Fitzsimons Jeanette: Climate Change Response (Moderated Emissions Trading) Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Fitzsimons Jeanette: Climate Change Response (Moderated Emissions Trading) Amendment Bill — In Committee 
[Sitting date: 24 November 2009. Volume:659;Page:7994. Text is incorporated into the Bound Volume.] 
JEANETTE FITZSIMONS (Green) 
: 
 I will begin by just briefly awhi-ing the Maori Party which is a membership-based grassroots party like the Greens. We know what that means. We know that it leads to some difficult internal decisions. We know what it is going through at the moment. The Maori Party members should not withdraw their votes because Labour has asked them to and they should not withdraw their votes because the Green Party has asked them to; they should listen to their members and do what their members are asking them to do because that is who they are accountable to. 
I want mainly to talk now about what I think is the primary reason for the unease that is being caused to members of the Maori Party to the Greens and to most other people who oppose this legislation. It all comes down to the intensity basis for the allocation. That is what creates the huge inequities and the huge debts going forward into the future that this legislation creates. There has been a lot of talk about the phase-out rate of free allocation. Nobody seems to have twigged that under this legislation there is no phase-out. The 1.3 percent is a complete mirage. Any industry getting an allocation that grows by more than 1.3 percent a year gets no phase-out at all. 
Let us look at the dairying industry for a moment. Dairying output has been growing by 4.4 percent a year recently. That is a huge rate of growth and the National Government and Fonterra want it to go on for ever. I do not know where they will put the cows I do not know what they will do about the rivers etc. but the fact is that is its output growth and the free allocation depends on output. So we will get a 4.4 percent increase each year in the basis for the allocation then a 1.3 percent decrease leaving—if my school maths serves me well—a 3.1 percent increase in free allocation to the dairy industry every year. There is no phase-out. If Comalco manages to increase its production by more than 1.3 percent a year it gets no phase-out either. If Methanex manages to ramp right up to full production in two plants it gets a massive increase as well. The free allocation goes on then for ever. 
The key difficulty with it is not what happens in the next few years. It is not about how much we might help people with sunk investment in existing plant transition to a new world. What it means though is that new investment decisions—people building new plants that will be trade-exposed or existing plants significantly expanding in the trade-exposed area—will not take the price of carbon into account in making those investment decisions. Investors who are looking at a choice between a low carbon investment and a high carbon emissions investment will have no encouragement at all to take the low carbon investment because the intensity-based allocation says “You go for it and the taxpayer will cover 90 percent of your increase in emissions virtually for ever.” 
The other thing the intensity allocation does is it takes away what limited cap there was in the existing legislation. We had some argument previously between the Minister for Climate Change Issues and David Parker about whether there was a cap in the existing Parker legislation. In a sense there was and in a sense there was not. The Act that is law now has no cap on emissions. Emissions can continue to grow but at the full cost of carbon. What it does cap is free allocations and that is what creates the full cost of carbon for growth in emissions. But that cap on allocation is taken away in this legislation so in this bill neither emissions nor free allocations are capped. There is no sense at all in which it could be called a “cap and trade” scheme. 
Let us go back to the fisheries management system of individual transferable quotas which is often held up as the ideal “cap and trade’” system. Imagine a fisheries system with no total allowable catch: fishers had quotas and could trade them but there was no total allowable catch. That is how stupid this is.