Smith Nick: Climate Change (Emissions Trading and Renewable Preference) Bill — Second Reading 
Smith Nick: Climate Change (Emissions Trading and Renewable Preference) Bill — Second Reading 
[Volume:649;Page:18078] 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This Climate Change (Emissions Trading and Renewable Preference) Bill is the most complex and important bill that Parliament has seen for a long time. It will have far-reaching implications for every New Zealand business and household for many decades to come. It deserves better than the current shoddy deal with Winston Peters where he can keep his ministerial portfolio in indefensible circumstances so that this bill can be passed by a wafer-thin majority amidst the dying gasps of this Government. 
Peter Brown 
: I raise a point of order Mr Speaker. The member is distorting the truth to the degree that it is unethical. By implication he is alleging corruption by either individuals or political parties. I take strong exception to that. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I was listening very carefully to the member and I do not think he strayed too far but I would just ask the member to be very careful in his speech. 
Hon Dr NICK SMITH 
: Speaking to the point of order I say that this is a very important bill. It is the most important bill of this Parliament. I will not have my speech broken up by spurious points of order and I ask that you allow my time to begin from now. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I will be the judge of that Dr Smith. 
Hon Dr NICK SMITH 
: So you will allow my speech to be repeatedly broken up? 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No I will not allow it because frivolous interjections lead to disorder and I will not allow that. If it happens too much then the member may well be invited to start again. 
Hon Dr NICK SMITH 
: The pre-election passage of this bill is not about making some great contribution to the global challenge of climate change but about saving Helen Clark’s ego. She wants the international accolades for passing the most ambitious “all sectors all gases” emissions trading scheme in the world knowing that some other poor sod will actually have the job of implementing it. A simple example showing that is the fact that this is the first emissions trading scheme to include agricultural emissions yet it does not answer the most basic of questions—that is whether the obligation will rest with the farmer or with the processor. 
National takes the issue of climate change deadly seriously. We also believe that emissions trading is the least costly and most efficient way for the Government to constrain emissions and change human behaviour. That is why in Cabinet in 1999 National agreed that emissions trading was where the work was to take place. That is why in 2000 we expressed concern when this Government stopped that work. That is why in our own  
A Bluegreen Vision for New Zealand  
document of 2 years ago we said emissions trading was the right way forward. When the Government dropped its carbon tax in December 2005 we wrote specifically to the Minister stating we were prepared to work on a bipartisan basis towards developing a balanced and workable emissions trading scheme for New Zealand. It is disappointing that that letter never even had a response. 
When this bill was introduced at its first reading we in good faith voted for its introduction. I also note that there were several times during the select committee proceedings where the Government did not maintain a quorum and if National had wanted to be destructive we could have brought proceedings to a close. 
But just because we support an emissions trading system that does not translate to our supporting any old bill. We need to be sure that the proposed bill is balanced and workable. We need to get the detail right. We are not satisfied of that and nor is a majority of this Parliament as reflected by the minority reports. It is irresponsible for this Parliament to be passing law when we know that it has very clear flaws. 
National has outlined six principal areas where we think this bill is deficient. First it is not balanced. The bill reflects the idealistic carbon-neutral mantra of the Prime Minister. The bill should reflect National’s more modest goal of a 50 percent reduction in emissions by 2050 which would be in line with the goals of our major trading partners. The Government needs to be honest: if New Zealand is to be a world leader in reducing emissions and is going to be carbon neutral under an emissions trading scheme it will mean world-leading costs for consumers. I do not think that is something New Zealanders will bear. 
This bill is a massive cash cow for the Government. Officials advised the select committee that the Government is set to profit by $21 billion from the sale of emission permits. That figure is double that given out in tax reductions by this Government and it is proof that what it giveth it taketh more than double. We are yet to see the Government’s assistance package to consumers and we will judge it on its merits. National’s policy like the Australian approach is that there should not be a net profit for the Crown. Climate change is not an excuse for Dr Cullen to get his fingers deeper into the pockets of New Zealanders. 
The third issue is alignment with Australia. There are important differences between this bill and the Australian proposal. The Australian proposal has rejected Eastern European hot air. It has included a price cap. It has excluded forestry pre-1990. It has included the fishing industry in its grandparenting. It has deferred agriculture until significantly later. National is not of the view that we should blindly follow Australia but we should try to align the schemes as closely as possible at the beginning. The closeness of our economies will create investment distortions where we unnecessarily take a different approach in our legislation. 
The next issue is the incentive in this bill to export jobs and emissions. The bill fails to recognise that while New Zealand has an emissions trading scheme but others do not there will be an incentive to relocate investment jobs and emissions offshore to no advantage at all to the global climate. There is no gain for the climate if Rio Tinto departs New Zealand and manufactures its aluminium in the Philippines or if Holcim Cement closes its works and imports cement from China to New Zealand. In both cases the climate would lose because the electricity used is more likely to be generated by coal and is therefore not renewable and because of the extra emissions created by shipping the cement to New Zealand. This problem can be resolved by taking an intensity approach to the allocations for trade-exposed sectors in the interim period. 
Our fifth concern relates to the way that this bill discriminates against small and medium-sized enterprises. We have hundreds of trade-exposed businesses—which we heard from during the select committee hearings—that are to be excluded from receiving any allocation and will face significant extra costs. That is not the case with the Australian scheme. The bill will undermine those businesses’ competitiveness and New Zealand jobs and growth will pay the price. 
It also unfairly discriminates against particular sectors. Why does this bill provide for 90 percent grandparenting for the steel aluminium dairying and cement industries but make no grandparenting provision at all for our $2 billion fishing industry? This bill will impose extra costs of $20 million a year. We have just lost 320 jobs in the Nelson seafood industry and we risk losing more if we dump these extra costs. That is why National has said that that important export industry needs to be treated the same as others. 
We also have concerns about the rigid phase-out in this bill from 2018 to 2030. It is very brave to predict today where international negotiations on climate change will go for the next 20-odd years. We want a more flexible approach that phases out allocations in line with the policies of our major trading partners. 
I also must put on record our serious misgivings about the all-important application of the emissions trading scheme to the forestry sector. The provisions in this bill have triggered the greatest deforestation that we have ever seen in New Zealand history to the loss of both our economy and the environment. This is the one sector that can help New Zealand with climate change yet the Government has completely alienated it. We are not satisfied that the provisions in this bill will work for forestry. They will not restore confidence in the sector and get the badly needed new planting started again. There are perverse incentives in the bill to harvest 7-year-old trees and that is disastrous for both the environment and the economy. 
It is not surprising that there are so many flaws in this bill given the flawed select committee process. We had 1000 amendments dumped on us 3 days before deliberation and I will bet that not a single member of the Government has read every one of those amendments let alone understood them. That is no way for Parliament to advance this sort of legislation. There is ample time for New Zealand to get an emissions trading system right. National says we should take the time. This issue is too important to be playing politics with.