Sowry Roger: Electricity and Gas Industries Bill — In Committee 
Sowry Roger: Electricity and Gas Industries Bill — In Committee 
[Volume:620;Page:15852] 
Hon ROGER SOWRY (National) 
: 
 Part 4 of the Electricity and Gas Industries Bill is a large part and substantial because it includes new Part 4A as well—or are we just debating Part 4 Mr Chairperson? 
The CHAIRPERSON (H V Ross Robertson) 
: I called clauses 40 to 45. 
Hon ROGER SOWRY 
: That is fine because Part 4A is substantial and we will come to that soon. Part 4 in the first part of this bill really relates to the introduction of gas amendments into the legislation where the Government decided— 
The CHAIRPERSON (H V Ross Robertson) 
: I am sorry to interrupt the member but I tell him that Part 4A is included in clause 45. It is inserted by that clause. So now the member will be aware of that. 
Hon ROGER SOWRY 
: I will start again; I thought I was getting an extra part to debate. Part 4 is a large part and of course includes all of Part 4A. It is a huge part of the bill and it is worrying because it will stop infrastructure development in this country for the gas industry. I will be particularly interested to see where United Future will go on this one—I know where ACT and I think New Zealand First will go—because this part has been totally opposed by the industry players. 
This bill proposes a mechanism by which the Minister can nationalise gas facilities. If members look at new section 43C(2) inserted by clause 45 relating to “Wholesale gas market” and “Processing facilities” they will see that those provisions allow a Minister to regulate when gas is found—say if one of the new rigs finds gas—and where the finder wants to bring it on shore but does not have a processing facility to enable the gas to be processed. The finder can go along to the existing processing facility and say: “We require you to give us space to process our gas”. Effectively we will nationalise that facility so that we can use it to process our gas. 
Now what does that mean? Well the Government says that that means the gas gets processed but the industry says it means that it will not drill here. A large company like OMV New Zealand will go back to Brussels and say it wants to bring a rig down to drill off the Taranaki coast to find gas. But then it will say: “Gosh! If we find some and build a processing facility some other company can come along and just demand and have the Minister give access to that facility to our competitor.” So why would a company invest? Why would it build a new facility in New Zealand if that were the case? Why would it do that? I hope the Minister will take a call and explain that. 
I raise a point of order Mr Chairperson. I understand in fact I see that the Minister the Hon Pete Hodgson is now in the Chamber. My understanding unless there has been a new Standing Order is that if the Minister is in the Committee he is required to take the chair. 
The CHAIRPERSON (H V Ross Robertson) 
: The Minister is quite prepared to take the chair. 
Hon ROGER SOWRY 
: It is good to have the Minister in the chair. I hope he will explain to us how he will alleviate the concern the industry has around the potential nationalisation that is provided for in this clause in this part. I say to the Minister that the industry players who have come to see me—and there have been a large number of them—have all said the same thing: they could not convince their parent companies who without exception of course are foreign companies to invest in New Zealand because of this part. Not one of them has said that it would invest—because of this part. I know it suits the Greens not to have any investment here but I think the Minister is being quite genuine—in fact very genuine to be blunt—in his desire to see more gas discovered here because the biggest problem we have at the moment is the lack of gas. If people are not prepared to drill—because they are scared they might find something and then if they find something they might have to go back and try to invest in a processing plant and then they know they would never get approval because of the potential nationalisation of that plant—then we are not going to make any progress with drilling notwithstanding the fact that we have a couple of rigs out there at the moment. They are watching this legislation and this part very very carefully. 
I say to the Minister that I think this part should be withdrawn. I think that he has a threat in it that is overcooked. He does not need it at the moment. The industry is functioning without it and my appeal to the Minister is not to proceed with Part 4A but to treat it—[ 
Interruption 
] I wish the junior Government whip would just try to contain himself for a moment. My appeal to the Minister which really comes after talking with the industry is that if he feels he needs Part 4A as the stick in a carrot and stick approach he should recognise that he has showed his hand and he should put the part in a black box and keep it. He should tell the industry to get on with it that we expect reasonable access and that there is a threat of regulation. He has used that before for the electricity industry and my appeal I guess is for him to do the same with gas. He should not legislate for it now because my worry is that it will turn investment off. 
I noticed and I am sure the Minister will have taken a bit of heart today from the announcement about the progress on access to the pipeline. He nods and he has good reason to take heart from that. He probably has good reason to say that it got that far because he has been out there with a big stick. But all I am saying to the Minister is that I think he should step back from Part 4A and that he should not pass it. He should just say to the industry that it is there. We have had a Gas Industry Steering Group that has gone away and looked at that part. The Minister put Mr Bolger in charge of that group as I think a clever political move and nothing other than that. It does not have the approval of the industry and industry groups have said to me that they do not agree with those provisions at all. They have said that both as a collective voice and as individual companies. I tell the Minister that they do not agree with that part. 
So my appeal to him is that he should not just listen to Mr Bolger and Mr Roche who have been paid to give the Minister the advice he wants but he should listen to industry representatives themselves. They are saying they can see what the Minister is proposing but they do not like it and do not want it. They want the Minister to let them get on with it and do their own thing. I think that that is the right way to go. So I hope the Minister will take a call. In fact I am sure he will because he did on earlier parts. I hope that he will consider freezing—stalling whatever—Part 4A in particular and holding it and let us just see whether the industry can sort itself out. I have confidence in their being able to do that but I think that if he proceeds with this part the only effect it will have is that companies we want to come down here and prospect will not. They will know that if they find something they will not be able to get the approvals they need to build the processing facilities because any processing facility effectively can be nationalised at whim by a Minister. That is bad legislation for this country.