Smith Nick: Climate Change Response (Moderated Emissions Trading) Amendment Bill — Procedure Second Reading In Committee 
Text is incorporated into the Bound Volume 
Smith Nick: Climate Change Response (Moderated Emissions Trading) Amendment Bill — Procedure Second Reading In Committee 
[Sitting date: 24 November 2009. Volume:659;Page:7926. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I am in no doubt that we are about to start a pretty important debate for New Zealand about how it responds to the challenge of climate change. 
The first point I make having been a member of Parliament now for 19 years is that the debate about a pricing instrument to constrain emissions has gone round and round in circles. I will just recite the history. Back in the time of the previous National Government we originally proposed a low-level carbon tax. A Cabinet decision was made in 1999 that we should get officials to work on an emissions trading scheme. The last Labour Government came to office in 1999 and said that it did not want to do an emissions trading scheme; it wanted to do a carbon tax. We had officials beavering away for 5 or 6 years on a carbon tax and then they came back to a conclusion of an emissions trading scheme. So my first point is that this debate has gone on for a very long time. There have been over eight different public consultation documents. There have been three rounds of select committee hearings. There have been over 2000 submissions. I say to the Committee that there comes a point on an issue as big as climate change where we need to make progress. 
At the last general election National had a very comprehensive policy around emissions trading. I will go through what we said to the electorate. First we said to the electorate that we wanted to align New Zealand’s emissions trading scheme more closely with Australia’s scheme. Every member of this Committee would know that New Zealand and Australia have very closely integrated economies and that it makes good sense on a global issue like climate change for us to work closely with Australia. I challenge those members who have been quite strong with their rhetoric around the weaknesses that they see in this modified emissions trading scheme. Every single criticism they make they can make also of their Australian Labor Party colleagues who are putting a bill through their Parliament that is actually slightly softer than this one. 
So if members want to make criticisms of this bill—for instance to argue that it does nothing for climate change—they need to argue that the Australian scheme also does nothing for climate change. If they want to argue that it costs billions of dollars they need equally to say that that cost would apply to Australia. I think that point just exposes the extreme rhetoric that we have heard from Labour members over this bill. We said to the electorate that we would align the scheme more closely with Australia’s and we are doing just that. 
Moana Mackey 
: Jesus! 
Hon Dr NICK SMITH 
: Oh excuse me! I raise a point of order Mr Chairperson. I am more than happy to tolerate interjections but I think swear words of that sort are quite inappropriate and I ask you to take some action. 
The CHAIRPERSON (Eric Roy) 
: I have to say that I did not hear what the member said but— 
Moana Mackey 
: I withdraw and apologise. 
Hon Dr NICK SMITH 
: First we said we would align the scheme more closely with Australia’s and we are doing that. 
The second thing we said in respect of our changes to the scheme is that we did not see an emissions trading scheme as some means for the Government to grab great wealth from the private sector and from families and homes. We said we wanted a scheme that would provide a financial incentive for fewer emissions but would not simply export industry offshore. So in aligning this bill with Australia’s scheme we are saying we want to do our fair share on climate change. It is true that the changes we are making do not result in the Government’s making billions of dollars. That is true. Does it involve a cost to the taxpayer? No it does not. 
Hon Pete Hodgson 
: Yes it does. 
Hon Dr NICK SMITH 
: Mr Hodgson claims that it does. Let us be clear about Treasury’s projections. I know that members opposite have become very excited about the $110 billion figure. Let us be clear though and honest with the public about what Labour is saying. First up Treasury is saying that $50 billion more revenue would come to the Government under the previous Labour Government’s emissions trading scheme to 2050 than under National’s scheme. Well that is true but it relies on a faster abatement rate than that of our proposal to align with Australia’s scheme. So if members opposite want to get up and say that our scheme would take $50 billion more from New Zealanders than Labour’s scheme would have done they are right and they should be upfront about that. But that is quite different to describing a cost. 
How do they get to that $110 billion? They say that every year— 
Hon Pete Hodgson 
: We looked at Treasury’s projections. 
Hon Dr NICK SMITH 
: I say to Mr Hodgson that it is about being honest about what Treasury is saying not misinterpreting it. 
The second point members opposite make is that if we invest the money from the emissions trading scheme—those super-profits—and compound the interest we can add that up to $110 billion. Well hang on a moment! When the previous Labour Government announced its emissions trading scheme it said that the Government would not bank the super-profits of the scheme but would reinvest them in climate change policy. So my response to members opposite is that they cannot say on the one hand that Labour would spend that money on climate change and on the other hand that it would claim the interest at the same time. That is not consistent. 
The members opposite are misleading on a third point. With their rhetoric they say that this is a big subsidy for those big ugly international corporates. Do members opposite know that the advice is that 80 percent of the allocation that we are debating is those big ugly corporates—those 32000 New Zealand farmers? Why not call them what they are? Members opposite are really saying that they want to incur on New Zealand farmers $40 billion more in costs. That is what they are really saying and they should be honest with the electorate and say that that was the advice. But this Government is saying that we do not want to make those super-profits from an emissions trading scheme. 
We said a third thing to the electorate and we were quite upfront about it in our policy. We said that we wanted to take an intensity-based approach. This is very interesting. The Emissions Trading Scheme Review Committee sought advice from two of New Zealand’s most important economic analysts—that is Infometrics and the New Zealand Institute of Economic Research. How many times have I heard those two firms and their advice quoted in this Parliament? In my career here I would say I have heard it hundreds if not thousands of times. I have heard the Opposition quote both those firms over and over again. What did the New Zealand Institute of Economic Research and Infometrics advise the special select committee? The first thing they said is that in the short term it was actually a pretty even argument between a carbon tax and an emissions trading scheme but on balance they thought we were best to progress with an emissions trading scheme. The second thing they said was that the best way to avoid the problems of carbon leakage—that is just exporting industries offshore—was to take an intensity-based approach. The intensity-based approach is what is in the Carbon Pollution Reduction Scheme in Australia and that is another strong reason for that approach. 
These amendments are a sensible way forward for New Zealand on one of the most complex areas of public policy. 
Moana Mackey 
: Then why is it so rushed? 
Hon Dr NICK SMITH 
: The member interjects about the process. First I point out that a year ago when Labour had its climate change legislation before the House it introduced not just one Supplementary Order Paper—I have introduced one—but four Supplementary Order Papers. No briefing was provided as I provided to members on mine and they were passed into law on the same day. 
Moana Mackey 
: So long as it’s been at the select committee. 
Hon Dr NICK SMITH 
: I put an issue to the member who is interjecting. I invite her to remember that when I was having discussions with the Labour Opposition about an agreement that we might be able to reach I said to them that I was running into a real deadline. I needed to get an amendment bill through the House before 1 January because there were problems with the legislation that would come into effect. I said to them that we really needed to conclude those discussions quickly because I was running out of legislative time and the bill had to go to the select committee. Do members of the Committee know what Labour members said to me? They said that if I agreed with them they would support the bill not needing to go to the select committee. 
Hon Members 
: Shame! 
Hon Dr NICK SMITH 
: Let us be clear. If we get an agreement with the Labour Party the bill does not have to go to the select committee but if we get an agreement with the Maori Party the Labour Party has a completely different standard! That is why I say to Labour members that I will test them on their rhetoric every way in this debate because in this bill we have a sensible way forward on climate change. 
The last point I make is that we accepted an agreement reached in good faith with the Maori Party and the moment that agreement was announced I said that I remained as committed as I was the day before I reached agreement with the Maori Party to continuing discussions with Labour because it is my view that for all the rhetoric that will occur in the Chamber over the next couple of days there is actually a very high level of agreement about the sensible way forward. There is a very high level of agreement. We agree that an emissions trading scheme is the best way forward. We agree that we need to have allocations. We agree that we need to have transitional measures. We agree that the science is such that we need to take action. So it is my view that this bill is the responsible and right thing to do on this complex issue. 
I am really looking forward to a detailed debate in this Chamber. We might get away with sound bites rhetoric and spinning outside but in this Chamber we will scrutinise every single one of the false claims that are being made by Labour on this scheme. The scheme is the sensible way forward and I am looking forward to that debate.