Climate Change Response (Moderated Emissions Trading) Amendment Bill

I move, That the Climate Change Response (Moderated Emissions Trading) Amendment Bill be now read a second time. This bill is about implementing for New Zealand a workable, affordable emissions trading scheme, which will enable New Zealand to make progress on the hugely complex and difficult issues that confront all nations over climate change. The revised emissions trading scheme is consistent with National’s pre-election commitments. It will align our scheme more closely with Australia’s. It will provide incentives for industry to reduce emissions without encouraging an exodus overseas of industry and its skilled staff. It will amend the scheme so that households, farms, and businesses will not be funding multibillion dollar windfall gains to the Government.

In broad terms, this bill is about New Zealand doing its fair share rather than taking a position that had New Zealand way out ahead of any other country. I am very pleased to have been able to work with the Māori Party to secure an agreement that ensures it can join us in supporting this bill. The agreement reached with the Māori Party strikes the right balance between protecting the future of our economy and protecting our environment. The revised emissions trading scheme will be good both for iwi and for New Zealand as a whole. It will halve the initial cost increases of the scheme for households, and it is workable for business while ensuring that New Zealand does its fair share to combat climate change.

Some people are questioning the merits of the Government’s ambition to try to pass, with the support of the Māori and United Future parties, our amendments by Christmas. However, if the bill is not passed, the existing scheme comes into effect on 1 January. This would increase power prices from that date by 10 percent, and it would put $400 million a year on to the costs on industry, without allocation plans. There are also a number of serious errors in the existing legislation that would have cost New Zealanders jobs.

The bill makes a number of important changes to the scheme. Firstly, it makes critical adjustments to entry dates. Under the bill the industrial, energy, and transport sectors will enter the emissions trading scheme on 1 July next year, and agriculture will enter the scheme in 2015. There will be a transition phase for the first 2½ years, with a half obligation and a fixed-price option of $25 a tonne. These changes will halve the increase for electricity and fuel for both consumers and business.

The bill also makes changes to support for trade-exposed emissions-intensive industry and the agriculture sector. It is broadly accepted that without these measures all we would do is export emissions-intensive industries offshore, which would cost New Zealanders jobs and result in the emissions occurring from some other country. The first change is that a high and medium-intensity threshold is specified. Secondly, the allocations will be based on an industry-average basis, not just on 2005 levels. This will ensure that we do not reward those with higher emissions and punish those who invested early in improving their efficiency.

Thirdly, the allocations will be production-based. If companies and farmers cut their production, their allocations will drop; if their production grows, their allocations will increase. This is about the very important issue confronting all nations designing an emissions trading scheme, and that is the issue of leakage. This Government is not about exporting jobs offshore; we are about incentivising more efficient production here in New Zealand. Fourthly, the phase-out of support after 2013 is being changed. The existing scheme leaves it flat, out to 2018, and then reduces it at 8 percent per year. This bill provides for a reduction in that allocation support of 1.3 percent per annum, though I think it is very important to note that this will be reviewed each 5 years, and, as I said in the House earlier, the broad principle that it should apply to that phase-out rate is that it is similar to our trading partners. Finally, we have introduced flexibility to the point of obligation in the agricultural sector, commencing at processor level with the option to move it to the farm gate.

The bill also makes further technical changes to make the scheme more workable. A good example is removing the liability associated with nitrogen curing of cabling, which would have actually cost New Zealanders their jobs in places like New Plymouth if we had left the existing scheme in place.

This bill was referred to the Finance and Expenditure Committee. It was my preference to refer it to the special climate change committee, but members opposite objected to that. We then agreed with them that we would send it to the Finance and Expenditure Committee, and as a sign of just how much bad faith there is from members opposite they then voted against the motion for it to go to that committee. The committee received 379 written submissions on the bill, and heard a total of 125 oral submissions. It is disappointing that the committee was unable to reach agreement on amendments to the bill, because there was actually very broad agreement on many of the changes contained in the amendments to make this bill work.

The Government will be putting forward Supplementary Order Paper 98 to address a number of the issues that arose from the submissions and from the legal review by officials. As part of the agreement reached with the Māori Party, the Māori Party will be putting forward an amendment that recognises the Treaty of Waitangi. This provision will specifically set out the ongoing decisions on which the Government or Crown has an obligation to consult with Māori. Most of the changes contained in the Government’s Supplementary Order Paper are refinements of policies that are already in the bill, or simply technical amendments. In relation to pre-1990 forestry, amendments are made so that changes in the legal title after 2002 do not unfairly disadvantage landowners when beneficial ownership has not changed. Without these changes, some forest owners might unfairly receive a lower allocation. We have also clarified that, subject to clear criteria, forest owners managing wilding pines from planted source should be eligible to apply for a tree weed exemption. This will help to ensure that important efforts to control tree weeds in a number of areas like the Marlborough Sounds and in Southland are not disadvantaged by the emissions trading scheme.

In addition, the Government has also made a decision to exclude the combustion of solid biofuels from the emissions trading scheme. Given that this is a very small source of emissions, and given the Government’s commitment to encourage fuel switching in this area, we have made a pragmatic decision to exclude emissions from this local-cost clean energy source from the emissions trading scheme. The cost of that provision is very small and the emissions are approximately 25,000 tonnes per year.

Supplementary Order Paper 98 provides for the exclusion of solid biofuels from the emissions trading scheme. That Government Supplementary Order Paper also contains a number of technical changes in response to submissions. For example, in response to concerns regarding the earlier date of entry for liquid fuels, a shorter registration period has been provided for large users of such fuels. A number of further amendments are included in the Supplementary Order Paper to improve the effective operation of the bill, but they do not make any substantive policy changes to it.

I note that in the United States Congress there is a vigorous debate about putting in place an emissions trading scheme, and I note that the same thing is going on across the Tasman in Australia. In every one of those countries the issue has been fractious, it has been divisive, and it has been hotly debated. That is proper: this legislation is probably the most significant change and reform, of a financial nature, since the introduction of GST. But I note that there were public submissions in 2007, there was a select committee process in 2008, there was another inquiry in 2009, and there have been four rounds of submissions. On an issue like climate change there comes a point where it is important to make progress, and in my view this bill does a very good job of balancing New Zealand’s environmental and economic interests while ensuring that we do our fair share as a responsible country around this huge challenge of climate change.

The Government has made a mockery of Parliament’s processes by the way it is dealing with the Climate Change Response (Moderated Emissions Trading) Amendment Bill. The amendment itself is flawed on multiple levels. It will make us poorer, our economy weaker, and our emissions increase. The tragedy is that none of that needed to happen. We could have instead achieved something enduring through good-faith discussions, but that is not something the Minister for Climate Change Issues is capable of. By the end of this week every part of Parliament’s consideration of this bill will have been rushed and inadequate, particularly given the immense economic, social, and environmental outcomes at stake.

At the Finance and Expenditure Committee, submitters, experts, and officials were all given impossibly abbreviated time frames in which to contribute effectively. The committee was given less than 2 months to scrutinise extremely substantial amendments and to consider 379 written submissions. Oral submitters were given only 10 minutes to speak—if they could do so, given the short notice they were provided with. Our independent expert, Dr Suzi Kerr, was not able to provide information until the final day of deliberation. As such, her advice was not able to be incorporated into departmental reports, which were likewise unable to be provided until the final couple of days of deliberation. The Parliamentary Counsel Office could provide only an untested draft of revision-tracked amendments on the day of deliberation itself. There was a fundamental lack of robust supporting information available to assist the committee and submitters in evaluating the rationale for, and costs associated with, the amendments.

The bill was roundly and publicly condemned by Treasury. Treasury said that the level and quality of the analysis available were just not up to the significance of the proposals, and that the analysis did not provide an adequate basis for informed decision-making. Treasury is right: there is no analysis of what drives the key changes in this legislation, and, throughout, the Minister has obstructed attempts to obtain background information that might assist the committee or the public to assess the bill—just like his selective quoting of documents in question time today. This includes key documents such as Treasury’s long-term analysis of fiscal costs.

The committee and submitters were completely unable to scrutinise the forthcoming amendments foreshadowed prior to the first reading of the bill; they comprise 121 pages, and were tabled in the House at 2 o’clock today. They include changes that were settled on only yesterday in exchange for the support of the Māori Party—apparently, as the proxy for the Iwi Leadership Group. The impacts, fiscal and otherwise, of these backroom deals will never receive proper parliamentary scrutiny.

How can the process I have described give anyone confidence in the end-policy outcome? Given the shambolic process that the bill has been subjected to, it is no surprise to find that it is fundamentally flawed, but the magnitude of the policy incoherence is breathtaking on many different levels. It will make New Zealanders poorer, our economy weaker, and our emissions higher.

The worst area of the bill concerns the level, duration, and model of the allocation of units—in other words, the way that it gives emitters ongoing rights to pollute. The bill puts in place an uncapped, intensity-based allocation model. This allows the overall level of allocation, and therefore emissions themselves, to actually increase. In other words, there is no cap in this “cap and trade” scheme. The lack of a cap obviates the whole point of an emissions trading scheme, which is to reduce emissions over time at least cost. It should do this by allowing the trading of permits under a cap, and then reducing the cap over time. If production of emissions-intensive trade-exposed activities increases by more than 1.3 percent a year, as it almost certainly will in many years, then absolute levels of allocation will actually increase. So, therefore, will emissions. The Parliamentary Commissioner for the Environment rightly advised us that a cap is vital to create the right incentives to reduce fiscal risk, and to create policy certainty for business. The intensity-based nature of the allocation model does not support emissions reductions appropriately, and it does not provide the incentive of the full emissions price at the margin.

The level and duration of allocation here is overly generous and too slow. Both the Parliamentary Commissioner for the Environment and the independent expert, Dr Kerr, say this. The phase-out rate of 1.3 percent for at least 80 years defies any common-sense notion of transition, and, as with any protection or subsidy, future Governments will find it very difficult to reduce previously promised protection levels. The bill makes it very difficult to alter levels of allocation, with additional 5-yearly reviews following any change recommended. If levels of allocation are no longer appropriate, surely they should be altered promptly. It is unfair to the taxpayer to do otherwise. Indeed, the Institute of Policy Studies sums up this point up. It told the select committee: “the bill [is] designed more to tie future Governments’ hands with red tape rather than to enable flexible and effective policy …”. Also problematic is the proposed transitional period, which provides a half-obligation and a fixed $25 per tonne price to the energy, transport, and industrial processes sectors until the end of 2012. This shifts more than half the costs of emissions until 2012 from the polluter to the taxpayer, and reduces incentives for appropriate levels of emissions-reducing investment and behaviour.

A further concern is the delay in the inclusion of agriculture from 2013 to 2015. The Parliamentary Commissioner for the Environment notes “there is insufficient evidence to justify delaying the entry of agriculture to the [ETS].” It will keep the costs of emissions with the taxpayer until 2015, and will delay appropriate levels of emissions-reducing investment and behaviour in this sector.

So why are these changes being made? In reading through the regulatory impact statement it appears that the primary official reason is to prevent “carbon leakage”, especially to Australia. And there is not much more analysis than that. Just how much economic activity will move in the absence of this bill? How many jobs would be lost? How does the value of these losses compare with the value of the subsidies provided? None of this most basic information has been made available. It may exist; it may have been withheld by the Minister, along with much other vital information. We, as a Parliament, will never know. Treasury itself concluded that there is no clear analytical basis to align with the currently proposed Australian Carbon Pollution Reduction Scheme, given New Zealand’s and Australia’s unique emissions profiles and industrial structures. The fact that the Australian scheme is still proposed only and could be subject to further revision—assuming that it survives the Liberal Party caucus room in 3 or 4 minutes, when its meeting finishes—only adds to the incoherence of the proposal to harmonise.

Dr Suzi Kerr advises that free allocation should be phased out relatively quickly, irrespective of our competitors’ behaviours. She says that this is for the same reasons that we do not subsidise agriculture, even though the US and the EU still do. In her words: “The benefits to the protected activities are vastly outweighed by the costs to the economy as a whole.” She considers that the phase-out of free allocation in the current Act, at 8 percent ending at 2030, was probably already too slow on economic grounds. It is proposed to be replaced by a phase-out of allocation at 1.3 percent for the next 80 years. This bill would make highly undesirable changes in order to achieve objectives that Treasury, the Parliamentary Commissioner for the Environment, a leading independent expert, and others tell us are without any clear analytical basis.

The tragedy here is that Parliament could instead be assembled today to debate a politically sustainable scheme. It is a matter of public record that early this year Labour offered talks to National as to what amendments might be needed to reach enduring certainty over climate change policy. When National walked out on those negotiations in favour of advancing the amendments contained in the bill, there were only three issues outstanding. The first was the entry date of agriculture; the second was the transition period, half-obligation, and fixed price; and the third was the allocation model, level, and phase-out rate. We were prepared to compromise on these in order to achieve an enduring emissions trading scheme. We would likely have agreed to a compromise agriculture entry date of 2014. We would likely have accepted the transitional price cap and half-obligation. We would likely have accepted an intensity-based allocation within a cap, subject to reasonable phase-out rules. All were less than ideal compromises but we were prepared to make them in the interests of achieving an enduring emissions trading scheme.

We negotiated in good faith and we could see no reason for National not to do so, as it appeared that the only significant issue for it to compromise on was the issue of the cap on free allocation in agriculture. If National had done that, an enduring and effective emissions trading scheme could have been achieved. We forgot whom we were dealing with. Instead, we have a bill that will make New Zealanders poorer, our economy weaker, and our emissions higher. If Parliament passes the bill in anything like its current form, a priority for Labour will be its repeal and its replacement with legislation providing for a robust emissions trading scheme and fit-for-purpose complementary measures.

I thank members for the applause! I am speaking on the second reading of the Climate Change Response (Moderated Emissions Trading) Amendment Bill. I am the chairman of the Finance and Expenditure Committee, which the bill was referred to. The Minister for Climate Change Issues noted that the original preference was to send it to a specialised committee or to renew the previous climate change committee. But having said that, I tell the Minister that the committee welcomed it with open arms when it arrived.

It would be courteous and correct of me to acknowledge the members of the committee. The process we went through was somewhat unusual—but I have been here for only 4 years. On the whole, with some exceptions, the contribution of members was valued, of course. I particularly acknowledge the officials, advisers, and anyone and everyone who participated in getting the bill at least to its second reading. Politics aside, there were some tensions, stresses, and strains around the bill. Sometimes I think the officials, in some of the goings-on, very unfairly bore the brunt of some members’ frustrations. I need to give my personal thanks to the officials for their work. Actually, some of them are almost old friends, because this was the third time that many of them had sat down at the end of a committee table to look at the emissions trading scheme. The Minister alluded to the 2007 committee and the review committee earlier this year. We must have had well over 1,500 submissions on the policy.

The Finance and Expenditure Committee normally operates quite well. Members acknowledge their policy positions, there is good, robust debate, and we go on quite well. I reiterate my personal aim, and what I like to uphold, which is that all members at all times treat all people as they themselves would like to be treated: with respect. Acknowledging the various positions, I say that of course there is going to be disagreement. I acknowledge some members’ frustration at the tight time frame for the bill, but the Minister in his first reading speech explained why that was. It was always a given that the bill would come back to the House on 16 November or earlier.

There has been a lot of comment about the process of the bill as it went through the select committee. Some of the comment in the media has been criticism of me and of the committee. I have remained silent on that criticism, because some of the allegations were made in the committee, and I will not go outside of that. But, in terms of some of the points that were raised, I was on the other two committees, and a 5-minute submission time for many speakers was quite the norm. I recall that in 2007 four submitters had 15 minutes to share amongst themselves, that submitters were grouped, etc. I want to point that out, because some of the criticism of the process and of our committee is not quite fair. Sure, there is politics involved, but I do not think the criticism is quite fair.

I point out that many members were actually asked for lists of those whom they thought the committee should hear. Virtually without fail those names were asked to submit, without problem. At no time did this chair actually say that all submissions should be heard on one night in a period of 5 hours—which has been alleged, I think. That was what was available to us in our first opportunity to hear submitters, to hear evidence.

I also point out to some of those who have criticised the process—knowing that the timetable for the bill was always tight, knowing that November 16 was always the report-back date—that something that tightened the process was that some members wanted to spend some time away from these precincts. It is fair enough for members to want to spend time with their families, and I encourage that at all times. I do not disregard it, at all; I think it is quite fair. But we have to acknowledge that all the decisions are decisions of the committee. Perhaps some wanted to go on holiday. To criticise me for an allegedly fast process or an abuse of process, when members were choosing not to be in the precincts in order to go on holiday, is somewhat cute. I think it is very curious that some of those members have chosen to criticise me.

To those who wanted to hear absolutely every submitter, I say that I find it somewhat curious that during the proceedings some members complained about the committee hearing so many submitters, when earlier they had asked to hear every single submitter. As was noted earlier, all submitters have a right to be heard, but many wrote submissions. Some submissions, in fact, had party crests on the bottom of them.

Members will note from the commentary that the committee came out 6 all; it was not able to reach a majority. It is disappointing that the committee could not get to the stage where technical amendments to the existing scheme were able to be passed, or issues that I think the whole committee generally agreed on. I acknowledge that there is a Supplementary Order Paper covering tree weeds, such as wilding pines, etc.

I have two points. I have a quick note for my friends in the ACT Party. They believe in the market, they believe in market instruments, they believe in supply meeting demand, and I know and acknowledge that some of them do not think that climate change is going on, do not believe in the science, etc. That is absolutely fine, but the point I raise is that if that is correct, if that turns out to be true, then the price of carbon units will actually be zip—zero. If it turns out not to be correct that human-induced climate change is going on, the price of carbon—which everyone talks about right now at being $25 or $50 a tonne—would fall to zero, and the scheme would fall apart.

I will touch on the mythical figure of $110 billion, which I am sure members will speak to over the next wee while. It was an interesting time in the committee, to be fair, when that misunderstanding, shall we say, came about. The bottom line is that there is no such amount as $110 billion; the amount is actually $50 billion to $55 billion. But let us turn it on its head and take the number that members on the other side are talking about. What they are saying is that they are very disappointed that their original scheme would have taken $110 billion out of the economy; that is what they are saying. This scheme is not taking out $110 billion. It is simple compounding up. It is simple maths. I think those members actually acknowledge that, although I think they need to sit down with their leader and discuss it, because he raised the point again today. It is fair enough to have a discussion of the $50 billion to $55 billion amount, even though it is full of variables for Africa, but the figure of $110 billion is a mythical number. It is used just because it sounds big. For anyone in this debate to use that figure dilutes and undermines his or her integrity.

This bill set outs and follows the principles that National laid out before the electorate before the election last year. The electorate endorsed those policies and principles. Most of this bill concerns technical amendments and small fix-ups, which I think the other side generally acknowledges, to the existing legislation. The substantive issues are emissions intensity without a cap, and an open or closed economy. I look forward to further debate on this bill.

“Sometimes a picture paints a thousand words” is the saying, and this Climate Change Response (Moderated Emissions Trading) Amendment Bill is no exception to that. There have been some wonderful cartoons in the paper in the last few weeks on this issue. My particular favourite is one of Tom Scott’s a few weeks ago. In it there is a great big, very overweight industrialist sitting in very plush surroundings in his gentlemen’s club. He is saying to himself, in the little bubble of his speech: “Oh, New Zealand is a great country—all those punters paying for my greenhouse gas emissions.” Then he looks around at the waiter, who is over in the corner and is drawn like Manuel out of Fawlty Towers, and he says “Waiter, another gin and tonic please, and make sure it is an organic lemon. We all have to do our bit for the environment.”

Well, that is it exactly, is it not? What has happened here is that the punters out there, the taxpayers, the mums and dads and their children, are to pay for the emissions of the big emitters. They are to pay $50 billion more for emissions under this new scheme than under the current one. The effect of that by 2050 is that Government debt will go up by $110 billion. That is what Treasury says, and it is correct: $50 billion excluding interest; $110 billion including interest.

These numbers are so astronomically large that people find them hard to comprehend, but there is a very good comparison to be made between the long-term effects of this policy and those of some of the mistakes that have been made by earlier National Governments that have populated this place. One of those mistake was introducing supplementary minimum prices. There was a fiction in New Zealand that supplementary minimum prices were affordable, that the subsidy to the agriculture sector could be sustained, and that New Zealand would be wealthier as a consequence of that subsidy to agriculture. Of course, we all know how that ended. It ended in tears, because the country could not afford it. Government debt got too high, and, as a consequence, the subsidy was withdrawn. That is what will eventually happen under this new scheme in agriculture; it has to, because this is unsustainable, with $50 billion of emission allocation rights and $110 billion of debt. Farm prices will go down by a large amount, and a lot of people who have invested their money in the intervening period will lose money, because they have been given the wrong signal by the economy.

Climate change is a very, very serious problem, but at its heart the way to cure it is obvious. There is only one solution: we have to reduce our greenhouse gas emissions. We sometimes lose sight of that. We know that the pricing of emissions is absolutely fundamental to causing businesses to have a financial interest in reducing emissions. Otherwise, it is in their financial interest to make as much money as they can by increasing emissions. So the objective of an emissions trading scheme, or of a carbon tax if one goes down that route, is to reduce emissions by giving a financial incentive to do so to those that produce the emissions.

We have heard the Government try to justify its changes by saying it is aligning the scheme with Australia’s. Well, the first reality is that it is not in our interest to do so. Australia’s economy is fundamentally different from New Zealand’s when it comes to emissions. More than half of Australia’s emissions come from coal; half of our emissions come from agriculture. Would it make sense for the Australian emissions trading scheme, which is called the Carbon Pollution Reduction Scheme, to exclude coal? Of course it would not. Has it excluded coal? No, it has not. Should New Zealand exclude agriculture because we would be aligning ourselves with Australia? That is a ridiculous suggestion. It is as stupid for New Zealand to exclude agriculture as it would be stupid for Australia to exclude coal. The suggestion that we should align our scheme with Australia’s makes no sense. And anyway, we are not doing that, because eventually we are including agriculture. We are just not doing it properly, and we are doing it too late. So we are not having a real alignment with Australia, but the alignment that we are having is not in our interests.

I am not the only one who says that. The Parliamentary Commissioner for the Environment has said it. The specialist adviser to the Finance and Expenditure Committee said it. I want to mention her—Dr Suzi Kerr. Where is Dr Suzi Kerr at the moment? She is a world expert. She is currently a visiting professor of economics at Stanford University in the United States, one of the United States’ leading universities, and, indeed, one of the leading universities in the world. Dr Suzi Kerr from New Zealand is currently lecturing there in emissions pricing. We had the benefit of one of the world’s leading experts on emissions pricing giving advice to the select committee. Could we take into account her advice properly? No, because the process was so fast that we got her advice only on the last day. Notwithstanding the fact that on the last day it turned out that the cost, in terms of Government debt, had gone up to $110 billion, the National Government would still not slow down the process to enable us to properly consider the implications of that. So we could not consider Dr Kerr’s advice properly.

Dr Kerr said the phase-out under the existing scheme, which phases out the free allocation to major industries at 8 percent per annum, was, if anything, too slow and would lead to economically inefficient outcomes for our economy. So what do members think she thought of a 1.3 percent abatement of free allocations, which is so slow as to virtually not happen? She thought that it was nonsense. She thought that it would make New Zealand poorer, not wealthier. She thought that we were setting up a system that will encourage an increase in emissions in New Zealand rather than a decrease—a scheme that will do the opposite of what it is meant to do.

I want to mention also that the media are on to it. Editorials, from Auckland to the bottom of New Zealand, are now saying that the proposed changes to the scheme are wrong. So are the commentators. We have heard the borax being poked at some of New Zealand’s leading commentators. We have had criticisms of Brian Fallow today; we have had people writing off Rod Oram as a sycophant or non-entity. In addition to those people, we have had Richard Long, former chief of staff for National, being highly critical of the changes. He has been written off. We have had Fran O’Sullivan being very critical of what is being done, and no doubt National will write off her criticisms, as well. That is on top of Treasury criticising the changes, the Parliamentary Commissioner for the Environment criticising them, and the Ministry of Economic Development, another arm of the Government, saying the phase-out of the free allocation is far too slow and not warranted.

Still the Government proceeds remorselessly on. As a consequence, our country will get poorer. Our economy will not adjust. We will not take advantage of the opportunities that will arise for those who move into this new world with appropriate speed.

I also want to touch on the deal that has been done with the Māori Party. Only a matter of months ago the Māori Party said the existing emissions trading scheme was too weak, and, if anything, it should be strengthened, and it would prefer to go down a carbon tax route rather than an emissions trading route. The Māori Party is here today to vote for the opposite of that. It is voting for an emissions trading scheme that no longer works, that will increase emissions, and that does the opposite of what Rahui Katene, in her minority report, said at the Emissions Trading Scheme Review Committee some months ago should not be done.

Further than that, a fundamental principle is being breached by the deal that is being done. The Māori Party and the National Government might like to characterise some of the criticisms that are coming from lots of people as coming from a race agenda. It is not. Once people receive a Treaty settlement, so long as there has been no withholding of information and no misrepresentation by the Crown, then those assets are in the same position as any other assets owned by any other group in New Zealand. The owners must be bound by the same laws, whether it is the Resource Management Act, the Income Tax Act, or the emissions trading scheme legislation. There is no basis for having separate rules. The New Zealand Herald put it very well in its editorial, saying there are things that we do not know when we enter into a Treaty settlement; there is an upside and there is a downside. It pointed out that at the time of the Treaty settlement with Ngāi Tahu, the boom in prices that would be occasioned by the free-trade agreement with China had not been thought of. Should the Crown go back and take value off Ngāi Tahu as a consequence of not predicting that, or not disclosing that? Of course it should not. Conversely, Ngāi Tahu should not expect to receive some additional compensation over and above what is being paid to other owners in society for emissions pricing. There is no justification for that. It actually undermines the principle of full and final settlement, and it creates different asset classes in New Zealand according to the ethnicity of their owners, which is wrong.

I stand to speak on the second reading of the Climate Change Response (Moderated Emissions Trading) Amendment Bill. This bill is fundamentally about climate change, and it seems that not a day goes past when the evidence around climate change does not get more alarming. In fact, we would think that if we read the evidence and followed the debate around the science of climate change, then, if that was what drove us, we would become increasingly concerned and would want to make our response to climate change stronger and stronger over time.

Just today, for example, when I was scanning the papers, I saw that the Antarctic ice sheet is melting faster than previously thought—for example, the West Antarctic ice sheet is currently dumping about 132 billion tonnes of ice per year. One hundred and thirty-two billion tonnes of ice per year is being dumped by the West Antarctic ice sheet into the sea, which is more than we had previously thought. The East Antarctic ice sheet, which we thought might be accumulating ice because of the increased precipitation of snow on the surface, actually appears to be dumping about 57 billion tonnes of ice per year. We are losing that ice from the East Antarctic ice sheet. The reason why this is so significant is that these ice sheets have a dramatic impact on global sea levels. The West Antarctic ice sheet by itself would result in a 5-metre sea-level rise if it were to disintegrate.

It is against this background that we are considering a bill that will weaken New Zealand’s response to climate change. It is really quite hard to fathom that in a world where the evidence that we are changing the planet itself is increasing and strengthening, and in which the science is becoming more and more compelling, the New Zealand Parliament looks as if it is passing a bill today that weakens the New Zealand Government’s response to climate change. It is hard to fathom. People in future years will look back on this debate, scratch their heads, and wonder that at the very time when the evidence around the acceleration of human-caused climate change is gathering, and when we are in the run-up to perhaps the most important conference in the history of humankind—the UN Climate Change Conference in Copenhagen—the New Zealand Parliament should choose to weaken the response of the New Zealand Government and the New Zealand people.

This is a time when we should be more concerned, because, of course, the Intergovernmental Panel on Climate Change had a very modest prediction about sea-level rise—18 to 59 centimetres by 2100—but that was premised on the basis that we could not predict what would happen with the big ice sheets in Greenland and Antarctica. But we know now that those ice sheets appear to be losing a lot more ice than we thought previously, and they appear to be warming more quickly. We would think that in the face of science and evidence, the New Zealand Parliament would look at the science, strengthen its response, and aim to have a more considered and stronger response on climate change. Instead, the bill in front of us today is a bill to weaken our response to climate change. It is a shameful day to be a member of the New Zealand Parliament and to watch the New Zealand Parliament passing this legislation.

It is important to remember that during the last Eemian period—128,000 years ago—greenhouse gas concentrations were at about the same level as they are today but sea levels were from 5 to 7 metres higher, because there is a lag in our system. There is a lag between the time we increase levels of greenhouse gases and the time we see sea levels rise. What we are looking at right now is an increase in greenhouse gases in the atmosphere, but we are yet to see the full impact of that increase in terms of melting in Antarctica, sea-level rise, and more extreme weather events—although already we have seen very significant extreme weather events.

In the face of the fact that we know we have yet to see the full impact of climate change, the New Zealand Parliament’s response—and it would appear to be the New Zealand Government’s response—is to weaken the ability of the New Zealand economy to reduce its greenhouse emissions. In fact, we are introducing a system today where we take the “cap” out of “cap and trade”. Someone one day came up with the idea of “cap and trade” as a way to cap emissions and then allow for the most economically efficient way to reduce those emissions under that cap. But the Government has decided today to take away the cap so that we do not have a “cap and trade” system any more, and to take away the fundamental driver of the price. Of course, the result is that the New Zealand economy will respond by increasing greenhouse emissions.

In New Zealand we have already increased greenhouse emissions very, very significantly. Our increases are in the order of 22 percent, or more, since 1990, and over the course of the previous Government, greenhouse emissions increased by about 14 percent. In spite of the Green Party’s efforts to constantly call on that Government to address climate change, only towards the end of its term was that Government willing to address climate change to some degree. The emissions trading scheme that was brought in by Labour and the Greens in the last Parliament, which was not a perfect scheme but which made some progress towards introducing a “cap and trade” system, is the very scheme that we are dismantling today by taking away the cap in the “cap and trade”.

It is hard to get our heads around the idea that this is what human beings, who have spent many millions of years developing a consciousness and an ability to understand the world, would do. It is hard to comprehend that the majority of members in this House today are going to vote for a system that will increase New Zealand’s greenhouse gas emissions at a time when the science and the evidence around the impact of climate change is building all the time. It is in fact a suicide note. What this Parliament, and Parliaments in a similar situation all around the world, are doing is writing a collective suicide note to future generations. We all talk about what might happen in 2100, but there are children born today who will be alive in 2100, and they will look back and curse us. They will curse the members of this Parliament, and they will curse this Government for weakening our ability to reduce our greenhouse emissions.

This is a Government that will walk into negotiations in Copenhagen with the objective of weakening the global agreement there. That is what this is all about. That is why the Government wants to get this bill in place—so it can walk into Copenhagen and try to undermine the agreement to reduce global greenhouse emissions. It is hard to get our heads around the idea that at a time when the evidence that we need to reduce our greenhouse emissions is becoming more compelling, a Government would bring a bill into the House that will increase our greenhouse emissions. It is hard to understand that human beings who so value their intelligence, their consciousness, their science, and the evidence would bring a bill into the New Zealand House of Representatives that will increase our greenhouse emissions—which is what this bill does. It is a very hard thing to understand.

There are ethical issues associated with what we are doing today. It is the wrong thing to do to future generations. It is the wrong thing to do to children, and to the people who will come after us. It is also an incredibly stupid thing to do from an economic point of view. If New Zealand wishes to be prosperous, it must make the transition to a low-carbon economy. There is no other form of prosperity for New Zealand in the future. To anyone who sits here and thinks that this will all go away—which is, of course, what this bill hopes—and who thinks that New Zealand can somehow have a prosperous future with a high-carbon or carbon-intensive economy, I say that there is no such thing. Either we have a low-carbon economy, which gives us the opportunity to have a prosperous economy, or we have a high-carbon economy, which means we will not be prosperous. This bill will lock in investments that lock in a high-carbon economy; there is no way that we can have a prosperous economy if we lock New Zealand into a carbon-intensive economy. But this bill locks in that high-carbon economy.

We can only hope that it is not too long before we get rid of this stupid bill. We can only hope that it is not too long before we have a carbon trading system that plays a part in putting a price on greenhouse emissions so that we can reduce our greenhouse emissions. That is the only way we can send a price signal through our economy in order to move it toward a low-carbon economy. We also need the complementary measures of State regulation and State incentives to reduce emissions. We also need all the education and individual action. But if we undermine the price signal, which is what this bill does, we undermine our ability to reduce our greenhouse emissions, and we lumber future generations with a huge debt and a huge increase in greenhouse emissions. It is a shameful bill.

Let me be clear about a number of things. First up, we have a very, very good Government. Certainly, we have an excellent Government compared with the Government we had for the previous 9 years. But even a very good Government can make bad policy. Even a good Government can make bad policy, and with this Climate Change Response (Moderated Emissions Trading) Amendment Bill we have a very good Government making atrocious policy. Not only do we have a very good Government making atrocious policy, but we also have a good Government following an atrocious process. The Ministers of this Government who are voting for this bill and for this process have to accept that responsibility, and so does every member of Parliament who is voting for this legislation today and confirming the process that has been followed.

Let me also make it plain that the ACT Party totally opposes having an emissions trading scheme for New Zealand. An emissions trading scheme for New Zealand will hike the costs to business, to farmers, and to hard-working New Zealanders right at the time when we can least afford it. There is no doubt about it: an emissions trading scheme will put up the cost of basic goods and services for ordinary New Zealand families. That is what this bill will do to New Zealanders, that is what an emissions trading scheme will do, and that is why the ACT Party is the only party prepared to stand up in this House to oppose having an emissions trading scheme.

Following the election we had a difficult situation with regard to the emissions trading scheme, because we had National committed to the emissions trading scheme and the ACT Party implacably opposed to it. We agreed to have a comprehensive review through a select committee. What we wanted—in fact, what the select committee was supposed to do—was to do the rational thing for the country: to look at the options and to provide the costs and the benefits. It never happened. To this day this Parliament and the public of New Zealand still have no idea of the cost of this scheme. They have no idea of the cost of an alternative, such as a low-level carbon tax, or indeed of the cost of having a simple delay for a couple of years. They know nothing.

Then we discovered that the Government had done a deal with the Māori Party, in order to put the changes through the select committee that National wanted to make to Labour’s emissions trading scheme.

Charles Chauvel: Disgraceful.

Hon RODNEY HIDE: Well, that was not disgraceful; what was disgraceful was what happened next. That was the true disgrace. At that point, on behalf of the ACT Party I said to the Prime Minister and National that we understood they did not have the Māori Party’s vote on taking the legislation all the way through, and that if there was any difficulty with the vote they should come and talk to the ACT Party. I said that, yes, we opposed the emissions trading scheme, but that we were prepared to help the National Government for the good of the country and, indeed, we were even prepared to swallow a dead rat. We were prepared to swallow a dead rat in order to get a better result for New Zealand.

But National never ever came to the ACT Party in order to discuss the options for the reform or the delay of the emissions trading scheme. National made a decision to commit to the Māori Party and so to lose any negotiating power that it might have had. I accept that it is the prerogative of Nick Smith and the Prime Minister to do that. They are the ones with the votes. They are the leaders of this Parliament and this Government, but I say that the result was bad policy. It was atrocious policy and an atrocious process, and New Zealanders were sold out.

What have we discovered? We have discovered that all of this had to be done in a great rush, ahead of the rest of the world, in order to be done before the talks in Copenhagen. We had to be ahead of every other country. We discovered today at question time that this deal with the Treaty clause in it was concluded, according to the Minister, only after 1 o’clock yesterday, which was a couple of hours before it was announced. We know from the Minister of Māori Affairs that the deal was concluded only at 12 minutes past 3—presumably that was when he was told that it had been accepted at Cabinet—which was 18 minutes ahead of the time the deal was made public. The deal with these five iwi and with the Treaty clause will now be passed under urgency, with no proper parliamentary scrutiny and no public input. The deal was agreed to only yesterday, and it will be passed into law today.

Hon Dr Nick Smith: Tomorrow.

Hon RODNEY HIDE: Oh well, it will be passed into law tomorrow, but I say to Dr Smith that we are in urgency, thanks to him.

I will read that Treaty clause to members: “In order to recognise and respect the Crown’s responsibility to give effect to the principles of the Treaty of Waitangi,”. I challenge the Minister for Climate Change Issues and the Māori Party to stand up in this House and put on record in Parliament what the principles of the Treaty of Waitangi are. If we are to have Parliament giving effect to something, then I think it is quite reasonable to ask what we are giving effect to, in this Parliament. We are not giving effect to the Treaty—actually, if we were giving effect to the Treaty, then we would not be having an emissions trading scheme—but we are giving effect to the principles of the Treaty.

I remind the great National Party, our support party, of National’s position in 2005. It is our job to remind National of its principles, its position, its philosophy, and its policy. Its policy in 2005 was that the principles of the Treaty of Waitangi were to be expunged from all legislation. Why? According to Dr Don Brash, who was the National leader at the time, the principles of the Treaty were undefined and unnecessary. This is what Don Brash said in 2005, an election year: “This process”—that is, the process of inserting the principles of the Treaty every which way—“is becoming deeply corrupt, with some requirements for consultation resulting in substantial payments in a system that looks like nothing other than stand-over tactics.”

I am sorry to say this, but the National Government, the Prime Minister, and the Minister for Climate Change Issues have allowed themselves to sell out their voters and their supporters by inserting in legislation the principles of the Treaty that they were opposed to and by cobbling together this deal in the last few minutes before going public. They are ramming through under urgency, with no parliamentary scrutiny or public input, a deal for consultation in order that the principles be given effect to, and for regulations down the track to be passed. I say that Don Brash was right when he said that this process is becoming deeply corrupt, with some requirements for consultation resulting in substantial payments in a system that looks like nothing other than stand-over tactics. I say “Shame on National and shame on the Māori Party.”

May I say it is a joy to work with a party that is not tied down in “Hide-bound” ideas.

In speaking to the announcement made yesterday of the proposals to reduce emissions in order to meet the Kyoto Protocol, Ngāi Tahu kaiwhakahaere, Mark Solomon, made a key statement. He said: “It is a day where the ledger is made even.” Mr Solomon was referring to the fact that relevant information was withheld from Ngāi Tahu when they bought forestry land for conversion to farming. Ngāi Tahu’s case was that the Crown did not meet its information disclosure requirements of their Treaty settlement in respect of the likely impact of an emissions trading scheme on pre-1990 forest land. Similar issues were raised by Waikato-Tainui, Te Uri o Hau, Ngāti Awa, and Ngāti Tūwharetoa. Yesterday’s announcement made the ledger even, in that it covers the cost of the loss the iwi will experience under the scheme. It was an announcement that recognised the constructive engagement that has taken place between the iwi and the Crown to try to address a situation in which they had been unknowingly disadvantaged. It was an announcement that reflected the generosity of spirit entered into between the Crown and the Treaty partner.

The question of balance is an appropriate one to be considering as we debate the Climate Change Response (Moderated Emissions Trading) Amendment Bill today. The Māori Party has worked relentlessly to try to achieve outcomes that can work in the best interests of the nation. As a nation dependent on a favourable climate for our heavy involvement in primary production, climate change represents a significant risk to the quality of our everyday life. Climate change will have profound implications for Aotearoa over the long term, and potentially significant levels of costs. So there is no dispute: collective responsibility for environmental and social outcomes is the only way to respond to climate change. The way in which we have been able to mobilise this collective effort is through compliance with the targets of the Kyoto Protocol. We know that there is no single piece of legislation that can be the catch-all, comprehensive answer to climate change. The real answers can only come from people as whānau, communities, and enterprises deciding to change how we live and interact with the environment.

This bill is only a small part of the change that is needed. But what is so important about this bill is that it aims to reduce the total greenhouse gas emissions by encouraging all New Zealanders to take responsibility. We have all known that New Zealand’s emissions are increasing, with greenhouse gas emissions in 2007 about 22 percent higher than they were in 1990. In fact, if we did nothing at all to reduce our emissions, our total emissions could total well over 30 percent higher by 2012. The Māori Party believes that it is high time that we as a nation stopped the years of lobbying Parliament on how the emissions trading scheme should be structured, and focused on the real challenge of addressing our collective responsibilities for carbon emissions. The Māori Party is standing up for four outcomes that we believe are in the best interests of our people and the nation: our whānau, our whenua, the Treaty of Waitangi, and the Māori economy.

I want to raise a concern about the criticism suggested by the Leader of the Opposition that the so-called special treatment of some tribes will do little to help Māori households. At the risk of pointing out the obvious, hapū and iwi are built upon the very foundations of whānau; there can be no iwi without whānau. The key stakeholders for Te Rūnanga o Ngāti Porou, for example, are the descendants of Porourangi. As a descendant of Kai Tahu, I remind the House that the broad mission of Te Rūnanga o Ngāi Tahu is to promote and enhance the social, cultural, and economic well-being of Ngāi Tahu whānui. So when Mr Goff talks about preferential treatment or special deals for iwi, he needs to be very careful that he knows what he is talking about.

It has been very clear to us that paramount in the concerns of the iwi leadership has been the need to support Māori households. I read this morning the views of Rāwiri Te Whare, the General Manager of Te Pūmautanga o Te Arawa. In referring to the attempts of some politicians to polarise the issue as a race-based one, Rāwiri Te Whare said: “The criticism is unhelpful and simplifies what is actually a complex issue. Iwi leaders do not seek special treatment for Māori, we are seeking fairness on a proposal that will have a disproportionate impact on our businesses—and therefore our ability to assist to lift the social, cultural and economic aspirations of our people.” The question of fairness, of balance, has been uppermost on our minds as we tried to negotiate concessions that would support our more vulnerable families along with our fledgling iwi enterprises in fishing, farming, and forestry.

A key win for all of our whānau and all lower-income households is that they will be better supported to insulate their homes to decrease the cost of electricity. We also know that warmer homes mean better health outcomes and a better quality of life. Insulation leads to lower power costs and better health. Our priority was to ensure that the funding available gets to those homes most in need. So we are really thrilled that the new money, the additional $24 million we were able to negotiate, will mean that an extra 2,000 houses of community services card holders will be insulated every year from now up to 2013. We pushed hard for this, as well as halving petrol and power prices, in order to cushion the blow on low-income families. A major emphasis for the Māori Party was on doing all that we could to ensure our whenua will be sustainable and healthy for our mokopuna.

The package includes a range of environmental outcomes, from working with iwi to invest in indigenous forestry to recognising the importance of biodiversity to all people, so that future generations inherit a country that is a better version of the clean, green Aotearoa we inhabit today. Our negotiations have been critical in recognising that iwi are the key drivers behind the Māori economy, which contributes some $16 billion to the economy of this nation. It is our view that any legislation passed in this country must support the Māori economy to reach its full potential. Our people are heavily involved in fishing, farming, and forestry, all of which are affected by the scheme. We worked hard to make sure that our people’s businesses are not the hardest hit by the scheme, so that the outcomes are fair and our economy can grow.

And, finally, I want to bring to the House the significance of the Treaty of Waitangi to this debate. We entered negotiations understanding that the Treaty must be provided for in the scheme so that it is fair for our people, no matter what future changes are made along the way, and so that Treaty settlements are respected. The Treaty is about joint responsibility and working together. This bill reflects our role in responding to the shared challenge of climate change. The agreement allows for more Crown-iwi partnerships in tree planting on conservation and Māori land. It makes a commitment to the Treaty relationship through the highest level of input on agricultural, forestry, and fishing issues. To this end, I will be tabling a very important amendment during the Committee stage to ensure that the emissions trading scheme gives effect to Treaty principles.

The scheme is not perfect by any means. But we believe that it balances the concerns of whānau and businesses with the need to ensure we protect our environment for future generations. Ultimately, it is those mokopuna whom we must think of as we make our vote today. Kia ora.

I rise to take a call in this debate. A little more than 10 years ago, New Zealand entered into the Kyoto Protocol. New Zealand committed itself to Kyoto, and this Government is committed to follow through on those obligations. Living in a carbon-constrained world is a legal, economic, and environmental reality. It is something that all New Zealanders have to grasp as part of this debate. As well as that, it is a trade imperative to now be seen to be doing our part around our carbon obligations as set out in Kyoto. New Zealanders need to understand that whatever they may think of the debate, from a matter of trade we need to do our bit under Kyoto. We need to be seen to be playing our part. Under the Climate Change Response (Moderated Emissions Trading) Amendment Bill, we are.

There is one other starting point that New Zealanders need to grasp if they are listening to this debate and when they think about this debate. They need to understand that on 1 January, without this bill masses of cost will come into play. The power bills of households will go up by 10 percent, and it is Kiwi mums and dads who will bear that cost. As well as that, if we do not change the legislation, the jobs of thousands of New Zealanders will be put at risk. The Labour Opposition talks about jobs, but if its scheme comes into force on 1 January of next year, which it will do if we do not pass this legislation, not only will the costs of households go up dramatically, but New Zealand jobs will be at risk. This bill is about getting that balance right between those two things. It is about getting the balance right between what we must do to play our part in terms of the environmental, economic, and legal realities as set out in the Kyoto Protocol, and ensuring that in doing so we do not sacrifice the New Zealand economy, the jobs of New Zealanders, and the wealth of every citizen in this country, as well as future generations, as Rahui Katene referred to in her speech. This bill does that well. Politics aside, we have a workable solution that balances our international obligations, our environmental obligations, and the fiscal realities.

When this Government was elected, we talked, in regard to emissions trading, about a couple of things. We talked about the need to be aligned with Australia as much as we could. We talked about the fact that Australia is our major trading partner, so it would make sense to put our industry on a similar footing to that in Australia. We talked about the fact that to National, an emissions trading scheme should not be a tax-generating mechanism. That is what it was going to be under the Labour scheme. It was setting itself up to suck another $2 billion a year out of the economy to put into its war chest. We do not see the emissions trading scheme as revenue gathering for the Crown. We see the emissions trading scheme as about protecting the environment and protecting jobs. We set out to design a scheme that was fiscally neutral, and that is what we have done in this bill. We do it without risking our key industries.

Let us be really clear that under this bill the cost on New Zealand households will halve—it will halve. That is what we are talking about. We are not talking about big business. We are talking about cutting in half the cost that the Labour Opposition wanted to put on Kiwi households. This bill will not impose that cost.

I shall spend a moment talking about agriculture, because that is an area of great importance to my Selwyn electorate. Agriculture is a crucial industry to this country. It always has been and it always will be. We are not prepared to see agriculture sacrificed but we must deal with it within the emissions trading scheme. The reason we must deal with it is that it is almost half of our emissions profile. I know that other countries have decided to exclude agriculture, and if it were possible, that would be great. But when, in New Zealand, half of our emissions profile is agriculture, we must include it in an emissions trading scheme, and it has stayed in our system. But—and it is a big but—we will ensure that we will do it in a way that does not see farmers go into bankruptcy in their thousands, as would previously have been the case. We have deferred the introduction of agriculture for a further 2 years to enable time to look into better ways for farmers to adapt and to reduce their emissions so they are not just fed to the wolves.

We are not here to put people out of business. We are not here to kill off industry. We are not here to see New Zealand continue to sink further and further down the OECD rankings, and that is what would happen if we did not stand up for agriculture. So we must include it. But the Minister has worked very hard, as have officials, to ensure that it can be included in a way that enables our farmers and our agriculture industries to survive. That is through a deferral of 2 years. That is through the reduced phase-out rate. Instead of losing their allocations at 8 percent a year, our farmers will see a phase-out rate of 1.3 percent a year, starting in 2016.

Hon David Cunliffe: We’ve been saving 1.5 percent since 1990.

AMY ADAMS: As Mr Cunliffe said—for once in his life managing to say something that is remotely accurate—they are getting phased out a lesser rate now than they have already been working to reduce their emissions. So we are saying to them that that is great. It is fantastic. That is the point. The point is if they are already reducing their emissions, we support them. This is a carrot and a stick.

Hon David Cunliffe: Yeah, with no stick.

AMY ADAMS: If they reduce their emissions, they will not have a bill. If they do not reduce their emissions, they will have a bill, I say to Mr Cunliffe. I do not know why he finds that so hard to grasp. But we cannot in this country simply ignore it. The way Kyoto works is that we have to account for our entire domestic emissions profile. In this country, if we were to leave agriculture out, all of that burden would fall on the rest of the economy. In Australia, the emissions profile of agriculture is 13 percent. They may find that workable, although I suspect we will find that there will be considerable cost there in agriculture, albeit that may be achieved through other mechanisms apart from those directly in the scheme.

The bill we have before us does, in my view, strike the right balance with our environmental obligations, with the trade realities of needing to show the rest of the world that New Zealand is doing its bit between meeting our Kyoto legal obligations and the need to ensure that we do not walk away from Kiwi jobs and do not put the income of more Kiwi households at risk. We do not want to see big cost increases on Kiwi households that do not need to be there. This bill will halve those increases. It will protect those jobs, and it will do our bit for the environment. I am very pleased to support it.

I thank Amy Adams, the member who has just resumed her seat, for clarifying several things. The Climate Change Response (Moderated Emissions Trading) Amendment Bill is putting on New Zealand households—on hard-working New Zealanders and their children—a debit equivalent to $92,000 a household. By the Government’s own numbers, even if we take the most favourable assumptions and leave out the compounding cost, it will be $50 billion a year by 2050. This is based on a carbon price of $25 a tonne in 2013, going up to $50 a tonne thereafter. The Government’s own number is $50 billion by 2050. If we put in the cost of capital, we see that it will be $110 billion, yet those members have the gall to say that Labour wants to impose costs on New Zealand households.

The member who just resumed her seat is from an agricultural constituency and she did agree with the point that agriculture has been reducing its emissions by 1.5 percent per year, on average, since 1990. But the obligation this Government is bringing on the sector is for 1.3 percent—less than that—going forward. Analysis presented to the Finance and Expenditure Committee said that the first 5 million tonnes of agricultural carbon emissions reduction will be at a profit, but the Government will write the sector a cheque as well, anyway.

But the saddest thing was not Miss Adams’ speech; it was the previous one by Rahui Katene. She is a member I do respect, but I ask her whether, unlike Ngāi Tahu, other iwi like Tainui got Department of Conservation lands in their settlement, or whether those other iwi who participated in the Crown Forestry Rental Trust will have access to the last-minute deal that the Māori Party has brokered for its benefactors. Members should make no mistake: this is not a deal for the average Māori up and down the motu. This is a deal for a very small number of people—wealthy interests at the “Browntable”—and that is not kaitiakitanga and it is not whanaungatanga in any understanding that we possess.

But let us put ourselves in the shoes of our children. No member of this House, whatever party they come from, can honestly look their children in the eye and say to them that they will be better off in the future as a result of this bill, and that their future will be brighter than ours. Let us cast our minds back a little and think about the place that this baby-boom generation has occupied in our history—the children of the Second World War who vowed to build a better world. Here we stand today at the cusp between their era and the era that our children and our grandchildren will inherit, but what do the latter have to look forward to?

The thing that worries young people today is not the global financial crisis—that is just a blip—it is not the end of the American empire or the rise of East Asia, but it is the threat of a changing climate. That is why we go to see movies like The Day After Tomorrow, 2012, and even Twilight. We go to them because this civilisation, our young people feel, is entering its twilight. Our young people are no longer optimistic that their future will be better than this generation’s past, but what is the National Government doing about it?

This Government is imposing on the young people of New Zealand, and on our grandchildren, a bill that will put liabilities on the credit card for generations to come, in order to subsidise the big polluters of today: the powerful interests that support the National Party. It is as cheap and as dirty as that. If smirking members opposite doubt me, I say let us cast our minds back to when the man who is now Prime Minister said climate change was a hoax. Then, just before the election, when he worked out that young people vote, he said that, no, he had always believed in it. Now he has returned to type, because this bill is hype; it is a hoax and it is a nonsense.

Why should we be surprised? The process that has been used by the “Minister for Shambles” was exactly that. It was a travesty. There is a telephone book of amendments laid on the Table that this Parliament has not seen before today. I appreciate the Minister inviting some of us in this morning, but those Supplementary Order Papers have not had the benefit of a select committee process. Even those parts of the bill that did go to a select committee had to be considered in the absence of material that that Minister withheld under the Official Information Act. Although 379 submitters said they wanted to be heard, the chairman of the committee felt there was time for only 30. We finally insisted on 127, but most of them got called the same day and were told “Pony up, or lose the chance. This is it.” Yet that National Party had the gall to say of last year’s bill that Labour’s emissions trading scheme was rushed. Labour spent a whole year on a select committee process; National has allowed 1 day for submissions and tabled those amendments in the House. There is a word for it—I cannot use it—it starts with “h”. Members opposite know which word I mean. National has one set of standards in Opposition, but runs right over them when it gets into Government. I say to those guys opposite that the issue with that is that a party like that does not stay on the Treasury benches for long, because New Zealanders know the difference.

I ask what our young people want. Our young people want responsible leadership. They want leadership that can see into the future and help to bring the present to that better place. Our young people know that they are being cheated today, and that they are being presented with a huge bill for a scheme that is badly designed and that has not been properly considered. It is a scheme, according to Treasury’s regulatory impact assessment unit, that could not stand scrutiny because the analysis it was built on was flawed—or words to that effect. It is a bill that did not have even a departmental clause-by-clause report. Officials could not produce one because there was not time. It is a bill for which the Parliamentary Counsel Office could not produce a revision-tracked set of amendments for the committee to consider in the normal way, because there was not time.

What is the rush? Is it to allow a Minister and his leader to grandstand in Copenhagen? I pity them, because Charles Chauvel will be there telling people the truth about the sham that is being driven through this Parliament today, and the world will know that the Government is “100% Pure”—“100% Pure Nonsense”. [Interruption] I have two minutes left before the next member’s call, I say to Ms Wagner, and I hope she will enjoy my speech, because I am so far from finished with this bill!

We have a long few days ahead of us on this bill. I am looking forward to the Committee stage—to counting every subsidy, to unmasking every dirty deal, and to showing out every craven emitter who has come to the door of the Minister, where God knows what has been exchanged for a $110 billion cheque. How ludicrous is this: a “cap and trade” system with no cap? It would be like a carbon tax with no tax—

Charles Chauvel: And no carbon.

Hon DAVID CUNLIFFE: —and no carbon. The idea of emissions trading, for the general public, is that New Zealand gets to adapt to a low-carbon future at the lowest economic cost, but it only works if we actually have to trade, and that only happens if we actually have a cap. Treasury and the Parliamentary Commissioner for the Environment agree that this bill will reduce emissions by up to less than 1 percent only. So what do we get—and, hey, let us be generous—for our $50 billion? What do we get for that? According to the independent authorities, we get less than 1 percent of emissions reduction for at least $50 billion on the Government’s debt by 2050.

Is that anybody’s idea of a good deal? Is it anybody’s idea of a good design? Is it anybody’s idea of a good process, or a good future for our children? If I feel upset about this bill, it is because I have kids, and I cannot look them in the eye and say that today we as a House are making their future brighter.

I support the Climate Change Response (Moderated Emissions Trading) Amendment Bill. I support it because it is a moderate, common-sense response to an enormously difficult problem. It has been really interesting to listen to David Cunliffe today. He spent a heap of time in the Finance and Expenditure Committee bleating that he did not understand the bill, in order to make political points, but his speech today proves the point: he truly does not understand it at all. His speech was full of emotive rhetoric and there was no intelligent comment.

Everywhere around the world, Governments and people are struggling with the concept of climate change. It is a fiendishly difficult problem. As the Australian professor Ross Garnaut said: “It is harder than any other issue of high importance that has come before our polity in living memory.” But around the world there is general agreement that this is a truly global issue and it has to be tackled. Every country has to deal with the problem, every country needs to be involved, and Governments around the world have accepted that fact. Indeed, I cannot think of any country that has declared it will do nothing. It is a fiendishly difficult problem, and it comes at the worst possible time: a time when the world is also struggling with a hugely challenging financial situation, a time of great economic turmoil and international uncertainty. This bill is a first step, a sensible, pragmatic, responsible response to both environmental and economic conditions. It includes a series of reviews, starting in 2011, which will allow us to tweak the legislation as the global situation clarifies.

The process of getting to this point has been agonising. There is general agreement that New Zealand needs to have an emissions trading scheme, but little agreement about how it should be formulated. The devil is always in the detail. Way back in the late 1990s, National began advocating for an emissions trading scheme, but between then and now—and a Labour Government—we have had a failed tax proposal, an unsuccessful industrial scheme, and an unrealistic Act. Now, finally, we have a reasonable and rational scheme that allows New Zealand to do its fair share for global climate change without destroying our economy or the quality of life that it delivers.

Over the last decade we have seen lots of energy, angst, and good intentions to tackle the issue of climate change, but it has all come to nothing. It is very, very unfortunate that politicians have not been able to work in concert to deal with an unprecedented, important, and difficult issue. National highlighted in its Bluegreens discussion document, coming up to the last election, that long-term environmental issues should be treated in a far more bipartisan way. We believe that the environment is too important to be squabbled over. Environmental decisions have long-term consequences, and therefore need more than a 3-year, a 6-year, or even a 9-year focus. We will still be dealing with the issue of climate change in 2020 and 2050. If ever there was an issue on which parliamentarians should have worked well together to get the best possible outcome for this country, this is it. I agree with Charles Chauvel, who said Parliament has a golden opportunity to reach a broad consensus and take New Zealand’s emissions trading scheme design off the political battlefield once and for all.

After two previous select committee processes to consider the issue, including an in-depth and pretty intelligent review of the present emissions trading scheme and related matters, we should have been able to deal with this new legislation efficiently and effectively. An enormous amount of research and information has been available in the public domain, and the people of New Zealand want us to sort this issue out once and for all. It is therefore absolutely disappointing that although Opposition members continue to state how important this legislation is, they were not prepared to knuckle down and get the best possible result for the country. Their uncooperative squabbling and childish behaviour reflects badly on them, and it undermines any professed commitment to a better environmental future for New Zealand. Political grandstanding, stupid party politicking, and half-truths were the order of the day. The fact that we could get no agreement was an enormous waste of time and money, and a waste of the best intentions of submitters who will be affected by this bill. On principle, the Opposition would not even agree with uncontested technical amendments. So much for Labour’s claim that we cannot afford to delay our emissions trading scheme!

After listening to Labour speakers, I remind everyone that despite Labour’s rhetoric, until 2018 there is very little difference between the allocations under this bill and those under the existing legislation. I also reflect that this is high-profile legislation that affects all of us. But it is a hugely complex process, and most New Zealanders do not understand all the issues. Everyone is affected differently. Therefore, many people are partly informed, some are uninformed, and some are misinformed. Opinion is polarised. Labour can quote plenty of criticism that suits its purposes; ACT can do the same—although I must say they make strange bedfellows. The Government’s job is to walk the knife-edge between conflicting opinions and produce rational, sensible legislation. This bill is about implementing a workable and affordable emissions trading scheme. The legislation includes provision for regular reviews in order to give us enough flexibility to manage our responsibilities intelligently as the world grapples with the ongoing issue of climate change. I support this bill.

I am very happy to follow the “Let them eat cake.” speech made by Nicky Wagner, which bore absolutely no resemblance to the bill before us, the Climate Change Response (Moderated Emissions Trading) Amendment Bill, or the process it went through. The gall of that member to stand up and chastise other countries for not doing enough to deal with climate change, when we are sitting here, under urgency, considering legislation that had only 6 weeks at the Finance and Expenditure Committee—only 6 weeks at the select committee. Submitters were rung and told that they had to come in and give their submissions 4 hours later that night, after we had heard that the National Government wanted to limit the number of people coming in to only 20 of the hundreds who had submitted. The officials made mistakes in the process because they did not have enough time to prepare the papers. Our deadline did not give us enough time to even do the departmental report properly. We could not get a clause by clause analysis. We could not get a revision-tracked version of the bill. And that member has the gall to stand up in this House and say that Labour was being difficult!

Labour members were being difficult because all we wanted—and we put a motion before the select committee—was an extension of time so that we could have time to consider the technical amendments that that member just accused us of not being prepared to consider. Well, how did that member vote on the motion that Labour put forward asking for another week to properly consider the bill? [Interruption] She voted against it. I tell Nicky Wagner not to stand in this House and chastise members of the Labour Party for being difficult. Why could we not have had another week in which to consider at least the technical amendments?

Nicky Wagner: You could have done it if you’d just got on with it.

MOANA MACKEY: I do not know whether Nicky Wagner has discovered the power of time travel, but it was simply not possible to do it in the time that we had. This bill is an incredibly important bill, and it had 6 weeks—

Nicky Wagner: For God’s sake, Moana.

MOANA MACKEY: Oh my God! Seriously? It had 6 weeks at the select committee, I say to Nicky Wagner. It should have had 6 months at the least. When Labour’s scheme took 8 months, National members said it was being forced through. When Labour heard 60 hours of submissions on our emissions trading scheme, they said it was not enough. But National allows only 20 submissions on this bill, and that member sits there and chastises us for complaining that the process is being rushed. Unbelievable! And that was from a member who claims to have blue-green credentials. She should be standing up in this House and saying stop the madness, slow this down, and let us have some proper discussion about legislation that will shift $110 billion worth of liabilities away from polluters and on to the taxpayers of New Zealand.

I heard earlier that the Hon Dr Nick Smith said that my colleague Charles Chauvel was just being ridiculous when he said that the Carbon Pollution Reduction Scheme legislation was not going to pass in Australia, and that he was scaremongering. I am sure the Minister knows by now that Andrew Robb, who is the climate change spokesperson for the Liberals, spoke against the legislation in their caucus. They had 15 speakers for, and 13 against, and they have had to hold an emergency meeting. I think the Hon Dr Nick Smith ought to calm down his rhetoric a little.

While we are talking about the Hon Dr Nick Smith, I want to talk about the process that we went through. He has been chipping away at me across the House, and, to be fair, I have been chipping back at him. But the fact is that Labour did not disengage from this process. We absolutely believe that it is critical that we get bipartisan agreement on an emissions trading scheme; we absolutely believe that.

Hon Dr Nick Smith: Where were you this morning?

MOANA MACKEY: I was at a tangi this morning, I say to Dr Smith, and I have only just got back, so I am sorry about that. I would like to pay my respects to the family of Hāwea Vercoe, who tragically died over the weekend. I was at a tangi, and that was why I could not come to Dr Smith’s meeting.

The fact is we had a very, very good meeting. We had a great meeting with the Minister for Climate Change. We laid out what we thought the areas of agreement were, where we thought we could go from here, and the things we were not going to agree on that we thought could be put aside because they were not critical to getting agreement on an emissions trading scheme. Then we went away. Over the weekend Labour had its annual conference, so we were busy. My colleague Charles Chauvel emailed—I was copied into the email—a copy of Labour’s response, with a “Where to from here?”, a draft memorandum of understanding. I then got off a plane in Wellington to hear that National had done a deal with the Māori Party. So when the Hon Dr Nick Smith says that Labour walked away, that is absolutely not true. He then invented a conversation that he had had with my colleague David Parker, saying that he had said to David Parker: “Oh, you need to get back to me by Friday.”, and David Parker had said that he would. That conversation never happened. The only conversation David Parker had with the Hon Dr Nick Smith was about the Resource Management Act amendment bill that was going through that week. That is not true, and the Minister knows it. Does he have to start inventing conversations that never happened? There were three Labour members in the room, and none of us told the Minister that we would get back to him by Friday. None of us were under the—

Hon Dr Nick Smith: Ask George.

MOANA MACKEY: The member says to ask George, ask his adviser. I guess the public will have to go by that member’s record. We did not give that undertaking; if we had, why would my colleague have spent all weekend drafting a very comprehensive response, which he emailed to the Minister before he went to Cabinet on that Monday, before the decision was announced? Then the Minister could not even pick up the phone to ring Charles Chauvel, our spokesperson, to say to him: “Look, we’ve done a deal with the Māori Party.” We heard about it on the news, along with everyone else. So when the Minister accuses Labour members of disengaging from the process, I say that that is absolutely unbelievable. We did not walk away; there was nothing to walk away from. By the time we had heard on the news that a deal had been done and that we had been excluded—

Hon Dr Nick Smith: Why not more deals? Why can’t we include the Māori Party?

MOANA MACKEY: Because Labour will not support an intensity of emissions approach without a cap, I say to Dr Smith, and we will not support 200 years of subsidies, as we were told, to the biggest polluters.

Hon Member: 200 now.

MOANA MACKEY: That is what we were told by some of the submitters. To be fair, David Carter said only 90 years, so I will go with what the Minister of Agriculture said; he is promising subsidies for only 90 years. But the fact remains that Nicky Wagner, who got up to say how shameful it was that we were not able to get bipartisan agreement, needs to walk down to the front bench of her own party and tell her Minister, who walked away from Labour in negotiations, who then made up stories about—

Hon Dr Nick Smith: No, I didn’t. The door’s still open.

MOANA MACKEY: We are in urgency, this bill is being forced through the House, and the Minister says the door is still open. That is what negotiation means to National—it is take it or leave it. I want to tell members what happened here. When we had meetings with the Hon Dr Nick Smith earlier in the process, he was very reasonable on a whole number of things. He said that agriculture was not a bottom line for him, and that if we thought it had to come into the scheme in 2013, then that was fine, and he would not have an issue with it. I remember thinking that that seemed very strange, because I had been meeting Federated Farmers groups who had told me that the Hon David Carter had promised them that agriculture would never come into the emissions trading scheme and have to face the full cost of its emissions.

Hon Dr Nick Smith: Not true!

MOANA MACKEY: You know, in this instance, I think I believe Federated Farmers, I say to Dr Smith.

Hon Member: Everybody’s lying except Nick Smith!

MOANA MACKEY: That is right. Here we are in a situation where everyone is lying except the Hon Dr Nick Smith.

Mr DEPUTY SPEAKER: You cannot use the word “lie”.

MOANA MACKEY: I apologise. I withdraw that comment. Everyone else is wrong and only the Hon Dr Nick Smith is right; that is the situation we are in at the moment. Well, Federated Farmers members said before the election that agriculture would not come under the emissions trading scheme, because David Carter had told them that it would never come under it and that farmers would never have to face the full cost of their emissions.

Hon Dr Nick Smith: He never said that. David Carter never said that.

MOANA MACKEY: I say to Dr Smith that all I am saying is what Federated Farmers told me, and if we look at this legislation we see that they are absolutely right: National has delayed agriculture coming in for another 2 years, farmers are not going to have to face the full cost of their emissions for God knows how long after that, and there will be review periods and review periods so that the time frame can be pushed out even further and even further—and I firmly believe that it will be pushed out even further and even further.

To be fair to the Hon Dr Nick Smith, I actually think he does believe we need to do something about agriculture, but he was rolled by his caucus. I think he went back to his caucus and told it what the deal was, and his caucus said that, no, the bottom line for it was that agriculture should not have to face the full cost of its emissions. He had made promises—well, they were not promises; they were indications—to Labour members that he would be prepared to move on some things, and all of a sudden they were off the table. All of a sudden, we came back and found out that there would be an intensity of emissions approach without a cap, which basically means that we are going to pay polluters to pollute more.

In fact, polluters would do better to lift their greenhouse gas emissions, because then they would get more free allocation. That is what this approach means. I do not know why the Minister thinks that is a good policy for reducing greenhouse gas emissions. One would think that the point of having an emissions trading scheme would be to reduce our emissions; otherwise, what is the point? This emissions trading scheme amendment bill does not do that. What it does is provide incentives for some of our biggest polluters to pollute more, because they get more free allocation for doing that.

What it does most, and the worst thing about is, is that it turns the existing emissions trading scheme, which is a polluter-pays model, into a pay-the-polluter model. Who is going to pay the polluter? The New Zealand taxpayer.

Hon Dr Nick Smith: You don’t believe that.

MOANA MACKEY: Well, where is the $110 billion going to come from?

Hon Dr Nick Smith: You don’t even believe what you are saying!

MOANA MACKEY: I do believe it, because that $110 billion has to come from somewhere. It ain’t going to come from private schools; we have already seen that National is happy to take money off adult and community education to give it to private schools. It will come from health, it will come from education, it will come from social services, and it will come from the public sector. It has to come from somewhere.

Hon Dr Jonathan Coleman: Tell the truth!

Mr DEPUTY SPEAKER: You cannot use that phrase.

MOANA MACKEY: Jonathan Coleman can scream out that I am not telling the truth, but I look forward to his telling me where the $110 billion will come from. Where will it come from, I ask Dr Coleman. It will come from the taxpayers of New Zealand. This is a disgrace.

It is my pleasure to speak last in the second reading of the Climate Change Response (Moderated Emissions Trading) Amendment Bill. The previous speaker, Moana Mackey, was talking—apparently—about this bill, but members would not know that from the rhetoric that came from her. They would know that nothing that came out of her mouth made any sense whatsoever—either she cannot count or cannot read, or both. But we will find out about that.

This bill provides a step along the path towards meeting our climate change needs, a future for my children and my future grandchildren, and the ability, whether members believe in climate change or not—like some of our friends over there in the ACT Party—for New Zealand producers to get their goods into overseas markets while we are doing our fair share. Some will say the bill does not do enough; some will say it does far too much. But this bill will provide some comfort to mums and dads out there who may be listening to this debate today, in that the cost of this scheme will be half what the Labour scheme would have cost.

Moana Mackey: What a load of rubbish!

AARON GILMORE: I ask the member to read the bill. That member is proving that she has not even read the bill.

This bill went to the Finance and Expenditure Committee, and I must say that sitting through that committee while it considered this bill was an experience. We have heard about all the sorts of behaviour that occurred on that committee. I do not want to go into that, but I must say that I will recall that behaviour for years to come.

I want to talk a little about the so-called cost to New Zealand of this emissions trading scheme—Mr Cunliffe’s $110 billion; the so-called huge cost for taxpayers. There is no $110 billion cost to New Zealand. We have heard that New Zealand will have to pay a large amount of money, and that there will be $110 billion of debt for this emissions trading scheme. Climate change is complex, but if those members who are making that claim about $110 billion had read the bill or knew how to count, or both, we would not have this misunderstanding. What is that mythical figure—the supposed $110 billion debt that will occur? What it is is that instead of taxing the good people of New Zealand by $2 billion per annum, the Government is giving back $2 billion to people to allow them to have a transition to a sustainable climate change position.

We campaigned on providing a fiscally neutral emissions trading scheme, and this bill helps to deliver that. We believe in jobs and in our communities. So we believe that the best thing to do is not to have the Government gain $2 billion from taxing people but to use that money to mitigate the transition path to a better position for our communities out there. This scheme has been designed so that over the next decade there is only a small net gain for the Government, rather than it raising billions of dollars from communities out there. Jobs that would have gone from thousands of factories and businesses up and down the country under the Labour scheme will be kept. We care about jobs, and we care about communities.

Finally, contemporaneously with this bill we have announced a suite of measures, which other people have not spoken about, to add to the transitional part of the legislation. There is $323 million for home insulation and a further $24 million for low-income households. In my maiden speech I spoke about living in a State house that was uninsulated and that my family could not afford to heat. I am proud to be part of a Government that has introduced a housing scheme that gives people in State housing the ability to have their homes heated and insulated properly, so that other little kids out there listening to this debate today can grow up in a warm and healthy home. What else have we done? We have introduced $36 million for bio-diesel, we have introduced funding for a centre of research excellence for agriculture, we have introduced some changes to the Resource Management Act to streamline renewable energy projects, and there are many more measures. We have also resolved the legal dilemma that existed with regard to iwi, who had been so easily brushed aside by the previous Labour Government. That is something that we inherited.

We will hear plenty more over the next day or two on this bill, and I look forward to contributing to the debate. I support this bill.