Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill — Second Reading In Committee Third Reading 
[Volume:651;Page:789] 
Tuesday 16 December 2008 
( 
continued on Wednesday 17 December 2008 
) 
Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill 
Second Reading 
Debate resumed. 
Hon PANSY WONG (Associate Minister of Energy and Resources) 
: 
 Good morning to you Mr Assistant Speaker Barker and to my fellow parliamentarians; and good morning to all the listeners and viewers. 
I remind everybody that we are debating under urgency the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. This bill is a clear indication that John Key’s National-led Government is fulfilling its election promises. During the lead-up to the election National campaigned on dumping the Labour Government’s Biofuel Bill. We intend to apply a consistent tax incentive for sustainable biofuels exempting ethanol and bio-diesel from excise and road-user charges in proportion to the blend. We are also committed to developing a process for approving the tax exemption of sustainable biofuel taking into account the impact of the net reduction of greenhouse gas emissions on biodiversity and food supply. 
National is committed to encouraging the development of the biofuel industry but unlike the previous Labour Government we listen to and trust New Zealanders. We know that New Zealanders will make informed choices. We are not like the Labour Government which believed in compulsion and did not place any trust in New Zealanders to make the right choices. Even before the introduction of compulsion in relation to the sale of biofuel New Zealanders could purchase biofuel. 
We all know the negative impact of rushing into new territory. We know that the first generation of biofuel sources had a devastating effect on many economies when people turned food crops into biofuel. We also understand and have seen the impact on deforestation of rushing headlong into pushing biofuels. We believe that in order to encourage development and place trust in New Zealanders to make those choices it is important to dump this last piece of compulsion. I congratulate the Hon Gerry Brownlee on diligently putting the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill before the House. 
Hon DAVID PARKER (Labour) 
: 
 There is a saying that it is an ill wind that blows no good. It gives me no pleasure to rise in this debate and reflect on what is going down in New Zealand at the moment under this National-led Government. I think it should send a chill down the spines of all New Zealanders that New Zealand is now backtracking on sustainability initiatives across the ambit of the environment whether it is through changes to the Resource Management Act or measures to deal with climate change or water quality. We will see New Zealand’s environment going backwards at a time when most of us accept that the world has serious environmental problems. 
I have long had a strong environmental ethic and I think that most New Zealanders do. About one-third of our country is in national parks. We are one of the first countries in the world to do something about truly trying to make our fishing sustainable in the deep seas and our inshore fisheries. I personally did a lot of work around water protection and trying to stop the degradation of waterways over many years was part of my work. I was not one of the first in the world to come to the conclusion that climate change is a serious problem that must be addressed. Others in this House like Pete Hodgson Jeanette Fitzsimons and Simon Upton were ahead of me in that regard but eventually I got there. 
I became convinced—like the National Government pretends to be—by the scientists who overwhelmingly tell us that climate change is a real and pressing problem that could change the world as we know it. It is not an exaggeration to say that climate change could change the world as we know it and this has been proven to such an extent that it is now the responsibility of politicians and Parliaments like ours to do something about it and to moderate emissions so as to not let climate change get as bad as it could get. 
I personally see climate change as an indication of a wider ill. I am personally convinced that we on this planet are living in a way that is beyond the environmental means of our ecosystems to cope. Our planet is filling up with greenhouse gases in a way that is unsustainable. There is undue pressure on our waterways; there are dropping aquifers; there are collapsing fisheries; there are dying coral reefs; there is desertification not just in Africa but also in Asia and in large parts of Australia; there is pressure on food production; and there are rising sea levels that are starting to threaten atolls. If there is even a metre of sea-level rise there will be 30 million people on the move in Bangladesh. 
These are serious problems. What worries most of us about what is happening is the truth that the world is living beyond its environmental means. More than that an international response is required in order to do something about it. Underneath that international response action by individual countries is required. It saddens me to realise that if New Zealand cannot get these problems under control then the world is doomed to a future that is not as good as it could be. 
If we look at our country with our wealth of natural resources our environmental ethic and our wealth—and we might not be as wealthy as our Australian cousins across the ditch but by God we are very wealthy compared with the world average—our low population density our climatic advantages that we already have and our richness in renewable energy we see that it is probably one of the wealthiest countries in the world when it comes to renewable energy sources. If New Zealand cannot get this right then the conclusion to draw is that the world will not. We really are to that extent the canary in the cage. We should reflect on this reality: if New Zealand does not get these issues right then the world will not. That is a very very sad conclusion to reach because that will affect our children and their children. Millions and millions of desperately poor people in developing countries will be more affected than most and it will make their futures even bleaker than they currently are. For people in developing countries who are poor their future is already bleak. 
Against that background I think it is very very sad—and I am somewhat ashamed—to be in a country that is turning its back on those problems when we can fix them or our share of them comparatively easily. That is where this bill fits in. To deal with climate change we have to reduce greenhouse gas emissions. Half of our emissions come from agriculture. It is pretty hard in that space. Things can be done to reduce agricultural emissions—I am not letting agriculture off free because some things can be done—but they cannot be reduced by a lot. The rest of our emissions come from the use of energy and from process emissions from things like smelters that use coal in the production of metals. 
If we cannot do much in the agricultural space we have to do our fair share in the area of energy. Our energy emissions come from two main sources: electricity production and transport. Transport in New Zealand has a big share in that; we are already pretty green in our electricity production and we are starting to do even better. However in transport we can do only three things: first improve the efficiency of vehicles; second change the modes of transport to more efficient modes such as more freight on rail and more freight on bigger trucks which sometimes is a good idea; and third substitute out the existing fossil fuels that we burn to produce greenhouse gases for new sources of fuel that are carbon neutral and do not produce greenhouse gas emissions. 
 The two most likely candidates in that field for New Zealand are electricity substitution and biofuels. This bill deals with biofuels. Other people have talked about the terrible injustices that have been done by this bill to Mr McNicholl and others—the job losses and the multimillion dollar losses that have been caused to industry. I am not going to focus on those things in this contribution; I am going to focus on the environmental aspects. 
Every country in the world has a problem with transport emissions; they are very hard to fix. But given that we pour billions and billions of tonnes of carbon dioxide into the atmosphere from the burning of fossil fuels for transport we have to do something about it. If we do not do anything about it we may as well give up on the ambition to reduce emissions because it will not work. Transport emissions are such a big part of the problem and that is where biofuels come in. They are not a universal panacea and they are not the answer to everything but they are an important part of the solution. They are something we can use now they make economic sense as well as environmental sense for the country they are affordable and they are achievable. 
We have heard the Minister of Energy and Resources the Hon Gerry Brownlee saying in this House and on the radio that the Government is putting forward this legislation because of sustainability concerns. The Government is actually taking out of the legislation the sustainability controls that control the import of unsustainable biofuels. Already the legislation requires the oil companies to now report the source of their biofuels. So if they are importing unsustainable biofuels they get dinged now because the public sees that and the companies will not want to risk their brand value by doing something silly during this short intervening period while more detailed and prescriptive standards are worked out. 
On top of that the Act—which this bill repeals the relevant part of—already includes more than the normal amount of detail seen in primary legislation concerning sustainability principles. It sets out three principles relating to greenhouse gas reductions on a life-cycle basis including competition with food—because of course we do not want to put up the price of tortillas in Mexico City by turning corn into ethanol—and it addresses biodiversity concerns so that people cannot knock over rainforests and orang-utan habitats in Indonesia for example to produce palm oil for New Zealand biofuels. That is not allowed under New Zealand legislation. The Minister is stripping out those environmental protections by the repeal of this part of the Act. I think that might be a mistake on his part and he does not realise it. I will be promoting amendments at the Committee stage to fix that particular omission in this bill. 
More fundamentally the Minister knows—and the National Government knows—that the biofuels that are starting to be produced in New Zealand from tallow are the most sustainable sources of biofuel in the world according to the United Nations and he is killing that industry. Not only do we have the loss of jobs and the loss of money for those people who have invested their life fortune and done the right thing—and I feel very sorry for those people—we see that the Minister is ruining the environment and that should be on his conscience. It is the wrong thing to do and it sends a chill down my back. 
CHRIS AUCHINVOLE (National—West Coast-Tasman) 
: 
 This is just a brief call. I was most interested to hear the previous speaker because he covered a range of discussion that probably we should have started this debate with because it includes very important features. I suggest though that the weak part of the Opposition’s argument is the compulsive nature of the regulation; that is the bit that is being changed. The previous speaker ended on the subject of tallow and how efficient it is at making biofuels. Tallow is a by-product in many cases but I wonder what happens to those products that would normally be made of tallow. We cannot introduce— 
Hon Darren Hughes 
: That’s not a serious point! 
CHRIS AUCHINVOLE 
: It is a serious point. It is just as serious as biofuel’s taking away food production from Mexicans is a serious point. For those who use tallow the matter of tallow production is a serious point if suddenly those people do not have that base product any more. 
However the previous speaker concentrated on the sustainability aspect and the standards that are being torn out by this bill going through. The reality is that they are not: the standards will continue to be developed they will be developed by the officials and that will be done in exactly the same time frame as or even sooner than would have been possible through the legislation that is now being changed. Therefore the central objection to this bill is void because the standards will be made they will be achieved and furthermore they will be produced by people who actually want to produce them. The whole business will not be based on the compulsive negative aspect and it will benefit from the change. 
Hon DARREN HUGHES (Labour) 
: 
 This bill the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill is in its second reading before the House. It is a very sad bill from a sad Government on this very important topic of climate change. Our country as the Hon David Parker has said has to take some pretty firm measures in response to climate change because we have so little influence over the profile of our greenhouse gas emissions. That means that every measure we take has to be thoughtful has to be resolute and has to actually mean something and do something. But this repeal bill takes away the real chance for New Zealand to be able to do something constructive with regard to climate change and it is a huge shame and a wasted opportunity that this Government has brought this bill before Parliament for debate today. 
It makes one wonder what the Government now says New Zealand is doing at all with regard to climate change. For a while after a movie called  
An Inconvenient Truth 
 came out the National Party decided that climate change was a popular topic and so there was a bit of a flurry of activity. That led to a very brief period of time when Dr Nick Smith thought he was relevant again and he was allowed to put out a Bluegreens discussion document. 
Hon Trevor Mallard 
: And where did that go? 
Hon DARREN HUGHES 
: Actually just about the only thing that National stands for in terms of recycling was putting every copy of the Bluegreens vision document into the green wheelie bins around Parliament. That is the only thing those members have done in terms of the environment since the general election. We know that that document now is out of vogue and out of step because the National Party has moved on to something else. The new buzzword is that everything must be “balanced”. We must have balance with everything. So if one does nothing on the one hand one ought to do nothing on the other. That is the new balanced approach that National is bringing to New Zealand’s response on climate change. National has decided that it is no longer a sexy topic but the problem for National is that the science has not gone away. Of course there is a question mark over that because the whole world now waits with bated breath for the New Zealand select committee of Parliament— 
Moana Mackey 
: High-level. 
Hon DARREN HUGHES 
: —which was elevated yesterday to a high-level select committee of course. I mean how anything can be high-level without the Hon Gerry Brownlee’s intellectual firepower on it is beyond me! In fact at the General Assembly of the United Nations they must be standing around the espresso machine saying that it is good of New Zealanders to decide for them what is happening about the science of climate change but that it is a pity that Mr Brownlee is not involved. That is what they are saying while they wait for the high-level committee to report back on the balanced approach of how one can do nothing on the one hand and less on the other. 
We will now have a ridiculous situation. People used to look at a little country like New Zealand—4 million people at the bottom of the earth—and see it as a bit of an honest broker. We have always punched above our weight on foreign policy; people have looked at what we have done and said that we have had a principled stand on things. They have said that we have always had good examples to back up our rhetoric on things. We have not just gone along and given the flash speeches heard at some international forums where countries with dubious records on things have got up and lectured everyone else. New Zealand has always been one of those countries that have been able to get up and say hand on heart that “This is the stand we are taking this is the reason for it and this is what we are actually going to do about it in our country to give effect to what we are saying.” 
Everything National has done since the election takes away from all of that. I can now see why it was so dismissive of and derisive towards the previous Labour Government’s ambitious goal of carbon neutrality for our country which was a vision statement of where we could actually try to go. National poured scorn on that—I thought it was just for political reasons. I thought it was just attacking the Labour Government of the day which is a fair cop in politics. Actually though it goes to something deeper than that. National does not want to do a blind thing about climate change and this biofuels repeal bill is a classic example of that. 
The problem is that this bill is not only bad for our response to climate change but it is also bad for jobs. This bill actually costs jobs in our economy at the very time the economy is in recession and job security is one of the things New Zealanders are worried about first and foremost. 
Hon Trevor Mallard 
: Who’s the member for Waharoa? 
Hon DARREN HUGHES 
: My colleague Trevor Mallard makes the point: who represents the people of Waharoa in Parliament? Do National members know? Does the Minister know who the local MP for Waharoa is? There is a lot of silence. The Minister would not have a clue of course. I want to hear from the local member of Parliament about what he will do to stick up for jobs in his electorate because that is such a critical thing at this time. The National Government not only is weakening New Zealand’s reputation and taking us down a path that is very disappointing in terms of what we are able to do on climate change but also is stopping and cutting the feet from under New Zealand - based industry. 
We know that this Minister loves to cut the base from under New Zealand industry because one of his first bold moves was to cancel the Buy Kiwi Made Campaign which is one of the small things we tried to do to give New Zealand manufacturers a chance to say there was something decent about what they did. There are jobs for hundreds of thousands of New Zealanders in that sector and we wanted to show our support for it. The campaign cost very little for the good it did for New Zealand manufacturers but the Minister has got rid of it. Now he is bringing this bill to the House. We know that Mr Tom McNicholl has put $10 million of his money behind the biofuels industry. He wanted to create jobs—47 jobs I think as a start. If that industry had got under way there would have been more and more jobs but the Government’s very clear message is that it sees no future for biofuels. That is what this bill is about. 
Hon Gerry Brownlee 
: Rubbish! 
Hon DARREN HUGHES 
: The Minister says “Rubbish!” but where are his details on tax incentives? [ 
Interruption 
] That was not the question. Gerry Brownlee is barking away over there. That was not the question he was asked. I asked him why he does not have any details on tax incentives if he is genuinely in favour of biofuels. Where is that information? 
Hon Gerry Brownlee 
: Just wait! 
Hon DARREN HUGHES 
: The point is that that is the Government’s policy on climate change—“Just wait!”. The point about climate change is that we cannot wait. We cannot have that luxury of laziness that conservative attitude of “She’ll be right; don’t worry about it. We’ll wait until Labour gets back in and fixes it up”. 
This is bigger than being just a New Zealand problem; this is a world problem that requires leadership from the Government. The only leadership that the Government has given is to say first and foremost let us cancel everything that was put there by the previous Government and let us talk about nothing that replaces it. The emissions trading scheme has been suspended even though the Prime Minister could not tell the House yesterday exactly what part is suspended. The biofuel legislation is now being repealed which will ruin any chance of a biofuels industry for New Zealand; it will ruin not only the jobs in that industry but also the chance for that industry to make a positive contribution to our economy in a clean and green way. 
Of course there is National’s disgraceful treatment of the forestry sector. We remember Dr Nick Smith coming into Parliament question time after question time screaming and ranting—that was just during the parliamentary prayer actually—as he does about the forestry sector and about his concerns about forestry. Yet National’s first thing here has meant that the new Labour Opposition’s first lobbyist friend is Dr Roger Dickie from the Kyoto Forestry Association. He is not somebody who normally sought meetings with Labour when we were in Government but he has been knocking on the door to ask us what on earth National is doing. 
In this climate change space the Government is very very disappointing; its getting rid of the biofuel legislation that is currently on the books is such a wasted opportunity for our country. I cannot understand why more members of the National Party are not motivated to ask Cabinet Ministers and the leaders of their party exactly what they will do now. When Labour was in Government its members wanted to be leaders in climate change. We were out there boldly saying that Labour thought New Zealand had a real role to be a leader in that area. The National Party disagreed with that because it never likes leading on anything. Those members said that they want to be fast followers. It was not actually their line; they waited for the New Zealand Institute to say that and then they decided that it was their slogan. They wanted us to turbo-charge our way to a balanced approach by being fast followers. It turns out that the engine on the turbo has been turned off completely and we now will not be fast followers; we will be people who just trot along. What will happen is that New Zealand will be completely overtaken in the climate change debate. 
We are a country whose economy is hugely dependent on primary industry and we require a stable climate in order to run this economy—not that we heard about agriculture science or exporting in the Speech from the Throne. National might like to work out that agriculture is the basis of the New Zealand economy; so much comes from it. We should be acting on climate change for selfish reasons. We should say that as an agriculture-dependent economy we should selfishly be worried about climate change because our economy is one of the ones that has the most at risk if we do not get it right—not only in agriculture but in horticulture in viticulture and in all the areas of our economy that rely so strongly on a stable climate. The world’s planet is so important to the basis of our economy that we should be acting selfishly if that is to be the only motivation. If that is the only way we can connect emotionally with National we should plead for it to act selfishly: “Please act selfishly on climate change.” That kind of language might get those members to do something about it. We were always motivated by saying not only that New Zealand had a role to play in the world that was bigger than just our own interests which were huge but also that we were able to lead in this field. This is just another example of National needlessly taking us backwards. 
Hon Dr Jonathan Coleman 
: Talk about the food crisis. 
Hon DARREN HUGHES 
: The Minister of Immigration mentions the food crisis and I am very interested that he does so. With the obligation on the books right now New Zealand has the ability to be self-sustaining in this area. We could now already use all the tallow that is generated in New Zealand and we could meet our obligations today from that. If the Minister does not know that then it shows that not only has he not read the bill that is before the House but also he clearly did not pay any attention during the Cabinet committee or the Cabinet process. 
Hon Dr Jonathan Coleman 
: What about the deforestation in Brazil? 
Hon DARREN HUGHES 
: The member asked about Brazil. I am glad he has asked about the Brazilians because National has not always been known for its open-minded foreign policy. If the Minister had read the legislation he would know that all of the concerns he is now yelling across the Chamber are covered by the legislation. Jacqui Dean shakes her head but in terms of her worrying about the resources of the planet I say that that was kind of put in the box when she said she wanted water to be banned and that she is the leading light of the National Party in that particular regard. 
This is a bad bill. The Labour Opposition strongly opposes it. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 The Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill is probably the saddest thing that has occurred here and we have seen the National Party approach to it in the way its members are concerned about it: they are not even prepared to get up on their feet to take a call in order to be involved in the debate. What is very very clear to me is that National members have not spent their time getting their heads around this issue. They got themselves into a position probably cajoled by the oil companies’ position of a couple of years ago and lined up by Nick Smith trying to be pragmatic but in the end they have not logically reasoned through what is necessary in this particular area. 
People should think very carefully about the comments that David Parker made. I absolutely agree with him. We have a spectacular advantage in being a small isolated country and a country in which experiments can occur. We can be a leader and some of those experiments will be successful; we have to accept that some of them will not be successful. What has been made very very clear is that in the area of tallow the research work has been done the plant development work has been done and we will be in a position to meet the obligations under this bill from July given what had occurred. 
I am very surprised that I have not yet heard Lindsay Tisch take a call in this debate. I think he needs to get up on his feet to say whether he thinks that jobs in his electorate are important. I know that if his opponent in the Waikato electorate Jacinda Ardern who made a brilliant maiden speech yesterday was the member for Waikato then she would be making some comments and she would be standing up for Waharoa. It is not a place where there are thousands of easy jobs to get. It is a rural area and a place where clearly there is quite a lot of dairy still going on but there is not a factory and not a lot of jobs in the area. 
Shane Ardern 
: Open Country Cheese is there. 
Hon TREVOR MALLARD 
: Waharoa? OK I apologise. I have my little towns out in the east Waikato mixed up. But the point that I am making is— 
Hon Dr Jonathan Coleman 
: You probably closed a school there. 
Hon TREVOR MALLARD 
: No I did not. I tell the member what I did: I had more guts than any National Party Minister. If I was closing a school I went there and I knew exactly where it was. I do apologise; I lived in Hamilton and I went through Waharoa occasionally. The point is that if I was the local member then I would have the backbone to stand up in this House and defend Waharoa against Gerry Brownlee who is stripping it of jobs. 
The decision of Gerry Brownlee and the National Party is to say that jobs in Waharoa do not matter. That is what he is saying. He is also saying to Tom McNicholl that he does not care that he is 75 years old. He does not care that he has put 10 years of investment into this project that he has lined it up following the international signals following the signals from Government and following the signals of what is possible. Tom McNicholl has done the right thing and National is to take $10 million from him. National members are going to cause him to mothball his $10 million investment—the $10 million investment that can make an enormous difference to New Zealand’s reputation. I just ask how the next time John Key meets Gordon Brown if it ever happens again he will be able to look him in the eye and say that he—Mr Key—not only is a climate change denier but also wants Mr Brown to take off his tax on people travelling to New Zealand. Not only is Mr Key denying climate change but also he is closing down plants that could make a difference. John Key is closing down a plant that could make a real difference to climate change in New Zealand—a $10 million plant; one that will employ over 40 people. It will make an enormous difference— 
Hon Gerry Brownlee 
: I bet it’s still there this time next year. 
Hon TREVOR MALLARD 
: I bet it will still be there and it will be mothballed. It will not happen. I believe Sue Wood. I do not believe Gerry Brownlee; I believe Sue Wood. 
Hon Gerry Brownlee 
: Where are they selling the stuff now? 
Hon TREVOR MALLARD 
: They are selling it raw to China for methane-producing chickens. It goes to methane-producing chickens now or it could be used to cut fuel emissions in New Zealand. That is the choice. 
Hon Gerry Brownlee 
: It’s the same outcome. 
Hon TREVOR MALLARD 
: Gerry Brownlee says that eating a chicken is the same as driving a car. He probably does both. He probably has a chicken from KFC on the seat beside him. He probably cannot drive without that on the seat beside him. He looks like he cannot go anywhere without it. I tell members that it is a major pity that the member does not live in Wainuiomata. The Wainuiomata KFC has just closed. If Gerry Brownlee lived in Wainuiomata I am sure that not only would we be driving decent fuel but also KFC would have survived because it— 
Hon Dr Michael Cullen 
: What came first—the chicken or the Gerry? 
Hon TREVOR MALLARD 
: We will not even get a “Gerry-can” of biofuel as a result of this bill. 
I go back to the point that I was making. How can New Zealand hold up its head internationally? How can we argue against the outrageous things that—I agree—the Brits are planning to do? I do not think it is on for John Key to call Gordon Brown a hypocrite as he did in the House yesterday. I think that is not conducive to good diplomatic relations. It is not conducive to good diplomatic relations to call the British Prime Minister a hypocrite. It will not help John Key as Minister of Tourism to get the next meeting in an attempt to wind back—and I agree with our Prime Minister—Mr Brown’s misguided approach in the tourism area. 
National says that it cares about jobs. We are expecting later this week an enormous package from National; an enormous job stimulus package. I would just ask what those members are doing when in this area their policy is costing jobs in the forestry sector when their policy of throwing the emissions trading scheme to the wolves is costing jobs in the carbon market and now they are taking out jobs in the biofuel industry. I cannot think of anything much better than the existing legislation. It is a win-win. It means jobs for Kiwis and less money spent overseas on importing fuels which helps the balance of payments. It reduces our emissions and helps us with our Kyoto liabilities. I ask Government members what is wrong with any of that. 
Hon Dr Michael Cullen 
: I don’t think it was a donation from Shell. 
Hon TREVOR MALLARD 
: Well I think it does get to that in the end. However I say to Dr Cullen that I have driven up and down the North Island a couple of times in recent months and stopped at Bulls where there is now 10 percent biofuel in the higher octane petrol at the Mobil service station. I do not know where else it is happening around the country. It is not happening in my local area yet but I to say to members opposite that it is already happening. It is a good thing. It is a bit like a golden egg. Why kill the goose? 
AARON GILMORE (National) 
:  
I rise to support the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill and unlike the previous speaker I will not talk about “our enormous package”. I know a little bit about the biofuels and bio-gas industry. I have been a director and entrepreneur in this industry for a number of years. I have sat here for the last day or so listening to some of the ridicule from members opposite who have been talking about how National is dead against jobs in this industry and dead against issues that would prevent people going out of business. In fact that is entirely incorrect. We are dead against the obligations that exist under the current Energy (Fuels Levies and References) Act. My own experience is that there has been a gold rush of businesses seeking tallow and other fuels to use for biofuel and bio-gas in New Zealand. A lot of work has been done on the so-called standards that were in the existing Act. When we look at them we see that there are a lot of problems with those standards and that they are essentially unworkable. 
I come from a perspective as a former entrepreneur in the sector in talking about some of those things. My own experience is that it has been possible to be successful in setting up bio-gas or biofuel businesses—these things are largely interchangeable because vehicles can run on liquefied petroleum gas that has come from bio-gas or from bio-diesel. We have done that with no help from the Government no obligations and no subsidies—and it works. Equally the international evidence from organisations like the Royal Society is such that— 
Metiria Turei 
: Why the subsidies for big companies then? 
AARON GILMORE 
: Well the member would know that as I just mentioned the companies I am involved with have no subsidies at all. 
Metiria Turei 
: Why the subsidies for the big companies then? That’s your policy. 
Hon Gerry Brownlee 
: That’s exactly what was in the law! That’s what the obligations are all about.  
AARON GILMORE 
: That is exactly what I am saying. That is what the obligations are all about—absolutely. The Royal Society in Britain has talked a lot about the issue of biofuels and the fact that many biofuels may actually cause an increase in climate change. That work has been released by the learned Royal Society of the UK. The use of specific percentages in the short run will only move to increase imports of biofuels from some of these places that we have talked about previously. Yes there is a very good opportunity to create a biofuel and bio-gas industry here in New Zealand. 
Hon Darren Hughes 
: Does this bill help? 
AARON GILMORE 
: Well the current Act does not help at all. That is for sure. All we can say is that there are many smarter ways to deliver what both sides want. We do want to deliver a biofuel or bio-gas industry in New Zealand. It does provide sustainable fuels but what is quite clear is that the current Act with its obligations does not and will not deliver that in time. As I say the current standards are unworkable and we need to make a change by introducing this bill to allow smaller companies with innovative technologies to not be obligated to operate under a system that is unworkable under the existing Act. 
A party vote was called for on the question  
That the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill be now read a second time. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Bill read a second time. 
In Committee 
Part 1 Repeal of biofuel obligation 
Hon DAVID PARKER (Labour) 
: 
 This is the most important and worst part of the Energy (Fuels Levies and References) Biofuel Obligations Repeal Bill. It repeals the biofuels mandatory obligation an obligation that was put in place to cause oil companies to start with modest levels of biofuels being blended into the fuel they sell—0.5 percent of the fuel by calorific value had to be biofuel this year rising to 2.5 percent by 2012. These were not large quantities but enough to cause the oil industry to develop the blending infrastructure and to take product from those who were willing sellers of the product in order that we start to bring forward biofuels to reduce our greenhouse gas emissions. 
It has a number of other benefits including slowly weaning us off our oil dependency. New Zealand’s biggest import cost is oil products. We spend literally billions of dollars every year on oil imports and this was a start towards substitution of some of that oil product primarily for environmental reasons but with economic benefits. 
The Minister in the chair the Hon Gerry Brownlee has been on national radio and in all of the media claiming that his justification for doing this was sustainability issues. He claimed he was repealing the biofuels legislation because he had concerns about the importation of unsustainably sourced biofuels. It is somewhat ironic that in doing that his legislation is so ham-fisted so ill-considered that he strips out of the law the only protection in law—in any law—against the importation of unsustainably produced biofuels. 
There was a view a couple of years ago—a view that I never held—that all biofuels were good. It was arrant nonsense. There are some biofuels that are bad. Some cause the cutting down of rainforests the loss of habitats for endangered species degradation of water and loss of whole ecosystems. We do not want those biofuels. The legislation we currently have in New Zealand creates standards that prevent that outcome. Other biofuels— 
Jacqui Dean 
: But no sustainability standards. That’s the problem. 
Hon DAVID PARKER 
: The legislation includes three sustainability principles that are detailed to a greater degree of specificity than is normally found in primary legislation. And I have to thank the Hon Nick Smith for his involvement in this in the select committee; he made a credible contribution to some of the drafting of that. He seems to be involved in the killing of the whole thing now but he actually made a credible effort in the select committee and I thank him for that. Metiria Turei from the Greens made a fundamental contribution to it and Moana Mackey from Labour was also influential. 
As a consequence we had three sustainability principles in the legislation. The first was the protection against loss of biodiversity because of the logging of rainforests and that sort of thing. The second was the competition with food production. We do not want to put up the cost of food because of producing a petrol or diesel alternative that competes with food production. So that principle is enshrined in there as well. The third was that there had to be a substantial reduction in greenhouse gas emissions. The minimum reduction was 35 percent from memory. 
Metiria Turei 
: It was. 
Hon DAVID PARKER 
: I thank the member for confirming that. Those principles can be articulated only in regulation. The whole detail cannot be put in the Act. So the principles were set out in detail but the fine detail that sits behind it is in regulation. That regulation was to be promulgated by the middle of next year and would have been. I know that that was achievable because I was the relevant Minister at the time and officials assured me that it could be done. It was a lot of work to do in that time but it could have been done. 
In the meantime all sellers of biofuels—that is the major oil companies meeting their mandatory obligation—had to report their source of biofuels. They were not going to put at risk their brand with accusations that they were going to be selling biofuels produced by knocking over rainforests in Indonesia. Of course they were not going to do that. More important though the myth about sustainability is exposed by the fact that those sustainability criteria that sit in the Act and will still be needed even if one does not have a mandatory biofuel sales obligation get ditched from the legislation by this one clause in this part of the bill which takes out all the relevant sections that impose sustainability criteria. So rather than making the problem better if Mr Brownlee and his Government were really concerned about sustainability issues it makes it worse. According to what we have heard from some of the interjections from Jacqui Dean they need more sustainability provisions. By repealing the provisions they do not have more; they are taking them out and leaving it worse not making it better. 
I have amendments that I will be proposing during the Committee stage because that can be fixed. One can remove the mandatory sales obligation and still keep protections against the importation of unsustainable sources of biofuels but this bill does not do it currently so I am proposing amendments which I hope the Committee will support that do achieve that. I would encourage ACT to read those because I am really trying to convince the Committee that that particular amendment does not run against the provision that repeals the mandatory obligation but it does keep the sustainability criteria for imports of biofuels. 
The second issue that Mr Brownlee says he was worried about during the election was that there was an “un-level playing field” I think was the phrase used—one of those hackneyed phrases now—to say that somehow because there was a tax break for ethanol and no tax break for bio-diesel it was wrong. Well the advice was that we needed both bio-diesel and ethanol and that was the view of the then Government—we wanted a bit of ethanol so that oil companies started updating petrol infrastructure and bio-diesel so that they update diesel infrastructure; we needed a bit of both. In order to bring ethanol on we actually needed to have that subsidy but we did not need the subsidy for bio-diesel because the mandatory obligation would be enough. So why have a subsidy when one does not need it? It seems nonsense that we are now going to talk about a subsidy for bio-diesel. But be that as it may— 
Hon Gerry Brownlee 
: No we’re not. 
Hon DAVID PARKER 
: The Government is now not going to give a subsidy for bio-diesel? 
Hon Gerry Brownlee 
: No tax equalisation. 
Hon DAVID PARKER 
: Tax equalisation is what? A subsidy for bio-diesel the same tax break that ethanol currently gets; is that effectively what the Minister wants? 
Hon Gerry Brownlee 
: That’s what is likely to be— 
Hon DAVID PARKER 
: Well this legislation does not do it. So the Government wants to protect the biofuels industry by giving it that same tax treatment that ethanol gets but the bill does not do it. Now I am promoting another Supplementary Order Paper that goes some way to doing that because I am really worried for those people who have lost their life fortune in appropriate investments in what is the world’s most sustainable source of biofuel which is tallow. I am worried for the workers who are going to lose their jobs— 
Hon Tau Henare 
: Oh whatever! 
Hon DAVID PARKER 
: Tau Henare does not care about unemployment. This will be a continuing theme from this Opposition because the Government is already causing rising unemployment not just in the biofuels industry but also in forests. 
Hon Tau Henare 
: Rubbish. 
Hon DAVID PARKER 
: I have a letter that I am going to table from the former president of the National Party complaining about the injustice that the Government is causing to Mr McNicholl who is losing his life fortune—more than 46 full-time jobs will be lost from one employer alone to say nothing of the rest and Tau Henare and the rest of the National Party say “whatever”. That is absolutely outrageous. 
 Not only is this bill environmental vandalism but it is economic lunacy and it is doing an injustice. If the Government wanted to do away with the mandatory obligation and replace it with other policy it could do so but it should do it through a select committee. It should not ride roughshod over the rights of people and do this under urgency. It should bring forward the whole of its new policy not just the dirty little bit that cuts off the mandatory obligation and kills business. It should say what it will do in its place to support biofuels. But the Government is not doing that. This bill is part of an outrageous array of policy that is to the detriment of the environment to the detriment of our economy and to the detriment of our reputation of being a good people. That reputation is something that is valuable to me. I do not do these things just for money; money is important and I am not saying we should do silly things in a money sense. This bill certainly is not just about money but the ethics of it should be brought to head too. 
I seek leave to table a letter from the former president of the National Party Sue Wood. 
The CHAIRPERSON (Hon Rick Barker) 
: Leave is sought to table the letter. Is there any objection to that course of action being followed? There is none. Leave is granted. 
Document by leave laid on the Table of the House. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Part 1 is the more important part of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill and is a part about which my colleague David Parker has asked serious questions of the Minister in the chair the Hon Gerry Brownlee. I acknowledge that the Minister attempted to reply by way of interjection but it is getting close to the time when he should take a call in order to put the National Party’s view on the record. 
A couple of major points have been made. The first regards the timing of this bill versus the timing of the introduction of the tax incentive or subsidy and the extension of the tax exemption from ethanol to biofuels and what happens in the dead period in between. I accept the Minister’s word that he intends to move in the direction of tax incentives; that could well be a logical move. That approach could well make a difference or at least neutralise the situation. What I do not accept is the chilling effect in the interim whereby a biofuel factory that is nearly built will be mothballed. The appropriate approach is to make the two changes together—to put in place the replacement provisions and then take the current provisions out—if that is in fact the direction that people want to go. I do not think that that is good policy by the Government or that it is the right approach but if the Government is heading down the path of effectively a taxpayer subsidy of biofuels for a taxation equalisation scheme then that is the approach that should be taken. 
The second point regards whether the Minister is deliberately taking the sustainability principles out of the Energy (Fuels Levies and References) Act. Every now and again Ministers make mistakes especially when legislation is slightly rushed as this legislation is. I can see no reason whatsoever to remove the principles unless it is in order to fulfil the Government’s obligation to the oil companies—or whatever we are doing at the moment. The Government probably has an obligation to the oil companies as a result of commitments made maybe a year or two ago. I am making the point that there is no need whatsoever to take the sustainability principles out of the Act in order to fulfil the policy intent of this bill. 
The principles were not in the Energy (Fuels Levies and References) Amendment Act 2008 when it originally came before the House as a bill from the Labour Government. An enormous amount of multipartisan work was done to get the principles agreed to and I acknowledge that Dr Nick Smith took a role in that work. I know that members of the Green Party and Moana Mackey were actively involved in it as well. It was quite a good example of members of Parliament working together positively in a select committee. When that occurs it is good for New Zealand’s international reputation; it was logical and coherent. Even if we go back to the old Ruth Richardson approach we should still ask what mischief we are trying to fix here. The mischief that we are trying to fix is not the sustainability principles. 
The National Party has a different view as to the proper approach to this issue and as to whether there should be regulation as far as quantities of biofuels are concerned. I think it is fair to say that it is not part of a secret agenda. National members were clear about that before the election—they were wrong but they were clear. They won the election and they have the right to bring in legislation in order to fulfil their election commitments. But as they are doing that we have to keep considering what the best way of doing it is that does the least harm. 
It is becoming increasingly clear that the approach National is taking is not well reasoned. I point to the ACT Party and in particular to Rodney Hide who has responsibility for regulatory matters. Rodney Hide has responsibility for regulatory impact statements; this bill does not even have a poor excuse for one. There are a couple of explanations for that. One is that it was so rushed that even a vague attempt at an unsatisfactory report could not be made. Last week a couple of bills before the House included very poor regulatory impact statements. They stated that a narrow group of Government departments had been consulted. In a couple of cases they gave their views—I think only where it suited the Government. I think that the Ministry of Economic Development stated that the 90-day legislation did not go far enough; that was included in the regulatory impact statement of the Employment Relations Amendment Bill. 
Why is there not a regulatory impact statement in this bill? It is because if there were such a statement then the National Party would have to put on record in the bill the effect of the legislation on Mr McNicholl. A clear effect of this legislation is the confiscation of Mr McNicholl’s investment. The Government is saying to Mr McNicholl in a way that is pretty unusual for the National Party that although he has made a big private investment and he has put a lot of his family money—the vast majority of his family money I understand—into this investment it does not care. The Government is saying that that is not important that it does not respect private investment and that it does not believe in the principles of regulatory certainty. 
I think the New Zealand Parliament has got a lot better at regulatory certainty over the years. There was a period of time with Sir Robert Muldoon—and probably to be fair Sir Roger Douglas—when there was not a lot of regulatory certainty. They went off in different directions with their regulation—or lack thereof—but both of them destroyed a lot of wealth in New Zealand as a result of their lack of commitment to regulatory certainty. This bill takes away certainty for people who have made a very big investment. 
This bill will do us enormous harm internationally. The suspension of the emissions trading scheme is just an embarrassment. Maybe it is fair to set up the Emissions Trading Scheme Review Committee—a committee that at least some people claim will go into the science of whether climate change exists—because John Key has had two positions: believer and non-believer. Maybe he really does want a committee to tell us whether climate changes exists and whether global warming is important. If that is the case why can he not be honest about it? If he is really still a doubter about climate change—if the Prime Minister of New Zealand is standing almost alone amongst world leaders in doubting climate change—why can he not front up and say that that is the case? That would be a better explanation for this legislation and for National’s pandering to ACT in the setting up of the Emissions Trading Scheme Review Committee. The Prime Minister says it is a high-level select committee. Is that not embarrassing for every other select committee in Parliament? It is not a high-level committee at all; it is a committee of members of Parliament nominated by their parties in a very normal way. I do not think there is an excess—other than from the Labour and Greens side—of intellectual power on that particular committee. 
The point I am trying to make is that that select committee along with this bill and along with the suspension of the emissions trading scheme makes New Zealand look like a country that is absolutely in reverse on its climate change policy. 
Hon Member 
: And forestry. 
Hon TREVOR MALLARD 
: The forestry area is another area. 
We had the potential to lead the carbon markets in the world but John Key has stuffed that. This bill is a sad bill and we will suffer for it. 
METIRIA TUREI (Green) 
: 
 I was on the Local Government and Environment Committee which considered these provisions and worked very closely with Moana Mackey— 
Hon Member 
: And Nick Smith 
METIRIA TUREI 
: Yes and Nick Smith. He was very engaged in the discussion and the debate particularly on the sustainability clauses. In fact the Green Party is the architect of the sustainability clauses. There was some provision for them in the original Biofuel Bill but we redefined those clauses and the sustainability principles significantly in order to meet the growing concerns about the impact of unsustainably grown biofuels not just in terms of greenhouse gas emissions but in terms of their impacts on indigenous biodiversity indigenous communities and starvation around the world. It is certainly true that very large corporations particularly oil companies and others are looking at buying up millions and millions of hectares of land in places like Africa South America and the Pacific whether it is indigenous forest cover or other land that is used for food production in order to grow biofuels to feed the increasing market for alternatives to petrol and oil fuels. Western countries in particular are desperate to find ways to fill their gas-guzzling sport utility vehicles as opposed to developing countries which are desperate to fill the starving bellies of their people. 
The first principle that we fought for and which was included in the legislation was around the fact that a sustainable biofuel must emit significantly less greenhouse gas over its life cycle than obligation engine fuel emits. We were very clear to put in a principle that identified both the production of that biofuel as well as a percentage limit. It was a hard-fought-for discussion in the select committee. Many hours were spent on debating the wording of the principles to make sure that they were practical achievable and set an extremely high standard so that New Zealand would not contribute to starvation would not continue to contribute to greenhouse gas emissions where it was possible to avoid doing that and would not contribute to the elimination of indigenous biodiversity. So we were very pleased to see that we had a very strong principle around emitting fewer greenhouse gas emissions. There was no problem with that; the committee was OK with that. I do not remember Nick Smith having a big problem with it; maybe he did have one. It certainly seems very odd that he wants to get rid of that principle now. 
The second principle was very important to us. It was around food production: that sustainable biofuels should not compete with food production and should not be grown on land of high value for food production. That principle was put in place specifically to meet the concerns that Nick Smith expressed. He had very deeply held concerns about the destruction of indigenous rainforest in Brazil and he talked a lot at the select committee about how those communities were using food-growing land to make biofuels and then cutting down indigenous forests to feed themselves. He said it was terrible that poor people had to do that in order to sustain themselves in Brazil when it meant the destruction of the rainforest and that all of the really good food-producing land would be used for biofuels instead of food. I am sure he had a genuinely held concern that that should not happen. 
I was happy and the Green Party was happy to work through those issues and to find wording that would meet Nick Smith’s deeply held beliefs and concerns about Brazilian rainforests. So we came up with the words stating that the sustainable biofuels were not to “compete with food production” and would not be “grown on land of high value for food production”. That was specifically put in there to address the really deeply held concerns that Nick Smith had about biofuels. In the end the result was a very good one actually; it turned out that the standard is a very high one. We are talking about very poor communities in those countries. We are talking about indigenous communities in those countries and often about people who for example have the lowest incomes the highest rates of child mortality the highest rates of poverty and the highest rates of homelessness. The communities of those countries really are struggling and we wanted to make sure that we provided the best protection we could in New Zealand as far away as we are from them to make sure we did not contribute to those problems for them. 
So that is what we did; we put in the sustainability clause on food production specifically for the sake of Nick Smith. We did that so he would know when he was driving his car around with a biofuel blend—and I do not know what kind of car he drives—that he was not starving a poor Brazilian child and that he would know a poor Brazilian family was not having their home and livelihood wiped out because the land on which they were growing food to feed the family for the next 6 months or the next year was now to grow the biofuels that would feed his car while he travelled with his family around the country perhaps on their Christmas holiday a nice family trip or maybe even just a Sunday drive. Nick Smith could then therefore feel secure that he was not contributing to the poverty and the starvation of those poor people. 
But it turns out that an ideological gap of some kind some ideological lacuna in Nick Smith has driven him to argue—and he must have argued this in Cabinet—that the sustainability clause that he so wanted to see in the legislation and that he worked so hard to make sure was in it is now being taken out. His concerns about poor Brazilian children and poor indigenous communities—that they might starve as a result of land being used for biofuel production and that the indigenous forests from which they might gather their food or take their medicines or that they might have their cultural expression or engagement with would be destroyed in an effort to grow the food previously grown on the land now taken to grow biofuels—have all gone now. For some strange ideological reason Nick Smith has decided that when he drives his car around the country takes his family for a Sunday afternoon drive or maybe goes away for a weekend or perhaps even for his Christmas holidays he does not mind if his car is being fuelled by— 
Hon Darren Hughes 
: What changed? 
METIRIA TUREI 
: If Nick Smith does not now mind that unsustainable biofuels may be fuelling his car if he does not mind that a Brazilian child may perhaps starve to death because the land from which that child would otherwise have had food is now being used to grow biofuels and if he does not now mind that a poor Brazilian family may have lost their home lost their land and lost their forest to the large multinational corporations that will buy up indigenous forest and destroy it to grow biofuels on what did change? 
What happened to poor Nick Smith that meant he could feel so strongly about those people in one instance and then completely desert them in the next just as a result of the election? It is a disgraceful and very sad demise of the principles of Nick Smith that he could change his position so much and actually be in the end responsible for public subsidies going to the very international corporations that will buy up food-growing land for biofuel production and that will buy indigenous forest cover and destroy it—knock it down—in order to either grow more biofuels or provide food sources for those communities even though they were perfectly fine beforehand. The public subsidies will go towards impoverishing indigenous communities. The public subsidies will go towards destroying indigenous forest eliminating the habitat of precious rare indigenous species and even destroying the New Zealand industry in biofuels. 
I do not know how Nick Smith or even Gerry Brownlee could have possibly thought that it is a good idea to have a sustainable New Zealand biofuel industry taken out and jobs lost right at the time when we are most concerned in this Parliament about the economic insecurity of the community and when we are most concerned about increasing job losses. There have been massive job losses in the last year or two just as a result of the slowing down of the economy. Right at the very time when the local industry had a foot in the door and was able to compete with the multinational companies National now wants to subsidise and pump money into those multinational companies. Just at the time when the local industry had the opportunity to grow and to provide jobs for New Zealand workers and to support New Zealand families and their children Nick Smith has decided to take all that away and to provide public subsidies to cut New Zealand jobs destroy a New Zealand industry starve and impoverish indigenous communities and destroy indigenous forest. This is being done by the National Government which supposedly has such a commitment to sustainability and environmental principles. 
Moana Mackey 
: That’s right! 
METIRIA TUREI 
: Yeah that is right. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 We have had the first and second readings of this legislation and now the Committee stage. The second reading was a bit of a repeat of the first reading because of course there was no select committee in the interregnum. There was no report back from the select committee because there was no select committee. So we had a somewhat repetitive debate in the first two readings of this legislation which was characterised by a great deal of sophistry—by a great deal of pretence from the Government speakers. 
However through that pretence or sophistry a couple of threads emerged—for me anyway. One of them was that the technique of a mandatory sales obligation did not fit with the ideology of the new Government. That is a fair enough position—it is entitled to its ideology even if it does not make sense—but ideology it is. The second was to do with the fact that the Government was concerned—I think those concerns were manufactured—by the fact that there was no regulation in place to secure the sustainability aspects of biofuels. 
Let us take a look at these two issues. The first is the Government’s ideological resistance to a sales target. The sales target or a mandatory sales obligation is one tool that is used broadly to promote energy change. In the free market of the United States—in that great home of the greatest economy that the world has ever seen—mandatory sales obligations in energy are very widespread; they occur in many many states. It may even be that they occur in most states; I simply do not know enough detail. But it is common indeed for state Governments in the US to require mandatory sales for this or that—most particularly in renewable energy for the electricity sector. So there is nothing particularly ideologically blinkered about this or that American state but none the less we find that this Government has decided all by its little self that a mandatory sales obligation is somehow an ideologically impure act. 
The whole idea of a mandatory sales obligation is to ensure that the wholesalers—that is to say the oil companies—put in the infrastructure that they need where they want to in the parts of New Zealand they want to to begin to build a distribution system that we know this country will need sooner or later. That is what a mandatory sales obligation does; that is its function. 
But it is the second issue I want to concentrate on in this contribution. We are in Part 1 of the Committee stage and many speakers before me have pointed out that the Government cried crocodile tears over the fact that we are not fully paid up in terms of getting our regulation written for sustainability—that is correct; it is not due until 30 June next year—and that therefore we cannot do anything now. 
There are two different ways of approaching that and I would like to invite the Minister in the chair the Hon Gerry Brownlee to take a look at these two different ways. The first is to simply delay the legislation by say 6 or 12 months. A thing to do would be to come up to this Chamber with an amendment that said that because we do not have lock stock and barrel in respect of the sustainability regulations—even though we have more legislation in law than any other country in the world and even though we have mandatory transparency regulations making oil companies tell us where they get their biofuels from—because the door is still slightly ajar we could simply delay this legislation by say 6 or 12 months until that regulation is promulgated. The Minister may want to take a call and indicate why his Government is going for abolition instead of delay. The second thing however is this: the Minister’s position as I understand it—and again I would be grateful if he would clarify his position—is that the Government is of a view to promulgate sustainability regulations for the future in respect of biofuels anyway. I wonder whether the Minister could give some sort of body language indication as to whether that is the case. 
Hon Dr Michael Cullen 
: A wee wobble. 
Hon PETE HODGSON 
: A wee wobble. No we have wobbling going in all sorts of directions. Why do I not just repeat the question? My understanding is that the Government is of the view that this country will at some point need sustainability regulations as they affect biofuels— 
Hon Dr Michael Cullen 
: In the fullness of time. 
Hon PETE HODGSON 
: —in the fullness of time. I ask the Minister whether my understanding is correct. I have an affirmative ladies and gentlemen. I have an affirmative from the Minister and I thank him for that. That piece of body language tells me that the Government will promulgate sustainability regulations as they affect biofuels. It raises an interesting question: to which part of which primary legislation might these regulations attach? You see we have before us in Part 3 of the legislation that is being abolished the most advanced progress on defining sustainability for biofuels in Western legislation. And we are about to ditch it. What is sensible about that? 
Hon Dr Michael Cullen 
: We did it—that’s why. 
Hon PETE HODGSON 
: Oh it is because the previous Government did it—the naughty old Labour nanny State Government! Is that right? The legislation being abolished is really good. It is legislation that is particularly good and we know that because it was argued by none other than Nick Smith in the select committee. We know it is multiparty; we know the Greens were deeply involved; we know the National Party had its role to play; we know people like Moana Mackey from the Labour Party were actively involved; but it was all done during the time of the dirty rotten stinking Labour Government. I ask the Minister whether that might be the reason why we have to ditch this legislation. Oh we have a negatory response! We have a negatory response from Mr Minister. I am grateful for his forward communication but I want him to take the stand if he will and please give us some indication of when we might be getting some better-than-before regulation concerning the sustainability of biofuels and to which part of which primary legislation we will attach these regulations when we have them or whether we have to come back to the House and put back in that which we are today seeking to abolish. 
We have a negatory response there too. I am confused; I am bewildered! I need the assistance of the Minister. I need the assistance of the uber-Minister and the intellectual rigour that he can present to the Committee. 
Hon Gerry Brownlee 
: Read the bill. 
Hon PETE HODGSON 
: I am being told to read the bill. The bill says: “Let’s get rid of what we’ve got. Yours sincerely.” That is what the bill says. That is the beginning and end of it so one does not need such a long time to read the bill. 
I ask these questions seriously. First of all if the issue is that we have not locked and shuttered all of the regulations that officials have not got themselves to June 2009 and that therefore we have some sort of chink in the armour why not go for say a 6 or 12-month delay? Secondly if the Government’s intention is—and I am assured by the Minister’s body language that it is—to come up with very good sustainability regulations for biofuels then where will those very good sustainability regulations for biofuels sit in the architecture of the statute of the land? I ask whether the Minister would care to take a call and answer either or both of those questions. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
MOANA MACKEY (Labour) 
: 
 I point out to the member who just moved a closure motion Chris Tremain that Part 1 is the part of the bill that repeals the mandatory obligation for oil companies to provide biofuels. It repeals the sustainability standards. I think it shows the contempt in which National holds this Committee that it would move a closure motion so early on in the Committee stage. 
Hon Darren Hughes 
: Before the energetic Minister even had a chance. 
MOANA MACKEY 
: Before the Minister of Energy and Resources who is in the chair has even had a chance to get to his feet. I know he wants to respond; he has been itching to get up and I look forward to his contribution. 
I start by thanking the officials who worked on the original biofuels legislation. They worked incredibly hard to provide the select committee with advice under very tight time frames. I apologise to them that we are back in the Chamber undoing a lot of the good work they were involved in. 
I would like Mr Brownlee to take a call because he made a very interesting comment in either his first reading speech or his second reading speech—they were about half an hour apart so it is hard to differentiate between the two—that all the oil companies would come to him to ask to defer their first year’s obligation. I think that claim needs to be explored in the Committee. He did not of course mention that there is a 5 percent penalty for any oil company that wants to defer—it would have to add 5 percent on to the following year’s obligation. I genuinely would like the Minister to take a call to explain why he said that all the oil companies would ask to defer their first year’s obligation because I think that comment which he made in the House last night was important. 
This bill has not been to a select committee. Many members have made that point and it is important to make it again. The Minister in the chair does not seem to care about Mr McNicholl the jobs at that plant that will go and the loss of the $10 million investment. Mr Tau Henare said “So what?” I believe when that was raised. 
Hon Darren Hughes 
: He said “Whatever!” 
MOANA MACKEY 
: Oh “Whatever!”. I am sorry; I would hate to misquote the member. 
Hon Darren Hughes 
: He’s cool. 
MOANA MACKEY 
: Quite. I think it is important that the Minister who did not allow this legislation to go to a select committee takes some calls in the Committee stage. National should appreciate that the Committee stage is very important when a bill has not been to a select committee because it is the only opportunity that members on this side of the Chamber—and through us members of the public—get to question the Government on what is in this case a terrible piece of legislation. I would urge National to think seriously about this bill. 
I congratulate the Leader of the House Gerry Brownlee on his 100 percent success rate so far in not having bills go to a select committee under his watch—100 percent of bills have gone straight through the House with no select committee process and no public accountability. I am sure Mr Brownlee is very proud of that record. I note that even in the current urgency motion the only bills that he is sending to a select committee are the previous Labour Government’s bills that have been carried over from the previous Parliament. All the bright new ideas that National members have come up with themselves are just being forced through. I think they are a little bit scared of what the public might say if they got to have their say at a select committee. 
Labour members of the Local Government and Environment Committee worked very hard on Part 3A of the Energy (Fuels Levies and References) Act—the part that is now being repealed. It was at about the time that a lot of information was coming out from the United Nations from the OECD and from the Parliamentary Commissioner for the Environment about the dangers of biofuel. We took all that on board which is why Part 3A as enacted is considerably different from what was in the bill that was referred to the select committee. Members of the select committee worked incredibly hard to develop the sustainability standards that we now find in the legislation. One of the submitters told the select committee that that submitter had joined the United States federation of biofuel producers—or whatever it was called—which is predominantly made up of the oil companies and in the time that the submitter had been in that group it had spent US$118 million on discrediting biofuels. In comparison a much smaller amount had been spent by the groups that were trying to promote biofuels. That was something we as a select committee had to consider when we were looking at the information being put before us. 
There will always be reasons for not passing environmental legislation. It does not take a brainiac to sit down and work out an argument against doing something. That is the easy part. The harder part is to say we will not throw up our hands and say it is too hard; to say we will work to develop sustainability principles that are more advanced than those anywhere else in the world and then we will send our Minister away to do some work on those standards. One of the important parts of the part that is being repealed is the obligation for the Minister to go away and develop proper standards and regulations. Repealing Part 3A means that Mr Brownlee can do nothing. Under the current Act by the middle of next year he would need to report back to Parliament with details on those regulations or reasons why they had not been developed in the time frame set for developing them. By repealing this part of the Act the National Government is washing its hands of there being any requirement in law for it to do anything about sustainability standards. We simply have to take those members’ word that that is something they want to do. 
Well I say to members of this House that we should look at their record so far in their first 1.5 weeks in Government. Let us see how much we can trust National members to do what they say they will do on sustainability standards. We have seen a stalling of the emissions trading scheme—although we are not quite sure any more whether it is a stalling. 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
:  
It would be great if those opposing this Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill actually knew what we were talking about because quite clearly there is some confusion about the principal Act that this Labour Opposition believes we are dealing with. I will make it very very clear. Nothing in the bill that we are debating today will prevent the development and promulgation of sustainability standards. 
Mr Hodgson asked what will be the principal Act against which those regulations are set. It remains as it always has the Energy (Fuels Levies and References) Act 1989. Part 4 provides for a number of things. Section 35(1)(c) provides that sustainability standards for all fuels sold in New Zealand should be published. All I can say is that this section is not being repealed so the obligation in the sense of sustainability standards remains in place. 
Hon Members 
: It’s not an obligation. 
Hon GERRY BROWNLEE 
: Well it is actually. We think it is an obligation. We as the Government believe we are obligated to provide sustainability standards for those who want to sell biofuel in New Zealand and we will do that. The officials have started the work. They have indicated that under the previous Government’s work plan it might have taken them 3 or 4 years to get there. We have said that we want it much much sooner than that. We do appreciate though that no country in the world has developed those standards yet. The European Union has been at it for some 13 years and has not got there yet. But the National-led Government will make it sometime during next year. 
The other thing I would say to Moana Mackey is that section 35(1)(d) of the principal Act provides that there should be a statement at the pump regarding the sustainability of the fuel being sold. That section is also not being repealed today. What we have is simply a bill that takes out the obligation that says biofuel must be sold in New Zealand at particular percentages by the fuel companies—the ones that are selling fuel. 
It is the compulsion aspect that will kill sustainability in New Zealand: the short showers that New Zealanders were almost restricted to the types of light bulbs that people have to buy and also now the blend of fuel that people must put inside their fuel tanks. That is what was wrong with the approach of the previous Government and that is what is being changed. 
I will say it again. At the moment 20 million - plus litres of biofuel are produced in New Zealand each year. It is being sold somewhere and the development of further plant to produce biofuels will see those sales increase. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 Well that was the best that the Minister could do saying that the Government has the power under old Labour Government legislation from 1989 to make rules about sustainability. The problem with that argument is that the rules are not specific. They are not according to particular criteria as they are under sections 34G and 34H of the current Act—the Energy (Fuels Levies and References) Act—which is why my colleague Mr Parker has put forward an amendment to retain sections 34G and 34H. I suggest that the Minister look carefully at that because it will help him in the future. 
In section 34H there are particular principles around biofuels emitting less greenhouse gas biofuels not competing with food production or being grown on land of high value for food production and biodiversity and land with high conservation values being preserved. These are important issues. Under what the Minister is proposing to use he will not have those kinds of criteria necessarily at all but a very simple statement at the pump which will be just about as useful as most statements of a commercial variety telling people what is happening in terms of those kinds of things. 
The fact is that the real reason the National Government is repealing this legislation is that it is Labour Government legislation from the last year or two and therefore it must be wrong. It is a “Yah boo sucks—I get to play with the marbles!” kind of approach to sensible legislation. The legislation we are repealing was extremely carefully thought through with very considerable output from a wide range of experts who came before the select committee. What we are replacing it with is nothing of the same order of size or quality in that regard and there can be no reliance upon that. 
We then come to this extraordinary argument about the nanny State and this compulsion which is that if we are somehow compelled to have biofuels then we will have less biofuels than if we are not compelled to have biofuels. It is a very strange inverted logic. This is because the Government says it will have a tax incentive and that is a tax incentive where there will be no excise duty on biofuels. Well there is no excise duty now on ethanol the mix for petrol. 
Indeed as the Minister knows—and let us not have one of these “Oh my God is that what Labour’s secret plan was?” reactions because it was all publicly announced—the Labour Government was going to increase the excise duty on the petrol portion to keep the excise duty on the total litre of fuel at the same level. The gap between the duty on petrol and the duty on ethanol would have actually increased under what the Labour Government was going to do. So if there was an incentive then the incentive would have been bigger under the previous regime than it will be under this regime. There was not only a mandated minimum but also a larger incentive to go higher than that mandated minimum. The real problem is that because the National Government of the 1990s repealed excise duty on diesel there is no excise duty to give relief from for bio-diesel so what this Government is presumably planning is to give some kind of rebate to bio-diesel producers. 
Hon Member 
: But they’re not doing it. 
Hon Dr MICHAEL CULLEN 
: The Government is not planning to do that according to what we can find out so far. There are no specifics around that. And if it does that kind of thing then it has to be paid for from somewhere else in the system. There is no free lunch. 
Indeed Dr Smith’s extraordinary argument which was so economically illiterate was that if instead of charging people the full price we give them a subsidy out of taxation this somehow lowers the cost to them. It lowers only the cost that people see at the petrol pump; it does not lower the cost to them. They are paying the cost somewhere else within the system; they just do not see that specifically. It is just a complete smoke and mirrors trick and it is bad economics because it gets all the signals in the wrong place. The nanny State is replaced by this kind of au pair State which is what the National Party wants to have instead in that regard. 
In terms of the cost the argument is that it will cost more but the cost is only a few cents in any case. Either National wants to have biofuels or it does not. If it does then biofuels at low oil prices will cost more than oil. Those members cannot have it both ways. They cannot say: “It may cost more and we still want to do it but because it might have cost more under Labour that is bad. But if it costs more under National then somehow that is good and it will still happen in any case.” The illogicality of the arguments being put forward in this debate is appalling 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 I would like to celebrate that this Committee is having a huge debate around sustainability and that the key issue exercising people on both sides of the Chamber is how we can get the most sustainable biofuels in New Zealand and make sure that our fuel-purchasing policy does not contribute to world hunger does not destroy the rainforests of South-east Asia and does seriously reduce carbon emissions. But I am afraid that that is only the appearance of what is happening. What has actually happened is that very early on in the debate on biofuels the National Party found a line of attack because the bill as introduced did not say anything about sustainability and the information that was coming out internationally at that stage was about the serious effect that some biofuels were having on food supply and on biodiversity. Having latched on to this line of attack National members are determined to hold on to it regardless of the fact that the strongest sustainability clause in the world has been drafted by the Greens and the previous Minister and put in the legislation but National members are trying to pretend that it is not there. 
In fact what is happening here is that in order to ensure that we have sustainable biofuels the Government is proposing to remove the quite specific clause that indicates what sustainability standards have to achieve. There is nothing in the old Act the Government is planning to use to indicate what sustainability is or should be. The Minister’s press release that said there was going to be sustainability standards mentioned carbon reduction only; it did not even mention the problems with food security and biodiversity. So the Government is going to take away the quite clear direction that the regulations currently have to meet—that the sustainability standard will ensure that it does not compromise food security and biodiversity and does reduce carbon—and replace it with nothing but the word “sustainability”. Nobody who sees that could believe that National has any interest whatsoever in the sustainability of biofuels; it is simply a convenient line of attack on the previous Government. 
The Government is actually doing this because of the ideology that nothing that is mandatory can possibly be good and that the way to meet policy goals is to always give people choice and freedom but not compulsion. The previous National Government tried that with building standards with the building code and with the verification that houses were built to spec but what did we end up with? We ended up with leaky buildings precisely because it did not believe in having mandatory enforceable standards. So we got a whole lot of greedy developers poor design poor construction and poor local authority oversight which led to a massive headache that the previous Government never managed to solve and I suspect that this one will not either. It will be hanging around members’ necks for quite a while. 
The Government says that we cannot write sustainability regulations because the rest of the world has not quite done it yet. Well I want to know whether the Minister has called in the two very good officials who have been working on the regulations and whom David Parker and I talked to about just what could and could not be done. When we gave them a bit of a shove they agreed that yes of course they could do it by the middle of next year; it would not be 2011 but it would just have to come up their priority list a bit. They were quite enthusiastic and exercised about how to write those standards and I was really looking forward to them coming out. Has the Minister called them in and asked them whether they really can do this job whether they are worried they do not have a lot of international precedents to follow and how they are getting on with it? I do not believe he has. I think he is just saying that New Zealand bureaucrats are no good that New Zealand officials cannot do it and that we are not going to have standards in time. I think that shows a terrible lack of confidence in the people who are advising him. 
Hon Gerry Brownlee 
: What rubbish! 
JEANETTE FITZSIMONS 
: Well I really hope the Minister is going to take a call and say “Fitzsimons you are totally wrong. I did call those officials in and here is what they said.” 
JACQUI DEAN (National—Waitaki) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon David Parker to clause 4 be agreed to: 
to omit “Part 3A is repealed” and substitute “Sections 34B to 34F and 34I to 34ZA of Part 3A are repealed”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 58 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1. 
Noes 62 
New Zealand National 57; ACT New Zealand 5. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Part 1 agreed to. 
Part 2 Consequential amendments to principal Act 
Hon DAVID PARKER (Labour) 
: 
 I have proposed an amendment to this part of the bill to give the tax break or the subsidy that National has said it wants to give to the bio-diesel industry in order to give it competitive neutrality with ethanol so as to bring forward bio-diesel but that National has not included in the bill. National finds it easy to draft a clause that completely ruins the biofuels industry in New Zealand a fledgling industry at the cost of scores of jobs. We know of one factory alone that will as a consequence of this legislation lose current jobs and jobs that are about to be created. It will lose at least 46 full-time jobs plus no doubt some part-timers and millions of dollars of capital investment. That is I emphasise but one biofuel producer and maybe just maybe a tax break on bio-diesel would be enough to save that company. I somehow doubt whether it will be enough to do that because the fundamental problem is that the oil companies do not want the bother of selling biofuels. They have their existing product streams that they buy. They import product from offshore and they do not want the hassle of having to blend in 0.5 percent of biofuels in the first year. It is easier for them not to do that so without compulsion they probably will not do it. 
But there is a chance that the oil companies might do so if the subsidy for bio-diesel—which National campaigned on and said was its policy—was put into place now. That might save those jobs. That might save the family fortune of Mr McNicholl. It might not do so but it might and National would at least be honouring its pre-election commitment that it would give a tax break equivalent to the tax break that ethanol gets. Ethanol gets a tax break of 42.524c per litre. That is the excise duty on petrol. Road-user charges are paid for diesel and it is not as easy to give a break on that but we can give the equivalent of the excise duty as a tax break to bio-diesel sellers—and National has been proposing that. 
That is what my amendment does in its proposed new clause 16. It takes only three lines to meet that promise. It states that the sellers of fuel will get a credit against the levies they have to pay under the Energy (Fuels Levies and References) Act “equivalent to 42.524 cents per litre of biodiesel sold by the levy payer.” It is very simple; why has National not done it? I am proposing an amendment that might protect the jobs I spoke about. It is less ideal than the mandatory sales obligation which is simpler gives some certainty to the producer and has a better environmental outcome as a consequence of that but as a second-line alternative that amendment is pretty good. 
I ask the Minister in the chair the Hon Gerry Brownlee whether the National-led Government will vote in favour of that amendment. It does only what he said the Government would do which is to give an effective tax incentive to bio-diesel equivalent to 42.524c per litre of bio-diesel that is sold. It does that by way of having a credit against the levies that would otherwise be paid by the sellers of ordinary fuel. It is very simple to understand. It might protect the jobs that I spoke about or it might not but it is more likely to do so than the current regime that is being pushed through under urgency by this National-led Government without any select committee process. I urge the Minister to consider that. 
The alternative is that the National Government will do to the biofuels market what it has already done to forestry. It has cost that industry over $300 million and probably $400 million of inward direct investment. It has killed scores of jobs in the forestry industry through the suspension of the emissions trading scheme and the uncertainty around it. This Government has killed jobs in the service sector. We had some of the largest companies in the world that trade in carbon rights coming to New Zealand to set up business. They were to open their New Zealand offices in the week that the National Government said it would suspend the emissions trading scheme. Those businesses cancelled that with the cost of jobs. The “Great White Trader” John Key—we are told that he was a trader to the world and has wonderful commercial skills—has killed the carbon market. 
MOANA MACKEY (Labour) 
: 
First of all I will just mention how disappointed I am in the member Jacqui Dean who sought to shut down this debate so quickly. This Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill has not been to a select committee. This is the only chance we are getting even to try to question the Government on why it is doing this and on parts of this bill. The Minister in the chair the Hon Gerry Brownlee seems particularly reticent to stand up and answer any of our questions. He has answered only the questions he has wanted to answer and then he has answered some questions we did not even ask. Well that is not particularly useful and I point out to the Minister once again that he is ramming this bill through under urgency. 
This bill should have gone to a select committee so that Mr McNicholl and other people who are adversely affected by the repeal of the mandatory biofuel obligation could have had the chance to have told us why. National members who believe that Mr McNicholl is lying and is just saying what he is saying for some competitive advantage would have had the opportunity to put those questions to him I say to Mr Brownlee and to challenge him at a select committee rather than to stand up in this Chamber where Mr McNicholl has no right of reply and no ability to defend himself and just call him a liar and a scaremonger. I do not think that that is good for the Parliament of New Zealand. I do not think that that is good enough for this Parliament. I think that if that is the way this National Government is to continue with 100 percent of bills so far being rammed through under urgency in this House with no select committee process then it will be a very long 3 years for the people of New Zealand. 
Jacqui Dean is probably worried about compulsion. She is the member who wanted to ban water so I find that concern slightly difficult to take from her. But I will support the amendment of the member David Parker. The relative tax treatment of different fuel types was something that the select committee did consider quite carefully. As the Minister will know in the explanatory note that accompanied the Biofuel Bill that came back from the Local Government and Environment Committee we recommended that a total review be made by 2010 in order to consider all fuel types. The review was to consider not just vehicles using biofuel and engine fuel but also electric vehicles—which we were told during the select committee process had to drive around with a sticker on them stating “diesel” I think because that was the category they fitted into most easily as current rules did not allow for them—and to consider LPG as well. Perhaps it is time to review the way in which we tax vehicles and to apply an environmental eye to that and not just to apply road-user charges and excise duty. 
When Gull Petroleum first wanted to blend ethanol into its fuel it wanted to know what the relative tax treatment of ethanol would be. Currently ethanol is brought into New Zealand for two reasons: as drinking alcohol or for use as a chemical. Ethanol as a chemical attracts no excise; ethanol as a drink obviously attracts alcohol excise duty. A decision was made at that time to allow the excise treatment of ethanol as a fuel to be treated as ethanol as a chemical which meant that it would attract no excise. The company was given a commitment that until 2012 that would be the case and that the decision would not be reviewed. We took that very seriously at the select committee. Gull Petroleum had made all this investment in its infrastructure and in bringing in blends and it had gone into a contract with Fonterra until 2012 to take ethanol from whey to blend into its fuels so we did not want to say to Gull Petroleum that we would take that away at that time through a select committee process that had been looking primarily at a mandatory biofuels obligation and not at the relative tax treatment. 
But the point was that we were putting in place a mandatory biofuels obligation that addressed a number of those issues; with that being taken away suddenly this becomes a far more pressing issue. That is why I urge the Minister in the chair Gerry Brownlee to support this amendment. It does what he has already said in this Chamber that he wants to do so I do not see any issue with that. But it provides some kind of incentive which he will be taking away with the repeal of this part of the existing legislation. 
Certainly a number of the bio-diesel producers who came before the select committee were concerned about the relative tax treatment. We know that the way in which we treat the excise on ethanol is an issue of great concern. We have seen the impact that the subsidies on ethanol in the United States have had on the world biofuel market. It has made it extraordinarily difficult and the “splash and dash” ethanol that we have seen produced out of the United States has distorted that market. It has made it a lot harder for our producers here to be able to compete. 
We believe that this is an issue that needs wider treatment than just being about ethanol and bio-diesel versus engine fuel; it needs to go beyond that. I would like the Minister in the chair to take a call on this part because it seems to me that we are entering a real no man’s land here and we are in real danger of ending up with absolutely nothing. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I rise to speak to Part 2 of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill and to support the amendments in the name of my colleague the Hon David Parker to insert a new clause 5A and a new clause 16. 
I ask the Minister in the chair the Hon Gerry Brownlee why this Government is determined not to listen to the very many strong voices on this issue and to push through this legislation under urgency. Only the National and ACT parties are supporting the bill in this House—it might be called the “Bio-fools Bill”. 
The bill is contrary in fact to past actions by a National Government. I acknowledge the courage that a previous National Government showed on alternative fuels in the 1980s. I think all of us can remember the installation of compressed natural gas (CNG) and liquefied petroleum gas (LPG) facilities around the country. LPG is still there; CNG sadly has gone. But that was the courage that a National Government showed in spite of some opposition from the oil industry. 
I also acknowledge the comments from the Hon Peter Dunne in expressing his disappointment that National is revisiting this legislation. When the Biofuel Bill came into Parliament earlier this year he expressed some concerns about the issue of sustainability—which the Government is promoting as it introduces this legislation—but he noted that as that bill progressed amendments were made to it that gave him satisfaction in terms of the final shape of it. He is now saying that this legislation will bury a tallow-based biofuel industry here in New Zealand. 
I also note that a couple of years ago the National list member Nicky Wagner issued a press statement saying that the biggest potential sources of bio-diesel in New Zealand were tallow and animal fat by-product. Yet it is already on the public record that the $10 million invested by Tom McNicholl whose firm Biodiesel Oils is the biggest producer of tallow-based bio-diesel is going down the drain as a consequence of this legislation. I ask where Maurice Williamson and Pansy Wong are. They represent seats adjoining Biodiesel Oils’ East Tamaki plant. I ask whether they are speaking out on this issue in support of their constituents whose jobs will be lost. Indeed I ask where the member for Waikato is because Biodiesel Oils’ Waharoa plant is being mothballed as a consequence of this legislation. That tallow-based bio-diesel industry will be going down the gurgler. 
I also note that the Government has made considerable reference to the issue of biofuels perhaps pushing up the price. In fact that is not the view of a former icon of the National Party one Barry Leay the secretary-general of the National Party for many years. He is a director of the Aquaflow Bionomic Corporation which is making fuel from algae growing in sewage works in Marlborough. In response to comments made by the Hon Nick Smith who said that biofuels would push up the price by perhaps 5c to 7c a litre Mr Leay said that people who were saying that were “making comments without a clue about what’s [actually] happening in the biofuel industry.” and that that sort of speculation was really just scare tactics by the National Party. That is an interesting commentary from somebody so closely associated with the National Party. 
Of course Sue Wood a representative of Biodiesel Oils has made commentary on behalf of her client Mr McNicholl as to the devastation this bill will mean to him. His $10 million investment in biofuels will be rendered absolutely useless if I may use that expression by this legislation. 
I also note commentary on the Labour Government’s biofuels legislation when it was brought in earlier this year. It was referred to as being a significant step forward in the task of reducing New Zealand’s reliance on imported fuels and as comprehensive and forward-thinking legislation. That commentary came from another producer of biofuels a company based in Canterbury that was not in support of the mandatory minimum biofuel requirement but in fact wanted no limit on blends. However it made very very clear that it thought the biofuels legislation was comprehensive forward-thinking legislation that therefore needed to be retained. I ask members opposite from Canterbury what they are doing to support that industry which I am sure will also be affected by this legislation. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I draw the attention of the Committee to two amendments both in the name of the Hon David Parker. The first of them is straightforwardly the new Government’s policy. It is the Government’s stated policy which is that there needs to be an equivalence between ethanol and bio-diesel in financial terms. That is the amendment that says “(5) A credit shall be allowed against the levies otherwise payable pursuant under this section”—section 24 of the principal Act—“equivalent to 42.524 cents per litre of biodiesel sold by the levy payer.” Clearly we would support such an amendment. It is not our preferred option. Our preferred option is that the entire Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill not proceed but if it is to proceed I say let us amend it to see whether we can save the people who are already involved in bio-diesel production by implementing stated Government policy. 
Does that mean that when the amendments are put the Government will vote against its own policy? I ask whether that will be the case or whether the Government may take a bit of advice to satisfy itself that the Hon David Parker’s wording is correct and decide on the floor of the Chamber that when its own policy is promoted by Her Majesty’s loyal Opposition it will support it. Those seem to me to be the two options: either a Government goes with its own policy when the Opposition has written it for the Government or it votes against its own policy because the Opposition has written it. Those seem to me to be the two propositions for the Government to decide between. 
The second amendment also in the name of the Hon David Parker is very straightforward. It simply requires the Minister of Energy and Resources by June of next year to table in Parliament a report on the financial and unemployment effects resulting from the enactment of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. We remind ourselves that this Government came to office saying that it wanted to do some regulation-busting. It wanted to make sure that the steps taken by this new better-than-before Government would be ones that helped economic growth and put economic growth “front and centre”. That is what the Government said in the Speech from the Throne. 
But unfortunately because a decision was taken to pass this legislation in urgency there was no regulatory impact statement. There was none. 
Hon David Parker 
: And ACT voted for it. 
Hon PETE HODGSON 
: ACT’s leader “Mr Regulation-buster” voted for this legislation to proceed when the regulatory effects are known to be deleterious. They are known to be deleterious yet ACT will vote for it. It is one of only two parties that are doing that mind you. 
Hon David Parker 
: And it controls the votes. 
Hon PETE HODGSON 
: Indeed it does control the votes. ACT is the swing party on this particular legislation. The National Party is going for it. National stated its policy and it stated it before the election. It won the election; it has the mandate. So that is what we would expect from National but not from the ACT Party. The ACT Party is going to vote for legislation that it knows will be deleterious in an economic sense. It knows that. The regulatory impact statement if it had been produced would have shown that. That is why we have regulatory impact statements. 
The amendment in the name of the Hon David Parker suggests that because there was not time to do a regulatory impact statement—the legislation having to go through in urgency—then we had better make time to do one afterwards. That is not unreasonable. 
But I ask members to wait; there is more. The Minister asserts that his decision to repeal this legislation—and I think it is sophistry—will not be damaging. He says the use of bio-diesel and biofuels in general will double over the next few years and there will not be a loss of jobs. He keeps on asserting that. He keeps on asserting that by way of interjection and he says that in his speeches. Let us just test that. If the Minister is so pleased with his assertions that he will not be doing any damage then he will not mind reporting to Parliament to prove that will he? So let us have the Minister support this amendment so that he can come to Parliament—[ 
Interruption 
] The Minister is shaking his head. We have had another bit of body language. The Minister was shaking his head. He is asserting that there will be no damage. When invited to report to Parliament to prove there has been no damage he declines to do so. I wonder whether the Minister is as sure of his facts as he asserts or whether he is telling little white thingies. 
Hon DAVID PARKER (Labour) 
: 
 I want to take up the issue about what the effects will be on the biofuel industry and the broader effects of this legislation. Tallow is a low-value by-product of the livestock processing industry. Someone once quipped to me that New Zealand has the highest tallow-to-population ratio in the world. That is true because for a small country we raise a lot of livestock. We are rich in tallow resource—the cheapest most environmentally sustainable source of biofuels in the world. 
Chris Tremain 
: I raise a point of order Mr Chairperson. The member has risen to his feet to speak on Part 2 which is a reasonably tight part but he said quite clearly that he wants to speak to the broader effects of the legislation. I think he needs to be brought back into line in that regard. 
Hon DAVID PARKER 
: Speaking to the point of order Mr Chairperson I say that the effect of this part is to revoke the mandatory percentages that are set out in the schedule of the Act. What I am talking about is completely within the realms of this part of the Act. If the member does not understand that he should read the bill. 
The CHAIRPERSON (Lindsay Tisch) 
: Yes. 
Hon DAVID PARKER 
: The effect of this legislation is to take out the mandatory obligation for biofuels so there will no demand for tallow to be turned into bio-diesel. That surprises me. Tallow is a low-value by-product of the livestock processing industry in New Zealand and the National Government is stopping value being added to that by-product for the benefit of New Zealand farmers and the New Zealand economy—value that would have been added in New Zealand. It would also substitute for expensive oil that we import. Every year in New Zealand we spend billions of dollars on imported oil and some of that expenditure would be avoided because biofuels would be turned into bio-diesel that would be used instead. 
I have submitted two amendments to this part. The first is to give the tax break to bio-diesel producers and I have already talked about that. I have just tabled for your information Mr Chairperson and for that of your Clerk at the Table another version of the first amendment. This version takes out the word “pursuant” because there was a redundancy in the use of that word. It stated “pursuant under”. Both of those words are not needed so I have taken out the word “pursuant” leaving just the word “under”. Under this amendment bio-diesel producers would get a tax break of 42.524c per litre which is the excise duty relief we have already given to ethanol and that meets the policy objective of the National Government. National stands for that but did not include it in its own bill. 
In respect of the second amendment we have not had a regulatory impact statement and I think it is absolutely scurrilous that the votes of the ACT Party will pass this legislation. This is the party that says it stands for regulatory impact assessments of all bills that pass through this House. There is no regulatory impact assessment for this legislation. We have seen the letter from Sue Wood former president of the National Party on behalf of Tom McNicholl and he provided his own information to the Government on 2 December. I will also table that particular bit of information in a moment. It is known to the Government that this legislation will cause job losses and multimillion-dollar financial losses to the biofuel industry yet there is no regulatory impact statement. 
My other amendment requires the Minister to table in this House by the middle of next year a statement or an assessment of what the effects of this legislation are. It is not as good as having a regulatory impact statement available to the House before we determine whether legislation is passed but it is better than nothing. So I suggest that the Committee and particularly ACT should vote for that. If ACT votes for that amendment it will go through because except for National the other parties in this Chamber support it. If the ACT Party does not vote for the amendment then it will not proceed despite the fact that it does exactly the thing the ACT Party says is most important to it which is that we should be looking at the effect on business of changes to the law not just on business but also on unemployment. 
The ditching of this mandatory sales obligation will cause financial losses and injustice. I do not like this new Government causing injustice to anyone and there is clearly a multimillion-dollar injustice being caused to at least one biofuel producer and no doubt to many others as well. The banks of these producers may well walk in tomorrow—we do not know what level of indebtedness the producers have. I am not suggesting that the banks will walk in but they could do so if the producers are in debt in respect of these facilities. If it is not one biofuel producer in New Zealand that has levels of indebtedness it will not be able to service because of people not buying its product it will be another one. There will be insolvencies jobs lost and injustices caused to people who lose their family fortune. On top of all of that we will have an environment that is going backwards because of this legislation. 
MOANA MACKEY (Labour) 
: 
 I am happy to take another call on this part in support of the amendments proposed by my colleague the Hon David Parker. I urge the Minister to take a call and tell us his thoughts on these amendments. We are trying very hard to work with the Government to come up with a compromise. We appreciate that this is a policy that the National Party campaigned on during the election campaign and that that is why this bill is now before the House. We are trying to be constructive and bring forward amendments that minimise the damage this bill will reap not only on the biofuel sector but also on jobs. I urge the Minister to take a call. 
I reiterate that schedule 5 is important. The select committee did a lot of work on that year-by-year mandatory obligation. If I remember correctly the original bill had a top point of 3.4 percent of total fuel sales by energy. Again I reiterate that that is hardly an incredibly high difficult-to-reach mandatory target. A target of 3.4 percent is not exactly going to break the back of those who work in this area. The legislation was about getting a domestic industry in place and supporting the development of that industry whilst at the same time doing important work to bring down greenhouse gas emissions in our transport sector which is one of our largest areas of greenhouse gas emissions after agriculture. 
The amendments the Hon David Parker has proposed will help an industry that has been starting up while being assisted by the mandatory biofuels obligation introduced by the previous Government. It gave the industry certainty and allowed it to know what the obligations were going to be and what kinds of sustainability standards were eventually to be put in place. It also allowed the industry to make long-term investment decisions. 
 I reiterate once again how important this Committee stage of the whole House is. This bill has been rammed through with no select committee process and no opportunity for those who will be disadvantaged by this legislation to come and put their case. There is no opportunity for the National Government members who disagree with them to challenge them in public to their face rather than in this Committee where they have no right of reply and no right to correct some of the misinformation that has been spread about their position. 
When the select committee members originally looked at schedule 5 and at how the mandatory biofuel obligation was going to be implemented they saw there was a steep incline in that graph after the first few years. That was because we were expecting a large ethanol plant to come online. We had been told how much ethanol it was going to be able to produce to feed into the local domestic market and we made those obligation points accordingly along that line. During the course of the select committee process—and again this shows just how important these select committee processes are in responding to the reality of what is out there which might be quite different from the reality of the time at which the bill was drafted—it became clear that perhaps that information in schedule 5 did not take into account the reality which was that this large ethanol plant we had been expecting to come online was not now going to happen. 
If that points to anything it points to the need for certainty in that sector. One of the reasons given for the plant not coming online was that the company had not been given certainty early enough that it was actually going to be able to produce this product. As well as I pointed out before the subsidy in the United States market had led to a lot of uncertainty here at home with the “splash and dash” ethanol that was being produced out of the United States. It really did distort the market and make it more difficult for ethanol producers here at home. 
The select committee listened throughout that process and we changed the schedule. We reduced the top target from 3.4 percent to 2.5 percent. We asked officials to go away and do some work on what biofuel was already available in New Zealand and what was due to come online. They came back and told us that a 2.5 percent mandatory obligation required I think 5.5 petajoules of biofuel—the original 3.4 percent would have required 8 petajoules—and that already in New Zealand we had the capacity for 4 petajoules of tallow bio-diesel I think 2 petajoules of rape seed and other bio-diesel and I think 0.3 petajoules of ethanol. I do not know whether I have those figures exactly right but they are from memory at a select committee. 
During this process we were told at the select committee that people were making those investments because this bill was before the House and because they knew the mandatory obligation was coming on. We were told by one of the oil companies—which already had infrastructure for dealing with ethanol because the company sold it—that it was looking at bringing in the obligation earlier because that was a market advantage and as the company was going to have to do it anyway why not get the jump on the rest of them. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I stand to do two things; one is to support my colleague David Parker and his two amendments to Part 2 of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. I note that we are yet to get a response from the Minister in charge of the bill the Hon Gerry Brownlee. We have not had the Minister on his feet in this part. It is really just a matter of politeness and tradition in Parliament that relatively early in each part—we are not saying that the Minister has to reply to every speech or to all points that are made—especially when there are amendments the Minister indicates whether the Government is going to support them and the reasons. It is not onerous; they are relatively simple matters and he has had advice from his advisers in case he was not sure of their effect. 
These are relatively simple amendments. One of them requires the Minister to report on the financial and unemployment effects of this bill on New Zealand’s tallow to biofuel industry. It is just a matter of coming back to the House before the end of June to report on how many jobs have been lost as a result and what the financial effects are on individuals. It might be called the honesty clause I think. If in fact the National Party does what it says it is going to do and does what it is going to be asked to do by way of the next amendment the Minister will be able to report positive effects—that jobs have grown within New Zealand and people have made money. That would be a good thing. 
The other amendment I think goes more directly to Government policy. I know generally Government is responsible for its own policy and implementing it but every now and again it needs a hand in turning it around. We from the Opposition are here to help as far as the Government is concerned. This amendment inserting new section 24(5) to the principal Act makes it clear that: “A credit shall be allowed against the levies otherwise payable pursuant under this section equivalent to 42.524 cents per litre of biodiesel sold by the levy payer.” This extends to bio-diesel the exemption from excise duty that is currently enjoyed by bio-ethanol. It is a levelling of the playing field. The Government says it is its policy and I think it is a matter of getting that implemented. 
The other question I want to ask and I will take a point of order at the end of my speech to table a letter is whether the Minister read the letter of 2 December from BioDiesel Oils (NZ) Ltd addressed to Joe Connell within the Energy and Communications Branch— 
Hon Gerry Brownlee 
: No. 
Hon TREVOR MALLARD 
: No he didn’t. 
Hon Gerry Brownlee 
: It was never given to me. 
Hon TREVOR MALLARD 
: That is an outrage. It is an absolute outrage that the letter from the person who has spent $10 million on biofuel was not given to the Minister. I do not want to criticise officials but I think the nicest thing I could say is that it is waiting in the pending tray within the Minister’s office. But he has not seen it. We have a letter here to a person who was a policy analyst in the fuels and Crown resources part of the branch outlining the job losses that will occur including 22 staff in Waharoa and 24 staff in East Tamaki. The letter is from Tom McNicholl—I will make it clear that I do not have a signed copy of the letter but I am informed by a past-president of the National Party Sue Wood that this is a letter— 
Hon Steve Chadwick 
: Sue Wood had it? 
Hon TREVOR MALLARD 
: Sue Wood is the person who supplied this letter. She says it is a copy of a letter to the Ministry of Economic Development outlining the case for this plant and the Minister tells us that he has not read it. That is almost unbelievable. It is an outrage that we have in this Committee a Minister who is too damn lazy to read the mail to his ministry on this. I am very rarely almost speechless in this Chamber and I am getting very close to saying that it beggars belief that a Minister could be so lazy so indolent that he does not read the file on this bill. It is a very short file. It is a file that—because the consultation was so restricted—is tiny. The idea that this Minister can come into this Committee with legislation that wrecks a family and wrecks an industry and tell us he has not even read their letter— 
Hon Gerry Brownlee 
: I haven’t received the letter. 
Hon TREVOR MALLARD 
: If the Minister has not looked in his pending file could I make a suggestion. I suggest to the Minister that we take leave to move on to the next bill and come back again to this to give him time to read the letter so that he understands the implications. Is the Minister prepared to do that? No he is not. He is not prepared to do that. I am not saying we should delay the passing of this bill; I am just saying we should deal with it later on today or tomorrow to give the Minister time to be fully informed. I could give him a copy of the letter which I know is sitting in his pending tray but he has not got off his big chuff wandered over to the tray to pick up the files that are sitting there and read them. If Helen Clark was Prime Minister he would be in her office by now explaining because that is a sign of absolute incompetence. The very first thing that Ministers do before they take a Cabinet committee paper on a bill to Cabinet especially when it does not have a regulatory impact report is ask— 
Hon Gerry Brownlee 
: What’s the date on the letter? 
Hon TREVOR MALLARD 
: 2 December. 
Hon Gerry Brownlee 
: Why didn’t they send it to me? 
Hon TREVOR MALLARD 
: The person who asked for it was one of that Minister’s officials. That is the way things are done. Officials send out for the information it comes back and the Minister reads it. This Minister should read it. 
Hon Gerry Brownlee 
: We were never given it. 
Hon TREVOR MALLARD 
: The Minister did not go to his file and read the letter. If he had asked like any decent Minister would ask for the file on this bill he would have read it. I do not know that particular official but I know that group of officials. They worked for me on I think three separate occasions: twice when I was Acting Minister for a period and once when I was Minister of Energy. 
Hon Pete Hodgson 
: Good officials. 
Hon TREVOR MALLARD 
: They are competent officials. That is a well-run section of the ministry. I wager they would have a file that indicates— 
Chris Tremain 
: That is nothing to do with Part 2 of the bill. 
Hon TREVOR MALLARD 
: The letter relates absolutely to Part 2. This letter refers to the factory in Waharoa; Part 2 wrecks that factory. 
The Minister of Energy and Resources has told us he has not had the energy to get off his backside and read the letter. If there is one letter that he should have read it is this letter. In the Cabinet committee discussing this bill John Key would have asked: “What do the people affected by this say?”. That is a standard question asked by Prime Ministers and chairs of policy committees. They asked that in my presence during the previous Labour Government—when Helen Clark was Prime Minister. They always asked those questions—and Gerry Brownlee would have had to answer. 
I seek leave to table the letter of 2 December from Tom McNicholl to the Ministry of Economic Development. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought for that purpose. Is there any objection? There is no objection. The letter can be tabled. 
Document by leave laid on the Table of the House. 
CHESTER BORROWS (National—Whanganui) 
: 
 I move  
That the question be now put 
. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I rise to speak on Part 2 and to support the Hon David Parker’s amendments because although Opposition members would much rather we were not even debating this silly short-sighted bill we are here trying to improve it. In particular we are trying to help National keep one of its promises. That is quite a remarkable thing for Opposition members to do but we are here to help. We have all heard a lot about promises in the last couple of weeks. That is the main reason apparently that we are in urgency ramming through bill after bill because National claims it needs to keep its promises. In reality of course we know that National members are doing this because they do not want to hear from the public of New Zealand about some of the legislation that National is putting through. 
In particular they do not seem to want to hear about the impact of this bill on people such as Tom McNicholl who are making a concerted effort to build a new industry in this country. We would be able to help them do that if we kept in place the legislation that the previous Labour Government led through the House before the election. But no the National Government wants to take that legislation away. The Hon David Parker has put forward an amendment that will allow bio-diesel to be extended the same tax relief as bio-ethanol. 
Yesterday the Minister of Energy and Resources Mr Brownlee told the Committee that we would be hearing about tax relief about incentives to allow the industry to continue. We have seen nothing of that today. The industry will be in a vacuum when this legislation passes—a vacuum of Mr Brownlee’s making. But Labour can fill that vacuum by offering the opportunity to put in place a system whereby bio-diesel will have the same exemptions that bio-ethanol does. This is an opportunity for the Minister in the chair Mr Brownlee to take a call and let us know whether he is prepared to do something to honour National’s election promises. We say: honour the promise to keep this industry going. 
Mr Parker’s amendment to Part 2 gives the Minister that chance. It gives him a chance to help save the 46 families who will be affected if and when Mr McNicholl’s business is closed. That is the reality and that is what we have heard. If the Minister had received the correspondence from his ministry he would know that that is what Tom McNicholl is saying and that is what Sue Wood is saying. They are saying that the legislation the Minister is bringing to the House will affect those 46 families in East Tamaki and Waharoa. One would have thought National would be concerned about those areas. Mr Chairperson you might be concerned about them as well. We need to know whether the Minister is prepared to support this very good amendment from David Parker which will actually help secure that industry. 
Members on this side of the Chamber know that the mandatory obligations that Labour put in place are a far better way of ensuring that this industry continues to grow but there is now an opportunity for the Government to stand up and for the Minister in the chair to take a call and say that he will accept the amendment. There is also an opportunity for ACT Party members: we know that they believe in regulatory impact statements; they believe in making sure that things go through with proper scrutiny. They could vote for this amendment too. They could vote down the whole bill and send it away to a select committee so that we have a proper process—and goodness a regulatory impact statement! Would that not be novel to have a regulatory impact statement on a bill that is fundamentally changing an industry in this country—indeed a growing industry—and fundamentally compromising the lives of 46 families that were going to be employed and also other families in the future. 
Moana Mackey 
: One would think it would go to a select committee. 
GRANT ROBERTSON 
: One would think it would go to a select committee; but no this Government wants to ram this bill through under urgency. The Government it seems does not even want to take the opportunity to honour one of its own election promises. This opportunity was there for the Government to do that. Mr Brownlee has not taken a call on Part 2 and I urge him to take a call and let us know what he thinks about this amendment. This amendment would actually save his hide in the long run. He may not think that right now but that is what this amendment does. But much more important this amendment ensures that the industry has some kind of future. At the moment we have a vacuum in place because the Government has no plan to ensure that the bio-diesel industry can continue. It is an outrage to push this bill through the Parliament in a way whereby nobody who is affected out there in the community is getting an opportunity to comment on it. Part 2 is about putting in place everything that is required to repeal the very things that are needed to keep that industry going. It is an outrage. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon PETE HODGSON (Labour—Dunedin North) 
:  
The revelation that the Minister has indicated that he has not seen the letter of 2 December raises two questions. The first of them goes to the Minister— 
Hon Gerry Brownlee 
: I raise a point of order Mr Chairperson. I want to make clear that my responses to the Hon Trevor Mallard were about what I thought was a new letter that was being provided to him. I have in fact received that letter referred to. A response to Mr McDonald is being prepared. 
Hon Trevor Mallard 
: That cannot possibly be true because I indicated to the member that the letter was dated 2 December. It cannot be a new letter. The member cannot have told the truth to the Committee. 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot make allegations about missing letters. We wish to move on— 
Hon Trevor Mallard 
: Mr Chairperson— 
The CHAIRPERSON (Lindsay Tisch) 
: The Minister has made a statement that he has received a letter. He has acknowledged that to the Committee. We wish to move on. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. I think there are two points. One is whether you are right to allow the Minister in the chair Gerry Brownlee to correct that statement by way of point of order. He should have taken a call. The other point is that the name he said was McDonald. The letter is from McNicholl. The letter that he did not read was a letter from McNicholl not McDonald. For the Minister to say that he has a letter from McDonald now does not help at all. It was clearly stated in the Committee before that it is a letter dated 2 December from McNicholl. 
The CHAIRPERSON (Lindsay Tisch) 
: There is a mistake in the naming of the person who wrote the letter. Mr Mallard has made the point very clear— 
Hon David Parker 
: Point of order— 
The CHAIRPERSON (Lindsay Tisch) 
: I am ruling at the moment. The points have been well made. The Minister has acknowledged that there is a letter. He has identified that and acknowledged it to the Committee. 
Hon David Parker 
: I raise a point of order Mr Chairperson. I am absolutely bemused as to how you know that a mistake was made by the Minister the Hon Gerry Brownlee because he has not taken a call to correct it. There is a proper procedure in this Chamber to be followed. It is not for members to cosy up to the Chairman particularly a Chairman who is in a difficult position as you are on this issue coming from the area in which this factory is located. 
The CHAIRPERSON (Lindsay Tisch) 
: Mr Parker you know that you cannot bring the Chair into this. The Minister said he has received a letter. He has acknowledged that to the Committee; he has explained it and we wish to move on. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. The Minister may have acknowledged a mistake privately to you. That is not on the record of the Committee and you cannot as the Chair put it on the record of the Committee. You especially cannot enter this debate when you Mr Chairperson should not be in the Chair anyway. 
The CHAIRPERSON (Lindsay Tisch) 
: The Minister has not made a private comment to me about this matter. He has acknowledged it to the Committee. He said so and that is where the matter lies. These are debating points—they can be brought up in debate. I wish to move on. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: Is this a new point of order Mr Mallard? 
Hon Trevor Mallard 
: It is Mr Chairperson. It relates to what you said. You indicated to the Committee that the Minister had made a correction to the Committee. He could not possibly have corrected the name “McDonald” to “McNicholl” because he did not get to his feet. It is not possible that he made a correction to the Committee and for you to say that he did is just wrong. 
The CHAIRPERSON (Lindsay Tisch) 
: The Minister made an interjection to that effect and that is what is before the Committee. 
Hon David Parker 
: I raise a point of order Mr Chairperson. I have been paying particular attention to this debate and particular attention to this error which I heard and pointed out to my colleague Mr Mallard. I heard no such interjection from Mr Brownlee. He has not been on his feet since he made that error. He is able to take a call at any time to correct that position. This mistake is very important given that scores of jobs are at stake and millions of dollars. It is in an area close to Matamata— 
The CHAIRPERSON (Lindsay Tisch) 
: These are debating points. 
Hon Dr Jonathan Coleman 
: I note Mr Chairperson that your authority is being consistently challenged by members opposite and it has included members making allegations about your unfitness to sit in the Chair. I do not think that adds anything to the debate or to the perception of the Chamber. I ask you to assert your authority Mr Chairperson because you have ruled. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: Is this a new point of order? 
Hon Trevor Mallard 
: Yes it is a new point of order. You indicated to the Committee in your last ruling that Mr Brownlee had corrected his position by way of interjection. He could not have done that in a parliamentary manner because for the entire period that we have been considering this we have been dealing with points of order. He cannot interject during a point of order and if he had interjected during a point of order I am sure that you as Chairperson would have reprimanded him for doing that and made him withdraw and apologise to the Committee. 
Chris Tremain 
: Point of order— 
Hon Trevor Mallard 
: I am still going. 
The CHAIRPERSON (Lindsay Tisch) 
: There is a point of order in progress. 
Hon Trevor Mallard 
: I am saying that despite the fact that I have indicated there is a conflict here I have confidence in you as the Chair and I know that you would not have let Mr Brownlee interject during a point of order. If he had done that you would have ruled him out of order and made him withdraw and apologise and that interjection would not be on the record of the Committee. 
The CHAIRPERSON (Lindsay Tisch) 
: Thank you Mr Mallard. The Minister is prepared to take a call. We are just waiting for the letter. The Hon Pete Hodgson has the call at the moment. We are just waiting for the letter. 
Hon Trevor Mallard 
: I have tabled the letter Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: Yes we are just getting it now. 
Hon PETE HODGSON 
: I raise a point of order Mr Chairperson. We have reached an unfortunate position in this debate. My recollection of events is that the Hon Trevor Mallard in his contributions to the debate got a series of responses from the Minister that were not on the record of the Committee because they were by way of interjection. The interjections were that the Minister had not received the letter that Mr Mallard was referring to. In the course of the interjections the Minister then asked what the date of the letter was and a number of us gave the Minister the date of the letter which was 2 December of this year. After that date was given the Minister continued to assert by way of interjection or by way of body language that he had not been in receipt of it. If it is OK for him to correct a person’s name by way of interjection to you Mr Chairperson then it is also OK for this Committee to say that it has been misled by the Minister who said that he had not received the letter when he knew the date but who then changed his mind when he raised a point of order as I got up to speak. I am saying to you Mr Chairperson that you have to make a decision as to whether the Minister in the chair misled the Committee. My assertion is that he has. 
The CHAIRPERSON (Lindsay Tisch) 
: Two letters are involved. I have a letter here dated 12 December. We are waiting for the letter of 2 December which apparently was tabled. The Minister is prepared to take a call. We hope that that will clarify the matter. The member made a point about the Minister making a correction by way of interjection. He made a mistake about the name. He knew that he made a mistake and he will take a call. Hopefully that will clarify the matter. I would like the member to resume his speech. 
Hon David Parker 
: I raise a point of order Mr Chairperson. The letter of 12 December to which you refer is a complete irrelevance. It is from neither a Mr McDonald nor a Mr McNicholl; it is from the former president of the National Party Sue Wood. That letter is an irrelevance. I cannot see the relevance of it to your ruling. 
The CHAIRPERSON (Lindsay Tisch) 
: We are just waiting for a copy of the letter of 2 December. We do not have that. 
Hon Trevor Mallard 
: It’s on the Table. 
The CHAIRPERSON (Lindsay Tisch) 
: It is not on the Table here and that is why I have only one letter Mr Mallard. So that is where we are at. In the meantime while we are waiting for the letter and for the Minister Gerry Brownlee to return I ask the Hon Pete Hodgson to continue. 
Hon Steve Chadwick 
: I raise a point of order Mr Chairperson. In order to be helpful I would like to table the letter of 2 December. 
The CHAIRPERSON (Lindsay Tisch) 
: It has already been tabled so we do not need to proceed with that. 
Hon PETE HODGSON 
: I raise a point of order Mr Chairperson. I have raised with you a point of order regarding your view as to whether the Minister misled the Committee. I am asserting that the Minister to your right has misled the Committee and I am asserting that he has done so by way of interjection. I have asked you to tell me whether you agree with that assertion and you have not told me. If you do not agree with that assertion I ask why you do not agree with it. As it stands at the moment if an interjection is to be part of a correction or a part of the debate—as a result of your earlier remarks—I point out that these interjections were made after the Minister knew that the letter in question which he denied receipt of was dated 2 December; then having worked out that he was wrong he raised a point of order to correct himself. Therefore the question that I have for you Mr Chairperson which you have not yet answered is whether the Minister has misled the Committee. 
The CHAIRPERSON (Lindsay Tisch) 
: It is not my understanding that the Minister has misled the House. The Minister will be taking a call to clarify matters. That is my ruling; I wish to proceed. 
Hon PETE HODGSON 
: Thank you for your ruling. I raise a point of order Mr Speaker. When you were giving me the call not so long ago I think you said I had 3 minutes and 28 seconds left—that is from a 5-minute call. The words used in my contribution so far have been these: “The revelation that the Minister has indicated that he has not seen the letter of 2 December raises two questions.” That is as far as I got. 
The CHAIRPERSON (Lindsay Tisch) 
: Is this still a point of order? 
Hon PETE HODGSON 
: Yes it is. 
The CHAIRPERSON (Lindsay Tisch) 
: I did stop the clock when you were bringing forward the point of order. 
Hon PETE HODGSON 
: Well I am just asserting rather obviously by way of quoting verbatim that what I just said does not take 90 seconds to say; it takes about 10. I wonder whether you could recalibrate your clock Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: Yes you did speak before you sought a point of order so we assumed that was part of your speech. But— 
Hon PETE HODGSON 
: Mr Chairperson I did not seek a point of order. The Minister called a point of order when I was one sentence into my contribution and that does not take 90 seconds. 
The CHAIRPERSON (Lindsay Tisch) 
: I am happy that we start the call again as a 5-minute call. 
Hon PETE HODGSON 
: That is very generous Mr Chairperson. The fact that the Minster has— 
Nathan Guy 
: Make it good! 
Hon PETE HODGSON 
: It will be good all right. The Minister’s point that he had not received the letter which he made when Mr Mallard questioned him about whether he had received it has now been reversed by the Minister who raised the point of order to say that he did receive the letter. 
Hon Gerry Brownlee 
: I raise a point of order Mr Chairperson. I think it would be good to raise a point of order now to clarify this matter as people fire dates all over the show. The first point I make is that the letter of 2 December— 
The CHAIRPERSON (Lindsay Tisch) 
: No that is a debating point. 
Hon Gerry Brownlee 
: Well most of what the member is about to say is totally irrelevant. 
The CHAIRPERSON (Lindsay Tisch) 
: We are not getting into points of order that become debating points. The Minister may take a call following the Hon Pete Hodgson’s call. 
Hon PETE HODGSON 
: We of course look forward to the Minister’s explanation but the facts as they stand at the moment are these. The Hon Trevor Mallard pointed out that a letter had been set to Ministry of Economic Development officials. The Minister indicated by way of a shake of the head that he had not received it. Mr Mallard responded in dismay as one might expect because the letter says that this man’s business is going down the gurgler as a result of this legislation. Repeatedly as Mr Mallard tested whether the Minister had received the letter we were told by way of an interjection and a shake of the head—or whatever—that he had not. That caused some concern on this side of the Chamber as one might understand. The letter has been around the news media because it has been followed by another letter from none other than an earlier president of the National Party yet the Minister sat there and denied knowledge of it. It was beyond belief. 
That was the situation that we were in and repeatedly the Minister gave one point of view. He is about to change that point of view but it does beg the question as to how he could ever be in denial of the knowledge of that letter. None of the rest of us had any misgivings about whether we knew about it; it was all around the country. The Minister has in short misled the House and that is serious. It is not a minor thing. Not only did he mislead the House but he did so even though he was under some focused attention from the Hon Trevor Mallard. I do not think that that is tolerable. I think the Minister has to say to the House that he is sorry. 
He has to apologise to the House for misleading us and then he has to answer another question: did he show the letter to the ACT Party because the ACT Party stands for economic growth and it stands for getting Government out of the lives of business? This legislation is taking down that man’s business. Mr McNicholl’s business is going to the wall and his letter in very moderate moderating language—it is a very very moderate letter—spells it out. I want to know whether the swing party in this debate was aware of that letter. If it was that is fine and dandy—we know how to value the ACT Party accordingly—but if it was not made aware of that and the Minister himself has denied knowledge of it for long enough then it raises some pretty interesting questions about whether the ACT Party is making an informed choice in this debate. I think the Minister has some questions to answer and he can begin by saying he is sorry. 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
: 
 I will clear this matter up by going through a bit of an order of what happened. Firstly on 2 December BioDiesel Oils wrote to the Ministry of Economic Development to a Mr Joe Connell. 
Hon Trevor Mallard 
: Don’t mention the name. 
Hon GERRY BROWNLEE 
: I mentioned his name because the member did. Mr Connell was engaged— 
Hon Members 
: He did not! 
Hon GERRY BROWNLEE 
: He did actually. 
Hon Pete Hodgson 
: I did not mention his name. 
Hon GERRY BROWNLEE 
: Members should not be silly; the  
Hansard  
record will show that. 
Hon Trevor Mallard 
: I think I did mention it the first time; it was a mistake. 
Hon GERRY BROWNLEE 
: Thank you. Subsequent to that on 4 December BioDiesel Oils wrote to me. That letter was written by a Mr Tom McNicholl and I am now informed that he attached to that letter the letter that had been sent some days before to the Ministry of Economic Development. 
On 11 December following our announcement I received a further letter from Tom McNicholl via Sue Wood. That letter will be responded to of course in due course but in the interim I asked my office to make contact with Mrs Wood in order that we might have a meeting with Mr McNicholl. That meeting and that offer were rejected. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Is this not just a classic? Within the first fortnight of Parliament since the election we already have the first Minister who is at risk. What is absolutely clear now is that despite getting a letter twice—once via his officials and once appended to a letter to himself—he did not read it. He made it clear to the House earlier that he did not read that letter. The letter was sent to his office twice and he did not read it. [ 
Interruption 
] The Minister might have looked at the letter later on when Sue Wood sent it but he had not read it when he took it to the Cabinet committee. He did not give it to John Key and he did not brief him on the effects of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill on this business. 
I ask John Key what he is doing having a Minister who is so lazy that he did not read the correspondence and show it to him or who deliberately deceived the Prime Minister by not giving him the full facts at the Cabinet committee when this legislation was being debated. It is absolutely intolerable to have a Minister who is either so lazy that he did not read the material or so thick that he did not understand it or who has deceived the Prime Minister by not tabling that letter—or at least a synopsis of it—at the Cabinet committee especially in the absence of a regulatory impact report. 
There is no regulatory impact report on this bill and therefore the Minister in charge of it has extra responsibilities. He must be even clearer than he would normally be not that there is any excuse for not being clear anyway in a Cabinet committee when seeking permission to have legislation go into the House. There is an extra obligation on this Minister as a result of the lack of a regulatory impact report. And what have we heard? We have heard that he did not read the letter. That is what he told the House—that he read neither the 2 December version nor the 2 December version that was appended to the 4 December version. 
What can we say about that? We can ask the ACT Party—and I know the answer to this because if the Minister did not show the letter to the Prime Minister I bet my bottom dollar that he did not show it to the ACT Party—what it is doing supporting legislation that does not have a regulatory impact report. That is a very bad reflection on Rodney Hide. Even a skimpy little one—a quarter of one—like those we had on the bills last week would have been a start. 
 I ask the Minister whether it was deliberate. Did he deliberately not have a regulatory impact statement because of this issue? I do not think it was deliberate; I do not think he knew the issue existed. I do not think he knew the issue existed because he told us he did not read the letter. He told us he did not read the letters of 2 and 4 December. 
This matter goes to a question of the competence of a Minister. When the Minister brings his first legislation to the House—the very first legislation—if he is not sure what to do there are a lot of very good people in the Cabinet Office to ask. There are a lot of people there—good public servants—who will give him advice if he asks for it about other things he should consider. There was no regulatory impact report so checking that the legislation does not affect people would have been the first bit of advice. Checking that it does not affect people would have been the first bit of advice that he got from the Cabinet Office. I ask the Minister whether he asked the Cabinet Office for advice. No he did not. He did not ask the Cabinet Office for advice on this measure. 
So there was no regulatory impact report and an uncertain new Minister who did not know what to do. The Prime Minister was clearly deceived—we are told it was accidental—and I believe the Minister when he said it was an accident. He did not mean to deceive the Prime Minister on the effects of this bill but nevertheless he did deceive the Prime Minister on its effects by not reading the correspondence and sharing it with the Prime Minister. 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
Hon DAVID PARKER (Labour) 
:  
I want to follow up on the Hon Trevor Mallard’s comments here. We have heard various versions from Mr Brownlee all of which—all of which—conclude that he did not read the letter— 
Hon Trevor Mallard 
: The letter he got twice. 
Hon DAVID PARKER 
: It was probably three times because it was then attached to a letter from Sue Wood. 
Further in Mr Brownlee’s last contribution when he finally got to his feet and took a call on this legislation—which kills a whole industry—he said that he had offered to meet with Sue Wood and Tom McNicholl but that they had declined. That is on the record. I find that very very hard to believe. I have had numerous conversations with Sue Wood. She tells me that she has been brushed off by the Minister’s office that she has been trying to get through to the Minister—[ 
Interruption 
]—No I do not mislead the Chamber I say to Mr Brownlee. 
Hon Gerry Brownlee 
: Yes you do. 
Hon DAVID PARKER 
: I do not. She has told me that within the last week she has again been on to his office and that she has been brushed off by his office. So the idea that the Minister has offered to meet with Mr McNicholl and with Sue Wood the former president of the National Party is something that I invite Mr McNicholl and Sue Wood to call him on because if that is wrong then the member has egregiously misrepresented the position to this Chamber and he ought to be judged for it. 
The letter that he has not read needs to be read out to him now. There are very important passages in this letter. My call will not allow me to read all of them so I hope other members will make some of the other points but I will read a paragraph from about the third page of this letter which is very detailed: “The undersigned”—Mr McNicholl—“who owns BDO has during the last 8 years invested over $10 million in research and development and plant and equipment including the purchase of sites.” He further writes: “Repealing the mandate will also halt all on-going work and efforts in new technological innovation and development. The future value of this advancement will be completely wiped off for the investors”—that is $10 million of investment—“and shareholders as well as place New Zealand in a disadvantaged position worldwide in terms of engineering and process technology export to the rest of the world.” So there are export consequences as well as the loss of investment. 
The letter elsewhere says that the East Tamaki plant which has already been built is having “technological advancements currently being undertaken in our 10000000 litres plan at East Tamaki. The production volume will be drastically reduced (already it is at a very negligible level due to the minimal off-take by the oil companies) … The company will have no second thoughts to mothball its operation at East Tamaki and stop construction of building and site works on its new 60000000 litres plant at Waharoa to avoid any further loss.” It goes on to say: “We plan to employ 22 staff on three shifts at the Waharoa plant and 24 staff on three shifts at East Tamaki; a total of 46 full-time jobs when both plants are in full production to meet the mandate.” That would have been at the start of next year but that investment is being lost—those jobs are being lost. This is just one of many biofuel producers. 
The Minister got this letter but did not read it and we have no regulatory impact statement and we have no reference to a select committee. I invite ACT members—even at this late stage having now been provided with that letter by Labour members because they did not get it from National members—to read that letter to consider the effects of this on business and to consider whether they ought to be voting to slow down this egregious legislation rather than voting for the injustice they are about to cause Mr McNicholl a 75-year-old man. He is no highfalutin businessman; he is a very down-to-earth man. This is his life savings I expect. I do not know details of his financial position but I expect that his life savings are tied up in this investment and he is about to lose them as a consequence. 
This has all been spelt out to the Minister and it has all been spelt out to the Ministry of Economic Development. The ministry quite responsibly has made contact with this business. It is clear from Mr McNicholl’s letter of 2 December that it was written in response to a query from the ministry. The ministry was acting on behalf of the Minister. This letter no doubt went to the Minister’s office but he has not read it. 
COLIN KING (National—Kaikoura) 
: 
I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon David Parker to Part 2 be agreed to: 
to insert the following new clause: 
5A 
The Minister will on or before 30 June 2009 table in Parliament a report on the financial and unemployment effects of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill on New Zealand’s tallow to biodiesel industry. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 58 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1. 
Noes 63 
New Zealand National 57; ACT New Zealand 5; United Future 1. 
Amendment not agreed to. 
The CHAIRPERSON (Lindsay Tisch) 
: The second amendment in the name of the Hon David— 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 58 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1. 
Noes 63 
New Zealand National 57; ACT New Zealand 5; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 63 
New Zealand National 57; ACT New Zealand 5; Progressive 1. 
Noes 58 
New Zealand Labour 43; Green Party 9; Maori Party 5; United Future 1. 
Part 2 agreed to. 
Clauses 1 to 3 
Hon DAVID PARKER (Labour) 
: 
 I am promoting an amendment which is about to be tabled to this part of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill because I thought a very good suggestion was made by Mr Burns earlier in this debate that this legislation should be renamed the “Bio-fools Bill”. It is absolutely nonsensical legislation and it should be called what it is: it is foolish legislation. 
This legislation causes egregious injustices but the thing that concerns me most of all is that the Minister in the chair the Hon Gerry Brownlee has not read the most pertinent piece of correspondence that has come to his office concerning the effects of this legislation. Recalling that there is no regulatory impact statement and no select committee process it is important that he reads or learns of information about the adverse effects of this legislation on people on jobs on investment and on employers. So I will start reading this letter and I think it is so important that this be on the record that I expect other members of this Committee might want to read the parts of the letter that I do not get to in my contribution. 
This is a letter dated 2 December 2008 from BioDiesel Oils (NZ) Ltd. It is addressed to the energy and communications branch of the Ministry of Economic Development and it states: “Dear”—whoever—“We have received your email of 2 December 2008 in regards to the ‘state of play’ of the New Zealand biofuel industry in the context of a National party pre-election indication of its intention to repeal the biofuel obligation. 
We have considered the implications this will have on our existing operations thoroughly and append our response below. 
1. Biodiesel Oils NZ Ltd (BDO) was until 1998 a major solvent recycling and collector of used cooking oil. It was exporting UCO which was also referred to as tallow. 
In 1999 the company commenced research and development in the manufacture of biodiesel with UCO and later progressed to using animal fats in particular tallow. 
The company continued investing heavily in improving its production and chemical technology for converting tallow as a result of the government’s indication to promote greater use of renewable energy across the economy as part of the National Energy Efficiency and Conservation Strategy (NEECS). 
Around August 2005 when the company became aware that the government had in principle agreed to a Biofuel Sales Obligation it took further steps to invest in ramping up production output of its R&D plant in East Tamaki to 10000000 litres a year. 
When it became evident that the government was going to legislate the compulsory use of biofuel the company went ahead with its plans to construct a new 60000000 litres plant at Waharoa which is well underway. 
The company only uses locally sourced tallow that is now being exported for other purposes as its feedstock. This raw material complies with sustainable standards. With the combined capacities of both plants (East Tamaki and Waharoa) BDO is well positioned to satisfy the biofuels obligation for at least the next two years. 
BDO was very conscious and still is that the biofuel obligation introduced on 1st October 2008 is the single most important driver to sustain biodiesel production demand and consumer use. Without this the business case for BDO would have been extremely weak right from the start and investments decisions in R&D and production facilities would not have won approval from the shareholders and Board of Directors. 
It is therefore pertinent for the government to realise that our investments in biodiesel was primarily in response to legislating the biofuel obligation. 
2. Any change to the biofuel obligation will result in an immediate order to ‘stop work’ on all technological advancements currently being undertaken in our 10000000 litres plan at East Tamaki. 
The production volume will be drastically reduced (already it is at a very negligible level due to the minimal off-take by the oil companies) or ceased since BDO supplies its biodiesel only to Shell and BP. The company will have no second thoughts to mothball its operation at East Tamaki and stop construction of building and site works on its new 60000000 litres plant at Waharoa to avoid any further loss. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I will continue to read the letter: “Stop work will also be issued to the various supply partners to whom BDO has outsourced the fabrication of tanks vessels and process equipment for the new plant. This will invite cancellation fees from our supply partners and their material suppliers which could be detrimental to the bottom line in this troubled time. The company will also have to lay off two full time stainless steel tradesmen employed at the East Tamaki site. 
We plan to employ 22 staff on three shifts at the Waharoa plant and 24 staff on three shifts at East Tamaki; a total of 46 full-time jobs when both plants are in full production to meet the mandate. 
3. It must be noted that oil companies (BP and Shell NZ) are vital partners in the upstream supply chain of biofuels as they possess the expertise and facilities for blending and control the infrastructure for distribution and retail to the market. 
It is however our contention that the oil companies are against retailing both biodiesel and ethanol as this will have direct implications on their sales volume of mineral diesel and gasoline and monopoly. 
Some two and a half years ago we wrote to the oil companies pointing out that preparations be made for blending biodiesel with mineral diesel at their terminals. This suggestion was ignored to the extent that the oil companies have now requested us to undertake the blending at our site. This has imposed an additional $20000 on us to install a storage tank for mineral diesel at our East Tamaki site. We complied with this request as we realised that we were at the oil companies’ mercy to ensure the continued sales of our biodiesel. This proves our point that the oil companies had never been serious in retailing biofuels. 
The government must take notice of the consumers’ mindset in that they would not buy a new product such as blended biodiesel or ethanol unless there are cost savings compared to conventional fuels. In this regards the biofuel obligation would be a valuable aid to change the behaviour. 
4. The undersigned who owns BDO has during the last 8 years invested over $10 million in research and development and plant and equipment including the purchase of sites. 
 He firmly believes that any change contrary to the current biofuel obligation will see the instant demise of the biodiesel and biofuel industry in New Zealand. Apart from that it will destroy every dollar that has been invested in this sector by private individuals and companies like ours who believed in the government’s policies and goals for securing a better future and economy for her people and the country. 
To achieve the desired outcomes in reducing the rate of carbon emission the government has to see that sufficient volumes of biofuels are consumed. And to facilitate this demand huge capital costs and cash flow is required to build and operate biodiesel plants. It will therefore be stupid for BDO to build production facilities if it is unable to recover its investment due to the lack of volume off-take. 
Exempting excise tax and road user charges from biofuels act only as subsidies to fuel consumers. They do not compel the use of biodiesel unlike the biofuel obligation. 
Repealing the mandate will also halt all on-going work and efforts in new technological innovation and development. The future value of this advancement will be completely wiped off for the investors and shareholders as well as place New Zealand in a disadvantaged position worldwide in terms of engineering and process technology export to the rest of the world. 
We would urge you to recommend the retention of the mandate as laid out in the Biofuel Act. There is no sustainability issue regarding the product we produce which meets all standards. 
Yours sincerely 
Tom McNicholl 
Managing Director” 
I say to the Minister in the chair Gerry Brownlee that this is the letter that he did not read. This is the letter that he said he had not seen. This is the letter that goes to the heart of what he is seeking in this legislation to undo. I say to the Minister that this letter could not put it more clearly. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I am waiting now for the Minister in the chair the Hon Gerry Brownlee to get on his feet because he has left us with the very very distinct impression that he is absolutely incompetent. What he has done is tell the House that he does not read his correspondence. One letter would have gone via the ministry and it would have been part of the file on the bill. Another one went directly to his office on 4 December and it was attached to another letter. What he has told us is that he did not read it. 
What has also become clear is that that Minister having not read the letter and having not understood the effects of this legislation on a New Zealand business did not indicate to the Prime Minister in the Cabinet committee that this plant would be mothballed. He did not indicate to the Prime Minister in the Cabinet committee that 46 people would not have jobs as a result of this legislation. 
It is pretty rare for me to be caught short of something to say in the House but on this occasion it just beggars belief that a Minister in charge of this legislation would not tell the Prime Minister that the direct result of it would be that an individual would lose a $10 million investment and 46 people would not have jobs. There are a few other issues as well such as the fact that New Zealand’s international reputation will be going backwards not to mention the effect on the environment as a result of this legislation—and we have tended not to focus on that issue quite as much since the Minister made his startling admission that he does not read his correspondence. 
What is becoming clear to the House is that this is not the sort of bill that should be passed under urgency. Clearly urgency in this House has meant that the ACT Party has not been able to properly consider its position. To be fair to that party it was probably misled by the Minister as well. It is a very very serious matter. I ask Mr Garrett whether that letter was shown to the ACT caucus before it agreed to support the bill. I say to the member that he does not have to take a call; he can just interrupt. Let me put it this way: we are assuming that the letter was not shown to the ACT caucus. If we are wrong then it is incumbent on the member to tell us. Are we wrong? The member is not telling us so we will take it that as well as the Cabinet committee not seeing the letter the ACT caucus did not see the letter. The vital bit of business-wrecking information was not shown to the ACT caucus. 
I ask the ACT Party whether this situation makes any difference about how it feels about the legislation now. ACT is the party that is making the difference here. I ask whether the ACT Party as one of its first real choices in this Parliament wants to go down in the history of Parliament as being the party that supported the incompetent Minister. Clearly Rodney Hide the leader of a party that was not responsible enough to do a regulatory impact statement on this bill before it was introduced should have been asking Gerry Brownlee questions at the Cabinet committee about the effect of this legislation and about the lack of a regulatory impact statement—I understand that Rodney Hide is on the policy committee through which this legislation would have had to be passed. 
Not only should John Key have been asking the questions—certainly the previous Prime Minister would have been asking questions in respect of this particular matter—but answers should have been offered by Gerry Brownlee anyway. But he could not offer the answers because he did not read the mail. That is a sign of absolute incompetence from a lazy Tory. 
MOANA MACKEY (Labour) 
: 
 The Committee finds itself in an extraordinary position with a Minister in the chair who has not read critical pieces of evidence regarding the repeal of legislation when that will severely damage New Zealand’s economy and the investment of hard-working small-business people whom National claims to care about—both small and medium sized businesses. A gentleman who has invested $10 million wrote to Mr Brownlee asking him to please reconsider this legislation as he had invested $10 million of his own money—as he says in the letter if the Minister had bothered to read it—because of the biofuel obligation that had been brought in. He clearly outlined the case for why we need such an obligation and why it is very important for that obligation to continue. What did the Minister do? 
Hon David Parker 
: He ignored it! 
MOANA MACKEY 
: He did not even read the letter. 
The first paragraph of the letter is a response to an official from the Ministry of Economic Development. It says: “We have received your email of 2 December 2008 in regards to the ‘state of play’ of the New Zealand biofuel industry in the context of a National party pre-election indication of its intention to repeal the biofuel obligation.” I was on the Local Government and Environment Committee which considered the Biofuel Bill and the officials from that ministry were very good; I found those officials to be extremely knowledgable in this area. But it seems to me that perhaps the official had been asked by Mr Brownlee to send an email out to people. I find it hard to believe that of his or her own volition the official decided to send an email out to people in the industry—good on the official if he or she did—asking them to explain the “ ‘state of play’ of the New Zealand biofuel industry in the context of a National party pre-election indication”. To me clearly that direction came from somewhere. 
I wonder whether the Minister will take a call and indicate whether that direction came from him. If it did not come from him I ask why because it seems a sensible thing to go out and ask the industry where it is at and whether the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill will have an impact on the industry especially given that this bill has no regulatory impact statement attached to it. If the Minister did put that direction in and ask his officials to find out the state of play why did he ignore the information that came back from Mr McNicholl of BioDiesel Oils (NZ)? It seems astonishing to me that an email would go out presumably from the Minister asking about the state of play and then he would ignore all the information that came back in. Perhaps we could call the bill the “Biofuel (Ignorance is Bliss Head in the Sand) Bill”. 
Hon Steve Chadwick 
: It’s arrogant. 
MOANA MACKEY 
: It is arrogant because this bill is not going to a select committee. Mr McNicholl had no opportunity to come a select committee and explain the kind of impact the repeal of the mandatory biofuel obligation will have on his company and on his workers. At a time when one would think that the Government of New Zealand would be wanting to create jobs and support innovative businesses like BioDiesel Oils (NZ) Ltd Mr Brownlee comes down here to the Chamber—after bills last week that ripped the guts out of research and development—and has more legislation that will damage the very companies industries and entrepreneurs that we need at this time in order to bring us through the recession given what is happening overseas at the moment. 
I ask Mr Brownlee to take a call and indicate to the Committee whether he gave a direction for his officials to contact industry players and ask them where they were at. If he did I would like to know why he ignored that very crucial letter which he said he had not seen but now says he received and did not bother to read. 
I tell the ACT Party members to read that letter as clearly they have yet to see it. In all genuineness I ask them to read the letter and see the kind of impact this bill is going to have. At the very least the bill should have gone to a select committee. For a party that campaigned on having a regulatory impact statement attached to every single piece of legislation I tell Mr Garrett that this is a very very poor way to start. How much legislation has so far had what the ACT Party promised would be attached to every single bill and what is ACT’s leader now the Minister of? It is those members’ votes that will pass this legislation. It will not go unnoticed out there in the New Zealand public that a party that campaigned on the basis of the need to know what the impact of this legislation would be before it was passed is supporting this bill being rammed through the House with no select committee process and no regulatory impact statement. 
The Minister in charge of the bill has not even read the very information that he asked for. It was a smoke and mirrors request to make the sector feel that it was being consulted when clearly the Minister’s intention was to ignore every single word it said. 
JACINDA ARDERN (Labour) 
: 
 I am grateful for the opportunity to speak on this bill but it is with some shame that I do so and that shame is based on the subject matter we are discussing today. 
I have listened with some considerable interest and deep concern to the debate on the floor of the Chamber because this debate is all we have to go on. This is it. There is no select committee process and there is no regulatory impact statement. What we hear from members today is all we have. That is why I have listened with considerable interest to the discussion on this side of the Chamber because I believe that it is the only side of the Chamber that is taking into account the interests of our communities the interests of the players in this industry the interests of the people who might have been employed in this industry and the interests of the environment—and that is a big one. 
We are discussing the title of this bill. I have some suggestions for the Minister Gerry Brownlee and I would like to throw one out there to begin with. Based on what I have heard I propose that the title be the “National May or May Not Believe in Climate Change for Political Expediency But Will Do Nothing About It Bill”. I know that it is not too snappy but neither is National’s policy on environmental issues. 
What have we seen in the first month of this National Government? Let me give members a little refresher course. As soon as the Prime Minister made his first visit abroad what did we have? We had the Prime Minister of the UK Gordon Brown throwing a tax upon us. 
Hon David Parker 
: I raise a point of order Mr Chairperson. I hesitate to interrupt the member but it is impermissible for the Minister to be in the Chamber and not be sitting in the Chair. I would request that the Chairperson bring the Chamber to order 
The CHAIRPERSON (Hon Rick Barker) 
: The member is correct. The Minister who is responsible for the bill has to be in the Chair or he has to leave the Chamber. If the Minister wishes to make a phone call he should excuse himself. 
JACINDA ARDERN 
: I am happy to provide a copy of the  
Hansard 
 of my speech to the Minister for him to read when he has finished his all-important phone call. I hope he is speaking with the managing director of BioDiesel Oils. That would be a worthwhile conversation. 
I again reflect on what we have seen from the National Government on environmental issues. We have had the airport tax. We would hope that when a Government thrusts something like that upon us one of the things that we would see was a robust debate about all the things that the Government is doing in response to environmental issues that might allow for some bartering that might allow for a little bit of negotiation. What did we have? We have a select committee to question climate change I say to Mr Brownlee. That is what we have got. We have got the repeal of the biofuels obligation. And there is the emissions trading scheme. We cannot discuss what the Government is doing with the emissions trading scheme because I do not know whether the Government knows what it is doing—but we will come back to that. Those were our chips; that was what we had. If indeed the National Government believes in climate change what is it going to do about it? Repeal is not the answer. 
I propose another title for the bill: the “Gutting the Biofuels Industry Bill”. Aside from the environmental issues that is the other argument that we on this side have had to put because the National Government has not put it. The National Minister has not taken many calls on this part so I thought I would take the liberty of sharing some of his views on the impact this bill will have on the biofuel industry. His statement to the  
National Business Review 
 was: “We think that the growth of the biofuel industry will continue. A large number of biofuel companies in New Zealand who are currently producing … have been quite positive about where we are heading”. So positive in fact that the first thing they do is shut up shop. The first thing one of our major players in the industry does is shut down. 
For the edification of the members in this Chamber and because there is no regulatory impact statement I would like to share with them a little information about one of the communities that will be impacted. Waharoa is a small rural community in the Waikato. At the last census the unemployment rate was 23 percent. Given that we do not have a regulatory impact statement I would like to share with the Minister the unemployment rate in that small town. For a community that does not number more than a thousand what a boost 46 job placements would have been—massive. 
Hon Trevor Mallard 
: 22 jobs. 
JACINDA ARDERN 
: Rather there would have been 22 job placements which would have impacted on a number of families. What have we seen in the Waikato electorate alone since the National Government has come in? We have seen a loss of job opportunities in Waharoa. We are already facing 160 job losses in Morrinsville. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I move  
That the question be now put 
. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I particularly want to make reference to the Hon David Parker’s two amendments that are on the Table. The first of them was the excellent idea that he picked up from my colleague Brendan Burns to rename this bill the “Bio-fools Bill” because that is a very accurate representation of what the National Party is actually doing here today. Its members are making fools not only of themselves but also of New Zealand as a country on the world stage. I know in my time as a representative of New Zealand overseas that we were often proud to stand up—including I might add under a National Government with Simon Upton—to talk about New Zealand’s record on the environment and how we led the way. Unfortunately under this “Bio-fools Bill” along with the other measures that have already been brought in by the National Party in this short term in Government we are not able to say that. It is not only that; it is the importance to our overall economy and to new industries that are growing here. 
David Parker’s amendment to omit clause 2 is to substitute it with the following: “This Act shall not be submitted for Royal Assent until 30 days after a regulatory impact assessment and the report on the financial and unemployment effects on New Zealand’s tallow to biodiesel industry have been presented to Parliament.” That is a very very good amendment because at this time we are rushing through this bill without the opportunity to understand the regulatory impact or the impact on employment or the finances and economy of New Zealand. As we have just heard this is going to have a major impact not only on the small community of Waharoa but also on the people of east Tamaki. The bio-diesel industry was an industry that was growing and taking off and this bill is gutting it. As my colleague said we could call this the “Gutting of the Bio-diesel Industry Bill” because that is what the bill does. I urge the Minister Gerry Brownlee to take a call and tell us whether he agrees with the Hon David Parker’s amendment. It would be an opportunity to take some time over this bill and assess its impacts on the industry. 
We have already heard today in quite a startling development that the Minister in charge of this bill the Hon Gerry Brownlee did not even read the information that came to him from the industry that would be most affected by it. That is an unbelievable situation when there is no select committee process for the bill. We have a situation where the Minister in charge of the bill is also the Leader of the House and he has a 100 percent record of putting bills through this Parliament that have not been to a select committee and have been taken under urgency. Here we have an industry that will go down the gurgler on this Government’s watch—an unbelievable situation. I urge Government members to at least take a call and tell us what they think of the Hon David Parker’s amendment. I think it is an excellent amendment. It will give us the opportunity to understand the true impact of this law on the economy of New Zealand and on its industries. 
I also say that at an international level this has been a week of shame for this country in terms of its environmental record and this bill represents that. We have been proud of that record rightly but it is also important to our economy. We know that internationally buyers for supermarkets overseas and consumers who are thinking of coming to New Zealand as tourists all look to New Zealand to see us as a sustainable country. Yet we have seen over the last 2 weeks the Government take steps to suspend the emissions trading scheme—we think; we are not sure about that—to get rid of the biofuels obligation and to get rid of insulation for homes. If we had those things then we would be able to stand up on the world stage and say proudly that New Zealand is a country that takes sustainability seriously. We could get over the tyranny of distance by saying that we are a truly clean green country. Yet we come here today to debate a bill that will repeal the biofuels obligation and remove the opportunity not only to create an industry in this area but also to continue to show that New Zealand is a country that is serious about addressing climate change. 
This bill shows that National is not serious about addressing climate change and it is certainly not serious about listening to the concerns of the industries affected by the bill. We can read the letter from Tom McNicholl which Mr Brownlee decided not to read and we can also hear from Sue Wood talking about Tom McNicholl. It is perhaps hard for Mr McNicholl to talk about how he feels about this bill but Sue Wood has very clearly stated that her client is devastated. The person she is working for is devastated. Yet Mr Brownlee was not even prepared to read the letter to find out what was going on behind the scenes in this industry and to make sure that someone like Mr McNicholl could contribute to New Zealand in the way he wants to. 
NATHAN GUY (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 We could call this bill the “Climate Change Denial Bill” as some of my colleagues have suggested because fundamentally this bill comes down to a question of whether we believe in human-induced climate change. But of course Government members are taking a balanced view on these things these days a very balanced view! One day they think it is a hoax and the next day they believe in it. It is a balanced view. Tomorrow they will be back to thinking it is a hoax again or maybe that is where they are today because this bill effectively is Government members standing up and saying they still think that climate change is a hoax they still do not believe in it and they still do not think they need to do anything about it. 
Or Government members could start talking about whether they believe in the development of alternative fuel sources. Do those members believe in doing that? We have not heard very much from the Minister in the chair the Hon Gerry Brownlee. I wondered whether the Minister wants to step out of the House again and have Mr Williamson resume the chair because I think we were getting a bit more engagement from him when he was sitting in the chair. [ 
Interruption 
] That is right; we are getting a lot more engagement from Mr Williamson over on the backbenches. He is a Minister who believes in free speech and I am sure he wanted this bill to go to the select committee so that he could have a say on it. 
Hon Trevor Mallard 
: But Maurice doesn’t believe in climate change. 
CHRIS HIPKINS 
: Yes that is right. I am sure that Minister would like to have the opportunity through the select committee process to stand up and share with us his views on climate change. I think he would like to stand up and give us his views on climate change because this is a very important bill. This is a very important issue for New Zealand; in fact it is a defining issue for New Zealand. This bill is about whether we want to reduce our dependence on foreign oil. Do we want to reduce our dependence on foreign oil? It appears that this Government does not. Do we believe that New Zealand’s clean green image is something worth protecting? It appears that this Government does not. 
Hon Steve Chadwick 
: Well we do. 
CHRIS HIPKINS 
: It appears that this Government does not believe in New Zealand’s clean green image but we do—that is absolutely right. We in the Labour Party do; we think it is worth protecting. We will not enhance our environmentally friendly image by being fast followers. It appears that not only were we following but also we have turned around and we are going the other way. We are not turbocharging fast forward to the future but we have hit the reverse button and we are going backwards. This bill severely undermines New Zealand’s credibility on climate change. In fact there are members of the Government who think it is a bad idea as well. 
We are into inclusive government so I thought I would share some of the views of members of the Government—in fact those of Peter Dunne who stated: “I am particularly disappointed for the domestic biofuel industry which has for a long time signalled to me that unless Parliament enforced stiff regulatory legislation there would be no capacity to develop a domestically based tallow industry.” 
 That is from Peter Dunne a member of the Government. It is quite a good statement and I will share with members a little bit more: “As a result of National’s repeal domestic suppliers will find themselves undercut by cheap unsustainable imports which will eventually force them out of the industry. The environmentally conscious biofuel consumer will be faced with an imported product with all of the source sustainability uncertainties that we are all actively trying to avoid. The repeal of this legislation means there is nothing to stop the importation of biofuel from cleared South-East Asian rainforests from land that used to grow food for the poor people of the third world or from the United States’ carbon-intensive ethanol market. While National claims its repeal is due to concerns about environmental protection and world food shortages it is about to do the very thing that will potentially bury a 100 percent sustainable tallow-based biofuel industry right here in New Zealand.” That was from Peter Dunne a member of the Minister’s Government. 
Why does the Minister in the chair the Hon Gerry Brownlee not stand up and explain to us why National wants to do that? The Minister is reading his papers very intently now. Perhaps he is reading the letter at long last. Perhaps he will stand up take the next call and share with us his views on the letter which he now appears to be reading. I very much look forward to hearing from that Minister. 
Let us talk about some of the other things. This bill has not gone to a select committee so I will share with the Committee some of the other people’s views. They would like to have their voices heard. Brian Cox the executive officer of the Bioenergy Association stated: “New Zealand’s ability to seize the opportunity to become self-sufficient in liquid biofuels for transport will be slowed if the biofuels obligation in current legislation is removed”. He went on to state: “Investor confidence is key”. I thought investor confidence was something National believed in. 
Moana Mackey 
: No only in theory. 
CHRIS HIPKINS 
: Oh that is right; those members believe in it only in theory. Or is it another one of those things they believe in until they get into Government and then they can change their minds on things? They can believe in all those lofty things about being pro-business when they are in Opposition but when they get into Government they say: “Oh well we will just change our minds; we will just do whatever we like anyway.” 
Hon Steve Chadwick 
: Some are all right. 
CHRIS HIPKINS 
: Some are all right; that is right. 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Motion agreed to. 
The CHAIRPERSON (Hon Rick Barker) 
: There is an amendment to clause 1 in the name of the Hon David Parker which is ruled out of order as it is regarded as not being a serious amendment. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Clause 1 agreed to. 
The CHAIRPERSON (Hon Rick Barker) 
: We now come to clause 2 and there is an amendment in the name of David Parker that seeks to change the commencement date. There are some concerns about it not setting a precise date but on balance I think we will let the Committee decide the question. 
The question was put that the following amendment in the name of the Hon David Parker to clause 2 be agreed to: 
to omit this clause and substitute the following clause: 
This Act shall not be submitted for Royal Assent until 30 days after a regulatory impact assessment and the report on the financial and unemployment effects on New Zealand’s tallow to biodiesel industry have been presented to Parliament.  
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 58 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1. 
Noes 63 
New Zealand National 57; ACT New Zealand 5; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Clause 2 agreed to. 
A party vote was called for on the question  
That clause 3 be agreed to. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Clause 3 agreed to. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I raise a point of order Mr Chairperson. I bring to your notice that in the brace of votes we have just had United Future’s party vote was consistently recorded by one of the Government whips. In an earlier phase of the Committee of the whole House stage the United Future vote was not recorded by the Government whip. That leads to two possibilities: the first is that United Future had a view that it wanted to vote only in the latter stages of the Committee of the whole House and the second is that United Future’s vote was not recorded even though the National Party whip was under instruction to record it. It seems to me that the latter of those two explanations is the more likely. Therefore some of the votes recorded earlier in the Committee of the whole House stage may need to be adjusted. 
The CHAIRPERSON (Hon Rick Barker) 
: That is not a point of order. The votes are matters for the whips and it has always been the acceptance of this House that the whips are accurately recording the votes and casting the votes in accordance with a party’s wishes. What those wishes may or may not be at that time is for that party to determine not for the House. The record stands unless the whips come back and say that they have made a mistake and that is not the case at this point. 
House resumed. 
Bill reported without amendment. 
The CHAIRPERSON (Hon Rick Barker) 
: I move  
That the report be adopted 
. 
A party vote was called for on the question  
That the report be adopted. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Report adopted. 
Third Reading 
Hon GERRY BROWNLEE (Minister of Energy and Resources) 
: 
 I move  
That the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill be now read a third time 
. Hearing this debate one would think that this bill was about shutting down the biofuels industry in New Zealand. That has to be the most hysterical reaction to this particular bill that I could possibly imagine. I am staggered at the claim that the 20000 litres of biofuel produced in New Zealand right now will not apparently be produced the moment that this bill passes its third reading. I do not believe that. I think that in fact the biofuels industry in New Zealand has a very bright future indeed. What I my party and others who support this bill do not accept is that the only way New Zealanders will embrace biofuels is if the Government insists they become the compulsory customers of certain companies inside New Zealand. That is not a reasonable way to progress a move that is designed to improve New Zealand’s carbon footprint. 
In the Committee stage the Opposition kept on talking about the prospect of biofuels reducing our dependence on foreign oil. Well there is a prospect that that might happen but let us be very clear: to meet even the one-half percentage obligation would require some 60 million litres of bio-diesel. To get up to the full extent of the obligation in 4 years’ time would take over 300 million litres of bio-diesel. At the moment this country produces 20 million litres so it would be decades—decades—before we reached the position that would see us through biofuel non-dependent on foreign oil. Of course oil discovery in New Zealand may advance that position much more quickly. 
What we need is a programme in this country that encourages the development of biofuels and that ensures that the development of that industry is met by a market willing to take that fuel and I am confident we can have that situation in New Zealand. Interestingly we have it now but I think we could expand it quite considerably. 
The Opposition has also said that we are doing away with the option of producing standards for the sustainable production of biofuels. That is simply a total red herring. In fact the principal Act the Energy (Fuels Levies and References) Act 1989 requires that those sustainable standards are put in place. 
Hon David Parker 
: No it does not. 
Hon GERRY BROWNLEE 
: Mr Parker I am reliably informed is a guy who has always had his own view on these things. 
It also means that the work now being done by New Zealand Government officials to develop those standards will continue and those standards will be promulgated as soon as they are available. That has got to be a good thing because it will mean that New Zealanders can be sure that when they are pouring this new fuel into their tanks they are doing something to reduce the nation’s carbon footprint. 
There is a huge amount of international condemnation of biofuel produced in other parts of the world. As I said before we would need 60 million litres in the current year to meet the obligation put on the oil companies. We cannot do it from inside this country. 
Hon David Parker 
: Read the letter. 
Hon GERRY BROWNLEE 
: There are those who say we can do it; well where is the production now? It is no good saying that if the provision goes ahead we can do it because the obligation is there right now. It has been there from 1 October 2008. 
Moana Mackey 
: It’s 0.5 percent this year 1 percent next year. And this guy is doing it and you’re putting him out of business. 
Hon GERRY BROWNLEE 
: The member has made a lot of fun and games about the letter sent by the gentleman who has the plant in Tamaki and is proposing to build more plant. I have read that letter. He has put his case very succinctly but from his perspective. I have made the offer through Sue Wood to talk to him. It has been rejected. I cannot do much more than that. I cannot be fairer than that. The fact is that the biofuel obligation cannot be met in New Zealand without the importation of biofuels. I know that under the current law the opportunity for the big oil companies to have their obligation pushed out exists and that request would have come over my desk in no time at all. 
Also it is a little bit staggering that those in the industry who say that it is being destroyed and that they could have produced enough biofuel inside New Zealand actually did not have watertight non-breakable contracts with the oil companies. If they could not get that sorted out in the period that the obligation has been in place then what was the chance it might have been sorted out any time soon? 
I have said that I think biofuels do have a big future. I quite like the idea that a cleaner fuel would be available for many of the activities in New Zealand that require the burning of diesel. I point to Solid Energy’s approach. It has an experiment involving a fishing fleet in Wellington. That fishing fleet is 100 percent fuelled by bio-diesel and that is a great use of that fuel. Those on the boats like it. The fuel has proved to be very very reliable. If something goes wrong if the tank leaks or the boat spills some of the fuel then because it is biofuel it simply becomes fish food and does not do any environmental damage. That is a great use of it. Those sorts of things will develop. 
I note also that the company that Mr Leay heads up has had a product tested by Boeing. It announced that in the market just recently. The fuel is an algal-based biofuel. Quite interestingly a barrel of that particular biofuel has about a 33 percent jet-fuel capacity. That is fantastic and I am sure that technology will develop as time goes on. 
One can go through all of the biofuel companies look at what they are doing and see a clear picture of how they might progress their industry. But their coming to the Government and saying that they can make the progress they want to make only if Parliament chooses to give them customers by compulsion is not a particularly good way to go about it. 
Then there is the issue that has been advanced by our opponents that if this bill passes the country will be flooded by unsustainably produced biofuels. Well hang on let us work that out. They are saying that without this bill there will be no biofuel industry which would tend to mean there are no users but they say that somehow the country will be flooded with imported biofuel. I do not accept that for one moment. Some of the arguments mounted on the other side of the House have been to say the least very very inconsistent. 
What we will do is ensure that there is a sustainable standard for the import of biofuels to be used in the production of biofuels in New Zealand. And I will say this: when this bill passes later this afternoon the 20 million litres a year of biofuel produced in this country right now will still have markets and will still be sold and there will be more people looking for more of it as time goes by. We most certainly encourage that. 
Hon DAVID PARKER (Labour) 
: 
 The Minister of Energy and Resources the Hon Gerry Brownlee did not take one call of substance during the whole of the Committee stage of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. He was exposed this morning as not having read the very important correspondence from BioDiesel Oils (NZ) Ltd—a company that this legislation may put out of business with the loss of 46 full-time jobs and the loss of $10 million of capital investment and research and development expenditure. 
As he gave his third reading speech he made another error that really disturbed me. He said that the Energy (Fuels Levies and References) Act already requires sustainability standards even when the detailed sustainability provisions have been taken out of it by this bill. He is wrong—he is just wrong and he does not understand the legislation. An empowering provision in the Act allows sustainability regulations to be developed to ban the importation of unsustainable biofuels but the provision is a power not an obligation. The obligation arose in the provisions that will be taken out by this very bill and it disturbs me that the Minister does not understand that fundamental point. This is Mr Brownlee who has been on Radio New Zealand National saying that National’s real reason for introducing this repeal legislation was that it did not want to see unsustainable biofuels imported into New Zealand. This bill makes a nonsense of that argument. He does not understand his legislation. 
I want to return to a higher level in this debate. I will not now traverse the issues of the terrible injustice that has been done to some biofuel producers in New Zealand but I will restate the reality that if biofuels were going to happen by themselves they would have happened by now. It is easier for oil companies not to incorporate biofuels in their fuel stream and that is why they do not. They have ample capacity to deploy 100 percent mineral oil and mineral oil - based petrol and diesel. They do not need to include biofuels and it is a bit of a hassle for them to do so. That is partly because they have to buy product from some other company. They like to have vertical integration of all parts of the supply chain and to have the profit stream that flows through to them as a consequence so they will not deliver biofuels unless they have to. That is why the mandatory obligation was necessary. 
The approach is similar to that taken in a lot of other countries. The approach being taken in New Zealand was a very moderate one—0.5 percent biofuel required in the first year. Again Mr Brownlee has it quite wrong. He pretended only 20000 litres of biofuel per annum would be available in New Zealand yet evidence has been read into this Parliament’s record that a factory in Auckland is already capable of producing 10 million litres per annum and an additional factory under construction in Waharoa is capable of producing 60 million litres per annum of bio-diesel from tallow which is the most environmentally prudent source of biofuel in the world according to the UN and most of the ecologists who follow these issues. Again it is a misnomer to suggest that if the mandatory obligation had stayed in place unsustainable biofuels would have come into the country. They would not have. From now—from 1 October this year—companies have to report the source of their biofuels. No fuel company will put its reputation at risk by importing unsustainable biofuels in the short period prior to the implementation of the detailed regulations that were to be promoted under the sustainability provisions and that are already quite detailed in the legislation. 
What was the import of the biofuels obligation? Most people in the world—as well as the National Government—say that they are convinced that human-induced climate change is real and that we need to reduce emissions. It is very hard for New Zealand to reduce emissions in agriculture. It can be done but there are no substantial ground-breaking alternatives to cows that do not produce methane. We can reduce the rate of emission but we cannot avoid emissions altogether. Some substitutionary technologies in energy can avoid greenhouse gas emissions and one of them is biofuels. 
Sitting suspended from 1 p.m. to 2 p.m. 
Hon DAVID PARKER 
: Before lunchtime I briefly recounted how the Hon Gerry Brownlee is still mistaken as to the effect of this legislation as shown in his third reading speech. He said that after the repeal of the sustainability clauses in the current legislation there will still be a requirement for biofuels coming into the country to meet sustainability standards when that plainly is not the case. He further said that there will be a requirement for the new Government to develop sustainability standards. That is not the case either. The legislation is permissive and allows standards to be developed but there is no guarantee that there will be a requirement to do so and there is no prohibition on unsustainable biofuels being imported in the meantime. 
I also highlighted that the Minister when sitting in the chair acknowledged that he had not read the statements that came from one of the major producers of bio-diesel from tallow. Correspondence that had been sent to his ministry on 2 December was copied to his office on two further occasions yet on no occasion did he read it. Indeed it appeared obvious that until we provided him with a copy of it this morning he had not read the correspondence. The reason I highlight that is that I think it is tragic that the effects of this legislation on that industry are going completely over his head. 
He did not read the important correspondence which showed that as a consequence of this legislation the $10 million investment made by Mr McNicholl’s company in production of bio-diesel from tallow is likely to fail the plant will be mothballed and the people who would be employed at the East Tamaki factory and the Waharoa factory will presumably be either laid off or not employed. A total of 46 full-time employees were intended to be in place by the early part of next year to operate on a 24-hour basis this very large facility that was going to be producing between the two sites a total of 70 million litres per annum of bio-diesel from tallow—a by-product of the livestock processing industry. The amount produced by that company alone during the first 2 years would have been more than enough to meet the mandatory prescription in the legislation. It was achievable. 
Mr McNicholl’s letter describes how giving biofuels a tax break equivalent to the tax break that we have given ethanol—relieving ethanol from excise duty is equivalent to a 42c per litre tax advantage for ethanol—is not the answer. We did not think it was necessary to bring the tax break forward for tallow if there was a mandatory obligation. But in the absence of a mandatory obligation it is obvious that the oil companies will do just as much as they have in the past—very little—to introduce biofuels. Gull Petroleum has produced a little but the major oil companies have not done much to incorporate it in their fuel streams. 
We tried to pass an amendment that would have made good the National Party promise that it would give equivalent relief or assistance to the bio-diesel industry. I proposed an amendment to that effect. This very simple amendment gave to sellers of bio-diesel relief of 42c per litre of bio-diesel sold and credited it against the levies that were payable under the Act. Again both the National Party and the ACT Party opposed that. 
It is interesting that this bill is opposed by Peter Dunne by the Maori Party by the Greens and by the Labour Party. We all see the injustice that is being done in addition to the environmental back step—one of many that are being taken by the Government at the moment be they on biofuels or on something else. For instance the next piece of legislation to be considered the Electricity (Renewable Preference) Repeal Bill makes it easier to build coal-fired power plants amends the Resource Management Act and abandons efforts to hasten insulation and other improvements—such as efficient light bulbs—to energy efficiency in homes which should be encouraged. This is to say nothing of the suspension of the emissions trading scheme and the job losses that have already occurred in the forestry industry and the carbon service industry as a consequence. 
However those consequences stand small in comparison with the environmental damage that is being done. The economic consequences of this bill are bad enough but I hang my head in despair that this Government is far from building on our fine traditions as a country of doing the right thing in respect of these issues and of taking sensible but not costly decisions that improve the environment and also create new jobs. The Government is ruining all that through the repeal of the biofuel obligation. Thank you. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 It seems to me that over the last 2 weeks the economic direction in this country has been set and it has changed from where it was in previous years. Generally speaking it seems to me that our approach to economic development and to progress as a nation is starting to regress. We are going backwards not forwards. We are becoming dumber not smarter. We are becoming unsustainable not sustainable. We are becoming antagonistic to new technology instead of embracing new technology. We are in denial of the global mega-trends instead of mindful of them. 
It is almost as though climate change is some sort of grand intellectual global plot that this Government feels it needs to pay some homage to because it is a vote maximiser. Actually to do as little as possible is the mindset that the Government is in. That appears to me to be what has happened in recent weeks. It started last week with the repeal of tax credits for all research and development in New Zealand. That in itself has set the scene for an economic direction that will be based on volume not value and based on making sure we are technology followers not technology leaders. That is hard enough and difficult enough to swallow. 
Then what happened was that the climate change policy of the new Government altered between election day and the formation of the Government and it altered very substantially. It altered in the sense that the Government’s position when it was trying to win an election was that it would amend the existing emissions trading scheme. Now we have this so-called high-level select committee that is taking us back to the drawing board to see whether we think climate change is of much consequence. This committee will look at what everyone else thinks about it what the big global take on it is what we think about the science and whether we are to have a carbon tax or an emissions trading scheme. As a result there has been a whole lot of lost investment in this country and the economic consequences of that are measurable and have come to book. 
As a result of the delay in emissions trading—if we ever get emissions trading back under this Government—we have also seen a delay in the retrofitting of all of our pre-1977 houses. This country is full of very very cold dogboxes. It is a country in which the graphs for admissions to hospitals in the winter months for various bronchitic diseases are much much more severe than they are in say Britain or Sweden where there is not a seasonal rash of admissions or a seasonal death pattern. There is a seasonal death pattern that exists in New Zealand that does not exist in those parts of the northern hemisphere. Even though the climate in those areas is colder than ours those countries none the less have much better building stock and pay much better attention to housing standards. We had an opportunity to fix that and it has gone out the window. That is a very very significant change indeed. 
We have had some other changes and one that we are debating right now is how we are going to put an end to biofuels. Right through the debate on the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill the Minister of Energy and Resources Gerry Brownlee has clung tight to the sophistry that he is not doing biofuels in the eye and that they will be able to proceed even though the requirement for a sales mandate is being abolished as a result of this legislation. Evidence has been adduced by the Opposition to show that the Minister is wrong. The evidence is really clear and it comes from the industry itself. It comes in the form of letters and one of those letters in particular has been read out in full during the Committee stage of this debate. It stated without any hesitation that the industry could not go ahead without this sales mandate. 
The Government’s reason for not proceeding with biofuels legislation that uses a sales mandate is that it is ideologically opposed to it. The Government is ideologically opposed to a sales mandate because it thinks it is coercive. Of course it is coercive. If we want to start something that has resistance from some of the largest multinationals in the world then we have to put our foot down just as we have to coerce oil companies to take sulphur out of petrol too much benzene out of petrol or lead out of petrol. We have to show them we mean it; if we do not they will continue to colonise us. That is what will now happen: those companies will sell mineral oil in this country pure and simple for the foreseeable future. There will be no beginning of the switch to an alternative even though we know that oil is a finite resource that sooner or later it will run out that before it runs out its price will go up and that it will then go up in price again. These things are now being ignored and newly so. I do not think I can recall a Western nation that has taken a step against biofuels. A number have failed to take any steps towards biofuels but I cannot think of a Western nation that has got up and said: “We are going to axe progress on biofuels.” I do not know of one and that it is a shameful position for us to be in. 
The real problem is that the Government’s arguments against biofuels are so weak. They have no balance to them they have no substance to them they have no logic to them and they hold together badly—so much so that the Government was forced in order to fill its speaking time to come up with a bunch of stuff that were red herrings. The debate that we have had in the last day has shown them to be red herrings. I guess the one that comes to mind and it will do as an example is the Parliamentary Commissioner for the Environment’s assertion that the Biofuel Bill as introduced was a bad bill. Well at the end of the day no one in the House disagreed with the commissioner. Certainly no one on the Local Government and Environment Committee disagreed with the commissioner. As that bill went through the House there was awareness that the price of food and the price of oil ran the risk of becoming linked and that that would be a bad thing because a person’s Sunday drive would be responsible for someone else not eating. So the members of the select committee and a few others who were advising from the outside moved to address that and to put sustainability descriptions into our primary legislation that are the most advanced in the world. Underneath that primary legislation further regulation was to be developed. 
The next bit of sophistry that came from the Minister was the claim that the regulations were too hard. Is it not interesting that official advice has apparently flip-flopped in the space of one general election campaign? We were in Government not so long ago and when we were in Government the advice was: “We will be ready by July.” Now it seems it will take far too long so the country most advanced in putting in legislative policy involving biofuels for such a future is the one country that is about to back off and say: “Square one is good for us. Going back to the point of zero is where we want to be.” So we now have a Government that has already started to show a pattern. The Government is only a few weeks old but the pattern is to go back to the future. The pattern is to say: “Let us find the reverse gear and depress the accelerator as far as we dare.” 
This is dreadful legislation. It is dreadful because it does damage to this that or the other company; it is dreadful because of job losses; it is dreadful because it takes us backwards; and it is dreadful because it leaves us ill-prepared for the future. 
If we think of the first charge on any Government we know that it is to defend the realm. In this country we do not have big threats of marauding hordes coming from Indonesia. Our threats are the external shocks of climate change and oil depletion and we have decided in this House today to see whether we can ignore those as possible threats. That is shameful—it is shameful. The biofuels legislation that is about to be ditched was modest enough but it was a start. It was a good start. There was an industrial development response to that start and there was a capital investment response to that start but now it is going up in smoke. It is going up in the smoke generated by mineral oil and that is not the future; it is the past. 
Hon Dr NICK SMITH (Minister for the Environment) 
: 
 It amazed me that the member Pete Hodgson talked about shameful policy. I will begin my contribution on this biofuels bill by reciting for members opposite their actual record on climate change. When they came to Government in 1999 New Zealand’s emissions were 68 million tonnes of carbon dioxide equivalent. In 2000 that figure went up by 1.9 million tonnes. If we go a further few years forward we see that in 2003 that figure went up by 2.5 million tonnes. If we look in terms of the most recent data we see that the figure went up by 2.9 million tonnes. For all the talk of members opposite about carbon neutrality their climate change record was one not just of increasing emissions but also of an increasing rate of an increase in emissions. In fact during the previous Labour Government’s period in office of 9 years the rate of growth of greenhouse gas emissions was almost double what it had been in the preceding 9 years under a National administration. So when I hear a former climate change Minister like Pete Hodgson saying that we who have been in Government for not yet 5 weeks should be ashamed I say that he should reflect on his own record. 
This biofuels amendment bill does exactly what National went to the electorate on in the 2008 election and said we would do. We have a mandate for this change and I tell the House that it is appropriate we pass this bill under urgency because there is the real risk of a waste of public money being invested in infrastructure which will not apply if we get on and get the law straight in respect of biofuels. 
The first point that is critical in any debate around biofuels is whether it will do good. I could quote  
Time 
 magazine the United Nations the OECD and the world food organisation which this year have all expressed real concern that biofuels are doing more harm than good. 
Hon Pete Hodgson 
: What is the world food organisation? Where is its headquarters? 
Hon Dr NICK SMITH 
: Well the member opposite wants to quibble about what those organisations are. Let me go through them again. The United Nations Secretary-General has urged member countries not to impose mandatory requirements for biofuels. Our very own Parliamentary Commissioner for the Environment has said that a compulsory biofuels requirement will do harm to New Zealand’s clean and green reputation and members on this side of the House agree with that caution. 
I also want to pop the balloon that has been put forward that says that somehow the previous Government provided for a sustainability standard. It did no such thing. The select committee was asked to develop a sustainability standard and when the officials said that it was pretty difficult and that the European Community had been trying to do this for 5 years and it could not get there do members know what the Government members decided to do? 
Chris Auchinvole 
: What did they do? 
Hon Dr NICK SMITH 
: They said: “Let us kick it to the officials. Let us get the officials to sort it out. It is too hard.” and the officials came up with some highbrow principles. I say to this Parliament that it is so easy to have highbrow principles but what is needed is the pragmatic ability to have regulations that work. They do not exist and it is an indictment on the previous Government that it introduced a compulsion for biofuels without actually having a sustainability standard in place. It was one of those classic examples of putting the cart before the horse. 
Members opposite have said the problem is that some biofuel companies would like the compulsory requirement. I bet they would! I would love it if this Parliament were to pass a bill to compel people to use my particular product. I brew a drop of home brew and it is an excellent organic drop. I would love it if this Parliament were to pass a bill to deal to those big corporate beer companies and require them to include a blend of 0.5 percent of “Nick Smith’s Home Brew Beer”. I would love to see such a bill passed. I could justify it because my beer is particularly good and I think it should be better valued by Parliament. But does Parliament really think that such a law would be good law? It would be a nonsense. For members opposite to simply say that because some biofuel company would like a compulsion to buy its product and that that somehow is good law is a very pathetic advance. 
The real difference in approach around the issue of biofuels is this. The first thing is that this Government is open about the fact that this House of Representatives will not be the one that finds the answer to the challenge around climate change and new fuels. I honestly do not know whether the answer will be hydrogen vehicles electric vehicles biofuels or some other technology that has not yet been invented. I do say to this Parliament that when we try to pre-guess what that answer is we are pretending we have a level of knowledge that we do not have. We should not try to pick winners—like biofuels. 
I would love it if the next speaker explained why we would compel biofuels but not electric cars. I personally believe that electric cars will be a bigger part of the future than biofuels. I think that Parliament should say that we have a transition to make to new renewable technologies and that we need to provide a kick-start and some incentives for them. The answer is not to compel any one of those technologies but to provide a consistent financial incentive to move to them. The idea that Parliament could prescribe that the exact answer is for New Zealand to have 2.5 percent biofuels by 2012 in my view was quite ridiculous. The proposal from the Minister to look at an excise tax advantage that would then allow that to flow through does make a lot more sense. 
The second point I will deal with is the issue of cost. Officials have made a prediction but nobody knows the proper price. It depends on the sustainability standard but we do not know what it is yet. If the sustainability standard is very narrow and tight then the price will be quite high. If the sustainability standard is very loose and very open then the price will be quite inexpensive. But if we take a moderate view of it it is about 4c a litre. Each cent on a litre of gas costs $60 million so we are talking about a $240 million cost being put on to consumers for this biofuels incentive of a teeny-weeny little percentage. 
As the Minister responsible for Climate Change Issues I put it to this House that the biggest contribution New Zealand can make to this huge challenge of climate change is around the technology to reduce the methane from agricultural emissions. Do members know that we are spending just $4 million on research and technology to solve that problem? How many members in this House can put hand on heart and say that putting a cost of $240 million on to the economy for biofuels while we spend just $4 million on agricultural emissions from farm animals—the real elephant in the room around climate change—is a sensible programme? In my view it is completely disproportionate and out of order with what is logical. 
The last challenge I would have for members opposite is simply to go back to their record on climate change. Can any member opposite name for me a country that has had a larger increase in emissions than New Zealand has had over the last 9 years? Can they name any country—any? The reality is that the previous Government had the very worst record and the few countries that may have had a worse record most of us have never heard of. I think it is about time that members opposite made some apologies for their appalling record on climate change before they lecture this Government about its sensible programme. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 I have to begin with that last point from Dr Nick Smith. As he well knows New Zealand’s greenhouse emissions rose fast under the National Government of the 1990s and they rose faster under the Labour Government of the 2000s for one simple reason—that is the economy grew faster under Labour than it did under National. I make no excuses on the grounds of economic growth; the climate does not care how fast the economy grows. And it did take the Labour Government a long time to realise it had to take some action. But finally the Labour Government took some action. It put in place some provisions to reduce our greenhouse emissions—very late nevertheless it did it. But what is the first thing the National Government has done? It has repealed the lot of them. Well maybe that is a lesson to Labour—that a Government has to do things early in the term if it wants them to stick. But the fact is that we did get some good policy and now it has gone. 
I begin my third reading speech on the bill to abolish the biofuel obligation by reading a little bit from the briefing to the incoming Minister of Transport. This is what the Minister was told by the Ministry of Transport: “Reliance on fossil fuels to power transport leaves New Zealand exposed to the expected rises in oil prices due to increased demand and a supply that many forecasts suggest will peak between 2010 and 2020.” The Ministry of Transport has finally got on board with peak oil! “To help our society and economy adjust to the true cost of using oil and emitting carbon dioxide the transport sector must improve energy efficiency and shift to energy sources and modes of transport that are more sustainable and over which we have more control. New Zealand is relatively well placed to generate electricity from renewable sources has good sources of first-generation biofuels in limited volumes and is developing sources of environmentally friendly second-generation biofuels. Making the most of our opportunities will be an important focus of the ministry’s activity over the coming decade.” Well it looks as though the ministry will not have that opportunity. 
I note that despite that briefing from officials the new Minister of Transport has not spoken once in this debate. Would we not think that an incoming Minister of Transport would be interested in a debate about what vehicles in New Zealand will be running on in the future? But he has not contributed one thing to this debate and I find that sad. No one in Government in fact has spoken up for our need to reduce dependence on imported oil. No one has spoken up on our need for fuel security at least in an emergency—to have enough fuel to get food to the supermarkets and to maintain emergency services. I have to say to Dr Smith that electric cars will not do that. No one from the Government has spoken up on the need to encourage science innovation and entrepreneurship which will lead to second-generation sustainable biofuels in New Zealand. That is an area where New Zealand has a big competitive advantage. Nobody over there has recognised the importance to business confidence of being able to rely on a law. Those issues have been left to the Greens. 
Biofuels are not the saviour of the world. They are not the whole answer to climate change and nobody has ever pretended that they are but they are part of it. New Zealand is particularly well placed because of our large land area and good growing climate and because of the wastes that occur from our agricultural industry. There are good biofuels and bad biofuels and the way to distinguish them is with a sustainability standard but the Government is repealing detailed instructions for writing that sustainability standard. Nick Smith in all his speeches and the Minister as well insists on conflating the United Nations’ concern about the effects of ethanol grown from subsidised corn in the US with the effects of bio-diesel made from tallow in New Zealand but they are as different as chalk and cheese. To be for one does not mean that one is for the other. 
The Government position is based on an aversion to mandatory means but we already mandate the composition of motor fuel. We already mandate sulphur levels the lack of lead and a whole lot of specifications around volatility and combustibility. What is so different in mandating 2.5 percent of renewable composition? Nick Smith again knowingly misrepresented the situation by saying that it was equivalent to compelling oil companies to buy Tom McNicholl’s product. Well he knows that is not true. It is equivalent to requiring oil companies to buy some renewable fuel. Tom McNicholl has to compete with everybody else on whether his product is the one that makes it. 
I thought that one benefit of this debate was that the Minister Gerry Brownlee was learning some stuff from all the contributions in the House. But I heard his third reading speech and I am afraid I was wrong because he still does not grasp the most important point of this whole debate. He is taking an economics 101 approach that says if the demand is there the market will provide. If we are talking baked beans or shoes that is correct but in this case the market will not provide and here is why. First of all oil companies will never demand biofuels. Why should they? They have their own product. They are not the consumer. As oil prices rise they will just put up the price of what they sell. So there will never be demand from oil companies for biofuels until oil wells are physically incapable of delivering enough oil. 
Members should remember that the briefing to the incoming Minister of Transport—and a very conservative briefing at that—says that that time will be from 2010 to 2020. If it is 2010 we need to have infrastructure in place now but we are not going to have that. As well when oil wells are incapable of delivering enough oil it will be very hard to import biofuels because everyone will want them. We may not even have our own tallow at that stage in order to set up an industry because it may well be under long-term contracts for export to China where the Chinese will be making biofuels out of it for their people because tallow will be a valuable ingredient. 
Gerry Brownlee thinks that because Fonterra and Gull Petroleum have a contract to sell 22000 litres of ethanol that shows that it can be done. Well they had a bit of surplus feedstock they were already making ethanol and Gull Petroleum was expecting a legal obligation so it got in first. It was a marketing strategy; it was a one-off drop in the bucket little bit of ethanol blended with petrol and it will be the last of that kind because the company did it expecting an obligation. If a company is building a biofuels plant will it invest under the law as the law is going to be in a few minutes? Well it will not if it is making ethanol because ethanol cannot be sold here as a fuel unless it is blended and oil companies will not be providing blending facilities. Most vehicles cannot run on pure ethanol so companies will not be proceeding with trying to make ethanol from waste wood for the same reason and that research will go overseas. If a company is making bio-diesel it may focus on whether it can make direct sales such as to the fishing fleet we have heard a lot about. When oil is $150 a barrel companies will get orders and when oil is $49 a barrel as it is now they will not get orders and nobody will build a plant when there is a stop-go market that depends on the fluctuation of international oil prices. So when oil hits $200 a barrel there will be no industry and maybe no feed stocks. 
The Minister even says that oil discovery in New Zealand may reduce our dependence on foreign oil faster. Well I am sorry but I tell him that oil discovered in New Zealand will not belong to us. It will not necessarily be refined here and it will be sold on the world market. We will have as much ability to buy it here as we have to buy any other oil in the world. It is frightening that as we get so close to peak oil we have a Minister of Energy and Resources who does not know that. He says we cannot meet our obligations within New Zealand without imports so let us look at the arithmetic. The first company has 10 million litres now with 60 million litres under construction making 70 million litres in all. If we add eco-diesel we have 20 million litres now with 20 million litres coming online next year. When we add BioDiesel Oils (NZ) 70 million litres are planned and under way. I tell Mr Brownlee that a total of 280 million litres a year by 2010 is already in the pipeline and that is almost the 300 million litres the Minister said we would need in 2012. That is without any wood or any algal biofuels. Clearly we can do it within New Zealand. The quantities in the Act are designed to keep pace with what we can do in New Zealand but all of that careful thought to give just enough encouragement to a New Zealand industry is being wiped away by this legislation. 
DAVID GARRETT (ACT) 
: 
 I rise to speak on the third reading of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. As members of the House clearly know ACT is committed to supporting National’s first 100-day plan as laid out in the document  
My key commitments to you.  
The caucus and I intend to honour that pledge. Having said that I say I have listened to the contributions from the Opposition members with interest. As a new member of the House I was not involved in the debate surrounding biofuels last year. During the debate over this last day I have personally come to see some considerable sense in what has been said by members on the opposite side of the House. I stress that that is my personal position and view and that the ACT Party is committed to supporting the Government. 
I am glad to hear that Labour members recognise that some biofuels would dramatically increase fuel prices worldwide particularly hurting the 1 billion people who survive on less than $1 a day. I hear Ms Fitzsimons’ distinction—and I hear it loud and clear—between various biofuels and I hear her point that not all biofuels are alike. I am pleased to hear that both Labour and the Greens recognise the negative impacts of some biofuels—in particular those produced from corn and rapeseed which have been shown to contribute higher levels of greenhouse gases than fossil fuels. Certainly from my personal perspective bio-diesel produced from tallow in New Zealand appears to provide a number of benefits over the use of fossil fuels or fuels produced from what were once food crops. 
It is clear to me from listening to the debate that biofuels warrant further investigation and my hope is that over the next 3 years the Government with help from its support partners my party and the Maori Party can come up with a common-sense approach to this issue: a common-sense approach that will allow the development of biofuels that contribute to lower levels of pollutants in our environment but do not cause unintended consequences. It should be an approach that will allow the development of biofuels that will not lead to further price rises being imposed on those who can least afford that and most important an approach that will allow the development of a biofuels industry in New Zealand based on good science and good economic sense. That I am afraid is where I and my colleagues opposite diverge. Their feeling and it seems to be shared wholeheartedly by the Greens is that biofuels in order to be viable require regulation and compulsion. ACT agrees with the Government view that using compulsion to create a captive pool of customers is a bad idea. 
With regard to the letter from Mr McNicholl I read it with considerable interest and I noticed a couple of things. I think that maybe it was not very well expressed. He says that without the biofuel obligation the business case for BioDiesel Oils (NZ) would have been weak from the start. But BioDiesel Oils (NZ) appears to have been set up in 1998 so I assume he means the project to produce bio-diesel from tallow. The other point is that Mr McNicholl—understandably—has some concerns. He has relied on a captive market being delivered to him which is now going to be removed. Well I am afraid that is business. 
Mr Brownlee has made the point very well that the bio-diesel that is produced now is being sold somewhere and that it has been sold for some time. And we are not talking about a couple of truckloads; 10 million litres is a huge amount. ACT does not agree that mandatory limits need to be put in place. One point that has not been made is that if bio-diesel is a sustainable product at a good price all the supporters of the Green Party will flock to buy it. They have sincerely held philosophical beliefs in sustainability so if bio-diesel is available they will buy it. I am prepared to admit that I have learnt something and have refined my knowledge which was limited in this area. I would hope that the members opposite might learn something and see that mandatory levels are not a particularly good way to go. Clearly there is merit in tallow-based biofuels and that is an option that New Zealand companies should be taking seriously. 
One point that Ms Fitzsimons made your Honour—I am sorry Mr Assistant Speaker; it is a long habit and is hard to break—was that oil companies will not develop this industry because they do not need to. In the short term that is right of course; they have a vested interest in protecting their mineral oil market. But one crucial thing is that oil companies are not stupid. I heard Ms Mackey say she had worked for one. Well I worked for 10 years of my life in the oil industry and I think she would probably agree with me that the one thing the oil companies are not is stupid. They all know that we will eventually run short of oil. It is becoming more and more expensive. Peak oil is not going to happen in 2010 or 2020 but it will happen. And if the oil companies do not go down the route of supplying biofuels their competitors will. We have already seen—and it is a minor marketing point perhaps—that BP changed its identity some years ago from British Petroleum to Beyond Petroleum. All right that is a marketing ploy but it illustrates that the company recognises that diversity will have to happen and it will have to source liquid fuels from sources other than 10000 feet below the ground. 
Having said all of that as I said my personal view is that work needs to be done on biofuels. I think much of merit has been said by members on the other side of the House but ACT remains in support of this bill. Thank you. 
Hon PANSY WONG (Associate Minister of Energy and Resources) 
: 
 I am pleased to take a call in the third reading of this Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. The bill is intended to repeal the compulsion part of the biofuel legislation that was passed by the previous Labour Government which continued to show its distrust of New Zealanders’ ability to make an informed choice. We all know that biofuels are already available for sale. National has made the point that we support the development of the biofuel industry but we also trust New Zealanders to be able to make an informed choice. Instead of making it mandatory to force the various distribution chains to sell “x” quantity of biofuel our approach is to implement viable alternatives such as tax incentives and at the same time—which is most important—to develop a sustainable standard. 
The Hon David Parker sat there and did nothing for 9 years and then in the last minute of a dying Labour Government those members brought in legislation that talked of compulsion and mandatory actions. I think that those members should have got the message from the New Zealand public that they have been voted out of office. On this side of the House the Government side we show that we have confidence in New Zealanders. Before anybody thinks about mandating anything a credible standard has to be developed to judge what a sustainable biofuel standard is. 
I ask members to think about this. It is incredible to think that the previous Labour Government—and this is why it lost office—would mandate an action without even developing some standards. What is a sustainable biofuel? We have all learnt now on looking back that the first wave of biofuel was disastrous for food crops and that the second wave led to deforestation. Now once again with the technology still in development some people want to rush headlong into mandating something. 
I am very very proud to be on the Government side. We are able to provide a viable alternative of tax incentives for the development of the biofuel industry and at the same time we are able to show our confidence in letting our people—New Zealanders—make those informed choices. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I rise to speak to the third reading of the Energy (Fuels Levies and references) Biofuel Obligation Repeal Bill. It is one of the few times I regret I have only 10 minutes to speak on the third reading. There are some points that I think are important to make. 
The first is that I welcome the comment made by Mr Garrett from the ACT Party that he had a personal view that was not consistent with the ACT position— 
David Garrett 
: I didn’t say that—“differed slightly from”. 
Hon TREVOR MALLARD 
: —was slightly different from the ACT position—after listening to the arguments from the Opposition. I welcome his frankness in saying that—and saying it even before I understand he has had his maiden speech in the House. It is good to hear that someone was listening to the debate and some of the points were well made. 
I also want to say to Nick Smith that his work in the select committee—it was relatively unusual—on the development of the legislation now being repealed was valued by members from the Green Party and the Labour Party. It was good. What I think he fails to understand—maybe he did not look carefully at the detail of this bill—is that the very sustainability requirements in that legislation are being repealed by this bill. He seemed to indicate that the work would continue anyway but of course it will not be required by legislation because those standards are being repealed. 
I want to make some general comments about climate change. As a relatively small country New Zealand has the possibility of doing some pretty wonderful things. We are over-reliant on motor vehicles compared with the majority of OECD countries we have a poor public transport system and therefore having a go at transport fuels is a very good way for us to reduce emissions. I agree with Nick Smith: I think that in the longer term it is likely that battery-powered cars will make progress. 
Hon David Parker 
: The Government’s ambition. 
Hon TREVOR MALLARD 
: That was the ambition of David Parker and a lot of work has gone on—including by State-owned enterprises—in this particular area in order to make sure we stay at the front of the world. But that is a longer-term situation and it may well be that some electric cars will have to be dual-fuel and that we will still have to rely on a normal combustion engine type of arrangement at least for some of the longer routes. Therefore we have to think about the use of fossil fuels the use of ethanol bio-ethanol and bio-diesel. 
 I was lucky as Minister of Energy and Minister for Economic Development to see quite a few projects around the country. People have been looking at making fuel from gas from the smokestacks at New Zealand Steel—Stephen Tindall and his team have been working in that area. People have been looking at using algae and they are likely to make progress. But we have only one world-leading biofuel technology in New Zealand that is ready to go now and that is fuel from tallow. It has been 10 years in the making a lot of very good research has gone into it and its economic viability is essentially proven. Most important it competes really well against international biofuels most of which are not sustainable. So it is win-win: we have something sustainable—it uses what is pretty close to a waste product in New Zealand; something we have a very high proportion of per head compared with most countries—and it works price-wise vis-à-vis international prices for biofuels. 
But there is a problem and that is that the oil companies do not like it. They do not like the investment in mixing that they have to do to ensure that it can be used and if there is not an element of regulation or compulsion they will not do it. They are big economic organisations and they make decisions in their interests as individual companies. It is right that they should do that. That is the way it goes and we accept that that is the way the world works. Over the years we have made lots of decisions that have hurt oil companies. They fought like hell when we took lead out of petrol. They hated it—they absolutely hated the idea of it being taken out. A whole pile of standards have been set and I think none of us would now want to go backwards. This situation is similar. This is about the setting of a standard that is important for the planet. Shifting towards biofuels is an important part of that. 
We are really lucky in New Zealand that a man—a pioneer and I understand a 75-year-old—Mr McNicholl—has decided essentially to shift the emphasis of his company which had been involved in recycling in a number of areas; over the last 10 years his major focus and his major investment have been on research and development on and then the building of what is essentially a pilot plant and then on the building of a major plant in Waharoa for the conversion of tallow to bio-diesel. I compliment him. He was a long way ahead of the pack and he got some endorsement internationally—the product is proven. He got some support. It was not that anyone was told that Mr McNicholl’s bio-diesel had to be used rather than the imported stuff; no one said that. No one said that people at the moment have to use sustainable stuff—although people have to declare if they are not which is quite an incentive to use it. But there was no compulsion to use Mr McNicholl’s product; it would compete with the overseas products. 
Mr Assistant Speaker Roy I regret to inform you that during the Committee stage of the bill we had an admission and an interchange that I would describe as unseemly at best. It became very very clear that Gerry Brownlee who is only 5 or 6 weeks into his term as Minister of Energy and Resources is behind in his correspondence. In fact that became clear 2 weeks ago so 3 weeks into his time as Minister he was behind in his correspondence. Mr McNicholl through the Ministry of Economic Development on the 2nd and directly to Mr Brownlee on the 4th sent a letter that outlined the issues for that company and the fact that this bill would result in the mothballing of his plants. It was again sent to his office on the 12th by Sue Wood a former president of the National Party. Unfortunately Mr Brownlee did not read that letter until 17 December—today. 
Hon Gerry Brownlee 
: Rubbish! 
Hon TREVOR MALLARD 
: No he made it absolutely clear in the Chamber that he had not read that letter until today. 
Hon Member 
: Ask him directly. 
Hon TREVOR MALLARD 
: I ask the Minister whether he had read it before. Again he refuses to deny it. But he made it clear in the Committee stage that he had not read that letter until today. 
He made some other comments. He said that his office had offered Mr McNicholl a meeting. As of Friday last week that was being vehemently denied by Sue Wood a former president of the National Party who said that his office gave her the brush-off when she tried to set up a meeting. It may be that as this legislation was falling down around his ears he offered a meeting after the fact. 
But the point is that Gerry Brownlee by not reading his correspondence misled the Cabinet committee that approved this bill. It is absolutely incumbent on a Minister especially one proposing to take to the House legislation without a regulatory impact statement—such as this bill—to brief his Cabinet colleagues on the effects. He has told us that he did not tell either the Cabinet committee or Cabinet that a company in which $10 million had been invested would be mothballed and 46 jobs would not be available. This is from a Government that says it cares about jobs and cares about investment. He has told us that despite having the letter in his office he did not tell his Cabinet colleagues about it. Well if that occurred two or three times under a Labour Government the Minister would get the sack. If it occurred once the Minister would get a very serious reprimand. I want to know from the Prime Minister what he is going to do about his incompetent lazy behind-in-his-correspondence Minister Gerry Brownlee. 
MOANA MACKEY (Labour) 
: 
 I am happy to take a call in the third reading of this very very bad and damaging bill—the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. I note once again that this bill did not go to a select committee. Those affected by this terrible legislation were given no chance to come and have their say. Those National members who say that Mr McNicholl is lying when he says that he will lose his business if the Act is repealed— 
Hon Gerry Brownlee 
: No one said that. 
MOANA MACKEY 
: So is he telling the truth in his letter when he says that his plant will go under? 
Hon Trevor Mallard 
: He doesn’t know. Even that’s a very bad admission. 
MOANA MACKEY 
: That is right. He does not know because he read the letter only just before the lunch break. The National members who say that Mr McNicholl was not telling the truth in his letter when he said that his plant will go out of business if this bill is passed would have had the opportunity at select committee to have that discussion with Mr McNicholl face to face. 
Hon Darren Hughes 
: And Sue Wood from Otaki knows that. 
MOANA MACKEY 
: That is right—Sue Wood from Otaki the former president of the National Party knows that. The least the people of New Zealand should expect is that when their Government plans to pass legislation that is not only environmentally damaging but economically damaging legislation affecting someone who has invested $10 million of his own hard-earned money and employed 22 people in Waharoa which as my colleague Jacinda Ardern—who campaigned very hard in that electorate told us—had over— 
Hon Trevor Mallard 
: 23 percent unemployment in 2006. 
MOANA MACKEY 
: —over 23 percent unemployment plus another 20 people in East Tamaki that person has at the very least the right to come along to a select committee and put his case. He has the right to have National members who are like lions in the House today actually face up to this person who will be put out of business and tell him why they are passing the legislation. 
There is no good reason for this repeal bill other than revenge on the Labour Government—National does not like it because we put it into place. 
Chris Auchinvole 
: Oh! 
MOANA MACKEY 
: I am sure Mr Auchinvole’s call will elaborate on this in great detail but we also know that Mr Brownlee tried to claim in the Chamber today—I do not know whether it is true—that he was trying to get a meeting with Mr McNicholl to talk about the issue with him. According to Sue Wood as of Friday last week that was not the case. Again I come back to the fact that we would not need to be having this discussion if this bill had gone to a select committee and Sue Wood and Mr McNicholl had had the opportunity—which most in this country would think would be their right—to come along to a select committee and face up to those who are planning to put them out of business with this legislation. 
Hon Darren Hughes 
: Sue Wood was campaigning for the Nats at the election. 
MOANA MACKEY 
: That is right. She campaigned for the Nats at the election. The National Party campaigned on this policy. What it did not say is that the bill would be rammed through under urgency in the first 2 weeks of Parliament with no select committee process for the public of New Zealand to have their say. 
 Mr Brownlee has talked a lot about how unhappy he is about compulsion. This is a very fundamental philosophical opposition on his part so I went back and had a look at his first reading speech on the Biofuel Bill. I know that National supported this bill to select committee but Mr Brownlee raised a number of issues and concerns that he had about the bill as it stood going to select committee. He seemed to actually know a little bit about it. I read through his first reading speech; there was not a single mention of compulsion at all. I remind members that at the time the bill went through its first reading the mandatory target obligation was 3.4 percent not 2.5 percent as it came out of the select committee. At the first reading Mr Brownlee apparently had no problem with compulsion. In fact he went on to say: “we support the bill—with considerable goodwill—going to a select committee recognising the importance of all of this for New Zealand’s future. It has to be said that as an agricultural producing country with a huge emission problem from our agriculture sector and not wanting to penalise ourselves unduly in the future getting this part of the emissions profile in better shape is in all of our interests.” I do not know what has changed between now and then—who knows? 
Hon Gerry Brownlee 
: The select committee led me to change my mind. 
MOANA MACKEY 
: It is the select committee process that made the bill better. The select committee process that addressed every other issue he raised in his first reading speech apparently made it so that National could not support the legislation. 
But there was another very good first reading speech from a member of this House who is held in high regard Mr Eric Roy. I would like to read from his speech because I think it also raised a number of issues that we agree with here. He pointed out that there were a number of complex issues when it came to biofuels but that that they were part of the solution in terms of our response to the whole issue of climate change. He believed it was important that they formed part of the debate. He also said: “I also believe that New Zealand has to be in there at developmental and experimental stages because we will gain credibility in terms of the products we sell.” I agree with this entirely. He said: “we sit at 19.5 tonnes of greenhouse gas emissions per head of population and the rest of the world is at 5.5 percent. I happen to believe that there is something immoral in First World countries saying yes that the planet is in crisis but they will hold just where they are and everybody should hold where they are which means that underdeveloped countries stay underdeveloped. So we need to look for solutions.” I agree with that sentiment. He then explained the situation that we were in with the amount of fossil fuels that we were producing. He pointed out—quite rightly—that the transport sector was an enormous part of that area and that we needed to do it. He went on to say: “Biofuels are actually something we can engage in almost immediately. Both our diesel engines and our internal combustion engines can get straight into utilising these fuels. So we have an advantage there and while not neglecting other things”—like electric cars—“we are off first base in terms of working with biofuel solutions.” That just about says it all. 
One of the issues that consistently came up at select committee was that of low-hanging fruit. New Zealand is very different from most other developed nations. We need only to look at our greenhouse gas emissions profile compared to other developed nations to see just how different we are. New Zealand’s greenhouse gas emissions profile is nearly 50 percent agriculture which more closely resembles the emissions profile of a developing country than a developed country. It means that when we come to look at solutions for climate change we have enormous amounts of waste by-product from the production of meat and dairy which can be used for the production of biofuels and which other developed countries do not necessarily have in similar proportions at their disposal. 
We are for example talking about tallow. The research on tallow has been world leading. There were times when the cold flow properties of tallow were in question and people were worried. We saw a lot of evidence at select committee that this stuff is being used in Edinburgh. If bio-diesel from tallow can be used in Edinburgh at the temperatures it gets down to then certainly bio-diesel can be used all over New Zealand—otherwise not sold in the parts of the country where it may be too cold to be used. There is also the production of whey from our dairy production using ethanol. Ethanol is also a high-energy option and as we know the legislation was about energy not volume. 
Our dairy industry gives us huge advantages over other countries. It is not simply to say that we are the same as every other developed country—we are not. We have low-hanging fruit at our disposal that we can use now. The only reason that this legislation will be repealed is that the National Party does not like it. Mr Brownlee asked people to trust him to develop sustainability standards according to the principles already in the law. The legislation he is repealing had a requirement to do that. We proposed an amendment to leave the sustainability standards in the requirement. If he was genuine in what he said about those standards he would have supported that amendment because the principles that we worked on very hard at select committee were a good guidance. We were told at select committee that people wanted a clear steer on what those sustainable principles would say—what they could and could not do. These are long-term investments that both the producers and the oil companies are taking and they do not want to enter into a contract to find that 1 year down the track they are in breach of that contract because they can no longer sell that biofuel in New Zealand. 
If Mr Brownlee was serious about sustainability standards he would have supported the Hon David Parker’s amendment which left the requirement for him to develop those standards in the law. I suspect that it will be a very very long time before we see anything come out of this. A lot has been made of this obligation. It was an issue that we took seriously but what has become clear in this debate and at select committee and if we read the letter from Mr McNicholl is that the obligation made a difference. Mr McNicholl stated as much in his letter. He said: “Around August 2005 when the company became aware that the government had in principle agreed to a Biofuel Sales Obligation it took further steps to invest in ramping up production output of its R&D plant in East Tamaki.” He goes on to say: “When it became evident that the government was going to legislate the compulsory use of biofuel the company went ahead with its plans to construct a new 60000000 litres plant at Waharoa which is well under way.” So to say that a biofuels obligation does nothing flies in the face of the evidence that has been presented to the select committee and indeed to this House. 
It is appalling that the Minister in charge of the bill did not bother to read Mr McNicholl’s letter; he admitted as much in the House today. He finally read it when Labour members tabled it. I do not understand why this legislation needs to be rammed through under urgency. It provides no certainty as the Minister has just told us that he will go ahead and develop sustainability standards anyway. The sector out there is still wondering what the standards will say and do. At least if he had supported the Hon David Parker’s amendment to keep the sustainability principles in the bill people in the sector would have had some kind of clear steer on what those standards would be. They are now in no man’s land—they do not know. They do not know whether there will be any kind of sustainability principles produced at all. If there are people now have no idea what they might be because the Minister has taken them out of the legislation where they already were. This creates more uncertainty for the biofuels sector more uncertainty for oil companies and thoroughly dreadful legislation. 
METIRIA TUREI (Green) 
: 
 I want to take a reasonably short call on the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill. My colleague Jeanette Fitzsimons has described in some detail the facts about this issue the extent to which the Minister has got the issue completely wrong and why this bill is such a bad thing for the National Government to pursue. I want to talk about the international concern about biofuels and particularly unsustainable biofuels. There is a range of different kinds of unsustainable biofuels and I want to describe some of them. 
Unsustainable biofuels are those where the greenhouse gas emissions from the production of the biofuels are high. There is simply no means by which a biofuel is a viable alternative to the use of fossil fuels where in the production of that biofuel the greenhouse gas emissions are equivalent to those of fossil fuels themselves. It was very important in the setting of the sustainability standards that we made it very clear that a sustainable biofuel was only one that had a reduced level of greenhouse gas emissions over the life cycle of that fuel—a 35 percent reduction as a minimum so that it was a real reduction. 
But now that the National Government is repealing that legislation there will be absolutely no requirement in law that the biofuels used in this country emit less greenhouse gas than oil-based fuels. Taking that as one example we will shortly have biofuels imported by large fuel companies and being used in this country—mostly because the New Zealand industry is being slaughtered by this legislation—that are likely to emit over their life cycle the same greenhouse gas emissions as or possibly even more than oil-based fuels. So the repeal of the legislation by the National Government is likely to maintain greenhouse gas emissions at the same rate as at present for transport fuels or possibly even increase them. Certainly it will make no contribution at all to New Zealand’s obligation to reduce its greenhouse gas emissions. 
 The door will be open even further in terms of unsustainable biofuels in that the biofuels that the National Government is allowing to be brought into the country are unsustainable in terms of food production. Biofuels will be imported that are produced on land that people would otherwise have used to produce food for themselves their families and their communities or would have used in further trade around their communities to support themselves. A significant amount of writing has been done on this issue around the globe by people like Vandana Shiva. She has written a great deal about the impact of unsustainable biofuels on the poorest communities around the world in terms of the displacement of people and the theft of land. There has been a significant theft of land managed or owned by very poor communities; it has been taken off them by large international corporations. Some people have reported having land taken off them at the point of a gun; they have been forced off their land by the employees of mining companies and palm oil companies particularly in areas like the Solomon Islands. 
I have been to the Solomon Islands and visited with people there who were campaigning against unsustainable biofuels particularly those produced from palm oil. Much of the land those communities were living on and the forests those communities were living in were being used as a food source. People were also using those resources to build their homes and care for their children and they were using the forests as the source of medicines. Those communities were engaged in ancient knowledge ancient cultures and ancient traditions. Their lands were being stolen from them at the point of a gun because of the drive for unsustainable biofuels. International companies wanted the land in order to produce unsustainable biofuels that they could then sell on to Western countries like New Zealand because there is a demand for biofuels here. 
So what did we just make sure of? The Green Party along with Labour and even with a bit of agreement from Nick Smith agreed that we should have sustainability standards in New Zealand law that would say a sustainable biofuel was one that was not produced in competition with food production and was not grown on land that was used for food production and that would not impact on indigenous biodiversity. That standard is currently in the law that is soon to be repealed by National. It would have made sure that no biofuels imported into this country came from the end of a gun at the cost of indigenous communities losing their forests and watching their homes be bulldozed by international fuel companies who wanted their land to grow biofuels on. Under the existing law we would have made sure that biofuels produced in such circumstances did not come into New Zealand. New Zealanders would have felt absolutely assured that— 
Hon Gerry Brownlee 
: Where are the standards? 
METIRIA TUREI 
: The standards are in the law. The Minister of Energy and Resources does not know where they are because he has not bothered to read the legislation. He has no idea what he is talking about. He has not seen the standards so obviously he has not looked at the legislation that is in place at this very moment which he is repealing. He obviously does not even know what he is repealing. 
Those standards are in place right now and New Zealanders would have been assured that they were not responsible for the destruction of homes the theft of land and the destruction of indigenous rainforests around the world particularly in the Pacific. Those rainforests are very important not only for biodiversity reasons but also as food sources and medical sources for the people who depend on them. The poorest people on this earth rely on those natural resources for their lives but those resources are being taken off them by multinational corporations that want to grow biofuels to feed greedy Westerners who just want cheap and easy biofuels. The National Government is making sure it is possible now to import such biofuels into this country. 
It is also worthwhile to remember that not only is National opening the door for unsustainable biofuels to come into New Zealand but also it is providing public money to the companies that are part of the process of stealing land off poor people threatening them with a gun and destroying the indigenous forestry and rainforests. National is to give those companies subsidies to do all of those things. Not only will the subsidies go to those companies but also the same process of subsidising international companies will mean that our New Zealand domestic industry involving sustainable biofuels made from waste products will be killed off. The public purse is being used to fund the theft of land by multinational corporations and the destruction of New Zealanders’ jobs and New Zealand’s domestic biofuels industry. That is the National Government’s recipe for the economic—I do not know what it is; it is certainly not economic growth or development—degradation of this country. 
It is a tragedy for New Zealand to see that in just this one little piece of legislation which is only a few clauses and a couple of pages long. This bill is just a tiny little thing but inside it we can see the whole of the National Government’s policy and programme for this country which is to be as unsustainable as possible in the interests of both greed and international companies to destroy New Zealand industry to encourage job losses rather than job growth and to make it as hard as possible for the international community to look on us with anything but disgust and distaste. 
This legislation along no doubt with other legislation that is to pass sometime in the future and certainly a bundle that passed last week just goes to show the extent to which the National Government will drive this country into the dark ages. It will drive New Zealand back to a time when unsustainable growth and a very large pool of unemployed workers were created to the benefit of wealthier companies and particularly international companies; and back to a time when public money is funnelled either into private schools—we see almost a doubling of funding for private schools by the National Government—or into private companies so that more and more money is taken out of the public purse and given to private profit-making enterprises all in the name of greed and the National Government. So much for a brighter future! Indeed this National Government will drive New Zealand back into the dark ages and we will be ashamed to face up to the international scrutiny that will no doubt come as a result of that. In the context of indigenous communities that have relied on Western countries like our own country to put their interests at least a little into our consideration we might at least acknowledge the fact that their homes and livelihoods are to be destroyed. This National Government has no concern for them or for the interests of New Zealand. 
This is a sad sad day and this bill is a disgraceful act on National’s part. 
CHRIS AUCHINVOLE (National—West Coast-Tasman) 
: 
 This has been a very interesting debate to listen to and I really have enjoyed the beginning of each speech that has come from the Opposition side of the House. Sadly towards the end of all of those speeches we have heard a more partisan tone and they have turned into diatribes against the National Government. We even had Mr Parker talking about energy-efficient light bulbs and saying they should be back in there. Actually we have just had an election and the people have indicated what they want. There has been such a waste of energy in the discussion of the details of this but the thrust of the original discussions was good. 
I have a few questions to ask. Where is the mountain of surplus tallow at the moment? There cannot be a big surplus without displacing the production of other products by taking the tallow away. Opposition members say we will make more money out of tallow. Yes but this is the whole argument about biofuels. Corn was a low-value product that the Mexicans used as a base food supply and now it is beyond their reach. 
Hon David Parker 
: People don’t eat tallow. 
CHRIS AUCHINVOLE 
: Well no they do not but they make a lot of things from tallow that keep them healthy and clean and that they can afford. And Labour members talk about capturing it and legislating by compulsion so that it has to be used in biofuels. 
Mr Parker talked about an environmental backwards step and about the use of compulsion in order to introduce changes of that nature being the environmental backwards step. I was interested in what Mr Mallard said. We nearly got there and I thought his speech was going to be good because he was talking about the need to use new technology. The biofuel legislation restricts the use of new technology because it puts a ring-fence around a particular biofuel and says that people must use that one. 
Moana Mackey 
: No it doesn’t. 
CHRIS AUCHINVOLE 
: It does. It is not a mandate for change. Internationally the United Nations and the New Zealand Parliamentary Commissioner for the Environment both say that compulsion for biofuels is a disaster. 
Like Moana Mackey I shared an involvement in an oil company. We had a little oil company; there were about four of us in it. We used to import fuel. 
Hon Darren Hughes 
: Just like the Clampetts! 
CHRIS AUCHINVOLE 
: Ha ha! We changed it. It was a small business but there was enough technical knowledge amongst the partners to know that New Zealand had never had much of a go with decent petrol. We have not talked about standards that are really good for the country. That is why we have been badly served. 
Moana Mackey 
: So why didn’t it go to a select committee and all your questions would have been answered? 
CHRIS AUCHINVOLE 
: Well— 
Hon Gerry Brownlee 
: Moana went to forecourt school. 
CHRIS AUCHINVOLE 
: There we go. But even forecourt school people know that New Zealand’s petrol has never been the very best in the world. A lot of improvement can be made without having this sort of regulated procedure. 
To conclude I say the biggest problem coming in the arguments from members on the other side of the House seems to concern the loss of the compulsory nature of the legislation. 
Moana Mackey 
: The Minister didn’t care about the compulsory nature in his first reading speech. He didn’t even mention it. 
CHRIS AUCHINVOLE 
: But that is the only bit that seems to have objections to it. This is worthwhile legislation. It will set the clock straight. It will not stop the production of biofuels. It will not stop the encouragement of new technology. It will stop us walking into a backwater. Thank you Mr Deputy Speaker. 
Hon DARREN HUGHES (Labour) 
: 
 The Labour Party in Opposition joins with five other parties in opposing the third reading of the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill in Parliament today because we believe this is very bad law and we believe this is a backward step for New Zealand. We do not believe there is any upside for New Zealand in this bill going through. We do not believe there is any upside for the environment we do not believe there is any upside for New Zealand industry and we certainly do not believe there is any upside for New Zealand jobs which will take an active step backwards when this bill receives its third reading if indeed that is what happens at the end of this debate. 
I would have thought that the National Government would reflect on the fact that five of Parliament’s seven parties are strongly opposed to this bill including its support party the Maori Party which is standing up for its beliefs and voting against this bill. We also heard from the ACT member who spoke David Garrett that he is against the bill as well but he will vote for it on the basis that it is part of the Government’s programme. That is not the position of course of the other support party the Maori Party which is not doing that but ACT has decided to support a bill that its individual members do not support. I acknowledge that United Future the Progressive Party the Labour Party and the Green Party are also not supporting the bill. That leaves National with only 62 votes against 59. That is a majority. It is a simple majority—a simple majority from a simple Minister. It means that the National Government will win on this but it should show those members that people are very upset about this bill going through because this is not good law for New Zealand. This is not a step forward for New Zealand industry. 
That fact is really compounded by the fact that this bill did not get a chance to go to a select committee. It is yet another bill from the inclusive Government that John Key told us he would run on which the public have not had a say. We heard from Mr Auchinvole that the reason the public did not get to have a say on this bill is that we had an election and there was a change of Government. I am sure that National’s decision to repeal the biofuel legislation was what drove tens of thousands of New Zealanders to the ballot box on 8 November! It is as though somehow anything that was ever in the National Party manifesto need never go to a select committee again because it is National Party policy. There is an arrogance in that stance that I think National will live to regret particularly when these bills cause long-term damage to our country. 
Hon Gerry Brownlee 
: No it doesn’t. 
Hon DARREN HUGHES 
: This bill does because this bill denies an opportunity. This bill is costing one man who has been mentioned several times during the debate—he has been the poster boy for it in a way—millions and millions of dollars in losses as a direct result of the decision this Parliament will make in 10 minutes’ time. That goes alongside other bills passed through their third readings that have also made an impact on people right down through to last week’s KiwiSaver changes which change people’s savings during their working lives. That makes a big change for people for ever. This bill makes a change that is negative and its consequences are more far-reaching than I think the Government is prepared to give us credit for discussing today in Parliament. 
My colleague Moana Mackey quoted extensively from the Minister’s speech that was given when he was the shadow Minister in this area and really I felt he was hung drawn and quartered on his own words with the bluster we have heard from him today and yesterday about why he feels the need to repeal this biofuel obligation. We know that his colleagues have not read a lot of the legislation that the Government has put before the House this week and last week; I suspect that they would not even have had a cursory debate on it in their caucus room. But what has been clear from a lot of the Government’s speakers is their total lack of understanding and failure to appreciate the fact that the obligation we are talking about is a tiny obligation out of all the oil sales in New Zealand. National is acting as if the former Government had on the books a compulsory measure by which absolutely everything had to be fuelled by biofuels; we would not even be able to spark up the lawnmower this weekend without pouring biofuel into it because the evil Labour Government in that nanny State way had insisted that only biofuel could be used. 
Paul Quinn 
: You agree—at last! 
Hon DARREN HUGHES 
: I want to say to the Government that if this bill did not pass then 99.5 percent of our oil would still be coming from the current sources we have—99.5 percent. In our law we had 0.5 percent as a target in order to get an industry going for biofuels. I do not know what bright ideas Mr Quinn has about climate change; I suspect that his bright ideas do not stretch all that far past dawn. But for those of us who have been trying to think about what things New Zealand can do in order to make sure that we can respond to climate change we can say we have not seen any ideas come from National. 
What has come from those members are things that have actively undermined New Zealand’s response to climate change and this bill has to be one of them. Gerry Brownlee has said that one of his first priorities as Minister of Energy and Resources in New Zealand is to take away choice from New Zealand consumers because he is taking away the ability for us to develop a proper industry in this country. He is happy to cut across private property rights and that relates to all those slogans and all that language that National members always use. But when those slogans do not suit National’s argument we never hear of them. National used to be the party of private property rights. I can see why ACT Party members privately have their views on these things but they are tottering along behind National in this respect. National is going to cancel the private property rights of somebody who has put in millions and millions of dollars of his own money into that property—his life savings. 
Paul Quinn 
: Like economic transformation closing the gaps knowledge wave? They’re slogans. 
Hon DARREN HUGHES 
: Mr Quinn in his rant yesterday told us that he would be behind the ordinary person in Parliament because he was a bloke’s bloke and that he would stand up for people yet today he is putting his vote behind a measure that will destroy millions of dollars belonging to a 75-year-old man who wanted to take the entrepreneurship— 
Paul Quinn 
: Rubbish! 
Hon DARREN HUGHES 
: Paul Quinn says “Rubbish!” but we know that he does not have a clue about it because he started shouting out “Rubbish!” only when Gerry Brownlee said “Rubbish!”. If the member is taking his cue on research from Gerry Brownlee then that would be a very strange way to spend his parliamentary career because one of the things that came out in this debate—for a bill that did not go to a select committee—was the fact that Gerry Brownlee was so far behind on his paperwork that he had not even read a letter from Sue Wood the former president of the National Party. I know that the National Party was very— 
Mr DEPUTY SPEAKER 
: Order! 
Hon DARREN HUGHES 
: It is fine by me Mr Deputy Speaker; if the man wants to make a fool of himself then he can do it for 2 years 10 months and 3 weeks and his little time in Parliament can be known for that. It is fine by me. 
But Sue Wood the former president of the National Party was very active in the National Party campaign at the last election. She was busy helping Mr Guy in Otaki during that election and she would have been thinking to herself that she would have a party in Government that would listen to what she had to say. I think she has put up some good arguments in her letter. But we now know that it is not her arguments that have been dismissed by the Government; it is her envelope that has been dismissed by the Government because Gerry Brownlee has not even had the energy to do his paperwork or to read his correspondence. He now has staff who can open his envelopes for him. Of course previously Gerry Brownlee used to go to any function that involved the opening of an envelope but now he has people to do his envelopes for him and he cannot even do that. 
Hon Dr Michael Cullen 
: What about a crusade on reading? 
Hon DARREN HUGHES 
: A crusade on literacy—that is right. If Sue Wood is listening on the airwaves now I would say for her benefit that the problem with her letter where she does deserve to have absolute criticism levelled at her is that she wrote a 1½ page letter to Gerry Brownlee. Everybody knows that one does not go over a page with Gerry Brownlee if one wants to have one’s views taken seriously. And if one really wants to convince Mr Brownlee one should double-space the page because the amount of biofuel he spits out when work comes over the desk could have actually met our sales obligations without our needing to pass this repeal bill which is being rammed through the House under urgency by a Minister who is not on top of his portfolio. 
Hon Annette King 
: Or even under it. 
Hon DARREN HUGHES 
: Well I do not want to pursue that line of inquiry all that far. But I say that the Labour Party is strongly opposed to this bill first and foremost because of its climate change measures. We are worried about that. We are worried about our country slipping from the position we have had as an honest broker on these matters a position of being a country that is respected and listened to on a challenge that will not go away just because there was a change of Government in New Zealand on 8 November. I will tell members one other thing: that challenge will not go away just because the ACT Party has decided to have a high-level parliamentary select committee inquiry into it. As loyal as we all are to New Zealand if any member in this House honestly believes that the world is waiting for the entire debate on human-induced global warming to shift all because our Parliament has a select committee hearing on it then that member is more deluded than many who currently sit opposite. 
The other thing we are very concerned about is the fact that we are shutting the door on the opportunity to develop an industry here which means that jobs will be lost as a result of the Government’s measures. We are heading into a recession when the Government will see lots of job losses. It is already promoting that as one of its policies; it will go back to its policy of 6 percent as the natural rate of unemployment. All the right-wing language is already coming through in that respect. The Government is determined to close the door on jobs here but I think that is a crying shame. At 0.5 percent the existing legislation still left 99.5 percent for the Government’s big oil company mates that got to National as Sue Wood herself suggests. That is one of the issues here. National’s links have not been able to be explored during this debate because we have not had submissions from the oil companies but I can guarantee that had the oil companies made submissions those submissions would have very closely reflected the Minister’s arguments; I am sure. 
Hon Annette King 
: Have they been to your office Gerry? 
Hon DARREN HUGHES 
: The Minister would have met with them before the election and made promises to them. He nods his head at that because he has made big promises to big oil. That is absolutely fine—that is what he has done. But even if the Government had left the requirement at 0.5 percent it would not be wiping out the oil industry; it would be opening opportunities for jobs and the industry and for making sure New Zealand was still playing a role in shifting our dependence away from non-renewable sources of oil which members must agree is something we have to do. 
So as always in these matters National is showing all its imagination and flair. It is getting rid of legislation yet has nothing to replace it with. This is a whole lot of hot air and bluster from the Minister in charge of the legislation. At the end when Ministers have the privilege of representing New Zealand abroad they will have a very sad and sorry story to tell. 
A party vote was called for on the question  
That the Energy (Fuels Levies and References) Biofuel Obligation Repeal Bill be now read a third time. 
Ayes 62 
New Zealand National 57; ACT New Zealand 5. 
Noes 59 
New Zealand Labour 43; Green Party 9; Maori Party 5; Progressive 1; United Future 1. 
Bill read a third time.