Crown Minerals Amendment Bill

Members, we come now Part 3. This is the debate on clauses 36 to 50, “Amendments to rest of principal Act”, and the Schedule. The question is that Part 3 stand part.

Part 3 of this legislation is largely concerned with the changes to the decommissioning provisions in the legislation. A bit of context for this that I think is useful for the committee is that our Government changed the decommissioning regime in New Zealand. We did this for a very good reason, and that is because the New Zealand taxpayers were left holding the bill of nearly half a billion dollars for cleaning up after the operator left the Tui oil field. That is the New Zealand taxpayer that had to stump up nearly half a billion dollars—dollars that could otherwise be spent on hospitals, that could be spent on schools, that could be spent on housing, that could be spent on all manner of things, but instead the Crown was left with a liability for an international company that extracted its profits from New Zealand, then left the mess for us to clean up. This was in no way fair. Our Government moved to tidy this up and to ensure that New Zealand taxpayers would never be put at risk again.

As Minister, I was proud to bring those amendments to this House and to ensure that we were protecting New Zealanders from international companies that would come in and not only extract minerals in this country but extract the security of New Zealanders and their tax dollars as well. It simply is not on. Quite frankly, I am shocked to see this Minister bringing amendments to this House that put New Zealanders so far down the pecking order, that put the New Zealander taxpayer at so much risk and expose them to such financial liability. This is because—and this goes back to what the Minister told us in Part 1—industry hated it. Industry hated the amendments that they may have to take responsibility for their own risk. New Zealand moved to put in place the kinds of protections that we see in other First World jurisdictions, but industry didn’t like it—surprise, surprise!

What have we seen? We’ve seen this Minister, who’s told us he takes his advice from industry, moving to bend to the will of what industry want again. That’s what we’re seeing in Part 3 of this legislation: a watering down of those protections for the New Zealand taxpayer. The regulatory impact statement lays bare what the exposure to the New Zealand taxpayer is in terms of liability from decommissioning. The regulatory impact statement tells us that the estimated decommissioning of four offshore fields is over $2 billion—$2 billion are the estimated costs of decommissioning—and onshore fields are a further nearly half a billion dollars. The decommissioning cost per field can range from $2 million at the low end to $1 billion at the high end. The Crown Minerals Amendment Act introduced a risk-based decommissioning regime that reduced the risk to taxpayers. That’s what the official advice in the regulatory impact statement tells us.

David MacLeod: Question?

Hon Dr MEGAN WOODS: My question to the Minister is: why is it that he is watering down the protections to the New Zealand taxpayer that were put in place? We will go into the details in further contributions, but the one that I want to concentrate on here and one that has attracted a great deal of attention is the trailing liability. Why is it that that would be limited only to the previous permit holder? What we saw when New Zealand taxpayers ended up carrying the cost and the burden for cleaning up after Tui was because of a complex set of transfers of permits—loopholes that the previous National Government had left in the legislation that exposed the New Zealand taxpayer. We risk this again if trailing liability is limited to only the previous permit holder. The Minister needs to explain to the committee the policy rationale and the advice of why it is that it is fair to New Zealanders that they have to shoulder the risk of multinational companies that come into New Zealand, extract profit, and leave us all holding the risk and the burden.

This is an inoffensive part of the legislation. It deals with the fact of how to establish a balance so that we protect but have a very sophisticated array of options that the regulator can put upon permit holders without squashing and without ruining the sovereign appeal of our reputation for investors. We know that it’s important that we borrow the best practices; for those reasons, our trailing legislative options in this bill enjoy a great deal of resonance with the UK and other such OECD countries.

There has to be a balance, and the balance has been struck. We have tidied up a loophole. That loophole ensures that those who sell controlling shares in an entity that may have owned a permit, that they—i.e., the word “person” pertaining to both an entity and an individual—can be held responsible. Trailing is all about ensuring that the taxpayers, through regulatory surveillance and regulatory enforcement, can have confidence that those entities that do not comply and do not meet their obligations can be held accountable, but the ways to hold them accountable are not simply singular. There are a range of instruments that this bill enables the regulator to use, to impose that enforceable obligation. I won’t mention any firms because a number of the firms have inherited historical decommissioning obligations that go back to earlier companies.

I don’t think that clamour should be mistaken for clarity or coherence. I know that this is a slightly excitable portion for some members, but it’s a relatively inoffensive, technical set of provisions and it ensures that those people who hold permits cannot escape their obligations. It’s done in a modernised, sophisticated way by people who understand the chicanery of commerce.

Thank you, Mr Chairman, and I thank the Minister for that contribution. I think the question still remains: why is it that the Minister is choosing to prioritise the needs and wants of multinational companies over those of New Zealanders and New Zealand taxpayers?

One of the things that the Minister said is that this aligns us with best practice in other countries. Well, the Minister’s own advice, the regulatory impact statement, tells us that “Jurisdictions such as the UK and Australia impose perpetual liability on decommissioned wells and infrastructure. For infrastructure that is left in situ in the Exclusive Economic Zone and Continental Shelf”. What the Minister has told the House is simply incorrect. Actually, other countries seek to protect their citizens and their taxpayers over and above the interests of multinational companies that come in and seek to extract profits. I think the Minister needs to clarify that comment that he just made to the committee.

The other question that the Minister needs to answer to this committee is why it is, when the advice in the regulatory impact statement tells us that the option of limiting trailing liability to the immediate permit holder will “increase the likelihood that, in a case where a financial security fails and enforcement against liable parties is unsuccessful, the Crown will need to assume responsibility as a last resort.”, he is increasing the risk. Let’s not make any bones about it: it is not the Crown; it is the New Zealand taxpayer that that is being increased at. This Government is putting New Zealanders on the hook for the risk of multinational companies, and they are saying that it’s an uncontroversial piece of the legislation.

The regulatory impact statement also lays out the multiple uncertainties with the route that the Government has chosen to go down, talking about “the likelihood and scale of a financial security failing or being insufficient in a given case”. So, Minister, have you received further advice on this, and has this uncertainty now been cleared? Also, the nature of the field involved in the default—the small versus large; offshore versus onshore—what is the nature of the risk on that? Has that changed since the regulatory impact statement was presented? At the point in time decommissioning eventuates—whether or not it’s exploration versus production—has the Minister given any consideration to having different trailing liabilities in terms of the point of decommissioning of various wells, and, if not, why not?

The number of available liable persons—because the Minister is sitting there talking about these permits transferring from person to person. Let’s make it clear: these transfer from corporation to corporation. Often what we have seen in the past is that these have been shell companies that have been set up that don’t have the requisite number of liable people that are there. That is when New Zealanders were left holding a half a billion dollar baby to clean up after the international oil and gas industry. I can tell you going and asking for half a billion dollars to clean up after a company that wouldn’t clean up after itself—when I had to ask for that money, knowing we could have spent it on schools and hospitals and housing—was one of the worst days that I had as a Minister.

How is it that this Minister can stand with any integrity and tell New Zealanders he has their interests at heart, when clearly it is industry that are pulling the strings?

I direct the member to section 89, and there it will be evident that this Minister has closed a loophole that was left by the former regime. There was a level of dilatoriness because there was too much heat in the absence of light. Now, let me turn the torch on.

In relation to perpetual liability, that is exactly as I said. The reference that the member is making to post-decommissioned perpetual liability is actually correct, and what we are doing is introducing various instruments that can be imposed upon parties to ensure that they are on the hook and that the instruments will incentivise them to meet their compliance obligations.

Now, there was an omission—and I direct the member to section 89 as a consequence of high-quality work from the officials motivated by clear leadership and balance on my good self. That’s probably the most important portion of Part 3. Part 3 closes up a loophole where those who have wanted to practice chicanery can no longer shift around shareholdings and escape liability.

I want to repeat before I sit down: this is a relatively inoffensive, largely harmless piece of the legislation because it builds upon the better portions of what the last regime put in place to ensure the taxpayer wasn’t stiffed. But what they did is they left a gaping hole that crooks could walk through. We have closed that down and we have left options that regulators can use to hold parties accountable beyond one blunt instrument, because, after all, we need a level of investment in our natural resource sector and investors look for options that suit both the regulator and suit themselves. That’s how international commerce works: because we didn’t have that level of sophistication, international commerce withered under the last regime.

Thank you very much, Mr Chair. I appreciate the Minister raising replacement section 89 in Part 3. There is a direct tension between the desire of the Minister to promote and make New Zealand—in his words, he talked about “sovereign attractiveness”; I think that was the term he gave. There is the desire for the Minister to promote and, at the same time, the duty and responsibility of the Minister to manage the risk of any given mining activity. Here, in replacement section 89, is set out what the Minister has described as what can be the burdens that can be placed by means of acceptable financial security on those miners and extractors.

The challenge here—and I put it to the Minister—under section 89ZM, “Matters to which Minister must have regard in determining acceptable financial security”, it includes a number of factors to do with the nature of the person undertaking the activity. For example, the Minister must, in section 89ZM(1)(b), take into account “the prescribed criteria (if any) relating to acceptable financial security arrangements including, without limitation,—(i) the following particular kinds and amounts of financial security: (ii) any prescribed hierarchy of securities: (iii) whether there is a preferred kind of security in the particular situation:”.

How will the Minister evaluate, as he is obliged to do, things like “(1)(c) … (i) the estimated cost of decommissioning: (ii) the extent to which the amount to be secured will cover the estimated cost of decommissioning: (iii) the extent to which the financial security arrangement to be put in place will ensure that the Crown will obtain payment of the amount in the event that the permit holder or licence holder fails to carry out the decommissioning or separately meet those costs:”—as my colleague Megan Woods has pointed out, we have had a catastrophic example of this with the failure of a company—“(g) any information relating to current or emerging risks to the permit holder’s or licence holder’s ability to comply with their obligations under this subpart:”?

There are a multitude of things where it is the Minister who is responsible for determining how much of a burden will be placed on the permit holder to ensure that he is protecting the broader risks to us as a nation—both to the public purse but also to the environment—because, obviously, where there is a failure to undertake decommissioning, where there is a problem, where there’s contamination that is not dealt with, it is not only a burden on the public to pay for the cost of cleaning that up if the company in question has not done the job; it is also an impact, possibly intergenerational contamination of the environment, and something that may not be possible to clean up.

How does the Minister ensure that the tension between his desire to make New Zealand an attractive prospect and his obligation to protect the interests of our country from the risks and the harms caused by that activity, including the costs of decommissioning—how does he get those numbers right? Who will be making those evaluations? Who will be making those assessments? Is there not, would he not agree, a significant risk that in his desire to achieve “sovereign attractiveness”, he will fail in his obligation to protect the sovereign commons of Aotearoa New Zealand?

Thank you. I first of all wanted to stand up for the people of Sandringham, who got a bit of a go over by the Minister last night and were belittled. People of Sandringham are people who are well informed, they’re very interested in this area, and they’re very concerned, Minister, about the implications of this section in particular.

This part is of concern because it has in it—we have the story, and you’ve heard Megan Woods talk about this, the story of Tui. We in Sandringham are particularly concerned about the risk that we face as taxpayers and the risk to the environment. What I would ask the Minister is: in the changes that are being made now, which he says strike a balance, can he give the people of Sandringham an assurance that in fact they are not going to end up—

Hon Shane Jones: Oh, the champagne crowd.

HELEN WHITE: They’re actually the hard-working tradies, sir, and they are the hard-working workers of our city. There are people who are very much from every walk of life in that particular suburb, which I’m very proud to represent. I want to know, for them, are they going to get into a situation where they are again having to fork out hard-earned taxpayers’ money? Or, in fact, can you give them an assurance today that your changed legislation will protect them in the event of another issue where there is a principal party that walks away, on sale, etc.? Now, I want to know whether there is an insurance you are confidently giving today.

CHAIRPERSON (Teanau Tuiono): Please don’t bring the Chair in.

HELEN WHITE: I’d also like to know—sorry, sir—whether the Minister is able to confidently give an assurance to the hard-working people of Sandringham of all walks of life, who often have small businesses, they often work for wages, they don’t have a lot of spare cash at the moment—is the Minister prepared to give them that assurance that this will not be a walk down memory lane where they end up having to fork out?

My context for that is that there are articles that talk about the amount of money that the oil and gas machine is making out there. I’ll just quote one of those: $2 trillion worth of profits in the last three decades of Exxon, Shell, BP, and Chevron. That’s $2 trillion. These are very profitable companies that are making money out of exploiting those gases, and surely they should be utterly responsible for the cost of repairing and decommissioning.

I guess the next question I have is: how big is that risk for the people of Sandringham? Are they in fact in a situation where that is a big risk or a little one? And has the Minister had advice on just how big it is? My understanding, and please enlighten me if I’m wrong, is that this covers all of the infrastructure that is present at the present time as well. We have a whole lot of pipes that will be deteriorating. I would like to know whether the Minister has had advice on the exact risk that we have in that situation.

Another thing that was asked at the select committee by me was: how does this marry up with the proposal of the Minister for Small Business and Manufacturing—and the Minister of commerce—to look at phoenix companies? I never got an answer to that. That is a very interesting proposal—to hold people accountable—but I would have expected that to be something that was looked at in terms of this legislation. Is it something where there’s legislation coming which we can rest assured is going to deal with the issue of phoenix companies and really hold people liable, or not? I’d really like an answer to that question, because I think it’s a very valid point given there is another issue coming.

I would also, Minister, like to know further about the UK perpetual liability scheme, because it was mentioned earlier. Is it something that the Minister has actually looked at, in terms of should we be adopting that kind of perpetual liability? If not, why not? What is wrong with holding these big companies that are making $2 trillion worth of profit in the last three years, who have themselves referred to this as a cash machine—why would we not be holding them perpetually liable? Thank you.

Thank you, Mr Chair, for an opportunity to contribute to this debate. It’s my first contribution and I have a number of questions about what the Minister has said concerning his changes to section 89Z.

The Hon Megan Woods has asked the Minister some questions, in good faith, based on a specific example in New Zealand’s history where Cabinet was required to make some decisions which were heavy, which cost the New Zealand taxpayers, and where New Zealand does not want to be in future, and the Minister has said that this is a relatively inoffensive change. Mr Chair, I’d put it to you that that is ridiculous. If this Minister has come down to the committee to play the unwitting ingenue with the Hon Megan Woods, then he can defend his position that he doesn’t think that this bill is in fact watering down the protections for the New Zealand taxpayer and he should be made to defend that.

He should be made to defend the fact that this change is the most valuable thing for the industry that could be done, because the financial security arrangements that section 89Z provides for allow the industry to decide exactly what those arrangements will be. It’s the industry who provides, on notice—not in consultation, not in line with a number of regulations that are set out in either the primary or secondary legislation, but just simply on notice to the Government—what that financial security arrangement will look like. We don’t even say a forward contract for the risk. We’re not even saying that it will be insurance. We’re just saying some sort of financial arrangement will be told in a letter to the Government and that will suffice for this protection. That is not a protection at all; that is allowing the industry to decide what the size of the risk is, how much they think it should be insured for, what the kind of limitation should be, and how best they can minimise what they take on so that the New Zealand taxpayer can pick up the rest of the bill.

My question to the Minister is: has Treasury booked this? Has that Minister been told by Government officials what the size of the risk is, and is it in the Budget? Has he got a line? Has he gone to Nicola Willis and said, “Well, this is going to cost us a contingent liability of some hundreds of millions of dollars, Minister, and that’s what I’m making a decision about and so you’ll have to take that into account in your forward planning”? Has he got advice from Treasury about what the contingent liability is here? That is of interest to the New Zealand public, and it is of interest to the way that we plan for these things for the New Zealand public, to know that they are being asked to foot the bill in future. Is it the Minister’s position, as he told Hon Megan Woods, that this should be a personal liability? He said that it’s “people” who carry these on, and it’s useful for us to actually consider in the mining context that it is people—it’s magnates around the world who buy into New Zealand and who are worth billions of dollars themselves; it’s human beings here.

The Minister is relying on the protection of the corporate veil here, actually, where we give a bunch of special rights to people to set up a company where they are not personally liable for the risk that they are creating, but they are personally entitled to the profits. Why is it fair that the Minister has extended these protections but not required the human beings behind this system to actually continue to be liable for the mining permits when he actually said in an answer—and relied upon the idea—that it would be the people, he said, responsible for the corporate chicanery, I think. Why wouldn’t we then continue, in his version of the world, to require those people to be responsible for the clean up? If those people were responsible for the financial security arrangements that he has created in section 89Z, then there would be a level of protection for the New Zealand taxpayer, but he knows that that’s not the case, actually, and in his answer to the Hon Dr Megan Woods he might want to correct that point.

Finally, I’d put to him that there is no accounting for how valuable this is to the industry. We don’t know how useful this will be in the future because there is no seeing out what those financial arrangements will be or where they will rank in the event of an insolvency. It’s simply up to the industry to provide to the Government what that arrangement will be, but not whether they will be able to call on it in the event of an insolvency, not where it will rank in terms of bank debt, in terms of if there are other liabilities owing—which always in these situations there are. Will they be able to call on those financial arrangements that they will have to prove they have in place to actually do the job, or will this be a mere paper protection that doesn’t actually look after New Zealanders at all?

I repeat again—because we are now suffering a bout of repetition—section 89 lays out the fact that no one is walking away from their decommissioning responsibilities once they are caught by this regime. In the event an entity or entitlements are transferred, the obligation of making good travels forward. The reference to the fact that there might be phoenix companies is not only out of order; it reflects the fact that there has not been adequate study directed towards these overdue improvements in the bill.

I say again: the trailing liability is a backstop measure that enables, and is clearly reflected in this bill, that people not run away from their obligations. The former Minister, the Hon Dr Megan Woods, makes a very good point. There was an egregious case of that. But, look, we can’t live the future on historical, random mistakes; we have to move forward and ensure that this sector attracts investment within guardrails, and that’s what section 89 does, in particular, by closing the loophole which I have spoken at nauseating frequency about during this period of time this morning. We are managing the Crown’s fiscal risk, but we’re also ensuring that we don’t squash initiative and close down this industry, because that’s not the position of our Government and certainly not the position of myself.

Once again, I feel that I’ve addressed virtually every question. There is one small matter that pertains to what the Minister may or may not be required to take account of, and I simply direct the attention of Opposition members to what the law actually says. The law is very clear in terms of what matters the Minister—and it’s not “may”; it’s an enforceable duty—must take into account, and that shows that whoever the Minister is in the future, or what’s delegated down to regulators, these are enforceable duties. They’re not discretionary duties, which would suggest that the members on the other side of the Chamber are playing for time, and, sadly, New Zealand does not have time to muck around on energy security any longer.

Thank you, Mr Chairman. The last sentence that the Minister for Resources said there actually brings us back to some unanswered questions through the course of this committee of the whole House stage that the Minister has not addressed, in terms of the time—the time it would take for anything that came about as a result of this legislation to go from exploration to production. We’ve heard from officials and a range of sources that the earliest date we could expect would be 2035. The Minister’s need for haste is somewhat put into perspective when you consider the time that it is going to take.

The Minister made a number of interesting points there. I particularly want to home in on, within clause 41, the replacement that will be made to section 89ZM. It’s what the Minister just referred to, what the Minister must take into account. Before I get into the detail of that, the Minister claims we’re getting into repetition, but we’re not.

Arena Williams: Far from it.

Hon Dr MEGAN WOODS: Far from it, because we’re still waiting for answers. One of those critical answers that we’re waiting on from the Minister is the advice that he received from his officials that told him that limiting trailing obligation would increase the risk to the Crown. It’s why it is that he is choosing—having had that advice, knowing that he is increasing the risk to the Crown; i.e., the New Zealand taxpayer, putting them on the hook—to go ahead with the option that he is; that is, limiting trailing liability back to one company.

Now, the Minister talks about a random mistake in the past. That was no random mistake; that was something that was allowed by New Zealand legislation and I am proud that our Government closed that down. What we have today in this Chamber is a Government that is choosing to blow that wide open again so that we can have more of that liability fall on the New Zealand taxpayer. The Minister says that this just puts us in place with other jurisdictions who have guardrails—

David MacLeod: Repetition.

Hon Dr MEGAN WOODS: —but the Minister has not answered the question—those guardrails that other countries choose to put in place for their citizens, for their taxpayers, are perpetual liability, not a limitation on trailing liability to the last permitholder. If we look to the UK and we look to Australia, they’ve put in place perpetual liability in their exclusive economic zone and in their continental shelf area. Why is our Minister giving New Zealanders a weak, anaemic, watered-down version of these guardrails? Why do we, as New Zealanders, not deserve the same guardrails that Australians or the British enjoy from their Governments in the protections that will be put in place?

In terms of replaced section 89ZN, what I’m wanting to know is, in terms of the subjective considerations that the Minister has to take into account—and is often the case with how legislation is written—are these cumulative criteria that need to be taken into account? Can the Minister choose, in terms of the hierarchy of the criteria that are laid out within the replaced section 89ZN? There is, obviously, a list that is put there, but is this the intended decision-making hierarchy that would be put in place when the Minister goes to make that decision? I think it is important that the committee understands how subjective ministerial decision-making will take place. This is a large piece of decision making that the Minister is carving out within this legislation, so it is important we understand what that is.

In terms of the estimated cost of decommissioning, if we look at the replacement section 89ZM(1)(c)(i), “the estimated cost of decommissioning” is the first—will that be the first one that the Minister has to take into account? Then add subparagraph (ii), “the extent to which the amount to be secured will cover the estimated cost of decommissioning”—is that the second or, within this subjective decision-making criteria framework, does the Minister have the ability to change the order of what needs to be taken into account? How does the Minister see that playing out and then how the various subclauses? Subjective decision-making is something the House always needs to understand further.

I move, That debate on this question now close.

Kia ora, Mr Chair. It is interesting that members on this side of the Chamber have had to labour this question in particular, about this section, because it is serious, and I feel like the Minister has sort of just tried to fluff it up and make out that this is no big deal—you know, “Nothing to see here, people.”

I think that the New Zealand public need to see what is going on here and they need to understand. Yes, we have talked at length about Tamarind; yes, we have talked at length about what the Hon Dr Megan Woods had to take to the Labour Cabinet in terms of the money that we, as taxpayers, have spent and are spending on that decommissioning. But I would also just remind the committee that it’s not only the taxpayer; it’s also contractors and local creditors who are out of pocket in terms of that space. It’s not just the taxpayer; it’s actually the small mum-and-dad businesses that the other side like to talk about championing, but they were left out of pocket in terms of what happened there with Tamarind. That’s why, on this Part 3, we need to be really clear, and we need to take our time to make sure that it doesn’t happen again.

The Minister has said that it’s just one bad apple and it’s just one thing, but the challenge that we have here—and I’m going to be talking about the amendments to section 89L in clause 37 shortly. The problem we have here—and in Part 1, when I spoke to the Minister—is around the fact that the decline that we’ve seen in fossil fuels since 2014 means that we’re in a position now where those who will come into this country to extract are, basically, trying to squeeze every last bit out, and we know that those businesses, those companies, are often the ones who are the rookies. They often are the ones who are doing all they can to squeeze that last little bit out. Yes, we have had this incident, but I am concerned that there will be more and more and more of them as we have less and less in the tank, so to speak.

On section 89L, again, we just want to be clear—and the Minister spoke earlier, saying that the word “must” is in there a lot. The word “may” does exist in there quite a lot, too. In section 89L(4), in clause 37(2), they’re wanting to replace “A financial security” with “An acceptable financial security arrangement”. Now, I am concerned by this because I think that changing the wording and putting in “An acceptable”—acceptable to whom? Who is this acceptable to? My concern is that, if it is acceptable to the Minister, that puts issues in place, where the fact is that a Minister who comes in could be someone not as diligent and not as well-thought-out as he is, and then “An acceptable financial security arrangement” could be unacceptable to the rest of us. The word “acceptable” is acceptable to whom? That’s open to discretion. It’s open to people to have their own game, where they’re looking at their own space and place. It is of real concern, and so I want to really challenge the fact that the wording is being watered down in section 89L(4) to “An acceptable”. I think that is unacceptable, that word “acceptable”, because who is that acceptable to?

I then want to move on, because, again, we are responsible, as people who administer the purse strings of this nation, as I’ve said, to local creditors, who are in a position where they are challenged in terms of this. Then I want to look at new section 89ZN, “Decision of Minister”, in clause 41. I come to new section 89ZN(3), which says that “The Minister may also direct how the financial security arrangement must operate in accordance with the prescribed requirements (if any).” Again, can’t we just put “must” in there, because I am concerned, and we on this side of the Chamber are concerned, that there are gaps and there are spaces where there is the potential for what we’ve seen in the past, which was the huge amount of money we’ve had to pay and the huge amount of, I guess, distrust that then came to the sector, but then also it was across all of those smaller creditors, who struggled and were unable to meet their demands when Tamarind closed down.

I want to clarify a matter because the former Minister, the Hon Megan Woods, has raised a very important point: how long will a liability exist for in terms of trailing? There’s two elements here: there’s trailing in some sort of Garden of Eden analogy, and there’s trailing back to the entity that will have held the entitlement. Their obligation is a perpetual obligation. It was possible for them to escape that obligation because of sloppy drafting and the ability for sharp practices in terms of moving shareholding around. That has now been blocked. So, yes, I think there’s a small measure of confusion here. The Minister is correct in that the perpetual obligation will not go back to distant holders of permits; it only goes back up the chain of ownership a certain level, and that is the balance between what the Opposition feel are the legitimate interests of the taxpayer, which I share, and also a common-sense approach.

Now, I go back again to section 89—I fear that very few people on the other side of the Chamber have read section 89—in each particular segment, it lays out the obligations upon the Minister, and yes, there is a change of language, and the Minister, with advice, had the ability to ascertain what is the most effective monetary deposit or enforceable financial instrument that should be relied upon by the regulators in the future. For those reasons, I say again, it’s a relatively inoffensive part of the bill.

“It’s a relatively inoffensive part of the bill”—I think it is, actually, a huge challenge. We’re not talking here about a dairy owner ending their lease and walking away. We’re not talking about a shoe shop that’s ending their lease and moving on and leaving the chattels and bits and pieces floating around. We are talking about the energy industry, we’re talking about oil and gas, we’re talking about the ocean, we’re talking about these types of things where it’s not just unplug and off you go; it’s actually the challenge of ensuring that it is done correctly and in a way that is acceptable to environmental standards. Once these holes have been dug, once these wells have been traversed and used, there is a huge process that goes on to decommission them. Again, it is not just a simple shoe shop owner leaving the lease and leaving a few chattels and a bit of wallpaper; this is actually an environmental challenge, this is actually a challenge for those small mum and dad businesses.

When the Minister said this is just a fairly easy, simple bit, that is not the case. We are talking about the seriousness of an oil spill, we’re talking about the seriousness of a gas leak, we’re talking about in perpetuity. The challenges we have are not just for today, not just for this decade, but in decades to come, to ensure that we have it right, so we need to continue to prosecute the section to make sure that the Minister has considered every option, has considered every part of this to make sure that it is not only safe for our environment, that it is not only safe for small businesses, but also to make sure it’s safe for whichever Government leads. I personally do not want to be part of the next Government when we’re having to make a call that the Hon Megan Woods had to make in the last term. I do not want to be part of a Government that is having to fork out more and more taxpayers’ money when, as has been said, we could be spending that on housing, on roading—we could be spending that on hospitals.

This is a crucial part of this bill, and we need to make sure that we get it right and that the Minister actually answers the questions for us.

Thank you, Mr Chair. I just want to address something that the Minister said in his last contribution. I think he is mistakenly thinking there’s confusion on the side of this Chamber about trailing liability and what that means. We understand only too well what this watering down of the protections for New Zealanders that is contained in this legislation is.

What I want to know from the Minister in the chair is what are the protections for the New Zealand taxpayer in a scenario where there is a transfer of a permit across two or three companies for the purposes of avoiding the liability because it only pertains to the immediate permit holder? What protections are there in the regime in this legislation or in other jurisdictions to stop the fact that a company will transfer a permit two times so that they can escape the liability and that that will end up with the New Zealand taxpayer? I don’t see any in this legislation. Maybe I’m missing it, but I look forward to the Minister in the chair detailing what provisions of this legislation contain those protections.

I move, That debate on this question now close.

I’ll reiterate; I’ll give the Minister time to get some advice to point us to exactly where those protections are within this legislation. This is a serious question that cannot be shut down by a Government that does not want to answer questions about the fact that it is putting the New Zealand taxpayer at risk. I repeat to the Minister in the chair: where are the protections to prevent a two-step transfer of a permit so that the Crown ends up holding the liability?

Thank you. I don’t want to water down what I’ve just heard—because I think it’s an absolutely critical question—by asking another, but I do want to ask another. What we have here is a regime for deciding on what a reasonable deposit is and for the use of that deposit, actually, for some of the decommissioning work. What I want to know about is that process of deciding a reasonable amount, what protection is there if the work, actually, that needs to be done turns out to be much more expensive than that deposit. There’s an actual use, from what I can see, of the deposit, if there is a deposit agreed that is cash or bonds, etc., for decommissioning. Well, what if the cost of decommissioning is actually way above the amount of that deposit? How confident is the Minister that we have the right kind of assessments going on and how related to the actual cost of decommissioning is the deposit?

What I understand the Minister’s saying is “It’s all a matter of balance. We’re going to just, basically, incentivise people to come here.” Well, we’re not going to be incentivising, from what I can tell in terms of the way he is looking at things, if the deposit is, in fact, the amount of the actual cost of decommissioning. Is he talking about amounts in bonds and deposits that are really a true reflection of the cost, or is he actually—let’s have it plainly on the table—giving people a discount? Is he saying, “This much is going to be put in by the prospector, but in order to promote this kind of activity, we are going to underwrite it as taxpayers to a much greater extent.”? And what is that balance struck?

I don’t like it—I don’t like the argument of the deposit and the balance—because I think there’s a problem there for New Zealand taxpayers and there is a problem with climate issues. I’d like to know how much security work we have beyond that deposit and also what is the amount of that balance in his head there, because I cannot see it written down anywhere. I just get words like “reasonable”.

David MacLeod: It’s defined by experts.

HELEN WHITE: Well, there’s a point being made across the table rather than from the Minister that, in fact, this is defined by experts. My concern about that is that there is just no transparency at all on who those experts are. I would ask the Minister—his colleague is suggesting that it’s defined by experts—who are those experts? What is their expertise? There is an issue of, really, ministerial vulnerability here of being sold a pup, quite frankly. That might well happen with expertise too, where, in fact, we do not have any criteria in this, from what I can see, that nails down who those experts will be, who’ll be giving that advice, and how much safety we have in this scenario.

I’m genuinely interested in that answer, but I don’t want to deflect from the critical question that’s been asked, and we have not had an answer about the actual issue of taxpayers picking up a tab here, because we do not really have any protection in this bill any more from—

Dan Bidois: Repetitious.

HELEN WHITE: And it’s not repetition. In fact, sir, if in fact we have not got the answer, all I’m saying is please do not lose focus on the issue that was asked about by the Hon Megan Woods. Thank you.

Thank you, Mr Chair. Just referring to the last two questions, the Minister for Resources has already extensively covered section 89—liability of specified persons for default by permit holder or licence holder—and the protections available within that, and the comparability of that with other jurisdictions.

Just before I take the next contribution, just to note that the generic issues around this section 89 have been addressed, but I do note that there has been drilling down into a bit more specific concerns around liability, for example. If future contributions could actually focus specifically on the clauses in terms of section 89, the committee would be grateful.

Thank you, and I thank the Minister in the chair, the Hon Penny Simmonds, for that contribution, but it doesn’t address the question of the protection around the liability. If I’m mistaken, I invite the Minister to point me, in section 89, to which bit does offer New Zealanders those protections, because my reading of the section 89 that is going to be amended, that is going to be put in there, which is about the revision of records, is that it does not contain any of those protections.

I go back to the Minister, on behalf of the Government, to tell us, to tell this committee, where the preventions for a two-step transfer of a permit exist within this legislation. It is not in the clause the Minister has just pointed to. It was not something that was addressed by the Minister who was formerly in the chair. It is something that this committee has not had answers to, to its satisfaction, and it is important.

There are a number of other questions that have been put in terms of the hierarchy of decision making, how the Minister will go through there—for example, with section 89ZM. Again, that has not been addressed. There are a number of outstanding questions, but first and foremost this committee deserves an answer, and New Zealanders deserve an answer, on what this Government is doing to protect them from holding billions of dollars’ worth of liability. There is nothing in this legislation, but if there is, I ask the Minister in the chair, the Hon Penny Simmonds, to point the committee to it, because there is nothing that has been discussed to date in this debate.

I move, That debate on this question now close.

Mr Chair, this is a serious question that has been put before the Government to attempt to shut down New Zealanders finding out where the protection is of them holding billions of dollars’ worth of liability that is caused by multinational companies that come in and not only exploit our resources, but this Government is setting them up to exploit New Zealand taxpayers.

This Government cannot answer where the protections for New Zealanders are. This is outrageous. This shows this is a Government that is not putting New Zealand first. It shows that it is a Government that is bending to the will of industry. It is doing what industry asks without due thought—even a passing thought—to how it is we protect New Zealanders.

I put to the Minister in the chair—I will give you time to get advice; I understand that is what is happening here—where in this legislation is the specific clause that protects New Zealanders from a two-step transfer of a permit? That trailing liability now means the Crown will pick up that liability. This is a serious question, and shame on those Government members that are attempting to shut down a debate where New Zealanders could get an answer on this most important question.

Thank you, Mr Chair, and I understand the Minister for Resources has spoken on this and I know that there was considerable discussion around this. The Minister has to approve transfers—that is the first protection—and also the previous permit holder plus controlling parties do remain on the hook because of that. Thank you.

That does not adequately answer the question. Once a Minister has done a transfer, that has to be improved—the Minister in the chair, the Hon Penny Simmonds, is perfectly correct that a Minister does have to approve a transfer; that is a given, that is recognised, and that is indeed a regime that we put in place. But that does not speak to the fundamental question. It is after that decision has been made that New Zealanders will be subject to the liability; it is the two-step transfer. It is unknown to the Minister at that time of approval whether there is going to be liability. I do not think any Minister is blessed with the gift of the ability to see into the future to know whether that is the case. It has to be a retrospective protection that is put in place for New Zealand.

We’ve seen in other regimes, and the advice that this Government receives, that they do it in the UK and in Australia by having perpetual liability in place in the exclusive economic zone and on the continental shelf. What the Minister in the chair is pointing to is not a protection in the question that is being asked; it is a provision in the bill—that is a given—but it is certainly not a provision to New Zealand. Unless the Minister can give us more detail, this is a Government that is leaving New Zealanders exposed to the tune of billions and billions of dollars of liability to pick up the tab for multinational companies.

Thank you. Before I take the next contribution, just to note that Speaker’s ruling 82/5 states that it is for the Minister to decide whether to answer a question. There is also a balance that needs to be made between a Minister answering a question and members not being satisfied. I am trying to strike that balance and note that there have been a number of questions asked and answered on the topic of the liability. I encourage members to address some other aspects of that part.

I move, That debate on this question now close.

The question is that the Minister’s amendments to Part 3 set out on Amendment Paper 214 be agreed to.

The question is that the Minister’s amendments to the Schedule set out on Amendment Paper 214 be agreed to.