Smith Nick: Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill — Second Reading In Committee Third Reading 
Smith Nick: Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:655;Page:4750] 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I move  
That the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill be now read a third time 
. I firstly acknowledge the thoughtful contributions that were made by members during the Committee stage on this bill and the inevitable commentary about the broader issues that we face around the huge issue of climate change and more specifically the complex issues of implementing an emissions trading scheme. 
I note that New Zealand is attempting to be the very first country in the world to include forestry within an emissions trading scheme. That is a very challenging exercise. Things that are man-made technologies—such as the burning of fossil fuels—or non-natural processes are relatively easy to measure. It is a lot more challenging in the area of climate change to be including natural processes—like the growth of trees agricultural emissions or many other elements of the natural sector—in an emissions trading scheme. To some degree the complexities we found around issues in respect of forestry are some of the underlying reasons for this delayed bill. 
The first thing I emphasise and I will emphasise it again is that this bill does not change the time frame by which any of the different parts of forestry will come into the emissions trading scheme. The bill is a technical bill that tries to provide some greater time frames in which the various requirements of bringing forestry into the scheme are able to be met. 
I will note specifically the different provisions. First up is the issue of the allocation plan for pre-1990 forest owners. The truth is that the forestry sector is not of a single mind. The truth is that there are different parts of the forestry sector that are impacted upon in different ways. On the part of pre-1990 forest owners there is actually not a huge amount of enthusiasm for the emissions trading provisions in respect of forestry because those provisions will put limits on their capacity to change the land use and that would have a substantive impact on land value. The previous Government responded quite pragmatically to that and said “Look we’re going to allocate some units to you to compensate you in some way for the way in which you are disadvantaged by those provisions.” 
At the core of this bill is the time frame in which that allocation plan is set out. Given that there is a select committee review it is proper that that be delayed for some time. Members opposite have said “Yeah that might be fair enough but not for too long.” They have introduced amendments that have resulted in the date being changed to 1 July next year. I think that is a pretty fair date and I am confident that we can resolve that issue by then. 
The second issue operates at the other end of the spectrum; that is rather than some of the very big forest owners there are some very small ones. The compliance costs of including very small forest holdings within the emissions trading scheme exceeds the benefit of doing so. The original emissions trading scheme provided for an exemption for blocks of trees that are fewer than 50 hectares in size. The issue is that unless quite a bit of money is spent on publicising those provisions a whole lot of people will not comply with them. We have made provisions in the Budget this year for money to advertise and to make sure that people are able to meet that requirement. If we insisted on it being required today a whole lot of New Zealanders out there would be disadvantaged. We have quite pragmatically taken a view that we will give people another year to apply for that 50-hectare exemption. 
The third part of this bill deals with the issue of where people have deforested and have obligations. Technically by 31 January this year they were required to report any deforestation that occurred during 2008. I know of public and private sector organisations that did not do that. Given that that legislation came into effect only late last year and it is quite an onerous obligation I am not completely surprised about that. I do not believe that anybody’s rights are adversely affected by extending that date for a year. The legislation further extends for a year the period in which those forest owners or those owners of land where there has been deforestation have to surrender the units associated with that deforestation. Again I do not think any party will be disadvantaged by that. If anything it will provide for a smoother transition of the entry of forestry into the scheme. 
I want to briefly touch on the history of the debate between carbon taxes and emissions trading schemes because it is relevant as we move forward. If we go back to the mid-1990s during Simon Upton’s time as Minister for the Environment we see that he said we should go ahead with a low-level carbon charge so we went along that track for about 3 or 4 years. It was almost said in this way: “Industry tidy your act up and get emissions under control. If you do we will not touch you but if you don’t we’ll put a low-level carbon charge on you.” When emissions did not move an iota the crunch came and it was time to implement a carbon tax. However the decision was made that theoretically an emissions trading scheme would be the better option. In March of 1999 the National Cabinet made a decision in principle to set officials in train to work on an emissions trading scheme. When the new Labour administration came into office it said that it was a bit suspicious of emissions trading and it did not want to proceed down that road. So for 5 or 6 years it worked on a carbon tax. After the 2005 election Labour abandoned its work on a carbon tax and went on with an emissions trading scheme. 
I am not trying to be precious here; I do not think parties on either side of the House come out of this shining with a great glow. There is a bit of a chequered record on both sides but that is also a commentary on how difficult this stuff actually is. In the debate on this bill I have welcomed the growing consensus that an emissions trading scheme is the right way forward. There is a pretty good consensus that it should include all sectors and all gases. We have a really important job to do over the next few months of this year to nail down the detail of what an amendment will require. An amendment bill is needed. The reality is that in this bill we picked up three of the main little mistakes that were made in the main emissions trading legislation and officials tell me that there are probably about another 20 errors that were made in that legislation that will need to be fixed up in a substantive amendment bill. 
From here we need to carefully consider the work of the Emissions Trading Scheme Review Committee and we then need to get a further amendment bill before the House. If we can build on the spirit of cooperation that we have developed on this minor bill there is a little twinkle of hope that we may be able to move New Zealand forward and have an emissions trading scheme that gets that right balance between this very challenging environmental issue and the huge issue of our economy our jobs and our certainty. 
I again thank members for their contributions to the debate on this bill. It is a bill that is required in order to be able to provide for a sensible transition of the forestry sector into the emissions trading scheme and I commend the bill to the House.