Land Transport (Clean Vehicle Standard) Amendment Bill

Members, we now come to the debate on clause 7, which is the debate on “Section 175 amended (Targets for reducing carbon dioxide emissions)”. The question is that clause 7 stand part.

Thank you, Madam Chair, for the opportunity to take a call on clause 7. This clause, effectively, does two things. What it does is it removes the prescribed targets which are in the legislation that the last Government legislated. Secondly, it allows the Government to be able to set new targets via regulation for any calendar year after 2024 rather than keeping those targets in legislation. So the targets for this current year will stay in law, the targets for last year will stay prescribed, but the targets for the next three years will be removed. The regulation-making power is then set so that the Minister can then set the targets for the next three years, just as it’s already in place for the years after that. There’s a regulation-making power which already allows those targets to be set for the following three years; this just simply brings that forward and allows for those targets to be set from the end of this year.

It’s a very simple clause. It makes two key changes which then enables the Government to make any changes. There is a review already under way as prescribed in the Act. As the Minister of Transport, I’m required to undertake a review of the standard. I was required to review the standard prior to 30 June 2024; the problem was that I could review it but there was no ability for any changes to be made. So, quite simply, I’m doing the review and now there’s going to be an ability for any changes to be made based upon that review. Actually, that is a common-sense approach; a sensible way. In fact, I remember being around the select committee table when this bill was being debated, going through Parliament, and, actually, one of the points which consistently came through is, actually, enabling the Minister to set these standards via regulation was put to the last Government, they ignored that advice, they ignored those recommendations; we are simply doing it in a far more sensible way. I look forward to the debate on this clause.

Thank you, Madam Chair. I have some questions that I put to the Minister around the commencement date that pertain also to this clause that I haven’t heard an answer to in the committee yet. This is particularly around repealing section 175(1)(c) to (e) and reducing the carbon dioxide targets that are in there. The effect of the repeal is that the targets for reducing the carbon dioxide emissions for the calendar years of 2025 to 2027 are removed from the principal Act.

What I’d like to know from the Minister, given that he’s going to have the ability to make those by regulation, is what will the impact on emissions reduction plan (ERP) 2 and ERP3 be? Will those need to be updated, given both of those emissions reduction plans have baked in emissions reductions that have been calculated by various measures, including the Clean Car Standard? In terms of the repealing of those baked in, if that’s the Minister’s intent just to put in place regulations that are as ambitious or more ambitious than what is currently in the legislation, then I’d expect that we’d see an improvement to the emissions reduction plans for those periods.

It might actually only be emissions budget 2, but the Minister will be able to tell me that—that it could be an improvement to that. But it is the way in which these two documents interact, and the fact that we are seeing through section 175 that that is the effect that is going to take effect. I think the committee needs to understand in terms of the Minister’s time lines, his level of ambition, and what the interplay with the emissions budgets will be.

Well, I thank the member for the question. The answer to that is there is a review under way. Under section 167C of the Act, there are a number of criteria under which the Minister has to be satisfied and take into account and consider when setting the regulations. So in setting the regulations, I will be satisfied and have consideration, and undertake the appropriate processes as required under that piece of legislation.

Thank you. From the Minister’s answer, is he telling me he will not be satisfied if there is a negative impact on the emissions budgets—so ERP2—and he will not make a change that will have a negative impact on that emissions budget?

Thank you, Madam Chair. I would like some clarifications from the Minister because I’ve been kind of waiting since the title to ask this question because it’s pertaining specifically to clause 7.

CHAIRPERSON (Barbara Kuriger): Good idea! [Dr Xu-Nan pauses speech] Sorry, I just said “Good idea!” because it’s specific to the clause.

Ha, ha! Playing the long game. Thank you, Madam Chair. Minister, you have already mentioned—and I appreciate the fact that you laid out what is in section 175A Land Transport Act around that “The Minister must, not later than 30 June 2024, initiate a review”. And the Minister already mentioned before that if you initiate the review, there may not be any opportunities to make changes because what is being repealed—section 175(1)(c) to (e)—is already locked in to 2017.

However, can I just check: my presumption when it comes to something like this is that “initiate a review” doesn’t necessarily mean that the review must be completed within a particular period—it just means that we need to have a process in place to start reviewing for it. I’m curious to know in this case when we’re looking at section 175(1)(c) to (e) that when we are looking at the initiation of the review, what outcome is the Minister hoping to achieve by making the presumption that two years of data between 2023 and 2024 only would see a viable trend on how successful this was, and meets the criteria that the Minister has just laid out in section 175A(2) onwards in terms of things that the Minister must take into account?

So I guess my clarification that I would like from the Minister is: the current settings were put in place for us to see that five-year trend, but now, by removing that, and I don’t know how long the Minister intends for this review to take place, but presumably the original intention—if the Minister would like to clarify as well—is to see that five-year trend. So the review that the Minister is intending on conducting: would that also take place in consideration of that five-year trend? And, if not, and because we are seeing the repeal of section 175(1)(c) to (e), if that’s not the case, what are we able to perceive or how are we able to be enlightened by two years’ worth of data? So if the Minister wouldn’t mind clarifying that.

Thank you, Madam Chair. The questions that relate to the review I think are outside the particular clause here in relation to what this clause is doing. The clause is doing two things. One is it’s removing the standard for the next three years and then allowing them to be set by regulation. The review is under way in order to provide—well: (1) to fulfil what the law requires, and (2) to provide advice as to what those standards should be. That work is under way.

I note the member is asking about time frames and all of those—they’re all good questions, but ultimately they’re not necessarily part of this clause in terms of what this clause does. What I would say is I’m not going to be doing a review for multiple years because that would not be—ultimately, decisions need to be made, targets need to be set.

Also, the Government’s position has been very clear: we support having a standard, but we also believe that there should be the opportunity for that standard to be amended by regulation rather than having it prescribed in legislation, which is what this clause is doing.

Thank you, Madam Chair. Still interested in a response from the Minister of Transport to the issues that have been raised by my colleague the Hon Dr Megan Woods, particularly just some clarification around whether he would or wouldn’t make regulations that would, basically, be more to the detriment in relation to what emissions reduction plan (ERP) 2 and 3 looks like. So that’s still on the radar for the Minister’s consideration.

I’ve got three Amendment Papers in my name—42, 43, and 44—and given the Minister has not shut them down as of yet, they might be up for consideration. Well, they’re up for consideration; whether they are up for him to take them on board or not, we’ll wait with bated breath as we progress through this. The one that I do want to speak to specifically is 43, because clause 7 basically strikes through all of those listed specified targets in sections 175(1)(c), (d), and (e), and they relate to the various targets post the end of this calendar year—so (c) relates to 25 January, (d) 26, and (e) 27, and then from that point after is when the regulations kick in.

What my Amendment Paper seeks to do is still allow for the Minister to make regulations post the end of this calendar year, but what it does is it seeks to ensure that any of those regulations that are made under the regulation-making provision would be such that those targets that are made by the Minister would not be set at a higher level than in any previous calendar year. Effectively, I guess, you’d call it a “sinking lid” so that we have a baseline where the targets for the current calendar year for a type A vehicle is 133.9 grams and for a type B vehicle is 201.9 grams. Then what we see if you look at those over corresponding years, the targets in the primary legislation are naturally going to decrease every year until the regulation-making power kicks in.

Now, what Amendment Paper 43 provides for is an ability for the Minister to still make the regulations but a guarantee that the regulations that he would make would, effectively, never be an increase on any previous calendar year. So I invite the Minister to share his thoughts on that. If he is serious about meeting our targets in relation to the various agreements that we have signed up to as a country, I think that would actually mitigate a lot of the concern that has been raised by some who haven’t been consulted. So I ask the Minister what his perspective or view is on that particular amendment to ensure that he still retains the power to make or set these targets by regulation.

The only point of difference, of course, is that the sinking lid for the targets would continue to be on the incline. It would mean, potentially, that he could set those targets, or the Minister could set those targets, at the current rate and that that wouldn’t change, but what it would guarantee is that there wouldn’t be an increase in that. So I’m interested in the Minister’s response.

Thank you, Madam Chair. I think the questions from the member Tangi Utikere and the Hon Dr Megan Woods in relation to the emissions reduction plan (ERP) and ERP 2 and 3 are good questions, but, ultimately, those are questions that will be dealt with as part of the review. This clause is quite simple. It makes two changes. One is to remove the targets and then allow for them to be set by regulation. There is already empowering provision and considerations that have to be taken into account when setting targets and what the Minister has to take into account as part of that process.

Thank you very much, Madam Chair. I have been waiting to ask this question: on clause 7: why did the Minister of Transport feel it necessary to delete the existing standards for 2025 to 2027? The bill could have been drafted to allow new targets to be set by regulation for those years without deleting the existing values in the meantime. Why did the Minister think it was necessary to delete the targets in the meantime?

Because what it does is it, quite simply, makes consistency between how targets are set after 2027, with those targets set between now and 2027.

Although leaving the existing targets there in the meantime until new ones—I mean, it would also be the case that there would be the consistent approach of being able to make new targets through regulation, even if we left the initial targets in the legislation in the meantime so there was some sense of there being a target for 2025, 2026, and 2027 in the interim. So why did he delete the targets before the new ones have been set?

Well, there is a target in place right now for 2024. We’re not removing or amending the target for 2024—the one which is in existence now. There’s a review under way, and that review will provide advice around what the target should be going forward. But this, ultimately, empowers those decisions to happen.

Thank you, Madam Chair. Following on from that line of questioning from Julie Anne Genter, I have an amendment in my name that would allow for this. The point that she has made is the right one: we’re not disputing the Minister’s ability to create for himself new regulatory-making powers that would apply from 2024, but those could exist alongside the primary legislation, particularly 175(1)(c) to (e), whereby he would be able to set other targets and a number of other things that are set out at 167B in the primary legislation that aren’t covered by what is set out in the primary legislation between 175(1)(c) to (e). It would be really useful if he could comment on the interaction between section 175(1) of the original Act with section 167B of the original Act.

What I want to ask is, also, given that he has said there is no intention for him to remove 175(1)(b) from the primary legislation—that’s not an amendment that he’s proposed—he is, essentially, creating a power for himself. He’s got a regulatory-making power which will apply between July and December of 2024 alongside the primary target in the Act: those primary legislation targets that are set out in 175. He himself has just told the committee that his regulation-making powers can exist alongside the primary legislation. I’d like to hear from the Minister, then, why that cannot be the situation in 2025, 2026, and 2027.

Thank you, Madam Chair. I thank the Minister for his earlier comment on Amendment Paper 43. I know that he has said that that will form part of the review, but I’m interested, Minister: do you think it is a way in which some of the concerns could be mitigated, by effectively allowing for a reduction? Well, not even a reduction, actually—just the targets as they currently stand for the current year to remain static through to whenever a regulation-making sort of date would kick in.

The other one is, I’d just remind the Minister that earlier in the day he did say he was going to provide a response to the Parliamentary Commissioner for the Environment’s letter, specifically in relation to clause 7, so he may want to take up that opportunity given he’d signalled that earlier in the day to do so.

Thank you, Madam Chair, and thank you for the opportunity to respond to some of those questions. The Government’s position is that—and I think it’s clear in the legislation—we are providing consistency with what the law says post2027 and what it will be post-2024. That is, the regulation-making powers will be used to set targets. We’ve made it very clear we support a standard, but we’re going to undertake a review. That review will provide advice in relation to setting those targets.

There’s a number of tabled amendments in terms of these issues. Some of them are inconsistent with Government policies, such as Amendment Paper 42, which says to “replace ‘2024’ … with ‘2028’.” That, of course, is inconsistent with the intent of the Government. There’s others which seek to delete subclause 2, which, again, would be inconsistent with the Government’s position, which is that we are seeking to be able to use the regulation-making power which already exists within the Act, to be able to make those amendments.

Was it important for clause 7 to delete the existing targets for 2025, 2026, and 2027 because the Minister of Transport intends to water down the standard for 2025?

Thank you, Madam Chair. I want to be clear that when we’re talking about section 175(1)—for anyone listening—that sets some numbers for targets for calendar years in paragraph (a) for 2023 and in paragraph (b) for 2024, those don’t change. What’s changing is the targets in paragraph (c), being 2025; paragraph (d), for 2026; and paragraph (e), for 2027. They are all being repealed. Those targets are being repealed.

The questions I’ve been asking in relation to clause 6, as well, are about whether there is any replacement regulation for those standards. The standards are being repealed, the Minister is saying he’s doing a review, and the Minister is saying that these changes enable regulations. They don’t require regulations. So what, I think, this side of the House is quite agitated about is the possibility that the Minister will not make regulations that are better for the environment but that he will make regulations that are worse for the environment than those current targets for 2025, 2026, and 2027.

This is a great opportunity for the Minister to record on the Hansard that it is totally his intention after his review to set targets that will be better in terms of reducing carbon dioxide emissions for the environment than what is in the Act at the moment, and if he can’t say that, then all of his arguments that we’ve heard in his previous speeches go out the window, because it becomes a policy debate. The Minister has said over and over again that all that this bill does is enable him to make regulations and it does cost recovery. But, in fact, if the Minister chooses not to make regulations, or makes regulations that are of less effect in terms of reducing carbon dioxide emissions, then it is a policy choice to increase carbon dioxide emissions, and we can’t see any analysis in the reports that come with the bill on that policy choice because we’ve been told that there is no policy choice. At the moment—and I’d really like the Minister to answer this question—it appears that it’s discretionary for him to make regulations.

The targets are gone, and that is a real problem, unless, of course, he can say on the Hansard and to the committee that he is committed to doing a review whereby the regulations will be better than what he’s repealing.

Well, the position of the Government is very clear. What we are doing here is we’re making the legislation the same for the years 2024 to 2027 in order to be exactly the same as what it will be post-2027.

All of those questions that the Opposition are concerned about are questions which they should have been concerned about with the legislation that they passed themselves when they were in Government, because, actually, they put in place legislation that enabled regulations to be made and they didn’t prescribe them for post-2027. We’re simply bringing that power forward.

The legislation allows for, or requires, a review to happen. That review is under way. The Government has said that we’re committed to a clean car standard, and we’ll make decisions as part of that review.

I move, That debate on this question now close.

I’m going to take a couple more questions but remembering that it’s quite a narrow part and the Minister has engaged in answering a number of questions. So I’m going to go back to the Hon Rachel Brooking.

Thank you. It’s a very short point, and that is that what the Minister of Transport just said gave us no comfort. To paraphrase somewhat, he said, “Well, it was always open from 2007”—I’m getting my decades mixed up; 2027. “It was always open from 2027 anyway, and so that’s all I’m committing to.”—nothing about there will be the minimum of what’s in the current Act at the moment, with the standards he’s repealing. Given that answer, my question was also: where is the policy analysis about that? A very simple question.

Thank you very much, Madam Chair. I do just want to note that earlier in the debate we were told that most of the substantive debate was actually relevant to clause 7. So this is, I thought, the time when we would most get into the substance of the bill, during clause 7.

CHAIRPERSON (Barbara Kuriger): Except the questions are becoming—the Minister’s answering the questions and we can’t guarantee that the members will like the Minister’s answers to the questions, but the Minister’s answering the questions.

Well, Madam Chair, I’m going to just take the opportunity to point out to the Minister, because he doesn’t seem to understand the difference between having 2025 set by regulation versus 2027 or 2028—and the difference is 2025 is in six months and 2027, 2028 is several years away. So the difference is that if he were to undertake a review—

💬 Tom Rutherford: What’s the question?

I don’t have to ask a question. I’m going to use my time to speak, thank you.

💬 Hon Members: Ooh!

CHAIRPERSON (Barbara Kuriger): That’s enough.

I don’t—[Interruption]

CHAIRPERSON (Barbara Kuriger): Carry on.

So the difference is that when the targets for 2025 to 2027 were set, that was years ago and the industry had several years ramp up to know what the targets were going to be. The fact that they can now be changed in regulation means they can be changed in the next six months and they could be changed to be more ambitious or less ambitious, therefore increasing uncertainty for the industry. Although given that the Minister keeps saying it’s increasing certainty and we know that he’s only really talked to certain people in the industry, we can, I think, assume that the only direction of travel will be to weaken the standards and therefore allow more highly polluting vehicles into the country than otherwise would come in, thereby increasing carbon emissions relative to no change.

Now, earlier I read from a letter, a statement from Drive Electric—they’re not the only ones. There are a number of people in the industry who are very concerned about the change to the standards from 2025 to 2027 and saying that this clause and this legislation increases uncertainty around direction of travel and any changes to the standard has broad economic implications. It’s unclear, but very likely it will reduce electric vehicle uptake, it will increase emissions from transport, it will increase imports of petrol and diesel relative to not changing the standard, which of course costs the economy and affects the current account deficit.

I guess my main question now for the Minister is: in whose interest is this legislation and the changing of the targets? Is it for the vehicle importers who want to sell more highly polluting vehicles and earn more profit at the expense of New Zealand and at the expense of the climate? Is that the interest that the Minister is legislating in, and, if not, why has he not opened up consultation and spoken to other people in the vehicle industry, people who represent electric and low emissions vehicles? Does he admit that bringing in the legislation now and making the possibility of changing the target for next year is increasing uncertainty and direction of travel? Is it in fact as a result of cancelling the Clean Car Discount? As I know very well, the vehicle industry wanted the Clean Car Discount. They did not want standards without the Clean Car Discount. When we brought in the Clean Car Discount, what happened is it made a huge difference to—

CHAIRPERSON (Barbara Kuriger): We are talking about another bill now, though. It would be good to come back to this one.

Well, OK. Those two bits of legislation work together and the combination of the Clean Car Discount and the Clean Car Standard together resulted in a substantial drop in the average emissions of vehicles being imported into the country. Since the Clean Car Discount was cancelled, it has massively increased the average emissions of the cars coming into the country. That’s why now the Government has to water down the standard and create a lot of uncertainty in direction of travel, because they got rid of the incentive that was working to change consumer demand but also the options that are available for people.

Of course the Minister won’t do this, but because we’re not having a select committee process, I think that it needs to be said that the voices of the people who care about the progress of our country, who care about actually switching our fleet to lower emissions vehicles because it’s better for everyone—it is literally better for everyone except some overseas car manufacturers who can make a bit more money selling us higher-emissions vehicles—oh, and also the people who produce oil, you know, and fund the Atlas Network, which is very influential to some of the people in here.

Thank you, Madam Chair. Madam Chair, I realise and take into account your guidance about the number of questions that we have had about the effect of, essentially, whether the primary legislation can still exist and doesn’t need to be repealed, alongside the Minister’s policy goals. The reason we need an answer on that, Madam Chair—and I’m going to ask the Minister again so he can have another go before his speech—is that we’ve had a Minister here resolutely continue to tell the committee that he is making a policy decision which only brings forward his ability to make decisions, and so there is no appetite from him in this stage of the debate to entertain that he would commit to setting ambitious targets which will meet New Zealand’s climate goals. There’s no intention to commit to the standards that already exist in the legislation that rachet up the requirements on the industry.

This is a problem and I’m going to offer him an opportunity to answer now, because he’ll get back in that seat at the third reading and he will tell us that he is ambitious for New Zealand’s climate goals. He will tell us that he is responsible as the Minister of Transport for reducing the carbon dioxide emissions of New Zealand’s fleet. We have heard that from Ministers of the Crown today in question time. We hear it from the Prime Minister weekly. So I am going to ask the Minister: is he committed to using his new regulatory powers, which he has come to the Chamber and proposed in this bill, to ratchet up the requirements on the car import industry, and will he commit, as the Minister of Transport, to using his new regulatory powers, which we cannot scrutinise, to improve New Zealand’s carbon dioxide emissions?

I thank the members for their questions in relation to this clause. As I’ve stated on a number of occasions, this is about the regulation-making power being extended from what it is post-2027 to 2024. Now, in the Act already, there is a range of considerations that have to be taken into account when setting those standards, and those are the things that I will take into account when considering the review, which is currently under way.

Now, I note that the member Tangi Utikere has been asking me to respond to the Parliamentary Commissioner for the Environment’s letter, which I think is a fair question. Effectively, the comment he is seeking in that letter—one is around timing. We’ve already debated that. The other one is around, again, more prescription around the use of the regulation-making power, and what I would put to the member is that there is in the Act already a range of considerations that have to be taken into account when setting the standard, which is exactly how I will undertake that.

I move, That debate on this question now close.

The question is that Tangi Utikere’s amendment to delete clause 7(1) set out on Amendment Paper 43 be agreed to.

Arena Williams’ tabled amendment to delete clause 7(1) is out of order as being the same in substance as a previous amendment that has not been agreed—Amendment Paper 43.

Tangi Utikere’s amendment to clause 7(2) set out on Amendment Paper 42 is out of order as being inconsistent with the principles and objects of the bill.

The question is that Tangi Utikere’s amendment to delete clause 7(2) set out on Amendment Paper 44 be agreed to.

The question is that Arena Williams’ tabled amendment to clause 7 to replace “2024” with “2025” be agreed to.

The question is that Arena Williams’ tabled amendment to clause 7 to replace “2024” with “2026” be agreed to.

The question is that Tangi Utikere’s amendment to insert clause 7(3) set out on Amendment Paper 43 be agreed to.

Madam Speaker, the committee has considered the Land Transport (Clean Vehicle Standard) Amendment Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

This bill is set down for third reading immediately.

Third Reading