Gas (Information Disclosure and Penalties) Amendment Bill

We come first to the Gas (Information Disclosure and Penalties) Amendment Bill. When we were last in committee on this bill we were considering Part 1, which is the debate on clauses 3 to 18 and the Schedule. The question is that Part 1 stand part.

Mr Speaker, I seek leave to move a motion without notice referring the exposure draft and terms of reference for an inquiry on the Natural and Built Environments Bill parliamentary paper to the Environment Committee for consideration.

We’re in committee, and only the House can give permission. So the question is that Part 1 stand part. If there’s no one wanting to take a call on that—Barbara Kuriger.

Thank you, Mr Chair. When we were last speaking on this committee stage, the Minister said in the House, “That something became very clear to”—this is a quote—“Something that became very clear to me as a relatively new Minister of Energy and Resources was something needed to be done about it—that we could not have a regime where there were some industry participants that were having to put drones into the air to fly over the pipeline to try and figure out what was going on because we had a voluntary regime that simply was not delivering the disclosure that was required. So that is why this legislation is before the House and why it is necessary.” So, in light of that comment that the Minister made, I’d like to ask her: when did the voluntary disclosure regime come into force, and does she know of any breaches of that voluntary disclosure regime since it came into force?

I’ll carry on if the Minister’s not ready to answer yet. There’s a couple of other questions that I’d like to ask the Minister. When she answered another question of mine last time, what proof does she have that the political decision has had no effect on the gas fields, she said “I think it was April of 2018, our decision.”, and she talked about the gap between April of 2018 and the spring of 2018 in terms of gas production, and said, in fact, talked about there not being enough time for their decision to have had any impact. The question that I asked her did not actually talk about April of 2018 and the spring of 2018, it talked about—I asked her the question, it was a broad question, and obviously starts in April of 2018 when the political decision was made, but I didn’t put an end date on that, so today could well be the end date, Minister.

I’ll take a very quick call. I’ll deal first of all with the question that pertains to the bill that we have in front of us, in terms of when the voluntary code came into play, and that was March 2020. The whole point is that it is a voluntary code. And in terms of compliance, I think that everybody in New Zealand wants to make sure that we have a well-functioning energy system and we have the ability to have the information that is required to do that. I do note to the member that the Gas Industry Company (GIC) itself is in support of these changes.

In terms of the question that is a little broader than the bill that we have in front of us—and I have already addressed that through the committee stages of this legislation—I would point out to the member that it was a decision taken in 2018. No exploration permits that would have been issued in 2018 would yet be in production. In fact, the time line around anything that would be in production is at least seven years. So no, it has nothing to do with the current tightness that we are seeing around the current failure of the infrastructure associated with Pohokura.

Next question, given that the Minister indicated, when we were previously on the bill, that she will not support ACT’s Supplementary Order Papers (SOPs) to protect commercial sensitivity, how will she guarantee that commercial sensitivity will be protected?

Happy to take an answer from the National Party spokesperson on the ACT Party SOP. This will be a matter for the—the bill already enables what we had there: the bill enabling the GIC to protect commercially sensitive information. I will be looking to the GIC to determine the benefits and costs around that. I think this is something well within their purview to manage.

Thank you, Mr Chair. To the Minister, we’re talking about sensitive commercial information. One of the reasons that ACT has proposed an amendment is because ACT is very, very concerned, as are many stakeholders, that the Government cannot protect sensitive information. Today, in this House, we heard about a serious breach of patients’ information—information about their medical history, about financial history, and about a whole range of matters pertaining to the operation of the Waikato District Health Board, which, based on what I understand the Government’s current plans for information technology and data protection are, we are in a very, very weak and exposed position right now. So I think it is very important for the Minister to tell the House and to give confidence to stakeholders, who, essentially, will be subject to a fishing expedition.

When I look through this bill, I am frankly astounded that a Government presiding over a health IT system where patients’ sensitive medical records about procedures and all kinds of terrible things that they’ve suffered are now on the dark web—what I see here is a Government that proposes a fishing expedition, and why the information that the Minister requires is intended to be broad and not exhaustive. How on earth will that benefit security of supply, knowing more about storage, knowing more about outages, and being able to actually target a better outcome for New Zealand from an economic and social perspective, this fishing expedition that the Minister proposes? What are you going to do to protect the data, Minister?

Thank you. I’m not sure that the Minister has an answer so we’ll give her a bit more time to think. I am interested in the fact that the Minister is expecting the industry to come up with a disclosure and with a plan so that everybody’s got some certainty—and everything I hear in energy at the moment is around certainty. I would like to ask the Minister: how soon will the Minister have a plan, as recommended by the Climate Commission, for our new renewable energy future? If the Minister’s asking the industry to have a plan and a disclosure, could the Minister do some work and have a disclosure as well.

I will answer questions that are to do with this bill, but as the member well knows, I think, the process around the independent climate commission and the Government’s response to that is a little out of scope for this piece of legislation that we have in front of us.

In terms of the disclosure, the Supplementary Order Paper that has been put up by the ACT Party on this, the new regulation-making power provides for both the provision of information and the disclosure of information. I do point the member to the fact that this is parallel to a system that, actually, we do have in regard to the electricity industry, that this is more about getting some symmetry across our energy system. So if we do—with the danger of going off and addressing what the plan might be in terms of our end of year response to the climate commission—we do need to start thinking in terms of New Zealand’s energy system rather than separately around our gas markets and our electricity markets and what those interactions will be.

So what this means is that an information disclosure regime would require the provision of commercially sensitive data, and we do acknowledge that, but this data may be aggregated or otherwise made anonymous for the disclosure of that data. There are well-trodden ways in which that can be managed, and we do see it within our energy system already. I do note that the electricity system does collect what could otherwise be considered commercially sensitive data. I do note that when we went through and did the Electricity Price Review, we got all of the electricity retailers to disclose commercially sensitive data to us at a meshblock level, on a voluntary basis, so that we could use that data for the study. They did that in a way that was really constructive and a way that we were able to work through this.

But how this would be implemented in terms of this would be determined by the Gas Industry Company (GIC) as part of the recommendation. I do point to the member that he’s saying, “Let industry do it themselves. There’s no point to have regulation.”, but I do note the fact that the GIC is in fact an industry owned body, so there is scope here for industry to be involved in this.

Thank you, Mr Chair. It’s a pleasure to take a call on the Gas (Information Disclosure and Penalties) Amendment Bill. I’ve actually got a couple of questions for the Minister, and I think, in the introduction to this bill, it talks about the outage at Pohokura and the cost of $2 million a day to their main customer. But this is a much wider issue than that, and the bill is talking about security of supply and all those issues that go with that. I mean, we’re in an incredibly interesting time at the moment. Whilst our lakes are starting to fill a little bit—our hydro storage—we are in a parlous situation. With a low gas supply, we’re totally reliant at the moment on Indonesian coal to keep the lights on. And I congratulate the Government for having the courage, despite their lofty climate proclamations, to bring a whole lot of dirty Indonesian coal in to keep the lights on. And we need that. But what I want to know about this bill is: is this going to give the industry enough confidence to invest?

We know they have to live up to their obligations to clean their act up, and their wells up, when they leave. That’s absolutely a given; I understand that. But the industry is lacking confidence now for investment—

💬 Hon Dr Megan Woods: That’s the bill later tonight. That’s not the one now.

You’ll get an opportunity in a minute, Minister. They lack the confidence at the moment to invest the money that’s required to keep these gasfields producing at the rate that we need them to. I note that the Minister for Climate Change refers often to the British being able to lower their emissions by 40 percent whilst growing their economy. They largely did that because they switched from coal to gas and exported their emissions when their steel mills went offshore.

So the issue for this bill is—I’d like to know does this bill give the industry the confidence to continue investing in their wells and their whole system of getting gas out of there, because, Minister, it’s really serious here. If one of those boilers, if one of those generation plants goes down, the lights go off. And we only have to remember in February of last year, in Texas, 80 people lost their lives because of poor decisions made around the gas supply. And to remind you, Minister, they decided, in their wisdom, in Texas, to switch their gas pumping from gas turbines pumping the gas along the pipeline to electricity, to lower their emissions, and the power went off, the gas froze in the line and people died. It’s important that we get this supply right and that the industry is reporting all of those things—well, you might shake your head, Minister, but, actually, 80 people lost their lives. I don’t think that’s a trivial matter; you might. But you’ve got a bill here about reporting—

💬 Hon Member: Which clause is this?

This is absolutely about the supply and security of supply. We need to have confidence that this bill will actually achieve what you say it’s going to, and I’m not sure we do. So give us some confidence.

Thank you, Mr Chair. I’m sure there’ll be plenty of opportunity for other members to contribute, because this is a really, really important piece of legislation, and it’s wonderful to hear so many members asking valid, important, and serious questions of the Minister. I have one which follows on from Mr Stuart Smith’s question. We know the Gas Industry Company already produces information about projected outages—about when, days and weeks ahead, there will be outages. We know that the Gas Industry Company produces information about when gas is being stored and when it is being drawn down from facilities like Ahuroa. And we also know that they publish a fulsome series—now running into the 300, nearly 400 technical disclosures about outages and maintenance and all kinds of things that are relevant to decision making by their customers, but also by Government agencies which do have a responsibility, as does the Ministry of Business, Innovation and Employment, for ensuring that New Zealand has security of supply with petroleum products. So, given that, we know all this information is currently being provided through a voluntary system, and that information helps decision makers make the right decision about security of energy supply.

Minister, I do have a question for you, a very specific question, and that relates to today’s wonderful news that two exploration permits have been issued for onshore natural gas exploration in Taranaki. That is the best news that the people of Taranaki have heard in years—

💬 Hon Member: And New Zealand.

—and years and years—and New Zealand, but primarily those people who live in Taranaki in places like Waitara, which is not a wealthy community, but where many, many thousands of people enjoy the benefits of high-paid jobs in industries that contribute enormously to New Zealand’s export revenues and also sustain many, many other businesses and thousands of jobs in those supporting industries and manufacturing and so on. So given we know these two facts—these are not to be fact-checked, these are not fact optional, Minister, these are facts. The Gas Industry Company already makes significant voluntary disclosures. Today, an announcement of two exploration permits. Question for the Minister: did the information disclosed voluntarily by the industry players contribute or assist the decision making today to award those two permits?

I will take a call on the several questions that the member has put there, the one in terms of the decision that was made today on the 2019 block offer. So the result we are seeing is the 2019 block offer. That’s actually a statutory decision that is clearly laid out in terms of the criteria that are used in terms of whether or not to award those permits. What we’re talking about here is an entirely different regime than our permitting regime. There’s different information that has to be disclosed through the process of putting in for a permit.

But in answer to the question, “Why don’t we just persevere with the voluntary code that is in place?”, the member is suggesting that that is sufficient. What I’d like to draw the member’s attention to, and he may not have seen it, is a document actually produced by the Gas Industry Company itself. This is, of course, the body which is, essentially, owned by the industry. It is the industry regulator—so in many ways is the voice of industry—which really clearly lays out what they see as the shortcomings with the current voluntary regime and makes the case of why there actually does need to be a mandatory code that is put into place. They talk about the arrangements “That are in place that ensure the effective and timely availability of gas production and storage outage information for all gas and related market participants.” What they talk about is that a lack of credible compliance and enforcement mechanism in the voluntary regime means the costs of non-compliance with the upstream to disclosure code might not outweigh any benefits. What they talk about is the shortcomings, and they list these out really clearly and why it is they do want to move to exactly what this bill is putting in place. The structure of the code as a multilateral agreement between producers and gas storage owners means that the code can only be enforceable between those parties and limits the role of the affected parties in changes of the code.

The second reason and the second limitation that they see there is some of the information in the outage definition is private information, making it difficult for third parties in the Gas Industry Company to review where the parties to the code have reported outage information consistent with the code’s terms and the timing of notifications for unplanned outages and material changes to planned outages may not address issues with the information asymmetry. Then they go on—also another point: the provisions of the code do not override confidentiality obligations and current contracts held by gas producers and gas storage owners.

I think one of the things that the voluntary code, that was put in after the situation that we did have with the outage, and what pre-empted this was always meant to be a stopgap measure. The industry themselves were telling us that there needed to be some longer-term, more structural changes that need to be put in place and that is what we have in front of us in the Chamber tonight.

I move, That the question be now put.

Thank you, Mr Chair. It is committee stage, and when members have a lot of questions, I don’t think it is actually responsible of the Government to move a closure motion. I think it is shameful that they’re trying to shut down debate. But there are some questions that I would actually like to ask the Minister. In particular, I’m looking at the main provision of the bill, where it actually says that if enacted, the bill will clarify that the gas governance regulations could, and I quote, “specially provide for arrangements relating to outages and other security of supply contingencies.” And it is this contingency that I’d just like to ask the Minister—my colleague Stuart Smith actually talked earlier about the reason why we have to actually import coal from overseas to provide electricity. I’m wondering if the Minister is looking at contingency plans, considering the fact that in Taranaki the exploration actually was cancelled. I know that Mr Court has actually just mentioned two of the 2019 block offers are coming to fruition today. But the thing is that I think all good Governments need to provide contingency plans, whether it is actually about population and what the population require in terms of health services. But in terms of power, if we are lacking in gas supply, we need a contingency plan. If we are lacking in hydro dams, we need a contingency plan. What contingency plan does she foresee as a result of this bill coming into fruition?

I have already addressed this question on two occasions in this committee stage. The member may not have been in the House for that, but happy to provide a further answer to that. In terms of the member asking what contingency plans are in place for the provision of energy in New Zealand, given that what we’re witnessing this year is not only a dry year in terms of our hydrology—in terms of our hydro dams, that we know are at about 78 percent of historical average in our dams, which is a marked increase on where they were—but we’re also seeing the failure of gas supply, that security of supply. What we’re seeing is production problems coming off one of our fields. So we have the convergence of these two things.

One of the things that I think everybody needs to understand is that the way in which New Zealand stores energy for a dry year is in its most expensive form in New Zealand at the moment. It’s in the form of fossil fuels, whether that be in the form of coal or whether that be in the form of gas. So what I’m happy to tell the member is that this is not a situation that this Government is content to see into the future for New Zealanders. This is not the way for New Zealand businesses and households to realise the potential and the benefits and the comparative advantage that we hold as a country in terms of our renewable energy.

So what we are doing is we are investing in how it is that we can address dry-year storage, not through expensive fossil fuels but through the cheapest form of electricity in the form of renewables. That’s exactly why we’ve invested $30 million into the New Zealand Battery Project, the first phase, with another $70 million already budgeted. What we have to do is find a way to move beyond fossil fuels, not just because we have to do that for our climate goals and we have to do that for the planet—I’d be very interested to know if the National Party currently thinks that we should keep burning fossil fuels into the future and, if so, how it is we’re going to reach the climate goals that they signed up to in Paris—but we also need to have renewable contingencies in place in how it is we store energy in the cheaper form of renewable energy if we want our businesses to flourish and if we want to seriously address energy poverty.

Mr Chair, thank you very much, and I’d like to thank the Minister in the chair, Megan Woods, for her comments, I think, except they don’t make a lot of sense. She’s talking about many years in the future, and she’s talking about a dry year this year, but, Minister, wasn’t it the case that the increase in coal importation started long before the suggestion that this was a dry year? In fact, under your watch, more coal was imported and used in the first quarter of this year than the last two years alone, and there are shiploads of thermal coal coming from not the West Coast, not near Huntly itself, but from Indonesia. You’ve mentioned that $30 million has been set aside by the Government, but I ask the Minister: how much does 2 million tonnes of coal from Indonesia cost, because that’s the suggestion of the amount that will be imported this year.

So is there less gas being used in New Zealand or less investment being put into gas supply in New Zealand as a result of the well-meaning but disastrous policy decisions that this Government made last term? And how does she equate that or her suggestions of the expensiveness and how harmful thermal coal is for the environment when so very much is being imported? Ministers of energy many years ago that were responsible for this portfolio were very proud of the amount of coal that was dug up in New Zealand. This Minister must be proud of the amount that’s been imported on ships that come all the way from Indonesia and are put on probably not rail but on trucks and driven all the way down to Huntly, where they’ve just had to recommission one of their coal boilers that was decommissioned many years ago. In as far as climate change is concerned, this Minister is a failure, but when it comes to energy, she’s one of the best Ministers of energy the coal industry in Indonesia’s ever had.

Happy to take a call on the member’s question around when it was that it was decided that coal would need to be imported to back up what was becoming increasingly apparent of the failure of gas to supply the security of supply that was required in a dry year. I’d point the member to the fact that, actually, weather forecasting is quite a long-range science, and, in fact, a La Niña weather pattern has been forecast for quite a period of time, certainly before the period of time the member is pointing to, to when the coal imports started arriving. What people that are skilled in the science of weather understand very clearly is that a La Niña weather pattern means drier than usual conditions in our southern hydro lakes. So the fact that where we require our hydro lakes to be filled is over the summer months, because, of course, winter, the precipitation tends to fall as snow in that part of the country that, in fact, the La Niña weather pattern—it was entirely predictable what was going to happen here.

I think one of the things that it’s really interesting to see the National Party showing its stripes on and where they sit in climate debates—that agency that would never be seen as a radical environmental organisation, the International Energy Agency, has now put out a report actually calling on the world to end the exploration permits of oil and gas. They understand that we simply cannot do this. We have to have an end mark. I would point that member to the fact that the latest figures that we have for the gas reserves that are in New Zealand are exactly what they have been for the last 20 years—it’s 10 years in that contingency planning. I would also point that member to the fact that he is somewhat mistaken in the lack of investment in our gas assets since we made the decision to end new exploration permits. In fact, there has been a billion dollars’ worth of investments since we made our decision in 2018.

Well, thank you very much. I just had a quick look on Google, and the only person more proud of the work as Minister of Energy and Resources is the Hon Arifin Tasrif, who is the Minister responsible for energy and mineral resources in Indonesia, because under this Minister’s watch this year, there are predictions of 2 million tonnes—metric tonnes—of thermal coal being imported from Indonesia at a whopping, whopping cost of US$180 million a year—US$180 million a year. So, Minister, it’s fine for you to try and say the National Party shows its colours here, because, actually, when it comes to energy in New Zealand and electricity, that is a great indictment upon this Minister and her work as Minister, that there was more coal in the first quarter of this year burnt than the last two years combined, and that shiploads—

CHAIRPERSON (Adrian Rurawhe): If the member would like to link these those comments to Part 1 of the bill—

Well, yes, I will. So in as far as Part 1’s concerned—

CHAIRPERSON (Adrian Rurawhe): —he might get it in order.

—could the Minister answer this question: the Gas (Information Disclosure and Penalties) Amendment Bill, will it mean more or less than $180 million worth of coal is imported from Indonesia this year? If the answer is: “It has, actually, nothing to do with that and will have no effect on it at all.”, what is the single use of this bill when Kiwis are having to pay much, much more and she stands here in this House and says, “We are the climate change defenders.” when, actually, it’s so much worse under her watch than it ever, ever has been?

I move, That the question be now put.

The question is that Simon Court’s amendment to insert new clause 11AA, set out on Supplementary Order Paper 41, be agreed to.

The question is that Simon Court’s amendment to insert new clause 11AAB, set out on Supplementary Order Paper 50, be agreed to.