Energy Resources Levy Amendment Bill

I move, That the Energy Resources Levy Amendment Bill be now read a second time.

As discussed in the previous reading of this bill, this legislation is a simple piece of legislation. It is tidying up an anomaly that exists within the legislation as a result of industry asking for clarification. It is seeking to look for a discrete change to the Energy Resources Levy Act to clarify who is exempt from the levy—a relatively simple change—because we have a situation where we have licences and permits that have been granted under various regimes, and they have differing rates of royalties that are paid. Most of those royalties cannot be changed. So we had the Energy Resources Levy Act that was passed so a levy could be put on to equalise.

Now, the practice of doing this—that the National Party are railing against—is in fact a piece of legislation that was passed in 1976 when Robert Muldoon was Prime Minister. This is a practice that was introduced by the Muldoon Government that the National Party see as the most egregious thing that a Labour Party should do. Sometimes it can be as simple as needing to clarify when it is that exemptions apply, because where it is that industry have sought that clarification is the use of the word “discovery” in the exemption clause, which has potentially been leading to confusion about whether gas production from newly producing deposits within pre-1986 licence areas could be considered new gas discoveries for the purposes of exemption. And that is what this piece of legislation is seeking to tidy up.

As my colleague, in the first reading of this bill, the Hon Dr David Clark pointed out, Treasury, in assessing this, decided that this is a piece of legislation that did not need a regulatory impact statement because the impacts are either small or having no impact on business. But this does have an impact for the New Zealand public. If we do not clarify this, New Zealanders could potentially miss out on millions of dollars in levies and royalties that are due to them.

We have had some commentary in the first reading of this bill about whether or not this was retrospective or prospective legislation. This is prospective legislation. In fact, the legislation is explicitly making that clear that this is drawing a line and saying, “Money that has been paid or unpaid in the past—that is not going to be touched.” This is about what happens going forward. And when we made the decision to end the granting of new exploration permits for oil and gas offshore in 2018, we always said that we would allow the continuing permits to run their course—whether that be from exploration to production. This is about making sure that we have a regime that is fair for New Zealanders as we go through that transition.

The question is that the motion be agreed to.

Thank you, Madam Speaker. For the benefit of those watching at home, this is the second reading of the Energy Resources Levy Amendment Bill. This is a time when we discuss what evidence we’ve heard at select committee and we come back and we debate the select committee report, essentially.

David Seymour: What happened to the select committee?

STUART SMITH: Well, I’m coming to that, Mr Seymour. If we’d had a select committee hearing, that would have been a very good, appropriate time for us to all learn about what this bill is really going to mean. At the moment, we have the Minister’s word—or assessment of it—that it’s very good, it has little or no impact, where we have to take her at her word.

But actually, going to the departmental disclosure statement, which one of the members just before—Dr David Clark, who just took a seat—was at pains to read out, in 2.3 what was written underneath it, “That the Treasury’s regulatory impact analysis team determined that the proposed amendment to clarify obligations relating to the fossil gas levy exemption in the Energy Resources Levy Act 1976 is exempt from the requirement to provide a regulatory impact statement on the grounds that it has only minor impacts on businesses, individuals, and not-for-profit entities.” What he didn’t say is further down in 2.5(b); it goes into the explanation underneath, it says—and I’m just going to the last sentence—“No quantified estimates are available as costs and benefits cannot be accurately estimated for levies that may be claimed as exempt, but the amounts involved could be significant, involving millions of dollars in lost levies.”

In a select committee, that’s where we would tease these things out; we would actually ask that question. How can they have no effect, and on the other hand it can have millions of dollars? Mind you—silly me—we have just had a Budget where billions have been thrown out; $7.1 billion of extra funding. So a few millions of dollars is nothing to this Government. Billions mean a lot to them, but millions don’t. It’s easy to spend other people’s money when you don’t care about where it’s coming from—

Melissa Lee: That’s so Labour.

STUART SMITH: It is so Labour. You’re quite right, Melissa Lee. I want to go now to who we may have had evidence from at our select committee hearing. I would expect we’d have had the oil and gas companies. They would have come along and they would have highlighted to us what impact this would have on them.

I’ve just put some thoughts down on paper. I think the economics of a field are based on—parts of that assessment would be the levy that was liable in that field. Now, that could put that at risk, so that changes the whole economics of the field, which means it’s probably uneconomic or it may well be. So that means it’s another hammer blow to the oil and gas industry, which I think is ironic.

Because, if I can give a little analogy here, when Henry Ford’s first Model Ts rolled off the production line—which made the first motor vehicles available at much lower prices and they were available to all—they had a significant problem with pollution in New York. Horse manure was stacking up; dead horses in the streets. They really needed to deal with that, and along came Henry Ford in the nick of time. So we saw a massive change from horse-borne transport in New York to motor vehicles.

But what they didn’t do was they didn’t go around and shoot all the horses. They didn’t say, “We’ve got cars now. We’re just going to shoot all the horses, we don’t need them any more.” But that’s, essentially, what this Government is trying to do. It’s another hammer blow to the oil and gas industry: “Let’s get rid of it; let’s destroy their confidence. They won’t invest; they’ll slowly wind down.”

But what they’ve forgotten is the lessons from history, and they should listen to history because they’re all history—most of them—on 14 October. But it’s absolutely putting energy security at risk. We would have heard all this from the oil and gas companies. But we could have also heard from the oil and gas users. That would be someone like—oh, I don’t know—Genesis, Contact Energy, Nova Energy, and then, of course, not to mention the glass companies, the steel mill, all of those companies who are reliant on gas.

One of the things we have to remember about a just transition is that it is completely unjust if you want to decarbonise by deindustrialising. But these guys are deindustrialising New Zealand to decarbonise, but they are doing it by accident. They don’t even know what they’re doing, because they don’t understand business and how it works. It’s basic economics, but I digress. So those oil and gas users would have given us valuable information at the select committee hearing.

Energy experts—they would have also given evidence at the select committee, and that would have been very helpful to inform the committee on the benefits or otherwise of this bill, and from a more dispassionate view—they aren’t necessarily invested one way or another in the oil and gas industry. So that would have been very valuable information for the committee. We could have heard from economists. We probably would have heard from an excellent think tank such as the New Zealand Initiative, who do a really good analysis on things like this—independent analysis that would have really informed the select committee’s decision-making processes.

I think one of the things that they would have pointed out is the costs at the margin that really drive prices in the market. And this bill will have an impact on the costs at the margin. It will drive up prices; it will increase energy costs. As we all know—well, most of us do—the cost of energy drives the cost of just about everything else.

We are in the midst of a cost of living crisis, and as my colleague, Hon Gerry Brownlee, pointed out in his speech, the Government or the Prime Minister and the Minister of Finance in their speeches—I made a comment on the quality of them earlier so I’ll resist doing it again—talked a lot about the cost of living crisis and how they were trying to do something through this Budget to alleviate it. And yet, the first bill that we are debating is going to add to it. It will add to inflation, which will add to the costs of every household. They don’t have to be someone who enjoys a gas-heated shower as I do as well. Either way, I also enjoy—

David Seymour: How long?

STUART SMITH: I don’t time how long it is. You can get an app to do that now, but I don’t do that. But those people will find it and the costs of other everyday goods and services, because they are reliant on gas and energy to survive.

So it’s a great pity that they didn’t think about this further. It’s a disservice to New Zealanders that this did not go before a select committee to have, though, all the evidence from those groups and members of the public no doubt. I expect we would have heard, probably, from the Taranaki Chamber of Commerce. I think they would have come along and given a view on that and it would be a valuable one. They would know—they’re out on the cutting edge of it. But also there are being oil and gas discoveries, or certainly good shows, in other parts of the country as well. Unfortunately, all of the potential royalties from those could have left billions on the table—not millions, billions. But that is unfortunately not going to happen now.

I think that we have come to a point where New Zealand is on the cusp. We are really at significant risk, and the sovereign risk that this will be increased because of this bill and because of the hastily, ill-thought out, ill-prepared oil and gas exploration ban that was announced by the Prime Minister in front of schoolchildren in Paris—well, that’s probably appropriate actually, quite frankly—just for a photo opportunity and putting all of our economic futures on the line.

I think it’s a pretty poor effort to do this, and if the Minister had believed this was a worthy bill, she would have come and talked to us. But she didn’t. So we oppose this bill.

I’m proud to be part of a Government that today delivered its Wellbeing Budget. And yes, as the previous speaker, Stuart Smith, said, there is a cost of living crisis. I didn’t quite understand—on the cusp of something he mentioned, but I’m guessing what was on the tip of his tongue was the cusp of a third-term Labour Government. But when he talks about how it’s going to hurt everyday mums and dads, when it’s going to hurt households, in terms of the cost of living crisis—did you know that only 9 percent of New Zealand’s gas is used for residential, for things like cooking or heating your water or those types of things.

So this where we look at it. We just want to ensure, as it says in the overview here, “To amend the Energy Resources Levy Act 1976 to ensure the Crown receives a fair financial return on its natural gas, now commonly referred to as fossil gases.” This is good legislation. We need to get on with it. I commend this bill to the House.

Thank you, Madam Speaker. Now that contribution was from Glen Bennett—Mr Glen Bennett—he’s the MP for New Plymouth.

Glen Bennett: You know my name.

Hon JUDITH COLLINS: And I know his name because we’ve been on select committee together, but I’ll never have to know his name after 14 October because he won’t be with us, I’m sorry to say that. Well, I actually am not sorry at all really because he won’t be, but he’ll have a really good MP there—the National candidate will be there: David McClean. He’ll be excellent. And I’m sure that he will understand—and David, I know that he will—

Hon Member: I don’t know who David McClean is—never heard of the guy.

Hon Kieran McAnulty: David MacLeod, but anyway, carry on.

Hon JUDITH COLLINS: Thank you for correcting me. They know his name because he will be here. Ha, ha! And you fell for it—and they fell for it.

ASSISTANT SPEAKER (Hon Jenny Salesa): If the member can just come back to the bill.

Hon JUDITH COLLINS: Coming back to the bill—and they fell for it, well done.

Energy Resources Levy Amendment Bill—what a bill. All this talk today about the bill; nothing from Labour about the cost of living crisis apart from the fact that now more people should pay more. If we look at this bill—coming back to this bill—it is supposed to be responsible. What is it supposed to do? It’s about fairness. Well, what we’ve learnt from this Labour Government is that every time they say fairness, they mean unfairness. When they say up they mean down, when they say down they mean up, when they say there’s a crisis it’s only when National’s in Government, and when there’s actually a housing crisis, as there is now, that’s actually under them, and when there’s actually a crisis of cost of living, it is again under them. And what is their answer to that? There answer is that we’re going to put up levies for those people who are licensed to take natural gas—because these people already pay various royalties and levies and things anyway—they’re going to put them up now for people who signed up under an old regime. So they’re going to put it up for new stuff.

But that’s forgetting the fact that when the deals were done, when the decisions were made—when the decision was made to go out and prospect and look for that oil and gas, the decisions were based on what was the law at that time. So what we’ve got now is this Government yet again coming along and just changing the rules, and that’s without proper consultation. We know there’s no consultation, because it, basically, says that. I’ve heard from the Minister today, who said, “This is what the industry wants.” Well, Stuart Smith and I have both heard from the industry this afternoon and they are not actually at all happy with what is being said by the Government. And we know from the departmental report that they couldn’t be bothered doing a regulatory impact statement. We know from it that they know that this is an extra tax, because even the departmental report written by the Ministry of Business, Innovation and Employment tells us that, yes, they do know that that is a tax. The Hon Gerry Brownlee pointed this out, and I haven’t heard that properly answered. So it’s yet another tax. And who pays for those taxes? Ultimately it’s the consumer.

So when people are looking at the cost of gas for their barbecues or their hot water or for their stoves, they know that the cost of gas is going up. Gas is seriously one of those gases that helps New Zealand, particularly in times when we don’t have enough hydro or other renewable energy available. Gas is a wonderful opportunity for us not to have to build yet another dam somewhere. This is what gets me on these energy issues. And coming back to the bill—this is the same party over there and their friends who support them who opposed all those hydro dams that were built.

I heard the Hon Dr Megan Woods talking about Rob Muldoon in 1976. Well, she may well have known him well but I didn’t. Secondly, might I point out that she wants to tar the National Party of today with everything that Rob Muldoon might have said or done. Well, I’d like to tar her then with Roger Douglas and all the excellent work that he did. So I suggest that she understands that two can play at that game. And by the way, Roger Douglas did some very good work. It was pretty hard on farmers, of course, but at the same time what we’re seeing is that if she wants to play that game we can both do that.

I think too that we might want to consider in this bill why it is so urgent. What is the urgency? So we’re going to be sitting in Parliament for the next day-and-a-half or two days for this supposedly urgent bill that’s of absolutely no importance, because the Minister couldn’t be bothered sending it around or even discussing it with other members of Parliament. So why wouldn’t she have done that? Why wouldn’t she have allowed this to go to at least a select committee if it’s not particularly important—or of no particular relevance? Why wouldn’t she have done that? And the answer is because they don’t want to answer the question about what happened to that promise of no new taxes when their own departmental report is really clear: this is a new tax—really clear. And who ends up paying it? It’s always the consumer.

So when they talk about how they’re worrying about the cost of living, they’re not worrying about the cost of living, they’re worrying about the fact that they’re not going to be in Government after 14 October. That’s the only thing they’re worrying about. They’re trying to get every single little cent so that they can waste it. We saw some astonishing waste today. We’ve seen some astonishing waste in the last six years. We’ve seen time and time again. And I know that Glen Bennett, MP in New Plymouth at the moment, who I noted was very keen to talk about the fact that I had been a previous Leader of the Opposition—and I’m looking forward to Glen possibly wanting to be the Leader of the Opposition one day, but, of course, it’s pretty hard to do that when you’re not in Parliament. So I suggest that that would probably be something that he could still put on his wish list, but it’s going to be a cold day in Hades when that bloke comes back in and when he ever gets a chance to the Leader of the Opposition.

This bill, though, coming back to it—Ha, ha!—is all about tax. It’s all these guys understand, isn’t it? It’s only ever “Someone else might be getting something more so we’ll take it. Somebody else might be getting something more so we’ll stick a tax on that.” How about growing the economy? There is nothing in this bill about growing the economy. There is nothing in here about giving people confidence to come and invest in New Zealand. There’s nothing in here, in this bill, about giving New Zealanders confidence to invest in New Zealand—nothing at all. It’s all about tax. It’s all about trying to take something that wasn’t there before for them—it’s always about that. Instead of coming honestly and with full disclosure to other members of Parliament to discuss it, what do they do? They come in here, sneak it into urgency. Never give anyone any heads up about it. Never involve the industry, because I don’t believe a word about that consultation, because the disclosure statement makes it really clear: no consultation. They’ve just decided it’s not that important because it’s not them paying the bills; it’s other people.

Stuart Smith: It never is.

Hon JUDITH COLLINS: It never is, as Stuart Smith says.

Another example of a Government that has lost the will to live. It should go. It should get out now, and they should just let some people who know how to run things get things done. And before I see Steph—Steph, Steph from—

Stuart Smith: Steph Lewis

Hon JUDITH COLLINS: —Steph Lewis about to rise and speak—I should know Ms Lewis because she’s on my select committee, which I so ably chair but with such humility, don’t we know! She’s going to say something, and it’ll tell us all about climate change. And wasn’t that a shocking contribution from that Ingrid Leary, claiming when we’re discussing this bill that we were climate deniers—what absolute tosh. Honestly, the cheek of it. I understand that she is a former journalist, but I expect better.

Every sitting week for the better part of the last year, I have brought my infant son in with me to sit in this House. And after sitting here for the last hour, listening to the offerings of the Opposition, I despair for his future if they ever get back into Government, because they have no ideas when it comes to climate change, they have no ideas when it comes to a just transition. And Ms Judith Collins, who’s just walking out—sorry, Judith Collins, who just spoke previously—talked about worrying; she talked about worrying for the future. Where is their worrying for the future of children like my son and my daughter when it comes to having a climate that is habitable?

Hon Judith Collins: Point of order, Madam Speaker. The member who’s just resumed her seat referred to me “leaving the House”. That is actually a breach of Standing Orders. I expect that you will want her to deal with that properly.

Hon Kieran McAnulty: Speaking to the point of order, it is quite clear to everybody that was in the House that the member corrected herself at the moment.

David Seymour: Speaking to the point of order.

ASSISTANT SPEAKER (Hon Jenny Salesa): I don’t need any more help, thank you. Steph Lewis, can you just correct and apologise for the fact that the Hon Judith Collins was actually in the House when you made that referral that she was out of the House?

STEPH LEWIS: I did in my speech, but I will apologise again; she is in the House.

As I was saying, I despair for my children’s future because they have not put a single idea on the table all afternoon or all year to show us what they’re going to do to transition us to a low-carbon economy, to transition us to 100 percent renewable energy. They have no ideas. We do have a plan, and coming to previous members’ comments around regulatory impact statements and one not being completed, I refer to my colleague Dr David Clark’s comments earlier around the statement that, actually, it was not required on the grounds that this bill has no or only minor impacts on businesses, individuals, and not-for-profit entities. Further, in here, the bill itself does not make any changes to levies prescribed within it. Instead, it clarifies who is exempt from paying the energy resources levy for natural gas.

We have a plan. We have a vision. We will do transition justly. I commend this bill to the House.

Members, the time has come for me to leave the Chair for the dinner break. The House will resume at 7 p.m.

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

ASSISTANT SPEAKER (Hon Jacqui Dean): Members, the House is resumed. When the House rose for the dinner break, we were considering the second reading of the Energy Resources Levy Amendment Bill. I call David Seymour.

Well, thank you very much, Madam Speaker. I rise on behalf of ACT in opposition to this Energy Resources Levy Amendment Bill, and I’d like to organise my comments into three areas. One is around the retrospectivity issue. Two is around the process and procedure that has brought about this debate. And three is around the wider issue of energy, and in particular the drilling for and exploration for and discovery of natural gas in New Zealand, and the way that New Zealand’s regulatory environment—and particularly the laws made by this Parliament—affect the prospects of investment, jobs, and growth for this country.

To take, first and foremost, the retrospectivity argument: let’s be clear that retrospectivity doesn’t just mean the rule will only apply for revenue taken on gas today. So right now, if you take gas in New Zealand, then you will pay a royalty to the Government, because the Government has claimed that it has a right over that and you have to pay them and that’s just the way it is. That royalty can be anywhere from 5 percent to 20 percent of that value, and how much you pay depends on when you discover the gas. What this Government is saying is, “Oh, no, no, no, no, no. That doesn’t matter any more. You won’t get any kind of exemption from paying higher royalties because of when you discovered it—you will now pay the rate that we say.” And they are right that it’s not retrospective, in the sense that you’ve got to pay money on gas that you extracted in the past, but that is a very narrow and naive view of what retrospectivity means. What retrospectivity means is that decisions you made in the past under one set of laws will now be judged differently under the law of today. And it’s an important point.

We don’t need to explain why it is that many things that people did in the past should now be judged by today’s laws. The question is always: can you be prosecuted based on the law at the time you did the act? It’s crystal clear in the criminal area. If we had a world where Parliament could change the law and then ban things that certain people had done in the past and then punish them, even though it wasn’t illegal to do it at the time, we would be a very different kind of country. In actual fact, when it comes to retrospectivity, there’s a very salient example in the world today: President Xi came to power by persecuting—or prosecuting, depending on your opinion—many people who did things years ago when they were thought to be OK, under new rules that he has since implemented.

That is why you need the rule of law. That is why people need to be able to invest in New Zealand—knowing that if I decide to invest in New Zealand under a law right now, then I am not going to have the rules changed on me by some future Government and the returns on that investment decision I made—way, way back when—are suddenly less than I might have thought because the Government changed the rules even for decisions I made in the past. In that very real sense, this legislation is retrospective, because it changes the rules on people who thought they had a deal. People say, “Oh, but it was 36, 37 years ago, to 1986.” But that is the nature of capital investment. When you’re in the oil and gas industry, you spend billions of dollars in the hope of getting returns over a long period of time.

So that just shows the total unreality, the impracticality of this Labour Government. Perhaps the most extraordinary contribution of all was from one Labour member, who agreed that it was retrospective but said it was OK to have retrospective legislation if and when something is inherently unfair. Now, you just think about that for a moment. The whole purpose of the rule of law is actually that you have a set of rights that you can objectively defend against improper prosecution or improper prejudice from the State. And then you have a Labour member who says, “Yeah, we agree in the rule of law, until we decide that something is inherently unfair.” Well, that is completely insane, and shows a total misunderstanding of the rule of law and retrospective legislation.

That brings me to the second part of my address, which relates to the procedure. It’s going to be very interesting to ask the Minister of Energy and Resources who were all of these people that—she said in the House—approached her and asked for clarification. Because as she would have you believe, people who pay the royalties—I think this is what she was saying, the Minister—actually came to her and said, “Please, we would like to pay more. Can you clarify that we have to pay more? We’re sick of these loopholes where we can’t pay as much, you know, tax as we’d like to.”

Hon Gerry Brownlee: They’re embarrassed.

DAVID SEYMOUR: That’s what they were. They were probably the people that signed that letter. They might have been some of the people that signed that letter. They wanted to pay more tax. I think the Minister should get up and explain who they were and why they wanted to pay more tax, why they wanted this “just clarification”, as David Clark explained in a rather Orwellian manner.

Now, it’s just a clarification, but I think also the reason that the Minister should do that—because in some circumstances, she might say, “Well, it’s private and confidential.” But there’s something really interesting that’s happened here. You see, normally a law is put out and it’s introduced, and everyone can view it for three days and look at it and think about what they’re going to say and whether they’re going to vote for it. This one was just dropped on the Table at about 4.30 today, and we’ve had a couple of hours in order to actually think about it and analyse it, let alone see what people in the community think. So I think it behoves the Minister, who has said she was approached by people in the industry, to explain who those people were and why they suddenly wrote to her—because we’re not going to get any other chance. There’s no select committee hearing. You see, for folks watching this at home, they’re rushing it under urgency.

And that takes me to the third and final point, which is about how New Zealand attracts investment jobs and growth, and how New Zealand transitions to a lower-carbon future. I just make two points. One is that when the Government frequently changes the rules, and especially retrospectively, people who have money and want to invest it—they actually have to think hard about what’s our scenario 10, 20, 30 years down the track. What sort of place is this New Zealand? Because for a long time, the New Zealand reputation has been: well, look, New Zealand doesn’t really have a huge amount of oil and gas, but when you go down there, you can trust the people, you can trust the courts, you can trust the Government. Those people in New Zealand, they are fundamentally good people. They wouldn’t just change the rules on you because the leader of the country’s Government decided she wanted a PR opportunity at Victoria University. You know, they wouldn’t change fundamental practices in the industry without so much as a Cabinet paper, let alone a consultation—or at least that’s what people used to think about New Zealand.

What I say on behalf of myself and, I’d dare say, the National Party, is when we win this election, we can change the laws back to be rational. But the thing that we can’t do is persuade the world that New Zealand is a safe place, because it’s the other guys they can’t trust. The damage that this Government has done to New Zealand’s international reputation, as we’ve seen from the various Labour Party speeches, they don’t understand. Perhaps the saddest part of this whole debate has been the two members, one from New Plymouth and one from Taranaki-King Country, I think, who seem to have no idea why they’re here. They represent the people of Taranaki, and yet they’re totally unable to say anything other than the one minute that they’re allowed by the Labour Party whips to speak. To give out pleasantries and pointless, illogical word soup about, you know, can I rub my belly and touch my head or something—I mean, people of Taranaki, those are your representatives.

I’m sorry that you’ve had to suffer this for three years, but I hope you’ll make better decisions next time, because New Zealand is not going to achieve its dream of being a First World nation and an island paradise when we have Governments that are so hostile to people who come from across the seas to do business with us, to trade value for value, and to get stronger together. We will become more kind of a big Fiji, and that is not a vision that the ACT Party wants to see for New Zealand. Thank you, Madam Speaker.

Tēnā koe, Madam Speaker. As I said in my first reading speech, the Green Party supports this bill. It is absolutely sensible economics and it makes sense for the people of a country to benefit from the natural resources in their country. And that’s why we’ve long said that our royalties on oil and gas should be raised to reflect the value of New Zealand. Now, of course, the people on the right, particularly David Seymour, will pretend that somehow foreign companies coming to New Zealand are doing us some huge favour by taking our natural resources and making huge profits off it. But, in reality, most countries, and particularly those that we would aspire to be like, understand that it’s important for New Zealanders to benefit from that, and that’s why we have resource rentals. But mostly, and most importantly, is that it’s really important to send the signal that there is value to this—that there’s a cost to it—and that when we’re using fossil gas, it’s contributing to climate change and it is a natural resource that doesn’t belong to the company that’s invested in the infrastructure; it belongs to all New Zealanders and it makes sense for us to get some collective benefit from that.

Closing the loophole to make sure that all of the gas is paying the same royalty, or is able to pay the same royalty, makes sense to me. People made investment decisions in the 1980s and the world has moved on and changed. It’s been nearly 50 years since the 1980s, and it makes sense for us to close this loophole and have an equivalent level of royalty applied to all of the natural gas—you know, if that is the way that, indeed, this change enables that clarification.

So it’s really hard to sympathise at all with the ACT Party and the National Party acting like this is some big outrage. I mean, what I think is outrageous is the way that they want to let the rich get richer, the planet get trashed, and then claim that somehow people are doing us this huge favour while they trash our planet and get richer at our expense. But look, that’s their world view. They’re here to defend the status quo at all costs because they have no imagination and no values. They have no values. They have no ability to understand that New Zealanders value our natural environment, they value a stable climate, and they value equality.

What I really love is hearing David Seymour refer to the wealthy people who are saying, “Actually, it does make sense for us to pay more tax. Please make our tax system fairer.” And he’s like, “How dare they? How dare they have that opinion?”—ha, ha!—because it conflicts with his opinion, which is that a very small number of people should get outrageously wealthy while trashing the planet and eroding workers’ rights. But, luckily, I do think that most New Zealanders are going to start to see how important it is that we work together, that we work together to take action on climate change, to protect our environment, and to have an economy that works for everyone, not just the wealthy few, and certainly not just billionaires whose own Governments have failed to tax them appropriately. So I have no doubt that we’re actually going to get a really good outcome this election. I’m feeling really good about it.

Thank you so much, Madam Speaker. It’s with pleasure that I rise on this very exciting Budget day to speak briefly on the Energy Resources Levy Amendment Bill, which is pretty simple in its intention—really struggling to find out why it seems so hard to understand, but I’ll just outline it a little. Basically, what we have is some inconsistent approaches that enable—we basically need to achieve a fair return to the Crown. Licences granted under the old Petroleum Act in 1937 resulting from discoveries before 1 January 1986 are subject to royalty rates of either 5 or 10 percent, but post-1986 licences and modern permits granted under the Crown Minerals Act pay either 12.5 or 20 percent. But to ensure that we get a fair return from the pre-1986 licences with low royalty rates—I refer you back to those either 5 or 10 percent—this Energy Resources Levy Act 1976 imposes a levy on gas production.

Really, what we’re doing with this bill, which as I said is extremely simple in its intention and clarifies and really just makes sure that there’s fairness and equity—which I appreciate are qualities that are sometimes lost on the Opposition. They just are highlighting the fact in this bill that the word “discovery” can lead to some confusion about whether wells within the pre-1986 licence areas can be considered new gas discoveries. This clears it up, it makes it fair, and it ensures that the Crown gets a fair return for fossil gas extracted from our beautiful country. Thank you.

Barbara Kuriger—five minutes.

Thank you, Madam Speaker. I just want to perhaps note for the previous speaker, Sarah Pallett, that there’s nothing fair and equitable about going back, 37 years after a contract is formed, and putting some extra costs on it to cover the deficit in Budgets that don’t seem to be working for the Government at the moment.

Now, in terms of this not having a select committee stage, there will be a lot of questions that come up in the committee stage, but there’s a couple that I just want to bring attention to from earlier. So the Minister actually said before that she had been asked by people in the industry if she would take a look at this, but if you look at 3.6 in the departmental disclosure statement, it says, “Has there been any external consultation on the policy to be given effect by this bill or on the draft of the bill?”, and the answer is no: “No external consultation was undertaken on this policy.” Now, people talking to each other from within and without this building is actually consultation, whether it’s formal or not. It’s actually having a conversation and talking to people.

The second part that I’m a bit confused about is that when Dr David Clark got on his feet, he talked about how the Treasury’s regulatory impact analysis team determined that the proposed amendment to clarify obligations relating to the fossil gas levy exemption and the Energy Resources Levy Act 1976 is exempt from the requirement to provide a regulatory impact statement on the grounds that it has no, or only minor, impacts on business, individuals, and not-for-profit entities. The Minister then went on to say that there are actually millions of dollars that are being lost to the taxpayer. So that’ll be one of the questions that I’ll be looking for answers to: is it not worth doing, or is it in fact worth millions of dollars?

It was really interesting—there’s a couple of other questions before. So the list MP for Taranaki-King Country did stand up and say, “Well, it’s all right; we did do the gas thing in 2018, but we’ve got all these things. It’s all right. We have a plan.” And can I just tell this Government that when you’re doing a just transition—and that’s not what this Government is doing; there is no transition, because all the magical things that they’re talking about on the other side don’t yet exist—that is not a just transition; that is dumping something and hoping for a future and having a plan and expecting people’s gas cookers and heating and everything to go ahead when the gas runs back, or bringing Indonesian coal into the country and then having the gall to tell us that we’re not wanting to do anything about climate change. There’s a whole oxymoron about that, because we know that gas is far more effective a fuel than what Indonesian coal is.

The other thing is that we were told by one of the members across the House, earlier, that it wasn’t really going to affect people and their cost of living in terms of households, because only 9 percent of the gas went to households. Now, it would be worth, actually, clarifying that one as well, because it might seem like a small amount, and it’s 9 percent of the gas, but what one really needs to ask is: how many connections and how many households will that be affecting with that 9 percent of the gas? Because it could actually be quite a proportion of the connections. So, little bit by little bit, it adds up to affecting a whole lot of households that will be affected by the cost of living, who won’t want to turn on their gas, because they won’t want to pay the extra cost that’s going to be driven by what the Government is trying to do.

And the Government can call it a levy amendment bill and they can go around saying that there weren’t going to be any extra taxes in this Budget—and I noticed one or two others did sneak in today, as well—but this is definitely a tax. This is a desperate attempt by a Government who’s running short of money to go back and look at a contract that was made 37 years ago. And I’d like to ask anyone on the other side of the House who’s actually old enough to remember 37 years ago how would they like it if someone knocked on their door after 37 years and asked for some more money for a contract that they thought was well done and dusted? We are never going to get any investment in this country—and others have said it before me on this side of the House—if we’re going to treat our investors like that; it’s just going to be impossible. Thank you, Madam Speaker.

Can I first acknowledge Te Paati Māori for allowing me to take their call. Can I just say this is hardly a bread and butter issue—this is hardly a bread and butter issue—but here we are, under urgency, discussing the Energy Resources Levy Amendment Bill. I want to agree with the Hon Judith Collins, who said that we should have had time to consider this bill, to give it full scrutiny. I want to join and add my concern that we are not going to have this bill properly scrutinised.

It really hurts me that, for some of the members across the way that purport to represent the mighty Taranaki—they would know that the iwi of Taranaki have a concerted effort and interest in Crown minerals, including petroleum and including this legislation. I want to hear from that side of the House where the rights and interests of iwi are in this, and I want to say that the regulatory impact statement that I read said that the Ministry of Business, Innovation and Employment (MBIE) did not consider that there was an issue. But who is MBIE? Do they represent a Tiriti partner?

I want to turn the House’s attention to Wai 796, which does lay down iwis’ rights and interests to Crown minerals. In the Tribunal hearings, they have acknowledged that those regions that derive benefit, in terms of energy, have a case to be heard around the returns of that energy. So I want to put to the House, to the Government of the day, like Taranaki iwi have said, that if we are using our whenua and our moana to extract Crown minerals, and in this case energy, then they should go back to the region. They should go back to the region. But we didn’t hear that in the passing of the Energy Resources Levy Amendment Bill. I think they should consider that, because that is what the rights and interests of our Treaty partner have asked for. And yet I have not heard anything from that side of the House that knows, particularly our Taranaki-based MPs, the significance of this bill to their mana whenua statement and also the importance of their whakapapa to their region of Taranaki. So I do hope those MPs that purport to represent Taranaki stand in this House and explain to the iwi of Taranaki where their rights and interests lie within this levy.

If you look at the explanation of this bill, it does talk about inconsistent approaches over time to achieving a fair financial return. That’s the purpose of this bill. Why didn’t they consider the rights and interests of iwi when they thought the inconsistent approach didn’t include the Tiriti partner? That the question I want to put to the other side of the House. They talk about a balance between 5 percent to 10 percent royalty, and going up to 12.5 to 20 percent royalty, but I didn’t actually hear from the Minister’s first speech about where they’re going to land. But, again, this is what happens when you’re considering considerable legislation in urgency: the public of New Zealand, and particularly, in this case, the iwi of Taranaki, do not have the opportunity to put down their concerns and therefore we have better legislation that we in this House pass.

But that is not to be in this House, because the Government feels that this is really critically important. My challenge is: as all Governments have the right and the numbers to pass legislation, when are the rights of the Tiriti partners going to be considered in their rushing of bills? This is the opportunity for the Government to show a bit of mettle in this space, but clearly they fail. They absolutely fail. So it will be no surprise to anyone in this House that I and Te Paati Māori are opposing this bill, for the very reason that they haven’t allowed the Tiriti partner the right to have their say through a full select committee. That is why we will be opposing this bill.

Thank you, Madam Speaker, and, as always, it’s an honour and a privilege to take a very, very short call in the House tonight on this, the Energy Resources Levy Amendment Bill, which amends the Energy Resource Levy Act 1976, to ensure the Crown receives a fair financial return on fossil gas.

As we’ve heard from others tonight, this bill clarifies that the levy applies to all gas produced from licences granted prior to 1 January 1986. This change is for the better. This is about fairness, and this is also about doing the right thing. I heard someone earlier—I think it was Mr Seymour—talking about the rule of law. The rule of law has to be reviewed; we have to look and make sure that it is still fit for purpose. And if it’s still fit for purpose, then we leave it alone, if it’s working. This clearly is not. Currently this is not fit for purpose, and that is why we are making the change that fits, and we are making the change that is fair. And we know this fits with the larger Labour Government’s goals of making sure that there’s fairness, but also tackling climate change.

As a Pacific woman, I look across to our Pacific Islands and I see islands like Kiribati, which is eroding, and I know and I’ve heard from them around—Pacific Islanders are the least to add to our climate issues and yet they are the most vulnerable and the most affected. We know that they won’t be able to take some of their grandchildren back to their island, because it will be gone, because of the climate change issue—because climate change is real.

So I fully support this bill; I fully support what this bill is trying to achieve, and making—like what this Labour Government is doing—good laws to ensure fairness, we ensure we are tackling climate change, we ensure those people can keep in their islands, and we ensure they can go back. It’s a great piece of legislation. I’m really proud, on this side of the House, to be tackling climate change. Thank you, Madam Speaker.

There’s something really strange about this bill. It is strange in so much as it’s hard to understand why it is that on a day the Government reads the Budget, on which it crows about the efforts it’s making to reduce the cost of living for New Zealanders, the first bill, as I’ve said earlier, that they bring into the House is a bill that will raise the cost for many, many New Zealanders. Not just those who have gas reticulated through their homes, mainly in the North Island, but also for the many thousands who rely on the energy source for the jobs that they’re doing today, for the incomes they receive.

Looking at the bill—again, it’s a very, very simple sort of structure. The main part of the bill is not much more than a hundred words. We’ve had it described by members on the other side as being “minor”, as being a “solution to anomaly”, as “closing a loophole”, as “getting clarification for”—apparently—“large numbers of industry sources” who were beating down the door of the Minister saying that “we’re terribly worried that we’re not paying you enough royalty, and we need you to clarify in the bill the way in which we can pay even more”. I don’t believe that for a minute. And then, of course, there is the suggestion that I’ve just heard from the previous speaker, Terisa Ngobi, “it’s about fairness”.

I think all of that misses a couple of very important points. The first is, any speculation on the discovery of a gasfield or an oil field can be massively expensive if it fails. It really is, I think, important, given that the legislation around the Crown Minerals Act—1937, 1976, and then 1991—the Government is very involved, up to those points, in encouraging the expenditure of that capital to look for gas because it’s good for the economy. And while there is a levy and a royalty extracted, it is, in fact, the effect that it’s had over a long number of years on our balance of payments, which, by the way, is now completely tatters. That can’t be misunderstood in all of this.

The Government has tried to say it’s not retrospective, but I think it’s worth just looking back a little bit. You know, go back 54 years to the discovery of the Māui field. It was known that the Taranaki Basin was oil- and gas-producing, potentially. But it was the Government who got very involved and encouraged the investors into that field. So it was Royal Dutch Shell—and a couple of others; I can’t remember exactly who they all were—put their capital—

Chris Bishop: Shell Todd.

Hon GERRY BROWNLEE: Shell Todd came in a bit later I think. They put their capital on the line, and in 1969, they made that discovery. It was considered, at the time, massive—an absolutely massive field that was going to transform New Zealand.

You could argue that it did. It made a huge difference, as I said before, to the balance of payments. But, more than that, it gave a fuel source that was able to be secure for investment in a whole lot of other industries—urea, for example. There was the Petrocorp, which was Government-owned at one stage—a number of these things that were big producers for New Zealand. It’s also worth noting that it took the investors in that field 10 years to get it to a producing state. So it wasn’t until 1979 that it started produce that gas.

Now, I wouldn’t mind betting that that’s one of the fields that’s caught up in this particular argument. What’s interesting about it is they made that investment initially on the basis that this massive field might last 30 years. Well, as we know, it’s now 44 years since it went into production—45 nearly—and it now has a situation where it will last at least another 10 years, with its economic life. During that time, it will produce just under 400 petajoules of gas, available for the New Zealand economy.

The question would be, what if that’s not there? What if it wasn’t there? There would be massive losses of jobs and a huge price increase for gas across the country. We’d probably end up being, much as we are with coal, importing liquid gas from other countries. We would be patting ourselves on the back, apparently, for our low-carbon profile with no regard for the fact that it’s been extracted from Indonesia or from anywhere around that part of the world where we might get that natural gas from—no regard for that. So what is happening here, I think, is a very blinkered approach to the issue of climate change, which is also being thrown up as a reason for bringing this new legislation to the House.

I think we can’t underestimate what the effect would be of losing 18 percent of the country’s gas production in one hit. I don’t think they’ll walk away; I don’t think that for one minute. But there is no encouragement to continue looking for gas deposits or expanding existing reserves when it’s well known now that, at any time, the Government may change the rules under which the original extraction was undertaken.

I think when people stand up in this House and say, “We’ve got to get a fair go for New Zealanders”, there is a complete ignoring of the history of gas extraction in this country and what this extraction has contributed to our economy, the jobs that it’s enabled, tens, if not thousands; and the changes that it allowed New Zealand to make at a very difficult time, in the early 1970s, for this country to completely reverse the dire predictions about our economic state and our balance of payments which were so savagely upset by the EU arrangements entered into by Britain.

If we look at the current reserves that are predicted just for that one field, Māui, the one that was supposed to be extinct 15 or 20 years ago, it’s around about 15 billion cubic metres of gas; that’s the best way to look at it. Most people don’t understand petajoules; it’s a difficult concept. But you think of 15 billion cubic metres of gas. Think of how many barbecue gas bottles that would fill; an enormous number—probably about 50 billion of those gas bottles.

Chris Bishop: Be enough for my barbecue.

Hon GERRY BROWNLEE: Well, Chris, I’ve seen some of your barbecues, and it might just start to run the supply low. I think the point here is that extra reserve is now going to come at an increased cost to the producers. Everyone knows that that cost is passed on.

So the question for the Minister today, and I’m sure that she’s going to answer this in the committee stage—oh look, she’s nodding her head; this is good. She doesn’t even know what the question is, but she’s nodding her head. That’s the way the Labour Government works: “We’ve got all the answers, don’t worry. Just come up with a question, we can answer it.”! There’s not a lot of thought gone into this, in my reading of it.

The first question that will need to be asked is: what is the value that is expected to be gained by this? What are the potential losses to what might be the industries that rely on that gas? Not an easy question to answer, but one that I would have thought should have been answered, and one that was not answered in the departmental disclosure document. I think that’s a bit of an indictment—actually, it’s an indication that this bill is here largely because the Minister thinks it’s a great idea, but hasn’t taken the level of advice that might be necessary to convince the rest of the country that it’s a good thing.

I’ll just finish by saying to all those people who are at home, cooking with gas, tonight: from the passing of this bill, there’s a high chance that the gas bill is going to rise even more than it might have under the inflationary times led by this Government.

It’s a pleasure to take the final call on the Energy Resources Levy Amendment Bill. Mr Brownlee, stop scaremongering. Mr Brownlee said that gas extraction contributes a lot of money in our economy—yes, in the short term, but in the long term it’s going to cost us more. It’s going to cost a lot more in the long term.

In October, I was in Africa, visiting Ethiopia and Rwanda, and I’ve seen the impact of climate change. For five years, there was not one drop of rain and the people lost all livestock, millions of livestock, and they were left exposed to the danger of deaths. People are dying—

Simon Court: It’s called a drought.

IBRAHIM OMER: —and you’ll have seen—it’s the impact of climate change. It is the impact of climate change. The last two, three months, we have seen it in action.

The Energy Resources Levy Amendment Bill amends the Energy Resources Levy Act 1976 to ensure the Crown receives a fair financial return on fossil gas. The bill clarifies that the levy applies to all gas producers from licences granted prior to 1 January 1986 and eliminates the risk of inconsistency in achieving a fair financial return for the Crown. The amendment will ensure that the Crown receives a fair financial return. In a nutshell, this is a good bill. I commend it to the House.

This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Energy Resources Levy Amendment Bill.

In Committee

Parts 1 and 2, the Schedule, and clauses 1 to 3