Crown Minerals (Decommissioning and Other Matters) Amendment Bill

I present a legislative statement on the Crown Minerals (Decommissioning and Other Matters) Amendment Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House, and can be found on the Parliament website.

I move, That the Crown Minerals (Decommissioning and Other Matters) Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 11 November 2021. I intend to move that the committee have the authority to meet at any time while the House is sitting except during oral questions, during any evening on a day in which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting in the House, and outside the Wellington area, despite Standing Orders 193, 195, and 196(1)(b) and (c).

We know that decommissioning costs are an increasing concern, both in terms of health and safety and environmental risk. Decommissioning can cover many things. It can include removing infrastructure, plugging and abandoning wells, and undertaking site remediation and restoration. The activities required to decommission a particular operation vary hugely from field to field. The costs also vary according to field to field—there is no one size fits all when it comes to the decommissioning requirement for our oil- and gasfields, but these costs can run into hundreds of millions of dollars. These costs fall firmly within the responsibility of the permit or licence holder. However, if a permit or licence holder cannot afford to carry out this work, then the Crown may be left as the only party that can fund the decommissioning. When it comes to decommissioning an oilfield, this is not a choice about whether or not it is done; it is something that simply has to be done.

This is not a hypothetical risk that policy makers have dreamt up; this is all too real. In April 2020, the Crown took on the responsibility for the decommissioning of the Tūī oilfield after the operator, Tamarind Taranaki Ltd, went into liquidation. To protect the marine environment, the Crown stepped up as the provider of last resort to decommission the Tūī infrastructure. The Crown initially set aside $155 million to do this, based on a 2015 study commissioned by the previous permit holder. While we have made good progress on decommissioning, those costs have far exceeded those initial estimates, and further funding was necessitated through Budget 2021. I am proud of the team decommissioning Tūī and what they have achieved, and there are some silver linings to be found there. But when you consider the costs involved to the taxpayer, I am very clear: we cannot let this happen again. We’ve already taken the necessary steps—well, some of the necessary steps—to avoid a repeat of the situation that we find ourselves in with Tūī.

We changed the legislation in our first term of Government to close the loophole that allowed us to get into this situation in the first place. When that change came into law in 2019, I signalled my intent to go further to strengthen the regulation of decommissioning. That is what the bill that I am introducing today does, and what it is intended to do. At its core, this is a very simple bill. It is about making clear what was always expected, that those who undertook and profited from petroleum activities would pay for the cleaning up—not the Crown, not landowners, and not taxpayers. The bill does that by introducing an explicit obligation on petroleum permit and licence holders to carry out and fund decommissioning. There are three pillars to the proposed regime that this bill introduces: a clear and consistent obligation to decommission, greater monitoring powers, and a requirement to obtain and maintain a financial security to carry out that decommissioning.

The first pillar, setting this clear and consistent obligation, clarifies to permit and licence holders what is expected of them. That is, who the obligation applies to and what they must decommission. Failure to fulfil this obligation will attract a civil pecuniary or criminal penalty, depending on the circumstances. The potential criminal penalty reflects the high level of public interest involved, and the potential health and safety and environmental risks that are associated with this work. As part of this obligation, I’m also introducing the concept of perpetual liability, which is a trailing liability, meaning if somebody transfers their interest in a permit, they will continue to be held liable for the costs of decommissioning in the event that the current permit holder fails to fulfil their obligations.

The second pillar of the regime allows us carry out more effective monitoring. It is designed to enable us to build a more accurate picture of a permit holder’s decommissioning liabilities and the associated financial plan that the holder has to meet those obligations. A permit holder’s financial position can change, and better monitoring means that we can work with permit holders and better understand the current or the emerging risks that are associated with that permit.

The final pillar of the regime requires a permit and licence holder to maintain a financial security. We hope that we do not have to access these funds, but this requirement provides a degree of assurance that money will be there if it is needed. In deciding the type and the amount of the security that will be required, I will keep a degree of flexibility in the decision making so that the specific requirements can be tailored to the individual circumstances and minimise the impact on businesses where possible. These three pillars, in combination with clear consequences for failure to decommission, are the basis of a more proactive regime.

The provisions of the bill that is being introduced tonight also bring New Zealand more into line with other countries which have, over the years, been increasing their ability to more effectively manage the risk to their taxpayers. We’re not alone in recognising the need to make this change. In 2020, the Australian Government announced it would step in and decommission the Northern Endeavour field after the field was sold from a large industry player to a smaller company. Australia is now also making change to enhance their framework for decommissioning.

In preparing this bill, I also became aware of the need to think of the future and the legacy that decommissioned petroleum fields present for the Crown and for the taxpayer, and the potential need to pick up the tab for any remediation work. Even if a well is plugged and abandoned to the highest standard, there does remain a possibility that problems can arise over time. Materials can degrade, there could well be a leak, or a natural disaster could change the integrity of a plugged or abandoned well. There have fortunately been very few examples of this, but the likelihood of an abandoned well leaking increases with their age, and, as we know, we are entering a phase where that could become a real possibility. If there were to be a problem with an abandoned well in the future, there is no guarantee that the company that drilled it would still even be operating in New Zealand, that they would have a presence in our country. So I propose to change this by requiring permit and licence holders to make a payment, or multiple payments, towards any post-decommissioning work that is required. I intend to consult on the factors that should be considered when setting this amount, and this could include things such as where the well is located and the type of hydrocarbon that it contains.

It’s important to note that this bill does not entirely eliminate the risk of the Crown having to step in and fund decommissioning, or pay costs related to post-decommissioning activities. There are further costs to the Crown as a result of the existing petroleum regulatory regime in the form of royalty refunds that will likely need to be made to some permit and licence holders. We know this. This is part of what is currently in people’s permits and the basis of which they are carrying out their activities in New Zealand. I have asked officials to put some time and some effort into looking at what that total royalty liability with refunds is likely to be there. We have consulted on these policy processes—

Order! Unfortunately, the Minister’s time is up.

Thank you, Madam Speaker. It’s a pleasure to take a call on this bill tonight, one that the National Party will be supporting through first reading to select committee because we are a party of personal responsibility, and when people set out with intentions of exploring, of course their intention would be to tidy up before they leave. Although, one would actually note in the timing of all of this, we could be suspicious and say this is the Government’s “Chased Them Away, But Make Sure They Pay Before They Go Bill”, in terms of the calls that they’ve made around oil and gas permits.

So as the Minister said, decommissioning is the process of taking petroleum infrastructure and wells out of service, which may include removing the infrastructure, plugging, and abandoning wells and undertaking necessary site restoration activities. We know that the New Zealand petroleum sector is maturing, an increasing number of petroleum fields are nearing the end of their economic life, but we also know that these assets are going to be used for some time to come in terms of producing gas for our transition fuels to the future. But we, too, believe that the clean-up process is important and the Crown Minerals Act currently does not explicitly provide for petroleum permit and licence holders’ decommissioning responsibilities for the length of time which they are responsible, or the consequences of failing to carry out the decommissioning. One also wonders what the cost of decommissioning this Government’s impact from 2023 onwards is going to be.

But that aside, this is a real issue. I have seen some of the decommissioning of the Tūī infrastructure as I’ve been down at Port Taranaki as that clean-up process was unfortunately left to the Government due to the situation with Tamarind. There is quite an effort going on in cleaning that up and it’s no small feat and it is important.

So New Zealand’s petroleum regulatory regime is based on a principle where those who have benefited from the environmental activities bear the cost of any associated remediation and clean-up activities. However, this principle is currently only explicit in relation to the lifetime of a petroleum permit or licence. So what this bill does is it provides an explicit obligation on petroleum permit and licence holders to plug and abandon petroleum wells and decommission any infrastructure left in situ after production is ceased. There are no market incentives for petroleum permanent licence holders to factor this residual liability into their economic decision-making. So really, as the Minister did touch on before, one of the bigger challenges comes once the well has been abandoned because the likelihood of an abandoned well leaking increases with its age. Moreover, there’s no guarantee that the company that drilled the now abandoned well will be still operating in New Zealand at that time.

But what we are a bit wary of, and why National’s supporting this for first reading and want to take it to select committee, is because we are really interested in what the public of New Zealand and the experts have to say around this. And I’m just going to make one comment to begin with tonight, from John Carnegie of Energy Resources Aotearoa, who said—

💬 Hon Scott Simpson: He’s a good man.

He’s a very good man, Mr Simpson. He’s an excellent man and he understands this industry—

💬 Hon Scott Simpson: In depth.

In depth, absolutely. So he talks about this bill having good intentions, which we would agree. The intentions around this bill are good, but they require careful work to avoid unintended consequences. With this Government we’ve seen a number of pieces of legislation already that have had unintended consequences, and we want to be very careful to work our way through this bill just to make sure that there’s nothing hidden in here that’s going to jump back and bite us, or bite Parliament and Government in the long term.

So these conditions are changing partway through to a retrospective liability and this could encourage earlier decommissioning. That was a comment that John Carnegie made and that could have a huge impact on energy security in this country, because, as we know, there’s already quite an impact on the energy security of this country from the decisions that the Government have made to date. That transition time, which is currently called a just transition, but doesn’t appear to be a transition at all because there is no plan.

So, on the impact summary, there’s a couple of things that would concern us on the National side of the House. One of the things that it talks about in the impact summary is the constraints on data on which to assess the risk. So there are some constraints to assess the risk for the Crown of potentially having to step in as a provider of last resort. The specific costs of decommissioning petroleum infrastructure in New Zealand is uncertain and can vary significantly depending on the timing, location, extent of removal required, and other factors. And so some of the numbers around this, it’s going to be a pretty hard job to make the predictions and to set the costs in place by the admission of those who have done the impact summary. So, certainly, the only certainty around this is the uncertainty, and that is something that, maybe during the select committee process, we could try and get a bit more information around so that when this job is done, it can be a little bit more accurate, if you like.

The second part of the impact summary talks about the limitation on consultation. So the consultation took place from 19 November 2019 to 27 January 2020 as part of the Crown Minerals Act review, where the feedback was sought from Cabinet that they agreed in June 2020 to undertake this. So there hasn’t been a consultation on the specific options that are being proposed here with industry or with other stakeholders. It’s anticipated, it says in here that “there may be some concerns which are further detailed … However, we note that all stakeholders will have a further opportunity to comment on those through the standard legislation change process.” Now, I did hear the Minister say before that I think it was 14 November or a date in November, if I’m correct, which doesn’t sound to me like it is quite the standard legislative process, although it’s a faster legislative process. Although compared to some, or a substantial number of other pieces of legislative processes that this Government has put through, this is what I’d call a medium-term one, because most of them being quite short, because this Government doesn’t have a history of wanting to go out and consult and listen, because someone might tell them what they don’t want to hear. There doesn’t seem to be too much openness and transparency around consulting with the public.

So having said that, I’m going to leave it at that for tonight, and just say, yeah, we do have our reservations around some of the details in the legislation, but we are supporting it to first reading. Thank you.

Thank you, Madam Speaker. This is one of the bills, when I was reading it this morning, that—you know, lots and lots of titles came up in my head—

💬 Hon Member: This morning?

—in terms of why are we doing something like this that is so important? Why are we only doing it now when there’s been such a problem for such a long time? One of those titles that came up in my head this morning—and this is probably my third time reading it, actually, to the member on the other side, because this bill has come up. As I was refreshing my memories on this bill, one of the titles that came up was “Labour Party not afraid to get into the details”—Labour Party not afraid to plug a gap in the legislation.

The other side may laugh at this, but their mistakes or the hesitancy of the previous Government not actually legislating this bill meant that the taxpayer has lost out. The taxpayer has lost out so much money at the Tūī oilfield. This bill is not just something that we’ve imagined, that officials have dreamt up. No, this bill is based on a real story. Taxpayers have already had to fork out $155 million to make sure that we decommission this field properly.

Another title that came out is that the Labour Party is ambitious in our environmental initiatives, but, at the same time, we make sure that the economy gets looked after. We know how important the energy sector is, how important sustainable energy is to our nation, and this is one of the steps that we will take to make sure that we look after the environment, that these oilfields get decommissioned properly with regard to the environment that they’re part of, and, at the same time, that we still get the energy that we need from the ground.

Another title that just came to my mind this morning as I was reading is actually a quote from the Hon Michael Wood. The Hon Michael Wood likes to say—and I think he said in this House plenty of times—that the market has failed; it’s time for the Government to step in. This bill is another example of where the market has failed and the Government needs to step in. So this is, once again, one of those bills that we’ve had to make sure that those users who have made money from our land, made money from our environment, and have, obviously, served our economy—they have made a profit and they should also be responsible for cleaning up after themselves.

As the deputy chair of the Economic Development, Science and Innovation Committee, we really look forward to hearing all of the submissions in coming months. The energy sector hasn’t been a sector that is a stranger to us. They have come to us on many occasions and engaged with us very constructively in the past, on many bills before this House. On that note, I commend this bill to the House.

Well, Madam Chair, thank you very much. Speaking to the first reading of this Crown Minerals (Decommissioning and Other Matters) Amendment Bill, I’m staggered. Fancy having to follow a speech like that. So the revelation tonight has been that Labour Party backbenchers are now required to go away and learn by rote the quotes from the Hon Michael Wood. Now, I’ve got a vision of the book—the book of quotes—probably about 100 pages; 99 of them will be blank, but there will be one page with one or two quotes mostly about a walking cycleway across the Auckland Harbour Bridge—

💬 Chris Bishop: That’s right, a little red book.

—and no—yes, it might well be a little red book, who would know? It probably will be a socialist Labour Party little red book, “Famous Quotes of the Hon Michael Wood”! And there we go, it will be a fascinating thing. What will be interesting is to hear other Labour Party backbenchers quoting from the little book of the Hon Michael Wood’s famous quotes—“The Little Red Book of Michael Wood”—

ASSISTANT SPEAKER (Hon Jenny Salesa): I invite the member to come back to the bill.

Well, I’m responding, Madam Chair, to the revelation from the previous Labour member, Naisi Chen, who was telling us what her bedside reading was, and the quotes that she has committed to memory. But this is a bill that warrants more serious consideration than the last Labour member has given it.

It is a problem because here is a situation where a company has defaulted on their environmental and corporate responsibilities in terms of decommissioning and cleaning up a gasfield off the coast of New Zealand, and, sadly, it’s been the long-suffering New Zealand taxpayer that has had to foot the bill for the tidy up, for the clean-up, and that is as a result of a hole in our law—not only a hole in the gasfield but a hole in our law. The challenge is to get the fix right, because this stuff is expensive. And, actually, the companies who trade in this area, in terms of gas exploration and extraction and oil or whatever kind of mineral extraction it is, they understand the costs involved. For many of them, the cost of exiting is a very significant portion of the total cost of their operation and of doing business.

Now, what particularly worries me about this exercise—and we will, no doubt, hear the details in select committee—is that the company that eventually went into liquidation and ceased trading, Tamarind, were a company that purchased what was left of the field, back in September 2019. Now, there is more than a hint, more than a suspicion, that, actually, Tamarind did not purchase that site, that facility, until near the end of its life. They are a company that, we are told, specialises in end-of-life gasfields and exiting them. I suspect that there is a real potential that an international organisation of that sort knew more about the loopholes and the intricacies and the costs than we did as a New Zealand Parliament and/or Government of the day. I think that there is a real potential that that purchase of their rights towards the end of the life of that field by a company that specialises in the operation of end-of-life oil and gas wells, they knew more about it than the unsuspecting New Zealand taxpayer. What is particularly galling is that this company, having gone into liquidation and ceased trading, their parent company actually continued to trade.

So the issues around the intricacies of company and corporate law are at play here, and not least of which is the intent and, indeed, the undertakings of an international parent company that sets up a smaller company that ostensibly comes into to do the end-of-life stuff, then falls over, for whatever particular reason, leaving the New Zealand taxpayer high and dry.

Now, this is not only a problem in terms of this particular case at hand but today is the second time that we’ve heard of a similar—not completely separate in terms of the style of a situation of this sort of thing occurring, where the New Zealand taxpayer has had to intervene to clean up an environmental mess left by a company that has either failed in its moral and corporate obligations or, in fact, has actually fallen over in terms of its liquidity and insolvency. I’m referring to the situation of the dross at Mataura, in Southland, and the taxpayers had to pick up quite a lot of that bill. Finally, New Zealand Aluminium Smelters Ltd has done what, I think, is the morally correct and proper thing to do and sorted it out, but not after a long number of years of putting the people of Mataura at significant risk, because the dross was liable to be exposed to water, which would have created a toxic mess, and that would have put people’s lives and health at risk. So, in that case, the aluminium smelter contracted out the removal and disposal of the toxic dross to a company that, in turn, stored it at Mataura, and then that company fell over, as well, leaving the toxic mess sitting there and no obvious owner of the obligation to put it right. So, after what is nearly a decade, or maybe even more, finally it has been—or at least it is now back on the site at the aluminium smelter at Bluff.

So the parallels to this legislation in terms of decommissioning Crown mineral sites and what has happened there just highlight, in my view, the kinds of potential loopholes that exist and the risk that exists for the New Zealand taxpayer if this sort of legislation is not right and detailed and correct.

So, at select committee—and we are going to support this legislation through to select committee—we will be wanting to make sure that this well-intentioned bill, because I’m sure that it is well intentioned, is actually not going to result in any perverse outcomes, that the well-intentioned objectives of the bill are going to be fulfilled, and that the detail will ensure that the situation that has happened concerning Tamarind will not happen again. That is where the trick is in terms of getting the drafting right, getting the wording right, getting the intent right, and getting a complete understanding, because we’re dealing with international companies, large companies with huge amounts of capital, big numbers of dollars at stake, and, for them, the potential of finding a narrow loophole that absolves them from fulfilling their moral, environmental, and legal obligations to New Zealand taxpayers and cleaning up end-of-life gas- and oilfields, without that correct analysis and making sure that the i’s are dotted and the t’s are crossed in this legislation, then we run the risk of having exactly the same situation occur again.

So, as my colleague Barbara Kuriger has mentioned in her contribution in this debate, we’ll be looking very carefully, at select committee, to ensure that the detail is analysed. We’ll be looking forward to submissions from people like John Carnegie, who is well versed in expertise and has expertise in this area, because he is a person whose judgment I value, and his experience, I know, will be of benefit to the select committee. So those are the issues that concern us.

There is one final matter that I do want to raise in this first reading speech and that relates to the question of whether or not this legislation is going to be retrospective. Now, on the reading of the bill at the moment, that question appears to be moot and it is a little bit unsure. But if, in fact, it is to be retrospective, then those businesses—

💬 Hon Andrew Little: What rubbish. The member should sit down.

—will want to be taking an even closer look at it. So this is a fair thing. It is obvious this matter has struck a raw nerve with the Minister who’s on duty tonight. He didn’t get a chance to have a go earlier on. He’d be better to tend to his papers. But it is interesting when the Minister does get a little bit roused up. So the question of retrospectivity is, obviously, something that will be teased out at select committee. So we’ll have a close look at it at select committee and we are going to support this bill through to first reading. Thank you.

Kia ora, Madam Speaker. Thank you for allowing me to take a call on this piece of legislation. Thank you to the National Party for, I think, supporting it through to the next stage. I look forward to it, and I feel like just because two of my colleagues across the floor have already mentioned John Carnegie, I’m also happy to talk about my relationship with John Carnegie at Energy Resources Aotearoa. We meet regularly and have robust discussions around issues like this, and very constructive conversations, less so than our previous speaker, Scott Simpson. I was unsure where we was going, but he was going somewhere, I’m sure, to at least support us vaguely on this piece of legislation, the Crown Minerals (Decommissioning and Other Matters) Amendment Bill.

I also heard earlier, Barbara Kuriger, that you were asking about us having no direction—you were questioning us around the just transition. I believe we’re making progress, investing finance and money into that—just under $14 million in the last Budget—for the next three years around the just transition. We’ve had Taranaki 2050. We have Ara Ake. Venture Taranaki has the offshore wind strategy. We’ve got, obviously, green hydrogen with Hiringa Energy. There’s a lot of work going on in this new space, in this clean energy space, and for that member to say that we don’t have a plan disappoints me, because, for all of us, we are passionate about our regions and our communities and we want to see right done.

It reminds me that earlier in the day there was the Ngāti Maru settlement, the first reading, which I was proud to speak on, and I was really surprised when I was meeting with local iwi recently that, for Ngāti Maru, on their whenua, 98 oil and gas wells they have had dug over the past 100 or more years. I look at this piece of legislation and think how important it is to ensure that the taxpayer, that landowners, that the Crown does not have to pay when it comes to a company like Tamarind, like others, who may fail in terms of that space. So we need to ensure that legislation is in place. Being on the select committee, I look forward to speaking and listening, as I always do, and having another coffee with John Carnegie and hearing his opinion. So I commend this next reading to the House.

Tēnā koe, Madam Speaker. I’m very happy to stand and speak in support of this legislation, and I have to say that the Green Party is thrilled to hear the National Party members making such positive remarks about this and acknowledging the important responsibility that people have to look after the moana and the whenua. If they are exploiting it or resources like oil and gas, we should at the very least be held responsible for decommissioning and clean-up afterwards, because what I take from that is most New Zealanders absolutely care passionately about our environment. We want to see it looked after, and we expect those who are extracting resources to do so in a manner as responsible as possible and to clean it up appropriately and not leave it to the people of New Zealand to fund the decommissioning.

Now, how it is possible that Tamarind was in the situation where they were able to just pull out and leave the cost of decommissioning to the New Zealand public is a question, given that the National Party had such an explicit oil and gas strategy in the last term they were in Government. I mean, I remember back in 2010, when the Deepwater Horizon crisis happened in the Gulf. The Green Party was asking questions of the then National Government, saying, “What is your plan, if we’re doing all this oil and gas exploration offshore, to respond to that type of crisis here in New Zealand?”, and the answers were completely insufficient. In fact, there was no thought or effort put into how we would plan for a contingency like that—how we would respond to it—and, apparently, there was not even an explicit statutory obligation for petroleum permit and licence holders to carry out decommissioning activities and meet the full financial costs.

Of course, even if that was the case that that responsibility existed and they had the statutory obligation, they were able to get around it, and so this work should have been done sooner. If anything, the Green Party will be asking questions at select committee about whether it goes far enough and about whether the penalties that are proposed in this bill are sufficient that it won’t simply be in a company’s financial interests to simply pay the penalty, which won’t cover the cost of decommissioning, and so that will be a question that we will ask. But it’s really good to hear—so far, anyway—across the House a consensus that petroleum permit holders should be held responsible and that there should be consequences or even criminal penalties if they fail to meet their obligations to our environment. This is the very least we can do. The oil industry, unfortunately, has a long history of lobbying Government to reduce their responsibilities and their moral, ethical obligations to the world, and we can see this very clearly.

Now, obviously, the transition that we’re in now to clean energy from fossil fuels should have happened 20 years ago. It could have happened 20 years ago, were it not for the very well-funded, powerful international oil lobby basically seeding confusion amongst people and lobbying politicians to not take action to transition to cleaner energy. Unfortunately, because we haven’t taken action sooner, it will be more expensive and more difficult, and there is a serious risk that we don’t have enough time to get off fossil fuels to avoid some pretty serious, damaging consequences for life on this planet.

I’m sure that members here will be really aware of what the latest Intergovernmental Panel on Climate Change science is saying, which is that we have record heatwaves in North America happening right now, in 2021. Imagine what that’s going to be like in 10 years or 20 years. As we’ve continued to emit fossil fuels, that traps carbon in the atmosphere, which is like a blanket suffocating the planet. It’s basically heating it up. Most of the extra heat that’s been generated by human-induced greenhouse gas emissions has gone into the oceans, and we’re looking at serious consequences for life in our oceans because of ocean acidification and changes in the temperature of the ocean, not to mention overfishing.

So, basically, humanity is at a major turning point right now. Either we’re going to take the actions that we need to take to enable life on this planet to thrive, or we’re going to continue doing what we’ve always done, and most people wouldn’t agree with that. Most people want to do the right thing, and they want to look after the environment and they want to leave a healthy moana for their children and grandchildren. But, unfortunately, most people don’t have the power that huge multinational oil companies have to influence politicians, and most people don’t feel that they have that power, but they really do—we do.

The voters have the power, and you can continue to elect parties that will be firm in the face of that lobbying and that will do the right thing. The role of Government is to ensure that these private corporations are not allowed to just run amok, exploiting our environment for their own shareholders’ personal, short-term financial returns. But, rather, we can find a way of working together to ensure that we’re looking after our natural environment and that we’re looking after our people.

All of this that has been done in the name of “economic progress” hasn’t really benefited many, many people at the bottom. It has enriched a very small number of people and it has had enormous consequences for the environment, which affects all of us and—

💬 Simon Court: And we’re all much better off with all this cheap energy—I mean, we are living this life because of the cheap energy, aren’t we?

I’ve an ACT member on my right who’s firmly in the denial camp. He doesn’t understand that his life and the life of his children is deeply related to the health of our water, our soil, our air, and our atmosphere and that the consequences of just pumping the pollution out into the atmosphere will be dire and severe for all of us. Of course, I’m not even going to go into the issues with plastics, and how plastics are affecting our health and the health of many other animals that we share this planet with. It’s really time for us to be responsible.

Most people want to do the responsible thing, and most people understand that in order for us to do the responsible thing, we need to have a strong, transparent, democratic government system that is able to regulate and hold these companies to account, and to tell them no sometimes—“No. No you can’t do that because it’s not in the interests of the New Zealand public.”—and I really wish that some people had said no in the past. When it comes to the way that this fossil fuel exploitation has happened in New Zealand, it has cost the New Zealand public, and we’re very fortunate we haven’t had a catastrophic incident like they regularly have now in the Gulf of Mexico, where we have pipelines bursting and catching fire. We haven’t had a severe catastrophic incident, but we have had many, many oil spills, and there are consequences for our sea life because of that.

So the Green Party is happy to support this bill. We will be looking to ensure that it is as strong as it needs to be and that the penalties are sufficient to get the behaviour that we want from these companies, and, of course, we want to see a faster transition away from fossil fuels, because that is the only way that we’re actually going to be able to respond to climate change.

The gauntlet has been laid out for us. It’s increasingly clear that we are running out of time, and we have to work together. We can work together to transition away, but not if we listen to the lobbyists, and definitely not if we listen to the big companies who want to keep doing things the same way they always have, and not if we listen to politicians who are in total denial about the state that we are in.

Madam Speaker, thank you. The ACT Party supports this bill. We’ll be supporting it to select committee. This is an important piece of legislation that allows us, for the first time, I think, since the Resource Management Act (RMA) was passed, to actually explore issues about legacy liability for environmental contamination and what you do with orphan sites. What’s the balance of responsibility and accountability between the private sector, who operates oil- and gasfields—and I do note that the Green Party member has left without actually waiting to hear—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! The member may not refer to the absence of a member, even though she isn’t absent.

Thank you, Madam Chair, for that reminder. I know, but some truths are inconvenient. So I just want to talk about some of the risks that this bill presents to Government and to our energy security, because the businesses that are involved in delivering energy in New Zealand—in the gas sector, in the oil sector, but also in the electricity sector—rely on having access to a secure supply at affordable prices and to be confident that the environmental issues are well managed.

It’s important because businesses in New Zealand, almost without fail, are socially responsible. We’ve come a million miles from that time 20, 30, 40 years ago where businesses thought it was acceptable just to liquidate and leave, and the issue that this piece of legislation aims to repair or address, the abandoning of the Tūī oilfield and leaving those decommissioning responsibilities with Government, was a surprise to many—a $350 million bill and counting, we see. But it’s not a surprise to all of us, because in a previous life, in a previous role, I led environmental decontamination projects at some of New Zealand’s worst legacy contaminated sites, where chemicals like 2,4,5-T had been manufactured and where very, very harmful timber treatment chemicals had been manufactured and used, so I do have some insights which I’d like to share with the House.

It is important to recognise that businesses that start off with a consent or with a permit that says “You must pay forward a bond or into an after-care fund because something might happen and we don’t know what will happen in the future.”—it is commonplace that those arrangements are made at the time of consenting large long-term operations like landfills, for example, like waste-water treatment and other types of sites which actually handle quite harmful materials, where, if something went wrong, it would be local government or central government that picked up the pieces and paid the bill. We’ve seen that a number of times over the past few years.

This Tūī oilfield is not the only example of this. We saw the awful Pike River disaster, which not only was a terrible loss of human life but has led to the Government, for a number of reasons, feeling it was necessary to commit tens of millions of dollars to remediate that site and make it safe. We’ve had the Rena disaster in the Bay of Plenty, where a freighter—not an oil tanker but a freighter—ran aground and caused significant environmental damage, and that cost was covered by the insurer but also significant costs had to be covered by the local authority and central government. We’ve seen the Whakaari / White Island disaster. We still don’t fully understand all of the reasons that happened, but it’s clear that the Government will have to bear significant cost in some way for that terrible, terrible event.

So when we think about what this bill is trying to achieve in order to offset the risk of a potential future liability for cleaning up oil- and gasfields where the operator leaves or goes out of business or somehow abandons their operation without fulfilling their environmental obligations—and remember, they already have resource consents if they’re onshore, and they have other permits under the RMA and issued by the Government through the Ministry of Business, Innovation and Employment if they’re offshore. So it seems remarkable that in 2021, we’re talking about having to create new legislation to address these issues.

We know there are a number of different ways to do it, but some of the risks that have been identified in developing this legislation have already been covered this evening, so I won’t cover them again. But what was interesting from the Government’s own regulatory impact assessment was something I’d like to describe here. It said that it does identify a risk of implementation: that the proposals need to be implemented in a way that does not precipitate or exacerbate the very financial problems they’re designed to safeguard against. In other words, scaring the horses, those New Zealand - based or international investors who we depend on to keep the gas flowing, to keep the lights on this winter in fact—actually scaring them, so they decide that they would rather pack up, leave New Zealand, and take their chances in the courts, because that is a very, very real risk.

If we think we’ve got a problem now with projections that New Zealand will burn over 1.5 million tonnes of coal this year, just wait until one of these big gas producers decides it’s not worth being in New Zealand based on the behaviours of this Government and their approach to regulation. It’s too uncertain. It’s too scary. They’d rather go and work somewhere else, like Victoria—that Australian state—which, after having had a moratorium on gas exploration and bringing new gas on stream, just last week announced that their moratorium was lifting, because they want more gas. They see it as the best transition fuel from coal and other high carbon emitting fuel sources, the best pathway to a low-emissions future.

So it’s surprising that while we’re here talking about all the terrible things this industry might do or might have done or could do and how we need to protect the New Zealand Government and taxpayer from that, actually there is still no recognition at all by this Government of the very important role that the gas sector plays in securing New Zealand’s energy, energy affordability, and making sure that not only do we keep the lights on but we have high-paid jobs for people from sometimes very remote communities and regions that have no other economic activity to speak of—high-paid jobs that mean they keep food on the table, their kids have shoes on their feet, they can pay their bills, and they can go to work for companies that actually treat them well and do observe all of the normal social responsibility practices we would expect from multinationals in New Zealand’s biggest industries.

So thinking a bit further about the risks of scaring those businesses and those jobs away, another regulatory risk identified by the Government’s advisers was reducing the attractiveness of New Zealand as a petroleum investment destination. When I read that, all I could think of was, “Ha! This must be a surprise to some people writing this paper.” But petroleum investment destination—I don’t think New Zealand currently has that brand. I think that we scared off our best chances of attracting that foreign direct investment some years ago, and we don’t know how we will ever return to that level of certainty.

But I want to give you an example of how the Government, in bringing this bill to the House, is actually acting quite duplicitously. It’s not sharing the full facts. In fact, some of what is written in the regulatory impact statement almost sounds like utu, particularly when you look at the way they’ve responded with this legislation to a court decision around whether a permit holder was likely to comply and give proper effect to their work programme. That was when the Government was successfully sued by a petroleum company and was then forced to admit, in fact, they hadn’t followed their own processes. Then, just a few days ago, the Government’s own radio station, Radio New Zealand, reported the Government was prepared to shell out millions—tens of millions—of dollars to Rio Tinto to help offset their costs of clean-up.

So it’s quite clear that the Government is prepared to play favourites and to buy silence when it has to, but sees an opportunity to go after an industry here that is already suffering from poorly thought-out regulation, and to go after them. That’s why the ACT Party supports this bill going to select committee: so we can start to hear some of the real, honest submissions from people who would be affected by what looks like a half-hearted, half-arsed attempt at legislation. Thank you, Madam Speaker.

Before I call the next speaker, could I ask the member to remove his coloured box from off the benchtop. Thank you.

Kia orana, Madam Speaker. Look, I have to say it’s not just a pleasure to follow the member who has just resumed his seat, Simon Court, but it is always a distinct pleasure, particularly because he started his contribution in the House tonight by actually conceding and acknowledging that this Government is introducing a bill that will be an important piece of legislation. There we have it, folks: an important piece of legislation. I have to say that he started his contribution in the House so well, and then it just headed further south thereafter.

Look, this proposal before the House tonight is a piece of legislation that will, in effect, strengthen the responsibility for permit holders, for licence holders, in two areas: the first in terms of their financial responsibility, and the second in terms of their legal responsibility. In doing so, what this bill does is it therefore decreases the risk that the Crown, property holders, taxpayers, and others will have to pick up the tab, pick up the cost, to remediate a failure to decommission. I actually think that ratepayers and communities all around this country will think that that is a good move. No doubt, when this bill moves through to select committee, we will hear as a Parliament from those communities of interest, and we certainly look forward to that.

I want to, in taking this brief call this evening, commend the Minister of Energy and Resources. Her initial reactions around this and in terms of the next steps that have been signalled need commendation, but they shouldn’t come as any surprise. This legislation will ensure, actually, that permit holders, licence holders, are in a position where they simply cannot abrogate their responsibilities and expect others in this community to pick up the tab. This will also, as has previously been mentioned, bring us into line with other global jurisdictions. This is a fantastic bill, and I certainly am pleased to support it.

Call Simon Watts—five-minute call.

Madam Speaker, thank you very much. I rise on behalf of the National Party and as the member of Parliament for the North Shore to talk in the Crown Minerals (Decommissioning and Other Matters) Amendment Bill first reading.

National supports this bill through to select committee. As we heard this evening, the process for decommissioning of petroleum infrastructure is one that is significantly expensive and one which is absolutely critical and necessary, as we have seen through failures in the past. This legislation will play a part in order to ensure that we, hopefully, avoid that situation and, in particular, ensure that the burden of the cost to decommission and tidy up once these works are undertaken is borne by the entity which undertook those works and not the people of this country paying for it out of their pockets, being the taxpayer.

We’ve heard the concept before from Barbara Kuriger, around the concept around personal responsibility. I think it’s really important—and this is something that is, obviously, a core principle of the National Party as well—that this, in effect, is something that we should expect. From what I understand and from what I’ve read, businesses on the whole across our country also acknowledge that when they do their business in this country, they derive economic gain, but there also comes with that obligations, ensuring that the way they leave our country is in the state in which they received it. So that is good.

I guess I do want to reference a couple of aspects around this, which I think, as it goes through into the select committee phase, will be important for that committee to consider. And particularly that is around the nuanced nature of a permit holder that basically assumes a liability for decommissioning, but through that process may transfer that permit to another party. But the way in which the legislation is currently drafted, the responsibility, if the party which receives or purchases that permit fails, will go back to the original seller.

I think that creates a certain—well, it’s an element of complexity that I think we’re going to need to look into from a practical aspect. I know Russell McVeagh have raised similar concerns in regards to some of that nuance, because you can imagine a director of a company—that the original company that sells the permit and then basically the company’s wound up, potentially under this legislation, those original directors may carry the liabilities in terms of their personal liability and also their director liability, both criminal and also civil, for potentially the failure of the entity that has purchased that payment.

Coming from a banking and financial background and having an understanding around the due diligence process required when purchasing organisations and entities, I think the emphasis around the due diligence required by the seller—actually, in this instance, around ensuring that the buying entity does have the financial capability not only to trade across the medium term, but also have the financial viability and sustainability to be able to afford to pay the decommissioning costs at what could be a reasonable point in the future. So I think that’s some of the element that will be worked through, and I’ve got confidence, I’m sure, that the select committee will consider that.

I think the other aspect as well is just in terms of the actual costs elements as well. So when you sell that permit, obviously the person buying it’s going to take off the costs that they expect it’s going to be to decommission. But again, if that company then subsequently collapses, then the original buyer may have, in effect, paid twice or had, in effect, a bit of a double cost on them. So I look forward to seeing this proceed through the House.

As we transition away from a fossil fuel economy, as we know we must, that does leave us with the problem of ageing infrastructure and how we manage the moving-out process from the companies who have been running our fossil fuels companies. How do we then go on to deal with the ongoing issue of pipelines under the sea, of aged and remaining infrastructure that may continue to cause us problems in the future? It may be, as our friend from ACT has said this evening, that most companies are responsible. One would certainly hope that they were. It is certainly a fundamental principle of ordinary morality that when one makes a mess, one cleans up for it.

But, just because we put out there clear guidelines as to the expectations of both sides of an arrangement, as to what the liabilities and responsibilities will be, is not a disrespect to either side of the equation. When we rent a house, we pay a bond against the possibility that we will not be honourable renters. When we sue someone, there are occasions when we are required to pay security for costs so that an ultimately successful person on the other end of our suing is not left out of pocket. It doesn’t mean that we are behaving in a dishonourable fashion to be clear about the responsibilities of both parties. This is straightforward, simple legislation. It creates a clarity of obligation on both sides; it gives financial security for costs, should the company not fulfil its responsibilities; and it enables effective monitoring of their finances so that we can find out whether that is in fact going to be the case. I commend this bill to the House.

Thank you, Madam Speaker. It’s been very pleasing today to hear this issue addressed both in question time and then in almost every speech today about the problem we’ve often had with older legislation not providing for things like bonds and financial instruments when an environment is left degraded. So we know that orphan sites and legacy contamination are issues and, as I said, it’s great that everybody across the House agrees that this is a problem.

So what does this bill do? Of course, it amends the Crown Minerals Act, and that Act applies to petroleum, which is a Crown mineral. The purpose of the Act includes the effective management and regulation of Crown minerals and good industry practice. There’s a regulatory scheme, and that includes some key framework tools, such as providing minerals programmes, which are done through public process, setting out how powers will be exercised, and then there’s a permit process as well. There’s three types of permits: prospecting, exploration, and mining. And here that interest is on mining. An application for a mining permit for petroleum includes a proposed programme of work. That is part of the focus of this amendment.

There’s other parts of the Act, of course, that relate to access to land, registers, enforcement royalties, offences, and regulations. But what this bill does is it does many changes to that framework, and that includes adding a function of the Minister to make decisions on decommissioning and requirement for financial securities. It adds new requirements for petroleum mining permits, and that is that they have to have a field development plan that details decommissioning work. It adds a new requirement for a notice of expected cessation and a notice of cessation. It adds new subparts, added that specifically address decommissioning requirements in some detail, and these were discussed by the Minister in her speech. And it includes assessment of financial capacity. It also amends the provisions around records to include financial and scientific, new infringement offences, and amendments to the regulations. It is an important environmental and also health and safety piece of legislation, and I wish the Economic Development, Science and Innovation Committee well with their submission process.

We too are supporting this legislation, the Crown Minerals (Decommissioning and Other Matters) Amendment Bill, through first reading to select committee, because we do want an opportunity for submitters to come and talk about how to improve this legislation and to get rid of any unintended consequences, or perhaps intended consequences, that stop the good function of business and instead don’t only focus on those where there might be a problem. We’ve heard other speakers in the debate talk about the Tūī field and the great cost to the Crown there. So it is important that we have legislation that prevents that. It means the taxpayer doesn’t unreasonably, unfairly, unnecessarily have to take up the cost of cleaning up after the decommissioning, and cleaning up the mess that may well be environmentally left behind after the exploration of oil and gas finishes.

However, I notice, when doing a bit of research on this, that there are concerns from the sector, from responsible businesses, about some of these consequences. And I noticed that Energy Resources Aotearoa have said new commissioning rules for natural gas- and oilfields have good intention but require careful work to avoid unintended consequences. Well, actually we want to hear from them to know what those might be, to ensure that’s not the case. One of the earlier speakers in the debate said that, as we transition away from using carbon energy, this becomes important. Well, actually, irrespective of that, it’s important to get it right. There have been very few cases where companies have not met their obligation when they have needed to decommission, and if indeed this is about when a responsibility or liability is passed from one party to another party through investment or sale, the responsibility should rest with the new owner of the permit, not the last one.

So it will be important that we look, when it comes to the Government wanting guarantees or deposits or things like that, that actually it is the new owners that take that responsibility on. It’s a little bit like, I suppose, in the case that someone, I don’t know, has a factory and they sell that factory to someone else, they retain liability for an extended period of time. Now, they shouldn’t be able to not meet their obligations. They shouldn’t be able to avoid them. But, in the normal transfer of a business and the conduct of business, it should be the new owners that have that responsibility, not somebody that many, many years before was involved but is no longer.

The other thing we need to make sure is that actually this is fair, and the reason for that is that this is a Government that have decided without any advice at all to stop the exploration of gas in New Zealand. This is the second week in a row that we are having a debate, or a discussion, on legislation brought by the Hon Megan Woods. Last week, it was about the measurement of gas in companies and so on, the reporting of it; this week, it’s around decommissioning. Last week, we didn’t support that legislation; this week we are. But Megan Woods, the honourable Minister, misses the point with this legislation. And the reason for that is that the Government have said they don’t want any more exploration of gas in New Zealand.

A speaker in the debate earlier, from the Government, said that’s why this legislation is needed: it will be needed much more in the future because we won’t have more exploration and the current assets will run out. But the problem we have there is that it’s extremely short-sighted of the Government, because this is a Government that, in the first quarter of this year, imported more coal than the last two years combined to generate electricity. It’s a Government that will import two million tonnes—two million tonnes—of coal this year from Indonesia to generate electricity. And I don’t agree with the member opposite when she said that this decommissioning legislation will be needed more in the future because the Government has made decisions that will exit New Zealand from exploration and from the production of natural gas. She’s wrong, but the sentiment around that is that, unfortunately, they’ve done that and therefore energy costs go up in New Zealand, electricity is more expensive for consumers, and gas that many parts of the world are using as a transitional energy away from heavy use of carbon or coal—

ASSISTANT SPEAKER (Hon Jacqui Dean): Just come back to the bill.

Well, I am, Madam Speaker, but when people are listening and the member opposite said the reason this is needed is because we’re not going to be having any oil or gas exploration again in the future, that’s a point that’s important to address.

So the point here is that, as energy costs go up and as other parts of the world use gas as a transition away from more heavily used carbon energy production—i.e., coal—and move towards more sustainable, this Government has given up on that, and instead they’re focusing on how they hold parties liable when they have to decommission. That’s important; we support that, but at the same time they should actually be saying we want exploration of gas so that we can transition away. In fact, if we had companies here who thought it was a good business environment to be in and they were looking for gas, perhaps Megan Woods wouldn’t have to import two million tonnes of coal this year from Indonesia to generate energy for New Zealanders at such a great, great cost.

We are supporting this. It’s interesting because we’re hearing more noise from the Government now, when they are held to account for the importation of coal, that isn’t good for the environment or climate change, but when it came to this legislation, they’re taking the shortest possible calls I’ve seen. It suggests to me that last week, when they were taking full calls, they liked the importation of that coal. What they don’t like is looking for gas in New Zealand and to be used as a transition. We do support this legislation, but we’ll be looking to make sure it’s fair and that actually the responsibility for the cost goes directly to those who own the companies and it doesn’t unfairly burden those who, in every good faith, have sold their licence to somebody else and that they’re not held to account for things they aren’t responsible for. Thank you.

You talk about fairness and unfairly burdening who?

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order!

Sorry, I beg your pardon—the member who has just—

ASSISTANT SPEAKER (Hon Jacqui Dean): The member will not bring the Speaker into the debate.

I apologise, but for those of us who live in Taranaki, when you talk about the burden of this cost, it is not—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order!

Sorry, I apologise.

ASSISTANT SPEAKER (Hon Jacqui Dean): The member will not bring the Speaker into the debate.

Of course. So the incredible cost, dollar-wise, to the taxpayer is not the only cost that is being borne by Taranaki. We have a whole pile of local contractors who were let down. We have had months of having a ship offshore with tens of thousands of barrels of oil in it, wondering if it would survive the winter, and we have had, for years, the ongoing experience of decommissioning the Tūī oilfield. For those of us for whom Taranaki is home, for whom those beaches are pristine and are really, really valuable, there is a cost. When you talk about—sorry, I apologise; when there are members on the other side of the House who talk about making sure that this goes to select committee so that we can talk to those who are being affected, it isn’t just the oil companies.

💬 Hon Todd McClay: Anybody can submit.

Of course—they can and they will, and we remind you that this is about—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order!

I apologise.

ASSISTANT SPEAKER (Hon Jacqui Dean): This is now the fourth time the member has brought the Speaker into the debate. I’d ask the member to be very careful. Thank you.

The provisions in this bill are about increasing their ability to more effectively manage the risks to taxpayers but also to make sure our communities are safe. We’re really pleased that iwi have already been involved in the process, not just on the ground with decommissioning Tūī but in feeding in responses to the discussion document. As a result, we are really pleased that we are going to be able to take this to the select committee and really sort this issue out. I commend this to the House.

Motion agreed to.

Bill read a first time.

The question is, That the Crown Minerals (Decommissioning and Other Matters) Amendment Bill be considered by the Economic Development, Science and Innovation Committee.

Motion agreed to.

Bill referred to the Economic Development, Science and Innovation Committee.

Instruction to the Economic Development, Science and Innovation Committee