Crown Minerals (Decommissioning and Other Matters) Amendment Bill

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

ASSISTANT SPEAKER (Hon Jacqui Dean): Leave has been sought for that course of action. Is there any objection? There is none.

I move, that the Crown Minerals (Decommissioning—

ASSISTANT SPEAKER (Hon Jacqui Dean): I beg your pardon. Sorry, that was me. So leave is sought. That legislative statement is published under the order of the House and it can be found on the Parliament website.

Thank you, Madam Speaker. I move, That the Crown Minerals (Decommissioning and Other Matters) Amendment Bill be now read a second time.

Today, we’re discussing a bill designed to strengthen New Zealand’s regulation of decommissioning. The cost of decommissioning varies, but can be substantial and run into the hundreds and millions of dollars. If a permit or licence holder cannot afford to carry out this work, then the cost lands on the taxpayer. This is not theoretical; this happened here in New Zealand in April 2020, when the Crown needed to take on responsibility for the decommissioning of the Tui oilfield after the operator Tamarind Taranaki Ltd went into legislation. When we first came into Government in 2018, we fixed the legislative loophole that existed that allowed for this to occur, and this bill is a further protection for the taxpayers of New Zealand from having to pick up the costs for this.

The Crown had to set aside $155 million for this decommissioning, based on a 2015 study decommissioned by the previous permit holder. We’ve made good progress on that decommissioning, but the costs have greatly exceeded those original estimates and further funding was needed to be appropriated in Budget 2021. This scenario highlights the importance of clarifying that petroleum permit and licence holders are responsible for decommissioning. We must get our regulatory settings right to ensure funds are set aside for decommissioning while petroleum is being produced and profits are being made. Globally, Governments are turning their attention towards planning for decommissioning and New Zealand should be no exception.

So the bill amends the Crown Minerals Act of 1991. The aim of these changes is to mitigate the risk to the taxpayer of having to stump up with the funding for the decommissioning, and this bill does this in three separate ways. Firstly, it clarifies who is responsible for the decommissioning, what they are responsible for, and that there will be consequences for failing to fulfil these responsibilities. It seeks to encourage all permit holders to carefully consider who they transfer to, by introducing perpetual liability. Second, it also enables a proactive approach to monitoring permit and licence holders’ financial positions and provides the regulator with enhanced oversight of planning under way for decommissioning. Third, while most operators want to do the right thing and plan for decommissioning, financial situations can and do change. That is why the bill that we have in front of us introduces the additional requirement that permit and licence holders must establish a financial security which can be used to fund and carry out decommissioning in the event that things do go wrong. The bill also requires a permit and licence holder to make a payment or provide a financial security that could be put towards the cost of any post-decommissioning work that is required.

The committee received 23 written submissions, which were supplemented by 11 oral submissions. I want to thank the committee for the work that they did on this bill. There was general agreement that the rules governing the petroleum sector’s responsibility for decommissioning needed to be strengthened. Concerns were raised, particularly by industry participants in the oil and gas sector, in relation to the impact this bill could have on future investment in the petroleum sector and the security of gas, but this bill is simply clarifying the existing expectation that exists, that decommissioning forms an important part of the petroleum life cycle. There were also concerns about how certain provisions will affect the existing petroleum permit and licence holders. The fundamental of the bill—that decommissioning must be carried out and funded by those who held the permit or licence—is not a new requirement in the New Zealand regulatory regime. I appreciate that some of the requirements will be new—for example, the requirement to hold a financial security.

The three aspects of the bill which drew the majority of attention were the perpetual liability, criminal liability for directors, and the requirement to make post-decommissioning payments. Several submitters raised concerns with the provisions that implement perpetual liability—that is, holding a former permit holder liable for the costs of decommissioning if the current permit holder fails to pay. The committee recommended retaining perpetual liability on the basis that this would only be used as a last resort. The committee did take on board the recommendations of some submitters to clarify the implementation of these provisions.

The bill also introduces a criminal penalty for knowingly failing to decommission. This is reserved for the most serious breaches and could apply to individuals, including directors in companies. Some submitters argued that this is not justified and expressed particular concern about the potential for a director to be criminally liable years after the company had transferred out of a permit. The select committee has recommended limiting this provision so that only directors of current permit or licence holders can be held criminally liable.

The provisions that enable funds to be collected for the post-decommissioning also attracted some attention for being a new levy or tax. I do not consider it to be either of these. It will not be a blanket fee calculated using a generic formula; instead, I propose it is determined based on the assessment of risk. The committee did not recommend removing the requirement entirely, as some submitters suggested. In response to the submissions, the committee made amendments so that the companies that still exist in New Zealand may propose a financial security. Most petroleum permits and licences in New Zealand are held by limited liability subsidiaries. I do not expect these companies will exist years from now when problems around decommissioned wells and infrastructure may arise and potentially fall on the taxpayers of New Zealand, and so this is why we require either a cash payment or a financial security that can be used for any future post-decommissioning work.

The committee also considered further advice from the Ministry of Business, Innovation and Employment in response to additional analysis carried out after the bill was introduced. This included proposals which were considered to contribute to the overall aim of mitigating the risk to the Crown or to improve the implementation of the provision. Among others, changes were made to the penalties and enforcement tools and to introduce a penalty for the failure to make payments towards post-decommissioning. This was to make clear that where there was an obligation to do something, we would expect it to be complied with.

So in closing, I do want to thank all those who have been involved in every aspect of this bill. It’s encouraging to hear that there was support for what we are trying to achieve here. While there may not be consensus on how we achieve it, I hope that parties are reassured that this bill has been thoroughly considered and views have been listened to. The aim is to provide a flexible approach to regulation which will allow requirements to be implemented in a proportionate way.

This bill tackles a very difficult question we have about the legacy of oil and gasfields as we look to our future, but in other ways it is very simple. It is putting in place measures to reduce the risks that the costs of decommissioning or further remediation work will entirely fall on the Crown or the taxpayers of New Zealand. I commend this bill to the House. It will modernise and improve the regulation of decommissioning and bring New Zealand into line with international best practice established by like-minded countries.

Thank you, Madam Speaker. This Crown Minerals (Decommissioning and Other Matters) Amendment Bill will bring another blow to energy affordability and security in New Zealand. When the Minister just said that there was support for what the Government is doing in this bill, I think that was a step too far. There is support for decommissioning from the industry, and the industry came into the select committee and have no problem with their responsibilities around decommissioning, but this bill is absolutely a step too far. Most bills have consequences, and the consequence of this bill is going to be like other bills that this Government has done: it is going to drive investment out of this industry, and before we know it, the energy security of this country, as we’ve seen in many things that this Government has done in the last four years, is detrimental to our future.

As I said, the industry wants to decommission. The industry acknowledges the responsibility of the petroleum sector to decommission, but this bill is an absolute overreach. The National Party supported this bill at the first reading because we wanted to go into the select committee. We believe in a process with legislation where you give the industry a chance to have a say, and the say was that this was a complete overreach. It was based on one bad experience. Last sitting block I was in the House talking about another bill that was based on one bad experience when a livestock ship overturned—a maritime accident. So one thing goes wrong and this Government goes into ban mode: “Let’s ban it. Let’s overreach. Let’s do whatever we can to destroy the industry.” I think that’s actually part of the plan with this bill, actually, because that’s what we’ve seen.

The financial requirements and penalties for companies decommissioning here are disproportionate to the risk. The bill is applied retrospectively and impacts on existing permit and licence holders, altering their rights and duties—some of these have been in place for decades. It will reduce New Zealand’s appeal as a location for petroleum investment and could also reduce our attractiveness for other investments because of these retrospective liabilities. The Minister said that the world is watching what is going on here. This is the most far-reaching piece of legislation in the world. So guess what, if these companies are going to go somewhere, they’re going to look around the world and they’re going to go, “Where are we welcome? Oh no, that’s right. First of all New Zealand closed us down for business, and now they’re putting these retrospective rules on us. They’re looking at perpetuity. Why would we go there? We’re certainly not going to go there.”

The comments that we got back in select committee—and it was really interesting, because I’ve been in select committees where Ministers are open to ideas and participants in select committees ask lots of questions and try to make a bill a better bill. Well, this wasn’t the case with this bill. The Opposition members were asking lots of questions, and we were trying to make it a better bill, but unfortunately no one was listening on the other side. So the Government is always wanting to be the first and the best in the world; we hear it again and again and again. We heard it in question time today. Never hear them talking about how the agricultural industry is actually number one for zero-carbon readiness. Never ever hear them talking about things that they don’t want to talk about where we’re the best in the world, but of course they want to be the first and the best in the world, and this proposal is stricter and leaves us with the highest level of regulation. And there are no other known directors in New Zealand who are bound to the requirements that this bill requires. We heard that from submitters that came in the room. In fact, I specifically asked the submitters if there were any other directors in this country that would be submitted to the requirements that this bill imposes on the directors of this industry.

The costs of this greatly outweigh the benefits. Each year the industry contributes around $2.5 billion to the New Zealand economy. It brings in about $750 million worth of export receipts. It generates approximately $500 million in royalties and income tax for the Crown. Now, it is adding value to this country, and even the Climate Change Commission has said that we are going to need gas to take us through into the future, because we have a black hole coming in this country when it comes to energy, I predict, and I’m not talking about coal but it will be filled up with coal. We’ve burnt more coal in three months of this year than we burnt in the whole of 2016 and 2017. We know we need gas to help us get through to 2035. The Climate Change Commission knows we need gas to help us get through this transition period, which Government actually defines transition as: “Well, let’s ban, let’s cut things off, and let’s figure out what’s going to happen in the middle and let the lights go off.”

💬 Dr Duncan Webb: Have you read the bill?

—because that’s actually what’s going to happen. And we’ve got a member over there, Duncan Webb, who actually asks if I’ve read the bill. Well, I have read the bill. I sat in select committee and I can tell you, mark my words, the lights are going to go off as a result of the decisions that this Government is making. Last time they went off it was a communication outage. Next time it goes off it’ll actually be a power off.

💬 Hon Member: The lights are already off in Labour.

Yeah, lights are off for Labour. And there will be consequences of this bill, and it’ll mean that that Government won’t be in Government next time, so that’ll be fantastic—the country will get a huge advantage out of that.

So when we look at the stakeholder commentary—none of which has been taken on board, none of which has been listened to—Business New Zealand said a balanced approach to decommissioning was needed. Both Business New Zealand and the BusinessNZ Energy Council have registered their opposition to proposed rules for decommissioning oil and gas infrastructure. So who are the people that really understand how this works? Not the Government. The Government doesn’t understand how this works. The industry understands how this works; they’re right behind decommissioning, and they know that this is actually an unworkable solution for our industry.

Energy Resources Aotearoa said the decommissioning overkill needs a rethink, but if you’re not interested in listening to the industry then law professor Philip Joseph “finds the bill to be retrospective and ‘constitutionally objectionable’ and ‘raises a fundamental rule of law concern’, which would be damaging to business confidence.” But, of course, this Government’s already damaged business confidence, so it’s not something that terribly worries them on the other side of the House.

Justin Smith QC “expresses serious concerns about ‘trailing liability’, which means former permit holders can be liable for fields they have transferred and no longer control. He says it is ‘a truly novel and draconian provision in New Zealand’ ”—Draconian. We’ve heard before that this Government’s taking us back to the 1970s; I think they’re taking us back to the Dark Ages and the coal age. Consultants Wood Mackenzie “find the New Zealand proposals are far stricter than comparable jurisdictions and unnecessarily duplicative. They find that ‘such a strict regulatory system is not necessary to obtain … level of taxpayers’ protection.’ ” And economic consultants Castalia “finds the proposal’s costs to greatly outweigh the benefits with net cost to New Zealand of almost $1 billion, generating only 11 cents of economic benefit for every dollar of cost.”

So perhaps, Mr Duncan Webb, you could read the bill. Asking me if I’ve read the bill—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! Order! The member won’t bring the Speaker into the debate.

Thank you, Madam Speaker. Duncan Webb might like to read the bill, rather than accusing people on this side of the House of not reading the bill, because, actually, this bill is going to take us back into the coal age, and we actually will oppose the bill on this side of the House with great gusto. Thank you.

Thank you, Madam Speaker. I find it really interesting how the other side—or the Opposition—has forgotten the cost of decommissioning the Tui oilfield. Let me reiterate to this House and remind the House and everyone listening that the Tui oilfield costed taxpayers $155 million. That is $155 million that we will never get back. That is hard-earned taxes of New Zealanders that we have to put into decommissioning the oilfield, and there are plenty of other oilfields in this country that we need to look into decommissioning if it wasn’t for this bill being passed. One hundred and fifty-five million dollars—how many more $155 million do we need to spend decommissioning all of the gas- and oilfields in this country?

Enough is enough, and that’s why we need to legislate this bill. I absolutely do not accept that the select committee process was by no means a collaborative, or one that we went into with open mind. In fact, the Minister, in her speech, had touched on all of the different terms in the bill that we have now actually adjusted because of the select committee process. I want to thank all of the submitters who came into our select committee, those who are experts in the field. Look, I really have to say that you guys are all great advocates for your industry, but, unfortunately, we do have to have a balance of approach to this. We need to make sure that we are good keepers of the taxpayers’ money at the same time while regulating industry. And so all of the little changes that we’ve made, for instance directors who, if you’re no longer serving on that board you are no longer criminally liable—all of these little changes, including to the Minister’s discretionary powers, have given more clarity because of the Regulations Review Committee. All of these changes were because the select committee process had worked. So I thank all the submitters. I thank all of our advisors. This is a great bill that is saving taxpayers’ money. I commend it to the House.

Thank you, Madam Speaker. It’s deeply ironic and a bit rich, frankly, to hear from one-term Labour Party backbench MPs about the benefits of not wasting taxpayers’ money. Here is a Government that has borrowed, printed, spent profligately more taxpayer money in the last four years than any Government in the history of our nation—most of it poorly spent. Most of it very poorly directed, poorly spent. So to have a one-term backbench Labour MP come to this House and cry crocodile tears about taxpayer money just doesn’t ring true.

We have a Government that is significantly out of tune with the New Zealand public, significantly out of tune with commerce, with industry, with the productive sector in New Zealand, and nothing actually reflects that more so than this bill. Members on this side have supported the bill at first reading. We thought that the Government might want to actually listen to the sector, listen to submissions from people who understood the sector, who operated in the sector, who had long-term interests in the sector, but, sadly, no—there was no attempt.

I listened carefully to my colleague Barbara Kuriger, who sat on the Economic Development, Science and Innovation Committee. I didn’t sit on the select committee, but I have read some of the submissions. Barbara Kuriger rightly indicates that often a Minister that is open to ideas, suggestions, and improvement will take into account submissions that are made from industry and sector groups that do know what they’re talking about. This has not been one of those cases, and this bill is the poorer for it, because it is an overreach.

It is a bill that goes several steps beyond what is necessary, and with all the potential for unintended consequences that come with a Government that doesn’t understand commerce, business, or, actually, the extractive mineral sector. They have a fundamental ideological opposition to the extractive sector; they just don’t like it. But they do like everything that comes from and with the extractive sector. They like to be able to use their cellphones, drive their cars, they like to be able to turn the lights on, they like to be able to heat and warm their homes, and they like all the benefits that come from an extractive sector, but they like none of the downsides that involve actually getting minerals and resources out of the earth, processing them, and then turning them into the beneficial aspects of our day-to-day life that we all like.

This is a Government that is sort of like that old analogy of, you know, wanting to go to heaven but not wanting to die. They’re full of grand gestures, virtue signalling on a grand scale but, actually, when the nitty-gritty comes down to it, it’s just a fundamental philosophical objection to the extractive sector, but also a fundamental philosophical objection to business and to commerce and to enterprise and to productivity. They don’t like profit, either.

Look, nobody in this Chamber would argue that the sector doesn’t have obligations to decommission; that’s a given. That’s understood, and completely proper and right. But from time to time, things don’t happen quite as they should, and this bill, which is an overreach, is a response to one situation of that sort. And yes, sadly, the taxpayer, the long-suffering taxpayer, has had to underwrite the decommissioning in this situation. But had this Government gone about putting in place a more practical, a more pragmatic, and a more sensible solution, then we would be able to support this legislation on this side of the House.

But we can’t, because they’ve introduced into this legislation a new, fascinating, and quite scary concept of perpetual liability. For anyone that has been in business or ever done a commercial transaction or been a director or a shareholder of a company, the concept of perpetual liability is an unknown one, but also kind of scary. It will have a chilling effect on the commercial sector, without any doubt, because what perpetual liability essentially means is that if a business sells their interests in an enterprise to another business, and then that business in turn sells it to another business and then so on, and the chain of sale and purchase continues through multiple owners of a business over many years, and decades, indeed, the original owners of that business, even though they may not have had a financial interest or a day-to-day management interest in the business for decades, will remain liable—not just civilly liable but also criminally liable for the misdeeds and the failures of the company or entity that is the one that drops the parcel, so to speak.

Now, that is a fundamental change to commercial law in New Zealand, and it has, I think, the potential for great disquiet amongst those who seek to engage in commercial activity in New Zealand, whether it’s in the extractive mineral sector or not. The concept that this Government wants to put this in place sends a chill up the spines of, I think, directors and shareholders and business people all around the countryside.

Chapman Tripp are a well-regarded law firm, and their corporate and commercial partners put out a paper about this bill, and they made some quite poignant, I think, comments about the failures of this bill. In their paper on this bill, they said, “We expect these provisions will cause significant anxiety in boardrooms.” They said the changes expose “sellers to a potential cost double whammy – first in the form of a lower purchase price to reflect the cost exposure created by the Bill, and later if the purchaser fails to carry out and fund the decommissioning activities.” They go on to say that “At the very least, this will make transferring permits or licences more intensive and cumbersome – particularly for the seller who will have to undertake substantial financial due diligence in relation to a purchaser’s ability to meet [future] decommissioning costs [into an unknown] future.” They go on—and this is the last quote from this piece—“We expect sale and purchase agreements going forward will include indemnities from the purchaser, indemnifying the seller for any liability under the Bill. However, those indemnities cannot extend to directors of the seller – a point which is explicit in the Bill.” Dr Duncan Webb comes to this Parliament with a reputation for being an academic lawyer—a lecturer, no less. He should understand the implications of this piece of legislation, and he should realise that this is a step too far.

There were a number of other submissions made. In fact, I think that there were 11 that were actually heard from of the 23, but one organisation that did not have an opportunity to submit has, as recently as a week or so ago, on 11 November, written to the Minister in charge of this bill, raising their concerns, and that is the Institute of Directors in New Zealand. Their chief executive, Kirsten Patterson, wrote to Dr Megan Woods in these terms about this legislation, and she says, “We support the intent of the bill, but we’re concerned about director liability and potentially unintended consequences, such as deterring capable, experienced directors from serving.” Now, that’s a real warning to this Government, who probably doesn’t understand the concept of what directors do.

She goes on to say the proposed director liability regime is overly onerous, and then says that “When designing a regulatory regime, it’s important that the director liability settings are proportionate and reasonable to the issues the regime is designed to address. This regime includes wide threshold for criminal liability that holds directors accountable for actions that are potentially totally beyond their control.”—potentially totally beyond their control. Now, that’s not how our commercial law should be based, and we think that that is wrong.

So if the Institute of Directors in New Zealand thinks there are issues, if prominent lawyers from big professional firms such as Chapman Tripp think that there are issues, and if there are submissions from industry and sector groups that say there are issues, then we’ve got a problem when the Minister won’t listen. That means that this will end up being poor legislation passed by a Government with an absolute majority that doesn’t listen and doesn’t care.

Kia ora, Madam Speaker. Thank you for allowing me to take a call on the Crown Minerals (Decommissioning and Other Matters) Amendment Bill, which is amending the Crown Minerals Act of 1991.

Now, 1991 was quite a different time to 2021, where we’re at now. For me, being in Taranaki where many—in fact, most—of the impacts of this bill are, a lot has changed in that time. For many of the businesses who have made their money in petroleum, who have made their money through exploration and discovery, and, of course, then onselling it—for a lot of our petroleum wells, they are beginning to come to the end of their lives, and what that means is that for many of our big companies, they’re very much around discovery, they’re very much around, then, extraction, but they’re not often around end-of-life stuff. So the issue we have with Tamarind—

💬 Hon Member: What a load of rubbish.

It’s completely true. So with Tamarind, they came in, because that’s how it works, to squeeze the last little bit out, and unfortunately, tragically, not $155 million the Government’s shelling out; it’s more like $394 million—I think it was around $195 million was added to the Budget this year because it is so extreme and it’s such a concern.

So I’m here this afternoon to support this piece of legislation ensuring that those who undertook to profit from petroleum, that they will be doing the right thing, that they’ll be very cautious when they onsell, they’ll be very cautious in those spaces, because obviously they don’t want to have legal action against them. They want to do the right thing, as I know they always do, because they want to care for the spaces that they onsell.

So we want to make sure that we get legislation right. I look at the United Kingdom, Australia. The United Kingdom has most of these things in place already. Australia is proposing to bring many of these measures in place. For that reason, I commend this bill to the House.

E te Māngai o te Whare, tēnā koe. I’m pleased to take a call on the Crown Minerals (Decommissioning and Other Matters) Amendment Bill and I’m speaking because Julie Anne Genter, our energy spokesperson, is on leave.

The Green Party is pleased to support this bill. It highlights, I think, the extent to which Aotearoa has been naive, and the public sector and regulators have been dominated by the protests of the oil and gas industry, that there are currently no explicit provisions in the Crown Minerals Act which set out the responsibilities of petroleum permit and licence holders for decommissioning wells and operations into the future. It doesn’t set out at the moment the length of time that they’re responsible for that, and it doesn’t set out the consequences of not doing that decommissioning.

Decommissioning, for anyone watching at home, occurs when it’s no longer profitable for a company to continue to extract oil and gas—the whole process of decommissioning commences. It’s the process of taking the infrastructure and the wells out of service, plugging the well so it doesn’t release hydrocarbons, remediating the site, removing production facilities and any equipment. But at the moment, the way the law is drafted means that permit and licence holders are only responsible for decommissioning for the issues that arise during the life of the permit and within six months of the resource ceasing to be active; not after that.

We’re supposed to have a regulatory regime in Aotearoa New Zealand which is based on “polluter pays”, where those who benefit the most from environmentally harmful activities bear the costs of any associated remediation and clean-up activities. Petroleum permit and licence holders are supposed to plug abandoned wells and they’re supposed to decommission the infrastructure, but that hasn’t happened. And as other members in this House have noted, that imposes significant liabilities on the Crown if it doesn’t.

What happens if things aren’t properly decommissioned? There are huge environmental impacts. You can get the contamination of groundwater because the fluids from the well leak into groundwater, contaminate aquifers and, potentially, our drinking water. If hydrocarbons build up under pressure, they can potentially blow out. If the wells and the infrastructure are offshore, then those may come loose from the seabed. And of course, if you haven’t got a properly decommissioned well, if there’s something like an earthquake that can also cause problems.

As the regulatory impact statement notes, there are currently 27 active petroleum mining permits and licences in Aotearoa; five of those are offshore, 22 of them are onshore. Some of them are large, like the Māui field, and some of them are much smaller. These are ageing and, as others have noted, when these wells age there is an increased risk of problems occurring, leaks occurring.

The Parliamentary Commissioner for the Environment recommended way back in 2014, when she looked at the whole regulation of the oil and gas industry, that there be changes to ensure that the industry bore the cost of both ongoing monitoring of abandoned oil and gas wells, the remediation of future leaks by, for example, the imposition of an annual levy. But the former Government didn’t act.

We’re getting action now because of what happened with Tamarind. That was a private equity company which bought those permits to operate the offshore Tui field. It claimed that it specialised in taking end-of-life fields and extracting the maximum oil and gas. It claimed that it would bear the risks of doing that. But it went into liquidation in December 2019, and, as the Minister noted, at an estimated initial cost of $155 million. So when the National Party talks about overly onerous responsibilities, they don’t seem to be recognising the opportunity cost of that initial $155 million, which has blown out to $394 million of cost to the Crown, to the public. What is the opportunity cost of that? How many thousands of hip replacements could have been funded from that? A new Whangārei Hospital, predator control over all of the conservation estate, but $394 million because Tamarind as a shelf company was able to get out of its responsibilities.

So this bill fixes big gaps in the Crown Minerals Act. It ensures that with this concept of perpetual liability, there is responsibility into the future. It’s creating a clear obligation to decommission, much greater monitoring powers, and a requirement to obtain and maintain a financial security to carry out decommissioning work and potentially have that paid through the future. So there’s an explicit legal obligation that the bill is creating.

I really acknowledge the work of the Economic Development, Science and Innovation Committee, because it did very detailed scrutiny of the bill and made a number of changes which—the National Party is seeking greater flexibility for the industry. There were some quite significant changes that the committee made so that it did, for example, amend the provisions that would enable a company to apply to the Minister to seek an exemption for a permit holder if they wanted to leave the infrastructure in place, for example. There are regulations, I think, that are out for public consultation at the moment on how this would all work. And it did do things like amend the definition of “petroleum infrastructure” to be less broad. So there are a number of quite specific changes that the select committee made in response to submissions.

But the concerns around perpetual liability—my understanding from reading the report and some of the submissions was that there were also changes there so that they would set out the priority in which the Crown would enforce liability. It would go to the current permit holder first and then whoever owned it before them. So there were changes made in response to submissions.

But this bill has a big gap. It doesn’t apply to mining operations. In the hills behind Reefton, OceanaGold has created an enormous tailings reservoir. Yes, it has a big impoundment, but in an earthquake, in heavy rain events, there is a risk in future that there may be cracks in that impoundment. The whole responsibility for the maintenance of that impoundment should be on the company in perpetuity. It shouldn’t risk falling to the Crown. So this bill is a great step forward in dealing with the petroleum industry, but it should apply to all mining operations, particularly those that create big reservoirs and impoundments as OceanaGold has done at Reefton. We commend the bill to the House.

Thank you, Madam Speaker. The ACT Party supported this legislation to go to select committee where it could be properly evaluated. It turns out that despite the objective being laudable, to improve the regulation of the decommissioning of petroleum structures and installations, it turns out that the Government has oversold the benefits and wasn’t clear and honest about all the risks.

Now, ACT supports the concept of “polluter pays” and that operators should take responsibility for decommissioning their oil and gas assets at the end of their life. We support making it a statutory obligation where previously there was no obligation. We can also support the ability of the Crown to assess the financial capability of petroleum permit holders to undertake their obligations. But what the ACT Party can never support is a trailing or perpetual liability on directors of companies who have undertaken and fulfilled their duties according to the law, to environmental best practice, who have met their social and economic obligations to communities and shareholders alike but would find that in years following their association with a business that may have been successful, they are held criminally liable for decisions taken by officers of the business in operational roles quite remote from the governance role that they held as directors. ACT cannot support that. It is chilling, destructive, and will have a very negative impact on any business intention to invest in New Zealand. It will result in the hollowing out of investment in quality businesses and a reduction in the quality of people who are prepared to stand up and become directors of companies.

We also do not support the creation of a post-decommissioning fund. Now, as a civil and environmental engineer, I’ve been involved in decommissioning extremely hazardous facilities like timber treatment operations and closed landfills, for example. But at the end of the process, an engineer, a scientist, a planner have to get together and propose to regional councils or to the regulator that they have cleaned up and decommissioned that facility as best as possible to manage the foreseeable risks. At that point, if you have a resource consent for an operation or a facility, the regulator will sign it off and say, “Here’s your bond back. We recognise that you have fulfilled your obligations as far as reasonably practicable at this point in time”—notwithstanding any other acts of God that might happen in years or decades to come, for which no director, no company should be held liable or could possibly plan for.

That’s why, if we’re talking about liability, engineers design buildings to withstand a certain earthquake load, not the unimaginable earthquake that might occur sometime in the future. They have to pick an actual earthquake level that they design for. There’s no point in designing for an earthquake that’s so enormous that might have happened once or might possibly happen in the future. You have to design for the risk that you can reasonably foresee. And so once a decommissioning activity is complete, then at that point the directors in the company should be released from any future obligations.

Now, we also oppose a mandatory financial security. If a business can demonstrate that they have the financial capability and the expertise to fulfil their obligations, then that should be sufficient. If, however, they choose to enter into an arrangement with a regulator where they would prefer to put up a bond or put up a security voluntarily rather than manage that themselves with their own bondholder, then that’s entirely up to them. But it should not be mandatory. We also find that the concept of a default to total removal of all structures—we’re talking about the bases, the feet, of very large oil rigs or other installations made out of steel which might sit on the seafloor. They’re covered in barnacles. They’re home to octopus. They are a treasure trove of biodiversity where they stand, in the natural environment. Yet this regulation, and the Minister who’s left the House because there’s obviously not enough, there’s—

💬 Hon Member: You can’t say that.

Clearly the information that’s been presented is too hot. But default total removal means that, actually, businesses involved in petroleum exploration, field development will have to remove things that could reasonably be left in place based on the opinion of an environmental scientist or a marine biologist or an ecologist who might say, “Look, look at the flora and fauna growing on the legs of this wonderful old structure. It’s like a shipwreck on the seafloor. There’s no reason why it should have to be removed as long as it’s made safe, as long as it meets the threshold of a low risk.” So the ACT Party opposes the default to total removal of all structures. It’s nonsensical.

Now, when we think about what decommissioning is, it must address the reasonable risks, and that is all. The reasonable risks include—look, what’s the balance in terms of health and safety versus environmental performance if you have to send divers down to remove things that were never intended to be deconstructed or removed. It’s only more recently that we’ve actually designed structures and buildings, for example, with the idea that they will in fact one day be deconstructed. Many things built in the past were not designed in that way, and it’s very dangerous to try to remove them, particularly if you’re talking about places where there are significant currents and movements on the seafloor. So decommissioning should be limited to what is required to meet environmental objectives while taking care of the health and safety of the workers involved, and make sure that what’s left behind is recorded so that we know what’s left behind. But that should be the limit of it.

As I’ve pointed out, when comparing this regime to a resource consenting or a building consenting regime, it’s important to note that this proposed legislation goes far beyond what is required in order to make sure that businesses fulfil their obligations to leave the environment behind in a suitable state and manage all the risks before they go to a low level of risk. Not zero risk, not no risk ever, for ever in perpetuity, but to an acceptable level of risk that is a low risk.

Now, this flawed piece of legislation has also threatened to drag in mining and quarrying. We have submissions from mining and quarrying organisations who have said, “Look, this bill is not clear enough. It’s supposed to address the risk of petroleum installations, but it also drags us in.” The mining and quarrying activities already have resource consents. They already have bonds in place. They already have consent conditions that they have to meet around making safe their sites when they leave, deconstructing any structures, replanting, and leaving the environment—in many cases—a much better place than they found it. Just like the OceanaGold Reefton Globe Progress Mine rehabilitation, which is an example of one of the best mine rehabilitations ever carried out anywhere in the world. New Zealand can be proud that businesses operating here are operating to a very high standard of environmental performance, and that must be taken into account. New Zealand businesses are good at this stuff. Engineers and scientists based here are good at this stuff, and they should be trusted, not punished, not having their directors penalised—in fact, discouraged.

What this bill represents is actually an attack on business. It’s an attack on business confidence. We’ve seen for the first time since the global financial crisis (GFC) that New Zealanders have less confidence in Government now than at any other time since the GFC. And legislation like this only contributes to and compounds the sense that the Government running this country doesn’t understand how business operates, what communities need to be successful. They are not listening. They have demonstrated time and again that despite the best evidence from businesses who say, “We want a better environment.”, that’s not enough. They won’t listen to them. For that reason, ACT opposes this bill. We do not believe that the Crown Minerals (Decommissioning and Other Matters) Amendment Bill should proceed beyond this point. Thank you, Madam Speaker.

Fa‘afetai tele, Madam Speaker, and as always, it’s a privilege and an honour to take a call in the House as the member of Parliament for the Ōtaki electorate. While I didn’t sit on the Economic Development, Science and Innovation Committee, I want to thank those who did, and who did the mahi—or the work—on this, the Crown Minerals (Decommissioning and Other Matters) Amendment Bill. The committee, I note, made some changes after hearing from submitters, I’m sure, to make this bill the best it can be. Thank you, again, to those committee members.

This bill ensures that the oil and gas operators meet the cost of decommissioning their wells, and that then, in turn, mitigates the risk to Crown, or, essentially, to the taxpayers and other third parties from these costs being passed on. We also know that this bill prevents the Crown from having to pay for decommissioning of petroleum fields if an operator can no longer afford to pay for that or is no longer operating on that site. So, further, in April 2020, as the member Naisi Chen mentioned, the Crown had to take on the decommissioning of the Tui field after their operator went into liquidation—again, costing the taxpayer.

This bill will also allow for more effective monitoring of the permit holder’s financial ability to decommission their petroleum field, and it would also ensure that the operators are able to pay for the clean-up costs by requiring them to make sure they set aside decommissioning funds for that.

Ultimately, this bill is yet another example of this Labour Government doing what it said it would: delivering not only for our planet, for Papatūānuku, for te ao, but for our people and our future. Kia ora.

Madam Speaker, thank you so much. It is the first time in, I think, 91 days that I’m standing in this House to speak, so I’d like to acknowledge my colleagues. I have missed you. I would also like to say to my select committee members from across the House that it’s lovely to actually see you in person, even though it’s across the room, because in select committee for the last three months, we’ve just been doing it via Zoom. So it’s nice to actually see you.

It is a pleasure to rise, together with my colleagues on this side of the House, to oppose this bill. I’d just like to say that my colleague Barbara Kuriger has actually done all the heavy lifting on this particular bill, and we on this side of the House oppose the Crown Minerals (Decommissioning and Other Matters) Amendment Bill.

We actually supported the intent of this bill at first reading so that we could go to select committee and hear the submissions, and I was in my office listening to the Minister when she talked about the 23 oral submissions. She said, you know, “This bill is this, and this is the reason.”, but what I took out of the speech that the Minister made was that it is incredible how this Government made a decision to stop oil and gas exploration and kill thousands of jobs in Taranaki, and this also means that it’s an overreaction to one incident that happened. This bill applies retrospectively and will impact on existing permits and licence holders, altering the rights and duties, and that is a huge impact on business.

If I could quote the chairperson of Energy Resources Aotearoa, Chief Executive John Carnegie, he said that this bill is “regulatory overkill”—and I’m quoting—“with different requirements piling on costs, far more than needed to protect taxpayers.” He also went on to say, “Much of the Bill is retrospective, which is like moving [a goalpost] after the ball has been kicked.” Who does that? You don’t do that in rugby. You certainly should not be doing that in business, either. When you make a commitment, you expect people to live up to their responsibilities, and when people are given licences, they should be doing what they are supposed to do.

Sometimes some businesses fail. They go bankrupt and you have to deal with those circumstances individually, not make rules that go right across industry and other industries and that could actually impact on them, and that actually means that consumers, potentially, will be paying higher prices for our energy. But do they actually care? This Government apparently cares a lot, and yet I don’t think they actually do.

When you actually look at the responsibility of the Government, you would think that they should care about what happens in the industry. I think, when I was listening to a speaker earlier—you know, nobody actually wants to increase carbon emissions in our country. We all want to do our fair share to reduce our emissions to make sure that we progress on to a time and place where New Zealand is responsible and will be carbon-neutral. I think that’s the goal. We actually want to get there, but the problem is that when Governments make regulations and pass legislation when we’re not ready to do so, what happens is that we have situations like under this Government. Instead of actually using less coal for energy, we’re using more coal for energy, and not only are we using New Zealand coal; we’re actually importing from overseas to use the coal to power up our energy industry.

I think this is where we show the Government to be not as responsible as they claim to be, but irresponsible in their application and delivery of our legislation and our regulations. I think this is one area where natural gas is used by 270,000 residential users, 11,000 commercial users, 5,000 large commercial users—including our hospitals—and 300 large industries. They don’t need it to be retrospective. They don’t need this bill, and I certainly do not support this bill.

I rise with absolute pride in this bill and the actual difference it shows between the two sides of this House, because this bill is actually just common sense. It isn’t something to worry too much about when what a Government is doing is taking mischief that it’s seeing, and that we can see through what was the Tui fields disaster, and making sure that taxpayers don’t end up paying for that—in fact, sheeting that cost back to who it belongs to: those who have made the profits.

So this is a situation where Tamarind, a company that came in and bought the Tui oilfields, said it would do a job, didn’t do a job, collapsed, and do you know how much the New Zealand taxpayers are paying for that: $394 million.

My colleagues have talked about some of the things that that could pay for, but I’d also like the New Zealand public to think about what it could have paid for in business. Is it actually an appropriate support of business to spend all that money cleaning up and shoring up and making safe something for companies that have made huge profits, when in fact that money could be used for wage subsidies, it could be used for our small businesses? That would be a good use of the money. It could nurture new things like new forms of fuel. It doesn’t have to go to big multinationals. Only bunnies do that. That is a naive thing to do.

Now, we have heard people in this Opposition have seen this as a block, but I say this is not a block. This is a support of businesses in New Zealand, and I’m proud to support and commend it to the House.

Thank you, Madam Speaker. I just want to rise in response to that last speech and talk about the Crown Minerals (Decommissioning and Other Matters) Amendment Bill; it’s a Government bill in the name of Dr Megan Woods. The difficulty New Zealand faces at the moment is the large degree to which this Government has transferred away from renewable energy into use of a carbon-based energy source through using coal as its mechanism to deliver heating to New Zealand and to keep the lights on, even if they did go off at a certain stage. The approach that the Government has taken from day one has been a very strict approach around energy. They’ve taken the approach that there will be no oil and gas exploration, that the country will deliver its energy needs without those key sources of energy, which actually are part of the transfer to renewable energy. Gas, for example, is widely used around the world and seen as a more renewable form of energy than, for example, coal would be—or a more environmentally friendly form of energy. So the ideology, and the blind ideology, of this Government has led to a position where New Zealand has an energy system that is now compromised.

When we come to this bill here today, this is a bill that has been in response to the Tui oilfield decommissioning, where taxpayers had to fund $350 million in the clean-up. The bill amends the Crown Minerals Act, and it does a number of things in that, and one of them is to require permit holders to submit plans, it allows the Minister to create regulations, and requires the permit holders to submit notices in certain cases. Now, all those factors, you may think, are fine and that is OK, but it flows from an approach that this Government has taken to energy that simply has not worked. And what we have seen is that the knee-jerk reactions of this Government around energy have compromised the ability of New Zealand to have the strong infrastructure that we actually would want as a renewable country going forward.

We just have to look at another bill that’s going through this House at the moment, the Land Transport (Clean Vehicles) Amendment Bill, which is similarly an approach by this Government around fuel. It’s more commonly known as the “Ute Tax Bill”, but it is a bill which this Government uses and says, “Well, this is an example where we can dictate energy policy.”

ASSISTANT SPEAKER (Hon Jenny Salesa): Come back to this bill.

Yes, Madam Speaker. So, in the way that they dictate energy policy there, we also see it here today as well. This is another aspect of retrospective legislation that we see from a Government that, when we were in Government, would always stand up and say we can’t have retrospective legislation, and yet they are doing it time and time again.

It also has the unusual effect of making the former owner liable for meeting the costs of decommissioning energy infrastructure if the new owner fails to do so, so it doesn’t follow general commercial practice in that regard. And as Business New Zealand has said, that could create a perpetual liability on energy businesses that strongly should be opposed. Like other legislation we’ve seen from this Government, they don’t have a commercial reality of what that actually would mean. They actually think that it’s fine to be able to put such restrictions on business, that it’s fine for this Parliament to legislate that somebody is liable. They don’t actually understand what it actually means to the consumer, because that liability has to be transferred to the consumer in some form as they have to meet the costs so that that company can actually be able to progress and survive, knowing that it has that liability.

So we see these downstream effects from the energy policies of this Government which doesn’t understand the practical realities of what they do, just like they banned oil and gas exploration, just like they put taxes on utes, just like they are here putting a liability on other energy providers. And it is all for a grand plan that just won’t work, because they haven’t invested in the things that we actually need like renewable energy. Where’s the grand plan of building the renewable energy that we need? Where’s the grand plan so that we can have those electric vehicles and we can actually charge them from renewable electricity? Are we going to be moving to a new fleet that’s going to be charged with coal-powered energy? That’s what’s happening in this country. It’s the case that we just don’t understand where we actually need to go. We’ve been blessed as a country to have a huge renewable base, and they’ve lost that. They are now making it even harder for future Governments to get that renewable target achieved. It’s going to be even more difficult when you place on top of that a lot of requirements about using electricity instead of other types of energy.

So what we have here is a very short-term Government when it comes to energy. They only look at their goals at the moment and progressing some grand ideals that they can promote on an election pamphlet. They don’t actually look at the reality of what energy requirements are for this country, what the needs are for our electricity supply, and how we could actually meet those in the future.

So when we see bills like this that are around energy, and specifically in regard to the petroleum sector and gas, that has had a vicious attack on them from this Government over the period of time that they’ve been in Parliament and has really compromised our ability to be self-sufficient in energy, this legislation just adds to that list a tax on our energy sector, which has been misaligned with our actual energy needs going forward. So that is what New Zealanders need to be aware of, that by taking the approach that this Government has done, we all suffer in the end in not being able to meet our renewable energy targets. As a country, that is not good for us when we sell ourselves on the world market as a clean, green country. But it actually means our consumers will have to pay more, because, in the end, we’re going to be paying—either through climate change, we’re going to be either paying through some form of cost on consumers, and the continual beating up of our energy sector that is a local energy sector, in favour of having imported energy, will be to the detriment of New Zealand consumers and the New Zealand brand over time, and the climate, essentially.

Now, the last week or so we’ve heard a lot of great talk coming out of Scotland around banning coal and those sorts of things, and yet, when we characterise the New Zealand environment, we see us using more coal. It just doesn’t make sense that the Labour Party and the Green Party, effectively, as coalition partners, have banded together to actually create the opposite of where the world is wanting to go. At the same time this is a Labour Party that talks about climate change as the biggest thing of our generation, and yet they do the very opposite from what we see around the rest of the world. They’re contrary in their policy to what is being approached in the rest of the world.

So when we come to energy and legislation, this legislation may not be as big as some of the other legislation they’ve done in the energy field, but it all points back to their misunderstanding of economics, their misunderstanding of how business operates, and their desire to just beat up the energy sector, because they just think that they shouldn’t be there doing it, and that they can hide behind a shipload of coal coming in every so often rather than actually dealing with the issues and actually having a forward-thinking approach that’s really based on renewable energy that actually would deliver for New Zealand going forward. So it’s very disappointing to see that from a Labour-Greens Government, but that’s the reality of what we face at these times.

Tēnā koe e te Mana Whakawā. Well, that was a speech that you’d expect from a true National Party member: fundamentally conservative. “Do nothing” is essentially the approach of the National Party. Change nothing, leave the status quo. And do you know what? We saw that for a long time, and things got progressively worse. This bill says, “No, we’re going to take a long-term approach.”—not an approach which satisfies the clamouring of industry today but one which will make any industry sustainable in the long term. That’s our plan across all industry, and a fundamental principle of that plan is to say that people who use resources, who damage the environment, and who cause an impact will pay for it. And that’s fair—that is absolutely fair, and that is what this bill does.

You know, I don’t know how many people have ever drafted or litigated an energy contract in this House. We hear from the other side, many times, that we don’t know what we’re doing, we don’t know what we’re talking about, but you know what? I’ve actually done a bit of work in this area, and the fact of the matter is—[Multiple interjections] Yeah, I know, how about that! There they are over the other side of the House pretending they know all about business and none of them have even seen an energy contract. Well, bonds and indemnities—we heard all this pooh-poohing about bonds and indemnities; they are fundamental to these arrangements. These arrangements last 20, 30, and 50 years sometimes, and the idea of a chain of liability—because the main evil we’re trying to attack here is the difficulty when people sell an asset to a less robust company, a company that doesn’t have the financial strength of the original licence holder. And that can happen down a chain across the life of a mine or of a well—it can happen many times: every five or 10 or 12 years. Now, what we don’t want to see is the weakest party being held holding the baby, a well with huge decommissioning costs, when all of a sudden, as we saw in the Tamarind situation, they go broke and they run for cover and the taxpayer bears the burden, whereas there’s people who have been extracting minerals for profit over a long period of time who get away with paying nothing. You know what? That’s not fair. We won’t have it.

So the committee’s done a really good job, and there’s nothing wrong with strict liability, either. Any economist will actually tell you that saying you pay regardless of fault means that an operator will absolutely take the appropriate level of precautions. [Multiple interjections] Go and do your research. I thought you’d like Richard Posner. He’s one of the neoliberal philosophers that I thought you’d be right into. Go and read what he says about strict liability. So go and do your research: strict liability is entirely appropriate, especially when you’re doing something which is inherently risky. The mere fact of drilling for oil and gas—it can be that no matter what precautions you take, devastation can happen. We can’t have someone going and doing something which is inherently dangerous and then say, “Oops, I did my best.” That’s not good enough. Reasonable precautions won’t do it. The committee’s done a great job tidying up some technical aspects of this bill. It’s a great piece of work. I look forward to seeing it going through this House and becoming law to protect our environment and create truly sustainable industries in this area. Kia ora, Madam Speaker.

The question is, That the amendments recommended by the Economic Development, Science and Innovation Committee by majority be agreed to.

The time has come for the dinner break. We will resume sitting at 7 p.m.

Sitting suspended from 6 p.m. to 7 p.m.

I declare the House in committee for consideration of the Drug and Substance Checking Legislation Bill (No 2).