edithatogo/nz-hansard-corpus huggingface dataset:
Warren-Clark AngieANGIE WARREN-CLARK (Labour): Thank you Madam Speaker. I rise to take a very brief call in regards to the Climate Change Response (Auction Price) Amendment Bill. Now we've heard a lot from a lot of people in this House. We've been in urgency for quite some time so it will be a brief call. However I do want draw the attention back to climate change and I want to quote Sir David Attenborough. He said Many individuals are doing what they can."—that's many individuals are doing what they can—"But real success can only come if there is a change in our [society] and in our economics and in our politics." I think this is what this bill is doing. It is indicating or heralding a time where we are going to make a change to trending towards a low-emissions economy.It's so important because climate change is one of our biggest challenges that we have. We have stood and many of us spoke on the very complex zero carbon bill in the 52nd Parliament. I have to say that this is another one of those very pointy-headed parts of legislation that are not necessarily enjoyable when you are participating in the process but they're really important. They're really important as a price indicator for us all. They're really important about giving some alternative options around the alternatives around finances. So this bill amends the Climate Change Response Act 2002 and the Climate Change (Auctions Limits and Price Controls for Units) Regulations 2020. It is a good bill. It is based on making a real and active change for our society and I commend it to the House."
Sage EugenieHon EUGENIE SAGE (Green): Kia ora Madam Speaker—thank you. Can I thank members of the Environment Committee for the collegial approach to the Climate Change Response (Auction Price) Amendment Bill. I am really disappointed that the National Party is choosing to vote against the bill at this stage because I had understood that they supported the concept of having a confidential reserve price and that they recognised the benefit that that would bring to the auction system. It does seem just because of the amendment having failed they are now voting against it. So that is very disappointing. I would remind the National Party that while they and ACT are objecting to this bill it was the major work that Minister Shaw as the Minister of Climate Change did last year with the Parliament to actually rectify the major shortcomings in the emissions trading scheme (ETS) that National had failed to fix—the fact that we had all of these international units coming in totally undermining the integrity of the emissions trading scheme so that the reforms that this Government have put through have been about improving the scheme. Everyone recognises—except ACT—that we need a confidential reserve price so why not support it?The whole basis of this bill the basis of the Government's reforms to the ETS is ensuring that we have a predictable price on emissions so that business can have that stability can then invest long-term in the technologies and in the manufacturing methods to reduce emissions. Under National the ETS was not working to reduce emissions. If we are serious about climate change which this Government is we needed to reform the ETS and that is what this Government has done at the earliest opportunity.This bill through the introduction of a confidential reserve price through the changes that the select committee has recommended and that have been put into the bill having the Minister consult with the auction price monitor having to review the methodology if the units don't clear because the confidential reserve price means they don't go above the clearing price—these are good changes. This is a good improvement to the ETS. This Government is about being serious about climate change getting our emissions down and this bill helps to do that. I commend it to the House.
Kanongata'a-Suisuiki Anahila; Salesa JennyANAHILA KANONGATA'A-SUISUIKI (Labour): Thank you Madam Speaker. It's always a privilege and an honour to stand in this House but in this particular kōrero about the Climate Change Response (Auction Price) Amendment Bill I take it seriously to stand and make a short call because I feel like all has been said tonight and I want to make a short call. So I want to acknowledge the Minister for his leadership on making it his priority to bring this into the House before 17 March when the auction kicks off. I want to acknowledge the chair of the Environment Committee for her eloquent leadership of the committee.We've heard today from the other side that it is a collegial committee and that we are very respectful and understanding of each other in these matters and then on the other hand they disagree with the bill the final reading. So I'm saddened to hear that we are no longer collegial in that part. I acknowledge that there were over 20 submitters that had made submissions to the select committee and I want to say thank you for making those submissions even though in this unprecedented time they had to be agile in using technology. So can I just remind—the purpose of the confidential price is to ensure that a particular auction does not clear significantly below the secondary market price to ensure the auction does not unduly influence the market. So it went to select committee and from the select committee it improved the bill. So there are some arguments saying that Well we needed more time" but actually the select committee after hearing from officials after hearing from submitters—we actually did make some improvements to the bill. It ensures that the Minister in setting the methodology consults when that person is appointed the independent auction monitor. And if at secondary market the auction goes—the confidential reserve price is not met and they are not sold the Minister must review it. Well actually one step further—the Minister must consult the Minister of Finance and then if it's unresolved the Minister must review it. So that's what happened at select committee—that we improved the intention of the bill. And as was said by members of the committee we were all very collegial and we all agreed to it. So I want to thank them for that agreement at select committee. I think that all has been said and I want to—the words that have been used around indigenous the words that have been used around the trees—all those things. The word that comes to mind when we talk about climate change is he waka eke noa. The thing is that in contributing to that we must—we must—make sure that we set a fair price that we do not undersell what rightly belongs to everybody. So on that note I want to commend this bill to the house. ASSISTANT SPEAKER (Hon Jenny Salesa): The next call is a split call."
Coffey TamatiTĀMATI COFFEY (Labour): Thank you Mr Speaker. The member for Coromandel needs to cheer up—cheer up! And I would suggest that maybe he wants to go and find something to go and watch. Maybe he wants to go and watch Harry and Meghan and maybe that's the reason that he's so fired up about this. But he needs to cheer up because this is a positive thing and in fact I've heard time and time again from the other side of the House that the time frame is the issue. But you see that's not the issue. The issue is climate change. The issue is that we have islands around the world that are sinking—not too far from us actually. And actually we need to treat this with the urgency that people that are going to be affected by climate change—e.g. the people of the Coromandel—deserve.Talk to our rangatahi—talk to them the ones that are striking out there in the streets. They're the ones that are passionate about this and they're the ones that are saying that we're moving too slowly as a Government. So I take issue with the idea that we've moved too fast. Some people say that the wheels of Government move incredibly slowly but we are nimble enough to be able to move and this is one example. Again the big picture—what is the big picture? That we tackle climate change and the effects that it's going to have on all of us. We want a sustainable future. We want to be able to invest in renewable resources. It is a very small—today's bill that we are pushing through Parliament is a very small part of a very big equation and we need to be focused on the big picture right here. So for that reason I commend this bill to the House.
Brooking RachelRACHEL BROOKING (Labour): Thank you Mr Speaker. I'm so pleased that everybody in this House and everybody in the select committee agrees that we need a really good emissions trading scheme (ETS). And I agree with Stuart Smith who's on the Environment Committee with me that we did have a very good process and everybody worked hard to understand and then comment on what is a very narrow bill. So we're not discussing all of the ETS here just this very small part of it.There's been quite a bit of discussion today about who the Minister consults with and that's important. So one of the things I'm very proud of in the select committee is this amendment that means that as well as the Minister of Finance the Minister can also consult with an auction monitor. Minister Shaw mentioned in the committee of the whole House stage—he referred to section 30GD of the Act and this is the bit about what an auction monitor is or can be. So they're to be independent. They have functions that include validating auction results publishing reports on the results of auctions and they can also monitor conduct of the auctions. They can make periodic assessments and report back on those and make suggestions and they can do calculating of metrics. So that's a good independent role. The Minister's got to consult with them as well as the Minister of Finance.Many submitters—we heard in the committee stage in particular about submitters who opposed this bill but there were also many who supported it. One from OMF said A carbon auctioning system without a confidential reserve price … is flawed." So I'm very happy to be supporting this bill today. Thank you."
Rurawhe AdrianClauses 1 and 2CHAIRPERSON (Adrian Rurawhe): Members we now come to the debate on clauses 1 and 2 which is the debate on title and commencement. The question is that clause 1 stand part.A party vote was called for on the question That clause 1 be agreed to.Ayes 108New Zealand Labour 65; New Zealand National 33; Green Party of Aotearoa New Zealand 10.Noes 10ACT New Zealand 10.Clause 1 agreed to.CHAIRPERSON (Adrian Rurawhe): The question is that clause 2 stand part.A party vote was called for on the question That clause 2 be agreed to.Ayes 75New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.Noes 43New Zealand National 33; ACT New Zealand 10.Clause 2 agreed to.CHAIRPERSON (Adrian Rurawhe): The question is that the Schedule stand part.A party vote was called for on the question That the Schedule be agreed to.Ayes 75New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.Noes 43New Zealand National 33; ACT New Zealand 10.Schedule agreed to.House resumed.CHAIRPERSON (Adrian Rurawhe): Madam Speaker the committee has considered the Climate Change Response (Auction Price) Amendment Bill and reports it without amendment. I move That the report be adopted.A party vote was called for on the question That the report be adopted.Ayes 108New Zealand Labour 65; New Zealand National 33; Green Party of Aotearoa New Zealand 10.Noes 10ACT New Zealand 10.Motion agreed to.Report adopted.
Climate Change Response (Auction Price) Amendment Bill — In Committee — Part 2
Shaw JamesHon JAMES SHAW (Minister of Climate Change): First of all I want to thank the member for taking the time to draft the amendment and I do acknowledge that having a partial sale is a valid alternative in terms of how you might approach it but it does introduce other risks into the functioning of the market and to the purpose of the emissions trading scheme (ETS).We were talking before about the oversupply. So there's about 120 million units sitting inside private accounts right and you compare that to the volume of trade that we're looking at here where each auction will put forward just over 4 million units. So you've got essentially that large supply of 120 million out there and it's really important to understand that one of the purposes of having an auction is to respond to demand signals that are provided by the market as a whole and not to meet the individual needs of bidders. Of course you will have—and we did have—a number of companies that made submissions from the perspective that they are coming from which is their own individual needs but if we were to design the market in that way you wouldn't necessarily get the level of functionality that you're looking for. So there is essentially a different incentive for the market regulator than there is for the market participants. So that's a fundamental difference.Partial sales do risk promoting unnecessary supply into a market where there is essentially insufficient demand. So if you don't get that clearance what that is suggesting is that the market as a whole doesn't have the level of demand that the market regulator says OK well we'll release those units for sale in that case." So that would be detrimental to the overall functioning and purpose of the emissions trading scheme. It's worth noting that the European ETS has exactly the same functionality so they have this sort of no-sale provision if the lowest price doesn't clear. So if the market doesn't clear then that doesn't go ahead. They've had 1000 auctions approximately in the history of the European Union ETS and only on three occasions out of 1000 has the price failed to clear and no units get sold into the system. So we are mirroring a much more well-established much larger market and in a tiny fraction of a fraction of their auctions has there ever been a situation in which they've chosen not to sell those units into the market because the price hasn't essentially been sufficient to demand it.Whilst a partial sale model is valid and was considered it was felt that actually ultimately we would fall on the side of where the evidence lay in terms of the European Union example and given some of the other risks that it would have. So on that basis—I know that this was canvassed in the select committee and didn't make it through—we won't be supporting this Supplementary Order Paper either."
Smith StuartSTUART SMITH (National—Kaikōura): Thank you Mr Chair. I rise to support Supplementary Order Paper (SOP) 15 in the name of Simon Court who has just taken his seat. I think it's a great Supplementary Order Paper that you put together Mr Court. Actually this issue was raised by submitters in the select committee and actually we were never really satisfied with a reasonable answer as to why we wouldn't allow the auction to clear if it met the criteria but the highest bids didn't take up all of the amount that was put up for auction. I think it's good to allow those people to get the units that they're after so I think it's a very sound SOP and I think that the Minister should get to his feet and say why that isn't being adopted if it isn't. He hasn't said he is not going to support it; perhaps he is. I think it's a very good piece of legislation. This really comes down to a matter of opinion and the matter of opinion is that of the officials not of the Minister or the politicians. The politicians are the ones that actually have to answer for bad legislation not the officials. I think this is a political decision and it's not the right one unless we actually support this SOP. So I'd really like to hear from the Minister whether he is going to support it and if he isn't why not because I think we deserve a sound explanation as to his reasoning. Thank you.
Shaw JamesHon JAMES SHAW (Minister of Climate Change): Thank you Mr Chair. I'll just start with the question that Simon Court raised about the recommendations of the Regulations Review Committee. There was a concern there about whether there should be more safeguards. That was actually in the report which was that they recommended that the Minister be required to consider independent advice from any auction monitor once appointed when setting the methodology and that of course has made its way into the bill. So that concern was addressed through the select committee process. Speakers from the National Party have repeatedly said that they consider this to be more of a tax than an emissions trading scheme or that it is moving from being an emissions trading scheme towards becoming a tax. That is an assertion without any grounding and no one has yet explained why it is a tax as opposed to an emissions trading scheme. The extent to which it is either a tax or an emissions trading scheme falls well outside the scope of this bill. This bill is extremely narrow and focuses on whether or not there should be a confidential reserve price inside the auction mechanism. It's also a false equivalence to use national security legislation for the purposes of market regulation. I am aware of the clause in that regulation. I sit on the Intelligence and Security Committee that's chaired by the Prime Minister so I am aware of it and I'm aware of the long tradition of how that's managed but security intelligence is not market functioning. The two are not even close. If the member could find a piece of market regulation anywhere in which leaders of political parties are consulted on the nature of that regulation I will be very impressed. I know there's not a lot of time left but you could always ask the library to see if there is anywhere a piece of market regulation that requires consultation with other political parties about the nature of that regulation. Going further the question is: why would you do it over just this? If you were to have political party consultation on the regulations why would you confine it to just the confidential reserve price? Why wouldn't you do it for the many dozens of other components of the regulatory environment and then why would you stop at the emissions trading scheme? Why wouldn't you also do it for the electricity market upon which much of the design of this is based? It is really outside the boundaries of what's appropriate in terms of how Governments set regulation. So I have considered it and reconsidered it and I will not be supporting the amendment.
Rurawhe Adrian; Shaw JamesCHAIRPERSON (Adrian Rurawhe): Ka te rā tēnā rā tātou katoa. Members before the dinner break we were debating the Climate Change Response (Auction Price) Amendment Bill. Stuart Smith had just finished so I'll take a call. Hon JAMES SHAW (Minister of Climate Change): Thank you Mr Chair. So just to the point that Mr Smith was making before the dinner break about whether or not I'd taken advice on consulting with the Opposition again I just want to draw the analogy back to the electricity market or in fact any of the other regulated markets that the Government has a hand in where that would be essentially an historical practice. The Government of the day sets regulations and in his comments Mr Smith suggested that we'd be consulting with the leader of the National Party the leader of Te Paati Māori and the leader of the ACT Party. Of course that is only true in this parliamentary term. It could well change and in fact it is likely to change in future parliamentary terms. So I don't think that you would say to any Government that having a mechanism where one small part of one market would be a function of consultation between political parties as opposed to any of the other parts of that market or any other market that the Government is responsible for regulating.
Edmonds BarbaraBARBARA EDMONDS (Associate Whip—Labour): I move That the question be now put.Motion agreed to.
Bennett David; Shaw James; Dean JacquiHon DAVID BENNETT (National): Thank you Madam Chair; just a couple of questions. So if the Minister is talking about market price like that does the Minister agree that the carbon price actually influences the forestry market and planting?Hon JAMES SHAW (Minister of Climate Change): Well of course the carbon market determines forestry plantations but that's well outside the scope of whether or not there's a confidential reserve price in the emissions trading scheme.Hon DAVID BENNETT (National): So one part of the primary industries has a confidential minimum price that producers would be able to achieve. Is that not true now?Hon JAMES SHAW (Minister of Climate Change): So foresters don't auction units into the system; it's the Government that's auctioning units into the system.Hon DAVID BENNETT (National): Yes but foresters get paid don't they for their units?Hon James Shaw: Yes.Hon DAVID BENNETT: On the price that's set at the market?Hon James Shaw: In the secondary market.Hon DAVID BENNETT: Yes and this influences the secondary market price doesn't it?Hon James Shaw: Yes.Hon DAVID BENNETT: So the Government effectively influences the secondary market price which is the price a forester will get for the product that they produce isn't it?Hon JAMES SHAW (Minister of Climate Change): Look I'm not sure where the member's going with this. So New Zealand is unusual in having forestry units in the emissions trading scheme and a number of other schemes don't have that at all. If you didn't have foresters being essentially able to say We're going to draw down carbon dioxide out of the atmosphere" that would make the emissions budgets even harder to reach. And you could argue that therefore an emissions unit would be even higher as a result because you wouldn't have that ability to net off at any point in the system.Hon DAVID BENNETT (National): Yeah I understand that. I just asked the question. So if a forest owner that's selling credits into the market or getting the carbon price that is on the secondary market and that price is now effectively influenced by the Government policy?CHAIRPERSON (Hon Jacqui Dean): The member David Bennett will sit if he's not using his call."
Shaw JamesHon JAMES SHAW (Minister of Climate Change): I'll take those issues raised by Simon Court and Stuart Smith together. They all fall outside of the scope of this bill because this really is just to do with a mechanism inside the auctioning system and it doesn't preclude any future decision about the use of international units or the way that those might come into the system at all because really this bill just deals with that very small matter of the confidential reserve price in the auctioning system. And so in relation to this bill no I have not taken any advice on international offsets.Stuart Smith: Any at all?Hon JAMES SHAW: Well that would be outside of the scope of this bill. Some of the questions that Mr Court raised were about collateral and the ability of essentially small operators to be able to access the market. Again those are unaffected by the presence or absence of a confidential reserve price in the auctioning system. They speak to wider design principles of the emissions trading scheme and I'd just like to say that I think that he will have plenty of opportunity to debate those in this House subsequent to the passage of this bill.
Smith StuartSTUART SMITH (National—Kaikōura): Thank you Madam Chair. Minister Shaw mentioned the oversupply and how the auction would work and cope with the oversupply—that was very helpful; thank you very much. I wonder though—given that we might have a supply and it might take 10 years to run down; the Climate Commission mentioned in their report their concern about too much forestry and restricting it to just 380000 hectares—if the Minister took advice on whether international offsets could be bought by the Government and auctioned through the auction system primary market. As the Minister will be aware—and I think it was mentioned earlier by someone anyway—about the much cheaper price for offsetting offshore I think that there will be a time when we will need international offsets. And one way to bring them into the market and to satisfy that demand but to manage it through the Government's process would be to introduce it through this mechanism thereby selling at a premium and some way of then the Crown recycling that capital through all sorts of ways—perhaps the way that it's done in Canada where it goes back on a per household basis or some of those sorts of things. I get that's outside the scope of this bill but this could be the mechanism to do that. Does this bill allow it? Is there anything precluding those international units going through this mechanism and did the Minister seek advice on that and was there anything that we should know about that was raised as a result of that?
Court SimonSIMON COURT (ACT): Thank you Madam Chair. To the Minister: so the ACT Party supports a fully functioning emissions trading scheme and while the bill as presented to the House does not yet represent that—it does still fall short of that objective—we believe that any improvement to the functioning of the emissions trading scheme is desirable. So that's why we've tabled an amendment which addresses a lot of the risks that some of the other members have addressed have spoken about: the risk that should the auction fail to clear should the bidders bid above the reserve price but not enough of them bid above the reserve price—so the entire volume of New Zealand units does not all clear—CHAIRPERSON (Hon Jacqui Dean): Order! If the member could confine his comments to Part 1 and when he's addressing his amendments do that under Part 2 of the bill. SIMON COURT: Thanks very much Madam Chair. So in terms of Part 1—just let me get back to the first page—the principal Act which allows for the emissions trading scheme and for the auction of these credits does still have some flaws which need to be addressed. Some of the submitters raised issues around the confidential reserve price which we'll get to. They also raised issues relating to the functioning of the bill such as the need for bidders to provide collateral to be able to—they're required essentially to put up 20 percent of their bid and what that means is that is a drain on working capital for their businesses. So we did hear from officials that those costs hadn't fully been taken account of when designing the Climate Change Response (Zero Carbon) Amendment Act and this Climate Change Response (Auction Price) Amendment Bill but that in future they would do something to address that. We would hope that the submissions from those organisations who do have a large stake in the emissions trading scheme are taken heed of at select committee and in future when future amendments are brought. But also there are a number of smaller what you'd call mom and pop organisations and these are people that we might not consider unless we've been there—places on the West Coast or in the South Island where a small family-owned coal mine might supply a single dairy company and their operation for example or a sawmill. So they're not intended to be big players in this auction process but they rely on other carbon traders to make trades on their behalf. One of the risks that was raised by those carbon traders—people who are experienced in working in these markets—is that they may not be able to secure the units for their smaller clients at auction and that they may therefore be forced into a disrupted secondary market. For that reason they were asking for more than the considerations which officials and the Environment Committee were able to give them.But I do look forward to discussing that further when we get to Part 2. Thank you Madam Chair and Minister I'd appreciate you just to offer your perspective on those comments.
Smith Stuart; Shaw JamesSTUART SMITH (National—Kaikōura): Thank you Madam Chair. The Minister mentioned that the market is oversupplied with units at the moment and I accept that. He went through the rationale of running small auctions in 2021 to get the market up and running and to ensure that everyone knows how it works and gets used to utilising the market. My question is: how much is it oversupplied by and how long does he think it will take to run down the stockpile? And should the first auction fail to clear what kind of difference will that make to that time horizon given that it's very important for us to have some clarity on these matters particularly for the people who will operate in this market so that they can have confidence that they are participating in a market that they understand fully because this will be the first time this market has run like this? While we have a secondary market it's not an auction system like this one where a certain number of units go up for sale and if they reach the parameters around a clearing price then that price is set and the auction is successful or a failure. You can call it whatever you like but essentially they either sell or they don't sell those units. And so how much is the oversupply estimated to be and how long will it take to sell that through? And what impact would 4.75 million units—in the first sale should that fail to clear—mean in that extended time frame? Thank you.Hon JAMES SHAW (Minister of Climate Change): Thank you Madam Chair. The member will be disappointed but probably unsurprised to learn that it's not a simple answer because it relates to the emissions trading scheme.Hon Scott Simpson: We've got plenty of time.Hon JAMES SHAW: Ha ha! We estimate that there are in effect about three years' worth of total demand in oversupply right? But you're not going to use all of that at any one time and there are two factors that mean that you don't get an exact number one of which is how forestry units work in the system and essentially the impact that that has in any given year on demand. Also the other big thing being that when you talk about oversupply you should always have a little bit of excess in the system right? To enable the functioning of the system. So there is more oversupply than we're comfortable with—is probably a way of describing it. Now what we have said is that the intention is to try and manage that down in a kind of very measured way over an extended period of time. So we've estimated—and I'm saying estimated" very consciously because it's not like a target or hard data or anything like that—but we've said about 10 years to run down that oversupply rather than try and sort of squeeze it out of the system really early on. So that's why when you look at the charts which kind of show the total emissions budget there's emissions that fall outside the emissions trading scheme and then of the emissions that fall inside it's divided up into essentially the stockpile units that are freely allocated under the industrial allocation system and then essentially the difference between those two is what we're saying we'll auction off in any given 12-month period."
Shaw JamesHon JAMES SHAW (Minister of Climate Change): Thank you Madam Chair. Look I just want to correct something from the outset about when the member says that the auction would fail. If the Government chooses not to sell units into the market because the price falls below the confidential reserve price that is not a failure of the auction; that is simply not selling something that was available at a price that is acceptable. In fact you could argue that that is saying that the market—there is not sufficient demand in the market at a price that roughly approximates the secondary market price to release those units into the market at that time. So that is not actually a failure of the auction.The other thing of course to remember here—and I know individual companies have submitted on this—is if we decide that we're not going to sell units into the market because there's insufficient demand at an acceptable price at that auction those units become available at the subsequent auction. Now that is because what we've said is that in any 12-month period there will be a total volume of auctionable units and so if some of those get carried—and that's because in the 12-month period the obligation on the company is a 12-month period. So if they don't get it at that first auction then they can have another crack at a subsequent auction.The other thing to remember is that the market currently is oversupplied; so there is actually a stockpile an excess of units in the market in totality. We actually made a decision quite early on—because there was an argument to say Well why would you auction any units into an oversupplied market at all? Why not just allow the stockpile to run down and then start auctioning into the system once the stockpile has run down?" We decided that what we would do is to auction frankly a fairly small amount of units on an ongoing basis to get that system up and running and run the stockpile down over a period of time at the same time so that by the time the stockpile does expire there's a long experience of auctioning units into the system. So essentially saying that there will be a limited number of units available in any 12-month period and that you can choose not to sell them in any given auction I think is one way to safeguard the integrity of the overall system. That's not a sign of the auction failing at all; it's actually a sign of the whole system operating."
Shaw JamesHon JAMES SHAW (Minister of Climate Change): I thank the member for her questions. It's actually incorrect to say that I knew that there was an issue at the beginning of last year. So officials discovered that there was an irregularity between the legislation and the regulations as they were being drafted. That came to light in August late August of last year. I was advised on 3 September that the inconsistency between the legislation and the way that the regulations were able to be drafted meant that the Cabinet decision to include a confidential reserve price would not be able to be included in the regulations under that draft. So that was on 3 September. The advice that I received from officials at that time was that the absence of a confidential reserve price in the early auction period this year presented a low risk. However there was some commentary over subsequent months. In particular on 2 November there was a story in Carbon News about—sorry I've got that wrong. There was a story a bit earlier that essentially meant that officials changed their view about the risk profile. So I then received further advice in about mid-November and that was when we decided to go with the recommendation that we would introduce legislation.I actually just want to correct something else for the record because it's again I think a misstatement of the facts. Scott Simpson talked about the stories in Carbon News and when we notified the market. It was quite important not to let individual companies knows earlier than anybody else which is why we released the story via Carbon News a media outlet. So OMF and Carbon Match the two secondary market operators found out that way. They didn't get advance notice. They obviously would have notified their clients; most of their clients actually read Carbon News anyway. And also I think a day or two after that story came out there was an email out to market participants as well. So everybody did find out at the same time that we were going to introduce it. So that's the time frame.In terms of the actual substance of the amendment put forward it's under the existing legislation. I would say it's unnecessary because it's within the scope of the auction monitor to conduct exactly those sorts of reviews about things like whether the technical reserve price or any other component of the auctioning system is functioning well and what further improvements that we might need to do. Section 30GD of the Act allows the Minister to specify the auction monitor look at exactly that function at the confidential reserve price if we wanted to take a look at it. But also of course we will know the extent to whether it's working or not due to the actual performance of the auctions as they occur during the course of next year.
Climate Change Response (Auction Price) Amendment Bill — In Committee
Rurawhe AdrianDEPUTY SPEAKER: This bill is set down for committee stage forthwith. I declare the House in committee for consideration of the Climate Change Response (Auction Price) Amendment Bill.In Committee
Luxton JoJO LUXTON (Labour—Rangitata): Thank you Mr Speaker. I have the pleasure to rise to take a very short call on the Climate Change Response (Auction Price) Amendment Bill and the reason that I am going to take a short call on this is because my colleagues on this side of the House have articulated extremely clearly the importance of this bill and the reason for bringing it to the House today.We've startled to tackle the long-term challenges that Aotearoa New Zealand faces and we know that climate change is one of the biggest challenges that we face right now. The emissions trading scheme (ETS) is a key tool to tackle climate change. So basically this bill is just technical and it simply enacts the original policy intent for the ETS auctioning rules. And for that purpose I commend this bill to the House.
Russell DeborahDr DEBORAH RUSSELL (Labour—New Lynn): Thank you Madam Speaker. Thank you for the opportunity to take this call. I just want to address something that was raised by one of the previous speakers around what would happen if the initial auction failed. Now this is a concern that was raised by various submitters to the bill. They felt that if insufficient bids were made at a price above this secret reserve price then the entire auction would fail and it would create a number of problems. One of the problems was that if people were pretty keen to get hold of some emissions units they might not be able to succeed and then they would be driven to the secondary market in order to perhaps pay an even higher price set there. I would like to suggest that if people are very aware that they need some units and are as it were desperate to get some they might already have been participating in the secondary market anyway and in that case in ordinary market conditions they would be perhaps putting in a higher bid at the first auction to ensure that they do get hold of the credits they need. That's the first protection there—just an ordinary functioning of the market.The second protection is that after this discussion at the Environment Committee there was an agreement that perhaps it was a theoretical concern around the operating of the market and that in particular this could be exposed during the first auction process which is happening quite soon. So clause 15AA has been inserted into the bill and what it does is it says that the Minister must review the methodology. So if that auction or if certain auctions fail then the methodology must be reviewed to have a look at the way the methodology could be improved. So that is the second protection against a particular auction failing.The third protection for those people who—and this has happened in the event that the people have not gone to the secondary market in the first place to acquire these units which they allegedly desperately need and the emissions trading scheme auction has failed. Then the third protection is that for that first auction there is still a capacity to buy units at a fixed price of $35 a unit. So it can be done. There is a protection in there as well for those people.So there is a series of protections available should this theoretical concern that an auction fail due to the reserve price being set at the wrong level. The select committee has done its job and has come up with an effective way to ensure that the auctions ought to succeed; that if they don't there is a process by which they can be reviewed. All in all it should work very effectively. As the previous speaker said this is a necessary process. It needs to be done. We're getting it under way. There are protections built into the bill built into the auction process. With that I commend the bill to the House.
Smith Nick; Salesa Jenny; Woodhouse MichaelHon Dr NICK SMITH (National): Thank you Madam Speaker. It's a pleasure—Dr Deborah Russell: No no. Point of order Madam Speaker. I do believe it was the Labour Party call.ASSISTANT SPEAKER (Hon Jenny Salesa): I'm sorry the Hon Dr Nick Smith Deborah Russell is right. I call Dr Deborah Russell.Hon MICHAEL WOODHOUSE (National): Point of order. Madam Speaker. It is entirely your prerogative to select who to speak to it but the previous speaker appeared to take the second five-minute slot of call No. 9 which is normally reserved for the Māori Party. The clock was set at five minutes for that purpose. Naturally she didn't need it all. But I just want clarification of whether we are now on call No. 9 or call No. 10 by your reckoning.ASSISTANT SPEAKER (Hon Jenny Salesa): We're now on call No. 10. The Hon Dr Deborah Russell.
Kanongata'a-Suisuiki AnahilaANAHILA KANONGATA'A-SUISUIKI (Labour): Thank you Madam Speaker. It's an honour and a privilege to stand here to contribute to the second reading of the Climate Change Response (Auction Price) Amendment Bill. It would be remiss of me not to address the hot air coming from the other side because didn't National sign us up to the Paris Agreement but had no plan? They signed us up—Yep we'll do that; New Zealand will do that."—but there was no plan. So it is my privilege to make a very brief contribution to this Climate Change Response (Auction Price) Amendment Bill because as one of the speakers from the other side said this should be owned by everybody. It should be owned by everybody because what it does is bring in fairness into this piece of legislation. It gives the Minister the authority to set a methodology for this confidential reserve price—it gives the Minister that. And on that note I want the House to hurry up and do that and I commend the bill to the House. Malo.Dr Deborah Russell: Madam Speaker?Hon Dr Nick Smith: Madam Speaker?ASSISTANT SPEAKER (Hon Jenny Salesa): I call Dr Deborah—Hon Members: Russell.ASSISTANT SPEAKER (Hon Jenny Salesa): Sorry. I call the Hon Nick Smith."
Coffey TamatiTĀMATI COFFEY (Labour): Madam Speaker thank you for allowing me to take a short call on this bill the Climate Change Response (Auction Price) Amendment Bill. We have sat through it as the Environment Committee we've taken the submission hearings we've digested it—we've had some good robust debate in our committee about some of the issues that were brought forward. Of the people that made submissions we got 20 submissions in half of them were from individuals the remainder of submissions were from the business sector from NGOs and one from a family trust. But one thing that I'd like to point out was that we didn't get huge engagement from iwi or Māori organisations in this and yet iwi and Māori organisations are going to be affected by this in the long run. The big picture of climate change is still the overarching goal that we're looking to tackle with this particular bill it does have a role to play and it has an urgent role to play as well which is why we're dealing with this in urgency through the House. One of the previous members from the committee also raised the point that actually there is a commencement date it is very imminent it's not too far away—it's just two days before the first New Zealand emissions trading scheme (ETS) auction is scheduled on 17 March. So that is the pressing need for this urgency. It's why we're dealing with it as a committee and we've moved very quickly through this process. But actually time is of the essence on this. We want to bring credibility to New Zealand's participation in the ETS scheme and for that reason I commend this bill to the House.
Utikere TangiTANGI UTIKERE (Labour—Palmerston North): Thank you Madam Speaker. It's a pleasure to take a call on the second reading of the Climate Change Response (Auction Price) Amendment Bill and a pleasure also to sit on the Environment Committee that heard from submitters. There were 21 submissions on this particular bill and we heard oral evidence from four. I agree with colleagues thus far in that the Hon Eugenie Sage chaired that process extremely well and agree with other colleagues in that colleagues were very constructive in terms of progressing this piece of legislation. Can I also just note my thanks to the offices that were involved given the time frames as well.My colleague who has just spoken the Hon Michael Wood is quite right. This is a technical bill but it is an extremely important one in ensuring that the process around auction for the sale of units within our country's emissions trading scheme system has value has currency but also actually that the process itself has absolute integrity. The bill from its introduction remains in two parts. The first is around permitting the provision of regulations to achieve what it's set out to do and the second part essentially creates or makes the regulations by amending the regulations with immediate effect. I want to just very briefly acknowledge the Regulations Review Committee as well for the work that it had done in bringing to the committee's attention some work that has resulted in what's currently before the House.This bill as has been said enables the Minister to set a methodology that will effectively calculate the confidential reserve price. But in doing so there is a level of accountability with the Minister as well and the provisions within the bill as it's reported identify that. So it is a good piece of legislation and I commend it to the House.
Wood MichaelHon MICHAEL WOOD (Minister of Transport): It was Mark Twain who once said I didn't have time to write a short letter so I wrote a long one instead." That's what we've just had from the member whose resumed his seat the Hon Scott Simpson because it was a 10-minute speech in which he largely acknowledged that this is an uncontroversial technical piece of legislation that pretty much everyone in the House agrees with. I think that is the nature of the debate that is ahead of us.Pleasingly there seems to be broad consensus that this is a sensible tweak to the legislation that's needed. There is a broad consensus across the House that our climate change response legislation is an important part of our climate change response architecture that setting a price through a market mechanism is important that it aligns strongly with the processes that we have set up through the independent Climate Change Commission and the carbon budgeting processes and that the ability to have a confidential reserve price is an important part of that process.This piece of legislation simply enables the Minister concerned to ensure that that reserve price is in place. It does seem to have the broad acceptance of the House. I think it's important that we proceed with it so that we can get on with the business of tackling climate change one of the greatest challenges of our times. I commend the bill to the House."
Brooking RachelRACHEL BROOKING (Labour): Thank you Madam Speaker. It is with great pleasure that I rise to speak—my first time speaking on a bill—and it's to do with climate change something that I care very deeply about. Of course the broader emissions trading scheme is all through the Climate Change Response Act and we're here today talking about the Climate Change Response (Auction Price) Amendment Bill and the setting of a reserve price that is confidential.I'm on the Environment Committee and agree that Eugenie Sage did a great job in chairing us hearing submissions and having some very good conversations about this bill and making the amendments that my colleague just referred to. I think the most important thing about this is to note as was mentioned by the Minister that we want the primary market this auction process and the secondary market to match up. So there is some wording in the bill about how prices should not be significantly below the prices of New Zealand units sold at the time in other ways on the secondary markets so that the sales by auction do not unduly affect secondary markets. That is the point of the bill and that is why I am happy to support it. Thank you.