Cullen Michael: Urgent Debates — Emissions Trading Scheme—Government Announcement 
Cullen Michael: Urgent Debates — Emissions Trading Scheme—Government Announcement 
[Volume:642;Page:12101] 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
: 
 I thank members for their contribution to date; obviously there are still some more contributions to come. We are trying to follow this debate between meetings over in the Beehive. 
I particularly welcome the fact that we clearly have a cross-party basis for moving forward on discussion around the details. As Bill English rightly said the technicalities in this are extraordinarily difficult. That means therefore that it is extraordinarily difficult to get them right and we need a lot more work discussion and feedback in the process of finalising some of these details. Equally we need to try as far as we can to get a high degree of certainty around the outcome because these policies are ones on which businesses and many others will be making decisions that will affect them for many many years to come and therefore they wish to have some degree of certainty that the framework once in place will be sufficiently robust and not need major changes from time to time. 
There is of course still a degree of scepticism around the whole issue of climate change and one sees that that scepticism is receiving perhaps rather more publicity than it really deserves given the current state of the science. That scepticism takes various forms. One form is to accept that there is global warming but to argue that there has been no effective input from human activity to cause that global warming. I think that that argument really falls down very firmly because the nature of the connections and the mechanisms in relation to the connections are now so well established that it is quite clear that human activity in terms of greenhouse gas emissions has contributed significantly to global warming over the last century or so. 
The second is the more complex argument that I have seen quite frequently. This argument is that the global warming we have seen is well within the known range of global variation in temperatures over the long run and therefore it is nothing to worry about. When one considers that sea levels have been many hundreds of metres higher than they are at present on occasions—and many hundreds of metres lower; let us remind ourselves the British Isles for example were connected to Europe as recently as about 9000 years ago—this is actually reasonably cold comfort particularly for people living in a Pacific Island State or Bangladesh given that not much of Bangladesh would be left if the sea levels rose some few hundred metres. 
That brings me I think to the more important point. Modern civilisation has arisen in the last 10000 years during a period of quite long climatic stability by long-term historic standards. It is probably one of the factors that has enabled civilisation to emerge. We have now developed intense economies highly populated and often based very close to the sea. Therefore climate change poses a kind of threat which when we were simply small numbers of wandering tribes—as we all were not many thousands of years ago—was nothing like as great then as it is now had there been this kind of global warming. But faced with the world as it is today we face a very different situation one that has a tremendous geopolitical context. I referred to Bangladesh before but can members imagine what would happen if 50 million 60 million or 70 million Bangladeshi saw their country disappearing underneath them? Where would they go in the meantime? What would happen? Who would take those people in? We can take in a relatively small number of Pacific Islanders who might be affected should their States completely disappear but it is quite different when looking at some other countries around the world. 
Let us look even at our own case. I live as probably Mr Tremain well knows about 1.5 metres above sea level in Napier. Quite a lot of people in Napier live about 1.5 metres or 2 metres above sea level. A lot of people in east Christchurch live at about that level above sea level. It does not take much change to have very significant impacts upon many New Zealand cities potentially by the end of this century on current forecasts. Let us remind ourselves that the data as it comes out is emphasising that the change is happening faster than previously thought as the recent data on the Greenland ice cap seems to be suggesting. 
So this is an issue that has to be addressed. We could say we do not need to address it in New Zealand because we are only a little part of the problem; therefore we can be only a little part of the solution. But of course that will not work. In the end the developed countries have to take the lead on this matter. We have contributed most of the problem; we have to contribute most in the first instance to the solution and in doing so to lay the ground for a more comprehensive international agreement in the future that will have the Chinas the Indias the Brazils and other countries tied into those kinds of solutions. It is significant that at the recent APEC conference it was the Chinese President who was one of those leading the discussion around climate change because China is recognising that these issues are of considerable significance for itself as well. 
It is clear I think after all the work that the emissions trading system is the best approach. It is the most comprehensive and it is the one that provides the clearest economic signals. A carbon tax was much simpler to implement. The emissions trading system is on the one hand much more complex to implement than a carbon tax because it involves issues of allocations free allocations and a market system being required to be set up in some way or another. But on the other hand it probably most effectively enables economic instruments to operate and decisions to be taken. 
Of course some relative prices will move; that is of the essence of the system. That is what it is designed to do—to send a signal that we need to increase energy efficiency and that we need to invest in renewable energy because we have changed the price of thermal generation and made it more expensive. So we have changed the decision at the margin in terms of choosing between thermal and geothermal or other forms of renewable energy such as wind or hydroelectricity. And yes other measures need to reinforce that such as measures around the building code recently taken and so on and so forth. But the reality is that we need to reduce our dependence on fossil fuels and we need to start doing that relatively quickly. 
I was fascinated at the press conference where journalists thought there had been no reaction to the increase in petrol prices that has occurred over the last 2 or 3 years. I simply ask people to look at the shift in the nature of new cars being bought over the last 2 or 3 years. All those Suzuki Swifts Honda Jazzes and all the rest of them are being bought rather than large 6-cylinder cars as was the case only a few years ago. People do react to those kinds of price signals and we do see motor manufacturers again for the first time for generations since the oil shocks starting to look at ways of improving fuel efficiency in their motor vehicles. We can change those motive powers. That is where I disagree so strongly with Jeanette Fitzsimons who seems to assume the motor vehicle is a thing of the past and that roads will not be required. What will change will be the energy source for motor vehicles. People will still want to have motor vehicles into the long-term future and to have the freedom and the pleasure they bring to ordinary people. We are not going to revert simply to wandering around the country on foot as we did up until a couple of hundred years ago. What will change is how we drive our motor vehicles not the fact that we have them. 
I think that brings a very important point. I think a false trade-off is often made between economic growth and these issues. What I think climate change is going to persuade us to do—and what the announcements today are part of doing and only part of doing—is to shift to a different form of economic growth that is far less resource-intensive but nevertheless is economic growth and economic development. We do not need to put on hair shirts and cover ourselves with ashes and pretend that what is required of us is to somehow go back hundreds of years in terms of our standard of living. If we sell climate change to people on that basis we will be lucky to get 5 percent support for the measures that are required to halt climate change. The best modelling we have is that over the next 5 years the measures we are proposing today will knock off perhaps 0.1 percent or perhaps 0.2 percent of total growth over that 5-year period. But in the longer term increased productivity and increased efficiency of which the climate change measures are part in practice may well lead at least to a stronger rise in our real and genuine standard of living and one that is far less reliant upon unsustainable resource use compared with our forms of economic growth over the last 150 years. 
In that respect the important thing now is a broad range of consultation and discussion both within this House between parliamentary parties and of course with the wider stakeholders. I think particularly there are issues specific to Maori that we need to ensure we have a good understanding of and common ground on before we move forward to final decisions in this area.