Land Transport (Clean Vehicle Standard) Amendment Bill

I present a legislative statement on the Land Transport (Clean Vehicle Standard) Amendment Bill.

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

Hon SIMEON BROWN: I move, That the Land Transport (Clean Vehicle Standard) Amendment Bill be now read a first time.

This bill does two things. Firstly, in relation to the clean vehicle standard, it enables the targets for the standard to be changed by secondary legislation rather than an amendment for them to be fixed in primary legislation. Secondly, it ensures that the standard operates on a user-pays model to minimise cost to taxpayers.

This Government is supportive of the clean vehicle standard to ensure that New Zealand has an affordable mix of clean vehicles. By encouraging suppliers to import vehicles with better fuel-saving technologies, it helps to reduce our emissions but also it helps to provide that mix of vehicles to the New Zealand market. Our Government is committed to this but we’re also committed to ensuring that we continue to provide the affordable supply and the range of vehicles that New Zealanders need into the market.

This piece of legislation does those two things. Firstly, it allows for the standard to be amended via regulation, and it also ensures that there is a user-pays approach to paying for the use of the standard. Effectively, the purpose of the standard—and the vast majority of countries have fuel economy standards of some description—is to ensure that countries and markets are able to get a fleet of vehicles into that market which meet those lower-emission profiles over time.

The problem, though, with the last Government is that, of course, they got up on their high horse and decided to set not only a standard which would become more stringent than some of the major manufacturing countries globally but they also chucked the ute tax on top—they also chucked the ute tax on top. So, of course, we’ve already got rid of the ute tax at the end of last year. But, in terms of the standard, they decided that even though we’re a country of only 5 million people—and the last time I checked, New Zealand doesn’t manufacture cars—

Dan Bidois: Oh, actually, Beach Haven does.

Hon SIMEON BROWN: No, no—well, we might, we might. There might be the niche car—

Dan Bidois: Fraser Cars.

Hon SIMEON BROWN: There might be the niche car here or there.

Tom Rutherford: They’ve only got one wheel.

Hon SIMEON BROWN: OK, “They’ve only got one wheel.”, says Mr Rutherford. But the point is that we’re a car taker, not a car maker. So we need to make sure, when we’re setting policies as a country, that we actually recognise that rather than setting a standard which says to the rest of the world, “We want you to manufacture cars to our standard.” Now, I’m sorry, but the major car manufacturers are not necessarily going to do that for little old New Zealand, as much as we’d like. So this legislation enables the review of the standard, which the legislation requires the Government to have started by June 2024, to be able to then make any changes which may flow from that review.

I instructed the Ministry of Transport to begin that review earlier this year. They have been engaging with the sector in relation to how we can ensure that New Zealand has the availability, the affordability, and the mix of vehicles that New Zealanders need, but also to ensure that it is cost-effective for New Zealand. Some of the advice that I’ve been seeing and receiving is that if we were to maintain the current trajectory, we could be increasing the cost of importing vehicles, on average, by thousands of dollars per vehicle. So this is an issue that we need to grapple with.

This legislation, quite simply, allows for any changes which flow from that review, which is currently under way, to then be implemented via regulation rather than for that to be set in primary legislation, which, I note, the previous Government, I believe, was advised not to set it in primary legislation when they actually put the legislation in place in the first place.

The second thing this bill does is it ensures that there is appropriate cost recovery for the administration of the clean vehicle standard. So the last Government, of course, set the standard up, and the deal at the time was that whilst the industry didn’t necessarily like where the standard was set and some of the targets which were not going to be achievable, the Government paid—well, through the taxpayer; the taxpayer ultimately paid—$11.8 million towards administering the standard on a per year basis. Well, firstly, I asked the officials “How much did it actually cost to run it?” Well, I found out that it only actually cost $6.4 million to run it. So the taxpayer was being taken for a ride in the first place.

Hon Member: Saved $6 million already, well done.

Hon SIMEON BROWN: So we saved $5 million already. But, secondly, actually, we have decided in this bill to take a user-pays approach so that as people import those vehicles, they’ll pay for it, rather than the taxpayer.

Hon Willie Jackson: Oh, user-pays, oh! Well, what a surprise!

Hon SIMEON BROWN: Well, I hear Willie Jackson on the other side, complaining about user-pays. Well, I guess the question the Opposition has got to ask is: are they prepared to increase taxes on working families to pay for the operation of the standard? Is that what the Opposition are going to do? Because I tell you what: whatever moves, they’ll tax it—whatever they see, they’ll tax it. They wake up in the morning, and all they can think about is what’s the next thing they can tax. That’s how the Opposition think. So this puts in place—

Hon Dr Megan Woods: You know you’re a Minister now, and this is actually an important part of statutory interpretation.

Hon SIMEON BROWN: —a user-pays principle and it’s about ensuring that—we have legislative statements now, as well, which are very important instruments. I acknowledge the process in which those were brought into the House. But what I would just say is that when the Opposition opposes user-pays, what they mean is, actually, they’re going to increase taxes on hard-working New Zealanders. Well, we stand on this side of the House with a far better and more principled approach to these things.

So that is, effectively, what the bill does. It’s a very narrow piece of legislation. There are two simple parts to it. I commend it to the House.

Kia orana, Madam Speaker. Look, it’s always a pleasure to rise and speak after Minister Brown because there’s so much content that he delivers that can just be—

Hon Dr Megan Woods: “The third-form pantomime”, he’s otherwise known as.

TANGI UTIKERE: Well, thank you, Dr Woods. I mean, there’s a lot in there that we need to digest. And do you know what? It’s good that the time of the House, unfortunately, is going to have plenty of hours and minutes to do exactly that because we are considering this piece of legislation under urgency when we don’t need to be here. It’s interesting: when we look at the context of this bill—and I’ll put the Minister of Transport out of his misery: we will not be supporting this piece of legislation this evening, and over the coming days we will tell you exactly why that is the case.

This bill actually was part of Budget day urgency in the motion. So this was a bill that was caught up alongside no scrutiny at the time, and still that is what this Government seeks to propose for this bill. It was alongside the waste minimisation levy, it was alongside the increase in the money that they’re going to take off councils in terms of a percentage of your fines, it’s around taxation, and now this bill, effectively, is introducing a new tax. It is a car tax. It is a car tax that is going to be applied on vehicles that individuals will be responsible for, and we’ll have a lot to say about this. But, in reality, this bill is seeking to give Simeon Brown, as the Minister of Transport, simply more power. That’s becoming a common theme that we will explore on this side of the House. It’s a common theme. I mean, Minister Brown is part of the panel of three—

Hon Willie Jackson: Fast track.

TANGI UTIKERE: —or the group of three around fast track—that’s right, Mr Jackson—

Hon Members: Back to the bill!

TANGI UTIKERE: —and that’s really important. Members opposite might say, you know, “Well, speak to the bill.” Well, this is about the bill. This is about giving power to the Minister of Transport to basically bypass opportunities that exist currently in primary legislation to set targets that will exist under regulation.

What that actually sends a signal around is that this is clearly a Government that is not prepared to heed the commitments under an accord that we should be taking responsibly and seriously around reducing our carbon emissions and not providing any support or substance around that. In primary legislation, which this bill seeks to amend, the targets are listed there for the next three years. What this bill, effectively, will do is run a ruler through those specified targets and hand over to Simeon Brown the opportunity by pen and paper to set those targets, whatever they might be about.

Now, we’re going to have a wee bit of time to talk about the level of consultation that has actually taken place up to this point in time. Actually, in terms of this piece of legislation, members on this side of the House have been inundated with members of the community; with other industry participants who are concerned about the fact that this piece of legislation is going through the House under urgency. I’m looking forward to hearing from the Minister, as this bill progresses—exactly who did he consult with? Who did he consult with in terms of forming his views around that? Let’s form a view around whether or not those people and organisations that the Minister consulted with are actually representative of the industry and of the community.

Now, if the Minister has actually been consulting with groups and industry participants and players that are representative of this community, well then, actually, we might reconsider our position on some aspects. So this is an invitation to Minister Brown—and I’m sure we’ll get to this—I invite you, Minister, to share exactly the wide breadth of consultation that you have indicated that you have taken. So we, with interest, look forward to that.

This paints a picture, though, in terms of the context within which this bill is introduced. It’s all—oh, they’re all silent now; I think they’ve been given the message, perhaps, that maybe they shouldn’t be interjecting. But I do look forward to the contribution from members opposite as this bill progresses. But this is a bill that is within the context of a bigger picture. There has been no replacement for the clean car rebate or discount; there is no incentivisation in the uptake of low-emission vehicles under this Government; and all the data indicates that, actually, and we will be talking about that, I’m sure. There is no Budget funding in the environment space that’s listed in Budget 2024.

This is a pure dereliction of duty by this Government, and members on this side of the House will be holding the Government to account, step by step, clause by clause, as we start to unravel some of the concerning features of this legislation. We do not commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It’s amazing that the Government introduced this bill with the claim that it was going to provide more certainty to the industry, because it does the exact opposite. But I’ve come to believe that this is a deliberate strategy of the Government, and it’s quite Orwellian to just say that what you’re doing is the opposite of what you’re actually doing and then say the opposite about the previous Government as well. So everything that they say about what the previous Government did is really what they are doing, like cancelling contracts for ferries, for example. And here they say they’re introducing a bill to increase certainty when there is no way we can read this bill as increasing certainty.

It is increasing uncertainty; it is reducing certainty, because the targets have been set out in legislation for years, and New Zealand was well on its way to reducing emissions far beyond what those targets were, thanks to the Clean Car Discount. We’ve got the facts on that. And, now, because they removed the Clean Car Discount, our average emissions of vehicles coming into the country have massively increased. Now, we just have to put this into context, OK? Because literally the only solution this Government has for reducing emissions from transport is electric cars. And the only steps they have taken are increasing the emissions of the cars coming into the country. So they’re increasing emissions from cars. So there’s no way to take seriously their commitment to meeting any climate targets, carbon reduction targets. It’s just not true. They have no commitment to that, because their actions are doing the exact opposite.

And the sad thing about it is that it also is bad for New Zealand economically, because we spend a lot of money just trying to move around the country. And people and businesses and households have to spend a lot of money on fuel to move around the country. And all of that fuel is imported because, despite whatever you want to do with oil and gas exploration, we have never produced the kind of oil that is used in cars and trucks in New Zealand. So it just means importing more oil and spending more money on getting around. And who benefits from this policy? Well, they make it out that it’s some sort of individual choice, but actually the real beneficiaries of this policy are the manufacturers of high-emissions vehicles, because those are more profitable for them. But they aren’t in New Zealand. New Zealand doesn’t benefit from more New Zealanders buying high-emissions vehicles. It just means we have more pollution and we spend more money on petrol and diesel. And diesel, by the way, has a lot of harmful health impacts that are not being taken into account, so we’re paying for it over and over and over again.

But the Minister of Transport, of course, is very engaged in the public opinion, the opinions of the people who comment on his Facebook posts. We know that his version of reality is entirely shaped by the comments on his Facebook posts—not actual data and evidence about what New Zealanders want and what is actually happening. Some of the high-emitting vehicle importers are opposed to those targets because they want to sell more high-emissions vehicles in New Zealand. But what is happening overseas? There’s this claim that New Zealand can’t control what’s happening overseas. Well, guess what? The targets are entirely in line—and I know you won’t be able to see this graph; I’ll have to bring a larger version of it to future debates. But the targets were actually entirely in line with what other countries are doing.

What this bill is doing is it means that we are going to, again, fall behind, because before the Clean Car Discount and before the Clean Car Standard were introduced, we had some of the highest average emissions of new vehicles imported into New Zealand. We had 189 grams of carbon per kilometre, and it was decreasing at a rate of only 2.6 per year. After the Clean Car Discount was brought in, we saw a huge trend in reducing the average emissions of the vehicles coming into the country and the combination of the Clean Car Discount and Standard was transformational. We got to the point that the average emissions in May 2024 would have been down to 92 grams per kilometre. So if we hadn’t removed the price incentive, vehicle manufacturers absolutely would have been able to meet this.

I have to say, this user-pays plan for administering the scheme is really interesting, but there’s no detail about it in the bill. How can we say this is increasing certainty for the industry when, literally, you’re bringing in a power to be able to regulate and charge them money, and we don’t know how we’re going to do that. It’s just Orwellian. I congratulate the Minister on his mastery of doublethink. He’s master of absolute black and white lies and propaganda.

Order! That was very unparliamentary. The member will stand, withdraw, and apologise.

Hon JULIE ANNE GENTER: I withdraw and apologise.

Thank you, Madam Speaker. I rise on behalf of ACT to speak in support of this bill, which removes red tape which has been concreted in in primary legislation. It’s not as far as ACT would go, but it is a lot further than this Government would perhaps go without ACT. Having secondary legislation to set the standard means that unworkable targets can be modified. So when we’ve got unworkable targets, which are increasing the costs, that can be dealt with. I’m glad to hear the Minister of Transport speaking on moving towards a user-pays model for funding this scheme, and ACT and myself commend this bill to the House. Thank you.

Look, I’m intrigued by all the noise from the Opposition, because this really is a very, very small bill. All it is doing is two things. The first thing it is doing is it is bringing forward by three to four years what is already set in the legislation now, which is to give the Minister of Transport the power to set the Clean Car Standard, by Order in Council anyway, from 2028, and the second bit is that—and I’m surprised particularly by the Green Party saying that they would like the motor vehicle import industry to be subsidised by the taxpayer—it allows cost recovery, which seems eminently sensible. I commend this bill to the House.

There are some very clear and easily articulated reasons why Labour cannot and will not support this bill. And I ask members in this House to turn their attention to an open letter that the Parliamentary Commissioner for the Environment sent to the Minister of Transport this week, given that this is rushed legislation going through this House without the scrutiny of a select committee. So before members get up and say, “Thanks, it’s a small bill. It’s only bringing things forward by three years.” I suggest they do some reading and find out the facts of actually what is happening.

Bringing forward the ability of the Minister to make those changes by three years does have implications for our climate targets and how it sits there. I refer the member to the letter from the Hon Simon Upton, who I have a great deal of respect for and who understands these things really well. One of the things that he says is, “The amendment bill changes the date specified in the regulation making power under section 167C(1)(J)(iv) to bring forward by three years the ability of the Minister to prescribe the targets by way of regulations. It will also cancel the currently legislated ratchet of emissions standards for 2025, 2026, and 2027, anticipating that these will [already have been] set by regulation.”

This is a political decision, the Parliamentary Commissioner for the Environment spells out. Once again, we are seeing a political decision by a coalition Government who has made it clear that climate action is not a priority. It is a Government that stripped $3 billion out of climate action in the Budget. It has no plan. We have a Minister of Transport who is also the Minister of Energy, and who has no idea how these portfolios fit with what we need to do as a country in terms of our emissions reduction. We have a Government that is floundering and is putting New Zealanders’ future at risk.

Here’s the thing: if New Zealand does not meet its domestic emissions reductions, we have one choice. And that is we go and we pay other countries to reach their domestic emissions reductions, such as what Switzerland is currently doing, paying to put electric buses on the road in Vietnam. Now, every day of the week I will stand in this House and I will defend us reducing our domestic emissions, investing in New Zealand jobs, New Zealand industries, and New Zealanders’ futures, rather than going offshore to pay other countries to do it. That is the future our Government is consigning us to. They do not have a plan. What they are saying is domestic emissions reductions don’t matter, New Zealand jobs don’t matter, the ability of Kiwis to afford to get around doesn’t matter.

What we can see from the cost-benefit analysis that was done on the original legislation that we put through is there were fuel savings of $128.4 million for New Zealanders by bringing in the Clean Car Standard. There was a reduction in maintenance costs of $191 million, reduction in vehicle ownership costs of $32 million, and a reduced social cost of carbon emissions by $51 million. This is a Government that does not care about that. They are on an ideological crusade to expunge from the statute book any meaningful climate action because they are a Government that is intent on taking New Zealand backwards for their populist ideology. They need to grow up. They need to present New Zealanders with a real and meaningful plan of how it is that they are going to address carbon emissions. And when we had members stand in this House and say, “This is a simple bill that doesn’t do much.”, it shows they’re not even bothering to read the documentation that sits alongside the legislation that is being introduced into this House. This Government should be ashamed.

This is another example of this Government getting things done. During the election, National committed to reviewing the Clean Car Standard. Then, in January, the Minister of Transport the very good Minister Simeon Brown, directed officials to begin a comprehensive review of the clean car vehicle standard. Now, here we are in June, a few months later, and this Government is passing the Land Transport (Clean Vehicle Standard) Amendment Bill in all stages. We are getting things done. We’ve got a mandate from the people of New Zealand. I commend this bill.

Look, it’s a pleasure to stand up and speak on this stupid piece of legislation. I say that because, as in so many things, this Government is just too late to the party. What we did was—and you’ve heard from my colleague the Hon Dr Megan Woods, who had a big part to play in bringing in what was termed the ute tax—this unfair incentive to get more electric cars on the road, to impose a greater cost on the high-emitting vehicles, and then to incentivise the low-emitting ones. And do you know what? It worked. It worked to the point where the uptake of that was so great that it was starting to cost us, but it had within that legislation the ability to fully cost-recover.

In its typically ideological way, the coalition Government has come in and said, “Oh, we’re going to get rid of that. That’s just stupid.”, at a time when we were reducing our emissions across transport, which all the farmers over there should acknowledge and applaud, you know, because that’s one area where there is technology and, in fact, we can make some progress. What was said at the time, particularly from the farmers—and a couple of members over there would be championing it—was “Oh, this is ridiculous. There’s no options for people in the rural sector.”

Grant McCallum: They’re right—correct.

Hon DAMIEN O’CONNOR: Oh, really? Well, maybe if you’d got out of your little head and got online and started to look at “What are the options in electric utes?”—well, let’s go through the list. Let’s go through: LDV, a T60; Volkswagen have an Amarok; Ford have a hybrid and an electric vehicle (EV); JAC are running electric trucks; Rivian in the US; Hilux are running a hybrid—up at the Fieldays, actually. The Ford Ranger will have a plug-in hybrid in two years. They will also have—

Grant McCallum: Oh, not yet—not yet?

Hon DAMIEN O’CONNOR: Well, just listen. The Ford Ranger will also have an H2X, a hydrogen vehicle. The Australians have got an ACE EV, Ford, Hummer, Tesla, RAM, Rivian—they’re all in what has been deemed the manufacturers’ race for the EV market.

You know what? We could have been, as we have been in the past, a very good test bed for that market, and, in fact, all of those, or most of those manufacturers would have probably put their vehicles down here to see how they’d perform in the market. I have to acknowledge that the conditions here in New Zealand are not quite as rugged as in Australia, but probably the utes in this market here are used to their full capacity and beyond, and that’s what manufacturers are looking for. That’s why we would have seen more of those utes in our market more quickly, because we had an incentive in place. The previous Government had the vision to get out there and talk to the manufacturers and say that there is an incentive for people to buy those low-emitting vehicles, and it’s paid for by the people with the higher-emitting vehicles. That is smart economic evolution and smart development of our economy, because if we don’t meet our targets, each and every New Zealander will be writing out cheques.

If we go way back to ask how did all this happen, well, Simon Upton, as a National Government Minister, signed up to our international obligation—and it included agriculture, may I remind the Government—in 1997. It was reinforced through the Paris Agreement—reinforced by the National Government and by the Labour Government—but, of course, we were struggling to work out how to implement it. We took a bold step in the area of transport and provided a cost-neutral incentivisation scheme that would have seen more of these electric vehicles alone.

Look, this piece of legislation we’re talking about here provides the ability to remove the targets in the Act—which is just crazy; that protects each and every politician—in order to enable targets to be set by regulations, which is a very risky process. This is a dumb piece of legislation. It’s too late, just at the time that the world is moving on, and we could have been at the leading edge of that transition.

Well, this Government, we sure know how to get things done. We got rid of the ute tax. All that did was drive up the price of vehicles for some people. Now we’re going to bring in a piece of legislation that’s going to help reduce the price of vehicles for your average Kiwi, and I commend this bill to the House.

Thank you, Mr Speaker. This isn’t a good bill. This isn’t a good idea. There are some parts of this bill which I look forward to discussing more carefully at the committee stage, which are the regulation-making powers. This bill would enable a Minister to set regulations which are not appropriately set in secondary legislation. As my colleague the Hon Damien O’Connor has alluded to, there are some problems with that and in moving them forward in this way that the primary legislation does.

But this bill is also not a good idea, because it takes away those tools that the Government has retained to ensure that New Zealand is meeting its international climate obligations. When you look at this bill, it doesn’t really tell the full picture of how useful a tool like the clean vehicle standard can be for Government. We had the Minister of Transport presenting what was meant to be a legislative statement but was really a pretty politically charged speech about taxing everything. This wouldn’t have acted like a tax, and I want to quickly explain to the House, in the three minutes I have remaining, why it wouldn’t have acted as a tax. I think this was something that Andy Foster alluded to in his speech too.

These mechanisms in other jurisdictions are for sending the market a really clear signal on what sorts of vehicles should be imported and what sorts of vehicles shouldn’t be. In most jurisdictions that use this kind of tool, large importers are able to offset the high emissions vehicles that they import, with lower emissions vehicles. It’s also done on a weights basis. So if you were Toyota, for example, and you want to be importing the Hilux, which is one of your most popular products, you offset that by importing lots of the electric vehicles that are also popular products for you.

Hon Peeni Henare: Of a base.

ARENA WILLIAMS: So most—exactly. The Hon Peeni Henare is drawing the point here that most of the large vehicle importers in New Zealand that we have in our market are already doing this. They’re already offsetting, basically, those larger products with the smaller ones that are super popular in our market. Used alongside a tool like the Clean Car Discount, you then further incentivise importers to act in this way. It doesn’t act as a tax at all. This Government is interested in stepping out its use of taxes like that, which actually work as a signal for the market, and doing things like time of use charging in our urban centres. This is exactly the same kind of tool which sends a really clear signal to the market that if you are going to be an importer, you need to be making sure that the fleet that you’re importing balances your emissions across the fleet. That’s how we change our emissions profile in our vehicle fleet overall, over the long term.

We know that, basically, New Zealand’s emissions profile—the big levers that we have here are, one, improving our transport fleet, and, two, on agricultural emissions. We’ve got a Government that has just hours ago removed its ability to step out the agricultural sector’s contribution to our climate goals. It has the right to do that. But then you would think that it would be interested in using some of the other tools in its toolkit to be able to impact on the emissions profile of our transport fleet, but, instead, it’s going the other way on that. That’s something that we will have to tackle in the committee stage.

When we’re talking about the reality of this for consumers, this is also a bill that pushes costs onto consumers, with a regime that was originally designed to put costs on the importers. The funny thing here is that if you’ve got a properly designed system, you’re sending a clear market signal to your importers to spread their emissions profile across their import fleet. But now, in this legislation, there’s a sort of policy call which is being made here that the major benefits of the Clean Car Standard accrue to importers of vehicles, and consumers—and so those should be borne by consumers. But that doesn’t actually achieve any of the policy goals that the Government should be advancing here, which is to change the emissions profile of our transport fleet. Again, we really need to turn to this and think carefully in the committee stage about why we set these fees in the first place, what kind of tool this is meant to be for Government, and what kind of outcomes we’re trying to see when we set fees and when we push costs onto consumers instead of spreading them more fairly amongst the industry, to actually change industry and importer behaviour here.

Just returning quickly to my point about the regulatory making powers: yes, it’s useful for Ministers to have some flexibility to introduce new standards, especially if things aren’t ready to go or if we’re getting good feedback from the industry about changes that need to be made. It would be appropriate to do that as an amendment to primary legislation, which this kind of process would allow. So I look forward to the committee stage.

Thank you very much, Mr Speaker. It gives me great pleasure to speak in support of the Land Transport (Clean Vehicle Standard) Amendment Bill, and I commend it to the House.

Bill read a first time.

This bill is set down for second reading immediately.

Second Reading