Crown Minerals Amendment Bill

I move, That the Crown Minerals Amendment Bill be now read a third time.

This Government is committed to ensuring that the regulatory system that manages New Zealand’s Crown-owned minerals and the permitting regime that underpins these sectors is robust and fit for purpose. This bill seeks to clarify and update statutory provisions and to address gaps, inconsistencies, and errors with the Act. The changes in the bill will ensure that the identified regulatory gaps are closed, it will ensure that there is clarity for regulators and for the industry around permitting, and it will address inconsistencies in the Act.

I’d like to acknowledge once again—as I have in earlier readings—and thank the Economic Development, Science and Innovation Committee for its consideration of this important and technical piece of legislation. The committee received 11 written submissions, and five submitters made oral submissions. The submissions came from industry participants, environmental non-governmental organisations, iwi, and a legal professional body. I’d like to thank those who took the time to lodge a submission and those who appeared before the committee. Those insights have helped to ensure that the legislation is as clear and consistent as possible.

Although this is a technical bill, it is also an important one. It is important as it ensures that the Minister of Energy and Resources has appropriate oversight over change-of-control transactions. Under the current legislation, a change of control of a permit participant does not require prior ministerial consent. This is not in line with the intent of the Act, as it allows companies to transfer operator responsibilities with reduced Crown oversight. This bill closes that gap and ensures that a change of control of a permit operator of a tier 1 permit receives prior consent from the Minister. It also ensures that the Minister must be satisfied that a change of control of an operator will not affect the permit holder’s ability to comply with an agreed work programme.

The bill as introduced did not expressly provide for a situation where a change of control of a permit operator was commenced but not completed prior to the new provisions in the bill coming into effect. This could result in an unintentional breach of the new provisions of the Act.

As many people in this House will be aware, OMV entered into a sale and purchase agreement in March 2018 with Shell Investments NZ Ltd to purchase all of the share capital of four Shell companies that hold Shell’s offshore petroleum assets in New Zealand. During the select committee process, OMV raised concerns that in the event that the bill be passed even slightly before their sale and purchase agreement was confirmed, OMV could inadvertently be in breach of the bill’s prior notice requirements for a change of control of a permit operator. The select committee recommended inserting a new clause into the bill which would confirm that the current law on change of control will continue to apply to any change-of-control transaction entered into before the new provisions commence. This gives certainty and clarity to commercial transactions currently being undertaken.

Another thing this bill does is provide clarity around clauses in the Act which could be interpreted in multiple ways, or where the meaning of the clause is unclear. Legislation that is unclear may lead to confusion and unnecessary administrative burden for those regulating the petroleum minerals sectors and for the sectors themselves. For example, the bill clarifies that a permit holder must have an access arrangement to undertake minimum impact activities on schedule 4 land, and clarifies which Ministers enter into access agreements in respect of Crown land and land in the common marine and coastal area. Clarifications such as these will ensure that New Zealand’s regulatory system works effectively for both regulators and the industry.

Finally, the bill addresses sections in the Crown Minerals Act where the wording of a clause is either inconsistent with another Act or inconsistent with the purpose of the clause. The bill enables amendments to be made to the minerals programme that are consequential on the changes made by the bill, without complying with the public notice and submission process that would otherwise apply under sections 17 and 18 of the legislation. The changes in the bill have already been through an extensive public consultation process, and it is not considered necessary to delay the update of the minerals programme by going through another consultation process on the same amendments. The new provision does not enable the introduction of new policy; it simply allows consequential changes to be made to the minerals programme.

This Government is committed to a just transition to a net zero emissions economy. The recent changes in the Act via the Crown Minerals (Petroleum) Amendment Bill to halt future offshore oil and gas exploration permits is a clear signal from the Government so that industry and New Zealand can begin to make this long-term, managed transition. We acknowledge that there is a need to look at the wider Crown Minerals Act and ensure that it is future-proofed to meet the needs of all New Zealanders. This is why, as previously stated, we will be shortly undertaking a wider review of the Act, which will involve engaging with iwi and other key stakeholders, on how New Zealand can sustainably derive value from its natural resources.

As I have said publicly, a just transition means that the existing work programmes of permit holders won’t be affected, regardless of the decisions that have been made on the future of the oil and gas industry in New Zealand. That means that our current regulatory system must continue to effectively manage the permits that are currently in place. To do this, the legislation must be robust and up to date.

This bill will ensure that the regulatory regime that covers our Crown-owned minerals is fit for purpose. The bill will close gaps, clarify unclear provisions, and address inconsistencies currently under the Crown Minerals Act. This will ensure that we have a regulatory system that remains effective and efficient, while at the same time it provides clear and transparent expectations to industry. Our goal is to have minerals and petroleum industries that responsibly deliver value to New Zealand, and the amendments in this bill will help us to achieve this. I commend this bill to the House. Thank you, Mr Assistant Speaker.

Thank you, Mr Assistant Speaker, and thank you to the Minister of Energy and Resources for her remarks. I thought she was doing exceptionally well—probably the best speech she’s ever given on oil and gas—until she started talking about the just transition. Then she was speaking to her Greenpeace stakeholders, the lobby group, just to remind them that she’s still on track to get rid of this industry in this country. That’s quite obvious.

Today, North Taranaki celebrates the arrival of a rig offshore from Taranaki, at the Pohokura gasfield, to do some work that will enable that gasfield to deliver energy to this country on an ongoing basis. It’s very interesting that OMV, the company which the Minister referred to, is undertaking this work—a company who has a proud international reputation. What this bill seeks to do, as the Minister says, is make the regime around the change-of-control transactions robust. There was an occasion where a respected operator from offshore wanted to exit their involvement in New Zealand waters, and so offered up shares in their company in this work that were purchased by another offshore company without the Minister of Energy and Resources’ awareness, and this is what has precipitated this bill.

It is correct what the Minister says, and the work was done by the Hon Judith Collins when she was Minister of Energy and Resources. In fact, all the work in this bill has been led by National MPs. It was around that transfer of control that we felt there was some concern, because it was an offshore field. We wanted to know that there was going to be genuine capability of those who were purchasing those offshore assets to undertake the work and, if it came to decommissioning, that their pockets were deep enough to do that work.

We also wanted to know in terms of the health and safety of our environment and those workers on those offshore platforms that that company had a good and strong history of good, sensible, and exemplary health and safety practice. So New Zealand Petroleum and Minerals had to go offshore to the country where this company has its domicile in order to inquire and have that level of satisfaction. I’m pleased to say that what they found satisfied their requirements. But what it did—it highlighted that there was a gap in our regime. There was a gap in our regime that there could be a change of control that would not or did not necessarily have the Minister of Energy and Resources’ prior knowledge or consent. So what this bill does is ensure that that takes place.

This bill, prepared by the National Government, has come to its third reading here nearly 18 months into this Labour Government. I’d have to say that as I look at it these days, I see there are weaknesses there. One weakness in this bill is it says in new section 41AC(2) in clause 8, “If the Minister is satisfied that there are compelling reasons why a relevant person could not comply with subsection (1)(b), the Minister may receive an application by a later date agreed”. Why I say that that is an area of concern is because it requires ministerial discretion. Now, I respect the Minister has that role and responsibility to make decisions by discretion, but I am concerned that we have had a history of this Minister of Energy and Resources rejecting officials’ advice and making decisions that affect an industry without evidence, without research, and without analysis, and that we rely on her discretion. I think that’s a problem. We can’t get away from it.

This is how politics operates: people get voted into office and elevated to a Cabinet role where they do have direction, and we have got to maintain safeguards for the people of New Zealand around that discretion. This is why this place operates and exists—not just for decision-making but also to hold the Government to account for that decision-making.

While the Minister talks about a just transition, I would like to raise something and read out a comment of hers, because this comes to the heart of this bill. She said, “Taking a just transition approach is important for maintaining the social licence necessary to realise our ambition for a low emissions economy.”—this is in her Cabinet paper—“It provides us with an opportunity to articulate a compelling long-term vision that offers reassurance that change takes time and is a natural process within economies and society.” We have seen anything but, and my concern with this piece of legislation is that it puts a weight of discretion upon the Minister.

What we read here in these words regarding the just transitions unit—which the Minister spoke about in her speech, though it had nothing to do with the bill—is that she is now stating that change takes time and is a natural process. Nothing natural took place last year. It was intervention. It was social and economic violence and harm created to an industry and to a community, and that’s why I say—and I am very glad to see—that there is a jack-up rig offshore from Taranaki working on a gasfield that is going to supply more gas to New Zealand. By the way, when that gas flows, the prices of electricity will drop. At the moment, they are double what they should be because of a constriction in gas supply. They were triple that in October-November.

Some people say, “Well, that’s why we shouldn’t rely on the gas industry.” Let me tell you there isn’t an industry out there that provides energy that does not need maintenance. We know that the pole from North to South, South to North came under huge need for maintenance, at one point in time. Because of the constrained supply of electricity, the price in Auckland went to $1,700 per megawatt when it’s normally about $70. I don’t hear the Minister of Energy and Resources criticising the electricity industry.

So what we want through this bill is, yes, we want to have a robust regime but we want to have a Minister of Energy and Resources who is going to treat an industry fairly, and we want to have a Minister of Energy and Resources who doesn’t put this stuff in the Cabinet papers that’s just a lot of rubbish, and it’s not what she believes. So I stand here to say that we will support this bill. Yes, I am increasingly upset by what has taken place, but I believe that these provisions are good and they should be there. We are proud on this side of the House to have initiated this work, and therefore we support it and I commend this bill to the House. Thank you, sir.

That was a speech of two halves, my word. On one hand, we heard a calm and reasoned exposition of Mr Young’s support for the provisions of this largely technical and uncontroversial bill, and it will be worthwhile reflecting a bit on those provisions a little later in my remarks. On the other hand, we had Jonathan Young unleashed—a volcanic man of oil and gas. We could smell the crude on his breath as he leaned over the microphone. What we learnt in his address is that Jonathan Young is genuinely contemptuous of the concept of a just transition. That was put very, very clearly in this speech—

💬 Hon Members: Rubbish.

We can check the Hansard for that. It does bring the question to mind: if one does not believe in a just transition away from an energy sector and an economy powered on fossil fuel, then one must believe in either no transition at all or a transition that is not just. Those are the only other options.

So it actually, I think, behoves the National Party to be really clear on where it lines up on this issue, which is one of the most important economic and social and environmental issues that our country and our world will face in the coming years and decades, because we can make choices at this point in time. But if we don’t start making choices to have a transition that is measured and that is just and that allows economies and regions to shift their modes of production and energy generation and to move the jobs in that direction—if we don’t make these choices and investments now, then either we don’t make them, and we’re ignoring the crisis of climate change that is bearing down upon us as we speak—

💬 Jonathan Young: It doesn’t need your help. No, it happens slowly.

—or it will happen all of a sudden, and where will those people be then? So on this side of the House, Mr Young, we stand firmly on the side of a just transition and we do it proudly, and we’re going to stand by those communities and those people as we do that. Just kicking the ball down the road is doing those people and those communities no favours at all.

Coming to the Crown Minerals Amendment Bill, this is, as I’ve said and I think other speakers have said, largely an uncontroversial bill. I did note there was a submission from Petroleum Exploration and Production Association of New Zealand, which was largely supportive, and I think, for the current Government, that’s pretty good going.

The bill addresses a number of inconsistencies within the Crown Minerals Act 1991—a couple of loopholes which have emerged over the years. I do want to acknowledge the work of the Economic Development, Science and Innovation Committee on this bill. It sounds like it was a good select committee process and—as I’ll come to—there are a couple of sensible changes that were suggested during select committee hearings in response to submissions that were received. It’s also important to say, as the Minister has indicated, that there’s likely to be a wide review of the Crown Minerals Act coming a bit later in time, but this was a bill that could proceed at the moment that makes some sensible and largely uncontroversial changes.

The most important change, I think, as I’ve had a look at this bill, are changes which close some of the regulatory gaps that we have at the moment, and the key one which has been identified by previous speakers relates to the fact that across the sector we have, it seems, two quite significant trends. One is that there is an increase in divestment and acquisition activity, and on the other hand there is a feature of the industry whereby older fields are sometimes being acquired by smaller players who are able to use particular technologies to increase the production on mature oilfields. This is leading to quite a bit of acquisition and divestment activity within the sector, and, of course—and it seems to be accepted on both sides of the House—we have to have absolute confidence and certainty that the operators of these facilities and these fields are organisations who are competent, who will do the job in an effective way, who don’t pose risks in terms of health and safety or environmental risk, and who can, at the end of the process, be trusted to have sufficient financial capability to be able to wind down those operations appropriately. So that’s why we have the ministerial process of approving changes to the ownership of these operations.

The gap that’s been identified within the course of this bill is when we have a change of ownership of one of these entities. That seems to slip through and doesn’t necessarily have to go through the approvals process, so that’s being tidied up.

The key things that the select committee picked up were, firstly, the need to ensure that we don’t have people who are caught midstream if those processes began before this bill comes into effect, and that’s, I think, fair and just that we allow for that to happen. The second thing is to bring a knowledge test in, so that if an operator comes above the 50 percent threshold but possibly because of transactions of which they were not aware, genuinely, then they are not going to be pinged by what are actually quite substantial fines of between $50,000 and $800,000, depending on the circumstances that are in the Act.

So I think those are very sensible and reasonable changes made by the select committee which support the intent of the Act, which is to close the loopholes and tidy up this important piece of legislation. The other changes mainly relate to wording changes and removing inconsistencies with other pieces of legislation.

So it’s a sensible bill. It seems to have wide support in the House. I commend the select committee, the Minister, and other members who have worked on it, and I look forward to further work in this sector from our dynamic Minister of Energy and Resources, the Hon Megan Woods, to ensure that we do have a just transition to lead New Zealand into the future. Thank you, Mr Assistant Speaker.

Thank you very much for the opportunity to speak on this piece of legislation, which National does support—the Crown Minerals Amendment Bill—which is part of the usual maintenance of legislation that this House does all the time. We pass laws, and over the years the evidence of the industry that is being regulated or legislated over shows that we haven’t thought of something quite right in the past, or somebody has found a loophole or somebody has done something that the Parliament didn’t expect, and so there is an ongoing continuous process of updating the legislation so that it will be clear and consistent.

In particular, what we’re looking at here is the oversight of the change-of-control process, and the Minister of Energy and Resources and several other speeches have outlined the changes that are particularly focused on in this bill, so I won’t labour those issues particularly heavily. But I would, I suppose, make the point that it is legislating for an industry that is indeed under threat by this ideological Government. So it’s tweaking the legislation for an industry that this Government is—

💬 Andrew Falloon: Killing off.

“Killing off” is not too strong a word to describe it. So, yes, we talk about the just transition, and I suppose our only concern is that we don’t want it to be a transition from New Zealand being a rich country to a poor country. If we’re not careful with the way that decisions are made in this minerals sector, we could be certainly imperilling our future prosperity.

So we all know about the oil and gas decisions from last year, which were not based on any kind of analysis that ordinary New Zealanders would expect that any Government would rely on and draw on in making major decisions about the economy which affect the ability of New Zealanders to go out and earn a living, a good quality income, to provide for the health and the education and all the things that we want to enjoy out of life. Before you make decisions that have a dramatic impact on the earning capacity of this country, you actually do the analysis—not you, Mr Assistant Speaker, but the Government—and they failed to do that in this particular case.

Worse than that, it’s not actually going to achieve any climate change benefit. As has been outlined by numerous reports in the process, if indeed we continue to import coal from Indonesia and places like that by shiploads trundling across the Tasman Sea, full of coal, in order to maintain the energy that we’re not getting from the gas that we used to be getting but we could be getting if we tried to look for it, then that is not helping the climate one jot. If you want to deal with the demand for the energy that is currently being generated out of gas, that might have an impact, but, of course, you’ve got to learn how to turn the milk into milk powder and all the sorts of things that require energy and currently use energy. They’re not interested in dealing with that detail, but that blunt decision-making last year around the oil and gas sector didn’t even contemplate those things.

It still doesn’t cease to amaze me, Mr Shaw—looking over here—what gives the impression of the members of this Government that New Zealand is unique, almost in the entire world, in being so rich and so prosperous that we don’t actually have to look in the future for oil and gas and mineral resources. Every other country in the world, apart from the French, I understand, who don’t have any—they have plenty of nuclear energy and all sorts of other things, and we’ve had a long history of dealing with the French over nuclear interests. So, apart from the French, everybody else, including the most sophisticated and wealthy economy in the world, the United States, which is now the largest producer of oil and gas currently and has seen the biggest reduction in greenhouse gases on the basis of that—they think it’s worthwhile doing. Every other country in the world does, but New Zealand, apparently, according to this Government, is so rich that we don’t need to do that. So we’ve got this bill trying to create clarity and consistency around the regulation of an industry that the Government is, apparently, quite happy to let wither and die sooner than anywhere else in the world.

Then we look at the question of—one element of it is clarifying access arrangements that are needed to access schedule 4 land. Now, that raises the other issue which is bubbling away in this Government at the moment in relation to exploration or extraction of minerals from parts of that land which are included in the Department of Conservation (DOC) estate—not necessarily schedule 4, but the scrublands that have come into what is called stewardship land within the DOC estate.

People sometimes might be surprised to learn that about one-third of the land mass of New Zealand is in the DOC estate—one-third. It’s not a small amount; it’s quite a large amount—one-third. The idea that every single square metre or hectare of that land is so pristine that our ecology and international reputation would collapse if we were to extract something from it doesn’t seem, to me, to hold up to any sort of rational assessment. So, over the last 20 or 30 years, there has been plenty of activity on that land which has been folded into the DOC estate but which came from a whole lot of other Government departments over the years and is of very low-quality conservation value.

Any pragmatic Government would say, “Yes, we absolutely look after our national parks, which are our heritage and need to be preserved, but we don’t necessarily have to do absolutely nothing on large areas of land.” So, as I understand it, the Greens have made it very clear that it is their very clear policy that we should do absolutely nothing on that land, and there’s a bit of an argument about greenstone and quarrying for just some aggregates and all sorts of things that come out of that area. But, you know, it can go down to coking coal and things like that.

💬 Hon Tracey Martin: Nine years and nothing. Now, we talk about it.

But New Zealand First, of course, have a very different point of view, as articulated by Shane Jones, and so we’re all very interested to know what the outcome of that argument will be and what horse-trading will be undertaken to see what they’re going to do over that issue.

💬 Hon Tracey Martin: What argument? It’s called negotiation—not that your party would know much about it.

Well, we’ll see. We’ll see where we get to on that argument.

It is important, because, ultimately, if you’re talking about economic development in a country, then you need to have a whole series of activities in order to create an economy which provides jobs and opportunities for New Zealanders. That’s about investing in high-tech industries, it’s about good quality farms, it’s about wine, it’s about having good quality infrastructure that carries the stuff, it’s about having a good quality education system and developing skills, it’s about capital markets—it’s about a whole lot of things. But in just about every other country in the world, it also includes actually making use of the mineral wealth of the country where you live. We just need to be a little bit careful, and it worries me that the direction of travel of this Government is to say “No, no. We’re so rich that we don’t need to do any of that.” for no reason.

So, if you look at the West Coast, whose economy was based largely on this extractive sector—you know, going back into ancient history, where they’d be taking lumps of coal the size of pineapples and all sorts of things, and making a real living. Those days have long passed, but there is still much wealth to be drawn from the natural environment. If we go about it in a careful, considered, and sustainable way that doesn’t have a long-lasting impact and is done with the assistance of top-quality science, then that can be an important part of a modern, sophisticated economy, and we’re not seeing much evidence of that.

But, anyway, getting back to this bill, it certainly, certainly is one of the basic pieces of legislation where we are maintaining a legislative regime for a sector which is and remains an important part of the New Zealand economy. On that basis, I commend this bill to the House.

Thank you, Mr Assistant Speaker. Unfortunately, I’ve only got a couple of minutes. I actually need far more time than that to address the seething mass of contradictions we’ve heard from the National Party over the last couple of speakers. I have sat here for weeks and weeks and months and heard them talk about banning oil and gas exploration, and Jonathan Young just tells me there’s a rig turned up off the Taranaki coast to continue on the transition that we’re doing. There will still be, as we know, 100,000 square kilometres of permitted prospects that are eligible to be drilled for oil and gas, and much of it—about the size of the North Island, I understand, is the land mass. So they’ve absolutely contradicted their own spin that they were putting out and the scaremongering that they were doing.

Of course, New Zealand First support this bill. This bill, the Crown Minerals Amendment Bill, is a sensible piece of legislation. It is largely technical and it does look to plug some gaps, and, of course, it is very important. We are a very mineral-rich country.

Debate interrupted.

The House adjourned at 10 p.m.