Groser Tim: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Groser Tim: Climate Change Response (Emissions Trading and Other Matters) Amendment Bill — Third Reading 
[Sitting date: 08 November 2012. Volume:685;Page:6449. Text is incorporated into the Bound Volume.] 
Hon TIM GROSER (Minister for Climate Change Issues) 
: 
 I move  
That the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill be now read a third time 
. I want to make some formal comments about the process and then end with some more personal comments about some of the issues that have been raised in debate over what has been almost a 2-year process of consultation since the Hon David Caygill was appointed to start the process. As I said this does reflect a long and comprehensive review. It generated significant public debate and I do want to thank all of those who have participated and engaged constructively with the review and the subsequent amendment. I also want to acknowledge the excellent work and quality advice provided by New Zealand officials. I thank the Hon John Banks and the Hon Peter Dunne for their support of and contributions to the bill. 
It began as I said in December 2010 with the appointment of the Hon David Caygill to chair an independent panel. That panel received 162 submissions on its issues paper and presented its final report to my predecessor in June 2011. In response to this report the Government outlined proposed amendments to the emissions trading scheme in April 2012 and following a number of general meetings and hui around the country it received 359 submissions from the public. Following on from the first reading the Finance and Expenditure Committee received 758 written submissions from interested groups and individuals. The select committee heard in person from 73 submitters from amongst those who wished to be heard. The committee reported back to the House on 17 October this year and the bill has now had its second reading and has passed through the Committee of the whole House. 
Overall I am pleased that following this long and comprehensive process the bill meets the Government’s three objectives for the scheme. First the amendments improve the operation and administration of the emissions trading scheme and I thank the select committee for its contribution to recommending changes to the bill. The changes that it has introduced have brought more flexibility into the emissions trading scheme specifically relating to the exportability of forestry units a levy rate for synthetic greenhouse gases and eligibility criteria for offsetting; secondly they have provided flexibility to cater for various potential international outcomes in the period from 2013 to 2020; and thirdly they are supporting the Government’s economic growth priorities more effectively. 
I appreciate that some sectors looking to sell carbon credits would like to see a higher carbon price to incentivise greater participation. I will make some observations on that in a moment. However given the global climate in terms of the international economy in this case the Government had to make some tough decisions to not artificially inflate the short-term cost of the emissions trading scheme to households and businesses. 
Let me pass now to some more personal comments on this as I say extraordinarily protracted debate in the country that has taken almost 2 years to conclude and to reach this point where we are today for the third reading. I think what has actually confused much of the debate is that the final stages of this very long drawn-out process have coincided with an extraordinarily low international carbon price. Let me make this very clear: in my view our Cabinet might well have taken a different set of decisions if we had seriously believed the international price would for ever remain at this extremely depressed level. But actually what this debate has always been about—and I do know there is at least one member in the Opposition and I will not mention who who fully understands this point but for political reasons has chosen to conflate the two issues—is the structure of New Zealand policy. It is not a debate about the international price. We have inherited the broad structure from the previous Government and after a lot of internal debate which is all on the public record this Government decided to carry through the structure but take off some of the speed at which it is going down what I call the climate change highway. Why? Because we campaigned quite explicitly on the basis of the formula that we wanted New Zealand to pay its fair share but not to lead the world. 
Much of the debate that I heard in Committee and have heard around New Zealand has really carried that debate on from the point of view of the election campaign. 
Hon David Cunliffe 
: It’s a sell-out. 
Hon TIM GROSER 
: It is perfectly legitimate for Mr Cunliffe or anyone else to continue to argue the alternative proposition—that we want to lead the world—but that is not the position that we have taken and it is not the position that I think is the right position for New Zealand in trying to establish a more robust economy and trying to compete in a very very difficult economic environment and to not pass costs on to households and businesses. I think the fact of the low carbon price has confused much of the debate amongst some of our stakeholders but this I am certain will not pertain. What this debate is about is aligning New Zealand in a slow progressive way to the world price. What happens to the world price is very largely outside our control. 
There is a second—actually also unrelated—aspect around the environmental integrity of some of the units that are being imported. Here actually on a personal basis I have great sympathy with those who are expressing concerns around this issue. The Government previously moved against some units that were associated with some extremely—let me use ordinary slang—dodgy activities going on around hydrofluorocarbons around the world which have a global warming potential of 23000—from memory—times that of carbon dioxide and some utterly perverse outcomes seem to be possible. I give full credit to my predecessor for banning the importation of those units once he had received technical advice. Because I am personally very sympathetic to this concern about the environmental integrity of units I have also recently asked for further technical advice given heightened concerns around some other units. I will await that technical advice and if that technical advice suggests that there is good reason to ban it then that is the position I will be recommending to Cabinet and no doubt I will consult stakeholders to make sure there is not an alternative view. On this side of the House we actually share that concern and we have demonstrated already a readiness to move on that. 
It is very important to the integrity of the scheme because there still are climate change deniers out there in this country—absolutely. I am not one of them but they are out there and nothing will undermine support for a response on climate change more than this being revealed as a scam that may in fact increase emissions if done the wrong way. But the key point I am making is that this is a scheme about a structure of a policy for the long term. The future Government of New Zealand whoever that might be in 2015 will have an opportunity to look at the settings but we now have got a stable policy framework. 
The second broad observation I want to note is around the issue of this leading the world and how you would actually measure this. Well I mean obviously this is not a scientific matter but the true fact of the matter is that only Europe Australia and New Zealand out of all the regions of the world have got a policy in place that tries to address a comprehensive price on carbon—only Europe Australia and New Zealand. We may be joined in 2015 by Korea but it should be recalled that Korea’s scheme has 95 percent free allocation for all energy-exposed and all trade-exposed industries and has no statement about what will happen in 2020 and after that. So at the moment it is only Europe Australia and New Zealand. Yes there are promising pilot plants being talked about in China. Yes there is a regional scheme in certain states of North America the Regional Greenhouse Gas Initiative rather interestingly referred to as a ReGGIe but this scheme is in serious trouble. There are serious legal challenges and the price of carbon has fallen through the floor. So when people talk about this it is really important to remember this cliché about distinguishing between talking the talk and walking the walk. 
Finally let me conclude with agriculture. There is not a country in the world that has put a price on biological emissions. We do put a price on processed agriculture but we do not put a price on biological emissions and that is a decision that the Government—whoever forms the Government in 2015—will take. What we have done is require the compulsory reporting of biological emissions at the point of obligation of the processor level and we will work with stakeholders to bring it back to this but this is ahead of us. Finally although I would like to expand on this Fonterra—the biggest dairy exporting company in the world. Really the Green Party in particular should reflect on where Fonterra is going—20 percent reduction in carbon emissions is its target by 2020. By 2014 it will not pick up any milk from any of its suppliers if they have not got a nitrogen plan in place. This is a company that is ahead of every dairy company in the world on sustainability and it is about time people started looking at the facts. I commend this bill to the House for its adoption.