Graham Kennedy: Questions for Oral Answer — Questions to Ministers Questions to Members 
Graham Kennedy: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:676;Page:21574] 
5. 
Dr KENNEDY GRAHAM (Green) 
 to the  
Minister responsible for International Climate Change Negotiations 
: Does he stand by his statement that “it is completely incoherent for the world to be now tentatively coordinating actions to put a price on carbon on the one hand while simultaneously massively subsiding consumption of carbon”? 
Hon Dr NICK SMITH (Minister for Climate Change Issues)  
on behalf of the Minister responsible for International Climate Change Negotiations: Yes. 
Dr Kennedy Graham 
: Well how does he reconcile that statement with the work of his colleague the Minister of Energy and Resources who stated last year: “We’ve taken a number of actions as a government to support the oil and gas sector” including $25 million worth of free geotechnical information and 183-day tax exemptions? 
Hon Dr NICK SMITH 
: The world spends about US$500 billion per year on subsidies. There are countries that spend more money on subsidising fossil fuels than they spend on education. The programmes that this Government has funded include GNS Science being funded to do seismic surveys and gather petroleum information on New Zealand’s huge exclusive economic zone and extended continental shelf. Those amounts are quite minuscule and I think it is a long stretch to call those programmes subsidies. It is simply New Zealand wanting to know what resources it has in the huge ocean area for which it is responsible. 
Dr Kennedy Graham 
: How is the granting of millions of dollars of taxpayer-funded research and tax breaks to private fossil fuel companies not a subsidy on fossil fuels? 
Hon Dr NICK SMITH 
: It is about the Government spending its money to find out what is in the ocean area for which New Zealand has responsibility—an area 20 times our land area—and this Government makes no apologies for funding both GNS Science and other parties so that New Zealand can make informed decisions based on knowing what resources are in that huge area of ocean. 
Dr Kennedy Graham 
: Is he perhaps then concerned that the Government’s emissions trading scheme which grants large unconditional subsidies to trade-exposed sectors with 80 years of phase-out and which allocates free units to polluters could be determined to be arbitrary or unjustifiable discrimination by the World Trade Organization; if not why not? 
Hon Dr NICK SMITH 
: It is a very long stretch for the member to claim that a partial exposure to the emissions trading scheme—for instance like our aluminium smelter or our steel mill which are among the very few such operations in the world to pay any price for their emissions—is to pay effectively a partial price. There is a huge difference between those businesses paying a partial price and those countries that deliberately set out to spend hundreds of billions of dollars subsidising fossil fuels. It is absolutely consistent for this Government internationally to advocate that those large fossil fuel subsidies be reduced if the world is serious about reducing greenhouse gas emissions. 
Dr Kennedy Graham 
: If we are in the business of comparing size for size then how does he reconcile the Government’s further delays to the emissions trading scheme which according to the emissions trading scheme review report will result in New Zealand taxpayers and households further subsidising greenhouse gas - emitting industries by at least hundreds of millions of dollars? 
Hon Dr NICK SMITH 
: This member and other members make the gross error of trying to claim that not exposing industries or consumers to the full price of carbon over all their emissions is somehow a subsidy. A subsidy implies that there is a cost to taxpayers. That is not true. It is not true and members opposite who attempt to run that argument ignore the fact that there is no international agreement beyond the end of 2012 for reducing emissions at this point and without it there is no cost to the New Zealand taxpayer. 
Dr Kennedy Graham 
: Taking the Minister’s definition of a subsidy as a cost to the taxpayer then what is his response to the Parliamentary Commissioner for the Environment’s report on lignite which stated that as things currently stand companies that develop products from lignite on a large scale are likely to receive subsidies of millions of dollars per year from the taxpayer? 
Hon Dr NICK SMITH 
: The question as to whether the development of lignite resources for briquettes urea or diesel and whether they would be eligible for an allocation under the emissions trading scheme is an open question. The reason that I am hesitant to give a judgment on whether they would or would not be eligible is that there is a proper legal process when an application is made and I would be subjecting myself to judicial review if I expressed a view on that prior to the proper legislative criteria that are set down in the Act being considered and prior to even receiving an application. 
Dr Kennedy Graham 
: Is it then this Government’s hesitant policy that the rest of the world should produce and use less fossil fuel but New Zealand should produce and use more; if not why is his Government granting subsidies to greenhouse gas polluters? 
Hon Dr NICK SMITH 
: No it is not and this Government is not providing subsidies to greenhouse gas polluters. I remind the member that we are the only country outside the EU to have an emissions trading scheme. Our aluminium smelter in Bluff is the only aluminium smelter in the world to face any price at all for its greenhouse gas emissions. This Government is about New Zealand doing its fair share on climate change and that is exactly what we are doing.