Chauvel Charles: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — In Committee Speaker Recalled In Committee 
Text is incorporated into the Bound Volume 
Chauvel Charles: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — In Committee Speaker Recalled In Committee 
[Sitting date: 06 November 2012. Volume:685;Page:6300. Text is incorporated into the Bound Volume.] 
CHARLES CHAUVEL (Labour) 
: 
 I want to speak in some detail to one of the Supplementary Order Papers that sits in the name of my colleague Moana Mackey because I do think that if the Committee were to take the Supplementary Order Paper on board then this legislation the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill would be greatly improved. Indeed that is a point that Moana Mackey made to the Hon Peter Dunne in a letter dated 31 October this year which I am going to seek leave to table at the end of this contribution. 
What I want to say to Mr Dunne is this. As Moana Mackey pointed out in her letter his commitment to supporting this legislation could still be fulfilled while voting for her Supplementary Order Papers. That is something that also goes for the Hon John Banks and any other member of the House who wants to support the legislation of the Minister for Climate Change Issues. But with some sensible tweaks it could be made better. 
I listened with great interest to the contribution of the member who just resumed his seat Denis O’Rourke because I remember that when I was chairing the Finance and Expenditure Committee that heard submissions on the original emissions trading scheme legislation the Labour Party did not have a majority on the select committee. The legislation was reported back to the House with the support of Jeanette Fitzsimons and Doug Woolerton and they made the decision that they did—to support an emissions trading scheme—because they heard evidence that indicated that it would make a difference to the behaviours that Denis O’Rourke has just quoted. And so it would have. 
 The original scheme would have encouraged greater use of sustainable practices in agriculture had the signal been retained that agriculture would eventually come into the scheme. The original scheme would have incentivised more use of rail for example to transport heavy goods rather than having those things on our roads. The original scheme would have incentivised greater renewable electricity investment. I can say that very clearly. I was on the board of Meridian Energy for a number of years. I remember very well the debates on that board in anticipation of what we all knew would happen—that the Government would bring in a price signal around the use of carbon. All the generators at the time knew that that would happen in some form or another and they began to modify their behaviour accordingly. Genesis Power—Meridian’s biggest competitor at the time—essentially was making plans to exit if it could its dirty coal businesses. It was for the first time looking at making investments in wind farms. Why did this happen? It was because everybody knew that a price signal was in the wind. 
The problem with some of the contributions we have heard already in this Committee stage particularly the one from the Hon John Banks is this: he says we have to defer this scheme it is too expensive it puts too much of an impost on our productive sector and it could not cope with it. Well let us be very clear. Let us as members in this Committee and the public listening to this debate be very clear about what we are actually saying. We are saying that those who emit those who pollute should not have to bear the full costs of that activity; the taxpayer should subsidise them. For all the rhetoric we hear about being indebted to China for our lifestyle the reality is that these changes will cost the New Zealand taxpayer $1.3 billion a year. That is the subsidy that we are conferring upon the polluting sector by failing to act and failing to put in place a scheme that would incentivise all the behaviours that—I agree with Mr O’Rourke—we want to see in New Zealand. 
When we hear this talk about New Zealand leading the world with an emissions trading scheme and other countries not pulling their weight what I say to members who say that sort of thing is to wake up and look at the evidence. We are falling well behind a number of countries in a number of areas. I see that the Minister in the chair the Hon Tim Groser is shaking his head. I hope he gets up and takes a call at some point in this debate. It is always a pleasure to hear from him and it will be great to have him share his wisdom with the Committee. 
But the point is this: the reality of what countries are doing overseas in fact to put in place better use of sustainable energy the attempts by countries overseas to bring in better sustainable practices in primary production—the manufacturing of solar panels in China is one example and the attempts by that country to wean itself off its addiction to coal and on to other forms of energy so that it is not engaged in polluting practices as it tries to grow its economy—is the reality of the world environment. It does not matter whether a country is running an emissions trading scheme or not; it is what it is actually doing in practice to properly price the use of polluting technologies and to incentivise the use of renewables and cleantech. That is where when we say we are falling behind members on this side of the Chamber start to get so concerned. 
The other real concern in the debate of course is the fate of forestry and what these changes will do to that industry. Again that is why Moana Mackey was so keen to write to the Hon Peter Dunne and say: “Look you have a chance not to completely devastate that industry which was brought into the scheme right from the beginning which was sitting on valuable credits and which now sees the value of those credits effectively being devastated.” That is a sector that we rely upon for our emissions profile which Dr Nick Smith was so ready to point to in his earlier contribution. Without the forestry sector and its contribution which will go out the window once this legislation is passed our emissions profile will look very poor indeed. I know that the Minister knows that fears it and is concerned about it. What I want to know is what the Government is going to do about it. 
What Moana Mackey has done is put up some alternatives. There is the Supplementary Order Paper in her name Supplementary Order Paper 142 which would restrict international units. What would happen under that proposal is that a 50 percent restriction would be put on international units so that New Zealand units would be preferred over international ones so as to protect our forestry industry. We are not linked to any other emissions trading scheme so this would effectively limit UN offset credits to 50 percent. We know that since the emissions trading scheme came into effect there has been a sudden collapse in the price of UN offsets—which no Government could have predicted—because of the massive oversupply of world units. With current UN offset prices at around $1 and the one-for-two deal that was brought into the scheme when Dr Smith was the Minister this makes our carbon prices around only 50c per tonne at present. The only scheme in the world at the moment that is comparable is India’s which charges 50 rupees as a tax for every tonne of coal that is burnt. 
So a restriction on international units coming into New Zealand is crucial to protect our forestry industry and to keep faith with that sector which has been part of this scheme for good reason from the beginning. If we do not move to protect the forestry industry then this Parliament will be ripping it off. Forestry groups—I know because I have seen the submissions—came to the Finance and Expenditure Committee and told the committee as they have told the Government time and time again that the faulty settings on the emissions trading scheme were harming forestry. They have been ignored. If we want to see deforestation on a big scale—let alone a deterioration in our emissions position—we will just go ahead and pass Part 1 as is without Moana Mackey’s amendments. But if we do actually care about those issues then we will try to deal with the issue. 
Without Moana Mackey’s amendments there will be significant job losses in the forestry sector. New Zealand is the only country that allows virtually unrestricted access to offset credits. In Australia only 12.5 percent is allowed and in Europe there is an average of about 14 percent. The 50 percent restriction that Moana Mackey’s Supplementary Order Paper would impose is generous by comparison but at least it is something and at least it would put in place some sort of protection for that precious forestry industry of ours. If we are ever going to link with the European scheme the Australian scheme or both then we are going to have to put in place some sort of restriction in order to be compatible—that is pretty clear—so we might as well do it now by way of Moana Mackey’s amendments. It would not significantly raise prices. 
At the same time we have seen that the collapse in the carbon price has had devastating implications for our carbon forestry sector—[ 
Bell rung 
] Mr Chairman.