Land Transport (Clean Vehicle Standard) Amendment Bill (No 2)

Members, we now come to Part 2. This is the debate on clauses 10 to 12, “Consequential amendments to Land Transport (Clean Vehicle Standard) Regulations 2022”. The question is that Part 2 stand part.

Thank you, Mr Chair. Well, welcome to Part 2, and I’m glad to see that Mr Menéndez March never skips leg day, with the amount of up and down there—congratulations on those votes.

We come to Part 2, “Consequential amendments to Land Transport (Clean Vehicle Standard) Regulations 2022”. It makes amendments to the regulations to align with all the amendments made and agreed to in Part 1. It’s such a small part that it’s almost worth reading it out word for word. Clause 10, “Principal regulations”, provides that “Sections 11 and 12 amend the Land Transport (Clean Vehicle Standard) Regulations 2022.” Clause 11 lets us know that regulation 3 is amended, and that’s the interpretation section. It says that “In regulation 3, definition of ‘expiry date’, replace ‘3 years’ with ‘4 years’ ”, and that’s quite helpful because that aligns with the change that we’ve just made in clause 6. Then, of course, we’ve got clause 12, which amends regulation 17, “Procedure and requirements for transferring carbon dioxide credits between accounts”, and it says, “In regulation 17(3)(b), replace ‘3 years’ with ‘4 years’ ”. They are three very straightforward clauses that give effect to the change made in the previous part.

There are some amendments on the Table that I think are worth very quickly traversing. As I mentioned before, those amendments that are inconsistent with Government policy won’t be supported by the Government for, I think, obvious reasons. There is one from Arena Williams at 3:15:20 p.m. on 19 November that seeks to replace the term “4 years” with the term “3 years and”—what looks like—“1 mouth”, but I assume it’s “1 month”. The issue with that is it then means that the statute, which will say “4 years”, would be inconsistent with the regulations, which would then say “3 years and 1 month”. For consistency’s sake, you would keep the statute consistent with the regulations, otherwise the chair of the Regulations Review Committee would be all over us like a hot rash, and we wouldn’t want that.

There are a number of other amendments to Part 2 that Arena Williams has put forward. I actually think it’s just worth putting on the record for the public what some of those amendments contain, just so that they know the extent to which the Opposition is taking this very, very seriously, I’m sure. One of those amendments is to replace the term “4 years” with “1,095 days”, another amendment is to replace the term “4 years” with “26,280 hours”, another is to replace the term “4 years” with “156 weeks”, and I think that one of the ones that is most impressive in terms of the mathematical ability of Ms Williams is the one lodged at 3:15:25 p.m., which is to replace the term “4 years” with “94,608,600 seconds”. Now, we won’t be supporting those amendments, because we think not only are they quite frivolous but they are—well, they’re just quite frivolous.

I’m sure there are some worthy amendments somewhere that are running around, but in terms of those ones, we won’t be supporting them at all.

Thank you, Mr Chair. I am taking my first call, and I want to go straight to clause 12. I’d also like to preface my contribution to say that the reason I haven’t been in the Chamber is that I have been upstairs working furiously through the regulatory impact statement (RIS), which is an incredibly important document to enable us to scrutinise what is a highly technical bill, and it is a bill that includes an amendment this morning that has quite a few changes in it. Without the RIS, we have not been able to do that effectively.

Clause 12 gives us that opportunity to do it, because clause 12 has a fundamental impact on the system in that it, basically, moves the system from annual compliance to multi-year smoothing. It encourages importers to bank and skim compliance obligations, and that does raise questions which we have not been able to interrogate properly because we’ve not had the regulatory impact statement to support that, and there are a number of other things. We will move through it, but other colleagues, including my colleague Helen White, has been doing the same thing—and I understand Tracey McLellan has, too—and so we want this opportunity to be able to ask questions. There are 14 specified risks that have not been able to come out.

Now, just to give members some context to this, I worked on this bill late last night. I looked for the latest update of the RIS. I couldn’t find it anywhere online. I was watching the proceedings in the committee of the whole House this morning and I was about to come down to contribute very early, and I heard the Minister quite glibly say, “Oh, there’s one on its way.” When we look at the 18-page document and we look at page 3, there are even annotations in red on the side of the document that make it almost look like a draft. It has been produced in a hurry. I went and checked with the Clerk of the House to make sure it wasn’t anything to do with me not being able to find the document and they confirmed that even though this is dated a few days ago, there can be issues with the links, and they could not confirm that the RIS would be available. Now, I can say hand on heart that I have not seen it until this morning.

I just want to point out, first of all, that although the Minister has said that clause 12 is technical, given some of the issues, the impact of it is not technical and is worthy of scrutiny, because what it does is it amends regulation 17 of the Land Transport (Clean Vehicle Standard) Regulations 2022, which is around credit expiry and use. Regulation 17 governs how credits expire, how they can be applied across years, the hierarchy of credit usage, and transferability rules, and what can happen is there can be penalty interactions. There can be a retroactive application to existing credits, which is really unusual in regulatory design, and it’s quite easy for the Minister to sort of say, “Oh, this is just about regulations.” when we know that regulations are worthy of scrutiny, particularly in a rushed process like this, and particularly where they could have a retrospective impact. That is what has been raised in the RIS because credits previously set to expire in 2025-26 now suddenly remain valid until 2028 or beyond, and so the fact that it does have retrospectivity is a problem. It’s also potentially inconsistent because it’s not amended precisely to reflect the new section 178(3) of the Land Transport Act 1998, and so there could actually be statute or regulation clash grounds for challenge.

That makes it administratively weak under law, and so I’m going to ask some questions specifically on that. Then—if I may, Mr Chair—I may take another call just to point out the 14 specific risks that have come up in the RIS, now that in the last couple of hours we have been able to actually see it, and some of them have quite a lot of public interest.

My first direct question on clause 12 is: has the New Zealand Transport Agency Waka Kotahi run system simulations to ensure that amending regulation 17 will not cause credit accounting errors? This goes to the amendments that my colleague Arena Williams had suggested, which were to get much more precise modelling so that there could actually be some evidence base, because at the moment we are having to rely on the Minister’s assurance that all his numbers stack up.

The second question: how will regulation 17 deal with multi-year bridging credits, especially those generated before 2026? Does the retroactive application of the extended expiry breach any principle of regulatory predictability, and is he concerned about that? Has Crown Law confirmed that extending the life of existing credits is legally safe, and is it consistent with the zero carbon Act budgeting framework?

My fifth question is: does the Minister accept that regulation 17’s amendment, effectively, weakens the constraint that the Clean Vehicle Standard was designed to impose year by year? So that is looking at one of the first risks that has come up in the RIS, and my colleagues will be asking more detailed questions. But that is around the gaming of the system, essentially.

There are 14 risks. There’s the gaming of the system. There’s the surge of high-emitting vehicles, which has been mentioned. This one—I think is maybe why the Minister was trying to get us out of the House so quickly—is a specific risk that mentions potentially higher fuel costs for New Zealanders of $115 million. There is the potential for increased national emissions. There are perverse incentives—now, Julie Anne Genter managed to ask a question about that, but without having the analysis of the RIS and being able to interrogate further, it is absolutely a valid point. I should think that she and my colleagues should be given the chance to actually look at what is the real risk of those perverse incentives and what will the outcomes be. Are they medium risks with high impacts—in which case, should we be taking this gamble?

We have other risks around reduced fuel savings and our emissions reduction pledges. We haven’t even touched on equity and fairness—and that seems to be a continual theme in this House—for communities that are going to be impacted by this. The Minister himself has tried to suggest that this is helping ordinary New Zealanders and that it’s only those who are in a privileged position who are going to going to have to worry about it, but, in fact, the RIS would suggest the opposite, and this side of the House is very interested in equity and fairness, particularly when it’s hidden in regulations.

We see a risk around the declining value of credits. Now, why on earth would we have a regulatory system that purports to support a bill that actually makes the value of credits decline, which ultimately could also lead to higher vehicle prices? It flies in the face of what this Government has said it is trying to do, and I can provide a couple of quotes from some of the Ministers who have talked about our emissions trading scheme and how we’re wanting to meet our climate targets. I mean, Christopher Luxon said, post-Cabinet in April 2024, that “We remain absolutely committed to meeting climate targets.” and Simon Watts said on Radio New Zealand that “New Zealand will not step back from its climate commitments.”, and yet we see, hidden in the regulations and the impact of the regulations through the lack of modelling and through this Amendment Paper, which was dropped at the eleventh hour and which is very, very technical, and we did not have the facility of the RIS to be able to understand what its impact was, including with the regulations—we are seeing a bill that is flying in the face of our climate commitments and what the Government says that it intends to uphold.

We also see risks about the slower uptake of lower emissions and about the potential restriction of the supply of vehicles that have cleaner emissions, and also there is a risk created by the undermining of the system by the provision of interim relief. There have been no questions on that, because we were not able to look at the RIS and understand that that actually was a risk. How big is the risk of that interim relief?

This comes down to the incomplete modelling. We do have technical questions not only on the RIS but also just to pinpoint on clauses 10 and 11, as well, which may sound quite technical, but they have only come to our attention and they are the result of the architecture of the regulatory system that Part 2 of the bill brings into place.

Although the Minister might like to look bored and act like this is all very technical, I think that New Zealanders will understand that this has been so rushed that we’ve had the most important document, really, for our ability to scrutinise properly, as the Opposition, dropped on to the Table during the debate. We now have the opportunity to get some real answers to the Minister about the modelling and about the unintended consequences of some of the maths that we are seeing come up through the RIS.

Thank you. Before the Minister takes a call, as well, I do take the point about the late publishing of the RIS statement. That is noted, but I want to encourage the committee to actually focus on this particular section of Part 2, as well. We do have a Minister here who can answer your questions, and so if you have been going through the RIS and you do have questions, I would ask you to focus on those questions and, hopefully, they will encourage engagement from the Minister.

Thank you, Mr Chair. Just in response to the member Ingrid Leary’s 10-minute contribution, she raised a number of questions. I’ll get some advice on some of the specific ones, but a couple that were mentioned in there were around whether this is inconsistent with the Act. I’ll point the member to—and I should have done this at the top, actually—Amendment Paper 444, which actually does make some amendments to Part 2, as well. That Amendment Paper does directly cross-reference to the Act to ensure that consistency, and so that should resolve that.

In terms of retrospectivity, there is no retrospectivity in the bill. The changes will apply to current, valid credits as at the date of commencement. It doesn’t reach back in time to credits which may have been used or not used, or cashed in before that point.

In terms of the risks mentioned in the regulatory impact statement, they are related to the Amendment Paper, and not to the change in clause 12, which actually refers to clause 6 of the bill. The Government’s position on this is that the benefit for New Zealand consumers outweighs the risks, and it is, therefore, a change worth making.

Thank you, Mr Chair. I just wanted to first of all take up the point about retrospectivity. Am I right, Minister, as I understand it, that with regard to the price for the credits currently, if people hold a lot of those credits, they will plummet in their value in the time period dramatically, from over $60 to $15? If I look at page 16 of the regulatory impact statement (RIS), at paragraph 51, I get the following statement: “However, 2,895,929 of these credits available for offsetting were issued in 2023 and under current settings, will expire during the period where their value is reduced.” That is a whole lot of credits where the market assumed certainty, and now that won’t be the case. They will be holding credits of much lesser value during that time. I’d like to have an answer to that question.

I wanted to note that when I was going through the RIS, I thought it was deeply ironic that the key vehicle importer stakeholders got this policy detail and they were able to provide comment on it, and that is seen as shaping the view. We haven’t been given that same respect and neither has the New Zealand public, and that is a lobby group. That is a group with power, and I’d like the Minister’s comment on that part—that is at paragraph 45 of the RIS. Why would the Minister consult with a lobby group that is an importer of vehicles, get comment, and shape policy in that way—is that a safe thing to do? What kinds of checks and balances are in the system with regard to that?

CHAIRPERSON (Teanau Tuiono): Can I ask the House to bring your questions to the very specific—

HELEN WHITE: Thank you. To go to the impact on clauses 10, 11 and 12, and look at that, I think that very relevant in the RIS are the paragraphs starting at paragraph 48, which are about credit deficits and credit surpluses, and that will result in additional fuel costs and emissions in 2050. That’s an incredibly important point, and it relates to this part of the bill in that way.

That’s the part that I was quoting from in terms of the change in value of those credits, and so that’s important. We don’t know a lot about those additional fuel costs, and this is the bit that probably most alarmed me in what I had read. If we go through, at paragraph 52, it said that “The key rationale for the Standard is the fuel savings and emissions reduction it provides. Modelling estimates that by suspending the charge rate of the Standard as per Option 4: New Zealanders would spend an extra $115 million on fuel between 2026 and 2050 with this proposal, $69 million of which would be spent in the first 10 years; The transport sector would produce an additional 83 kilo-tonnes of [carbon dioxide equivalent greenhouse gas] emissions between 2026 and 2050, of which 28 and 23 kilo-tonnes of [carbon dioxide] would be produced in emissions budget periods 2 and 3 respectively.”

I’d like to know what work has been done on that, but this was the bit that got me: “Due to time constraints, this analysis was unable to model the impact on fuel savings and emissions reduction for reducing the charge rates for Options 2 and 3. However, it is likely … the extra fuel costs and additional emissions would be similar, or [higher or] lower than what is estimated for Option 4 above.” Due to time constraints, we don’t actually know—we haven’t modelled the fuel savings. Is that correct?

I was also interested in this little footnote about how—[Time expired]

Thank you, Mr Chair. Look, just with regard to the question around retrospectivity, the bill doesn’t apply retrospectively. For something to apply retrospectively, it would say that it would reach back into the credits or charges incurred by an individual prior to the commencement date and say, “We’re going to retrospectively hit you with a penalty or provide you with a refund for those credits.” It applies from the day going forward. So if you cash in your credits today, it will be at the price before the bill passes, and if you cash the credits in on the day after its commencement, it will be at the new price. It doesn’t apply retrospectively, and that’s not what that means in that situation.

Just on the question around why a Minister would consult with the people involved in the industry to see whether this is a good idea, well, that is the way that Governments and Ministers make decisions. They consult with experts and people in the industry to determine whether or not the policy change is worth pursuing, what impact it might have, and what the costs and benefits are, and I would encourage the member to talk to her colleagues about the tens and hundreds, if not thousands, of industry advocates, association groups, NGOs, lobbyists, organisations, and unions that Ministers, for decades and decades, have consulted with in order to make sure that their policy lands in the right space.

Finally, again, the member brings up for, I think, the third time in this debate the fuel savings, or the opposite of fuel savings. As she has pointed out, the officials estimate that the temporary charges will reduce projected fuel savings by $115 million, and, as mentioned twice before, that is offset by avoiding about $264 million in net charges being passed on to consumers in higher vehicle prices. By my very quick fifth form maths, that makes a net benefit to consumers of $149 million in the system.

Before I take the next call, I’d just remind people that this is Part 2, “Consequential amendments to the Land Transport (Clean Vehicle Standard) Regulations 2022”, and I do understand that you people have the regulatory impact statement (RIS) now. But if people can relate their questions about the RIS to this very specific part, the committee would appreciate that.

Tēnā koe, Mr Chair. My comments relate to Part 2, clauses 11 and 12. This part extends the ability of the people who have credits for those credits to remain credits, and in the regulatory impact statement it says, in paragraph 57, that there’s a risk here in stockpiling of credits.

Earlier in this debate, the Government went ahead and amended the bill so that the charge rates are lower for 2026 and 2027, they massively reduced the charges for bringing in more polluting vehicles, and, at the same time, now—in this part, in clauses 11 and 12—they’re extending the period of time that people can hold credits for two years beyond that, up until 2028, or four years after they get the credits. I don’t understand how these two working together don’t completely undermine the goal of encouraging and supporting the industry to import more low-emissions and zero-emissions vehicles.

I guess my question is, will the Minister consider my amendment and—hold on. I don’t have the exact—we have some tabled amendments that would change it to two years rather than four years, and this is clauses 11 and 12. It would be helpful to understand from the Government’s point of view how we’re going to achieve the goal of reducing emissions from the vehicle fleet when the combination of these two changes is to make it easier for the industry—and particularly the new vehicle industry—to bring in more highly polluting, brand new vehicles which will be on the road for 20 years and, therefore, will still be putting out emissions in 15 years’ time, higher than what they would have been if we have had effective policies to incentivise more low-emissions and zero-emissions vehicles.

We’re falling behind the rest of the world. Our targets in 2026 are lower than that of China, the United States, the United Kingdom, Canada, South Korea, the EU, and Australia, and so we’re falling behind Australia on this and we have a much lower charge rate because of the amendments that were just passed in the previous part of this bill. What is the rationale in extending the credits to four years as opposed to two? Doesn’t that mean that there can be stockpiling of credits over the next two years, which then, again, slows the uptake of lower-emissions vehicles, and it means having more highly polluting vehicles coming into the country in 2027-28 than would otherwise be the case—and it doesn’t appear that any real modelling or climate impact has been done to see what that impact is.

Finally, the Associate Minister of Transport said just now in his contribution that it’s completely normal—this is how his Government does it—that they consult with industry. Did they consult at all with the Climate Change Commission or any independent climate policy experts to get a balanced point of view, and not simply the point of view of the industry in whose interests it is to continue profiting off higher-margin, higher-polluting vehicles? That is completely at odds with New Zealand’s interests in reducing fossil fuel consumption, which saves money for New Zealanders and helps us meet out climate targets and which is a non-negotiable—it’s something that we have to do. Yeah, those are my questions.

Thank you, Madam Chair. Look, the questions that the member Julie Anne Genter is putting relate to the substance of the policy, which was dealt with in Part 1, particularly around clause 6. Just for the clarity for the committee, Part 2 provides consequential amendments to the regulations, and, therefore, I’m happy to take questions on whether or not amending regulations is the right thing to do or why we’re amending the regulations, but the purpose of the regulation amendment is to align with the changes already accepted by the committee of the whole House in Part 1. That that is where the substance of the policy was discussed and debated at length, and I’m not sure what more can be said on a part that we’ve already progressed through.

Now, in terms of how you reduce emissions in the vehicle fleet, well, you ensure that it’s part of the comprehensive and capped emissions trading scheme (ETS) system, whereby emissions budgets are set for five-year periods where there is a sinking lid for emissions over time. Therefore, if the market or consumers or drivers choose to drive more vehicles or longer kilometres and that increases the number of vehicle emissions, then that will decrease the emissions available for other sectors to emit through New Zealand Units (NZUs), and so, over time, the balance of NZUs drops in the ETS—

Steve Abel: It’s a fantasy.

Hon JAMES MEAGER: It’s not a fantasy. It is quite literally how the law works that was put in place and supported by subsequent Governments, and if previous Governments wanted to change that law, they should have changed it. They should have bought millions of carbon credits and shredded them. But they didn’t, because they believe in the ETS like we believe in the ETS, and we think it’s the powerful and comprehensive tool to meet our emissions reductions and make sure that we meet our obligations across the world so that we can have a balance in the needs of working New Zealanders, who get out there everyday, drive their vehicles, go to work, clean their offices, grow the fruit and veggies, pour the lattes, put together the bicycles, clean the roads, sweep the streets, and do all the things that they do, grinding every day, day in, day out, so that we can come here to Parliament and debate some very sensible amendments in the Land Transport (Clean Vehicle Standard) Amendment Bill (No 2).

I move, That debate on this question now close.

I’ve been listening to the debate, and this is quite a narrow part in Part 2, but there are amendments that I understand may not have been addressed, so I’ll look forward to hearing some of those.

Kia orana. Thank you, Madam Chair. It’s my pleasure, as Labour’s transport spokesperson, to take my first call on Part 2. Madam Chair, I agree with you that there are some amendments here—one actually is in the name of the Minister of Transport—that I do have some questions about.

Essentially, Part 2 looks to incorporate the vehicle, I guess, by which the changes from Part 1 can be given effect to. I have had a chance to look at the regulations—the 2022 regulations—and the impact if the committee was to, effectively, take on board the amendments in the Minister’s Amendment Paper 444. What I find interesting is that the Transport and Infrastructure Committee, in its report, didn’t really make changes to any of the aspects in relation to Part 2. A lot of the changes from the select committee were in Part 1—or all of them were—and in Part 2, it’s as it was when reported back.

The select committee, after hearing from the community, determined that no changes were required for Part 2. What we now have in front of us, though, is an Amendment Paper in the name of the Minister that, effectively, makes some changes, and so that is what I would like to focus my questions to the Associate Minister of Transport on.

In particular, I want to look at clause 11. Clause 11 is, basically, looking at this issue of the expiry date and the definitions, and we’ve heard many times in this House that definitions are important. While the select committee saw no need to change, effectively, what is defined as the “expiry date”, what was already in clause 11—which is amending regulation 3—was the replacement of the term “3 years” with “4 years”. That was put before the select committee, and the select committee by majority agreed to that, but what we now have is a potential change from the Government to, effectively, modify that.

The first question I have for the Minister is, given his reference to the regulatory impact statement (RIS)—and I’m not going to go into the RIS, but there has been a reflection that has been made about the fact that in that document, there is clearly an annotation in the column that indicates that this is some feedback from industry participants. Now, it’s really interesting, I think, for the committee to get an understanding of to what extent industry participants have actually informed the Minister of Transport’s desire to make this change. We haven’t heard about the—well, we have heard some of the rationale behind changes to clauses 11 and 12 in Amendment Paper 444, but what we haven’t actually heard from the Government is to what effect there was any consultation that was taken by the Minister. Did industry participants have any impact on the Minister’s desire to bring this proposed change to the committee? I think that that is entirely reasonable to expect a response on.

The other one is in relation to the definition around the date. Clause 11 in Part 2 talks about the replacement of the term “3 years” with “4 years”. Now, we’d just assume that is in relation to a financial year or a calendar year, and it would be helpful if the Minister—perhaps that is already identified in a definition in the principal Act, but we have previously talked about the applicability of when things would kick in and when they wouldn’t.

My final question is on the proposed change in Amendment Paper 444 to clause 12. This is in relation to regulation 17 of the Land Transport (Clean Vehicle Standard) Regulations, where there would be a change around how things could be transferred between accounts. Yes, this bill will give an ability for changes to be made between different credit holders—and that’s why it’s in the bill now—around the difference between the used vehicles and the new vehicles. But, Minister, is that simply just an indication that the transfer is purely transactional, or are there other considerations that we should read into that, because the committee didn’t see a need to initiate a change in this space, and given that the Government has a majority on the committee, it could have done that if it wished to. Now, we have had this change landed yesterday, and it would be helpful to understand what actually is the rationale behind the transfer component. Is that purely a transactional thing that gives effect to the earlier provisions in Part 1, or is there a little bit more to be read into that?

Thank you, Madam Chair. Look, the reason that there are new clauses 11 and 12 on Amendment Paper 444 is because the Amendment Paper also amended clause 6, and the committee of the whole House has just agreed on that, amendment to change section 178(3) of the principal Act to no longer refer to “3 years” or “4 years” but to instead refer to—and the member can read it. It’s under clause 6. The purpose of replacing clauses 11 and 12 is to update the wording in the original bill to refer to the expiry date in section 178(3) in both clauses 11 and 12 to reflect the amendments that have already been made. The purpose of these two clauses is to update the regulations to reflect the substantive policy decisions that have already been made and discussed in Part 1.

Further to the member Tangi Utikere’s point, it’s—I don’t know what the point, really, is that he’s trying to make. Simply because a select committee agrees or doesn’t agree, or recommends or doesn’t recommend something, it doesn’t mean that the committee or the Minister can’t put amendments forward, and if the member thinks otherwise, then I assume he’ll be asking his colleague to withdraw her amendments, because I don’t think the select committee considered, for example, whether they should replace the term “4 years” with the term “94,608,600 seconds”. I think that if the member wants his colleague to withdraw all her amendments based on the idea that the select committee didn’t refer to that, then I’m happy for him to do so.

Thank you, Madam Chair. I really appreciate having the opportunity to take my first call on this part. It is about the definition of “expiry date”. This is an important reflection of the policy positions that the Government has taken here around extending for those importers who hold large accounts, either in deficit or in the positive, about how they can use those and how they can transfer them, because this extension further kicks down the road their ability to continue to, essentially, rest on the market conditions that were at play a couple of years ago, when there was strong uptake, consumers were able to claim the rebate, and there were also better economic conditions, and so a number of importers have sort of bank credits from that time.

The impact of that, though, is that for the period to be extended, the current requirement for importers to more stridently balance up their accounts by looking for more products to import that are cleaner materially changes. The information is not available to us as to who that impacts the most, and so in the information that’s been prepared by the Government on this extension from “3 years” to “4 years”, it’s not clear which importers are impacted by this extension, or whether they are large importers or small importers. My guess would be that the larger importers are benefited by this, and I would like to know from the Minister whether this has a material impact that is financially positive for those importers who will have a detrimental impact from the reduction in price.

It’s well understood now, following on from Part 1, that those accounts that many of the large importers have—perhaps, say, you might imagine Toyota in your mind when you’re considering this. They will be in positive now, but, effectively, if there is $6 million in their covered account, that was in the positive, but now it is worth $1.5 million. That is a substantial reduction, but to be able to use it out for an extra year might have a material impact on their financial position, and so I’m asking the Minister to help us to understand whether those things are meant to balance out, or whether this is simply something for the benefit of those large importers that doesn’t actually impact on their financial position overall, and whether they continue to suffer a detriment because of this policy.

It is not retrospective; it is retroactive. It has a retroactive effect on assets that have been accrued by those importers, and they have an account on a spreadsheet that they can see on a screen somewhere that goes from a value that is a high value now and that will drop down to, essentially, a quarter of what it was when this comes into effect. But they will be able to use it for longer, so what impact does that have on their financial position?

The other question I have about this extension from three years to four years is this. The Minister has noted one of my amendments which makes it clearer about what exactly the extension applies to and the time period it applies to, because that year-by-year accounting, at the moment, has a material impact on any given vehicle that was imported and on how you’re offsetting it and what transaction you can offset it against. That has an impact on changing economic conditions, because if we expect, in the next year, more people to be buying cars that can offset against what exists in the account of any given importer now, or traded by any given importer now, then the time needs to be clear, and that setting of four years doesn’t seem to me to be very clear when you have a number of these transactions happening on any given day and there is a need to account for each one.

I’ll bring the Minister’s attention to page 3 of the regulatory impact statement—which was presented last night—and the policy aims that the Government says it has around the stability of the system and the predictability of the system. It goes to the broader point that the law should be known and knowable. If the setting is four years, it’s quite difficult for people to predict exactly when the account should occur. This would have been a legitimate point to raise in the last amendment to this, as well, because in that formulation of years there is still some vagueness around that, and it would be useful because it does make a material difference to when consumers buy products and when these transactions occur.

I’ll take the points in reverse order. The idea that amending the term “4 years” to “94,608,600 seconds” would provide individuals with clarity and certainty is an interesting one. It’s not one we support, and assuming that Amendment Paper 444 is accepted by the committee of the whole House, it would also be inconsistent with the decision of the committee of the whole House. So it’s up to the Clerk, of course, but it may well be out of order for being inconsistent with that previous decision.

The points the member raised are all very interesting in terms of the substance of the policy and the regulatory impact statement, etc., but, unfortunately, the committee has already determined the question of what the substantive policy is or should be when it considered Part 1. Clauses, 10, 11, and 12 amend regulations to give effect to decisions that we have made in Part 1. The analysis of the clause is amendments—if you’re looking at the bill—changing the term “3 years” to “4 years”, or, if you’re looking at Amendment Paper 444, changing the definition of the “expiry date” to align it with the new meaning under section 178(3). That is what this Part 2 of the bill does. It amends regulations to give effect to the substantive policy, which we have already discussed.

For completeness, in the time I’ve got left, and to make sure that I haven’t inadvertently missed out anything that members may have raised in the past three or four contributions: again, consultation was undertaken with the Motor Industry Association and the Imported Motor Vehicle Industry Association. It was technical to understand the impact of any temporary changes. They are best placed to answer questions on technical matters and the impacts on industry. My instinct is that they probably did not express a view on the framing of the wording in clauses 11 and 12 to make it consistent with the amendments in clause 6. I’ve addressed the part about “year”.

Finally, the select committee’s recommendations by majority recommended that a further review of changes to the standard will be made, which is what the Government is doing, with a report back by June 2026. To, I think it was Ingrid Leary’s—no, it might have been Helen White’s points around the price of credits, I am advised that the maximum trading price of credits will reduce in 2026-2027 in line with the charges, but the Government policy is to extend the life of credits to 31 December 2028 so that no credits expire during the reduced charge period.

I move, That debate on this question now close.

The question is that the Minister’s amendment to Part 2 set out on Amendment Paper 444 be agreed to.

Arena Williams’ tabled amendments to clauses 11 and 12 are out of order as being inconsistent with a previous decision of the committee.

The Hon Julie Anne Genter’s tabled amendments to clauses 11 and 12 are out of order as being inconsistent with a previous decision of the committee.

Dr Lawrence Xu-Nan’s tabled amendments to clauses 11 and 12 are out of order as being inconsistent with a previous decision of the committee.

The question is that the Minister’s amendment inserting the new Schedule set out on Amendment Paper 444 be agreed to.