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Woods Megan; O'Connor GregThird ReadingHon Dr MEGAN WOODS (Minister of Energy and Resources): I move That the Energy Resources Levy Amendment Bill be now read a third time.The bill will ensure the Crown receives a fair financial return on its fossil gas. To ensure the Crown receives that fair financial return from our pre-1986 licences with low royalty rates the Energy Resources Levy Act of 1976 imposes a levy on gas production.The bill progresses a discrete change to the Energy Resources Levy Act to clarify who is exempt from this levy. This would clarify that production from deposits within pre-1986 licences operating on low royalty rates cannot be exempt and must pay the top-up levy on all gas that is produced. This will avoid any risk of confusion that licence holders could operate on a low royalty rate and not pay up the top-up level by claiming a discovery. The amendments will only apply prospectively so will not impact on previous payments or non-payments. It also validates those past levy payments.This bill ensures the Crown—and New Zealanders—continue to receive the levies it is entitled to collect. This is for the benefit of all New Zealanders. I commend this bill to the House.DEPUTY SPEAKER: The question is that the motion be agreed to.
Whaitiri Meka; Woods MeganHon MEKA WHAITIRI (Ikaroa-Rāwhiti): Thank you Mr Chair. Just a follow-up—and I want to say thank you to the Minister. That clarified her answer to consultation with iwi and obviously this is around permit-holders. I just want to follow up on that question to the Minister. In their current Treaty claims one of the issues—particularly from the Taranaki iwi—is really around ensuring that no future breaches will occur. So the question I have to the Minister: is she comfortable that the bill that we're passing through under urgency will not further disadvantage the iwi of Taranaki as they are processing their Treaty claims to Crown-owned minerals or to any other iwi who have an issue in this space?Hon Dr MEGAN WOODS (Minister of Energy and Resources): I'm happy to answer the two questions that have been put. The one from the Hon Judith Collins about why we're using this Budget urgency: what we want to do is we want to clarify this. We want to get this fixed up. We do want to be in a position that actually we can get that fair return for New Zealanders from the Crown mineral estate. Once you know about one of these things it is your job as a Minister to get this fixed as quickly as possible especially if New Zealanders may be forgoing lost revenue which at the moment is $50 million. I can think of lots of ways in which we could help New Zealanders with $50 million. In terms of the questions from the Hon Meka Whaitiri I haven't had specific advice around that. But what I would say relates to my previous answer which is that this is actually about getting a fair return that we can then spend on our health system and on our education system where we can address a number of things. But as I indicated in a previous answer it is my determination that the next phase of the energy future in Taranaki will be a far more equitable one.
Collins JudithHon JUDITH COLLINS (National—Papakura): Thank you Mr Chair. I'd like to ask the Minister for Energy and Resources—and it has been asked but it hasn't been answered—why this particular bill has not gone through a select committee process. Why is it her decision to rush this through in urgency when there is clearly a lot of interest in the bill and what its implications are for the oil and gas industry?
Court Simon; Woods MeganSIMON COURT (ACT): Thank you Mr Chair. Minister I just want to come back to transitional provisions. I asked you previously about this description in the legislative statement: The bill validates all past levy payments as proper." Your response was that the bill does not do anything retrospective and it states quite clearly that amended section 6 does not apply retrospectively. However this is very clear language Minister. It says the bill validates all past levy payments which appears to be retrospective and gives rise to a concern that levy payments may have been unlawfully collected and applied. Would you please clarify Minister?Hon Dr MEGAN WOODS (Minister of Energy and Resources): I'm happy to clarify that. What that is saying is that it is validating all the payments that have been paid in the past according to the law as it was there and not attempting to apply this new legislation to payments that have been made before the passage of this legislation. It is making it crystal clear that this is prospective not retrospective."
Bennett David; Woods MeganHon DAVID BENNETT (National): Yes I understand Mr Chair. The Minister has talked about the definition of deposits and things like that. I asked her a specific question just before that last change over in Chair.Is the Minister aware of any new deposits? The Minister didn't have a chance to answer it at that time. Would the Minister please answer that question now?CHAIRPERSON (Greg O'Connor): In so far as it is relevant to the bill.Hon Dr MEGAN WOODS (Minister of Energy and Resources): Mr Chair yes. I think if the member had been following the debate he would have already heard me address a similar question by one of his colleagues.CHAIRPERSON (Greg O'Connor): Simon Court—Hon DAVID BENNETT (National): Point of order. The Minister has not addressed that particular question. If she has then great but she hasn't.CHAIRPERSON (Greg O'Connor): The Minister has addressed the question. The member might not be happy with the answer but she has addressed the question.
Whaitiri Meka; Woods Megan; O'Connor GregHon MEKA WHAITIRI (Ikaroa-Rāwhiti): Thank you Madam Chair. To the Minister—because I am aware that the Minister has done quite a bit of work in Taranaki—the question is one of consultation. What consultation has she had with iwi who value and have a view around Crown minerals particularly in the Taranaki area—if she has felt and whether she can share with the committee her consultation process knowing that the Ministry of Business Innovation and Employment said there was no Treaty implications from this. I'm just interested in the Minister's view on what iwi have said around this and I guess the ongoing challenges they have around particularly Wai 792 and whether that has been factored in her decision here. So it's a process question Mr Chair.Hon Dr MEGAN WOODS (Minister of Energy and Resources): The consultation or the conversations that officials have had have been with licence or permit holders and as the member will be aware we do not have any iwi that hold under the Crown Minerals Act any oil or gas exploration permits. As the member will also be well aware when we're looking at what the new energy future looks like particularly in our offshore new energy the work that we are doing and progressing well around offshore wind that is something we're seeking to rectify because I want our new energy future to be one that is far more inclusive.CHAIRPERSON (Greg O'Connor): Just before I take Mr Bennett I'll just say that I have been watching this debate. I heard the previous Chair the Hon Jacqui Dean and I am as one with her.
Bennett David; Bennett Glen; Dean JacquiHon DAVID BENNETT (National): Thank you Madam Chair. Is the Minister aware of any new deposits in those fields?GLEN BENNETT (Labour—New Plymouth): I move That the question be now put.CHAIRPERSON (Hon Jacqui Dean): Just before we continue I'm not going to accept the motion because while we are getting close to exhausting new areas in the bill I think there is still enough interest across the House to warrant taking some more calls. But I do note that a considerable amount of time has been spent exploring a very very similar question. It's not for me to judge whether that has been answered but I would be suggesting to the committee that if they wish to keep this committee stage going then I would imagine that exploring other aspects of this bill would be a good thing to do.
Kuriger Barbara; Woods MeganBARBARA KURIGER (National—Taranaki-King Country): Thank you Madam Chair. I'm getting more confused as the Minister attempts to answer more questions. So on this issue of what is an existing deposit and what is a new deposit back in 2018 the Government passed a law that banned any new permits. Therefore the only place that people can currently go to get more gas is within existing permits. So I think we need to have a very clear understanding of what this word deposit" means because if it's not a new permit then it's something existing within an existing permit. And we're all sitting here not clear at all on what that means in terms of new deposits because they must all be within existing gasfields.Hon Dr MEGAN WOODS (Minister of Energy and Resources): I think the discussion we're having tonight in this committee exemplifies exactly why there does need to be clarity over what the exemption is. And I want to take this back. This is about the exemption and I'm going to direct members to new subsection 6(3) in clause 5 in Part 1 of the bill that we are debating here and I'm going to read this out: "The exemption in subsection (1)(a) does not apply to any natural gas produced from any land to which a licence relates if the licence was granted in relation to [the] discovery of natural gas made [after] 1 January 1986"—CHAIRPERSON (Hon Jacqui Dean): Before.Hon Dr MEGAN WOODS: Sorry "made before"—that's material thank you Madam Chair—"1 January 1986 (even if the licence was extended on or after that date)." The wording in the exemption clause is leading to confusion. It is exactly why industry has come to officials at the Ministry of Business Innovation and Employment asking for clarity around that. It's about whether fossil gas production from newly producing deposits within these pre-1986 licence areas can be considered "discoveries" for the purposes of the exemption—and that is the critical part. So a newly identified deposit of gas may be found within the bounds of an old licence area and that licence area could well be in a pre-1986 licence area. It should be payable as a levy and a low royalty rate."
Brownlee GerryHon GERRY BROWNLEE (National): We haven't had an answer yet to this question about what constitutes a deposit". So my understanding—and I'm sure it's the understanding shared by the entire geology profession—is that a gasfield is a geological structure that may expand or may be many many square metres if not square kilometres of geological structure likely to contain gas. And the point about putting down a well is that it creates an escape and the pressure that the gas is trapped in is released and the gas flows to the surface. That's roughly what happens.But the idea that somehow there are discrete little bundles—or whatever you want to call it like little underground lakes of gas—is complete rubbish. And I don't know how the officials from the Crown minerals department of the Ministry of Business Innovation and Employment can be so confused. A deposit of perhaps iron ore is very clear because it's one location and it's extracted from that location. But a gasfield is vast. It's a geological structure where tapping into it releases the pressure and lets the gas flow up.If someone decides then what the Minister is saying—if it's what I think you're saying Minister—is that if from one of Māui platforms they put the big LiDAR lines out and they put one of those seabed well heads on and go into the structure that is part of their licence somehow if gas flows into it it's a new deposit. It can't possibly be. It is either in the structure or it's not.The reality is that the licence is given on the basis that the structure in its entirety contains gas and that's the reason why the upper estimates of what the field can produce keep changing. That's why it was thought that 20 years ago it was all over. I can remember a point where they were saying that in 18 months it's all done and dusted. Then next minute—or as another sort of Taranaki-type saying would go "Nek minnit"—the estimate is enlarged. And now we've gone a full 20 years over those times and we're getting another apparently 10 years under current projections of what the field can produce—it's a 1P field.So it's very hard to understand why this term "new deposit" is being used. Why not just be straight upfront in the legislation and say that "Well from now on the levy arrangements that were in existence before 1986 are gone and these are the new levy arrangements."? That would be much more honest with the public of New Zealand and certainly with the industry itself. And I think we do need an answer as to why the officials have given you advice that there is such a thing as a deposit inside a gasfield."
Court Simon; Woods MeganSIMON COURT (ACT): Thank you Madam Chair. I wonder if one of the problems this bill is designed to solve might be revealed at the foot of the legislative statement where it describes transitional provisions. In the final sentence Minister the bill validates all past levy payments as proper and the money received has always been lawfully collected and applied." Is there a situation Minister where unless this is passed money may have been collected and applied unlawfully or not in accordance with any particular statute?Hon Dr MEGAN WOODS (Minister of Energy and Resources): The purpose of that clause is to make abundantly clear that this is prospective and not retrospective legislation."
Collins JudithHon JUDITH COLLINS (National—Papakura): Madam Chair I've given this some quite serious thought. The only time I can see deposits" being used is in the explanatory note which of course is not actually the bill. The Minister said "the new deposits". Well what is someone going out there creating new natural gas? Is that what it is? What is this? Are these new discoveries? It's certainly not new deposits. Someone is not out there pumping some natural gas in are they?Simon Court: If only!Hon JUDITH COLLINS: If only they were says Mr Court. But we really do need to have this sorted because it just doesn't make sense—what the Minister has told us—and again the term "deposit" doesn't seem to have any definition in the primary legislation or in this bill. So I'm just wondering: is there some other piece of legislation that the Minister can refer us to to help give some form of explanation as to what it is we are talking about?"
Smith Stuart; Woods MeganSTUART SMITH (National—Kaikōura): Thank you Madam Chair. I've just done a quick word search on the primary legislation. I can't find any reference to deposit" in there.We now have the Minister claiming that it is a deposit that's important and she's said that several times. What is a deposit? We have to have a definition for a deposit otherwise this is a hopeless piece of legislation if it doesn't even mention it in there. But the definition quite clearly—and the courts will go to the Minister's utterances on this bill and they'll say "Oh it has to be a deposit." What is a deposit? There is no legal definition in the levy Act so therefore what does it mean? It doesn't mean anything. Hon Gerry Brownlee: This'll be good.STUART SMITH: Yeah. Well we'll give the Minister a minute to read the note and hopefully come up with something a lot better than she's managed to give us other than more confusion. Hon Dr MEGAN WOODS (Minister of Energy and Resources): I repeat what we have been discussing through this committee stage: what this bill does is it will ensure that new deposits in old licensed areas are payable at the same as the deposit that the licence was granted on. STUART SMITH (National—Kaikōura): Thank you Madam Chair. Well that was a Sir Humphrey answer—there was nothing in that answer. We don't know what a deposit is Minister—that's the point which seems to be lost on you. The courts will not be lost on that. They are looking for this. This is a licensed area pre-1986 and what we've found is that you've said that it's not a new well but it's a deposit. It's a new deposit—what is a new deposit? We don't know. We're just going round in circles. It's a shambles—it really is."
Brownlee Gerry; Woods MeganHon GERRY BROWNLEE (National): I'm sure that the answer's just been given or will be the subject of a little more questioning from my colleague but the thing that's struck me is that tonight in the committee the Minister of Energy and Resources—as Minister you've said that there are only two fields that would be affected here: Māui and McKee. The permits for those fields are for the whole of the Māui field and the whole of the McKee field. So does that mean that if they continue extracting gas and can find a way to extract gas from their existing wellheads then there is no increase in charge? Or does it mean in fact that if they try to increase the size of the reserve by putting another wellhead off one of the two platforms—there aren't that many platforms out there—they would then be subject to this higher cost? I'm simply trying to make the point between trying to attract investment to get as much out of those fields as possible before they run out while there is this supposed just transition occurring because we don't have an immediate fuel source available to replace the gas that's being used inside the New Zealand economy at the present time.Hon Dr MEGAN WOODS (Minister of Energy and Resources): As I have previously answered this is about deposits not wells. So that's the more useful way to think about it.Hon GERRY BROWNLEE (National): No no you're missing the point I'm sorry. Let's clarify that because I saw your official run up to you. There is a thing called a licence and the licence is issued over a geographic area where it is assumed it is gas-controlling. So if you go outside of that area I would say that yes that is a new deposit. But if it's inside that area it's expected and it's part of the capital commitment that's been made by those companies. As I've just said before I think the P1 estimate for Māui is quite considerable—it's another 10 years. It's as I've said over and over 15 billion square cubic metres I should say of gas—a lot of gas. It's very valuable to the New Zealand economy providing lots of jobs on a daily basis and needs to be there as a stopgap as other fuels are brought on to line if in fact they are able to be brought on to line in that period of time. The question is: are we in fact—well how is that definition changing from what it's always been which is a licence over a geographic area compared to a new deposit?
Collins Judith; Woods MeganHon JUDITH COLLINS (National—Papakura): Thank you to the Minister for providing us with that answer. So if she hasn't received feedback from the sector then why would that be when she tells us that she received feedback from the sector asking for this matter to be dealt with in this way?Hon Dr MEGAN WOODS (Minister of Energy and Resources): I note in some of the speeches in the second reading of the bill there was somewhat of a misrepresentation of what I had said in my earlier speech. I said The industry had indicated that they wanted clarity." This was when they were dealing with officials when they were talking about the lifetime of the permit and developments that might be happening within particular licences. Of course there is ongoing relationships and conversations between officials and permit and licence holders and I myself meet with members of the industry."
Woods MeganHon Dr MEGAN WOODS (Minister of Energy and Resources): Madam Chair just in answer to the question—I have addressed it multiple times but I will answer it again and hopefully that will be the end of the question in terms of what triggered this legislation. As I have said multiple times what triggered this is the fact that there were members in the industry that were seeking clarity. It was unclear. It needed to be made clear. That is what has triggered the need for this legislation. I know that there is a desire on one side of the House to make it a whole lot more interesting than it is.In terms of the question asking is there anything in particular that triggered it: no other than officials brought to my attention the fact there was an area that needed clarity. Is it connected with the Greymouth decision? No not to my knowledge. In terms of feedback that I have received since this bill was tabled: no I personally have not received feedback from the industry on it. I have not had a chance to catch up with my officials over the dinner break about whether or not they received feedback.
Court SimonSIMON COURT (ACT): I just want to come back to some questions for the Minister that I pitched a couple of minutes ago about cost. And we do appreciate that the Crown is entitled to gain royalties from minerals including hydrocarbons—not commonly known as fossil gas" as described in the legislative statement not to any normal person who operates in the sector anyway. Minister what is the cost of this policy—cost to consumers cost to the business owners? Have they provided any feedback to officials or to the Minister herself since they became aware of this legislation or prior? Who knows—stakeholders may well have been consulted they might have been contacted this afternoon.Minister what are the costs? Have any stakeholders been contacted and have they given any feedback to officials or the Minister?"
Collins JudithHon JUDITH COLLINS (National—Papakura): Thank you Madam Chair. I'd like to ask the Minister about what exactly has triggered this whole debacle of a piece of legislation being rushed through Parliament tonight in urgency on Budget day when the Minister has just told us that she had advice on this in December last year.What is the very urgent and obviously very secret nature given that no other party in Parliament that we're aware of—it may have been the Greens but who would know?—was consulted or even advised that this was coming? Stuart Smith: The backbench didn't know. Hon JUDITH COLLINS: The backbench didn't know but that's not that unusual given them. So I have a question about that which is: is there any particular instance and does it have anything in particular to do with the fact that New Zealand Petroleum and Minerals—which is obviously the sector regulator and part of Ministry of Business Innovation and Employment—initially declined the application of Greymouth Gas Turangi and that that decision was overturned by the courts as being obviously not within the law? It was judicially reviewed so I just wonder if that has anything to do with it. If it's not then that timing is interesting. So if it's not that case that's driven the Government to spend all of this parliamentary time on this bill that would normally be going through a normal phase with a select committee is there some other discovery or some other permit that the Government hasn't alluded to yet that it's most concerned about?
Smith StuartSTUART SMITH (National—Kaikōura): Thank you Madam Chair. I will behave myself this time. The Minister has just confused matters even more. So now we know that it is a new deposit in a licence area. That's fantastic but I can't see a definition of a deposit. What is a deposit? How do you define it? Is it in the same structure is it in the same field and is it another deposit in the same field if it is? What is that definition and how is that determined? Is that determined by geological survey is that determined by the company concerned identifying it through its well logs as being a different structure? How do they ascertain that that is that different structure? I mean it's quite a technical area and I would suggest as we can't go down below the ground and have a look—Hon Gerry Brownlee: It's a question about stated reserves.STUART SMITH: Stated reserves. Well if that's the case we know that they change over time as the Hon Gerry Brownlee pointed out earlier in one of his contributions and the Māui field was estimated to go for how long?Hon Gerry Brownlee: 30 years.STUART SMITH: 30 years. It's gone 45. So the stated reserves were clearly exceeded—clearly exceeded. Were they the same deposit in the Māui field? Were they not?So this is not a simple thing and the Minister passed it off as though it was. It's not like a gas station. You drive along the road and you're either at the Z garage or you're down at the BP. It's not quite like that; it's much more complicated than that. But we need to know: does the Minister actually have advice on that? Because this is a pretty important point in a bill that has been rushed before this House that seems to have little in the way of justification and has certainly had little in the way of work. We understand she had some advice in December and started a work stream after that—probably after the holidays I'd say before any work was done. And how deep did that go? No pun intended there in terms of a well but I would really like to have an answer to that question. Thank you.
Brownlee GerryHon GERRY BROWNLEE (National): A question for the Minister: given that there has post the dinner break been quite a few answers to questions that were raised in the first and second readings how long ago was the first advice paper provided to the Minister on this? And would the most recent advice paper that led to the drafting of this bill contain this information?And then it's inexplicable in my head as to why—when it's also plausible as the Minister puts in her answers—was there no advice from the department that this could be a consulted matter that was dealt with by way of statute amendment? See what's still perplexing us is why something that is being blasély passed off as simple and you know of only just an updating sort of thing—bringing us up to the mark etc.—has got its own legislation under urgency on Budget day.So the question is: when was the first advice provided to either the Minister or a Minister; and would the latest advice have all of the information in it that the Minister's been able to give the House this evening? We'll get it eventually.
Woods MeganHon Dr MEGAN WOODS (Minister of Energy and Resources): Thank you Madam Chair. There's a couple of questions floating around which I will address. The Hon Gerry Brownlee asked if this would apply to new deposits in the Māui field. Yes it would because as you know Māui is a pre-1986 licence; so by definition. Also there was a question about whether this pertained to one company. I think if anyone does a scan of the licences that exist out there there are two fields that exist in the pre-1986 regime and that is McKee and it is Māui. So I think it's more useful for members to think about it in terms of the fields that are there.The previous speaker Stuart Smith did ask a question about what constitutes a new well. That is not the question that should be being asked. This is about deposits so not necessarily wells. It's about new deposits within those licensed areas. So I think that probably it's unhelpful to think about it in terms of those.There was a question about why now? Why now is because we have had industry seeking clarity around just these questions around new deposits within these pre-1986 licensed areas. I think all members just need to take this back: what we are saying is: should someone who is extracting from the New Zealand owned - Crown mineral estate be paying the top-up levy to take them to what they would be doing if it was a post-1986 licence? I think everyone just needs to get this in perspective. This is about making sure that New Zealanders are getting the fair value from the Crown mineral estate which belongs to all of us and our Government makes absolutely no apology for standing up for New Zealanders getting the value of that estate rather than saying that we should be charging 5 or 10 percent royalties to a company that is out of kilter with royalties that they're paying anywhere else in the world when they're extracting the Crown mineral estate and indeed that that same company would be paying in terms of the royalty plus levy if it was a post-1986 area. It is an absurdity. This is clarifying it and this is making sure that New Zealanders can extract that value.
Court SimonSIMON COURT (ACT): Thank you Madam Chair. Just further to that: why now? Minister you did describe benefits to the Crown of approximately $50 million. That means an organisation which participates in gas production or multiple organisations collectively are going to have to pay the Crown let's assume $50 million. In order to generate profit from a business typically for every $7 you earn you get $1 in gross profit—based on my experience working in different industries. So what are we saying here? That these organisations now have to generate $350 million worth of additional revenue in order to cover this $50 million cost? It's not clear whether the impact of this cost on top of a host of other costs that the Government has imposed on this industry including what appear to be excessive decommissioning costs—will these costs which the Minister hasn't been able to articulate—I'm picking that the industry might have to generate $350 million extra revenue in order to cover this $50 million impost.Will all of these costs hasten the end of field life? Will these costs reduce incentives to invest in plant and equipment and production in hydraulic fracturing—that wonderful technique developed to extract residues from gasfields that were once thought to be uneconomic? Will all of this negativity towards the gas industry this imposition of cost imperil New Zealand's security of supply at a time when the international strategic situation is becoming so uncertain that our neighbours in Australia are now starting to invest in long-range missiles to defend themselves from threats to the north? Security of supply Minister.Will the effect of adding cost to gas production flow on to customers to the tune of $50 million $100 million $300 million? And what about industrial and major users? There is a lot of major users that use natural gas—like Oji Fibre—to recycle paper that's in cardboard collected from kerbside; like O-I Glass who recycle glass collected from all around New Zealand. They're the only ones who do that in New Zealand. And of course Methanex which generates methanol—a product that if you've got a raincoat or you've got a backpack and it's water-repellent it has probably got some methanol in it that is quite likely to have come from Methanex in Taranaki. If you use a high-end cosmetic if you use paint if you use any kind of petroleum hydrocarbon - based chemical in your home or in your business it's quite likely you have Methanex methanol in it.So all of these costs are going to flow through into the economy and to the consumer. You described the benefit to the Crown but you haven't articulated the cost to the consumer and to business. And Minister on top of cost I would like to know whether the Minister has been contacted by any sector representatives anyone from the energy sector or any stakeholders since the bill was tabled this afternoon.
Brownlee GerryHon GERRY BROWNLEE (National): Well that's very interesting Minister. It would have been good to hear some of that earlier. It might have helped us understand a little bit better about what the Government was attempting to do. It's certainly not as clearly articulated in the explanatory note of the bill.But it is interesting to consider a couple of points and I'd like your view on it. So let's say one of those early gasfields is theoretically not going to be covered by this because there's nothing new about it but we all know that on the Māui field there's only two platforms but there are multiple well heads. So does this apply to new well heads? Because you've got as I said before 500 petajoules of gas there. A huge amount: 15 billion cubic metres that could be extracted over the next 10 years. You'd think that that $50 million that the Minister spoke of is going to have to be charged somewhere. So the question also arises: where there are currently gas contracts in place based on a price for supply that recognise the current levy or royalty arrangement would the Minister consider putting savings provisions into the bill that would enable those persons not to suffer losses? The thing that has been stated by the disclosure statement is that this is a tax and as such ultimately all taxes from revenues derived by those who are selling something whether it's a product or service and in this case it's a product it's ultimately the consumer who pays. It's kind of interesting to say Well New Zealanders are going to benefit from this." when so many are clearly not."
Woods MeganHon Dr MEGAN WOODS (Minister of Energy and Resources): I will in the course of this committee stage be bundling up questions and answering them as they arise. Two of the speakers that have spoken have asked what advice I've had on the potential benefits to the Crown. What we are talking about here—and I think it's really important that we do understand that this is actually about New Zealanders getting a fair return on the resources of the Crown mineral estate. The best estimate that officials have been able to give me at this stage is that unless we clarify this unless we tidy this up the New Zealand taxpayers could miss out on around $50 million. Hon Member: Per year or—Hon Dr MEGAN WOODS: Overall. In terms of the retrospective nature of this bill that Mr Bishop brought up I think one of the really important things to understand about this is that this is only talking about any natural gas which is produced from land to which a licence relates if the licence was granted in relation to a discovery of natural gas made before 1 January 1986 even if the licence was extended under that date. So there could be some fields and Mr Brownlee was talking about them that have been in production for a period of time. It won't apply to that. It's about new wells it's about new areas within that field that is pre-1986. We are in this position because in 1976 the Muldoon Government decided that it wanted a greater return on the Crown mineral estate. What they found is that according to the licences that had been granted you could not alter the royalty payment. So instead they imposed a levy. When the legislation was changed—and post-1986 we've ended up with some disparate royalty and levy arrangements. So we have a range that goes from around 5 percent under some of those early—that require the levy to top them up. Post-1986 those are more like 12.5 percent 20 percent royalties that are imposed. So this is actually about trying to—it's been used since 1986 the levy and it has been in all that period of time to try and equalise the return that the New Zealand public get from the Crown mineral estate. This is about New Zealanders getting a fair return from those companies that come in for a profit to extract oil and gas from New Zealand. Every country around the world that allows those companies to do that charges a royalty. New Zealand has some of the lowest royalties in the world and it was brought to my attention that we needed to clarify this and I want to ensure that New Zealanders get a fair rate of return.
Court SimonSIMON COURT (ACT): Minister I have a number of questions. This bill's been brought to the House under urgency with no opportunity to consult with stakeholders we assume no opportunity for a select committee inquiry no matter how truncated and I just want to observe that a number of bills have been passed through this House this year alone such as the severe weather emergency legislation bills which have offered even one day or 20 hours—sorry let me just correct it: 20 hours—for submissions and then a day for hearings for submitters. And yet this bill Minister—not even a day for submitters to offer their view on the bill and to help provide clarity to legislators many of whom particularly on the Government side seem to have absolutely no idea what the effects of this bill are. So Minister I have a series of questions. They're very specific. I will ask them as if I was a stakeholder as if I was an affected party who is not able to have their say and who is not able make a submission and I trust you will give us the decency of replying directly. Firstly what advice has the Minister had on the costs and benefits of this proposal?
Omer IbrahimIBRAHIM OMER (Labour): It's a pleasure to take the final call on the Energy Resources Levy Amendment Bill. Mr Brownlee stop scaremongering. Mr Brownlee said that gas extraction contributes a lot of money in our economy—yes in the short term but in the long term it's going to cost us more. It's going to cost a lot more in the long term.In October I was in Africa visiting Ethiopia and Rwanda and I've seen the impact of climate change. For five years there was not one drop of rain and the people lost all livestock millions of livestock and they were left exposed to the danger of deaths. People are dying—Simon Court: It's called a drought.IBRAHIM OMER: —and you'll have seen—it's the impact of climate change. It is the impact of climate change. The last two three months we have seen it in action.The Energy Resources Levy Amendment Bill amends the Energy Resources Levy Act 1976 to ensure the Crown receives a fair financial return on fossil gas. The bill clarifies that the levy applies to all gas producers from licences granted prior to 1 January 1986 and eliminates the risk of inconsistency in achieving a fair financial return for the Crown. The amendment will ensure that the Crown receives a fair financial return. In a nutshell this is a good bill. I commend it to the House.
Ngobi TerisaTERISA NGOBI (Labour—Ōtaki): Thank you Madam Speaker and as always it's an honour and a privilege to take a very very short call in the House tonight on this the Energy Resources Levy Amendment Bill which amends the Energy Resource Levy Act 1976 to ensure the Crown receives a fair financial return on fossil gas. As we've heard from others tonight this bill clarifies that the levy applies to all gas produced from licences granted prior to 1 January 1986. This change is for the better. This is about fairness and this is also about doing the right thing. I heard someone earlier—I think it was Mr Seymour—talking about the rule of law. The rule of law has to be reviewed; we have to look and make sure that it is still fit for purpose. And if it's still fit for purpose then we leave it alone if it's working. This clearly is not. Currently this is not fit for purpose and that is why we are making the change that fits and we are making the change that is fair. And we know this fits with the larger Labour Government's goals of making sure that there's fairness but also tackling climate change.As a Pacific woman I look across to our Pacific Islands and I see islands like Kiribati which is eroding and I know and I've heard from them around—Pacific Islanders are the least to add to our climate issues and yet they are the most vulnerable and the most affected. We know that they won't be able to take some of their grandchildren back to their island because it will be gone because of the climate change issue—because climate change is real. So I fully support this bill; I fully support what this bill is trying to achieve and making—like what this Labour Government is doing—good laws to ensure fairness we ensure we are tackling climate change we ensure those people can keep in their islands and we ensure they can go back. It's a great piece of legislation. I'm really proud on this side of the House to be tackling climate change. Thank you Madam Speaker.
Pallett Sarah; Dean JacquiSARAH PALLETT (Labour—Ilam): Thank you so much Madam Speaker. It's with pleasure that I rise on this very exciting Budget day to speak briefly on the Energy Resources Levy Amendment Bill which is pretty simple in its intention—really struggling to find out why it seems so hard to understand but I'll just outline it a little. Basically what we have is some inconsistent approaches that enable—we basically need to achieve a fair return to the Crown. Licences granted under the old Petroleum Act in 1937 resulting from discoveries before 1 January 1986 are subject to royalty rates of either 5 or 10 percent but post-1986 licences and modern permits granted under the Crown Minerals Act pay either 12.5 or 20 percent. But to ensure that we get a fair return from the pre-1986 licences with low royalty rates—I refer you back to those either 5 or 10 percent—this Energy Resources Levy Act 1976 imposes a levy on gas production.Really what we're doing with this bill which as I said is extremely simple in its intention and clarifies and really just makes sure that there's fairness and equity—which I appreciate are qualities that are sometimes lost on the Opposition. They just are highlighting the fact in this bill that the word discovery" can lead to some confusion about whether wells within the pre-1986 licence areas can be considered new gas discoveries. This clears it up it makes it fair and it ensures that the Crown gets a fair return for fossil gas extracted from our beautiful country. Thank you.ASSISTANT SPEAKER (Hon Jacqui Dean): Barbara Kuriger—five minutes."
Lewis StephSTEPH LEWIS (Labour—Whanganui): Every sitting week for the better part of the last year I have brought my infant son in with me to sit in this House. And after sitting here for the last hour listening to the offerings of the Opposition I despair for his future if they ever get back into Government because they have no ideas when it comes to climate change they have no ideas when it comes to a just transition. And Ms Judith Collins who's just walking out—sorry Judith Collins who just spoke previously—talked about worrying; she talked about worrying for the future. Where is their worrying for the future of children like my son and my daughter when it comes to having a climate that is habitable?Hon Judith Collins: Point of order Madam Speaker. The member who's just resumed her seat referred to me leaving the House". That is actually a breach of Standing Orders. I expect that you will want her to deal with that properly.Hon Kieran McAnulty: Speaking to the point of order it is quite clear to everybody that was in the House that the member corrected herself at the moment.David Seymour: Speaking to the point of order.ASSISTANT SPEAKER (Hon Jenny Salesa): I don't need any more help thank you. Steph Lewis can you just correct and apologise for the fact that the Hon Judith Collins was actually in the House when you made that referral that she was out of the House?STEPH LEWIS: I did in my speech but I will apologise again; she is in the House.As I was saying I despair for my children's future because they have not put a single idea on the table all afternoon or all year to show us what they're going to do to transition us to a low-carbon economy to transition us to 100 percent renewable energy. They have no ideas. We do have a plan and coming to previous members' comments around regulatory impact statements and one not being completed I refer to my colleague Dr David Clark's comments earlier around the statement that actually it was not required on the grounds that this bill has no or only minor impacts on businesses individuals and not-for-profit entities. Further in here the bill itself does not make any changes to levies prescribed within it. Instead it clarifies who is exempt from paying the energy resources levy for natural gas. We have a plan. We have a vision. We will do transition justly. I commend this bill to the House.ASSISTANT SPEAKER (Hon Jenny Salesa): Members the time has come for me to leave the Chair for the dinner break. The House will resume at 7 p.m.Sitting suspended from 6 p.m. to 7. p.m."
Bennett GlenGLEN BENNETT (Labour—New Plymouth): I'm proud to be part of a Government that today delivered its Wellbeing Budget. And yes as the previous speaker Stuart Smith said there is a cost of living crisis. I didn't quite understand—on the cusp of something he mentioned but I'm guessing what was on the tip of his tongue was the cusp of a third-term Labour Government. But when he talks about how it's going to hurt everyday mums and dads when it's going to hurt households in terms of the cost of living crisis—did you know that only 9 percent of New Zealand's gas is used for residential for things like cooking or heating your water or those types of things.So this where we look at it. We just want to ensure as it says in the overview here To amend the Energy Resources Levy Act 1976 to ensure the Crown receives a fair financial return on its natural gas now commonly referred to as fossil gases." This is good legislation. We need to get on with it. I commend this bill to the House."
Woods Megan; Salesa JennySecond ReadingHon Dr MEGAN WOODS (Minister of Energy and Resources): I move That the Energy Resources Levy Amendment Bill be now read a second time.As discussed in the previous reading of this bill this legislation is a simple piece of legislation. It is tidying up an anomaly that exists within the legislation as a result of industry asking for clarification. It is seeking to look for a discrete change to the Energy Resources Levy Act to clarify who is exempt from the levy—a relatively simple change—because we have a situation where we have licences and permits that have been granted under various regimes and they have differing rates of royalties that are paid. Most of those royalties cannot be changed. So we had the Energy Resources Levy Act that was passed so a levy could be put on to equalise.Now the practice of doing this—that the National Party are railing against—is in fact a piece of legislation that was passed in 1976 when Robert Muldoon was Prime Minister. This is a practice that was introduced by the Muldoon Government that the National Party see as the most egregious thing that a Labour Party should do. Sometimes it can be as simple as needing to clarify when it is that exemptions apply because where it is that industry have sought that clarification is the use of the word discovery" in the exemption clause which has potentially been leading to confusion about whether gas production from newly producing deposits within pre-1986 licence areas could be considered new gas discoveries for the purposes of exemption. And that is what this piece of legislation is seeking to tidy up. As my colleague in the first reading of this bill the Hon Dr David Clark pointed out Treasury in assessing this decided that this is a piece of legislation that did not need a regulatory impact statement because the impacts are either small or having no impact on business. But this does have an impact for the New Zealand public. If we do not clarify this New Zealanders could potentially miss out on millions of dollars in levies and royalties that are due to them.We have had some commentary in the first reading of this bill about whether or not this was retrospective or prospective legislation. This is prospective legislation. In fact the legislation is explicitly making that clear that this is drawing a line and saying "Money that has been paid or unpaid in the past—that is not going to be touched." This is about what happens going forward. And when we made the decision to end the granting of new exploration permits for oil and gas offshore in 2018 we always said that we would allow the continuing permits to run their course—whether that be from exploration to production. This is about making sure that we have a regime that is fair for New Zealanders as we go through that transition.ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to."