SpeechHon MICHAEL WOOD (Minister of Transport): Thank you Madam Chair. I'm happy to take a reasonably brief call at the start of this debate on Part 1 of the Land Transport (Clean Vehicles) Amendment Bill. I think as all members of the committee know who have been involved in the debate over its previous two readings this is quite a significant bill in terms of the Government's ambitions to develop a cleaner vehicle fleet by influencing both the supply of clean vehicles and then the affordability of clean vehicles for New Zealand consumers.Part 1 of the bill specifically amends the Land Transport Act 1998 and that's what the focus of these discussions in committee will obviously be. It does a number of quite important things that enable the bill in particular the enablement and the establishment of the Clean Car Standard. This part of the bill enables regulations to be made for fees and charges to be set up under the Clean Car Discount and the Clean Car Standard. It also enables the establishment of regulations to require a minimum proportion of zero-emission vehicles being imported as well. It provides for regulations for the approved testing cycle—that's a very significant and important part of the operation of this piece of legislation. There needs to be an approved and consistent testing cycle in order that the regulator and consumers can have confidence in the emissions standards of the vehicles that are both coming in for the purposes of the standard and also the discount.It also sets up some quite important provisions in terms of the Clean Car Standard in respect of the flexibility that has been designed to support importers to be able to achieve the Clean Car Standard. This is quite an important point because the purpose of the standard overall is to drive down the emissions of the fleet and we've great confidence that will happen. But we've tried to design it in as much as possible to provide flexibility for individual car importers—bearing in mind that they will have different fleet typologies—to be able to meet it. The purpose of this legislation is not to catch them out and to have people paying big fees it's to help them leverage down the emissions over time.So Part 1 also sets up the ability for importers to be able to bank borrow and transfer the carbon dioxide credits that are established under this scheme. All importers will have to establish a carbon dioxide account and as they bring vehicles in the carbon emissions profile of those vehicles will effectively go into that account as credits or debits. Those importers who over-achieve will have the ability to be able to transfer those credits to importers who might be under-achieving in order to help them balance up and ultimately achieve their obligations. So it is important to note this point that the intention is to lower those emissions across the fleet and those facilities help to enable that.Some other important points to note within Part 1—the first is the establishment of targets under the standard for both Type A and Type B vehicles. I think this is an important point for the committee to note in terms of the way in which this legislation scheme has been structured. We specifically set up different targets under the standard for Type A vehicles which are small passenger vehicles and then for commercial vehicles and utes which are Type B. They have higher targets that they are allowed to operate within. We are realistic and we understand that the emissions profiles of those types of vehicles are generally higher and so the standard allows for that. It has a greater tolerance for carbon dioxide emissions.That's quite an important point because we know that ultimately if the levels within the standard are set too low and are unachievable then we won't get the outcomes that we want. We won't be incentivising those importers to get the right kind of vehicles in if they are simply not available. But equally if the allowances are too high we won't be getting the incentives in place either. So that's quite an important part of the design of the scheme the Type A and Type B vehicles to allow for the different emissions profiles that are there along with different penalties and charges in respect of used and new vehicles which is a recognition that used vehicles will generally be on the road for a lesser period of time and therefore will emit less within the New Zealand context than new vehicles. That's why under the Clean Car Standard parts of the provisions we see that there are lower fees that apply there. Part 1 also ensures that we have obligations around record-keeping for those importers. That's a very important part of the integrity of the scheme and Part 1 establishes those provisions as well.I just want to touch on one more point which is I think quite important in terms of—well it's an important part of Part 1 in itself but I think quite important in terms of members of the committee understanding the underlying rubric of this piece of legislation. Here I'll refer members to page 6 of the reported-back bill which takes people—we're looking at page 6 at the bottom of the page here which sets out the considerations that the Minister must look at when the Minister is making regulations in respect of the bill to set fees and charges. This really goes to the purpose of the bill and Part 1 because these are the things that myself and future Ministers will be looking at as we make those fees and charges.So the first one if you look new section 167A(6)(a) set out in clause 5 that the fees or charges are appropriate to sustain a scheme designed to increase consumer demand for zero- and low-emission vehicles and decrease consumer demand for high-emission vehicles:". So there we have the high-level objective of the scheme which is pretty plain and pretty direct and that is the purpose. It's not a kink of the scheme that we want to disincentivise the highest emission most polluting vehicles; it is the purpose of it. And the purpose of it is that we incentivise those vehicles which are cleaner. Here I go back to New Zealand's performance in this area over the years where we have built up one of the dirtiest fleets in the OECD and it's been the lack of these provisions and regulations that most other countries have that have led us there.Then if we go to new section 167A(6)(b) set out in clause 5 this provides a little bit more detail about those factors that the Minister might consider. I just want to take a moment to take the committee through these because again they're important. I guess they set out the way in which we have tried to put together quite a carefully considered scheme here because these factors that the Minister might consider are about the real world. So firstly new section 167A(6)(b)(i) "the variety and availability of zero- and low-emission vehicles expected to enter the New Zealand light vehicle market in the following 12 to 24 months;"—so the Minister will be looking ahead receiving advice from officials from those people that she or he consults with to understand what the supply of vehicles might be coming in and then to calibrate the targets around that.New section 167A(6)(b)(ii) "the market behaviour of consumers including the nature of any continued demand for high-emission vehicles"—so actually looking at the responses that we are receiving from consumers. We're already getting good market data as things stand from the Clean Car Discount.New section 167A(6)(b)(iii) "international and domestic climate change ambitions and commitments"—this is a very important point because it's explicitly linking this legislation to both our international commitments those commitments that Governments of both stripes have signed up to in terms of reaching net zero and also the domestic commitments that the Parliament and the Government have signed up to in respect of the independent Climate Change Commission and its recommendations. They are factors that must be considered in setting this and I think that is a very important point for the committee to note. This goes to the why of why this legislation is going forward.Finally there is the anticipated impact of fees and charges on the market and also whether the estimated revenue to be received from the charges is sufficient to meet the costs of the scheme which is important. So I'll leave it there. Those are some key points I think for members to consider as we make our way through this debate in respect of Part 1. I'm very happy obviously as things move on to answer questions and hope that we can have a good debate about this important piece of legislation."