Shearer David: Energy (Fuels Levies and References) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeShearer David: Energy (Fuels Levies and References) Amendment Bill — In Committee[Sitting date: 11 February 2015. Volume:703;Page:1500. Text is incorporated into the Bound Volume.]DAVID SHEARER (Labour—Mt Albert):I want to just carry on where Stuart Nash left off because I think he is absolutely right. There is an enormous amount of sensitivity around putting up petrol prices. Yes it is only 0.045c a litre—it is only 3c a tank of gas or if you have one of the gas-guzzlers like the National Party members drive probably closer to 10c—and it is nevertheless a small amount but it is very sensitive right at the moment. We have seen in recent weeks the price of petrol falling but falling slowly. When the New Zealand dollar fell immediately—the day after the New Zealand dollar corrected—the price of petrol went up again. I think there is something that we need to be looking very very closely at here. We need to look at exactly who is extracting that margin—the petrol companies the retailers the wholesalers whoever it is—and make sure that the consumer is getting a decent deal because I do not believe that right at the moment they are.The AA—the Automobile Association not Alcoholics Anonymous—has been following this very closely and has been doing a great deal of work in this area and due credit to it for doing that. Even the Automobile Association was saying particularly with the price of diesel that it could not understand why the price of diesel had not come down further and why the price of diesel had gone up as quickly as it had once the New Zealand dollar had started to fall and therefore the cost of our imports started to rise. So this is a very sensitive issue.I want to agree again with Stuart Nash when he said that we need to watch this very closely. What we do not want to see is that the next minute we turn around and say that actually petrol prices have gone up and it was partly due to the Government to Parliament agreeing to put an extra condition or an extra tax or an extra levy on our petrol. That is certainly not the case when we are looking at 0.045 cents a litre—less than half a cent a litre.The Labour Party has supported this bill because it is part of our treaty obligation. We acknowledge that. We acknowledge as part of our agreement with the International Energy Agency and article 2 in particular that we need to have in place a 3-month buffer effectively that will enable us to have the safety of supply that we need. But it also goes a little bit further than that. It also enables New Zealand along with other countries to be able to effectively look after ourselves so that oil-producing countries do not spike supply as they have done in the past certainly in the 1970s. So this gives us a little bit of a breathing space while action can be taken should that happen with one particular big supplier for example.So it is part of our international obligation. As an international citizen we adhere to that we play a big part in that and we will go ahead with it and that is the reason. Certainly as foreign affairs spokesperson I am in agreement with why we should sign up to this and agree with the Government on this. This is not a club. This is not one of those clubs you join when you want to embark on an international expedition into a war zone. It is not a club; it is a treaty and we have obligations under that treaty. Just on that I think that in the debate on the Prime Minister’s statement the Minister of Defence today was wholly—wholly—unconvincing about the rationale for wanting to go into Iraq not understanding whether they could make a difference—The CHAIRPERSON (Lindsay Tisch): Order!DAVID SHEARER: —or have any idea of how they were going to get out.But coming back to the bill as I say the costs of maintaining this degree of backup in this treaty have gone up. This bill provides a smoother way of being able to recognise the way that those costs have gone up by allowing an Order in Council and the Minister to be able to set the levy rather than it having to come before Parliament. It is a much more efficient way of doing it. However of course we will be keeping a close eye on what the Minister does because we do not want to give the Minister carte blanche to just raise prices whenever he fancies doing that.I thought the regulatory impact statement was a good one. It was thorough and it went and looked at many of the other options besides this particular option to increase the levies. I just want to run through those really to reassure the public that this has been looked at. We understand we have these obligations and we understand we want to be part of this treaty; therefore we must meet those obligations. The various options that were looked at were whether we should embark on this treaty through ticket contracts effectively through a process of ensuring that we have the requisite amount of fuel essentially stockpiled or whether we should do that domestically. That was looked at and it was decided that the domestic stockholding was not a feasible option. It was not as efficient as using the ticket contracts. It certainly had much greater overhead costs in terms of what it would have imposed on New Zealanders and so as a result of that the Ministry of Business Innovation and Employment went with the ticket contracts.The ministry then looked at the obligations and who should be responsible for fulfilling those International Energy Agency agreement obligations—whether it should be the oil industry or whether it should be the Government. It was decided that given that the Government was able to enter easily into international treaties and for various other reasons it was a much better way of going about this rather than imposing those costs on the oil industry which obviously in turn would pass them on to consumers. The ministry then looked at how the costs of these obligations our agreement obligations should be funded and whether we just pass it through Crown funding or a fuel monitoring levy. The best system was that it would go through a funding ticketed regime generated by a monitoring levy.So I think there has been a good deal of work done on this as Clare Curran said in the Commerce Committee. There were some good although very few submissions made to the select committee. The bill was looked at in some depth. There were good questions asked and in front of us here we have the end result of that in the Committee stage. I think we have reached a pretty good point with where we are and that is the reason the Labour Party has supported it.But I just want to add before I finish my support for Dr Megan Woods’ Supplementary Order Paper 45 to exempt biofuels because I think she is absolutely right. Biofuels are the answer. They might not be seen by this Government as being the answer but this Government is unfortunately intractably tied to tired old thinking when it comes to the oil industry and alternative fuels. Unfortunately the support for biofuels was cut immediately when this Government came into office in 2009 and that effectively killed our biofuel industry. As Dr Woods said Scion our forestry research institute has done some extraordinarily good work in turning forestry waste and forest land into an ability to produce a biomass that would be able to support a biofuels industry. I think that that should get as much encouragement as it possibly can and that by giving an exemption to the biofuels industry in this bill as we have done for jet fuels—85 percent of all fuels I think are covered by this levy but jet fuels are not—we could do exactly the same with biofuels with very little problem and that would enable us to send a very strong signal to the biofuels industry that this is an industry of the future it is something that New Zealand has comparative advantage in and we should be able to support it.