Chauvel Charles: Climate Change Response (Moderated Emissions Trading) Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Chauvel Charles: Climate Change Response (Moderated Emissions Trading) Amendment Bill — In Committee 
[Sitting date: 24 November 2009. Volume:659;Page:7987. Text is incorporated into the Bound Volume.] 
CHARLES CHAUVEL (Labour) 
: 
 I want to talk about the issue of phase-out for industry and agriculture because I have tabled Supplementary Order Papers that would deal with this issue. They set out a position that I really wish the Minister in the chair Dr Nick Smith would consider in light of the comments he has just made about the unlikelihood of the 1.3 percent rate surviving. One of those Supplementary Order Papers changes the phase-out of free allocation to industrial emitters to a defined 18-year phase-out with all assistance ending in 2030. It does that by amending clause 22. It inserts new sections 82 and 85A into the Act. The phase-out rate is too slow. One of the problems is that there is no specified date at which allocation will end. Under the existing legislation in force now there would be a phase-out of all free credits by 2030 but under the Climate Change Response (Moderated Emissions Trading) Amendment Bill there will be an indefinite continuation of free credits. 
Hon Dr Nick Smith 
: Same as Aussie. 
CHARLES CHAUVEL 
: We have a completely different emissions trading profile from Australia. 
Hon David Parker 
: Because they’re wrong doesn’t mean we should. 
CHARLES CHAUVEL 
: That is a good point. Just because another jurisdiction is doing something that is flawed does not mean that we ought to copy them. That is one of the problems with harmonisation. I said to the Minister earlier half-jokingly that it might be the end of the career of the Liberal Party today or the next day thanks to the stance he has taken—which I happen to agree with—on its Carbon Pollution Reduction Scheme. It just shows the folly of harmonisation which is another argument that we will have to have. David Carter was reported as saying the other day that the Government plans to provide free credits for agriculture for 90 years. That seems to be pretty close to the truth given what others have said. The 1.3 percent per annum phase-out rate for free carbon credits means that taxpayers will still be funding over half of the emissions for high-intensity industry in 2050. According to the Parliamentary Commissioner for the Environment the phase-out rates will stop the Government from achieving its 50 percent reduction target by 2050. The effect of this absurdly slow phase-out rate on free emission rights compared with the status quo is shown in a couple of graphs in the Labour Party minority report. 
The comparison between the phase-out of the existing scheme and the scheme that the Minister proposes is quite instructive. Members will see on this graph the point where all assistance would phase out under the current scheme and under the amendments that the Minister proposes. Basically for high-intensity industries it continues indefinitely. For medium-intensity industries it continues for a long time. 
Compare that with another graph I have here which shows the situation under the Waxman-Markey Bill which is the leading proposal in the United States. One can see that at 2030 there is a very steep phase-out for all assistance. For all the Minister likes to say that he proposes the same sort of thing that is being done by our trading partners and our competitors it is actually not so because of the design of these amendments. 
It is not just industry where we need to be concerned about the phase-out. There is another Supplementary Order Paper dealing with agriculture. Again the Supplementary Order Paper phases out all assistance for agriculture by 2030 consistent with the industrial allocation amendment that I have just spoken about. It would also return the entry date for agriculture into the scheme to 1 January 2013 rather than 1 January 2015. This is an essential amendment for fiscal responsibility because it is the ridiculously generous allocation to agriculture in the amendment that causes the blow-out in the accounts that we have had so much debate about in the House and which is so unjustified. 
This assistance as David Carter told us will go on for another 90 years. The country cannot afford it. The Minister has admitted that it is unlikely to survive reviews. Why on earth we are enacting it and sending the signal to the market that cannot simply be maintained beyond the next review period is beyond members on this side of the Chamber. It is useful to recall what was said by the select committee on this topic. We said in our minority report that there should not be a change to the current entry date into the emissions trading scheme for agriculture of 1 January 2012. We all know the argument: agriculture contributes nearly 50 percent of all New Zealand emissions. However under this bill the agriculture sector is required to be responsible for only 4 percent of the total costs of meeting our international obligations. There cannot be any policy justification for delaying the date of entry for agriculture or not dealing to the phase-out.