, in the same breath, is “Oh, yes, but, you know, we still want to be there for a just transition and to manage a transition for the region and the economy.”

So the question to the Minister, when we look at these issues with respect to protecting existing rights, is, please, Minister, could you explain to us—those few who are listening and not watching the Melbourne Cup—what does “just transitions” actually mean, because—

💬 Erica Stanford: It’s not a racehorse name.

Yes, it’s not a racehorse name. It could be, actually. We hear it all the time—“just transitions”. I’ll tell you what this party thinks “just transitions” means: unemployment and severe dislocation cloaked in the language of empathy from our Prime Minister. That’s not just transitions; that is letting this country and regional New Zealand down.

So let’s hear what a just transition actually means, and I’m sure the Minister will say, “Well, this Part 2 is part of a just transition because a small part of the industry that currently exists onshore, they may continue.” Offshore, you can’t; onshore, you can. The assumption here is that, of course, onshore, those opportunities will continue unabated, and as Jonathan Young has very eloquently voiced this afternoon, actually, when you dig into—excuse the pun—how this sector works, it is not anywhere near as optimistic as the Minister has outlined.

Indeed, we heard through the select committee from a number of submitters over the chilling effect that this was already having with respect to those businesses who have interests in oil and gas in New Zealand, including the opportunities that are supposedly enabled in Part 2—the existing permitted opportunities. OMV talked about the fact that they have a third of that, as I understand, and if they don’t have a find by 2018 or 2019, they’re likely not to continue with any exploration.

So this came up time and time again in the select committee—a complete misunderstanding from the other side around how this sector actually works, the long-term view that investors take, and the chilling effect with respect to their investments, particularly for those existing opportunities that sit in the ground. The Minister, I am sure, will stand up and say “Don’t worry, we will have supply security because all of this onshore opportunity will be realised.”—that is nonsense. The data doesn’t support it. Jonathan Young, with huge experience from that region, has already talked to the fact that we will be exposed here from a security of supply perspective, and this Government simply wipes that critique away, thinking that somehow those with capital are going to magic up an opportunity, despite the constraints inherent in this part.

Thank you, Madam Chair. It’s a pleasure to speak on the Crown minerals bill. Now, this bill is plain madness, and we will reverse it when we get back in 2020. It does not reduce emissions, it does not speed up the transition to renewables, and it does not help climate change. Now, they talk about a transition, but what’s the plan? What is the plan to transition? You can’t just kill the supply without dealing to the demand.

Now, hydrogen—they talk about hydrogen. I’ve heard the Ministers talking about hydrogen. Well, hydrogen is not a fuel in itself; it’s a means of storage. It takes energy to create hydrogen, and it’s a means of storage, so that’s not a fuel. Hydro—we have nowhere near enough hydro, and can you imagine the Greens allowing us to dam some more rivers? I don’t think so.

💬 Geothermal: we’ve got beautiful geothermal power in Northland, but nowhere near enough geothermal in the whole of the country to meet the demand. Wind farms: I’ve heard the Ministers talk about “Oh, wind farms are going to solve the issues.”, but we would have to build four wind farms a year for 20 years to cope with the growth and deal with the energy demand for New Zealand.

So their plan is really to kill the oil and gas industry, and then hope and pray that technology delivers the energy we need. Well, in South Australia, they did that. They have a few numpties making a few decisions, and they got blackouts. So are we going to get blackouts?

The Crown is looking at somewhere between $7.9 billion and $23 billion in lost revenue from this decision, and that’s just Crown revenue—that’s not the wider economic costs. Well, for $7.9 billion, the Labour-led Government could have had their Auckland light rail, and we could build Waterview, Transmission Gully, Dunedin Hospital, the “Kiwi hoax” programme, and Christchurch Stadium.

Gas supplies 15 percent of New Zealand’s electricity generation. It covers our peak times when we have dry summers and dry winters, so it’s a vital part of our energy system, providing the back-up for our beautiful renewable energy grid. But there was no Cabinet paper, no consultation with the industry or the Taranaki people, and no cost-benefit analysis. Those members did not campaign on it and there’s no mandate, and they didn’t even give it to the experts on the Economic Development, Science and Innovation Committee. They gave it to the Environment Committee, which also, incidentally, has a majority with the Labour-led Government.

So it’s a major contribution to failing business confidence, and it hangs out the sign to overseas investors that we are closed for business. Anyone that understands oil and gas and investment knows that it’s a long-term strategy, and if they think that the Government wakes up one day, gets out of bed, and changes the rules, they’re going to get the heebie-jeebies and get out of here. It makes us look like a banana republic.

Oil and gas accounts for 54 percent of New Zealand’s primary energy needs and provides 4,600 jobs in Taranaki and 11,000 jobs indirectly, and it adds $2 billion a year to New Zealand’s GDP. The oil and gas sector is a major contributor of foreign direct investment, and do you know what? We had the bill at select committee for a month, two weeks of which was when we weren’t even sitting. So they had two weeks for an industry that’s worth billions of dollars to New Zealand to put their story across and give their submissions. I think that is pretty damned rude. To shorten what is traditionally a six-month process down to one month—I think that’s a slap in the face for the industry. And they even blocked the select committee from going to Taranaki.

Submitters said this will increase energy prices, increase electricity prices, increase the cost of living, and affect the very people that vote—I mean, a lot of Labour voters, the low-income New Zealanders. But I quote from Minister Megan Woods: “We are a Government that listens, then acts. That consults widely, thinks [about] issues deeply and seeks to forge consensus on how we can take New Zealand forward together.”—what a joke. This will be devastating long term for New Zealand. Like with charter schools, it’s blind ideology versus plain old common sense.

Thank you very much, Madam Chair, for the opportunity to take a call, although I am conscious that at 1 minute past 5 on the first Tuesday of November there might be quite a few dozen people who would usually watch Parliament TV who have probably switched over—and it has nothing to do with my colleague Matt King taking the call right before me.

I did just want to thank, actually, a couple of speakers who have come before me: both Deborah Russell, who is the chair of the Environment Committee, for taking a call—and I’m sure there’ll be plenty more opportunities for her to do so as we roll into this evening—but also, too, the Minister, Megan Woods, who has, I think, been quite good at responding to some of our comments today. But I do just want to pick up on a couple of comments that she made in some earlier comments, and they do relate to Part 2 of the bill. She mentioned that this bill, and particularly Part 2, would allow for a just transition away from oil and gas, and she specifically said they are “not pulling the rug out”—not pulling the rug out. Well, tell that to people in Taranaki. Tell that to the 15,000 people whose jobs will be affected by this bill progressing through Parliament. That’s 15,000 people, 15,000 families, who rely on a pay packet from the oil and gas industry.

And if members opposite want to repeat the line that’s been used many times this afternoon, that it won’t affect anyone who’s currently in work—well, go and talk to the people at Fitzroy Engineering Group, a company in New Plymouth which employs 400 people, who on the day this bill was announced implemented a hiring freeze. That’s an absolute example of where a company who is related to the oil and gas industry has said, “As a result of this legislation, we are going to hire no more people.” And that will be replicated across the industry. It will be replicated across the oil and gas sector, and replicated across all of the industries that are related to it.

She also went on to say, in another quite incredible comment, that the Barque development, which is off the coast of North Otago, would still go ahead. My area of Rangitata would benefit hugely, actually, from the Barque development, because they’ve been in discussions with PrimePort—the very large port in the central South Island—about bringing the gas ashore to Timaru. So a huge number, 3,100 jobs that would be created from the Barque gas development would be in Timaru. So parts of the bill, as it stands, say that current permits wouldn’t be affected, and that’s something that the Minister repeated this afternoon. She said that the Barque development can “still go ahead”. Well I just want to point the Minister to the permit holder actually, which is New Zealand Oil and Gas. In their submission to this bill they said, “the Bill makes development of this prospect materially less likely.”—materially less likely. So what that means is that those 3,100 jobs that would be created in South Canterbury and in North Otago from this gas development are less likely to happen because of Part 2 of this bill and because of this bill progressing into law.

It’s not just those 3,100 jobs, though; it’s also the billions in taxes and in revenue that would be created by that development. And it’s not just that and it’s not just the jobs; it’s also all those pay packets—those 3,100 pay packets that would be spent in Timaru, that would be spent in South Canterbury, and would be spent in the South Island. This bill, according to the permit holder, and particularly Part 2, is going to make that development materially less likely to occur because they can’t find the international investors to invest. They specifically highlight some of the comments that have come in from offshore, because they are a reasonable player in the oil and gas sector in New Zealand. But, of course, for a development like this and for bringing down a rig, for example, it is a very expensive enterprise to do.

So they have provided some comments from some of the potential international partners who had expressed an interest previously. One of them says, “Looks interesting but given state of play in NZ at the moment I don’t think we will get much airplay internally. So will pass on this one.” Another one said, “It’s been an education for me seeing the reaction by even discussing NZ here! … the NZ government has thrown a spanner in the works stopping future exploration licences.” The last one, which is my favourite, says, “I’m sorry to inform you but we excluded New Zealand from our area of interest for new ventures after series of opportunities review and recent political issues.” It is a direct—direct—result of this new Government and this Government bringing this piece of legislation in that that development off the coast of South Canterbury and North Otago is materially less likely, and it’s because they can’t find investors.

Thank you very much, Madam Chair. I usually say that it’s a pleasure to rise and speak in these debates, but I have to tell you that this one’s just not so good. It really is not good to be standing in this Chamber in a committee of the whole House that has been asked to go into an extended sitting in order to examine this bill as reported back from the second reading, because—well, it’s just a bad piece of legislation. The individual parts and clauses—specifically, a new Part 2 is being inserted into schedule 1 of the Crown Minerals Act—actually go to the heart of a lot of confusion that this bill has created, not just in this Parliament and not just in the local industry but, actually, globally about what exactly this Government’s intention is. You see, they’ve come back—if you look at, for example, new clause 23(2) being inserted into schedule 1, which says that existing permits continue to have effect—and it appears that what the Minister is trying to say is that permits could also be extended if they currently exist.

This goes to the central paradox of this bill, which is that on the one hand, the Government would have us believe that it is engaging in a nuclear-free moment and that New Zealand is leading the world, that it is going to transform the way that energy is used and consumed throughout this country, and then from here, beyond, to the rest of the world—that is the rhetoric on the one hand. That is the intention of the bill that we heard from members at the second reading.

Then, on the other hand, we ask ourselves, well, does the clause and the specific text that’s being brought back from second reading actually reflect that intention? What it seems to say is, “Well, maybe if you have an existing permit, extensions will still be allowed, and maybe your existing privileges granted will still be allowed.”, and that leads us to ask the question: does the Government really believe that it’s implementing a nuclear-free moment? Or, actually, what this Government is doing is trying to have a bob each way, because whenever they’re challenged—whenever the Government is asked about petrol prices, for instance, or what its intention is for the Taranaki region—they turn around and say, “Oh no, it’s not that bad. Most things will continue as they are. We’re not really making much change here.”

So what I want the Minister to stand up and answer is: when she puts in this new part of the schedule for all of these provisions for existing privileges, for existing permits, which one is it? Is the Minister taking us in a bold leap forward that is going to transform energy worldwide, or is it actually the truth that not much is changing here—that there’s nothing to see—because I think, if we’re going to be certain that this bill before us truly reflects the Government’s intention, she needs to tell us. What does she say to the Fitzroy Engineering that we just heard about from Andrew Falloon? What does she say to the global investors? Is she saying that “This is a nuclear-free moment and the time that New Zealand changes everything.”, or is she saying that “Actually, there’s nothing to see here and existing permits will continue.”, as the new Part 2 inserted into schedule 1 by this amendment seems to suggest?

I think the committee needs to know, because if it’s the case that, actually, this Government is trying to transform the world, then perhaps they need to be bolder. Perhaps they need to remove some of these protections and privileges that will allow—as they tell us—everything to carry on as it always has. But, on the other hand, if they are not trying to ruin people’s property rights and destroy New Zealand’s international reputation, then maybe what they actually need to do is give greater protections to people investing in the oil and gas industry in New Zealand.

So if the Minister could stand up and tell us which one is it—a nuclear-free moment, or “nothing to see here”—I think the committee would be greatly aided. Thank you, Madam Chair.

Thank you very much, Madam Chair. Speaking to Part 2 now of the Crown Minerals (Petroleum) Amendment Bill. I’d like to focus specifically on new section 26, being within the schedule that will be the new Part 2 inserted into the Act. In particular, I’d like to highlight what I think is some matter of drafting, actually, if nothing else, that could be tidied up, and perhaps the Minister might have a view on some of the suggestions that I’m about to make in that regard.

New section 26 is called “Specified proceedings unaffected”. So this is, basically, setting out that the bill will not affect a particular matter that’s before the courts at the moment. If you’ll indulge me for a moment, Madam Chair, I’ll quickly outline the words of that, and that will give me a better position from which to be able to highlight what I think are some limitations in the way that that’s been set out: “The proceedings in the High Court between Greymouth Gas Turangi Limited and the Minister of Energy and Resources”—and then, within brackets, a number related to the particular case—“may be continued, heard, and determined, or settled, as if the Amendment Act (other than this clause) had not been enacted.”

There are a number of difficulties that I have with the way that this has been constructed. The first is that, of course, this particular case that’s referred to might actually not still be going on by the time the bill is enacted, or indeed given Royal assent. So if the legislation—the bill—referred in some way to that possibility, perhaps by saying “the proceedings that are taking place as at 6 November 2018” or “at the time of drafting” or “at the time of the committee stage of this bill commencing”, or so on, then that might be helpful for the sake of clarity.

It’s also something of a concern to me that this doesn’t actually refer to the fact that the case might be appealed. So if this matter which is referred to in the legislation has been a proceeding before the High Court, in this particular matter, it might actually be subject to appeal, which would be the normal legal right of one or other of the parties to seek leave to appeal. And if that’s the case, then it’s not actually clear whether the exclusion that’s currently set out in new section 26 would actually continue to apply. I suspect it would, and perhaps at least for the sake of clarity for those who are particularly affected by that case, the Minister might be able to provide a view to the House for the sake of the record.

Similarly, in relation to the case itself, there might be ancillary matters, there might be related proceedings, there might even be different entities that become a part of this legislation—they might get joined at some other point in the process. It might be also, just off the top of my head, that the particular company that’s listed there as one of the parties might—and I suggest this not as a real possibility with any knowledge of that possibility—in general terms go into liquidation or receivership and, therefore, might be somewhat outside the effective definition within this Act of that matter that is excluded from its effect.

Similarly, the Minister of Energy and Resources might become a different entity by reason of—and I don’t mean the person herself in this case, but it might be that a different ministerial portfolio is created such that, actually, a different party to the proceedings would, effectively, be substituted. And I think that in the Act, if we’re going to go to the trouble of spelling out for very good reason that a particular set of proceedings is excluded, we might as well be precise about that.

Another related issue arises, which is to say that similar issues to this with the same justification for exclusion might arise, bearing in mind that this bill amending the Act will, basically, come within the limitation period for such issues. So I wonder if the Minister can advise whether she has given any thought to, or her officials might be able to give any advice on, whether similar cases to that might be precluded similarly.

Finally, as we’re competing for attention with the Melbourne Cup, I’d like to finish with a few more general remarks. It seems that the Government has its blinkers on. We can talk about that till we’re hoarse but, effectively, it’s an exercise in unbridled power, the way this has gone through. They’re jockeying for position on the world stage. It’s policy on the hoof. They should be reined in. They’re looking a gift horse in the mouth for this part of our economy. That’s seven horse puns on the trot—sorry, now eight—and I’m happy to be one of the “neigh-sayers”.

I call the Hon Megan Woods with some trepidation.

With some trepidation! I’m not going to continue the puns, but well done to that member.

Look, there are a couple of questions that have been raised in this part of the bill that I want to address. I’m going to start with one of the last ones that was raised by the previous speaker that just sat down, Chris Penk, which was around new section 26, in terms of whether another Minister could be substituted into there. I’d like to reassure that member that that’s a very specific clause that is actually about proceedings that are currently under way. So it’s related to one very particular set of circumstances.

Some other questions have been asked about what a “just transition” is. Well, I think that it is actually worth spending a bit of time talking about that and how it relates to this part of the bill, because a just transition is a transition where a Government is taking a long-term, managed approach; it’s not waiting for things to magically happen. It’s seeing that there is change coming down the economic line. We can see that fossil fuels are coming to an end in our economies around the world, and Governments all around the world are grappling with these questions. We have the opportunity here in New Zealand to get on the ground along with our regional economic development programme and plan for what the future industries are that need to replace those fossil fuel industries that are going to be displaced.

Not only can we think about what the regional economic development is that we have to do in that area—what are the businesses that we need to encourage, what does the Government need to stand alongside, what does it need to do to help, and we’ve already seen some small investments through the Provincial Growth Fund in this area—but we also can think very carefully and in a very managed way around what skills training requirements are going to be in that area. Although just about everybody who currently works in the oil and gas industry will be able to finish their careers working in the oil and gas industry, we are planning for future generations and the fact that we need to make sure that new industries—that we are planning for in that area, so that Taranaki can continue to be an energy leader for New Zealand, and that we have a population that is well placed to take advantage of the opportunities that are coming down the line.

I’m very pleased to say that this Government has already established a Just Transitions Unit. It’s on the ground, it’s working away, it’s doing some incredible work, and we’re seeing some really positive things come out of there.

I’d like to also address the question that was asked by a couple of members, but by Jonathan Young firstly, around clause 23(2)—and I think David Seymour also asked that—asking whether existing permits would be able to apply for applications. Now, it’s existing permits as they exist—that’s exactly what the clause says. So it’s very explicit there. I mean, new permits, obviously, will be treated differently. So the current conditions are that an application has to be made on very tight, very specific grounds in terms of applying for an extension of a permit. We set out, in terms of this tranche one of the changes, to do the bare necessities to put into effect the announcement we made. One of those was that existing permits would be honoured. So the member is correct in his assessment of that.

So just to clear up any discrepancies that might be there: under the current work, existing onshore permits can extend offshore and onshore —that’s under the law as it stands before the amendments are made. An existing offshore permit can extend offshore and onshore. But, under the amended legislation that we’re debating here today, a new permit cannot extend offshore, but a new permit can extend within the onshore area as per the clause in Part 1 of the legislation.

Now, we had some members say that this meant we were talking out of both sides of our mouths. This was saying that we were talking big, but we weren’t actually doing what we were. I thought David Seymour was about to table an amendment for us to go further, as many of the submitters who came ahead of this this bill did. But we made an absolute commitment to permit holders at the time of the April announcement—and, actually, before the April announcement, when the Prime Minister was talking publicly about this and I gave a speech to the Petroleum Exploration and Production Association of New Zealand conference prior to that announcement—where we talked about change coming, but that existing permits would be respected. That is exactly what we’re doing here with this legislation today. What we’ve also said is that there is tranche two of changes, where there does need to be a conversation within the new environment that we can manage permits. That’s a conversation that we’ve talked a lot with industry about, and that we’re willing to have under tranche two.

Now, Andrew Falloon, being a local member of Parliament, also raised a very local issue for him about some concerns that were raised around further investment in some of the exploration prospects and the ability of investors to invest in them. Well, I’d like to reassure that member and other members that I have met with many of the current permit holders. They have told me that they are getting some signals from the international investor community that they’d like to get some clarity. The Prime Minister and I both agreed that we would write to individual permit holders, spelling out exactly what the decision was and the fact that existing permits were to be honoured. This was appreciated by the industry and it has been proven useful.

What Andrew Falloon was also addressing in there was something that I have talked about with a number of permit holders in the industry body now, and it’s the reason why I’ve agreed to—on a case by case basis—consider a two-year-type pause on the drill or drop provisions so that there is more time for people to consider their options and to reconfigure the way in which they do things. That is something I have invited permit holders that would like to consider that to do—to come in and make a case and we can see if there is anything we can do. This is not about an indefinite extension. This is about a two-year - type extension where a business can reorganise itself for that smooth transition. We know that in order for this to be a smooth transition, we need to be making sure that we are working with not only the industry but also communities and wider stakeholders.

One of the things in this debate that I think is a bit regrettable is that there seems to be a perception that industry is the only stakeholder. I think we saw from the number of submissions to select committee, the thousands of submissions overwhelmingly in support—with a majority in support—of the legislation, that there’s a very wide range of people who feel they are a stakeholder in this issue, and that is something we need to consider. So they’re the questions that have been raised within this part of the bill, and I look forward to the debate continuing.

Thank you, Madam Chair. And I’d just like to add to Mr Chris Penk’s puns. I think this Government’s actually having a bob each way!

I was trying to look at the different parts, as I wasn’t part of the Environment Committee and was wanting to get myself familiarised with the Crown Minerals (Petroleum) Amendment Bill. Looking at Part 1 and Part 2, I’m sort of at a point where I think that, in one corner, the Government wants to end exploration; on another point, they want to continue. And I’m sort of thinking: which one are they actually talking about? I was getting a little bit confused.

In terms of what the Minister actually talked about when she said “just transition”, I guess it’s about where one looks from—where the perspective is actually coming from. When the Minister talks about the transition to an industry that is going to be hugely impacted, I don’t think anybody will be using the terminology “just”. You cannot have a just transition when there is a huge loss of jobs. And the question that I’d like to pose to the Minister, in terms of how little the impact to the economy is that she’s actually suggesting—that the economic impact of this decision is actually not going to change or impact on Taranaki, she says—the Taranaki region has the highest per capita GDP of any region in New Zealand; can she guarantee that the decision that she’s actually made and the decision that this Government has made is not going to impact on Taranaki having the highest per capita GDP of any region in New Zealand? It’s the best.

What about the Taranaki region having the highest average wage of any region in New Zealand? Can the Minister guarantee that the decision to stop—this particular legislation—is not going to impact on Taranaki having achieved so far the highest average wage of any region in New Zealand? Can she also guarantee that oil and gas actually accounts for 54 percent of New Zealand’s primary energy supply? How is she going to replace that? She says she’s actually going to be replacing it with clean energy. Considering the fact that earlier, during question time, I think it was, Mr David Seymour talked about 120,000 tonnes of coal that is actually coming in from Indonesia, I wonder how she can explain that when she talks about how, when she ends exploration, she’s going for the clean energy option, and we’ve got a situation where companies are importing 120,000 tonnes of coal. Oil and gas actually currently accounts for 54 percent of New Zealand’s primary energy supply. I’m not so sure whether this legislation is actually a good option to actually go clean. I don’t think she can actually guarantee that.

How about the oil and gas sector generating 4,600 jobs directly and supporting 11,000 jobs indirectly? Can she guarantee that those 4,600 jobs will not be canned? Can she guarantee that 11,000 indirect jobs will not be canned as a result of this Government’s policy on the hoof? I’m not trying to make a pun here. This seems to be characteristic of the decision that this Government makes: no Cabinet decision, no cost-benefit analysis by officials. I think one of the things that I actually read was that the regulatory impact statement assessment shows that ending offshore block offers is likely to cost this country $7.9 billion in lost revenue and, potentially, up to $23.5 billion. That’s actually more than two Auckland Harbour Bridges. Can the Minister actually guarantee that we are not going to lose that kind of revenue—the revenue that this country so needs to cover at least 316,000 hip replacement surgeries just for $7.9 billion? That’s actually a home for every homeless person in Auckland.

Thank you, Madam Chair. I’d like to take a call to speak directly to the comments that the Minister in the chair, Megan Woods, made when she last spoke. It was in the context of a question around a just transition, and she said that the whole purpose of a just transition and, indeed, the policy intent that sits at the core of this legislation is for the Government to look ahead and see where the changes, the big geopolitical and environmental and economic changes, are going to occur and get in front of that, and to assist the economy to move at the pace necessary to do that in an appropriate way. She said—and I quote—“The era of fossil fuels is coming to an end.” That, I think, is the most explicit statement today around the Minister’s and this Government’s view around the place of oil and gas not only in the New Zealand economy but in the global economy, despite the fact that the data is so clear that the demand for oil and gas, in particular, is going to be significant over the next 20, 30, 40 years.

So what this actually is is not a conversation around climate change or managing emissions; it is “We are opposed to the extractive industries and, in particular, we are opposed to the future of hydrocarbon.” There is no reference in this bill to the opportunity for innovation to be applied to the sector to enable cheap energy to still be a part of the mix globally but to have a reduced emissions profile. We get touted hydrogen as the solution. It may well be part of the mix; I expect it will be. But to assume, as she has said here this afternoon, that oil and gas have no future—and that is the intellectual rigour that is underpinning this bill and her comments—quite frankly is a disgrace. Show me data, Minister, which says oil and gas will not be a part of the global economy in 2050. Show me it. Table it. Say, “Look, New Zealand. This is the future we’re prepared to anchor your lives and economic opportunity to.” The data doesn’t exist.

She will show you a build in renewable energy—that’s fine from a very low base—but that same data will say that gas is a critical part of the global energies mix in 2050. Why? Because all those developing countries will be moving from coal to gas, a huge commercial opportunity for most gas producers in the world, now except New Zealand—now except New Zealand. The Government’s view of just transition is some two or three bureaucrats in Wellington coming up with $50,000 grants that Shane Jones can wave around. With respect, that is hopeless. We are not talking here about some sort of theoretical exercise; these are people. This is an economy, OK? This is an economy that will continue to be requiring hydrocarbons. There is no impact on demand; in fact, when petrol prices rise to $2.50, the Prime Minister says, “This is appalling. We need to look at the margins, because everyone’s hurting.” Goodness me. There is no intellectual coherence at all in this debate from the Government side. “We’re anti oil and gas. We see no future for hydrocarbons despite the fact, actually, that global demand is clear.”

A just transition? A just transition—having a couple of public meetings, eventually, in Taranaki, saying, “Oh, look, we’ll try and find a cycleway, $50,000”—

💬 Lawrence Yule: A church.

A church. I mean, with respect, how on earth can you frame up a policy response to one of the more critical issues of our time—climate change—and frame it like that when the impact on this country’s emissions will go the wrong way? Our ability to contribute to the developing countries’ world emissions profile and improve theirs—we don’t participate in that, because we’ve ceded that opportunity to all the other gas explorers of the world. As they say, there is no rigour in this at all. There wasn’t when the decision was made. There’s no supporting analysis from officials that says that we should be doing this. This is just sloganeering, and when actually put under the test, the Minister stands up and says, “Actually, from our perspective, there is no future in fossil fuels.” Well, tell that to the other 190 countries out in the world.

Thank you, Madam Chair. Following some of my colleagues’ comments—because I do think this is at the very core of what this bill is about; it’s the process of transition—I think that what New Zealand needs is not a “just” transition that everybody is confused about, but we need a “smart” transition. We need a transition that is comprehensive in its planning and in its consultation. We look to exemplars around the world, like Norway, who have very high uptake around electric vehicles, who have 100 percent renewables, and they do all of this on the strength of a hydrocarbon industry, who are now using those resources to invest and become international leaders in offshore wind generation, and from that the development and the production of hydrogen that will flow from some of those redundant offshore platforms in the North Sea. So people are using smart opportunities. People are consulting.

If you go and look at the definition of “just transition”, it says at the very beginning, at the front end of this, is a thorough consultation process. That is essential, because what we have today is a bill that protects the past but completely changes the future, hoping that this will make a way for Taranaki. But it’s through the people in the past—the Statoils, now called Equinor, who now are not just a hydrocarbon company but an energy company—that we see those transitions take place; that happen not driven by legislation—

💬 Kiritapu Allan: What’s the reference to Part 2? It’s very narrow.

—we are talking about what the Minister raised—but that happen because of a desire in companies to be relevant, to be purposeful, and to support their countries and economies. I think it’s a really important thing that we look at this.

I think that, in many regards, yes, I am pleased that there are provisions to protect those past permits and those companies that will, to some degree, be able to carry on with their permits in a business-as-usual case. But what we have are existing operators—people like Methanex, people who want to bring in carbon capture technology. They want to be able to better utilise the carbon dioxide that comes from their processes, and they want to be able to convert that into methanol and be able to not have those types of emissions happening in our climate and in our atmosphere.

So what is important is not just a just transition for the workforce, but if we were to do exactly what a just transition says, and that is to do a thorough consultation before—before—decisions are made, what we might learn is that there are technologies and that there is potential investment to achieve the very goals that this bill has as its policy statement, as its background. In order to do that, what it takes is it takes a Minister and it takes a Government to have the willingness to consult.

I’m very pleased to hear that there will be a thorough consultation around tranche two. I think that what people wanted was the thorough consultation around tranche one, and I think that if we had had that, then we would’ve had probably a far more steady process and a situation where companies would see a stronger future heading towards a low-emission economy, which everybody supports. I think that we have lost an opportunity—we have lost an opportunity—because the Government have rushed at this. They haven’t done the consultation that a just transition predicates.

What we need is a smart transition. We need a transition where people can stop, take a breath, think, consult, and consider. None of this has happened, and what we are left with, with all due respect, is poor legislation. It might be taking a hammer to a walnut, crushing it and thinking that we have made some significant difference. We have made no difference. All we are doing, when it comes to a high-cost transition to a low-carbon future, is making this country and people poorer. We won’t achieve it.

I move, That the question be now put.

Thank you very much, Madam Chair. I just wanted to make a short contribution on Part 2, so I’m grateful for this opportunity. Part 2 talks to a provision to protect existing or lodged applications for mining consents or exploration consents, and it talks to the existing permits and says that they continue to have the same effect as if this bill was not enacted. However, it talks also about applications that were submitted but not processed, and they’re being determined—so applications that were lodged or submitted but not determined before the commencement of this bill are going to be treated as having been withdrawn. So any applications that have been in the pipeline that haven’t actually been processed are going to be withdrawn.

Now, I thank Minister Megan Woods for her feedback on some of the questions that we have had this afternoon during this debate, but there was one outstanding one that wasn’t addressed, and that was my referral to coal-seam gas. That was an issue that was raised with me locally—

CHAIRPERSON (Hon Anne Tolley): That’s Part 1.

—and so I’d appreciate the Minister’s feedback on whether coal-seam gas is going to be captured by this bill and be disregarded.

I do also want to point out that in 2013, there was a visit to the wealthy sultanate of Brunei during the East Asia Summit by the then Prime Minister John Key. Back then, he said to us that “This is a country, that’s national income is dominated by the fact that it has very large oil and gas reserves,”—he was talking about Brunei, the fifth-wealthiest nation on the planet. Then he went on to say “We have 18 basins (in New Zealand) that are prospective from an oil and gas perspective and only one of those [are currently being tapped] into.” That is the potential of the sector to New Zealand that we have just had the curtain pulled down on.

Now, when you drill down into it, the world is not always seen through green-tinted spectacles, and we don’t all have the luxury to be able to do that. Some of us actually live in real New Zealand. We live in provincial New Zealand, not in the suburbs of Wellington, and certainly not in Auckland City. In regional New Zealand, in the provinces, we make a living by working hard and extracting something, farming something, or producing something. That’s real New Zealand. Now, that’s the real world, and it’s a very long way from the safety of Victoria University, where the Prime Minister chose to make this announcement. But by shutting down this industry here in New Zealand, we are shutting down the potential for our country to be prosperous.

Now, I do want to make note of one submitter in reference to Part 2 of the bill about existing permits. As has been well articulated already today by some of our colleagues on this side of the Chamber, it’s all very well to say that if you have an existing exploration permit, that is safe, but the cold hard reality is that there will be no investment partners who will come and invest here in an industry that has so much disorganisation and uncertainty associated with it. In fact, one submitter even took the opportunity of giving notice of their intention to sue the Government for the $104 million worth of their assets that are now going to be abandoned.

So we are very concerned about the ideology that is driving this, especially from a party and a Government that has so many times professed to be the most open and transparent Government this country has ever seen. Well, we are still to see that realised in the real world. It’s another ad hoc, on-the-hoof decision that’s been made. It’s going to have overwhelming impacts for this country. It’s going to deliver no benefit to the environment.

I move, That the question be now put.