Simpson ScottCLIMATE CHANGE RESPONSE (AUCTION PRICE) AMENDMENT BILLFirst ReadingDebate resumed.Hon SCOTT SIMPSON (National—Coromandel): Thank you Madam Speaker. The analogy for this bill to be likened somehow to the sale and purchase of a house at auction is not a bad place to start. But it doesn't really reflect the complexity or the importance of this piece of legislation or indeed the mistake that has been made and overlooked by Minister Hon James Shaw who usually is better than he has been on this bill. Because what we're going to find out in a minute or two is that there has been a long protracted tangled web of incompetence around this particular piece of legislation that dates back now well over 12 months.Minister Parker is correct in a way; no property owner taking a valuable asset like a house to auction would in their right mind I think not set a reserve that was confidential to them and indeed the auctioneer and that's fair and reasonable. So what we have here is a Government that failed to pick up on a mistake during the passing of the original and primary legislation the principal legislation and actually missed it. Or did they—or did they? Actually they knew. They knew all along about this potential error this potential mistake and there was dithering. There was dithering on behalf of the Minister who for a period of time said Oh no no no actually we don't need to worry about it. The risk is low. Let's not do anything." Then there was a range of activity that said oh actually no the fiscal risk to the Crown accounts is actually very significant it runs into hundreds of millions of dollars is the potential risk to the Crown accounts. I'm grateful to the editor of none other than a very good publication called Carbon News Adelia Hallett who wrote back in October of last year—in October of last year she wrote—that "The Government's surprising decision reported by Carbon News earlier this month to press ahead with the auctioning of carbon credits without a technical reserve in place to stop units being sold at below-market-prices opens the door for that very thing to happen." So there was commentary amongst the media that follows carbon issues they were aware of it and so too was the Minister.Then Adelia Hallett goes on to write in her article dated October of last year "And the price tag for taxpayers could be in the multi-millions-of-dollars. The new system which starts in March [2021] was supposed to include a technical reserve to stop units being sold [at] substantially below the prevailing price on the secondary market." So Adelia Hallett knew that it was supposed to be included and yet listening to the Minister tonight it would be just a question of hearing "Nothing to see here. Everything's calm. Everything's smooth. Everything's right." We've got the first auction on 17 March suddenly we have to pass this piece of amending legislation under urgency."The technical reserve"—the article goes on to say—"would have been the lowest price the Government was willing to take for units in any given auction." and that's exactly as the Minister used almost 10 minutes to describe in very very technical terms designed I think to probably confuse anybody that's listening at this time of the night about the process of this piece of legislation. So what we do is we go back to Cabinet papers and there were a number of them setting out the options the risks and making Cabinet aware of this loophole and the hole and the potential risk to the Crown accounts. Cabinet agreed with its economic development committee in a decision in March last year nearly 12 months ago—in March last year—that a technical reserve price must be set for each auction relative to the market price of New Zealand units (NZUs) using a prescribed methodology that is kept confidential. That was a Cabinet committee decision made in March last year. Can't say Minister that you didn't know that you weren't aware that you didn't bring it to the attention of colleagues—it's all there in the Cabinet papers.But then there was a more recent paper to the Business Committee in which Minister Shaw said that the auctions will begin without a technical reserve in place and the second paragraph of that Cabinet paper says—and remember this is March 2020 last year—that a technical reserve price to stop NZUs being sold at a price significantly below the prevailing secondary market would help ensure that the primary auction does not significantly influence prices in the secondary market. So Cabinet knew Cabinet was advised and what happened? The Minister said in that very document in the next paragraph—he said before going on to say that auctioning would start without one "However I recommend the proposed regulations be set without providing … a technical reserve price at this time."Now that's not the impression that was given by the Minister in his speech to this House this evening. The speech that the Minister gave to this House this evening implied that everything was smooth calm and this was just a technical bill that just needed some kind of change to tighten it up. Actually the Minister knew 12 months ago and what's more he was advising his colleagues around the Cabinet table 12 months ago of this loophole. He gave advice to his colleagues then that no reserve would be needed.So the questions that my colleague Stuart Smith asks are absolutely right: why the change? Why the change in demeanour why the need now? Why did Minister Shaw change his mind and what were the factors that led him to change his mind? Back in October last year the price was about $35 that NZUs were being traded at and that meant that there could have been a potential risk to the Crown accounts back then of something like $71 million per auction or a total of $285 million a year. That's why the Minister is bringing this legislation to the House under urgency because finally at long last some sense was prevailed upon him to bring it to the House now under urgency."