Energy (Fuels, Levies, and References) Amendment Bill

I move that the Energy (Fuels, Levies, and References) Amendment—

💬 DEPUTY SPEAKER: Sorry, a legislative statement?

Oh, yes—sorry. I present a legislative statement on the Energy (Fuels, Levies, and References) Amendment Bill.

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

I move, That the Energy (Fuels, Levies, and References) Amendment Bill be now read a first time.

This bill proposes an amendment to the Energy (Fuels, Levies, and References) Act so that the petroleum or engine fuel monitoring levy can be used to cover the costs of strengthening New Zealand’s onshore fuel resilience in addition to its existing purposes. One of the existing statutory purposes of the levy is to meet the reasonable cost of complying with New Zealand’s 90-day oil reserve obligation under the International Energy Agreement (IEA). However, it is unclear whether the levy can be used for initiatives that aim to improve resilience of fuel supplies in New Zealand, specifically, particularly Government procurement of onshore reserve diesel stock.

These initiatives may not meet the reasonable cost test as there is a much cheaper alternative for meeting the IEA obligation—namely, purchasing offshore oil tickets. Those tickets give the Government the right to purchase oil and fuel stocks held overseas at market prices during an IEA-declared oil supply emergency. They are useful for our contribution to managing international fuel supply disruptions, and we have had cause to release some of our offshore tickets during the Ukrainian conflict, to help in international efforts to stabilise the fuel markets. However, they are not physically held in New Zealand and they do not support our domestic fuel resilience.

This bill will ensure that the Government will have the flexibility to use the levy to fund onshore fuel resilience initiatives other than purchasing oil tickets. In October 2022, the Government announced a Fuel Resilience Policy Package that aims to strengthen New Zealand’s fuel resilience and economic security. The package includes introducing a minimum fuel stock obligation on fuel importers, which will be legislated through a separate piece of legislation—that is not what this bill is doing. The package also included Government procurement of services relating to storage and management of at least 70 million litres of reserve diesel stocks to be held onshore. This will boost our diesel stock levels to about 28 days of cover, on average, and will mitigate the risk of disruption to diesel supply, which is the most important fuel for critical services.

The bill will enable the levy to be used to cover the additional Government administration and procurement costs associated with implementing the Fuel Resilience Policy Package, as well as the costs of other potential measures for improving fuel resilience. I intend to have the minimum obligation coming into effect in the coming months, so the Government will start incurring costs of administering it soon. These administration costs are expected to be covered by the levy. I also expect the agreements for operationalising the reserve diesel stock arrangements to be finalised by the end of 2023. To make further progress in the relevant procurement processes, the Government needs certainty that it can use the levy for this arrangement.

In light of this, I am seeking to take this bill through all stages under urgency this evening. This bill will enable a smooth roll-out of the Fuel Resilience Policy Package and will better strengthen New Zealand’s fuel resilience and economic security. I commend this bill to the House.

Well, thank you, Mr Speaker. It is a pleasure to speak on the Energy (Fuels, Levies, and References) Amendment Bill.

💬 DEPUTY SPEAKER: Sorry, could I just say, the question is that the motion be agreed to. Carry on.

Thank you, Mr Speaker. I do have news for the Minister. She won’t be getting this through all stages tonight—in 10 minutes. I don’t think that’s possible, even though we are going to be cooperative.

First, the National Party does support this bill, but we do have reservations, and we have significant reservations because, yet again—yet again—a lazy Government hasn’t got themselves organised to be able to take this through a proper process. We should have a select committee process. This is an outrageous waste of Parliament’s time, putting us through urgency, when they clearly cannot get themselves organised. We should, at the very least, hear in select committee from the fuel companies, from the AA, and from the Motor Trade Association as well. All of these things are important issues for us.

The Minister mentioned fuel tickets, and I think that that’s a very good point to make. We don’t have the tankage onshore to have the storage that we necessarily need in New Zealand, and the closure of Marsden Point was supposed to not put our fuel security at risk. Yet since it’s closed, we have had two instances of shortage of fuel supplies at great cost, I’d say, to consumers, with airlines having to tanker fuel into airports—that means filling their tanks to the brim, burning more fuel to get to the airport where they don’t have the fuel supply, raising emissions, and then, of course, having enough fuel for the return journey. Similar, in a slightly different way, in overseas international travel, with aircraft leaving Auckland, for example, doing a short hop to Sydney or Fiji to refuel at great expense. Having an extra take-off burns a lot more fuel instead of climbing up to altitude where they use much less fuel rather than flying low. That all burns money. It costs airlines a lot of money. They don’t like it. And, ultimately, while the airlines pay the money upfront, in the end it flows through to the consumer in higher ticket prices. So we all pay.

We have found how vulnerable we are—and this is diesel we’re talking about here. But as you might be surprised, not all diesel is the same. It comes under different specifications, and so the diesel coming in to New Zealand will be tested in every shipment. We could have the same scenario that we had with the jet fuel, although we won’t be worrying about a freezing point, although diesel does have additives in the winter to stop it from freezing—it goes waxy in the fuel lines when temperatures are too cold. I know that from experience when I was farming in Canterbury and we got quite a bit of snow, so I know that that is an issue.

So we’re putting ourselves at risk, and so we do need to get fuel security sorted here in New Zealand. But tickets are not the panacea that has been alluded to. Marsden Point’s closure, which I alluded to before, is more serious than fuel security, although it is a really important part of it. But the much-needed, high-paying, highly skilled jobs in Whangārei all were lost as a result of the closure of Marsden Point, a massive cost and yet another example of a Government so hell-bent on lowering emissions that they want to de-industrialise and to decarbonise everything. They’re quite happy to do that, and I think that is outrageous and poor Government policy.

And we know that the Government at least had a part to play in it, because Naomi James, the former chief executive of the Marsden Point, wrote to the to the finance Minister, Grant Robertson, and asked him, essentially, to get ACC, who are a major shareholder of Marsden Point refinery and who had been instructed to divest themselves of fossil-fuel investments when Marsden Point refinery company was going through pretty difficult times, to help Marsden Point. The Minister wrote back and said, essentially, no, he wouldn’t do anything about it, so they had to actually make the decision to close the refinery. They may have done it anyway, but we will never know. And I suspect that was the straw that broke the camel’s back.

Unfortunately, these things have far-reaching consequences, and now we’re dealing with this bill under urgency tonight. So we’re only talking about 28 days of onshore storage—the International Energy Agency recommendation is 90 days of storage. We don’t have that. Diesel is the essential fuel we have for our emergency services and for transport, all of our food, and the supermarkets—supermarkets run out of food and they need to be restocked at least every 24 hours. We need fuel to run that. Our rail, for what it does—and that’s questionable at times—it also runs on diesel. And our ships are going have to run on diesel to meet MARPOL Annex VI, which is an emissions profile.

💬 DEPUTY SPEAKER: This is fairly broad. Can we talk about the levy, which is actually the point of the legislation—but carry on, Mr Smith.

Fuel security is a very important part of this. Why are we doing this under urgency? We still haven’t had an answer for that, although the Minister couldn’t answer the simple questions in the last bill. In fact, she caused more confusion than any light that she might have put on the issue at hand. What we don’t know from this is what the time line is that we’re going to get, and I’ll be looking forward in the committee of the whole House to getting some answers on this question. How long is it going to take to get the 28 days of supply onshore? That will be very interesting to learn. All these things, as I said, could have been teased out in a much more fulsome way in select committee, but we didn’t get the opportunity for that.

So, as I said, the National Party, supports it. We will help the Government out at this time. They desperately need help. We know that. But we do not like the process. We do not like urgency being abused in the way it is constantly—constantly—by this Government. It just shows how poorly organised they are. So we will support it, but we will be asking some hard questions during the committee of the whole House process—and that will be for the Minister’s benefit—tomorrow. And so we look forward to that tomorrow in the committee of the whole House. So with that, I recommended it to the House.

It’s time to rise from the Chair. The House is suspended until 9 a.m. tomorrow.

Debate interrupted.

Sitting suspended from 9.58 p.m. to 9 a.m. (Friday)