Hughes Gareth: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — In Committee Speaker Recalled In Committee 
Text is incorporated into the Bound Volume 
Hughes Gareth: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — In Committee Speaker Recalled In Committee 
[Sitting date: 06 November 2012. Volume:685;Page:6309. Text is incorporated into the Bound Volume.] 
GARETH HUGHES (Green) 
: 
 Kia ora. Nga mihi nui ki a koutou. Kia ora. In the last month we have heard extremely disturbing news from the world of science. We are hearing that the Arctic summer ice melt is happening faster and worse than scientists predicted. We have seen the impact of the super-storm Hurricane Sandy on the Caribbean and the East Coast of North America. There has been a huge economic cost and a huge people cost. Even the marathon has been cancelled there. Then in New Zealand we have seen our fair share of nature-related disasters in part caused by the more extreme weather that scientists are warning us is happening from climate change. This is having real costs for farmers real costs for horticulturalists and real costs for the New Zealand economy. 
In my second reading speech on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill I talked about my motivation for why I am voting against this bill which is my kids. I want my kids to grow up in a world with a stable climate. But what I want to talk about in this contribution dealing with Part 1 of this legislation is my motivation for again opposing this bill which is the economy. The economy is a strong reason to be opposing this bill and a strong reason why our country should be advocating greater climate change action. 
The fact is what this bill does and what an emissions trading scheme does—and we all know it is incredibly complex; very few people in the country actually understand what it is. It is an incredibly thick piece of legislation. It is incredibly complex and incredibly bureaucratic with incredible rent-seeking behaviour which we are seeing from certain sectors of the economy in New Zealand. It is something hugely complex but basically what it is is a fancy way of saying that we need a price on carbon. It is a fancy way for putting a price on carbon and trying to acknowledge that there is an economic externality which is carbon and the other greenhouse gases that impact on the climate impact on our agriculture and impact on our economy. The whole point of a carbon price is to send an economic signal through our economy. It is trying to encourage consumers to invest in low-technology appliances in their household or maybe to take the bus or walk or cycle instead of driving or maybe purchase a more fuel-efficient car. It is trying to send an economic signal to people with capital to invest in economic development so that they can invest in more efficient technology so that they invest in perhaps sustainable biofuels or woodchips for their milk dehydrator rather than digging up more low-grade dirty coal. It is about trying to affect those investment cycles. 
What we are seeing with the gutting that we have seen over the 4 years of the current Government is not the right signal flowing through the economy which is consumers investing in efficient devices and reducing their consumption of greenhouse gases. We are not sending those signals to people investing in our economy to invest in afforestation or to invest in efficient appliances. In fact we are sending the reverse message through these subsidies through the very clear signal this Government is sending to them to keep investing in dirty technology to keep investing in old-fashioned technology to keep polluting. That is the very strong economic signal this bill and the changes in this part send. Of course we can see it because we know our emissions have increased 25 percent above what our country promised—our Kyoto obligation. We are seeing it in our deforestation rates and our planting rates. We are seeing what should be a very rational very well predicted—economists obviously can and have modelled it. We are seeing exactly what you would expect which is when you send the signal to invest in old dirty polluting technology people will. 
So when we go through the history of this long debate in New Zealand the fact is that everyone could acknowledge that climate change is a severe economic environmental and social problem and a moral problem as well. We acknowledge that we need a signal on carbon to change some of those economic behaviours. We acknowledged—all the parties did—that it was a negative externality and in 2008 Labour in September of that year passed the emissions trading scheme with the support of the Greens. It was not perfect; I am the first to acknowledge that but it was essential that we sent an economic signal to send people the message to do the right thing. The fact was it was not the only lever the Government was using. There was also the thermal electricity ban work around biofuels and work around public transport. Basically the way we were and the way we are going to deal with what is probably the greatest security challenge and the greatest moral challenge of our generation is to use all the levers. You are never going to solve it with just one lever. You need to have a price on carbon you need to have community action you need to have strong regulation and you need to have people making a difference. The fact is people are making all sorts of changes to do the right thing in their lifestyles but their Government is telling them that it is not important and that it is going to continue to subsidise polluters. 
So what we see in this legislation with the significant changes we see in Part 1 is a destruction essentially of the emissions trading scheme. My colleague Dr Kennedy Graham calls it weakening it to an irrelevancy. Brian Fallow says it is putting the emissions trading scheme into an induced coma. The Parliamentary Commissioner for the Environment calls it toothless and a farce. And Rod Oram I think says it most bluntly of all which is: quite frankly you are killing it. The fact is that what we are seeing in the changes in this bill in Part 1 is more offshore sham credits flooding our market. We are seeing some firms if they are trade-exposed firms covering only 5 percent of their carbon costs. So for a firm with say a million dollars in pollution-related expenses the cost for it is $200. That is a subsidy. We can have a debate with the Minister for Climate Change Issues and the Government benches about what a subsidy is but the fact is that the taxpayer is picking up the tab—the taxpayer is paying—and if that is not a subsidy I do not know what is. We are sending the wrong message. 
We are seeing the changes in this part of the bill maintain those one-for-two surrender obligations past 2012. We are seeing that $25 price cap maintained indefinitely. We are seeing agriculture’s inclusion put off indefinitely. I mean that is half of our country’s emissions. We can rail against what other countries are doing or not doing on climate change but the fact is that in New Zealand where half of our emissions are coming from the agricultural sector we are not taking the responsible step. In fact we are taking the wrong step because we are not sending those signals to those farmers to invest in new efficient milking sheds or nitrification inhibitors or different ways of nitrogen and fertilising budgeting and it is good to see Supplementary Order Paper 147 which deals with this. But the fact is that there is a whole bunch of negative changes weakening and destroying the emissions trading scheme. It is good to see that my colleague Dr Kennedy Graham has a number of very common-sense and smart incentives to actually put our economy on the right foot. I guess the first thing is his amendment to clause 5 which actually puts it on a science footing. What we are not hearing from the Government benches of course is the science rationale for why it is making these changes or how they will impact our gross and net emissions or what it is going to mean for the climate. 
We are seeing that Supplementary Order Paper 147 in Dr Graham’s name inserts new section 69B which is putting the trade back into what is called a cap-and-trade scheme. We are seeing in subsection (3) an actual floor—a $10 floor—to the price of carbon. And of course we are seeing a restriction on the international units. What we are seeing through our economy is in fact a worsening of economic conditions. Our current account balance is going to continue to deteriorate. We are sending New Zealand dollars—our hard-earned New Zealand dollars—offshore to buy these sham offshore credits. We are sending the message that we are going to purchase other people’s emission reductions not ours. We are investing in less efficient appliances meaning we are importing more fuel. I mean this is the biggest strategic threat to our macroeconomic situation—this $8 billion fuel bill which is just not going to reduce under this legislation. We are seeing a worsening of economic conditions. 
What we are seeing through this bill is New Zealand losing and continuing to lose that green race as our most successful business leaders are warning us. For example I was reading about a wave-powered device that not the New Zealand Government but the US Department of Energy is funding and trialling off its coast. I was also reading today about the wonderful things New Zealand is doing for solar power in Tokelau. That is wonderful and I totally support it but why on earth can we not do some good things about solar power in New Zealand? We are seeing changes to electric cars. I have just met a fellow last week who cannot get a meeting with this Government. He is a world leader in electric car technology. He is being flown by President Obama to meet him at the White House but this Government will not do it. So the economic signals that this bill sends and the direct actions this Government is taking are sending Kiwis the wrong messages. 
Hon Trevor Mallard 
: Stick him in a red jersey. 
GARETH HUGHES 
: Stick him in a red jersey and he might get a call with the Prime Minister—maybe an apology. The fact is that we spent a billion dollars in the last financial year on these subsidies these emissions trading credits. All the seismic surveys all the picking winners—in the oil and gas sector the fact is that we are flogging off the energy assets. 
We could actually be addressing climate change. We could be using the amendments that Dr Kennedy Graham has put forward to switch our economy. We could keep our assets super-charge them and we could be a world leader not only in addressing climate change but in exporting clean green technology. The world is crying out for it. In fact in the last year international investment in clean energy outstripped that in fossil fuels. It is like we are looking to the past for our economic rule book when we should be looking to the future. The clean energy market is predicted to be an $800 billion industry yet we are moving away from it. We are doing everything possible to tell New Zealand businesses and Kiwis not to invest in clean energy and not to develop the expertise to export and manufacture what is surely going to be the 21st century’s economy. We are telling them to continue to pollute. It is bad for our economy. It is bad for our environment. It is bad for our kids and their future. We should do the right thing because it is the right thing but we should also take action on climate change because it is in our economic self-interest. Kia ora.