Simpson Scott; Shaw JamesHon SCOTT SIMPSON (National—Coromandel): Thank you Minister and I'm very pleased that the Opposition spokesperson at the time was able to cause such concern amongst the ranks of the officials in the ministry. This is cause for great optimism about the role of the Opposition in keeping the Government and holding them to account. But we still find ourselves here under urgency literally a few days before the first auction and passing this piece of legislation which in a previous debate my colleague Dr the Hon Nick Smith has made clear is likely to be the source of further amendment because of its rushed state. I particularly wanted to raise matters in Part 1 of the bill that go to the setting of the methodology by which the Minister will determine the confidential reserve price to be used in the auction process. There was quite a lot of discussion around that at the Environment Committee; the select committee has recommended some changes to provide a more robust approach to the setting of the methodology. But what I'm keen to know from the Minister specifically is his understanding of what will be required of the process that he will be undertaking and leading and what will be the role of his officials what will be the specific role of the Minister of Finance and will there be any other of his Cabinet colleagues involved? And I guess what I'm really seeking is some kind of reassurance that this methodology-setting process will be robust that it will stand scrutiny and that it will be one that the participants in the auction process can with confidence rely on in terms of them placing bids for what will be multimillion-dollar transactions. I think that they deserve to understand essentially what's in his head and his interpretation of the words that we are probably going to soon pass in this piece of legislation.Hon JAMES SHAW (Minister of Climate Change): So just very briefly my understanding is that officials will prepare advice as to what the formula should be. I will then consult with the Minister of Finance who presumably will also receive advice from Treasury on that. No other Cabinet colleagues will be involved in that process and we'll also as a result of the amendments that have come through from the Environment Committee—which I completely agree with—consult with the auction monitor not the auction operator as somebody previously mentioned about that and then we'll sign that off.It is also really important—I think some members have confused in some of the statements I heard in the second reading the formula with the price. So the Minister will not set the price at all but they will essentially sign off on the formula by which the price is set. It's actually the market that sets the confidential reserve price because the formula relates to what's happening in the secondary market.Hon SCOTT SIMPSON (National—Coromandel): Thank you Madam Chair and thank you Minister. There was some concern expressed at the Environment Committee as to whether indeed the Minister of Climate Change was actually the right person to be setting the confidential reserve price and I'm interested to know whether the Minister took advice about any alternatives to the setting of a confidential auction price by a process that maybe didn't involve him as Minister. The reason that people raised some concerns about it is that there is an obvious correlation between the Minister of Climate Change the auction process the involvement of quite significant financial transactions and the effectiveness and efficacy of the whole emissions trading scheme system. So this goes more to a question of I think perception but I do think that market participants and indeed the broader general public need to understand what the process was in coming to deciding that it should be the Minister of Climate Change. Was for instance there any suggestion that it might be some independent body of experts or maybe another potentially more appropriate Cabinet colleague that could do that that was—in terms of the public perception—one or two steps removed from the climate change broader debate if I can put it that way? As I say I think this goes to a question of perception rather more than reality but I do think it's an issue that is clearly of concern to some people and I'd appreciate the Minister's answer particularly to the question of whether there was consideration given to any other mechanism or person or office being the appropriate form for setting the confidential reserve price.Hon JAMES SHAW (Minister of Climate Change): So the responsibility relates to the ministerial responsibilities in relation to the regulations. So the analogy that I would draw would be the regulatory settings around the electricity market which are the responsibility of the Minister of Energy and Resources and the Minister of Energy and Resources has certain responsibilities relating to the regulations for the electricity market. So that's the analogy. So to have a Minister responsible for regulations that they aren't otherwise responsible for would be inconsistent with an approach that's widely accepted across Government. However it was felt that it made sense given the fiscal implications for the Minister of Finance to be consulted in that and I did like the Environment Committee's proposal which we've accepted as amended that the auction monitor also be consulted. So you do have through the auction monitor essentially an independent body whose job it is to look at the overall health and functioning of the market and to provide that view.