Maritime Transport (MARPOL Annex VI) Amendment Bill

on behalf of the Minister of Transport: I present a legislative statement on the Maritime Transport (MARPOL Annex VI) Amendment Bill.

💬 DEPUTY SPEAKER: That statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Maritime Transport (MARPOL Annex VI) Amendment Bill be now read a third time.

Mr Speaker, members of the House, members will be aware the Government is committed, which I think this is a commitment we share across the House, to the reduction of greenhouse gas emissions from transport, and to reduce shipping emissions, particulate emissions, for example. In doing so, this will contribute towards New Zealand meeting its emission goals and helping the world do better.

Shipping is a major contributor of noxious emissions to the atmosphere, particularly sulphur oxides, nitrogen oxides, and particulate matter. These affect both human health and the environment. Passing this bill will enable us to reduce these emissions and implement greenhouse gas emission reduction measures. It does this by aligning our domestic legislation under the Maritime Transport Act 1994 with the International Convention for the Prevention of Pollution from Ships, MARPOL annex VI. New Zealand’s accession to MARPOL annex VI will also strengthen New Zealand’s ability to play a credible role in negotiations at the International Maritime Organization to both push for global ambition and improve New Zealand’s ability to protect its trade and economic interests.

We expect all of the associated rules and regulations to be in place by the end of this year, which will enable the Ministry of Foreign Affairs and Trade to deposit the instrument of accession with the International Maritime Organization for the new requirements to come into force three months later, which is estimated to be in March 2022. I commend this bill to the House.

It’s a real pleasure to take a call on this bill, the Maritime Transport (MARPOL Annex VI) Amendment Bill. I’ve just come in from Auckland, and it’s great to be back in the House and to be able to remember what I’m supposed to be doing here after many months away. So, apologies for that, but I’m sure it will come flooding back. But this is a very good, common-sense bill. We support the bill, as we have right from the beginning, as the National Party. It is a positive step towards a much cleaner environment, we’re removing marine pollution, particularly around ports and harbours, and it’s just a very common-sense bill.

We discussed it a lot in our select committee, with an illustrious group of people around there, and we were all in violent agreement. I think we spoke to probably eight stakeholders—

💬 Greg O’Connor: Even more illustrious now.

Yeah, exactly. But, obviously, the MARPOL bill, we know what it’s about: it’s about marine pollution, and it’s about an agreement to reduce global marine pollution across the world. We were a signatory to it back in 1998. I think we’ve signed four of the six annexes; this is our fifth, and those different annexes are covering different aspects of marine pollution. Of course, 97 percent of the world’s shipping tonnage has actually signed up to it already—I think 94 countries, by memory—and it’s important that we play our part. We’ve probably been a bit slow, bit overdue, but we’re there now and we’re keen to do it.

Annex VI, as the Minister talked about, does limit air pollution from ships around ports and harbours, specifically nitrous oxide, sulphur oxides, and particulate matter. Of course, that’s really important because that has negative health effects around cardiovascular and respiratory disease, lungs, and general weakening of immunity. This legislation will give the powers to conduct inspections audits to ensure compliance. Of course, the way that shipping companies do that compliance is they’ve got two options: one is to install scrubbers, which are, sort of, very complicated exhaust gas treatment devices, and that’s frankly not realistic for the New Zealand shipping fleet. The other way is, obviously, to adopt low sulphur fuels and limit sulphur to 0.5 percent. Those fuels, of course, aren’t produced in New Zealand—Refining New Zealand doesn’t produce them, won’t produce them—and so we’ll be importing that fuel into New Zealand and making sure that we’ve got improved port reception facilities as well.

We had a good select committee process, and the good thing was that all our stakeholders, all the submitters that we talked to, were very much on board. As I said, we had eight submissions; I think two oral submissions, and, importantly, there were just some definitional changes that were of very minor consequence.

So this is a bill that’s hard to talk much longer on, suffice to say that we are very pleased to support this bill and commend it to the House.

The question is that the motion be agreed to.

I can only agree with the previous speaker, as the chairman of the same select committee, the Transport and Infrastructure Committee, which was much the poorer for the lack of those two members in the back row there, I might say. But they did their bit and it certainly helped us get this piece of legislation through.

Just to put this in perspective, a cruise ship—and it must seem a long time since we’ve looked out of the windows and seen a cruise ship coming in here. But one cruise ship coming into Wellington Harbour is the equivalent of 200,000 extra cars driving on an average day around Wellington—just to give you some idea of what a piece of legislation like this is meant to deal with. It does ensure that when these ships arrive, what they have traditionally done is they’ve used high sulphur fuel, which is 3.5 percent by mass, and that will now be required to be 0.5 percent. Why, you might ask. Well, it’s all about price. Obviously, the higher sulphur fuel is considerably cheaper than the lower sulphur fuel. So the scrubbers that are required, once they’re in New Zealand waters, to cleanse it—those scrubbers will actually literally take the sulphur out of it, and once they arrive in New Zealand, they’re required to cleanse it.

So the important part about this legislation is that it does align us now. If we’re going to take our part—and I note that we are at COP26, over in Glasgow, at the moment—and if we’re going to be credible on the world stage when we’re talking about all aspects of pollution of the environment, we’ve got to make sure that we are doing our bit. We ascribed to this and we signed up to this legislation. This now completes our obligations, and we can hold our heads high and know that we are doing what we should be doing, along with the rest of the world, in relation to the marine fuels. So I have no hesitation commending this to the House.

Thank you, Madam Speaker. I, too, join with colleagues from across the Chamber in supporting this piece of legislation. It’s been a long time coming. New Zealand—it’s fair to say, I think—could be accurately referred to as an outlier, in terms of our speed at which we have confirmed the arrangements under this protocol. In fact, I did a little of research earlier this evening—I didn’t sit on the select committee, so I wasn’t privy to the submissions that were made, and I see that the select committee records show that there were only eight submissions and only two were heard orally by the committee. But I did a little bit of research and I see that there have been a number of academics who have been literally badgering successive Governments over a long number of years to sign up to this protocol and for New Zealand to be playing our role, in terms of our international obligations.

There is a Dr Bevan Marten, from Victoria University, who’s written a number of very good papers on why New Zealand should have formalised the MARPOL Annex IV provisions far earlier than we have. In amongst it, he says—and this was back in 2016—that “The global conversation around the amount of pollutants that enter [the] earth’s atmosphere is impossible to ignore, and shipping-related emissions are no exception.” We, of course, by virtue of our position on the globe, rely probably more so than just about any other nation in the world on reliable shipping networks between ourselves and the rest of the world. We are literally surrounded by the largest moat in the world, so shipping plays a huge part in our ability to be functioning as a prosperous First World economy.

Pretty much everything that we need to import into New Zealand that obviously doesn’t come by air has to come, by definition, by sea, unless my colleague Maureen Pugh does a good swimming job across the Tasman.

💬 Maureen Pugh: Probably not.

Probably not? OK. So there are pretty much only the two ways of getting product in and out of New Zealand: air and by sea. The vast bulk of volume is by sea. We also haven’t had the benefit of an international fleet of vessels that are flagged under our New Zealand flag. So for many years, this was an issue that we sort of coat-tailed on the rest of the world with.

Most other countries, I think it’s something like 95 percent of countries, have actually already signed up years ago to this MARPOL annex—years and years ago. Most of the vessels that actually visit here to deliver goods or to take them away from our mostly primary production sectors are actually already complying. So one of the roadblocks has actually been the impact that this change will have on our domestic coastal shipping around the country.

I’m particularly reminded of the very good work of a former member of this House Annabel Young, who ended up being, for a long period of time, the executive director of the New Zealand Shipping Federation. She used to take every possible opportunity to lobby members of this House and this Parliament and previous Parliaments about the impacts that the acceptance and the confirmation of this annex would have on the coastal shipping arrangements around New Zealand.

Because international vessels are mostly compliant, it’s our local ones that haven’t been. Part of the reason that they haven’t been is, of course, cost. I’ve heard other speakers this evening indicate that one of the reasons is that the lower - sulphur oxide diesel is more expensive because the refinery up at Marsden Point doesn’t produce it and it has to be imported, and therefore there is a knock-on cost effect. So if we have our coastal shipping having to buy bunker fuel at a higher price, then we actually all end up paying for that one way or another, because of the cost of the goods that are shipped around the coast of New Zealand—eventually, sooner or later, we as consumers all pay for that. But I would argue that in matters such as this where we are taking cognisance of our place as a global citizen and a good world citizen, we should be prepared and willing—if necessary—to pay the price for a better environment outcome, even if, in terms of global impact, the changes here in New Zealand will be actually very small. Those changes send a significant message to the world that we are taking our responsibilities seriously, albeit late.

So we do support this piece of legislation. One of the things that also comes up quite often when people are talking about this fuel, and the changes, and the low sulphur fuel, is people sometimes make the mistake of assuming that just because most international shipping and our coastal shipping is fuelled by diesel, it’s similar to the same kind of diesel that you might put into a tractor or a domestic vehicle. They could not be more dissimilar. In the 2016 paper that I referred to earlier, by Dr Bevan Marten from Victoria University, he makes the very good point that “The vast majority, (95 %) of the world’s shipping fleet, runs on diesel. However, the diesel used in ships (usually referred to as bunker oil) is much lower quality than is used in road vehicles. Bunker fuel is much cheaper as it is virtually a waste product of the standard oil refining process. It is a cross between a solid and a liquid that is too thick for road vehicles—it is literally ‘the bottom of the barrel.’”

So people see the impacts of this bottom-of-the-barrel, thick, sludgy bunker diesel that is used for fuelling the vessels that we’re talking about, and they see it most regularly and obviously when they are looking at vessels that are sort of parked up, that are in ports—Auckland, Tauranga, Lyttelton—and these vessels are often kind of idling to keep the things going. You’ll see the black smoke coming, literally, out of the funnels. I’ve seen it here in Wellington on a still day when the harbour will be smudged with a black air line across the harbour that comes—and Paul Eagle, I think he’s seen the same thing. It’s quite disturbing when it is obvious and literally putting a black smudge across the pristine air of Wellington. Now, I know that Wellington doesn’t actually have too many clear still days, but when it does happen, it’s very marked, it’s very obvious, and it’s very apparent to even the casual observer—the obvious air pollution impact that this heavy diesel bunker fuel has.

So this is a piece of legislation that has been a long time coming. I think the Transport and Infrastructure Committee, from what I’ve read and the reports I’ve heard, have done good work. This will, I think, save our face, to a degree, because we have been so slow. I noticed also that one of the concerns that the shipping federation has had is that, well, if the fuel is not coming from Marsden Point, then we’re going to have to import it, and that will be expensive, the logistics of it will be complicated, and how will the New Zealand coastal fleet actually get to it? Well, I was delighted to see that, back in May of this year, the ports of Auckland and BP have actually entered into a commercial partnership to secure low sulphur fuel for oil suppliers for shipping through the Port of Auckland. And it seems that the ports of Auckland—they have a subsidiary called Seafuels, and in their commercial partner BP, they’ve reached an agreement to use the bunker barge Awanuia to deliver MARPOL-compliant very low sulphur fuel for the marine market in Auckland, and be serviced out of the Auckland port. So that’s an agreement that will help overcome the logistical challenges that some were concerned about in terms of this piece of legislation that we’re considering here tonight. The markets sort of solved the problem, as often the market does. So they’ve seen a commercial opportunity, they understand the imperatives, they understand that there is a market for low sulphur bunker fuel, and they’ve sought a way forward to do it. So I commend the ports of Auckland and BP for taking the initiative and for getting ahead of this piece of legislation. And good on them. I hope it works well for them.

So congratulations to the House—I think unanimity across the House tonight. We on the National Party side of the House, we support this legislation and do commend it, even though it is belatedly, to the House.

Tēnā koe, Madam Speaker. Look, can I just endorse all of those who have spoken. There is whole-of-House support for this bill. Just one thing: there was talk about Wellington not having beautiful days, and it just seems to be that we have beautiful days when MPs from outside of Wellington aren’t in Wellington! But every other day, I can assure you is beautiful, hot, and Hawaii-like. But that is for another bill.

Now, if I could just focus on the bill. This is part of this Government’s commitment to tackle climate change [Interruption] There you are; I knew they’d wake up, put it that way. It is also our contribution to making shipping more environmentally sustainable—the industry and the way that we do it. I did note that the previous speaker, the Hon Scott Simpson, did start to talk about coastal shipping, and that will be a big push in terms of adhering and achieving what MARPOL is intended for.

So I’m not going to say too much more. I commend this bill to the House.

Thank you, Madam Speaker. In the closing minutes of the House tonight, the Green Party is supporting this bill, the Maritime Transport (MARPOL Annex VI) Amendment Bill. And I’ll try and make sure my short contribution is worthy, considering that this is my first day back in the House in over three months, and today I had to ask three people what bill we were on in this House. I also voted wrong and had to go back and correct that, and then I also missed a whole bill voting. So I’ve set my standard really well! This contribution is going to be amazing by comparison.

So this bill, of course, addresses the impacts of shipping emissions by bringing us up to the world standard Annex VI of the international convention. And as everyone has said, it is long overdue. I think it was colleague Mr Simpson who said that, actually, the majority of other countries are already there. He said 95 percent—it’s even more than that: 97 percent of global freight capacity are already signed up to the convention. So we were lagging well behind in an almost embarrassing state. It’s about time and it’s good that we’re bringing this bill tonight in the House, because this is about our climate protection for our future and for our mokopuna. It’s about our beautiful country also, and we know what it’s like to have so many of our cities hugging the shore—our towns and cities around the country on our shorelines—and it’s not uncommon, unfortunately, to see giant plumes of smoke intruding from ships into our beautiful, beautiful landscapes.

So just a very quick contribution to support this bill and that the Greens believe that, yet again, Aotearoa can be at the forefront of pushing for global reductions in emissions, including through shipping emissions. So, pleased to commend this bill to the House.

Thank you, Madam Speaker. The ACT Party supports this bill. There will be environmental benefits, but unlike some of the more confused members of the House who believe this bill will actually reduce carbon emissions and help the climate, it’s not a bill about carbon emissions; it’s about reducing pollution. That’s sulphur dioxides.

There are real benefits to reducing sulphur dioxides. We’ve heard about air pollution, human health—but there’s a cost. There is a significant cost that New Zealand coastal shippers will bear and that our ports will bear as they have to build infrastructure to cope with the additional bunkering fuel requirements, the storage requirements, but also to cope with the discharges that this bill requires them to take care of when visiting ships visit ports and they’re required to receive whatever’s in the bilges from the ships. It’s been described as sediment. I’m sure it is a very toxic and harmful substance, so it’s good that these substances will be cared for, but there is a cost and there is also an issue with the supply chain.

These fuels are not manufactured in New Zealand. While it’s gratifying to hear that the private sector, in conjunction with a well-managed port at the Port of Auckland, has come to an agreement to provide some fuel storage, there are many other major ports around New Zealand where coastal ships call and where they often need to refuel. So this infrastructure will need to be replicated at other ports around New Zealand, potentially Timaru and Lyttelton, Wellington, Napier, for example. Each one of these ports will require its own fuel storage facilities. They all come with a cost. Those costs will, of course, be passed on to the consumer, and that is at a time of rising inflation when inflation is outstripping wages. We’ve seen the statistics today. We know that New Zealanders’ wages are not keeping up with the cost of living. This will add another cost.

There’s also an issue of the coastal ships themselves. New Zealand only has a few dozen of these ships, and most of them are specialist vessels that carry products like cement from port to port. That takes thousands and thousands of the equivalent truckloads off the road. But it does mean that we are heavily reliant on these ships as part of our supply chain. Some of the companies that provide these shipping services have bought new ships recently, in the past few years. These ships have a 30- to 40-year asset life.

Now, not all of them are compliant, although most are, and what these regulations mean is they will have to either retrofit some type of filter system or they will need to purchase a lower sulphur fuel. But they will actually have to modify the engines and increase the level of maintenance and the cost associated with that because they’ll no longer have the benefit of sulphur in the fuel. Sulphur is in fact a lubricant in the fuel. It has a positive benefit for engines, which is why sulphur has been in diesel as well as bunker fuel, because it actually reduces the amount of maintenance and wear and tear on these engines. So there will be an additional cost and there will be additional maintenance required to ships as they have to convert.

All of these costs flows through to the consumer. They flow through to the person buying goods at the supermarket. They flow through to the construction sector, which depends on cement and other materials that are carted by coastal shipping around New Zealand. The cost to shippers has not been quantified, but it can be absolutely certain that it will flow through.

Then there is the cost to the ports themselves of providing the extra tankage and complying with rules that are included in this piece of legislation where officials might direct a port to provide tank storage or other receiving facilities for liquid waste and sludges that are removed from ships now. Currently, ports around New Zealand are severely constrained for space. Their infrastructure, in many cases, is marginal. In many cases, they are owned by local government publicly, and they don’t have the capital that they need to actually invest in modernising their ports. This is not a situation where you can go back to your shareholders and say, “We need to build another wharf. It’s $100 million. Pony up with the money, but guess what! Your rate of return’s going to be 6 or 8 percent over the next few decades.” They have to go back to the shareholder, being a council in many cases—a regional council or a city council—and beg elected members to give them the capital that could otherwise be spent on water infrastructure or roads or libraries or pools, and so on.

So there is a cost coming to ports, which are already capital constrained. As with so many other pieces of legislation which express good intentions, this piece of legislation actually will have an environmental benefit. They come at a cost. While we must accept that there are trade-offs between environmental benefits and costs, and that sometimes Government regulation is required so that business actually internalises the environmental effects as a cost, rather than externalises those costs to the environment. So there is a place for Government regulation where there are no other incentives that will work effectively. But at the same time that these costs are being imposed, businesses are expected to face a raft of other costs, whether they be extra public holidays that the business sector did not ask for but are expect to pay for, whether they are extra taxes and duties and levies, such as fuel excise duty.

So the shipping companies that operate these vessels, that bring goods to our ports, that allow us to build homes and infrastructure, that bring goods to supermarkets, to the DIY store—all of these costs flow through. At a time when the cost of living is going through the roof, where wages are not keeping up with inflation, the Government needs to seriously consider how they reduce the cost on ordinary working people. As they impose new regulations on one part of the economy, how do they offset that with reduced costs in other parts of the economy? But that has not been a consideration for this Government. In my short time in Parliament—nearly a year—thinking about how to make New Zealand people’s lives better every day that ACT MPs come to the House, I haven’t seen a single piece of legislation introduced by this Government that reduces costs to working families and reduces costs to business. It’s all cost on cost on cost.

💬 Hon David Parker: National Policy Statement on Urban Development.

And that member, the Hon David Parker, he also knows this, as the Minister of Revenue, responsible for taxing New Zealanders. He’s well aware. How much extra tax has this Government collected? Billions and billions and billions of dollars in the last year. So that member knows full well that what I’m saying is true—it is cost on cost on cost. So if we’re going to accept environmental regulations that have some benefit but come at a cost, then the Government must consider what opportunities there are to actually reduce the cost to business. So we haven’t seen that in the short time I’ve been in Parliament. In fact, I think, like most New Zealanders, the ACT Party has absolutely no trust and confidence that this Government knows how to wind-back the cost dial, only how to increase it, because they believe that people have an unlimited ability to pay—deep, deep pockets. That’s not true. All of these additional costs flow through to the consumer when you go to Bunnings Warehouse, when you go to Mitre 10, when your builder says, “The cost of the concrete slab for your new house is going up because the shipping costs are going up at a time of international supply chain pressures.” We know where to pin these extra costs—that’s on this Government.

Now, ACT will support this bill, because reducing pollution is the right thing to do. But when it comes at a cost, and the Government has an opportunity to reduce costs in other parts of the economy, that’s what they should do. Madam Speaker, thank you very much.

Members, the House is suspended, and I’ll resume the chair at 9 o’clock tomorrow morning for the extended sitting. Good evening.

Debate interrupted.

Sitting suspended from 10.03 p.m. to 9 a.m. (Wednesday)