Hughes Gareth: Energy (Fuels Levies and References) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeHughes Gareth: Energy (Fuels Levies and References) Amendment Bill — Second Reading[Sitting date: 10 December 2014. Volume:702;Page:1336. Text is incorporated into the Bound Volume.]GARETH HUGHES (Green):Kia ora Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. It is great to take a last call on the last day of this Parliament this year. I would like to acknowledge members and wish them a merry Christmas and a happy and safe summer break. I rise to support this bill that we have in front of the House. I would like to acknowledge the Commerce Committee the chair and the submitters. I think it is fair to say we had a small number but high quality of submissions in the select committee. This bill is a very simple mechanism. You have to wonder why it is the most pressing item of business on the Government’s agenda on the last day of Parliament but it is a still a bill that the Green Party will be supporting no matter how small it is. Basically what the Government is doing in this legislation is taking the cost for New Zealand’s offshore oil reserves which are currently held on a ticket system—most of it is currently in Japan; it comes out of general Crown expenditure—and through the fuel excise levy and the road-user charges place a per litre price on oil and oil products so those costs of having those oil stocks are seen transparently.Why is the Government doing it? First of all it is important that New Zealand does have an oil reserve. I would argue that it would be better to have it onshore in New Zealand but there is an oil reserve which is part of our International Energy Agency obligations to deal with oil shocks which as we have seen have recurred throughout the decades. The Government has decided to do this move in part because of the rising costs of having those oil reserves. Government official advice looks to be about a $5 million per annum cost increasing to $10 million in the financial year 2016-17. But also the officials note in the small print that we are seeing domestic oil production declining in the medium term. Traditionally some of the New Zealand oil reserves were counted as part of the oil stocks for International Energy Agency reasons. However with the declining reserves of oil in New Zealand in fact we are having to increase the offshore stocks. I would like to reiterate the importance of having those stocks but when the officials looked at the guidance the cost of having it onshore which is what I understand that Air New Zealand was arguing in favour of it was only $24.3 million so an affordable cost in the context of $8 billion of annual fuel import bills.The real question that I think this Parliament should be asking is whether the tinkering we are seeing in the House tonight on the last day of the Government’s 50th Parliament while we are spending this money on storing—Tim Macindoe: 51st.GARETH HUGHES: —the 51st Parliament Mr Macindoe thank you very much.Simon O’Connor: Time flies.GARETH HUGHES: Time does fly. Why should we be spending this money on storing oil stocks offshore? Surely we could be spending this money domestically in New Zealand reducing the very cause of the problem it is trying to address which is our high dependence on oil and the clear economic impacts this can have. So we support the bill. We think costs should lie where they fall. We think there is a greater argument for transparency. It is going to add an economic signal which is that when people do fill up at the pump obviously someone has to pay for those fuel stocks being held in reserve for those recurring fuel crises we have seen again and again. It is pretty minor; it is only less than 0.5c per litre but it is an economic signal all the same.One big concern that we tried to address in the select committee which unfortunately the Government members did not want to act on was that biofuels including domestically created biofuels come under this. I agree with Z Energy one of our largest petroleum retailers that it is pretty absurd that biofuels which are more sustainable which decrease our dependence on oil and which increase our resiliency are going to be charged at exactly the same rate as oil. It sends the wrong economic signal to biofuel investors and biofuel consumers and it does nothing to increase our resiliency in New Zealand. There is also an equity argument. I agree with Z Energy that it is unfair that other petroleum products such as liquid petroleum gas jet fuel and bitumen are not going to face this very small charge yet biofuels are. So it seems that the Government does not quite understand the role of markets and how we could be using market and price signals to incentivise good behaviour and in this case we are actually disincentivising sustainable biofuels which are good for New Zealand good for the economy and good for consumers.That wider elephant in the room—which is not being addressed by this tinkering bill on the last day of the Government’s Parliament this year—is that 6 years since the last oil shock there is still no plan to reduce our dependence on oil. There is no plan to even start planning under National. When you look across the country there are councils like the Dunedin City Council when you look across the economy there are businesses and when you look across the world there are countries—and even militaries like the Pentagon the world’s single largest petroleum user—that are actively planning and taking steps to reduce their dependency on oil. New Zealand is the only country in the world that seems to be hell-bent on simply creating more oil. The Government has got an oil production strategy but no oil reduction or resiliency strategy and this is the big strategic economic issue facing our country. When you look at the host of issues facing us it is one of the big ones.In New Zealand we spend about $8 billion—billion with a “b”—importing oil from offshore. That is about the equivalent of our entire tourism industry. So we have got tens of thousands of people doing great work in our tourism sector across the country bringing foreigners down to enjoy our hospitality in New Zealand but the fact is that our entire tourism industry is basically only paying for the oil import bill. That is madness. We should be increasing our economic resiliency and diversifying our economy not just having one of our major economic sectors simply paying for the petrol bill. When you look at the impact on New Zealand’s economy we are incredibly vulnerable to high and rising oil prices. We are one of the most dependent economies in the world. I know that when I looked at our vehicle fleet a few years ago our average vehicle age in New Zealand is about 11.7 years which is one of the oldest vehicle fleets in the world. We drive some of the shortest trips in terms of kilometres in the Western World and we drive with the fewest passengers. So we are incredibly oil-reliant.My office did some analysis a few years back and we found that for every US$1 increase in the price of a barrel of oil it shaved $40 million to $60 million off New Zealand’s GDP. We have seen oil being a major driver of recessions through the last six-odd decades and when you look at the last great oil shock in 2008—which in part played a significant role in the global financial crisis—what Kiwis found was that they wanted to be able to keep doing things and undertaking economic activity. In the face of high oil prices they had no options. So in Wellington commuters flocked to the public transport system because they wanted to avoid paying higher oil prices but they were out of luck because there was such a limited capacity. In fact in Wellington we literally went to the museum to get rail units out of the museum and put them on the tracks to cater for the increase in commuters.In my hometown of Gisborne exporters wanted to put their products on the local rail line to get them to market rather than face high and rising oil prices but what they found was that the rail line had closed thanks to National’s inactivity and now it has closed for good. Across the country people wanted to get to work or school on their bikes to get fit and to save money but what they found was that there was no safe cycling infrastructure out there and they did not feel it was safe. So people felt trapped because the Government was not giving them options to escape high and rising oil prices and this slight marginal increase in the price of a litre of oil to pay for our offshore oil stocks is not going to make a shred of difference.This bill also does not take into account climate change. This is the greatest global environmental threat. The International Energy Agency—an agency that we subscribe to; that the Government actually contributes money towards—is advising us that we cannot afford to burn 70 percent of the oil reserves we have already discovered let alone go looking for more deep in our oceans as we invited Chevron Oil to do yesterday. We cannot afford to burn 70 percent of the stuff we have already found if we want a safe and stable climate for our kids.So instead of this tinkering what the Green Party has been advocating is real solutions for Kiwis and better ideas for the New Zealand economy. We would like to see greater action on electric cars. For a country with close to 100 percent renewables we could be helping to save consumers money. The equivalent to filling a tank of petrol in an electric vehicle is about 30 bucks—30 bucks versus say 150 bucks. We should be giving Kiwis better options for public transport such as the central business district rail link for Auckland; better buses cleaner buses and cheaper buses for Wellington; and clean energy. Imagine what kind of country we would have. It would be a more resilient country and a nicer country in terms of nicer places to live—healthier places to walk and cycle without the smoke pollution and particulates that are killing hundreds of us every year. We would see more jobs and more development. In short the Greens’ smart solution to deal with one of the biggest issues of our age will lead to a richer New Zealand in all of the terms that encompasses. Merry Christmas to you Mr Assistant Speaker and merry Christmas to all the members of Parliament and the public.