Crown Minerals Amendment Bill

Thank you, Madam Chair, for the opportunity this morning to speak on the Crown Minerals Amendment Bill. I sat on the Economic Development, Science and Innovation Committee, which considered this bill, which was very ably chaired by Jonathan Young. We took our time with this bill. We certainly gave it a lot more consideration than other Crown minerals amendment bills that have passed through this Parliament in recent months.

I wanted to ask the Minister some questions, and I’m sure the Minister who has just taken the chair, the Hon Phil Twyford, will be able to discuss with officials my questions and find out some responses to those. I wanted to specifically start with clause 14, which inserts new section 54A into the Crown Minerals Act, and it relates to access to schedule 4 land. We did make some amendments to this new section 54A at the select committee just to clarify its purpose, but it goes on to say that “Despite sections 53 and 54, if a permit relates to land in the common marine and coastal area that is described in Schedule 4, the permit holder may exercise the permit only—”, and then it runs through a series of requirements.

So my first question to the Minister in relation to that is: that discussion of schedule 4 and permits on schedule 4 land intrigued me a little bit, because, as members probably on both sides will call quite strongly, a few years ago there was a very loud debate about what activity should occur on schedule 4 lands. So I went off and did a bit of my own research and found that there are at least three mining permits that I could find for mining permits on schedule 4 land. The first one is in relation to a public recreational gold mine on a river on the West Coast. Then, in 2000, there was another one—obviously, under the previous Labour Government—underground mining for quartz, gold, silver, and clay at Broken Hills in the Coromandel. And then, in 2005—another one under the previous Labour Government—gold and gemstone stone mining in the Hutt River and the Paparoa National Park.

So I was able to find those three. So my first question to the Minister is: what other mining permits do exist presently on schedule 4 land, or what mining permits have been granted previously on schedule 4 land? Because if we’re going to be discussing schedule 4 in relation to activity about mining permits, it would be useful to know from the Minister what mining permits do currently exist on schedule 4 land.

The second question I had for the Minister is in relation to his powers over consent to change of control of a permit operator. Again, it’s new section 41AE in clause 8, and it refers to “When Minister may consent to change of control of permit operator”. Subsection 1 refers to the permit holder, given the proposed change in control—they’re required to, first of all, have the financial capability to meet their obligations under the permit. So the Minister has to be satisfied that they have the financial resources or capability before he is satisfied that a permit can be changed. So my first question in relation to that, to the Minister, is: how will he determine that, or how will she determine that, in this Government’s case? What is the metric that they’ll look at to decide whether or not they have that financial capability? Is it around the business nous or the qualifications of the people who run that organisation or company or entity, or is it in relation to sufficient capital—is the business sufficiently capitalised that if there was to be some sort of problem that arose, they would have financial resources sufficient enough to throw at the problem to fix it?

There’s also a couple of other requirements that the Minister needs to be satisfied with: first of all, that they’re likely to comply with and give proper effect to the work programme for the permit, which is sensible; and the third is that they’re likely to comply with the relevant obligations under this Act or the regulations in respect of reporting and the payment of fees and royalties, which, again, is quite sensible.

The next part, though, goes on to talk about the Minister needing to be satisfied that they’re likely to meet health and safety requirements under the Health and Safety at Work Act 2015. So my last question to the Minister is: how will that be determined? How will that be assessed? Will it be by the Ministry of Business, Innovation and Employment (MBIE), as the agency that she is responsible for in this respect, or will it be an organisation like WorkSafe? And if it is WorkSafe, will they be resourced, or is she satisfied that they are sufficiently resourced to be able to go into those businesses and assess that they are likely to live up to the obligations that are required by them under this new part—that they can meet the health and safety requirements under the Health and Safety at Work Act? Will it be MBIE or will it be WorkSafe or will it be another organisation? Thank you, Madam Chair.

Thank you very much, Madam Chair. I’m pleased to stand and speak here on the committee stage of the Crown Minerals Amendment Bill. This is a bill which commenced its life and journey under the previous Government and is carried on by the current Government, and it does address some pertinent issues. We have received Supplementary Order Paper 182 from the Minister of Energy and Resources, which seeks to bring alignment between this bill and the Crown Minerals (Petroleum) Amendment Act that passed just recently, in order to bring just a correct alignment, because the petroleum amendment bill—well, the Act now—is in play and we need to ensure that this is aligned.

So in regard to this particular stage, some questions that we would like the Minister to consider are in terms of the change of ownership of operator. We would certainly be keen to hear around the provisions that create an exclusion for OMV, who were in the process of change of ownership from Shell to themselves prior to the bill coming to the House, and we would seek assurance that that exclusion and provision is still robust or continues as they go through their final stages of their change of ownership. The change of ownership, of course, is a very important aspect in the petroleum space, in particular to have Government oversight, and it’s pertinent that this bill actually addresses that and, in particular, focuses on those transitions of operator. So it’s pertinent to understand that the Economic Development, Science and Innovation Committee have spent considerable time looking at this bill. Even though it’s particularly short, it does address those issues.

Just in regard to the previous speaker Andrew Falloon’s question regarding financial capability of new operators who come in, and the question about what the test is of that, I would also like the Minister, if possible, to answer the question around the financial but also operational capability of those companies that take operator control when it comes to the end-of-life decommissioning of a field. Of course, we have an example of that in offshore Taranaki, where the interests of AWE have been passed through to Tamarind, and Tamarind have specialist capability around decommissioning end-of-life fields. They have that ability because of their niche operations and because of their expertise to be able to bring further resources and capability on those fields and to bring those further resources to market.

So I would be interested to hear from the Minister, if possible, just around decisions, particularly for companies who take over operator control who have a specialist field in end of life or the decommissioning of a field, just what the criteria are and how they ascertain that they have that capability. The reason why this bill came to this House was because there was a concern that if a company did take over operator control of a field and they didn’t have that capability to do the decommissioning as required, then the costs of that would fall to the Crown. That, of course, is a concern, and it’s also a concern to other companies in the sector, in the industry, because they did not want to suffer reputational risk regarding that. So, if possible, can the Minister please give us some greater clarity on the assessment when there’s a change of operator, particularly around an operator coming and starting to work on a field that’s at the end of life.

So there are a number of fields, of course. There’s the Tūī Area field. There’s the Māui field. Those would all be considered to be mature fields. They’re all offshore fields. So there are considerable—[Time expired]

Thank you very much, Madam Chair. As I start my call on Part 1 of the Crown Minerals Amendment Bill, I’d just like to make note of the process that has been followed by the Economic Development, Science and Innovation Committee, in particular the work done by the Ministry of Business, Innovation and Employment (MBIE) prior to the preparation of this bill. Quite often we see, as the select committee process progresses, that there are issues raised that quite often set back the process and require further information. So I congratulate MBIE on the thorough work that was done in preparation of this bill, in particular the work that they did in consulting with the various sectors that are responsible for Crown minerals—even the Department of the Prime Minister and Cabinet—but they also went on to consult with the Petroleum Exploration and Production Association of New Zealand, Greymouth Petroleum, and Straterra regarding certain clauses in the bill. So I just wanted to acknowledge that before I started. Thank you for the opportunity.

I wanted to also bring up the point raised by my colleague around new section 54A in clause 14 of the bill. New section 54A talks about schedule 4 land. Part of the consultation that was done—I’m not sure it covered off the implications of the schedule 4 land. In particular, I want to point out the parts that refer to accessing coastal areas.

As a big part of the gold mining industry on the West Coast, black sand mining is quite a lucrative but also a fickle arrangement given that you are always battling with the tides. So I just wanted to make sure from the Minister in the chair, Phil Twyford, whether the implications of dealing with machinery and any of the, perhaps, biosecurity issues that may be as a consequence of having this heavy machinery on beaches in the coastal areas were a concern that was raised.

I did note also in the report from the select committee that the issue was also raised about biosecurity, and I note from the report that the transport of machinery around various mine sites was seen by some submitters to be of concern, yet the Crown Minerals Amendment Bill did not address any of those biosecurity issues. I just take the point that when you’re moving from, perhaps, one beach site or one bush site and you’re taking heavy machinery to another site—one of the points raised was around kauri dieback and transmitting those biosecurity risks around the country. So the bill did not address that, and I just wonder if the Minister could perhaps shed some light on the rationale for that not being part of the discussion at the time and whether he does in fact think that there should be some attention paid to that as part of this bill.

The bill makes very small adjustments to the existing Crown Minerals Act of 1991. One of the major considerations and changes that have been made is the cost of the penalties now going up to $800,000, and I just wonder whether the Minister could enlighten us about some of the considerations or perhaps provide an example of what might attract the maximum penalty. I do note that it is up to $800,000, but it does seem a high price to pay for, perhaps, an administrative error or non-compliance in terms of notification to the ministry. I just wonder if we could get some clarification around the types of misdemeanours that might attract that high $800,000 fine. Thank you.

Mr Chair, thank you for the opportunity to speak at the committee stage of this bill. I thank us for having a Minister in the chair, Phil Twyford, although some of the technical things, even with the greatest capability of the Minister, may be beyond him.

I am going to specifically focus on new section 41AE, inserted by clause 8, which is really about when the Minister may consent to a change of control to a permit operator. This side of the House, and, I believe, the whole Parliament, is supporting this bill, but there are some really technical issues that this provision, in my view, really gets to the nub of, and they are how a permit holder may be changed and given the proposed change in control. As my colleague Jonathan Young has previously said, in my view, the biggest risk in this space is that the permit holder, in the long term, does not satisfactorily meet the requirements for aftercare and other things such as that. Of course, that relies on all the things that are in this new section 41AE(1)(a), subparagraphs (i), (ii), and (iii), and they are that the permit holder “(i) has the financial capability to meet its obligations under the permit; … (ii) is likely to comply with, and give proper effect to, the work programme for [that] permit; and (iii) is likely to comply with the relevant obligations under this Act or the regulations in respect of reporting and … payment of fees and royalties;”.

If you go further down, under that it says, “Section 29A(3) and (4) applies for the purposes of subsection (1)(b) with all [the] necessary modifications.” I draw to the Minister’s attention a submission that, with the greatest respect, the Minister won’t have seen but is from the New Zealand Law Society. It relates to new section 41AE(1)(b), and it “imposes a test related to the health and safety capabilities of a permit operator that is framed in similar (but not identical) terms to those that apply to the initial [granting] of a permit under section 29A of the [Crown Minerals Act].” It goes on to say, “The provisions of section 41C(3)(b)(i), as they relate to health and safety capabilities, are different again; [and] the latter is framed in more general terms and does not refer to legislation operating in parallel with the Health and Safety At Work Act 2015”. It then goes on to say, “(such as the Maritime Transport Act 1994).” I understand that reference to the Maritime Transport Act 1994 has been deleted, but I’m asking the Minister to confirm that he or she is satisfied that there is complete consistency. I’ve read the report from the Ministry of Business, Innovation and Employment, who believe that a change to the Maritime Transport Act and removing that would ensure some consistency, but I’m just mindful that under the New Zealand Law Commission’s recommendations on 2.18, they say, as I’ve just previously said, it’s “framed in a similar (but not identical) way to the initial [granting] of [the consent]”. Then it goes on to say that “The provisions of section 41C(3)(b)(i), as they relate to health and safety … are different again”.

So we have a number of differences, and what I’m wanting an assurance on from the Minister is that those differences have been tidied up, as has been amended, 41AE. This is about consistency, and it’s about certainty. One of the things we got from most of the submitters in the select committee—and I arrived late on the select committee in this process—was the consistency that needs to apply to give them certainty about investment decisions, and this particular provision and what their roles and responsibilities are under the Health and Safety at Work Act, in my view, falls into one of those inconsistencies. While we’re in the committee stage of this bill and in Part 1, I just want to be absolutely assured by the Minister or his officials that there is complete consistency in terms of how 41AE is handled, because, as we’ve heard previously and we heard in the select committee, a whole lot of things have been done to reduce churn and to make sure that these permit changes and changes of ownership of these permits are done as seamlessly and as timely and as risk-free as possible, both to the company and to the environment. Thank you, Mr Chair.

Thank you, Mr Chair. This is my second call in this debate, and I intend to take a couple more, hopefully. I want to continue on a line of questioning I had previously with the Minister in the chair, Phil Twyford, and I hope he takes the opportunity at some point to address some of the questions that we’re raising this morning.

I want to turn to new section 41AA, inserted by clause 8, and particularly subsection (1)(a) of that section, which refers to “a person … obtains the power (whether directly or indirectly) to exercise, or control the exercise of, 50% or more of the voting rights in the corporate body”, and that refers to a change of control. So my first question to the Minister in relation to that is: will he treat a change of control differently if, for example, someone who is a 49 percent shareholder and is already well established with that entity was to increase their shareholding to, for example, 51 percent? The ownership of the company doesn’t change very much compared to, for example, an entirely new entity coming in and purchasing that entity outright—so that would, obviously, be a substantial change in control. So my first question to the Minister is: when he’s considering if there’s been a change of control and whether or not to grant a new permit to that permit holder, will he differentiate between a substantial change in control versus a relatively minor change in control?

The second question around that is: will he treat a change of control differently if it is a domestic purchaser versus perhaps an international purchaser? If you look around the oil and gas sector at the moment in particular, there is a small number of quite large players in New Zealand, but many of them have quite deep and strong international partnerships with other companies around the world to be able to finance their operation.

So my question to the Minister is: if there is a change of control, will he treat a domestic purchase of that entity differently to an international purchaser of that entity? The question that comes out of that is: if he does treat an international purchase of that entity differently to a domestic one, will he consider, for example, international or things that have occurred offshore perhaps in the environmental space? And, unfortunately, we have seen a number of—a relatively small number of—catastrophic incidents around the world in relation to things like oil and gas. So if he is considering something with the Crown Minerals Amendment Bill where there is a change of control and there has been some sort of problem overseas with an international entity and they are looking to purchase a domestic entity, will he treat them differently if they’ve had a problem somewhere offshore?

While we’re on that same page, I just want to have another brief question to the Minister, which is in relation to new section 41AF(4), set out in clause 8. It says the following applies: “the Minister may, by serving a written notice on the permit holder, revoke the permit with effect on a date specified in the notice if the Minister is satisfied that … (b) the permit should be revoked.” So the Minister has very broad powers under this particular part to be satisfied that a permit should be revoked. And so my question to him, on behalf of his colleague Megan Woods, is: would it be her intention to enter into some sort of discussion with that entity before he decides to unilaterally, shall we say, revoke their permit? Will he enter into correspondence of any kind?

The final question I have for the Minister before he, hopefully, takes his first call this morning is in relation to new section 41AC, set out in clause 8, “Application for consent for change of control” and specifically new section 41AC(2), which says, “If the Minister is satisfied that there are compelling reasons why a … person could not comply with subsection (1)(b), the Minister may receive an application by a later date agreed by the Minister (which date must not be later than the date on which the proposed change of control takes effect).” So my question to the Minister is: what is his definition of “compelling reasons”, because I think members on all sides would agree that there’s quite a difference between what one person would regard as compelling reasons and what someone else would. Obviously, in a lot of laws and regulations we have reference to a “fit and proper person”, but, of course, that definition can be very different from one person to the next. And so my question to the Minister is: what does he consider are compelling reasons why a person could not comply with subsection (1)(b)? I’d be very interested to hear his thoughts, and while he perhaps asks his officials those questions, I’ve come up with some more questions for him. Thank you.

Thank you, Mr Chair. It’s my pleasure to speak on this bill here that we’re looking at: the Crown Minerals Amendment Bill in the name of Dr Megan Woods. What we’re trying to achieve through this legislation is to amend the Crown Minerals Act to maintain the effectiveness and efficiency of the permitting regime established by that Act. Dealing with Part 1, there are a number of specific measures, which we have broad support for, which are designed to give more clarity around different elements of this legislation.

One example is late applications for consent to change of control. So this is to make it clear that a late application for a change of control must be made before the change of control is complete. Now, there have been lots of arguments about this particular instance over the years, and so this legislation, or this change, makes it clear that a late application cannot be made once a person is already in breach of the rules. So in respect of general regulations and laws that govern the economy and different parts of the economy throughout, the most desirable thing is to have clarity around what the law actually means. Poorly drafted legislation leads to uncertainty, and in this industry, like many industries, when we’re talking often about millions of dollars of investment over a very long period of time, the importance of certainty and clarity around what the law is requiring and saying is important.

The interesting thing, though, that I find about this is—and I’ve been looking at the departmental disclosure statement, which is very thin, and it deals with the impact analysis that’s been done on this legislation in Part 1 that we’re looking at the moment—is there analysis available on the size of potential costs and benefits of the change? And the answer to that is no. So one of the obvious questions I have for the Minister is why there was no analysis done of the costs and benefits of the proposed changes in Part 1 and throughout the bill, because, you know, I think that’s a basic practice that we should have, and it may be that it didn’t cross a particular threshold requirement—I’m not sure.

The potential for any group of persons to suffer substantial unavoidable losses—the answer to that is no, so maybe that’s the issue, but I’d like some clarity from the Minister around that. Also, it says, “For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by: … (b) the nature and level of the regulator effort put into encouraging or securing compliance?”. And the answer to that is no, and I just like some clarity around that from the Minister as to why that is the case. I would’ve thought, if we’re making a new law in this area which is intended to clarify what the law actually means, that it will have consequences.

The other point I wanted to draw attention to was the external consultation that went on, because the department has made it quite clear that the departmental consultation on the draft bill has taken place within various ministries—and that’s all very well; you’d expect that—but also targeted stakeholder consultation has taken place with the Petroleum Exploration and Production Association of New Zealand (PEPANZ), Straterra, Greymouth Petroleum, and other areas. Of course, this is what we would expect—that if you’re having legislation that affects an important industry for New Zealand, the Government and ministries would consult with the people most directly affected by it.

I just can’t help but make the obvious observation that this is in marked contrast to the way that the Government handled the broader oil and gas changes that have been brought through this House in previous months, where a massive change to the industry was brought through in the absence of any meaningful consultation with the sector that was affected by it, and that was an appalling piece of legislation. This particular legislation, which is much more minor, much more targeted and focused on dealing with a couple of particular aspects in relation to the Crown Minerals Act, has been dealt with, it appears, in the normal way of actually consulting with the industry, and I’d just like some clarification, if I could, from the Minister, that indeed that when we talked about targeted consultation—[Time expired]

Thank you, Mr Chair, and I’m pleased to see we’ve had a change of Minister in the chair, because, unfortunately, the previous Minister, Phil Twyford, didn’t take a single call. We’ve put in, I think, quite a few very important questions to the Minister this morning in relation to this bill, and the Minister hasn’t taken a single call yet to clarify the queries that we have and to answer the questions that we have, which I think is very disappointing.

I just want to take issue with what my colleague the previous speaker, Paul Goldsmith, actually said. He said this was quite a minor bill. Well, I actually think it’s quite important. There are a number of very important questions that we have in relation to this bill which I think are important for the Minister to respond to, because if he doesn’t, then it doesn’t have the adequate process around it, and that’s a very, very disappointing aspect for democracy. So I do just want to put a couple more questions to the Minister this morning, and I hope he takes the time to respond.

The first one of those questions is in relation to new section 41AB(4), set out in clause 8, and this says, “The permit [holder] must notify the Minister in accordance with subsection (5) if—(a) subsection (2) is contravened; and (b) the permit [holder] knows, or ought reasonably to know, that it has undergone a change of control.” So my question to the Minister is in relation to the word “reasonably”, because I get very nervous when I see reference to “reasonable” in legislation. As I was referring to in a previous contribution, it is very difficult for us to know what the definition of “reasonable” is, because “reasonable” can mean many things to many different people. So my first question to the Minister is: in relation to that word “reasonably”, how will that be determined and by whom? Will it be solely by the Minister, or will it be solely by officials, or will it be by officials providing advice to the Minister who then, ultimately, makes the decision?

As we know, in Government there are a range of processes—immigration, as an example—where some of the decisions are, essentially, delegated by the Minister to other officials. That could be the case here with the Crown Minerals Amendment Bill, or it might be that they have to go to the Minister for final sign-off, as we saw with a recent decision by the Minister of Immigration, which I won’t refer to because it doesn’t relate to the Crown Minerals Amendment Bill or the Crown Minerals Act. But it does raise a query or question, which is: how will it be determined, by whom, and what process will the Minister go through to get there? So I’d like an answer to that question this morning. It is a very important one.

There have also been a number of other questions raised by me in relation to the change of control, which I think is really at the heart of this, because the change of control element is what this legislation’s all about. It was, in fact, the very reason that this legislation came into being. There are a number of other aspects, contained particularly in Part 1 of the bill, which is the essential part, but the change of control is at the heart of the bill. There have been a number of questions put to the Minister in the chair this morning about how the change of control will be determined and whether there will be differences between a domestic purchaser and an international purchaser, for example. So those questions are very important questions, because they do go to the heart of Part 1 and to the heart of the bill.

So I hope that the Minister takes the opportunity to respond this morning not just to my questions that I’ve put to him but, I think, to the very good questions that particularly the Economic Development, Science and Innovation Committee chairman, Jonathan Young, has put to him. As Jonathan said, we did take a lot of time with this bill. It was a very lengthy process over quite a few months, which is in stark contrast to another Crown minerals amendment bill that’s passed through Parliament in recent months, and so we gave it the scrutiny it deserved. We took several months to assess that bill, and so I think it’s beholden on the Minister to acknowledge that process, actually, that we took to go through the Crown Minerals Amendment Bill, and to take a call this morning and respond to some of our questions. Thank you, Mr Chair.

Thank you very much, Mr Chair, for the opportunity to speak again on the Crown Minerals Amendment Bill. Look, we understand if we look at section 41AC, inserted by clause 8, “Application for consent for change of control”. In section 41AC(2), “If the Minister is satisfied that there are compelling reasons why a relevant person could not comply with subsection (1)(b),”—that (1)(b) refers to notification or application for consent from the Minister must “be made at least 3 months before the date on which the proposed change of control takes effect;”.

There are times when the control of a company takes place quite quickly and it’s often unknown by the directors of that company, such as a takeover where shares are traded. Some of the companies that operate around New Zealand are not publicly listed, so they’re not on the share market, but some are. Obviously, around the world, they’re publicly listed petroleum exploration production companies, and they are subject to potential takeovers through the share market. So a change of control can happen that is not, essentially, foreseen or planned or in a methodical fashion and manner, and, if that does occur, then they are in breach of this bill, because they have not, obviously, and could not have, informed the Minister and applied for approval to do that change of control.

So there needs to be an opportunity for a retrospective application. Obviously, when that takes place, and I believe that in this subsection 2: “If the Minister is satisfied [that] there are compelling reasons why a relevant person could not comply with subsection (1)(b),”—that is three months’ notice—“the Minister may receive an application by a later date agreed by the Minister (which date must not be later than the date on which the proposed change of control takes effect).” So what I’d like to know is that those changes of control can happen so quickly, and, if the letter to the Minister needs to be before that change of control takes effect: what if it takes effect through the sale and purchase of shares on the stock market and there is this shift of control?

So we obviously need clear provisions—and I believe there is discretion in this Act, because it’s something that we raised at the committee with the officials. But it would be good if the Minister could be quite precise and bring some clarity around this, around: is that a compelling reason why a relevant person could not comply, and what sort of discretionary process takes place—especially if that change of control has already historically taken place through that sale and purchase of shares? Is there a time frame? Is there a responsibility to, forthwith, in the fastest possible way, process that? Because we do not want to find companies who, in all good faith, see these sorts of activities take place in terms of a share sale and purchase, who then come into breach of the Act, as it will be, who then can have their permit revoked. We need all of those processes clarified as best as possible—that there is going to be a provision for those sorts of processes and, probably, abnormalities of what normally would happen in the sale and purchase and the change of control of, especially, a petroleum exploration and production company.

Thank you, Mr Chairman. I appreciate that the previous speaker was asking legitimate questions, and I think I’ll try and take the opportunity, even though I’ve come into this relatively late. It’s a piece of legislation the previous Government brought forward in an attempt to clarify the whole process, and I can vouch for the fact that it’s been imperfect, the Crown Minerals Act permitting regime, for many years, so we believe this is progress on it.

Can I address the issue of compelling reasons. I understand that the Act, at the moment, has a definition of “compelling reasons” in it, so we’re not inventing something new here, and the Minister will probably take guidance from the same set of criteria—that is, what is compelling or not—when making the decisions. One of those reasons is, of course, if the information wasn’t available. So that’s a fairly legitimate one. If the Minister can be convinced that that was the situation, clearly it would be a compelling reason.

Can I say that in terms of his reference to a change of ownership happening very, very quickly, if anyone is to buy shares or buy a company and not do some kind of due diligence, then they deserve what they get, quite frankly. If they haven’t looked at the company and all its potential and its permits and the status of those permits, perhaps, then maybe they shouldn’t be so quick to make the purchase—take some more time. So I think it’s fairly legitimate to ask of someone that they, you know, prior to the end of consent, then request a change of ownership. I think that’s perfectly reasonable.

If I can, without specifying particular cases, say that, you know, there’s been a bit of gaming and wheeling and dealing around these permits over the years, and I think that Government—previous Governments, and probably ours, too—is to have legitimate utilisation by legitimate companies of the access to the Crown’s minerals. So the gaming that has sometimes occurred, the wheeling and dealing in permits that has sometimes not been very clear, I think needs to be eliminated. We want people to be able to mine minerals for legitimate reasons in a legitimate way and to have access to them in a way that is overseen by Government in the proper way.

I think there have been a few questions asked prior to me coming into the chair. I’m not sure that I’m in a position to answer each and every one of them, other than to say that, you know, there has been thorough consideration. The ministerial oversight, which is pretty important here, is guided by the existing Act, and I think by, I guess, due diligence and by jurisprudence over other parts of the Crown Minerals Act in its history.

I don’t think there’s anything else that I can clarify for the member, other than, I guess, access to legitimate credibility for operators in terms of finance and health and safety. I think it would be fair to say that if anyone has a track record that is not up to spec—that is that they have abused the health and safety system or they’ve gone broke a number of times—then I think it would be fair enough for the Minister to take that into consideration when they are allowing a permit to be transferred. So, fair questions, but I have to say you have to trust the parliamentary system and the Minister in charge at the time, and I’m sure that as long as it’s a coalition Minister, there will be sound judgments made all the way through the Crown Minerals Act.

Thank you, Mr Chair. I just wanted to take a short call and refer my contribution just now to clause 9 in Part 1, amending section 41A, and in particular to subclause (2) in there. I find the numbering and the references in there quite confusing. Subclause (2) talks about repealing section 41A(1) and then, in subclause (3), replacing “section 41A(2) with:”. So section 41A(2) is replaced with “(2) A permit participant must notify the Minister in accordance with subsection (3) if—”, and subsection (3), I presume, is the section prior, which has replaced section 41A(2). So I found myself in a bit of a circular debate around tracking those numbers, but just wondered if there could be some clarification around that.

Also, I would like to get some clarification on exactly what the “permit participant” is that’s being referenced in this particular clause. I’m assuming that it is in reference to tier two permit holders, but I’m just not clear if that is indeed the case. I do note that a tier one is covered elsewhere in this particular bill, being those permits that are of higher risk, likely to be higher returns—we would hope—but also a lot more complex in terms of the oversight that is required from the ministry, but where tier two is lower returns expected, more likely to be requiring less management, a more pragmatic approach to the operation, and likely to be very small and perhaps even hobby operations. So I’m just really requiring the Minister Damien O’Connor, if he could, just to clarify whether this clause does indeed strictly apply to tier two permit holders.

I also take up the point around notification of the Minister, and could we perhaps get some clarity on the time frame around this in this particular clause, if it does indeed apply to tier two permit holders. In clause 9(3), it just simply refers to “(2) A permit participant must notify the Minister”, but, as I said, I found it difficult to track the numbering in there to refer me back to the appropriate part of that clause. Thank you, Mr Chair.

I move, That the question be now put.

Thank you to the Hon Damien O’Connor for his call. I think—just to go back to a question I asked previously, which I’m going to restate—my question was not around whether the health and safety Acts were complied with; my question was around whether in fact, under the rewording of new section 41AE(b), inserted by clause 8, and the striking out of the Maritime Transport Act, all the relevant provisions, as was talked about by the New Zealand Law Society, were now complied with. It was not about whether the Health and Safety at Work Act was complied with; it was about whether there was total consistency with this change and the health and safety Act now that the Maritime Transport Act has been removed. So I would ask the Minister whether he could try and answer that question. It’s probably a simple yes or no answer, but at this stage, I’d just like to understand whether that’s the case.

I also wish to talk briefly on the comment the Minister made about gaming and around the fact that the Minister has some discretion under the compelling reason clause. One of his views, and his comments, was that there is a compelling reason if the Minister doesn’t know or if the entity doesn’t know. I think the issue that was raised by Jonathan Young, which I strongly agree with, was that sometimes power and control changes, particularly in the sharemarket, for a whole lot of commercial reasons. I think the Minister and this Parliament need to be careful that we do not detract from value-based decisions that are made on behalf of entities and shareholders, because somehow they’re going to be trapped later on by this call that they didn’t get prior advice on.

The issue I challenge the Minister with—or “ask him to respond to” is probably a better term—is: if in fact it is known to people and to the market ahead of time that this type of thing is going on, or that there could potentially be a change in control, then that ultimately will get reflected in uncertainty in the market, and then in the value for all the various parties, who may be current shareholders or future shareholders. So I think all we’re trying to get to is if the Minister—and I haven’t seen the version of what a compelling reason is, but whether it’s a valid definition or not, the issue that we’re trying to raise is that sometimes control of an organisation changes at very short notice. If you give people a whole lot of notice or you give people a whole lot of information ahead of that time, the mere fact of that information being known has a fundamental impact on shareholder value and therefore share prices.

I think what we’re trying to get to is to make sure that if there are commercial transactions that occur in a public entity, like through a sharemarket, they are somehow done in an orderly way that means that approval can be obtained late. I notice in the Ministry of Business, Innovation and Employment report, as it was originally written, that they did consider the terms too harsh. There have been some changes to what is suggested now, and we support those, but in reality, we know how markets work. We can sit in this committee and we can make decisions, but at the end of the day, there will be value associated when these transactions occur, and what this side of the committee and what I’m suggesting is that we need to be very clear that we are not undermining or compromising commercial transactions or value.

I accept there is a fine line between that and gaming, but there could be consideration given to specifying in more detail the provision that relates to publicly listed companies and the sharemarket and changes of control that might occur in that way. Without that, it is my view that there could be a distortion in value and market share prices. I would like the Minister to further explain to me that it is a compelling reason—the fact that nobody knew this was going to happen before that day—because if that is in fact the case, then I think it should be spelt out in more detail.

As I’ve said previously, we support this legislation; we’re just trying to make sure there aren’t unintended consequences of what’s going to occur here. In particular, my contribution at this stage is really around publicly listed companies and a degree of change and control in the sharemarket.

Thank you, sir—just some matters which I don’t believe are repetitive but I would like some clarity around. New section 41AE, inserted by clause 8, where the Minister may consent to a change of control of permit operator—in there, it gives us some criteria by which the Minister needs to be satisfied, and here they are here. The Minister may grant that “if the Minister is satisfied that—(a) the permit holder, given the proposed change in control,—(i) has the financial capability to meet its obligations under the permit; and (ii) is likely to comply with, and give proper effect to, the work programme for the permit; and (iii) is likely to comply with the relevant obligations under this Act or the regulations in respect of reporting and the payment of fees and royalties;”. So, in essence, what the Minister is able to do is cast his or her eye across the capability of the new operator as if it were a new permit application. So it’s putting the ruler across them.

What I would like, in terms of that point—who “is likely to comply with, and get a proper effect to the work programme for the permit;”—I’m assuming in this that it is going to be under the work programme, particularly if it’s offshore but it also applies to onshore operations, that the aspect of decommissioning is fully appraised. I understand that under the Petroleum Programme 2013 in section 8.9 on decommissioning, and I just want assurance from the Minister in the chair that that aspect—because there are, as we know, a number of fields that are coming to end of life. And it’s important, because there’s been some wells in New Plymouth around Ngāmotu where hydrocarbons were first discovered in New Zealand. Only in recent years has there had to be—not decommissioning—further testing around the capping of those wells. There’s been concern in some of the neighbourhoods.

It’s quite amazing that on the shore of Ngāmotu Beach back in the 1860s and further 1890s, in particular, oil seeped up through the sands. So that’s why Taranaki is such a rich hydrocarbon basin. But it has been nearly 100 years later that some of these concerns have arisen around some of the wells. And I was there on site with the regional council and Ngāti Te Whiti as they were looking at some of their land where they were proposing to build a marae where there had to be some assurance and some investigation and certainly some investment to find out the answer—whether that well that was there was now safe and secure nearly 100 years later.

So what we need to have the assurance of is that, when there is a change of ownership, there is the capability not just to do business as usual but also, if there’s going to be a decommissioning of a well, whether that’s onshore or offshore, that that company has thorough capability or, if not, that they have the financial capability to bring in those experts who can do that work. We certainly want to know that when a field comes to the end of life, it is finally closed down and decommissioned to the satisfaction of all environmental concerns and health and safety concerns and there’s not going to be issues that come back years later. Certainly, as a field comes towards the end of life, I know that the Ministry of Business, Innovation and Employment, the Government, and the Minister are engaged with exploration and production companies to discuss and plan that process that often takes many, many years.

So I am assuming—it would be good if we could have clarification whether in new section 41AE(1)(a)(ii) the Minister can approve a proposed change of control if that company “is likely to comply with and give proper effect to the work programme for the permit;”. I think “is likely to comply with” is a bit loose. I think that we would like something a bit firmer than that, perhaps “shall comply with”. Thank you, sir.

I just want to focus here on clause 11, which is a good example of the way in which changes in this sort of legislation can lead to unexpected consequences. So the original bill, which was introduced by Dr Megan Woods, said that “An authorisation granted under the section is subject”—this is for authorisation of geophysical surveys on land next to land that somebody has got a permit to do drilling on or some sort of activity. So the original bill suggested that “An authorisation granted under this section is subject to the provisions of this Act as if the authorisation were a permit of the same type as the permit held by the permit holder and referred to in subsection (1).”

Now, the problem with that is that, say you’ve got a permit to do prospecting on land and you’re looking for an authorisation to do geophysical surveys on land next to that land or water, the bill as proposed would have allowed you to do prospecting or mining on that area instead of geophysical surveys. It was very poorly drafted. So the Economic Development, Science and Innovation Committee heard submissions on that, and we’ve changed it now so as to say that the authorisation “(b) does not authorise any activity other than the carrying out of … geophysical survey[s].” I raise this as an example of the dangers of getting this sort of legislation wrong, which is why it’s so important that effective external consultation be carried out on bills such as this.

We see, as I’ve said before, that targeted stakeholder consultation was carried out with the Petroleum Exploration and Production Association of New Zealand, Straterra, and Greymouth Petroleum on this bill. I would point out, though, that no stakeholder consultation has been carried out on the remaining proposed amendments, particularly Supplementary Order Paper (SOP) 182. That worries me, to be honest. It worries me that more mistakes will be made. So I’d be very keen to hear from the Minister in the chair, Damien O’Connor, and for him to explain to us why he is confident that the SOP changes brought in by the Minister of Energy and Resources, and the different elements of this legislation that we’re debating here in Part 1 right now—have they or have they not had effective consultation with stakeholders, and are we sure that we’ve got it right? I’m not at all confident, and this is an area where, quite frankly, the Government has not been consistent in its consultation with the broader sector. It has brought through very significant changes in this sector without any consultation in the broader oil and gas front.

On this particular legislation, which deals with some minor technical issues, there has been some consultation, but even that led to some mistakes in the initial draft bill. So there are parts of this legislation that we’re debating today that haven’t had decent consultation, and I’m worried about the consequences, and I’m asking the Minister to give us some reassurance that a genuine effort has been made to talk to the affected stakeholders in this area. If we go right back to it, I mean, how does New Zealand make its living in this world? Well, there are all sorts of elements to the New Zealand economy, whether it’s the productive sector in agriculture, or the services industry—which is going strong—or tourism when the planes are not on strike, and all those sorts of areas, but the extractive industries, such as minerals and mining, are an important part of this economy.

There are some people who will turn around and say, “Oh, don’t worry. We need to get modern. We shouldn’t be relying on mining—that’s old fashioned and part of the history.” Well, I’ll just say that the United States, the most sophisticated and successful economy in the world, still has a very major part of its economy focused on minerals and extraction, and we’re not so rich that we can avoid doing that. So it’s important that we get this legislation right.

The question was put that the amendment set out on Supplementary Order Paper 182 in the name of the Hon Dr Megan Woods to clause 11 be agreed to.

Amendment agreed to.

Part 1 as amended agreed to.

Part 2 Amendments to schedules of principal Act