Stanford Erica; Shaw JamesERICA STANFORD (National—East Coast Bays): Thank you Madam Chair. I would like to ask the Minister whether or not he sees a future in which we won't need a reserve price or a secret price for that matter. And the reason that I'm asking this is because someone much older than me—because I'm not old enough to remember this but when the New Zealand dollar was floated we had a similar situation where people were very worried—Hon Scott Simpson: Was the Minister old enough?ERICA STANFORD: Ha!—were very worried in this Parliament apparently so I hear that we would need some sort of floor and ceiling and in the end we didn't. And we look back now and say Well that's ridiculous that we would even be thinking that." So I'm interested in whether or not the Minister received any advice on whether or not there may well be a future in which this isn't required or in fact that the reserve price doesn't need to be secret. The reason I'm asking this particular question is in relation to my amendment which seeks to have an independent review of that confidential reserve price mechanism to actually look at the whole reasoning behind it and whether not only is it working in the way intended and not actually increasing the risks rather than reducing them but also in going so far as to consider whether or not the market is actually able to function as it should. And there may not in fact be a need either for a reserve at all or a secret reserve price which would take away all of the concerns that we have on this side of the House around who sets that mechanism that flows through into the price and all of the bits and bobs that go around that that we're worried about.So did he receive any advice from his officials on whether or not this may not be required in the future or in fact that the reserve price as it often is could just be made widely known? And if he did you know why didn't he take that advice?Hon JAMES SHAW (Minister of Climate Change): So when it comes to the confidential reserve price the analogy that I would use is selling your house at auction which is a system that New Zealanders are very familiar with. Usually when you sell your house at auction you don't tell the market what your minimum price would be. You don't say "I will only sell this property for $500000." because then bids will tend towards $500000 and obviously you'd like to sell it for more than that. So the question that you raised about the price floor of $20 which is public and currently the $35 fixed price option which is going to be replaced by the cost containment reserve trigger—those really are mechanisms to allow the economy to adjust over a period of time.So the idea of a cap on the price was actually introduced by the previous National Government as a way of limiting the price and I think it was initially—$15? [Interruption] Twenty-five dollars was the price that that Government said "We will not allow prices to float above $25. Rather at that point people can start exercising the fixed-price option." That was because it was felt that beyond $25 there would essentially be kind of too much damage to the New Zealand economy with cost to businesses and so on. And the net result of that of course was that it severely limited the impact of the emissions trading scheme. It was one of the factors that severely limited its impact over that sort of 10-year period. Now one of the reforms that we introduced was to allow that to move up to $35 and then we've said that from next year once we've got this cost containment system operating that will move and that $50 is the price there. What that does is it allows businesses to say "That's roughly the band within which we can see the market operating."Now is there a world in which you won't need either a clear price floor or a cost containment reserve? The answer is: I don't know. But at the moment as a transition mechanism we think it is an important part of the system in terms of being able to signal to the market but I think that having a confidential reserve price in which you are essentially trying to say "Is there sufficient demand in the market at an acceptable price without disrupting the secondary market?"—that that mechanism is valuable and that's why we're introducing the bill."