Mackey Moana: Budget Measures (Miscellaneous Fiscal Matters) Bill — First Reading Second Reading In CommitteeText is incorporated into the Bound VolumeMackey Moana: Budget Measures (Miscellaneous Fiscal Matters) Bill — First Reading Second Reading In Committee[Sitting date: 15 May 2014. Volume:698;Page:18022. Text is incorporated into the Bound Volume.]MOANA MACKEY (Labour): Why does the National Government hate the forestry sector? Why does it hate forestry so much? The one sector that got it out of a hole in the first commitment period of the Kyoto Protocol was forestry. This was the sector that put us in the black. Why does the National Government continue this sustained attack on the forestry sector? When I picked up the Budget Measures (Miscellaneous Fiscal Matters) Bill and saw the brief description of it I thought: “OK well that looks fairly reasonable.” until I read the bill and until I read the regulatory impact statement and realised that this is not about what the Associate Minister for Climate Change Issues was talking about at all. This is not an “unintended consequence” of the emissions trading scheme; this is the very deliberate result of a Government that has failed to restrict the cheap international units that have flooded into this country and collapsed the carbon price. This arbitrage issue is a problem only because there is such a differential between the New Zealand Unit price and the cheap Kyoto Protocol unit prices which the National Government has done nothing about and continues to do nothing about. That is the problem. Fix that and this all goes away. I will put forward an amendment in the Committee stage in my name to do just that—fix the actual problem instead of just taking another whack at the forestry industry.I really do not understand why National hates forestry as much as it does given the benefits of forestry to this country. The good news is that a Labour Government is coming. It has a plan for the forestry sector that includes restricting these cheap international units and assisting this export industry which has huge job potential. What the Minister would have us believe is that this is purely about reregistration. So in the mandatory emissions reporting period of 5 years a forester can go in collect New Zealand Units and then deregister from the scheme and pay that liability with these cheap Kyoto units. They can then the next day reregister to enter the scheme get New Zealand Units and deregister. We do not want that to happen but that is a symptom of the current failure of this Government to have an adequate price on carbon and to reduce the gap in price differential between New Zealand Units and foreign units. That is the actual problem.What the Government is saying now though is that it is actually not just going to stop the reregistration because you could just do that by saying that a forester can register only once in any reporting period. That fixes the problem and the problem goes away. What the Government has chosen to do is to say that if you are in forestry you do not have any access to these Kyoto units at all. So even if you are deregistering with no intention to reregister and even if you are deregistering because the economics are not working or for whatever genuine reason you do not get access to those units whereas everyone else in the scheme does. So this is not about reregistration at all because if it was we could simply fix that problem by saying that you cannot reregister. This is about whacking forestry once again. When you look at the regulatory impact statement on this bill it makes it quite clear that this is not actually about reregistration at all. One of the points that the regulatory impact statement makes is that it will be seen as unfair to post-1989 forest land participants because it imposes a restriction on their use of Kyoto units whereas other sectors continue to have unrestricted use.Let us talk about those other sectors. There is one other sector that is full of National Party mates who got free allocation of New Zealand Units and that is the heavy industrial emitters—so Rio Tinto. Remember the $80 million the Government gave Rio Tinto? Well Rio Tinto also got a free allocation of New Zealand Units and Labour absolutely supports that. Rio Tinto can engage in arbitrage by taking those New Zealand Units and paying its pollution liability with these cheap international units. Is the Government stopping that? No. And why? Because the Government likes those guys because they are its mates but it does not like forestry. So it is going to allow arbitrage to continue amongst the heavy industrial emitters who got free New Zealand Units allocations. They can continue to engage in arbitrage but forestry cannot—forestry cannot.One of the reasons for that that the Government talks about is fiscal risk. So it says that it needs to do this because the fiscal risk to the Crown is so great. Well if we take the Climate Change Response Act 2002 report from the Environmental Protection Agency and if we use the methodology that it uses for its calculations what we find is that in the year to June 2013 there were 36 million New Zealand Units allocated to industry—to the Government’s mates—which at today’s prices represent $111 million in value. Of that 36 million only 24000 were surrendered by that group to meet its obligations. So it was practically nothing at all. The balance was met through these cheap Kyoto units that we are now telling forestry they cannot have access to. So if we use the same logic as used in the Environmental Protection Agency’s own report what we find is that the fiscal risk to the Crown from the heavy industrial emitters’ arbitrage is $107 million. There is $107 million in fiscal risk.So what is the fiscal risk that we are dealing with here in this bill caused by post-1989 foresters? It is $11 million to $66 million. It is $11 million to $66 million in fiscal risk from forestry. There is $107 million in fiscal risk from heavy industrial emitters. And which is the group that we are targeting in this legislation? Forestry. Why? Because the Government hates forestry. Why are we not targeting heavy industrial emitters? Because they are the Government’s mates—they are the Government’s mates. So if this was about fiscal risk then we would actually be applying this across the board and we would have no issue with that—with it applying this across the board with the same rules applying to everyone and not one rule for National’s mates and another rule for the forestry sector which was the only sector doing the heavy lifting in the first commitment period of Kyoto in terms of emissions reductions.The Government has allowed the carbon price to collapse. There are practically no complementary measures going on at all. An analysis of the Government’s own figures shows that by 2030 if we compare doing absolutely nothing at all in terms of climatechange policy with the Government’s current plan on climate change policy the difference in emissions reductions is 0.4 percent—0.4 percent. We effectively have business as usual when it comes to climate change policy under this Government. So when I hear Minister Simon Bridges talking about needing to uphold the reputation of our emissions trading scheme—are you kidding me? Are you seriously kidding me? That thing lost its reputation the minute that this Government was elected and completely gutted it and allowed the carbon price to collapse overnight. Our emissions trading scheme has not had a good reputation since this Government was elected. It is nothing more than a fig leaf.I am sorry but the biggest risk to our reputation in terms of climate change is this National Government—Simon Bridges Tim Groser John Key—and Gerry Brownlee who is a climate change denier who just wants to build more of his carbon-sequestering motorways. When I hear the Government talk about the reputation and risk of our emissions trading scheme I am sorry—I am sorry—but that is just galling.The other angle on this of course is that there are people who are currently going through the process of deregistering and reregistering and who are going to be caught out by this. An email went out today to Ministers—because of course there was no consultation on this bill; no one knew this was coming—which said: “We have no problem with what we understand the legislation is trying to achieve but currently we have 25 clients who have sold some or all of their New Zealand Units to purchase emission reduction units. They have purchased these emission reduction units to surrender as the legislation allows once we had completed and submitted the deregistration applications to the Ministry for Primary Industries. We can complete these submissions by the end of next week but do not want to progress at the moment if we do as I understand our clients will be required to surrender New Zealand Units that they no longer hold. These are mum and dad - type forest owners and although the amounts involved may seem small to you they are substantial to them.” So do not fool yourselves National Government members that that is not going to have a very real impact on people today.What makes it even worse is that I have here theSustainable Forestry Bulletin from the Ministry for Primary Industries. What this does—and this is from August 2013 January 2014 and February 2014—is tell people how to deregister and reregister their forests. So the Ministry for Primary Industries has been providing guidelines and advice to post-1989 foresters on how to do this. They may be forgiven for thinking that the Government was OK with it. I think they could be forgiven for being extremely surprised that the Government has now pulled the rug out from under them when theSustainable Forestry Bulletin from August 2013 says: “Things to consider when removing and reregistering post-1989 forests in the ETS.”The Government has been promoting this bulletin as a legitimate tool for foresters to use. It has given absolutely no warning that this was going to happen. It has allowed price-gauging to continue under the emissions trading scheme by fuel and energy companies which are buying these cheap international units at 35c then charging through power bills and at the petrol pump around $20 a tonne. The Government has no problem with that; that is OK. It has no problem with the heavy emitters being able to engage in arbitrage. That is OK because they are their mates. But when it comes to forestry the one sector that has been doing the heavy lifting for it in terms of our net emissions—the one sector that has done this—the Government is whacking them once again. It did it the first time by allowing the carbon price to collapse. It has continued to oppose Labour’s attempts to restrict these cheap international units and now that it is doing some restrictions—