Smith Nick: Questions for Oral Answer — Questions to Ministers 
Smith Nick: Questions for Oral Answer — Questions to Ministers 
[Volume:638;Page:8912] 
6.  
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Minister responsible for Climate Change Issues 
: Does he agree with the estimate of Murray Ward former head of the Government’s own Climate Change Office that New Zealand’s Kyoto liability is likely to be $1.8 billion rather than Treasury’s current estimate of $567 million? 
Hon DAVID PARKER (Minister responsible for Climate Change Issues) 
: 
 No I do not. The figures used by Dr Smith are based on a volume of emissions that is unrealistically high and I am confident that the Government’s climate change policy will reduce our emissions not increase them—as Dr Smith projects. In terms of the cost of each tonne the price reflects the cost of reducing emissions and that price depends on how far and how fast the world moves to reduce emissions. What is clear already is that the price in New Zealand will be substantially lower than the European price upon which Dr Smith bases his calculations. 
Hon Dr Nick Smith 
: How is it credible in the Government’s accounts to include provision for deforestation of 26000 hectares when the December report of the Ministry of Agriculture and Forestry puts the figure at 47000 hectares; and is not the key reason that these Kyoto figures look so bad that the Government’s awful forestry policies are causing ever-increasing levels of deforestation? 
Hon DAVID PARKER 
: The Government’s proposed $21 million tonne cap on deforestation liabilities has been in the public arena for a long time. It remains true that the future cost of carbon depends on how far and how fast the world moves to reduce emissions. I make the point that that is up in the air and if the world’s purpose on climate change is as lacking as that of the National Party then the price of carbon would drop to zero and global warming would of course get worse. 
Hon Marian Hobbs 
: What recent announcements has the Government made about economic incentives to reduce greenhouse gas emissions across the economy in order to meet our Kyoto Protocol targets? 
Hon DAVID PARKER 
: We have consulted thoroughly over recent months and a clear message has been received—that is that the vast majority of submitters believe that all sectors can and should do their fair share bearing in mind that it will be easier for some sectors than for others. With this endorsement we have announced that detailed design work is proceeding on a possible “cap and trade” scheme covering all sectors of the economy and all greenhouse gas emissions. The design of effective greenhouse gas pricing is in the opinion of the Government important for both environmental and economic reasons. We look forward to continuing to engage with other interested parties as we complete that design. 
Nandor Tanczos 
: Can the Minister tell the House regardless of whether we are talking about $1.8 billion or $567 million what proportion of that is directly attributable to agriculture; and does he agree that until all sectors including agriculture have to pay for their carbon emissions that money represents a direct taxpayer subsidy to animal farmers? 
Hon DAVID PARKER 
: Approximately 49 percent of New Zealand’s greenhouse gas emissions come from the agricultural sector and it is important that all sectors do their bit. That is not to say that the agricultural sector should have to reduce emissions at the same rate of reduction that would be achievable for example in the transport or electricity generation sectors. 
Hon Dr Nick Smith 
: How is it credible for the Government to reduce its Kyoto Protocol liabilities for deforestation by approximately $500 million by saying it will do it with a 10 percent deforestation cap and by passing that liability on to forest owners when it has not introduced or passed any legislation to do this when the public statements of other political parties show that it does not have the numbers to pass such laws and when this liability stands to take effect in just 7 months—on 1 January 2008? 
Hon DAVID PARKER 
: I think it is about time for the National Party to stop scaremongering. Nick Smith should stop— 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. My question was quite a deliberate question about the 10 percent deforestation cap that will require legislation and whether indeed the Minister has the numbers for the Government’s books to be able to credibly reduce the amount by $500 million. The Minister chose to begin his answer by just making some derogatory comments about National. 
Madam SPEAKER 
: I agree. If the Minister would just address the question and leave aside all other superfluous comments. 
Hon DAVID PARKER 
: I am confident that the Government’s climate change policy will not only see that deforestation cap met but also bettered. National’s statements to the contrary are scaremongering again. Nick Smith should stop trying to frighten the New Zealand public about climate change action and actually start trying to become part of the solution. 
Hon Marian Hobbs 
: Has the Minister received any reports on alternative approaches to managing our Kyoto Protocol liability through a “cap and trade” scheme? 
Hon DAVID PARKER 
: Indeed I have— 
Hon Dr Nick Smith 
: National supports it. 
Hon DAVID PARKER 
: Nick Smith says those members support it. Well I have received reports of a “cap and trade” system that proposes no cap on deforestation no cap on agricultural emissions no cap on transport emissions no cap on industrial emissions and a cap at current levels on electricity emissions. This is Dr Smith’s “cap and trade” scheme—“cap and trade” without a cap. It would not work and it would be next to useless. 
Hon Dr Nick Smith 
: I ask the Minister—[ 
Interruption 
] I would be happy to table what our actual policy is for the benefit of members opposite. 
Gerry Brownlee 
: They would steal it. 
Hon Dr Nick Smith 
: Yes they probably will steal it.  
Madam SPEAKER 
: Would the member please ask the question. 
Hon Dr Nick Smith 
: How is it credible for the Government’s estimates of the Kyoto Protocol liability to be based on a carbon price of just $10 a tonne when the only Kyoto Protocol - compliant carbon market has a trading price of $30 per tonne; and why when it comes to the exchange rate is the Minister happy to use the high market value of 74c in the dollar to minimise the liability but will not use the market value for carbon? 
Hon DAVID PARKER 
: For a start the Government accounts do not have it at US$10 a tonne; they have it at US$12.50 or thereabouts. This figure is set by Treasury. I have confidence in the Treasury figure. One of the reasons I have confidence is that Treasury is right to use a figure that is substantially lower than the European figure—as this report from one of its economic advisers from London points out. It states that the European price is not appropriate for New Zealand—particularly because the European price is considerably more than what other Kyoto-compliant units can be bought for—and simply using the European price as a proxy for the assumed price in the Crown’s carbon accounts would therefore significantly overestimate the cost of Kyoto compliance. 
Peter Brown 
: Is the Minister aware of the promise made by the leader of the Labor Party in Australia that should Labor win the election it will introduce $10000 interest-free loans to homeowners to install solar heating; if he is aware of that does he believe that this could reduce any Kyoto Protocol liability and is worthy of consideration for introduction here? 
Hon DAVID PARKER 
: There is no doubt that increases in the use of solar heating of water reduce electricity consumption and therefore electricity greenhouse gas emissions. That is why the New Zealand Labour-led Government as part of our agreement with the Greens has given a push to solar hot water heating. That is being approached in three ways. We are trying to build volume so as to drive down the cost using market forces we have increased the subsidy and we are also driving costs out of the system—as Minister Cosgrove announced yesterday—by simplifying and making standard the consent processes which looks like it will save as much as $500 a unit. 
Peter Brown 
: I raise a point of order Madam Speaker. I think the Minister gave a very full answer but I actually asked whether he thought the interest-free home loans idea was worthy of consideration. 
Madam SPEAKER 
: I think the Minister did address the question. 
Hon Dr Nick Smith 
: Does the Minister recall Government Ministers telling New Zealand that we stood to make hundreds of millions of dollars by ratifying the Kyoto Protocol then in 2005 the Government saying: “Oops we got it wrong. We’re going to have to write out a cheque for $500 million.”; and given that the former head of the Government’s own Climate Change Office Murray Ward and also the Green Party are saying the figure is more like $1.5 billion to $2 billion will the Minister apologise to the public for the mess he has made over his numbers around the Kyoto Protocol? 
Hon DAVID PARKER 
: It will not have escaped many members that the person the member quotes Murray Ward was the manager of the Ministry for the Environment’s climate change team when the surplus of 55 million tonnes was projected. I do have confidence in Treasury’s projections. I do have confidence that it is correct as to the amount it assigns to the value of carbon. I also accept the proposition that the cost of carbon per tonne is likely to increase over time as the world becomes more ambitious in its carbon reductions. But that does not mean the cost of carbon will increase in the short term to the European price which is higher than our own. 
Hon Dr Nick Smith 
: I note the Minister accused me of scaremongering in respect of deforestation so I seek the leave of the House to table the 2006 deforestation report by the Ministry of Agriculture and Forestry stating that in fact our levels of deforestation are double those that the Government can provide for. 
Document by leave laid on the Table of the House. 
Hon DAVID PARKER 
: I seek leave to table a document entitled  
Price of Kyoto Compliant Emission Units 
 by a London economist which reports that the European price is not appropriate for New Zealand and would significantly overestimate the cost of Kyoto compliance. 
Document by leave laid on the Table of the House.