Hughes Gareth: Energy (Fuels Levies and References) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeHughes Gareth: Energy (Fuels Levies and References) Amendment Bill — In Committee[Sitting date: 11 February 2015. Volume:703;Page:1486. Text is incorporated into the Bound Volume.]GARETH HUGHES (Green):Kia ora Mr Chair. Ngā mihi nui ki a koutou kia ora. I rise to support this bill. Part 1 of this legislation essentially is the guts of the matter the heart of the bill which basically sets up that the Government has the ability under regulations to set an oil levy to recoup the income. Just a slight point from the speech of the last member Iain Lees-Galloway: this legislation and the debate around it is not really a question of whether we should have an oil stock; it is of how we fund it. And what this legislation empowers is the ability for the Government to gain revenue from the Customs Service via a charge per litre of oil instead of the current expense coming out of the consolidated account.The Green Party supports that entirely; there are a number of reasons. But let us go to the big picture which is that we know how important oil is to our economy. I know that the National members have probably heard me rattle on and on about the risks of deep-sea oil drilling. What the Greens have always said though is that it is an important part of our economy. We have never said that we are opposed to shallow or onshore drilling where the data clearly shows that there is a much lower chance of an accident or a spill occurring. You know it is clear based on US data that the deeper you drill the greater the risk of the spills. What I have always said is that we need a planned out staged transitional strategy because everyone from the International Energy Agency through to the OECD are saying we are going to have to leave oil before oil leaves us. So let us do it in a planned manner. Although I have often talked about the risks of deep-sea drilling I am the first to acknowledge the importance of the role that oil does play and has played in our economy.What we have seen—and I wish I had brought my graphs with me to the Chamber—is that when you chart the global recessions in the last 50 years all of them have been preceded by a sharp oil shock. We saw the most recent of this in 2008. So the point of this legislation in Part 1 of this bill is to deal with the global or the developed world response to those oil shocks—which led to global economic recessions and in some cases to depressions in some countries—and the international energy agencies oil stock treaties of which we are a member. We have empowering legislation sitting on our statute book to deal with carless days or other events or other strategies the Government may adopt to deal with it.In New Zealand a few years back my office undertook a study of the New Zealand economy and what we found was that for every US$1 price increase in the barrel of oil it shaved off between $40 million and $60 million from our gross domestic product. We know it is important. We know it has played a key role in driving recessions in the past for a country. In fact despite our high percentage of renewables—three-quarters—New Zealand is one of the most oil-dependent developed world economies in the world. We import around $8 billion per annum of oil despite exporting about $2 billion to $3 billion. Our vehicle fleet is one of the oldest in the OECD so per capita we are one of the largest consumers of oil in the developed world despite the high percentage of renewables. It may not be a fact that many New Zealanders or members are aware of but it means we are particularly vulnerable. Given we are a country that needs to export our products around the world the Green Party believes that enacting the provisions to actually set a charge on it as in Part 1 of this legislation is critically important.So we support this bill and the imposition of a charge. I want to address the point made by the member Iain Lees-Galloway about the cost but first we need to look at the raw facts which is that this is simply about recouping the costs of maintaining the oil stocks. It is not a question of should we have oil stocks although I note that one submitter did recommend that we should actually store all this oil in New Zealand but I understand the estimate there of cost would be about $20 million. Already the costs of the 90-day oil stocks are rising from between $5 billion to $10 billion or doubling by 2016-2017 from 2012-2013. So it is a clear cost that needs to be borne by the taxpayer. We think costs should fall where they lie.Secondly it is a question of transparency. There are all sorts of costs and expenses the Government has got to account for. We think it is fair that the taxpayers should be able to see exactly where it is coming from and where it is going. So we think it is fair that there is an element of transparency for any petroleum customer or user in New Zealand to see the costs of maintaining that oil security stock supply overseas. Thirdly it is an economic signal. It is not exactly a huge one. I understand that it is in the order of 0.045c per litre of oil. It is not really going to have an impact particularly not on the scale of the price reductions we have seen over the previous few months. So I think it is fair and appropriate that there is an economic signal for the cost of maintaining the oil stocks.I do want to pick up on the point that fuel poverty is a genuine and real issue in New Zealand. The data is a lot more common for electricity where potentially up to a quarter of New Zealand families are in energy poverty spending more than 10 percent of their disposable income just to keep the lights on or keep warm. I am not aware of any data for oil consumption but I am sure many members read the recent story about the worker I think from Auckland who was literally walking for about 5 hours a day to get to work. We know energy poverty is a real issue but I would not say that subsidising energy as other countries are doing—the International Energy Agency is actually recommending against it—is the answer. I do not think we want to spend taxpayers’ money to make oil cheaper. What we want to do is give people choice. We want to give people options to get around their cities or towns or regions safely cheaply and fast.What we did see in the last recession was very little choice for Kiwis. In my home town of Wellington they literally went to the National Railway Museum and pulled a unit out of stock because of the demand on the railway because of the price of oil. In my home town of Gisborne where I grew up people wanted to export their products on the rail line to avoid the high oil costs but could not because the rail line had shut and there was no funding to reinstate it. So we support the legislation and the idea of costs falling where they lie because it is fair and it is transparent.I would note an issue of equity for say those superannuitants who cannot or will not drive those students who cannot afford a car and prefer to bus or train or those people who as a lifestyle choice have decided not to purchase a car or use oil. I think it is important that they are not the ones bearing the cost of all the oil stocks. I think it is an issue of equity sending a price signal and that is why I just wish this Part 1 was more substantial. As The Economist magazine points out this is a fantastic opportunity with the low oil price to actually address some of our structural dependencies on oil. We are one of the most oil-dependent countries on an oil-dependent planet yet we have got one of the least-effective emission trading schemes in the world sending that price signal view.Sadly Part 1 does not deal with biofuels which is an issue that was not addressed at the Commerce Committee. Biofuels will be covered in this legislation and face the same charge despite the fact that biofuels support the energy resiliency of New Zealand and lessen our dependence on foreign offshore oil stocks. I note the submission of the likes of Z Energy saying that it was a counter-productive measure. I note from the latest data that has just come out which I have received from the Parliamentary Library that the percentage of New Zealand biofuels has actually fallen catastrophically in the last 7 years from a high of 1.2 million litres to less than a quarter of that today. I think policies have played a role. The lack of an effective carbon price has played a role and this further more punitive measure is further going to dampen demand.All members in this Parliament and all parties should be able to agree that if it is sustainable if it is not competing with food we should be encouraging biofuels if they have a net reduction of carbon emissions. It is good for Kiwi workers it is good for Kiwi farmers and it is good for Kiwi petroleum users. I think this is a point that may be picked up in the debate today. Why have biofuels not been exempted from this charge given other products have? I think of bitumen and liquefied petroleum gas but biofuels are not exempted. It would be good to get a contribution from the Minister or the National members to address this point. Thank you.