Mackey Moana: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Mackey Moana: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — Second Reading 
[Sitting date: 25 October 2012. Volume:685;Page:6218. Text is incorporated into the Bound Volume.] 
MOANA MACKEY (Labour) 
: 
 Only a National Government could pass a piece of climate change legislation that will actually see our gross greenhouse gas emissions as a country dramatically increase. Apparently on “Planet Key” you have not only its plentiful golf courses but also an emissions trading scheme that will result in mass deforestation the death of the carbon forestry sector and increasing gross greenhouse gas emissions. Apparently on “Planet Key” that makes good environmental and economic sense. Well it does not at all and Labour will be opposing this bill the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill all the way through. 
What I think people need to realise and what the Minister for Climate Change Issues clearly does not understand is that we no longer have an emissions trading scheme once this law is passed. We have a fig leaf. A fig leaf—that is all we have. I want to comment on the process as well because instead of going to a select committee for what should have been 4 to 6 months this bill went to a select committee for 7 weeks—7 weeks. The Minister did take on some consultation before the select committee process but he did not consult with environmental organisations he did not consult with Opposition parties he did not consult with concerned New Zealanders and in fact there was a lot that ended up in the legislation that was not actually part of the consultation. The select committee process was a rubber-stamping exercise from start to finish. I do want to thank the officials who worked on the bill because they were put under really unfair time pressures and time constraints. 
One of the things this bill does is it extends indefinitely the subsidies the Government has put in place for greenhouse gas polluters and it removes indefinitely agriculture from the scheme. I want to start with agriculture. New Zealand’s emissions trading scheme is designed to be an all sectors all gases scheme. It does not work if all sectors and all gases are not in the scheme. When agriculture represents half of New Zealand’s greenhouse gas emissions and the Government says that agriculture is never going to come into the scheme then the emissions trading scheme simply does not work. The Government needs to ask itself whether or not in that case the emissions trading scheme is actually an appropriate instrument for dealing with New Zealand’s climate change commitments. If it wants to keep agriculture out then that is its choice but in that case this emissions trading scheme is not the instrument that is going to help New Zealand meet its targets and the Government’s own targets. 
I want to be quite clear because the reason the Government says it is keeping agriculture out is that the cost would make agriculture uncompetitive. Well let us talk about that because no one is suggesting that agriculture should face the full cost of its emissions on day one of entering the emissions trading scheme. Under the Labour Government’s proposal which was a lot tougher than the National Government’s at a carbon price of $10—a carbon price of $10—the average dairy farm a typical dairy farm in New Zealand would have an annual cost of around $1000 per year per typical dairy farm and that is at a carbon price of $10. As of this morning UN offset units could be purchased for $1—$1. So if the Government were to bring agriculture into this scheme under this piece of legislation with its one-for-two surrender subsidy where UN offset units can be purchased for $1 and then subsidised a further 50 percent because of the one-for-two subsidy we are looking at an average cost to a typical dairy farm of $57 a year. If the agriculture sector is going to be driven over shore and made uncompetitive by an annual charge of 50 bucks a year then I would suggest that the agriculture sector has much bigger problems than the price of carbon. And it does—it is called an uncompetitive exchange rate. If the Government was really serious about helping agriculture it would do what Labour and the Greens have been talking about and look at monetary policy and the tools the Reserve Bank has for helping to control an uncompetitive exchange rate. This is not going to destroy the agriculture sector in New Zealand and agriculture should be coming into the scheme. 
Federated Farmers often make the point—and it is a fair point—that the agriculture sector is already paying a carbon cost through fuel and electricity. That is true. Well I want to know why Federated Farmers are not holding this Government to account and asking why the benefits of the low carbon price as well as the benefits of the Government’s transitional subsidies are not being passed on through fuel and energy prices because they are not. The Acting Minister for Climate Change Issues confirmed that today. He said that he just went out and asked a random man on the street in Tauranga whether or not the benefits of the low carbon price were being passed on at the petrol pump and in energy prices. He must have been talking to John Banks as that man on the street because they are not. 
I want to read to the Acting Minister the submission that we got from Gull Petroleum. What it said was “Gull notes that when it tendered to make fuel purchases from opposition oil company terminals in the Wellington Region as recently as October 2011 one of the companies priced carbon at $25 per tonne despite the market at that point being at $14 per tonne … This $11 per tonne difference between response to tender and actual market is approximately 1.5 cents per litre … Note if the same deal was offered now with the market at under $7 per tonne the effective price difference would be 2-3 cents per litre.” That is for the consumer. Well the price now is $1. No one seriously believes that those benefits are being passed on to consumers. They simply are not. 
Why is that important? It is important because this bill has serious implications for the forestry industry in New Zealand. There are two things that affect the forestry industry: one is what the bill does and one is what it does not do. Mr McClay can roll his eyes but I know that the forestry industry in his electorate is very very angry about this piece of legislation as it told me when I recently visited. The first thing it does is restrict the market for New Zealand forestry units because now agriculture does not have to purchase any units to offset its emissions and those who do have to purchase units have to purchase only half because of the one-for-two surrender obligation subsidy. So suddenly there is a much smaller market for these credits. That is not what the National Government promised the forestry industry when it was elected in 2008. It said it was going to support the industry. It said agriculture was going to come into this scheme and it did not talk about all these subsidies. 
The second thing is what the bill does not do. What the bill does not do is put any restrictions on the UN offset units which are currently priced at $1. I do not know whether the Acting Minister who gave the first speech in the second reading debate understands that there is no international price of carbon and that there is no international market. They are a series of schemes which have their own units and we accept all of them in New Zealand. All those other schemes that are currently being planned or are currently in place have restricted these units. What they have said is that a percentage has to be domestically sourced from within their own scheme and then people can go outside of the scheme. There are further restrictions. For example in Australia the next 35 percent can be sourced only from Europe or Australia so only 12.5 percent in Australia will be able to come from these UN offsets which are currently priced at around $1. So all this talk about how we just need to leave the market ignores the fact that there is no market. I am not sure the Acting Minister who answered questions in question time today and who spoke in the second reading actually understands that that is the case. 
The problem we have is that New Zealand’s gross greenhouse gas emissions are increasing. The Government is going to get up and say “Well you know what? We have met our Kyoto Protocol targets. We are on track.” Well yes we have but only because of the forestry sector. It is only because it planted enough trees to offset our growing emissions that we met the target. Without the forestry sector we are in serious serious trouble. We have the added problem that the forests that were planted in the 1990s are due to be harvested in 2020. The wall of wood as it is so called is coming down. Because of the long lead-in time for forestry—it takes a couple of years to secure the investment and go through the consenting phases then it takes 4 to 5 years for trees to start sequestering carbon at any real rate—we need to be planning and planting trees and forests now in order to undercut that wall of wood coming down and that is going to be very difficult even without this piece of legislation. 
This bill is devastating for the carbon forestry industry. I really hope that Peter Dunne does a little bit more consultation beyond the National Party on his position. I understand that he can vote for the bill—that is in line with his party policy; that is fair—but he can still support the amendment in my name that would restrict international units. That would not be out of step with his own party policy and it would be literally a lifeline for the carbon forestry industry. He needs to talk to more people than Tim Groser on this issue. He needs to talk to the very foresters who are going to be laying people off shutting down and exiting the emissions trading scheme before he puts his vote in this House to kill off the carbon forestry industry in New Zealand. 
You know what is even more bizarre about this? This restriction of international units which the National Party is battling against so hard now. Tim Groser promised that he would do this in April. In a speech to the Climate Change Iwi Leadership Group in April this year he said “The government proposes to enable in legislation the introduction of a mechanism that would place a restriction on the proportion of international units a participant can surrender to meet their ETS obligations. Under current settings there is a serious danger of NZ essentially exporting capital for no good reason resulting in a loss of economic welfare.” That is very true and the mechanism does exist. When will it kick in? If the Government is saying that at some point it will intervene—we currently have an effective carbon price of 50c you can buy UN offset units for $1 the Government will subsidise you for 50 percent and that is 50c—how much lower can the carbon price go before this Government intervenes and realises that it needs to live up to the promises that Prime Minister John Key made to the forestry sector back in 2008?