Watts SimonCLIMATE CHANGE RESPONSE (EMISSIONS TRADING SCHEME AGRICULTURAL OBLIGATIONS) AMENDMENT BILLFirst ReadingHon SIMON WATTS (Minister of Climate Change): I present a legislative statement on the Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bill.SPEAKER: That legislative statement is published under the authority of the House and can be found on the parliamentary website.Hon SIMON WATTS: I move That the Climate Change Response (Emissions Trading Scheme Agricultural Obligations) Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 1 November 2024.This bill will amend the Climate Change Response Act 2022 to keep agriculture out of the emissions trading scheme (ETS). It will pave the way for us to develop a fair and sustainable pricing system for agriculture that reduces emissions without sending that production offshore for farmers who are less efficient than they are here in New Zealand. This bill supports the Government coalition agreements and the National Party's manifesto. It delivers on action number 12 of the quarter two action plan to finalise policy to keep agriculture out of the emissions trading scheme. But not only that it actually supports farmers. Agriculture is the backbone of the New Zealand economy. It contributes 81 percent of goods exported and New Zealand - grown produce feeds over 40 million people worldwide. This Government is committed to supporting our farmers and the sector to reduce its emissions in a way that does not put farmers out of business and shifts production offshore.Currently under the Climate Change Response Act agricultural processes will begin to pay for emissions associated with the fertiliser and livestock that they process from 1 January 2025. Animal farmers will begin reporting their on-farm emissions from 1 January 2026 and paying for those emissions from 1 January 2027.Modelling commissioned by officials suggests that requiring agricultural processes to pay for their emissions under the emissions trading scheme would have a negative impact on both farm production and farm revenue particularly for the sheep and beef sector. In our current fiscal environment we cannot let agricultural production be sent offshore. Additionally if agricultural processes are required to pay for on-farm emissions that may mean that they pass these costs directly on to farmers regardless of whether the farmers' emissions efficiency rates are what they are. This means that there will be no incentive for farmers to reduce emissions and there will be no financial recognition for their individual effort.The obligations on animal farmers that start from 2026 would add additional problems. These obligations could require up to 100000 animal farmers registered reporting and paying for their emissions in the ETS. This would be overly burdensome for small farmers and would significantly increase the number of participants in that scheme which could disrupt the operation of the scheme. This is why this bill is necessary.In short without it the current system will present significant administrative implementation and compliance costs to our domestic agriculture sector. This Government is taking the steps necessary to support the development of the right tools and technology for farmers to reduce their emissions. We will invest $400 million over the next four years to accelerate the commercialisation of tools and technology to reduce on-farm emissions with on-farm measurement systems in place by 2025. This Government has commissioned a methane science and target review to consider the methane science and targets for consistency with no additional warming. These are only some of the actions that this Government is taking. More will be set out in the second emissions reduction plan which we will begin consultation on soon.In my maiden speech I spoke about how challenging times will require us to work together in the interests of all New Zealanders and that is what this coalition Government is doing. Minister McClay and I recently announced that the Government has disestablished the He Waka Eke Noa - Primary Sector Climate Action Partnership. Instead we are setting up a pastural sector group to work directly with the sector in a way that's fit for purpose. The Government has committed to doubling the value of exports in the next 10 years to help rebuild our economy. We cannot allow production to move offshore to less carbon-efficient farmers. And that's why this is important work that we work with the sector not against it to ensure consumers' expectations of sustainability are met while maintaining profitability in the sector. As I outlined earlier this bill is an initial step in this Government's plan to support farmers to reduce their emissions. The Government has signalled our commitment to introduce a fair and sustainable pricing system for on-farm emissions by 2030 and keeping agriculture out of the ETS is a key part of that commitment. I look forward to working with the sector iwi Māori and the public as we implement this plan and deliver on our climate change commitment. I am proud to commend this bill to the House.SPEAKER: The question is that the motion be agreed to.