Cullen Michael: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — First Reading Second Reading 
Cullen Michael: Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — First Reading Second Reading 
[Volume:651;Page:761] 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 If that member opposite the Hon Nick Smith keeps mentioning the words “nanny State” long enough he convinces himself that he has some kind of argument in these matters. I can only assume that some of the people opposite must have had nannies when they were young whom they did not like so somehow the word “nanny” keeps them going in some kind of big way. 
Hon Dr Nick Smith 
: Tell us about the showers Michael. 
Hon Dr MICHAEL CULLEN 
: I wish the member would have a cold shower from time to time and I am happy for him to have a 100-litre-a-second cold shower whenever he wants one. This is a man who gave a speech about economic lunacy. He talked about half of that in his speech actually because that was lunacy more than economic lunacy. 
Let me just take him through the illogicality of his argument. He claims to want to see biofuels used; I think he said that. I think the Bluegreen manifesto said National wanted biofuels. He claims he wants to see certainty for those in the industry and then he says he does not have a clue how much biofuels there may be if we go to a tax-incentive system. Where is the certainty and where is the guarantee that we will move to biofuels? He says that he wants to make sure that biofuels come from renewable sources. So do we all. That is why the legislation as revised by the select committee provides a process to ensure that sustainability. The member is still attacking the Biofuel Bill as it was introduced. He did not even read the legislation that came out of the select committee. We have certainty for the companies which consists of basically saying “We do not care what you do. We do not care if you have any biofuels.” So what message will they take from that? They will take the message “Don’t have any biofuels.” What about those companies that have already started putting in tanks to cope with the higher proportion than the present 0.5 percent? Where has their certainty gone? Where has their return on investment gone? 
Let me take the member through the economic arguments. He somehow seems to think that if we have a tax incentive then that will solve the problem. Actually it is not really a tax incentive. It is not taxing biofuels; it is continuing the regime where biofuels have no excise duty on them. Has that produced a rash of investment in biofuels? The regime that the National Government is suggesting is the regime before the biofuel legislation came into force minus the requirements in the legislation for some kind of sustainability certification and reporting. That is what Gerry Brownlee’s bill actually states: it removes the requirement it removes the provisions around sustainability. That is where we have been for years and we do not have any significant usage of biofuels in New Zealand. The member wants that but he is not going to get it. 
But if we have no tax on biofuels then what does that do? Firstly it reduces the Government’s revenue from road usage. We have hypothecation now on road-user taxes so if there is a reduction in revenue the Greens and I will not see more money for public transport and the National Government and I will not see more money for roads. We will have less investment in roading and less investment in public transport— 
Hon Dr Nick Smith 
: Rubbish! 
Hon Dr MICHAEL CULLEN 
: —unless—wait for it—there is a further transfer out of the Crown account into the land transport account which must come from one of three sources. It must come first from increased taxation elsewhere such as personal taxes company taxes or GST; secondly from cutting spending on services elsewhere; or thirdly from borrowing which means for future generations firstly higher personal taxes or GST; secondly a reduction in services; or thirdly more borrowing for their grandchildren which will lead to even bigger personal taxes or cuts in services. There is no free lunch in fiscal policy. The member has been there long enough now to have learnt that very very simple fact. He is asking for the Government to be able to tax elsewhere or to be able to cut social services. We have had a voluntary regime up until the passage of this Act and it has done nothing to produce biofuel usage in New Zealand. You see what the member is arguing is basically the big old Dick Cheney position. He is kind of the Dick Cheney of the National Party these days—he wants to do what big oil companies tell us to do. He does not want to do what some poor little New Zealander with only a few million dollars to invest has been trying to do to help this country because that person does not count. When it comes to the interests of Shell BP Mobil Oil and all the rest of them that poor little New Zealander does not count as far as National is concerned. National members get up in this House and make speech after speech with tears pouring down their faces as they talk about small business and all the rest of it. What is this bill about? It is about the interests of major international corporations versus the interests of New Zealand and New Zealand business. That is what this bill is about. 
Goodness me the main criticism that can be made of the current Act is not that it is the nanny State; it is basically leaving the kids at home with directions about where to find the food in the fridge. I think people could say that the problem with the current legislation is that it does not go far enough not that it goes too far. I hope that Ms Fitzsimons does not criticise us too much for that when she gets up and speaks because I think we are probably basically of one mind in that respect. There were jobs in this for New Zealand there was certainty moving forward as higher levels of biofuels began to be phased in there was a regime around sustainability— 
Hon Dr Nick Smith 
: What about the cost? 
Hon Dr MICHAEL CULLEN 
: The cost as the member well knows depends upon what the future cost of oil is. Ah suddenly there is silence. The penny drops. Oil at the moment is under US$50 a barrel. Less than a year ago—6 or 7 months ago—it was US$153 a barrel. If any member in this House thinks seriously that he or she knows what the cost of oil will be in 5 years’ time I would tell them: “Do not waste your time in here mate. Go out and make yourself a few billion dollars on the international market.” because if a member has that knowledge it is knowledge that nobody else in the world has. It is very precious and it is worth vast amounts of money. Why would one spend one’s time in Parliament beating one’s gums about the nanny State if one knows what the future price of oil will be? The member does not know that. None of us know that. We know—and I occasionally chip at the Green Party about this—that it will go up and down. We know there is huge volatility about oil prices but we also know one simple thing: the long-term trend of oil prices will be up. The trend may have been downwards recently over the last few months but it will be up over the long term. Why? Because at the end of the day it has to be a shrinking resource in relation to demand. If we really want to see people in the Third World increasing their living standards then whatever we do the chances are that it will increase their demand for fossil fuels such as oil—a pity but it is true. However much we manage to do in the next 10 years that is almost a certainty in that regard. 
So there will be pressure upon a finite resource. We do not know how big that finite resource is because we do not know what has yet to be discovered but one thing we do know utterly logically completely and obviously is that at some point the resource is finite and therefore it will cost more to extract. Therefore it will be demanded more and it will cost more. The cost argument is actually a particularly weak argument in this respect. What of the cost on the other side? The less we use biofuels the greater the liability under the Kyoto Protocol or under any likely subsequent agreement in terms of a charge to the Government because in the first instance that is a charge upon the Government it becomes a liability on the Government accounts and therefore it has to be met in some form or another. Again there is no free lunch here. This can be met in effect by saying to the public that we are sending price signals that are designed to encourage them to use more efficient vehicles and to drive their cars more carefully in terms of how they accelerate etc. all of which have very significant impacts upon fuel consumption and can save people far more money than the impact of 4c a litre or whatever it was the member was claiming in that regard. We have seen petrol prices at the pump vary by something like 70-odd cents a litre within the last year or so and the member’s heart bleeds—bleeds—for 4c a litre when that is a tiny fraction of almost day-to-day trends. We have seen petrol prices go up or down by 5c a litre in a day as a consequence of market movements over the last year. 
So the member has to get with the programme in that regard. He simply does not seem to grasp the point that this denial this endless series of moves to deny to put off the emissions trading scheme to cancel the biofuels obligation to try to set up new thermal power stations for no particular reason to add to baseload capacity when there is a huge amount of potential renewable capacity for baseload generation—all of that suggests that in National we have a party that stupidly opposes what the previous Government did for the sake of opposing it and is now stuck with the stupidity of its position.