Parker DavidHon DAVID PARKER (Labour): Thank you Madam Chair. My first question of the Minister is this. The Minister told the committee—and I thank him for this information—that the budget for this part of the ministry is going down from $11 million to $6.9 million. Can he advise the committee whether that $11 million included the administration of the Clean Car Discount—not the cost of the Clean Car Discount but the administration of the Clean Car Discount—in addition to this regulation-making function as to the standard? Hon Members: Madam Chair. CHAIRPERSON (Maureen Pugh): Ah—Hon DAVID PARKER: Well Madam Chair I had a number of questions but I was trying to do it on the backwards and forwards basis. If—CHAIRPERSON (Maureen Pugh): The clock's still ticking—so the Hon David Parker. Hon DAVID PARKER: Well OK I call. The next question I had was that I would like to have some dialogue with the Minister as to how it is that the standards are going to be developed because that goes to cost and actually relates partly to the issues I was raising in an earlier clause on the bill relating to whether this should sit with the Energy Efficiency and Conservation Authority. I hope the Minister will agree with me that one of the trade-offs that is being made in a standard is what is the capital cost of a more expensive more efficient vehicle and how that compares with the savings that are made by the user of that vehicle on lower fuel costs. Those lower fuel costs have two reasons. One electricity is a more efficient converter of energy to motion than the burning of a fossil fuel so the same energy content of electricity takes a vehicle further if it's electricity than it does if it is petrol or diesel because the conversion of petrol and diesel to motion results in a lot of that energy being lost as heat. That's the essential physical reason. The second reason why electricity is cheaper in a fuel sense than petrol is that per calorie if you like or per unit of heat electricity per unit of energy is cheaper than fossil fuels—renewables are. There are two reasons why the costs are cheaper to the consumer but those benefits of the cheaper energy price are spread over a long period. The capital cost is borne by the importer of that vehicle on day one and so in order to compare the benefits of lower costs of essentially electricity compared with fossil fuels with the capital costs there has to be a mechanism to compare the benefits that are received over a period of time compared with the cost that is incurred up front. That is achieved by applying a cost of capital to the upfront costs and comparing it with the benefits that flow over time which are discounted to take into account the fact that they are not received until a future date in order to compare the cost of this. Now this is technical work. It's important work but what drives the outcome is actually the discount rate that you use. So my next question to the Minister is: does he think that the ministry has got the headline capacity to actually make that proper assessment of the discount rate to do it? Again I would make the point that this work has been done time and again already by the Energy Efficiency and Conservation Authority who assess what is the appropriate discount rate to be applied. Until that discount rate was actually set at a fair level—and there were scraps on this in the early 2000s when Jeanette Fitzsimons was in charge of the Energy Efficiency and Conservation Authority when I was the Minister of Energy and we sorted this out and we got to a decent discount rate. Unless the discount rate is appropriately low you kill the economics in the cost-benefit analysis. So my first question is: why is it that these costs that are going to be recovered are going to include the cost of doing that cost-benefit analysis again in the Ministry of Transport when we know that that capability already sits within the energy conservation authority?