Smith Nick: Climate Change Response (Moderated Emissions Trading) Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Smith Nick: Climate Change Response (Moderated Emissions Trading) Amendment Bill — In Committee 
[Sitting date: 24 November 2009. Volume:659;Page:8017. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 The first thing I point out to Labour and Green members is that Labour was entrusted with this issue for 9 years and in every one of those years emissions went up. They did not just go up; they went up by ever-increasing amounts. I will give members some of those areas. The first is with regard to the electricity sector. During the term of the previous Labour Government emissions from the electricity sector increased threefold. We all accept that forests are an important part of the Climate Change Response (Moderated Emissions Trading) Amendment Bill but the last 9 years were the worst since World War II in terms of deforestation. That is the first point I wish to make. 
The second point I make is on whether I accept that business has a right to pollute. No I do not. What is behind the changes to make the emissions trading scheme affordable and workable is a really difficult problem. We want to make progress on climate change in New Zealand—we do—but equally we do not want to implement policy in New Zealand that exports industries jobs and emissions offshore. All the analysis says— 
Charles Chauvel 
: Show us the evidence! 
Hon Dr NICK SMITH 
: I will show members the evidence. The report that was commissioned by the New Zealand Institute of Economic Research made plain that the approach of a production-based method was the best way in which to respond to climate change without simply increasing emissions offshore. I tell members opposite that they might feel good if the cement steel and aluminium industries in New Zealand closed down and those goods were manufactured in China or some other part of Asia but it makes no practical difference to the environment and it costs an awful lot of New Zealanders jobs. That is the dichotomy that we have been working through. 
Mr Parker again used the figure of $110 billion. It is nonsense. I challenge David Cunliffe Labour’s spokesperson on finance on this basis. I tell members what sort of outcome there would be if we took the approach of adding every single year’s cost—and remember it is a loss of revenue not a cost—and then adding the compound interest on the basis that we would have invested that lost revenue. Labour’s policy is to reinstate a research and development tax credit. That would result in a loss of income of $260 million per year. Most of us in the Chamber would say that that policy costs $260 million. But if the members applied the approach that they are taking to their criticisms of this bill it would be correct to say that that research and development policy costs $43 billion—if we add it up each year and apply exactly the same approach. I challenge Phil Goff and David Cunliffe. If they are not going to be in the business of misleading New Zealanders on an issue as important as climate change and they want to adopt that approach to the assessment of numbers then they should be consistent. They should talk about their research and development policy costing $43 billion installing a huge debt of $43 billion on our children and increasing Government debt into the future by $43 billion. That is for a policy that in any one year would cost $260 million. 
The further point I make is on the controversy over the phase-out rate. We campaigned on a policy and we said that we would phase out industry support in line with our major trading partners. Australia has chosen a rate of 1.3 percent; we have set that rate for a period of 5 years through till 2018. A large amount of the argument is about what occurs beyond 2018. This bill will reduce emissions over its first 10 years according to the advice I have received very little—about 10 million tonnes is the reduction in emissions that it will cause over that first 10 years of the scheme. I say to the members opposite that making a big deal about what that phase-out rate will be into the future is pretty slippery ground to stand on. Every member of this House knows that there will be negotiations in Copenhagen that legislation is going through the United States Senate that legislation is going through Australia and most important that this bill will have a review in 2011 which is only 2 years away and another review in 2016. Even if we take the shorter phase-in and start the phase-out period a little earlier it is not until 2021 that there is any key difference in the approach. We all know that things will be reviewed and debated further down the track so for this Committee to be ripping its guts out and for us to have all of these quite personal and derogatory statements around a debate that is as far out as that undermines a pretty broad consensus about the way forward. 
Charles Chauvel 
: Why did you put it in? 
Hon Dr NICK SMITH 
: Mr Chauvel asks why we would put the 1.3 percent rate in. We have said we will put 1.3 percent into the law. We will review it in 2011; we will review it again in 2016. 
Charles Chauvel 
: How are businesses supposed to plan? 
Hon Dr NICK SMITH 
: I say to the member Charles Chauvel that this is a key difference. Let us say where it is at. We are saying to business that the phase-out rate will be in line with our major trading partners. I have to say that I have given notice in many business speeches that if our major trading partners give a stronger phase-out than other countries it is our intention to increase the phase-out rate. Equally I have to say— 
Charles Chauvel 
: Nonsense! 
Hon Dr NICK SMITH 
: Charles says this policy is nonsense. I ask him to ring Senator Penny Wong the Australian Minister in charge of their climate change legislation. Australia has exactly the same provision in its law— 
Hon Darren Hughes 
: They don’t have a law! 
Hon Dr NICK SMITH 
: Well neither do we have a law yet. We will be a few days ahead of them. In my view Mr Chauvel needs to get on the phone and make all the derogatory comments he has made of me to her. He will not and that shows the duplicity. 
Moana Mackey 
: Why? You’re the Minister in our country! 
Hon Dr NICK SMITH 
: I say to Moana Mackey and Charles Chauvel that they may not have noticed but climate change is a global issue so what other countries are doing is relevant. 
I have really enjoyed the Committee stage of this bill because we have been able to pop one after another the fragile balloons that Labour has put up as excuses for opposing this bill. I think those Labour members know in their heart of hearts that we are doing the right thing. I think they secretly admire the Maori Party because it was able to achieve what Labour could not—that is a sensible agreement on the way forward on climate change. 
The last point I make is that all the behaviour I see from Labour members is like that of a spurned bride. They get awfully bitter and twisted and that is because— 
Hon Darren Hughes 
: Have you looked in a mirror lately? 
Hon Dr NICK SMITH 
: I have to say that we wanted to get an agreement with Labour. That was my first preference. Time got tight and—unlike my discussions with the Labour Party which leaked all over the place—our discussions with the Maori Party were totally confidential. The key difference was that Labour assumed there was only one deal and that it was with Labour. 
Moana Mackey 
: No we didn’t! 
Hon Dr NICK SMITH 
: Labour did. After we did the deal with the Maori Party we said that we had introduced the bill only to the select committee. We wanted to build as broad a consensus as possible for this legislation and Labour walked out. This issue deserves better than that and I again say to Mr Cunliffe and Labour members that my door is open any day any week and any month to do what we should always have done—that is build a broader consensus of policy around this important issue for New Zealand and for the world.