Lee Melissa: Energy (Fuels Levies and References) Amendment Bill — Third ReadingText is incorporated into the Bound VolumeLee Melissa: Energy (Fuels Levies and References) Amendment Bill — Third Reading[Sitting date: 17 February 2015. Volume:703;Page:1646. Text is incorporated into the Bound Volume.]MELISSA LEE (National): I am actually very glad that the member Stuart Nash said as he sat down that he did support the bill and that we are in agreement. This bill enhances New Zealand’s ability to cope with international oil supply disruptions and we all know what could trigger that. The National-led Government is committed to improving New Zealand’s oil security through the Business Growth Agenda and an important part of this is the sustainable and user-pays funding of our oil stockholding obligations with the International Energy Agency. Those are the obligations that the previous member was talking about as well.This bill allows for the cost of meeting New Zealand’s oil stockholding treaty obligations under the Agreement on an International Energy Program to be met through an adjustable levy on fuels. New Zealand has a treaty obligation under the Agreement on an International Energy Program to contribute 90 days of net oil imports to the International Energy Agency oil stockholding. The collective stockholding mitigates the market power of oil-producing countries and releasing stock during an International Energy Agency - declared oil supply emergency helps to moderate extreme price spikes.Normal commercial inventories held by oil companies in New Zealand contribute to New Zealand’s obligations. The remainder of the obligation is met through the Crown entering into ticket contracts with oil companies and traders in other International Energy Agency countries. There is an impending rise in the ticket requirement principally due to a forecast decline in domestic oil production in the medium term. Domestic oil production contributes to the stock that New Zealand is required to actually hold in this country therefore a decrease will contribute to the amount of ticket contracts the Government must hold with other Governments that have met their own 90-day obligation of access to oil reserves.The ticket must be backed up by a Government to Government agreement that stipulates that the host country will not impede the release of the stock in the event of an International Energy Agency emergency. To date New Zealand actually has entered into an agreement and has held tickets in Australia Japan the Netherlands Denmark and the United Kingdom. Stockholding costs have previously been funded through general taxation. As the Minister of Energy and Resources has said in his speech this bill allows for the cost to be met instead through the existing petroleum or engine fuel monitoring levy.The forecast cost of the current method of meeting New Zealand’s International Energy Agency stockholding obligation—the ticketing regime as such—will not be fully funded by the existing Vote Energy appropriation. In the absence of further intervention New Zealand would become non-compliant with its International Energy Agency treaty obligations. I guess this whole thing is like quitting your insurance premium. It might alleviate some short-term cash flow problems but it does not do anything for your reputation with the bank that holds your mortgage. So non-compliance with New Zealand’s treaty obligation is likely to result in significant damage to New Zealand’s international reputation. I guess that is one of the reasons why the Opposition supports this bill as well—that we have an international obligation. It is likely that a number of New Zealand’s closest partners would perceive New Zealand to be free-riding on the collective international oil security arrangement and would exert pressure on New Zealand to comply as well. Oil security is closely linked to security generally and oil security is a key driver of the foreign and security policies of many International Energy Agency OECD countries. Non-compliance may for example have implications for our trade agreements that are already in existence or trade agreements that we could go into with those countries.What this bill does is shift the ticket cost from general taxation to a levy of 0.113c per litre on fuels which literally amounts to only about 4.5c for a 40 litre tank. The forecast revenue is roughly around $20 million over the next 3 fiscal years. The root cause of the rising cost of our International Energy Agency obligation is the forecast decline in domestic oil production in the medium term as I earlier alluded to. However I think the Ministry of Business Innovation and Employment expects that the recent increase in petroleum exploration activities will result in an upturn in domestic oil production in the medium to long term which will result in the downturn of the ticket costs that we have.This bill provides a sustainable funding source for New Zealand’s International Energy Agency oil stockholding obligations and realigns existing funding mechanisms so that oil consumers rather than general taxpayers apportion the cost. It is important. The modern world relies on vast energy supplies to fuel everything from transportation—I know that some members actually do not agree that transportation is actually important to our economy—and also communication to security and health delivery systems. I actually talked earlier in the day about transport delivering for our exporters as well as our manufacturers.Energy plays an important role in the national security of any given country as a fuel to power the economic engine. Petroleum otherwise known as crude oil has become the resource most used by countries all around the world including Russia China and the United States of America. All 28 members of the International Energy Agency hold the minimum of 90 days of their oil imports. This is about our energy security which affects our economic security. As we all know New Zealand’s economy is actually growing. It is performing way better than other countries. Thank God for the National Government for that.This is our commitment to the international agreement that is currently before us. New Zealand is in fact too small to mitigate the international oil supply disruptions on its own. The collective arrangement under the International Energy Agency is our best option for dealing with such disruptions. The ticket we are talking about is about 150000 tonnes of crude oil and refined petroleum products. We have two new Government to Government agreements that have happened in the last 2 years I think and they are with Denmark and Sweden. We have done a lot of work in this area. I commend this bill to the House.