Fuel Industry (Improving Fuel Resilience) Amendment Bill

I present a legislative statement on the Fuel Industry (Improving Fuel Resilience) Amendment Bill.

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

I move, That the Fuel Industry (Improving Fuel Resilience) Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported back to the House by 10 August 2023 and that the committee have authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 193, 195, and 196.

In November last year, I announced that the Government would be strengthening New Zealand’s fuel sector with a suite of initiatives aimed at increasing New Zealand’s fuel resilience to fuel supply disruptions. The headline initiative in this suite of measures is a minimum stockholding obligation (MSO)—which I’ll refer to as “the obligation”—the details of which are outlined in this bill. Fuel importers have limited incentives to hold reserve stocks above commercial fuel stockholding levels and invest in backup fuel storage facilities. In the absence of this bill, the sector may not keep sufficient domestic fuel stocks to mitigate the impacts in fuel disruption scenarios adequately.

The bill will ensure a sufficient supply of fuel is held in New Zealand. This will help mitigate the impact of any major disruptions to international oil and fuel markets, natural disasters, and infrastructure failures that could occur. It also creates regulation-making powers to adapt the design of the MSO over time in light of energy and transport trends. These powers can be used to introduce new stockholding requirements applicable to different types of fuels and specific strategic locations. Given the recent jet fuel rationing incidents, I have directed my officials to look into the case for introducing stockholding requirements specific to Auckland Airport and other strategic locations in the future. Once this bill is passed, we will have the flexibility to introduce these additional location-specific requirements through regulation.

As I announced last year, the obligation falls on fuel importers with access to bulk storage facilities. In New Zealand, this includes the five major fuel importers: Z Energy, BP, Mobil, Gull, and TasmanFuels. The minimum stockholding level at the national level will be set at 28 days of consumption for petrol, 24 days of consumption for jet fuel, and 21 days of consumption for diesel, on average. The minimum stockholding level is intended to achieve a good balance between minimising the impact of any potential fuel supply disruption and avoiding disproportionate price increases at the pump.

To meet the MSO, fuel importers do not necessarily have to make significant investments in fuel storage facilities. Some of them may need to change their stock management practices, however, to reduce fluctuations in their stock level.

I would now like to discuss some of the key provisions in the bill and how they ensure the resilience required in our fuel system. The required minimum volumes of stock are specified in the obligation in terms of average stock during a single month. The calculation method is intended to reduce fluctuations in fuel stockholding levels, particularly in the depths of the troughs in the inventory cycle. The calculation method underpins the stockholding obligation. Calculating it on a 12-month rolling average basis lessens fluctuations throughout the year and provides more certainty about the minimum stockholding level that fuel importers are required to meet.

The stock that may be counted towards the MSO is limited to stock held in a bulk storage facility and fuel cargo bound for a New Zealand port on a vessel within New Zealand’s exclusive economic zone (EEZ). Counting cargoes within the EEZ is a pragmatic approach to avoiding complexities around counting stocks on ships that are in port and discharging or are awaiting a berth to commence discharging, or after discharging cargo at one port and steaming to another. This typically accounts to one or two days of cover for each fuel type, and represents stock that can quickly contribute to any local fuel supply disruption while seeking to minimise the regulatory burden.

In light of the Auckland jet fuel incident, the bill provides for regulation-making powers to introduce location-specific stockholding requirements to be developed in the future. In particular, officials will continue to look into the merit of developing requirements specific to Auckland Airport, given that the major fuel importers have yet to agree on a new investment plan for the airport’s fuel infrastructure.

The bill is pragmatic in the way it deals with events that could impact on an obligated party’s storage capacity such as a force majeure event like an earthquake or a major fuel supply disruption. In events such as these, it may not be reasonable or beneficial to expect an obligated party to comply with the MSO. As such, the bill includes an exemption regime where obligated parties can apply to the Minister of Energy and Resources for an exemption. Exemptions will be provided on a case by case basis, using set criteria. In extreme cases such as following a large international fuel supply disruption, it may be necessary to issue a suspension of the regime so reserve stocks can be drawn down.

The bill also gives the chief executive of the Ministry of Business, Innovation and Employment the discretion to accept enforceable undertakings from obligated parties on my behalf. This would allow an obligated party and the regulator to intervene early in the event of a possible failure to meet the obligation. The information disclosure requirements will give much clearer oversight on the fuel importers’ stock levels and their contingency plans in case of outages. The bill also gives the regulator the ability to share information collected under the MSO with other Public Service agencies or statutory entities such as the Commerce Commission. Information collected such as fuel stock storage capacity and contingency plans is likely to be useful to other agencies involved in emergency management, including the National Emergency Management Agency.

This bill seeks to increase our fuel resilience in a way that will limit potential price impacts on consumers. The probability of a significant fuel disruption is low, but it remains impossible to predict. Any disruption, however, could have significant impacts on the New Zealand economy, businesses, and consumers. Recent jet fuel disruptions have highlighted the flow-on effects to our economy of such an event, which the country can ill afford in this time of recovery. I expect that this bill will mitigate the extent to which New Zealand is exposed to fuel disruption scenarios, and I am pleased to commend this bill to the House.

The question is that the motion be agreed to.

Well, the role of the Opposition is, of course, to critique the Government when they put on the table policy that is ill-considered and not in New Zealand’s best interests, and, my goodness, hasn’t this Government served up a lot of that over the last three years? But you have to bring some prudence and judgment to your critique, and we do that, as the National Party, every day. When the Government serves up something which is reasonably well thought through and pragmatic, then of course it makes sense for us to support it, and I can see the shocked looks of amazement over on the other side of the House. But, actually, credit where credit is due. On this occasion, I think the Minister of Energy and Resources has put together a bill that warrants our support, and we’ll be very interested in the feedback that we get from the submitters.

So, as the Minister has outlined to the House, the key component here is about ensuring that we have enough fuel stocks in New Zealand to be able to withstand geopolitical or natural hazard shocks. Those minimum fuel stockholding obligations, or MSOs, have been set as the following: 28 days of consumption for petrol, 24 days of consumption for jet fuel, and 21 days of consumption for diesel.

Now, not surprisingly, the tension in the conversation that the departmental disclosure statement and the regulatory impact statement have highlighted is the tension between the need that New Zealand businesses, high users of fuel, and the Channel Infrastructure leads have for this stock to be kept at a reasonable level, and, of course, the importers themselves, who are not that keen on having more obligation with respect to greater capital investment to ensure that they have the appropriate infrastructure to support the required stock levels that have been suggested. So we will be very interested, from the National Party side, to hear that debate and tension reflected in the various submissions that go to the Economic Development, Science and Innovation Committee, and assure ourselves through that conversation that, actually, the right balance has been struck here between ensuring that we have enough capacity in terms of those reserve stocks and that we have reached the right balance, because, as the Minister has said herself this afternoon, the probability of a shock is low, but if it happens, then the pressure that will come on the New Zealand economy if we do not have access to sufficient petrol, jet fuel, and diesel will be significant.

The challenge, I guess, from our perspective, is whether those timings of 28 days, 24, and 21 are right, bearing in mind that currently—as in right now—the stock levels for petrol are 43 days, as opposed to the 28 that’s suggested, and 47, as opposed to the 24 days that is suggested. Now, I appreciate that this moves a bit over the course of the year, but it suggests to me and to us that the concerns that the fuel importers have that this has not been the right balance are probably ill-founded, and I think that the Government has landed on something that makes sense. But, as I said, we will need to test that in the select committee.

We will need to test the calculations and we will need to test the risks and the implications, because the Minister has said herself that if this was to happen, it would cause a huge disruption. For example, if we had a natural event, that would cause a huge impact on our stores, and exemptions would be immediately applied to enable, essentially, the New Zealand economy to draw down on that fuel beyond our ability to replace it to the minimum levels outlined. The question is that if we have a significant earthquake or if we have a significant geopolitical event, frankly, is 28 days going to be sufficient anyway, and why have they struck that particular time frame as opposed to anything higher or lower?

I think these are right questions to ask, but the broad intent of the policy that the Government is putting forward here around fuel security and the importance of that from a New Zealand economic perspective makes sense, so we’re not going to quibble with that. As I said at the start of my speech, when the Government fronts with something which is poorly thought through and, frankly, incompetent, you will expect us, with loud voices, to critique it, as we do most days in this House—as we have for the last six years, and we will continue to. But when something pragmatic is put on the table, we support it. It’s very unlikely that this will be fully progressed by the election, and I have every confidence that the incoming National and ACT and “Whoever Else Party” Government will be able to progress this and get a—

💬 Hon Dr David Clark: The “coalition of cuts”—that’s what you’re looking for. That’s the phrase you’re looking for.

Sorry—have a turn yourself. I’m looking forward to your contribution shortly. It will be a highlight of your career, as this is for mine—as this is for mine—leading off here, on behalf of the National Party.

So look, it makes sense. It’s got a lot of sensible components. We will test it in the select committee to make sure the balance is well struck. Hopefully, I have every confidence that the incoming National Government will put it through in its final stages later in the year, and I commend the bill to the House.

Thank you, Madam Speaker. There’s lots to unpack in that last speech, from Todd Muller, but we’ll leave it at that for the time being.

My generation and the zoomers have been said to have lived through many once-in-a-hundred-year events. It started off in 2020 with the pandemic, then we had the Ukraine and Russia war, and then we had the floods on Auckland Anniversary and we had Cyclone Gabrielle. While I acknowledge this has been causing a lot of emotional distress and a lot of mental health issues, it’s also actually caused a lot of stress on our strategic oil supply as well.

As I look at this bill, I recognise that this is a bill that’s come out of this period of extraordinary time as we faced COVID-19 and the huge disruption that it had on supply chains, on our shipping companies, on our supply routes, and on our trade routes. But also during the cyclone and the flooding, we saw how emergency services needed that fuel to reach critical people and to reach those areas in regional New Zealand especially, but even out the back of Auckland, they needed that fuel to go out there and actually save lives. So this is a bill that’s come out of that, not to mention the war on Ukraine by Russia.

We’re trying here to minimise that disruption of war here on New Zealand’s fuel supply, and we know it’s been a really difficult couple of years for New Zealand but also the whole, entire world as well. So it is in that context that we arrive here at this bill, making sure that the Fuel Industry (Improving Fuel Resilience) Amendment Bill comes to the House, and I’m glad that so far we’ve got bipartisan support, because Mr Muller is right that this is really important for New Zealand. It’s resilience for the industry, it’s resilience for our economy, and, as I’ve said at the beginning of my speech, it’s also actually resilience for our National Emergency Management Agency. It’s resilience for our emergency response teams, it’s resilience for trade, and also, at the same time, even for some of our military and other Defence Force operations as well. So making sure that we have the right fuel supply in our nation, on our shores, is really important.

As we will all be aware, this is a whole set of measurements that has been brought here by the Hon Dr Megan Woods to make sure that we address this problem holistically. I remember during the Budget week as well, we were debating the bill and making sure that the levies that we had collected as a Government could go towards making sure that fuel resilience was looked after, here on our shores. So there’s lots and lots of different steps that we have to take to make sure that this has a comprehensive execution, to make sure that we actually get the balanced results that we do.

I still remember the morning—perhaps, if my memory serves me correctly, it was about a year ago—when we discovered that the aviation fuel that we had for our planes, especially, if I remember correctly, for Air New Zealand, was tested to be not of spec. I think it was something about conductivity and that it was too high in conductivity. Now, I’m definitely no expert in chemistry or fuel or the aviation sector, but I understand that that was deemed to not be appropriate, or we could not use it for the flights that morning. I remember, especially in the domestic situation, for the domestic flights, that Air New Zealand had to—kudos to them. I think they didn’t have to cancel any flights, but they had to definitely start redirecting different flights into different areas to make sure that they were able to cover all of their routes. I can only imagine the stress that was put on to their team and the stress that was put into trying to manage moving New Zealanders across our country in a timely fashion without disrupting our travellers indefinitely. I am sure that some of our MPs would have been in that category, as well.

This bill is to make sure that those situations no longer happen. It’s to make sure that the Government itself holds up some of the reserves in our own ways as well, in terms of making sure that we have that adequate fuel supply, but also making sure that the big fuel companies—especially the five big fuel companies that we’ve also enabled the Commerce Commission to do market research into. Obviously, we know that there are still competition problems, and I think I talked about this in the last contribution I made in the House as well. In New Zealand, with a population of 5 million people, often competition in big industries doesn’t happen very well just because of our sheer size, so sometimes Government has to intervene into the market to make sure that we have the right level of reserves.

So back to the five fuel companies that we know have access to storage facilities, those are BP, Gull, Mobil TasmanFuels, and Z Energy. It’s making sure that they have a combination so that between all of them, there is at least 28 days of use of petrol, 24 days of jet fuel, and 21 days of diesel in an average month. So that’s making sure that not only do we look after the aviation industry to resolve situations, as I talked about with regard to Air New Zealand, and making sure that even if we had a supply of fuel that was not up to spec, we would still be able to travel and bring New Zealanders to the places they needed but also we’ve also got petrol here, which obviously is for our household cars, but also diesel, which I know will have some industrial applications as well and users in our industries, and to make sure that some of those companies that have not yet benefited from a Government Investment in Decarbonising Industry Fund will need maybe the benefit of having that diesel supply there—or even maybe some of our farmers on their farms as well. So making sure that our economy keeps ticking along to make sure that even if we have—God forbid—another war somewhere else in the world—

💬 Simon Court: Well, we will.

—that has a strong and big implication on our fuel supply—and I hear Mr Court saying that it will. Unfortunately, I too agree that we will go into tumultuous times as well. Here in New Zealand, on our shores, we look after our economy and we look after our people to make sure that we have the right supplies to make sure that the New Zealand economy is going ahead.

As I read the regulatory impact statement, I also look at all of the different kinds of scenarios that officials have put together in making sure that this is a balanced policy. Like I said, we’ve gone through a one-in-a-hundred-year pandemic, and also we’ve gone through the severe flooding. Also in the document that the policy analysts and our officials have looked at the fact of whether or not our response is actually proportional to the likelihood of these events happening again. For instance, they looked at whether a closed border event is likely to happen, and they’ve actually rated it as an unlikely event. So, touch wood, and we’re hoping that will never ever happen again, and hoping that we’ll never have to deal with another big pandemic of the scale of COVID-19 on our shores again. However, even though it’s unlikely, we still have to make sure that there are precautions and that it is still on our risk register as a country.

So making sure we have that proportionate reserve on our shores is very, very important. Like I said, when we look at 28 days for use of petrol, 24 days for jet fuel, and 21 days for diesel, I reckon this is probably the right balance that our officials and our Ministers have found.

However, throughout the select committee process—and I join my colleagues, echoing the call to come to the Economic Development, Science and Innovation Committee. It’s a great select committee and we would really love to hear from submitters, especially from the fuel industry but also from those who have a critical reliance on fuel as one of their main means of doing business and on keeping New Zealand moving, and especially if you have a really big part to play in the New Zealand economy as well. We welcome you all to come to the select committee and make your voices heard, and also to particularly take note—as Todd Muller has mentioned as well—in terms of that balance and whether we’ve got the balance right, whether or not that provision is enough for your business or for your sector to keep going and to keep operating, and whether or not the mechanism for which we do it by is the right one, so that we can actually really benefit all of the companies that are on our front lines to make sure that this fuel goes out to the right people and so that the criteria that we introduce in this bill are actually the right ones.

This is a great bill. It’s a bill of its time—of our time right now—as we face more and more disruption and uncertainty in our economy and in our world. This is a bill that will make sure that New Zealand keeps on moving with our fuel industry, supplying and supporting some of those critical sectors of our economy, especially those in our transport sector as well, and so that is why I commend this bill to the House.

Thank you very much, Madam Speaker. It’s an interesting bill, this. We’ve said that we’ll support it at first reading and see where things go from there.

There’s been some discussion about balance. Just thinking about the risk involved, we’ve got a low risk of something that takes place but would have serious consequences if it did, so that’s the context for thinking about the need for fuel resilience. Others have commented on the “plausible fuel disruptions” that might take place for a number of different reasons—and that wording is from the explanatory note—which are things like the geopolitical situation, particularly in this moment in time, with the war in Eastern Europe, among other things. Of course, the tides of geopolitical change come in and go out, but suffice to say we always will need fuel resilience, and, of course, particularly, we’re talking about fossil fuels at the moment, and in due course that will change, too. But the bill does contemplate, actually, other types of fuel in relation to which we also need to be resilient.

So I don’t have a lot of comments to offer at this stage. I will note, actually, the defined term of “obliged persons”, and I’m trying to catch the eye of the member opposite who has given me grief before in a parliamentary speech in which I used the word “orientated” and I meant “oriented”, of course, with “orientation” being the abstract noun in this case. A colleague of that member said “obligated persons” a number of times.

💬 Hon Member: “Obliged”—“obliged”.

Actually, she said “obligated parties”, which is wrong—you know, it’s a double whammy, to be fair. But I’m going to say “obliged persons” because I know that to be correct, and I hope that the member, who I won’t name—but I think all I’ll say is that the Hon David Clark seems to know what I’m talking about.

Anyway, so minimum fuel stockholding obligation—that’s an MSO, as defined—sees fuel importers who have these obligations, they’ve got to retain a certain amount, and they in turn are able to draw fuel from bulk storage facilities. It seems to be a right and responsibility kind of balance. So just referring to that fact that there might be different types of fuel in the future to which this would apply, if so, then that mix of obligations, or rights and responsibilities, would apply to them. That’s as far as I can tell from the bill as we’ve seen it so far.

I suppose there’s a question about whether there’s a “Henry VIII” provision in the sense that this would potentially apply to green fuels, and that could be a matter of regulation. I say that because the bill tells us that it would be a matter that could be imposed by “regulations in the future”—there we go, I’ve found it. So that’s something to look forward to discussing at, perhaps, the select committee. I understand that the Economic Development, Science and Innovation Committee will have that dubious honour, and good luck to them. I won’t be subbing in, if I can help it.

Anyway, so that’s the aim. It’s to smooth the peaks and troughs and the fluctuations of the fuel supply, thereby ensuring its security for all the kinds of reasons that we need it. For that reason, I’ll go no further at this point, except only to say the National Party does support the bill, and we commend it to the House and to the select committee to which it will soon be sent.

It’s a pleasure to speak after that member Chris Penk, who is always wise in the matters of grammar, and I do acknowledge that he was referring to a conversation we had recently where we discussed some of our pet hates around words that add additional syllables where they’re not needed. So I will follow his lead and talk about obliged persons at the appropriate point in my contribution.

I do want to also acknowledge those who’ve gone before in this debate, and particularly Todd Muller. I want to wish him well in his retirement—a very sensible decision. Although, with his sensible speech today, I wanted to invite him to stay on—we don’t get enough of those from opposite. It was one where he contributed, I think, some wise thoughts on the merits of this bill and the reasons that we’re having it.

If I can remind members that this bill introduces a statutory framework for adopting fuel resilience measures over time to ensure that we as a country are well prepared should there be further supply chain interruptions, the likes of which we had during COVID and subsequently, actually. Shipping lines and the like are now starting to perform in a way that we might hope but previously they were horribly out of whack with our expectations, with the likes of the war on Ukraine, which had an impact on global fuel prices, and the natural disasters we’ve had in the North and on the East Coast of New Zealand in particular, where we’ve come to rely very heavily on diesel and other supplies at short notice for keeping communities supported through a very difficult period. So that’s the kind of context, if you will, for this bill, and it, of course, comes as part of the wider announcements the Government made in November last year in a package designed to make sure that we have the security that we want for our fuel supplies.

I did also want to note the other part of context here, which is the market study work that the Government did. The incoming Government in 2017 funded market studies for the Commerce Commission which aimed to make industries more competitive, and we know as a result of the work on fuel that we now have fuel prices on the forecourts, which helps customers decide where they’re going to shop. We also know that if we look at the fuel margins for importers, actually, they did drop in response to that legislation, as best we can tell, and that’s meant that people in a time of a cost of living crisis—

💬 Simon Court: Show us the evidence—show us the evidence.

—have saved money. The member opposite says, “Show us the evidence.” It’s there on the Ministry of Business, Innovation and Employment (MBIE) website. I can point him to the data, if he wishes. I don’t have the calculation in front of me. I’ve done it previously. Evidence is something that he’d like to see, so I’ll have a conversation with him afterwards and point him to where the fuel margins are on the MBIE website.

If he believes in markets and a market response, then he may be willing to attribute that response in the market to the changing conditions in the market and the changing nature of regulation surrounding it, because it changed the nature of the market and, therefore, changed the nature of the response. But he may not believe in markets—I can never tell with the ACT Party. It’s one of those great mysteries. They say they believe in markets, but then the next minute they turn round and pretend that they don’t happen, and want to regulate things or say some kind of economic-defying statement.

Anyway, back to this matter at hand—I shan’t be distracted too long off on that track. We know from that market study, of course, that the likes of Gull attribute their entry into the South Island to the changing conditions that came with the increased and appropriate regulation of the sector because they knew that they could then compete in a fairer market. With a fairer market, of course, what we do then see happen is we see markets deliver an outcome for consumers, which is narrowing margins and a more competitive market place. In a more competitive market place, of course, there are incentives to lower stockholdings, and this bill is designed to ensure that minimum stockholdings are in place so that in that more competitive market, we don’t get the unintended consequence of reduced fuel holdings, which we could imagine easily occurring in an actually more competitive market. So I think all of those things are useful context as we debate this bill, and I am pleased to see that the Opposition spokespeople that have spoken so far from the National Party are supporting the bill because they recognise sensible regulation that makes a market work in our interests and in the interests of consumers.

So to the bill itself and the response that it provides, it is there to boost New Zealand’s fuel supply resilience and economic security because we also know that where there are disruptions in fuel supply, that can have a knock-on effect in the economy. If planes don’t fly, our produce doesn’t get to international markets. If we don’t have the diesel generators to support industries to keep things cold when there have been natural hazard events, natural emergencies, then stock can end up being thrown away and not reach the intended markets. So these obligations that are being introduced for minimum stockholding in the bill build in the flexibility that we might need to adapt as a country to future events—to future supply chain disruptions.

I note the member Chris Penk raised the issue of “Henry VIII” clauses and the debate around that. These are regulation-making powers we’re introducing as a Parliament, and I think it’s a legitimate debate to have about the extent to which they will apply to ensure the security that we want. The bill grants the Minister the right to waive those obligations in a natural disaster, for example, where it’s obvious that those reserves need to be used to keep the economy going or to keep people safe. That makes sense that you wouldn’t then hold the stock, because, of course, the reason for holding the stock is to actually deal with the situation in those events.

So there are some very sensible debates that will need to be had around this. The Government also plans to buy and hold around 70 million litres of diesel stocks, which we know is approximately seven days’ worth of diesel stocks.

Those are the basics of the bill, but I wanted to turn for the point of the debate to the legislative statement that’s been tabled because it does reveal some of the finer print around the minimum stockholding obligations. Interestingly, the legislative statement talks about “minimum fuel stockholding” and then provides the abbreviation “MSO”. Now, we know that that stands for “minimum stockholding obligation”—it’s not spelt out in the legislative statement, but I think members will know about that—and it talks about “28 days of consumption for petrol on average;” must be held, “24 days of consumption for jet fuel on average;”, and “21 days of consumption for diesel on average in New Zealand.” in order to comply with the legislation. But the regulation-making powers which enable the Government to have a clear oversight of New Zealand’s fuel resilience are able to be adapted according to future situations. That is the wisdom that’s being debated here, and, as I’ve said earlier, it’s good to see that the National Party are intending to support this to the select committee.

The point I want to bring up is that the bill also empowers the chief executive of the regulator—in this case, I imagine it would be the Commerce Commission—to “accept enforceable undertakings from persons in connection with any matter relating to the enforcement of the MSO,” and so right through this bill, there are degrees of flexibility to ensure that it’s actually getting the outcomes that we want for consumers, for our citizens, and for our economy. That’s, I think, really sensible, and I do hope the whole Parliament, in fact, will support the legislation as a consequence and enjoy the debate through the select committee, where the finer points can be debated.

But the purpose, I think, is something that I hope all parties in this Parliament will support, and, really, the purpose is to have a framework, if you like, for introducing measures that cover off the monitoring and the measurement of fuel supply risks and the management of those risks as they’re identified. So one of the things that’s in here as a possibility is specified locations for stockholding of fuel. Now, those are not supplied in the initial version of the bill; those are to be determined through regulation and according—one would assume—to need. The methods of calculation for determining required stockholding volumes are up for grabs through regulation, and so too are the specific requirements for disclosure of information in relation to resilience of fuel supplies in New Zealand.

So those things are all able to be made through regulation according to this framework, and I guess they allow the Government to have a clear oversight as situations develop in the future. We want to be nimble, we want to be resilient, and we want our economy, in particular, to be protected, and then I will note in closing that there’s also provision outlined in the legislative statement for a review—in fact, there must be a review of the MSO within five years after it commences—and there is a very sensible list of things that must be considered in that review—

Order! Order! The member’s time is up.

Madam Speaker, thank you, and thank you to that previous speaker, the Hon Dr David Clark. I understand that he has also indicated that he will be retiring at the end of this term of Parliament, and we wish him well in his future career. But I sincerely hope he doesn’t end up in an academic role teaching young New Zealanders about economics or maths, because he’s demonstrated again that the Labour Party does not understand markets, competition, and economics.

But now what I want to come to is the problems with this bill. This is the Fuel Industry (Improving Fuel Resilience) Amendment Bill. Well, why does the Government insist we need to improve fuel resilience? It’s because people are afraid that at some point in time, their city or their region might run out of fuel, and what we saw during Cyclone Gabrielle was that when businesses and households run short of fuel, people become desperate very, very quickly. You can’t charge your cellphone if there’s no electricity. If the lines are down, the only option is a diesel-powered generator.

💬 Hon Julie Anne Genter: Not if you have solar panels.

Oh, apparently unless we have solar panels. But, of course, on a cold dark night in winter there is no energy coming from your solar panel.

The issue that this bill intends to solve is one that is existential, which is that without energy in readily available liquid fuels, our society will grind to a screaming halt. We know that and we know it’s existential, because it wasn’t that long ago when I was a kid that the movie Mad Max came out. Mad Max was all about a war for oil—that’s right, the first Mad Max movie, starring that great Australian actor Mel Gibson, was all about a war for oil.

Now, in the general policy statement the Minister of Energy and Resources cited, amongst some of the other problems, that the Marsden Point oil refinery is closed. Well, that raises some issues, such as why would an industry or a group of companies who think New Zealand is worth investing in close their refinery and leave the country? Could it have anything to do with this Government’s energy policy or with threatening New Zealanders that they shouldn’t be allowed to drive petrol and diesel vehicles on pain of taxation? Well, that could have something to do with it.

We’ve heard the Minister cite wars and conflicts. Well, there have always been wars and conflicts, so what should New Zealand do about that? Well, we could invest maybe 2 percent of our GDP in defence and be a trusted participant in security alliances, rather than take the “She’ll be right, mate. Nothing to see here.” approach that this Government has taken with defence. Maybe that might help secure shipping lanes and actually encourage our alliance partners to want to come to our aid and protect our supply lines in the event of a conflict in the North Pacific.

What this bill does do is highlight how incoherent the Government’s approach to energy policy is. They point out that the minimum stockholding requirement will have to be 28 days for petrol, 24 days’ worth of jet fuel, and 21 days for diesel, on average, and yet we’ve heard that, actually, the average stockholding in New Zealand is already double that. So what is the point of this legislation if it’s not actually adding to the resilience in New Zealand’s fuel supply and energy supply chain? Well, maybe the Government should look at itself: by banning oil and gas exploration that may well have contributed to the lack of resilience in the energy sector in New Zealand, it could have.

The former Minister of Transport Michael Wood claimed that New Zealand should reduce vehicle kilometres travelled by 20 percent. Now, I’m not sure if he’s aware that the city he’s the Minister for, called “Auckland”, in its unitary plan, forecasts that another 900,000 people will come to Auckland alone between now and 2050. That indicates that maybe 300,000 to 400,000 dwellings will be needed, and I can pretty much guarantee that every one of those families or homes will have at least one vehicle. Currently, it’s about 2½ vehicles per household. If they only had one—in some kind of nirvana—we’d still have another 300,000 to 400,000 private vehicles just coming to Auckland alone.

So the Government’s policy around energy and around fuels has been incoherent and damaging. It has undermined confidence in the sector and undermined willingness to invest in New Zealand. The Government’s only got itself to blame, and this bill is but a fig leaf over its poor policy.

The real problem with resilience is in the event of physical and natural disasters like we saw in Hawke’s Bay and in Auckland recently, because when the big one happens—and if you’re a Christchurch resident who was affected by the terrible series of earthquakes down there in 2010 and 2011, then you know that massive damage can be done in just a few minutes to the infrastructure of a city. What we saw during Cyclone Gabrielle in January-February this year was that a huge amount of damage can be done to roads, bridges, and ports even, which means that the fuel tankers—the liquid energy—as well as the power lines that supply electricity, are interrupted, and what we saw was that this Government couldn’t even get drinking water to the region, even though the navy tried to deliver it, because, apparently, it wasn’t good enough, or hadn’t passed some kind of test. Taumata Arowai, the water regulator, insisted there was some red tape that the navy wasn’t going to be able to cut through, so they wouldn’t allow its delivery of drinking water to the Port of Napier.

So maybe the issue here is really poor regulation and too much red tape. That means that, actually, New Zealand is not as resilient as it could be, if only businesses and the private sector and local government were allowed to build their way out of it, because the real problem with resilience when it comes to fuel supply is not whether a ship can get here in two or three days from Brisbane—which is actually quite doable for a ship full of fuel—but when it gets to New Zealand, will the port be available to unload it or will the port be damaged beyond repair? Will the roads, the bridges, and the other infrastructure be in working order so that truck and trailers and fuel tankers can get from the ports out to the places where fuel is needed, like service stations and hospitals, for example, and other public infrastructure that depends on generators? So, in summary, ACT will support this bill to first reading—

💬 Hon Members: Yay!

—to first reading only—at this stage. We want to hear from people who have good suggestions for the Government—good suggestions, submitters—and we hope the Government will listen. But if this bill doesn’t pass before the end of this parliamentary term, that’s OK. ACT will be part of a future Government, and we will be listening.

People are feeling brittle, they are feeling nervous, and they’re feeling afraid, and giving them some confidence about fuel security is one way to address it. Two-thirds of New Zealanders say that New Zealand is going in the wrong direction.

At public meetings, people regularly raise the issue with ACT MPs that they’re worried that since the Marsden Point oil refinery closed, New Zealand is more exposed to the risk of fuel insecurity. Then we point out to them that, yes, that’s potentially true, but if your Government has said to reduce the vehicle kilometres travelled and says that we’re going to eventually ban petrol and diesel vehicles, or at least try and tax them out of existence, and it’s going to ban gas stoves in new homes and so on, then, actually, you should be worried because your Government is not caring about your resilience, your future, or your security. What they’re doing is paying homage to their ideological dreams of actually turning New Zealand back to a time when we didn’t have sufficient energy to enjoy warm, healthy homes, and when we were too poor and we didn’t even have our own oil and gas.

ACT wants them to have the confidence—the confidence—that they can stay in New Zealand. They don’t have to leave, and a Government that involves ACT will make sure that the lights stay on and you can always fill up your Hilux at a reasonable price. Thank you, Madam Speaker.

Tēnā koe, Madam Speaker. Tēnā koutou e te Whare. I have to say that the previous speaker Simon Court’s speech just seemed like pure projection. Pretty much everything he said could be said about his own party’s policy: completely incoherent, no understanding of markets, totally in thrall to an ideology of, somehow, the private market solves only everything, and yet at the same time he thinks that the Government should have gotten involved to stop the closure of Marsden Point oil refinery.

💬 Simon Court: I never said that.

Well, the speaker certainly did imply that something else should have been done. So, anyway, it was a very confused speech from a very confused man but also not surprising, because he does have a background in civil engineering, and it is, frankly, traffic engineers and town planners who are entirely responsible for our transport system, which is terribly energy inefficient.

I think that it would be useful to traverse a little bit of the content that I would like to, which is not directly related to the bill, but it is responding to things that were raised in previous speeches. But first, I will say that the Green Party is supporting this bill, the Fuel Industry (Improving Fuel Resilience) Amendment Bill, and one of the things that is highlighted in the regulatory impact statement is that we are expecting a fall in demand for petrol and diesel. In fact, there’s already some signs that that is happening, thanks to the extreme success of the Clean Car Discount policies, which have led to a much greater influx of low-emissions vehicles than we saw before those policies came in. Climate change initiatives and technological developments mean that demand for petrol has plateaued and will start to decline from the mid-2020s. Of course, if we had more flexible and sensible town planning rules, then that would result in a reduction in vehicle kilometres travelled.

I think what the members from the National Party and the ACT Party are confused about is that our high reliance on private vehicles is a consequence of bad Government regulation and subsidies which have unintentionally created a transport system that is incredibly inefficient when it comes to energy, and it also costs households and businesses much more than is ideal because they have to spend so much money on private vehicles, which sit parked for 96 percent of the time. It’s extremely low capital productivity.

So the opportunity for New Zealand that you would think that people on the right would understand if they understood markets and economics—but, you know, they don’t; it’s more like a virtue-signalling thing on their part—is that there’s this opportunity to get better outcomes for the climate, for the environment, and for fuel resilience simply by planning our transport system in a more efficient way, which gives people more choice, which means they don’t have to buy as many private vehicles, which saves them money and saves time sitting in traffic. It reduces the amount of land—valuable land—in our towns and cities that’s tied up with simply moving or storing cars, but it also helps with this very thing that this bill is about, which is improving the resilience of our economy and transport system to shocks in supply for petrol or diesel, and to high oil prices.

So, as the Green Party has been saying for over 20 years, there is this incredible opportunity. Everything we do to improve our energy efficiency of our transport system also improves our resilience to high oil prices and also reduces the demand for petrol and diesel, and is a direct benefit to our economy because we don’t have to import as much fuel. So it’s just like win-win, win-win—all these things that we could do in transport. But, unfortunately, what is becoming increasingly clear in the speeches in the House and outside of the House is that the ACT Party doesn’t believe in climate change and doesn’t believe we need to do anything about it. It wants to protect the status quo. It doesn’t want us to actually take any proactive, practical action, even when it will benefit us economically, because those members are just ideologically opposed to any changes that might benefit our climate or our environment.

That is why it is truly a scary prospect, but it’s, fortunately, very unlikely that ACT will be part of the next Government. But certainly, voters at home should be asking themselves very serious questions: can we trust these people who have very fringe views on climate change? Can we trust them in Government? Absolutely not. They have no practical solutions, and they come to the House and give speeches that are just completely incoherent when it comes to responding to issues like climate change and our need to improve fuel resilience. So I think that’s enough from me on this bill. Thank you, Madam Speaker.

Kia ora, Madam Speaker. It’s wonderful to be standing here in the House this afternoon debating, reflecting, and supporting legislation that goes some way to improving our fuel resilience.

Now, I’d like to indulge you for moment—for not too much, but just a little—around fuel resilience and my experiences of it personally. I’m sure many of us remember the old days of being young, owning your first or second vehicle—some of you may remember being young—or being a student, whether it be a student of university or polytech, or a student just of the world. I was that student of the world, and, when it comes to fuel resilience and this legislation, I owned a Holden HQ 1972. It was a wonderful vehicle. It had two sources of fuel.

💬 Hon Gerry Brownlee: One of the greatest cars ever made. The HQ—absolutely brilliant.

That’s right, the old HQ. It’s actually the one car I regret selling, but I did—I did. This had two sources of fuel: it had petrol and it had LPG.

So it was dual-fuel, which relates very much to this piece of legislation, because the issue I had around my resilience and my fuel was you’d think that you’d never run out of fuel because you had two sources—right? Well, unfortunately, what happened is you’d drive along and you’d be cruising—and I lived in Wellington at that stage. You’d be cruising on the motorway out to the Hutt. You’d run out of LPG, so you’d just flick the switch and you’d be back on to petrol, and you’d be fine. You’d carry on with no catastrophes, no dramas.

The challenge I had in terms of the resiliency of my fuel sources was the fact that as a younger person with less money, sometimes I would either neglect to fill up one of my fuel sources or I couldn’t afford to that week. So I would just run off the fumes or the smells or the gases that were coming through.

Now, this was going well, and in terms of the Fuel Industry (Improving Fuel Resilience) Amendment Bill, I guess in a local context for me, as a Holden HQ driver—two-tone, gold; it had a beautiful white roof—I was off to work one morning, and I flew into the Terrace Tunnel, as you do, heading out to the Hutt Valley, where I worked at the time. As I hit the Terrace Tunnel, I conked out of LPG—I ran out. No worries whatsoever—you know, there’s fuel resiliency in the Holden HQ. I flicked it through on to petrol—easy does it, off we go. “Uh-uh, uh-uh, uh-uh, uh-uh”—it was one of those days. It was 8 o’clock on a Tuesday morning, and I had no fuel left in the tank, literally, on both types of fuel.

💬 Hon Gerry Brownlee: So you were the guy who locked up Wellington?

So I was that guy. As we look at this legislation, we look at it, because it does talk about how we ensure around the potential cost to the economy. I don’t want to admit to being that guy, but I did break down—well, I didn’t break down at all. I ran out of fuel in the middle of the Terrace Tunnel.

Of course, I thought that everyone was coming to my aid to help me, but, of course, it was rush hour and no one cared at all, so I was stuck there. I got out to use the phone—this was before cellphones. I got out to use the phone, but the phone wasn’t working. I thought, “That’s fine. Some dear person will save me.” No one came to save me—no one—until a kind police officer, who had obviously had several calls because by this stage I was holding up a lot of traffic, came through to save me. So they towed me to Tinakori Road, to the petrol station there—and there is relevance to this legislation as I speak.

ASSISTANT SPEAKER (Hon Jacqui Dean): Oh, I hope so.

We pulled in to the petrol station at Tinakori Road, I filled up and, of course, went in to pay, and the person at the counter said, “Oh jeez! What happened with you?”—you know, the police were getting involved. I said—around resiliency and around the cost that it takes if we don’t have resiliency—“Oh no, it’s a bit embarrassing. I ran out of petrol in Terrace Tunnel.” “Oh, you’re the guy? It’s all over the radio. The traffic’s held up for miles.”—slightly embarrassing. It was my fault, and I take full responsibility for my actions.

But when we look at this legislation, it’s not too dissimilar—or maybe very not similar at all—but why I say that I looked at it is because it was around the risk that disruption creates if we don’t have fuel resiliency in this country. As we look at it, it could be millions of dollars if we don’t have enough, or it could be billions of dollars, and on that morning in the Terrace Tunnel, hopefully, it was only tens of dollars that I held people up with, if not myself. But, actually, it is around how we find ways to ensure that we as a nation have fuel resiliency, that we ensure that we have fuel stockholdings, and that we ensure that our fuel is available, whether it comes to our planes, whether it comes to our trucks and our buses with diesel, or whether it comes to petrol itself.

Other speakers have spoken about it, but my Holden HQ, it used petrol, but it also used LPG. So when we look there, it’s 28 days of consumption for petrol, on average, it’s 24 days of consumption for jet fuel, on average, and then there’s the 21 days of consumption for diesel, on average. Now, the reason we are bringing this to the House this evening and hoping and looking forward to taking it to select committee—so far, we’ve heard that every party is supporting this legislation—is around boosting our fuel supply resiliency and our economic security to make sure that we get it right.

Now, I was listening to the ACT Party before and I picked up a few of their comments. I mean, they threw things around about red tape. They wouldn’t know red tape if they fell over it, because in my electorate of New Plymouth they are putting up hoardings in the electorate, currently, which actually are illegal and have had to be taken down. I guess if they had the “Ministry of Red Tape” there, then maybe that would have helped them out. But when they talk about our threatening New Zealanders and our obsession with ridding people of diesel and ridding people of big cars, I take exception to that. Also, when they talk about our “incoherent” energy strategy, I don’t understand how they could actually think like that. But then I don’t spend too much time thinking about what the ACT Party think about, because it’s not really much to think about.

So this bill does provide flexibility to introduce location-specific stockholding requirements through legislation into the future. When we go back to those different days around whether it be 28, 24, or 21 days, that again is what we look at in terms of the minimum fuel stockholding obligation, or the MSO, as I like to call it—in fact, everyone likes to call it that because it’s actually in the legislation. But this MSO is around reducing the risk that fuel stockholding and, therefore, fuel supply resilience could deteriorate as a result of international geopolitical events. As we’ve seen around the world, and if we look at what’s going on in the Ukraine, we hope that there aren’t any more incidents or situations of that sort. But we know that the volatility, sometimes, of nations around the world does have an impact on us. I need to remind us as a House—and I’m sure I don’t need to—that we are a small, tiny South Pacific nation at the bottom of the Earth, and—

💬 Matt Doocey: Outrageous!

That’s not outrageous, Mr Doocey; it’s a blessing and a wonderful thing to be this beautiful, small Pacific nation at the bottom of the world. But it creates challenges for us. It creates challenges for us in terms of our ability to draw down resources and to bring things from far away.

I want to close this very significant reflection to the House this evening by saying that I was part of the Taranaki 2050 Roadmap work in and around how do we decarbonise and how do we look to our future when we become carbon-neutral—when we ensure that our emissions not only drop but we hope that they will end. So this legislation is for now, but then I look at things like what we have in Taranaki and in the New Plymouth electorate, like Hiringa Energy, which is creating our own source of green hydrogen. Again, it’s a great initiative, and it’s looking at how we actually turn that into something to add into our trucking industry around the North Island and around the South Island. Again, that would be autonomous. We’d be having our own green hydrogen that we have here locally.

When we look at the offshore wind energy and, again, supporting that around green hydrogen, it’s not the complete solution, but it’s an “an”—it’s a part of our transition process. But it’s also a part of us, as a small nation ensuring that we have our own autonomy so that we are able to have what we need for when we need it and have the kinds of resources that ensure that future generations will benefit from the fact that we have clean and cleaner forms of energy.

So the Fuel Industry (Improving Fuel Resilience) Amendment Bill is good legislation. My Holden HQ wasn’t the greatest car, but it was a car that I none the less took great pleasure in driving. I didn’t take great pleasure in breaking down or running out of fuel, but, for me, it’s something that I am grateful for.

The member’s time has expired. The Hon Gerry Brownlee—a five-minute call.

I think that that previous speaker—Glen Bennett—should resume his feet and apologise to the House and to the nation for implying that the wonderful Holden HQ was not a great car. It was truly one of the great marks of the world, and I wish that he had spent a little bit of time telling us about what happened to that car, rather than blithering on with the rest of the incomprehensible speech that he offered to the House.

The question is why do so many Government members, when they speak about the new technologies that are coming on and the new fuel sources that are coming on, and they label them green and get excited about them as if it’s completely new and they’ve somehow discovered this themselves—they seem to think that as a Government, they are the ones who are seriously pushing it. They are not. These things will happen. Just as the candle was replaced by the kerosene lamp, the kerosene lamp was replaced by the filament lightbulb, and the filament lightbulb has been replaced by the LED lightbulb, so it will go on, and when it comes to motor fuels, the same thing will happen over time.

I’m struggling to see what it is that the Government think is so important about this bill, other than the fact that they went to the Commerce Commission and said, “Please conduct a market study.” The Commerce Commission duly did that and came along with various recommendations, central to which was price control. Last November, the Minister was out there, very much in this sort of boisterous mode, saying, “What a marvellous job we have done with this market study. It’s going to make all the difference in the world. We’re going to lower the fuel price.”—but then, of course, abandoning it. We haven’t seen a single bill here this year that would enable a Minister to exercise price control on motor fuels—and nor should we—because the experience this year has been that if a Government takes its own hands out of the pockets of consumers and takes less tax off them, you will get the sort of price stability that we’ve seen, even in the volatile world situation that we’ve got at the moment.

I think it’s fascinating that when one considers the current holdings—so, firstly, I’ll go back and say that the bill is going to compulsorily require oil companies to have specific tonnage of their product available to the market at all times. But when there’s an actual consideration of what the market does provide at the moment for their businesses and what do they need to have in their tanks to ensure that they have that continuum of activity, well, it’s 43 days of petrol, 40 days of regular petrol, 47 days of jet fuel, and 21 days of diesel. So why is the Government coming along with a bill that says, “Oh well, actually we’d be a lot better off and be far more resilient”—a word I hate, by the way, and I think it’s much overused—“if we dropped all that down to just 28 days of petrol, 24 days of jet fuel, and 21 days of diesel”? Why would we halve—compulsorily halve—what an industry itself has already decided should be twice as much to maintain that industry?

We’re a country that’s seven to eight weeks on the end of a supply chain. We cannot bring in crude oil now and have it refined in New Zealand, so we must have refined product, and the Government seems to think that while the industry itself has determined 43 days, 40 days, 47 days, and 21 days for different fuels, it would be better to compulsorily require 28, 24, and 21 days.

This is just a vanity bill brought in by a Government that’s run out of steam, and it’s fascinating that the only bills that we had out of the Budget that needed to go through with any degree of urgency were energy bills. That tells us that the great strategist for the Labour Party—the Hon Megan Woods—is the only one who’s out there pencilling up these bills at a great rate of knots to fill up time between now and when the House lifts late in August. We’re happy to send it off to a select committee because we want to hear from those fuel companies, who will, I’m sure, tell us that this is a complete nullity and a total waste of time.

Thank you, Madam Speaker, for the opportunity to take a call on the Fuel Industry (Improving Fuel Resilience) Amendment Bill. So I would like to start off, perhaps, by talking a little bit about the principles behind this bill. I know, unfortunately, I’ve drawn a split call, so that means I only have five minutes to talk about that, and I don’t have the luxury of some of the other speakers, where I could have talked in depth for 10 minutes on what needs to be said on this bill. But I would like to get us to think back a little bit to the time that we had the recent weather events, and, particularly, coming from a rural area, the importance, as my colleague—Bennett?

💬 Hon Members: Glen.

Glen. I was going to say “the Hon”, but he’s not “the Hon”. But he’s honourable—you know what I’m saying. But my colleague Glen Bennett was mentioning the risk—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! [Assistant Speaker points to the bill]

—the disruption can actually cause. That’s right. So what the bill does is it is making sure that we have the mitigations in place so that we don’t have to run out of our stock and we can draw on the resources that we have available. So, for example, looking at the civil defence centres that were set up, for example, where there was the need to put not only water and food in stock but also fuel, people had to run their generators. Of course, if you don’t have diesel sitting somewhere in your shed or wherever else in containers, you’re going to run out of the ability to make power, and in rural areas, it also means you won’t even be able to get the water out of your water tanks. So, again, the really important principle that sits behind this bill is that we are ensuring that we have mitigations in place to draw on our existing resources and we don’t get into issues.

Minister Woods has described it and said that this bill would enable the Government to have a clearer oversight of New Zealand’s fuel resilience and would build in the flexibility that we need to adapt the stockholding obligation as energy and transport trends are changing. So this bill that is being introduced today will help to ensure that we have sufficient petrol, diesel, and jet fuel in New Zealand to weather any potential major disruptions to our fuel supply. It has been said that that risk of disruption is potentially low. If it does happen, it could cost the economy hundreds of millions to billions of dollars.

So then a little bit on the technical parts of this bill. What this bill actually does is it enables the minimum stockholding obligations regulations to be adapted as the energy and transport environment evolves. That will ensure that, as a Government, there will be a clearer oversight of New Zealand’s fuel resilience, but at the same time we will also make sure that we build in the flexibility that we may need to adapt. So that means planning to buy and hold 70 million litres of diesel stocks in New Zealand, and that is approximately seven days’ worth—you would think it’s more, but it’s seven days—and that recognises the importance of diesel for running emergency services and transporting food. Now, that would require, obviously, setting up agreements with the fuel industry and storage providers.

The bill also includes introducing regulation-making powers so that the obligation can be adjusted as needed. So that means flexibility to introduce legislation-specific stockholding requirements through regulations in the future. As has been said before, that is for different fuel types, whether that is the 28 days of use of petrol, 24 days of jet fuel, and 21 days of diesel, on average, for every month, but that would be the combined minimum stockholding levels that this bill would equate to, roughly.

So the bill then, just to finish off—I see I’m running out of time, unfortunately—provides a statutory framework for implementing the Government’s fuel resilience policy package announced in November 2022, ensuring that we can take an adaptive approach to adopting fuel resilience measures over time, and ensuring that New Zealand will have continuous and adequate fuel stocks to mitigate the risk of fuel disruptions. Key components in that are—

Order! Order! The member’s time has expired.

Thank you, Madam Speaker. It is a pleasure to rise and take a call on the Fuel Industry (Improving Fuel Resilience) Amendment Bill. It’s really unfortunate to hear others on the other side of the House who don’t like words like “resilience”, given the huge challenges we have to support our entire economy and our people in it to make a just transition. I’m really proud to be part of a Government that is not scared to take on these challenges.

People sound surprised on the other side of the House that we’re going to have this grappling and this “How do we move from the carbon-based economy we’ve got now to one that means it is sustainable and future-proofed and means we can get to zero carbon?” It is really disappointing to hear people are surprised, or if they’re not surprised, they really can’t be bothered. They want to keep their heads in the sand because it’s all just too hard. This bill is a really good example of how we are helping this economy to grapple with that just transition.

We have heard a lot about the challenges to our resilience that are growing—you know, there are the examples of contaminated fuel and the supply challenges that were exacerbated through COVID and through the wars that are happening. As we heard from the other side of the House, they aren’t necessarily new and unique, but we have had the new and unique that are becoming the normal, which are challenging our resilience, and one of those is, obviously, climate change. We heard about it through the cyclone and the floods. We had isolated communities that did not have energy resilience. As someone who lives in a rural community, we know how to deal with power cuts. We don’t just have candles and torches; we have little—[Member gestures with hands]

💬 Shanan Halbert: What’s that?

What, a torch or a candle—no? All good. We know how to make sure that our woodpiles are stacked up, we know that we always have our phones charged, and we always have a full tank of fuel in the car. It is really, really important to those in our rural communities that we do as much as we can to provide that support.

The interesting thing is that because we have to and we are dealing with challenge of transitioning away from a carbon-based economy, we are reducing the incentives for our fuel companies to make that critical infrastructure that tides us over until some time in the future when we no longer rely on a carbon-based economy, and so we aren’t. As we see New Zealand and the planet reducing its fossil fuel reliance and consumption, we are seeing carbon-based fuel companies making decisions about cost and profit, and they aren’t necessarily in very good alignment with what we need as an economy. We need infrastructure and we need structures that will make sure that our economy will thrive.

For those over the other side of the House, who obviously didn’t pass level 3 economics, my students and I would have conversations, and probably the hardest topic to teach was those marginal cost curves, average costs, average variable costs, total cost—all of those things—and at which bit of the curve a firm would decide to change its behaviour. They were always really difficult to look at—curves on a piece of paper—but what we did do was we could pick up real-life examples, and this is one of them. This is a really good example of market failure that is, effectively, being imposed on the market to a certain extent because we do need to transition away from carbon fuels.

So what happens when we have market failure? We need Government intervention. Market failure isn’t really a problem if we’re talking about buying mangoes down at the local fruit shop. Apologies to mango-growers, but what I’m suggesting is that that is not necessarily critical for the functioning of our economy. But there are some places where we cannot have market failure and where we have to make sure that supply and demand have attention paid to them, and this is one such thing.

Energy is obviously critical, and it is even more critical that we support our entire economy to transition away from carbon to the alternatives. I heard from my colleague Glen Bennett from Taranaki. Those of us who’ve been in this just transition space for a very long time are very, very clear that we have to move the conversation—and we are—from oil and gas to energy. We have to move and make sure that those investments help us to have a lighter footprint on the planet, and we’ve heard about our offshore wind investments and solar and onshore wind, and all of those other things that will help us become not just 100 percent renewable but exporters of renewable energy—won’t that be fantastic when it comes about? But it is about supporting the market to do that. If we leave it up to the market, they will, quite understandably—because that’s how a firm works. It looks at those cost curves and it says, “New Zealand, infrastructure—I don’t think so.”, and they’ll walk away, and then we’ll really be in trouble.

So I’m really pleased this is going to the Economic Development, Science and Innovation Committee. I commend this bill to the House.

Thank you, Madam Speaker. Well, I was rather intrigued by the last speech on this Fuel Industry (Improving Fuel Resilience) Amendment Bill from Angela Roberts, talking about market failure. So just not very long ago we had the Hon Gerry Brownlee, basically, pointing out to the other side of the House that, currently, the industry has 43 days of consumption storage for petrol—that’s premium—40 days for regular, 47 days for jet fuel, and 21 days for the consumption of diesel. Now, this bill is actually mandating these same industries to 28 days of consumption for petrol, on average; 24 days of consumption for jet fuel; and 21 days of consumption for diesel. Now, I’m not sure how market failure fits into that conversation when the industry is actually doing double the quantity that this Government is putting this legislation in place to mandate them to do.

The other weird thing about this piece of legislation is that this is not a Government that’s typically worried about energy security, especially around our natural resources, and we keep hearing all the time about the just transition. Yes, there’s a plan, but you can’t heat people’s houses on a plan. You can’t fill their cars up on a plan. To transition oil and gas to energy, as the last speaker said, you actually have to have some things on the ground.

So we’ve heard this afternoon about Hiringa doing some great work—doing some really good work in hydrogen—but there’s no quantities yet. There are no amounts that we can use to actually put into our energy sources that will take this country anywhere in the short term. We’ve also heard about offshore wind. Now, look, it’s going to be at least 10 years before any of this offshore wind is likely to be up and running.

Yes, it’s good to have a plan and it’s fine to have a plan, but it was really silly to cut off the existing energy sources until that plan was well and truly in place. So anyone that talks about a just transition is actually just covering up for the fact that we could end up with energy insecurity somewhere in the middle, and particularly over recent times, when we’ve had some terrible things going on over on the other side of the world in terms of the war against Ukraine. So when this Government talks about making sure that we have plenty of petrol, jet fuel, and diesel on hand and making sure that the Government is mandating these industries to store half of what they’re already storing, I’m wondering how long it will be before they’ll be screaming about not having enough gas reserves and actually mandating the industry to store what they haven’t been allowed to extract.

So in considering this bill, National is supporting this bill. It makes sense to make sure we have enough energy security. It’s just this bill in itself is a complete waste of time, because that security has already been put in place by the industry.

Without a domestic refinery, New Zealand now relies solely on the importation of refined fuels from overseas, rather than just crude. So it was coming in to be refined before, but now, it’s actually just a terminal. But I think the other piece of resilience—whether we like that word or not—that has been lost is that when we look at the potholes and the bitumen that we used to get out of Marsden Point that is now not being used to maintain our roads, we are finding that the standard of road surfaces is far poorer than what it was at recent points in time when we had our own bitumen being produced in this country.

So while we’re starting to rely more on electric vehicles and to decarbonise away from fossil fuels, our heavy transport and airlines still need to keep our economy flowing. We’ve seen some very poor examples in the aviation industry recently where we needed to make sure that we’ve got the resilience and the right content in the fuel that’s going into our airplanes. None of us actually wants to jump on a plane that’s not fuelled correctly, so that’s extremely important, but the industry is actually taking care of it itself.

But road transport up and down the country relies on diesel and petrol, and we do need security of fuels. Utes use fuel. We hear about the fuel tax all the time. Major industries like agriculture and industrial processing require transport to function, and if they were without fuel, they would suffer immensely.

I think probably something that hasn’t come to the attention of most people in the Government is if you actually look at the large geography of New Zealand—and everyone talks about the farmers when it comes to ute taxes, because, of course, it makes very little sense to put a tax on something where there is no answer or no solution to the problem. But, actually, if we think about the energy industry, which works in the large geography of this country, and if we think about conservation, the conservation estate is huge. If we’re going to get to being predator-free and we’re going to do all of those things, we still need people who have fit for purpose vehicles—i.e., utes—that cover large geography. They don’t have the chargers that need to get around the country to help us do what we need to do.

So none of us would stand in the House today and argue about having fuel security—of course it’s important. But what we want to point out on this side of the House is that the Government is really undershooting on what the industry is prepared to do by itself. It just seems like the Government has run out of legislation where they’ve got new ideas, meaningful ideas. They’re throwing up ideas like this, which are going to be totally ineffective. We’re standing in the House and we’re actually having a debate this afternoon—if any of the public are watching—that’s actually mandating fuel companies to do what they’re already doing.

I’d like to mention that the five fuel companies that have access to storage facilities are BP, Gull, Mobil, TasmanFuels, and Z Energy, and they’re already doing this job. So I’m not quite sure what the Hon Megan Woods is trying to achieve by putting this piece of legislation in front of this House.

As I said before, in March and December last year, jet fuel arriving in the country tested off spec meant that fuel companies and airlines had to put in place contingency arrangements to minimise disruptions. So that’s a wise move that these organisations are doing to make sure that we do have enough fuel for our aviation industry—that’s really important—and the fuel was rejected because it had an increased level of conductivity. Now, I’m not a scientist, I’m not an engineer, and I don’t understand exactly what that would do to an airplane, but it sounds serious enough for me that I wouldn’t want to be flying on that plane if that fuel was put into it. So having more stocks of aviation fuel at strategic locations like Auckland Airport will reduce the risk of such incidents happening again. I guess we can buy into that when it comes to the fuel industry for aviation.

But the rest of this piece of legislation appears to us in the National Party to be a complete waste of time, and I would like the Government to actually focus on fuel security as much they do on the words “just transition”, which are extremely overused. It’s extremely inefficient.

I also come from Taranaki and, look, I can see things on the horizon, but they’re not things that are going to keep us, as a country, running as energy sources in the short term, unless something happens much more quickly than the Government is able to get infrastructure built, because we’re just going to end up in a very cold place. Our homes won’t be warmed and our cars won’t go. We do not have enough renewable electricity supply to drive the electric cars, let alone all of the other electricity transition that this Government is trying to do. I think the whole energy focus of the Government is extremely bad for our resilience, and nothing in this bill that we’re debating at the moment is going to make any difference to the big problems that we face in energy. Thank you.

Thank you, Madam Speaker. I have some sympathy for people at home who may be confused by the contributions coming from the National Party because, on the one hand, they’re saying that there is no market failure and that the airlines and others have access to enough fuel because of the good behaviours and the responsible behaviours of the fuel companies, and, on the other hand, they’re supporting the bill and saying that fuel resilience is a good idea. So I’m not quite sure where they stand on it, but what I can say that we have experienced situations where our fuel resilience has been tested, and the previous member Barbara Kuriger just referred to it.

Last month, there were stories on Radio New Zealand about fuel potentially running out for airlines because there was contamination, and there were people like Cath O’Brien from the Board of Airline Representatives of New Zealand who were saying that the Government needs to work with the industry to sit down and make some rules about fuel resilience so that there is a guaranteed backstop and we won’t run out of fuel. Also, in December, I remember people were really worried that Christmas might be cancelled because the same thing happened. There was contaminated fuel, and the travel association president, Brent Thomas, made similar noises: “Please, let’s have a proper plan around fuel resilience.”

So people can’t say that the fuel sector doesn’t need to have that when either they need to or they don’t. You either need resilience or you don’t need it, and, in my view, failing to plan is planning to fail.

What this bill does is it, basically, provides a flexible plan which is responsive. It means that decisions can be made by the Commerce Commission that respond to what is happening in the environment and by the triggering events, but that is also clear enough to know that there will be enough fuel available.

So if the people listening are confused, I think we need to know: do we need resilience? If we do, then let’s support the bill; if we don’t, then don’t. I can’t tell what the National Party wants to do, because they’ve got a bob both ways. I commend this bill to the House.

Motion agreed to.

Bill read a first time.

The question is, That the Fuel Industry (Improving Fuel Resilience) Amendment Bill be considered by the Economic Development, Science and Innovation Committee.

Motion agreed to.

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

Instruction to Economic Development, Science and Innovation Committee