Tabuteau Fletcher: Energy (Fuels Levies and References) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeTabuteau Fletcher: Energy (Fuels Levies and References) Amendment Bill — In Committee[Sitting date: 11 February 2015. Volume:703;Page:1491. Text is incorporated into the Bound Volume.]FLETCHER TABUTEAU (NZ First):I stand on behalf of New Zealand First and I just start by noting that I think New Zealand First is the only party that has opposed this bill from the start. I just take note of Part 1 new section 14(2)(ba) in clause 4 which states that the Crown must comply with our obligations under article 2 of the Agreement on an International Energy Programme to maintain the emergency reserves commitment. The party has always said from the start that that is an absolute necessity. However there are a few factors that I would like to outline whilst referencing the parts within the legislation but perhaps if you bear with me initially.I agree that the timing of another tax on New Zealand citizens through a petrol levy is perhaps a good one. We were told by the Green Party that it supported all parts. I note with some humour that the National members did squirm in their seats when the Green Party acknowledged that it agreed with all parts of National legislation—I am being snide. The legislation is essentially a regressive tax. I just wanted to point out for example that 42 percent of Rotorua household incomes are below $50000 and 58 percent of personal incomes in Rotorua are below $30000. So although I want to determine the actual figure of the levy itself which is discussed as being a very small number I would suggest that the levy itself is a regressive tax and unfairly and unnecessarily puts undue pressure on low-income earners. I will talk to some of these parts here where we could suggest alternative methods other than a levy that would ensure that we comply with our international commitments.What I would like to point out at this stage is that when we saw petrol go over $2—and I do not think anyone in this room would debate with me on the fact that it will do so again; the timing may be an issue I think and I hope that it stays low for a while—and what I was personally seeing in some of my studies was that petrol was becoming price-sensitive. There was an elastic response in terms of consumer demand to the change in petrol prices. That reinforces what I was saying about people being unnecessarily put under undue pressure with regard to the price of petrol. So New Zealand First just wants to stand in front of Parliament and say that the mechanism that we—I do not know—seem to have come to without much regard to consultation or consideration of alternatives seems an unnecessary burden on the New Zealand taxpayer.I want to talk about that because New Zealand First campaigned for example on the tax-on-tax issue. So for example right there the GST component on the levies which is nearly a third of the tax cost to consumers at the moment has a GST component to it. So when I originally spoke on the bill in earlier readings I suggested—and I do so again—that the Commerce Committee was perhaps in want of establishing alternative funding mechanisms in order to meet our international obligations.Did this Government explore also the fact that given some of the submissions the ticket price was described as fluctuating and when the discussion was taking place the ticket price was becoming quite high? I asked the committee what the consideration was other than the submission from an oil supplier around the holding of physical stocks in New Zealand. The oil supplier said that it would be prohibitively expensive and I imagine that the cost would be quite expensive. But what was the case? What was the research and what was the conversation that the committee entered into to understand what those prohibitive costs were? In those same submissions the conversation arose that we must meet our petrol stock commitments—this 90-day reserve—out of a need to maintain a level of safety as it were in case of some kind of worldwide emergency. So the stock levels were an absolute necessity. What we have said here is that we will buy tickets and that stock will be held overseas.I would suggest to the Committee and to the members here today that that does not actually answer or solve the problem that we could potentially face if there was a worldwide crisis. I would even go so far as to suggest that we would kindly hear the words: “Oh sorry we don’t have the stocks to send you. I know you have your tickets but unfortunately there’s no oil to be sent down to New Zealand.” So I beg the question of the Committee: how in depth was that situation that alternative around physical stocks taken into account?The other alternative that I would like to point out is actually putting the burden through legislation on the oil companies. I know invariably that oil companies will raise their prices but as I alluded to before there is some measure of an elastic response. I do not know whether you noticed in your summer holidays whilst you were driving around the country that this oligopoly market structure is starting to compete on price. It is something we have never seen before. What I would suggest to the Committee is that the producer surplus versus consumer surplus would be such that the burden of the extra cost would be taken up by the supplier more so than being passed on to the consumer. I wonder whether the select committee investigated that fact.New section 33 in clause 9 outlines the setting of the levy. Thank you for your forbearance. I come to some very specific points. I note that in new section 33 there is actually no specified cap. I think it has been mentioned before that what we are discussing here is a levy that we do not know when we will stop charging. We know we have to hold a 90-day stock but when do we stop charging the levy to maintain our 90-day stock? There is no actual description within the legislation to tell us that now is the time to stop using this levy.In the same section the Minister must consult only with those whom he would deign to consult with. It seems to be a precedent with a bit of legislation that I have personally noted coming through the Committee stage through the House—that the Minister can consult with whom he decides to consult with. It was talked about by my colleagues on this side of the Chamber that it is important that we talk to all of those who are involved not those whom the Minister decides are relevant. The reality is that the Minister’s opinion of relevance may not necessarily be that of this Parliament or the people of New Zealand. So it is concerning that that has been seen to be a precedent that has arisen in quite a few pieces of legislation that I have personally spoken to over the last few months.Actually in the legislation—please if the Minister can correct me—there seems to be no specificity as to the purpose of the levy in the legislation. It seems like it is some kind of assumption that the levy will be used for the purpose of complying with our international obligations. Forgive me if I have missed something there but there is definitely no specificity as to the value or the rate at which the levy will be collected. It has talked about the Minister’s proposed value or a formula used but the ambiguity there is a dangerous one. It has been noticed previously that there also seems to be no cap.