Norman Russel: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Norman Russel: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 08 November 2012. Volume:685;Page:6438. Text is incorporated into the Bound Volume.] 
4. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister of Finance 
: What are the estimated costs to the taxpayer resulting from the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Based on the latest monthly carbon price of $1.73 a tonne the changes proposed will reduce Government revenues by $105 million between 2013 and 2015. 
Dr Russel Norman 
: I seek leave to table the Cabinet paper that identifies the cost as $328 million. 
Mr SPEAKER 
: Leave is sought to table that Cabinet paper. Is there any objection? There is no objection. 








Document by leave laid on the Table of the House. 
Dr Russel Norman 
: How is the $328 million cost of his changes to the emissions trading scheme as calculated by Treasury consistent with his 2011 election promise that states: “We recognise the Government’s finances are under pressure and our changes to the ETS will be fiscally neutral.”? 
Hon BILL ENGLISH 
: Just to explain the difference in the numbers the member is using the carbon price around the time that policy decisions were made which was $6 a tonne. The estimate I have given the member is based on the latest monthly price of $1.73 a tonne. In fact as of today the carbon price is around $1 a tonne. In fact the drop in price indicates that the recession is having quite an impact on emissions particularly in Europe and that means less of a problem and the Greens should be pleased about that. And now I cannot remember what the member’s question was. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. I am willing to repeat the question. 
Mr SPEAKER 
: In fact the Minister actually disputed part of the information contained in the question and he is entitled to do that without further answer to the question. So the member cannot really ask for a further answer. 
Dr Russel Norman 
: Is the Minister familiar with this document that I hold up which is the National Party policy at the last election— 
Hon Clayton Cosgrove 
: He’s probably forgotten. 
Dr Russel Norman 
: —or has he forgotten? It says: “We recognise the Government’s finances are under pressure and our changes to the ETS will be fiscally neutral.” How are the changes to the emissions trading scheme which are not fiscally neutral consistent with this policy? 
Hon BILL ENGLISH 
: I can assure the member I am familiar with the document. As he would expect as Minister of Finance I am always keen to see fiscally neutral policy change—in fact policy change that saves money. In this case as the member will see the advice is clear from the Cabinet paper that the complexities particularly related to Treaty of Waitangi settlements and undertakings and agreements that the Crown had made in respect of carbon credits would have made it very difficult to unwind previous arrangements in a way that would allow us to have a fiscally neutral policy. Given that it would cost $105 million over the next 2 or 3 years that cost has to be incorporated into the Budget allowances and prevents the Government from spending the money on other things. 
Dr Russel Norman 
: Given his ambition to return to fiscal surplus by 2014-15 why is it that he prioritised spending between $100 million and $300 million on this policy to gut the emissions trading scheme when there are so many other much more important priorities for Government cash? 
Hon BILL ENGLISH 
: We looked at a range of solutions and of course the Government was keen—consistent with the policies from the Opposition—to make sure that the cost of living for New Zealand households did not go up more than necessary when they are under pressure. So we looked at funding it from the Budget. The other proposition we looked at was just printing the money but we were advised that that probably was not a good thing. 
Dr Russel Norman 
: How will eliminating a price signal for agricultural emissions as the changes to the emissions trading scheme do incentivise farmers to adopt the technology developed by the New Zealand Agricultural Greenhouse Gas Research Centre which according to the centre could reduce greenhouse gas emissions from pastoral farming to 25 percent of the levels prevailing in 2011? 
Hon BILL ENGLISH 
: I think we just have a different view about the state of that technology. There are some speculative options around but from the Government’s point of view there is really no technology available to farmers to enable them to respond to the price signal other than getting rid of livestock which we do not think is that good an idea because it would cut back New Zealand’s production. As it happens probably a higher environmental priority right now for our farming community is sorting out the issues around water which the Government is grappling with pretty intensively over the next 6 months. 
Te Ururoa Flavell 
: Kia ora tatou. What is the estimated cost to taxpayers and the forest sector of not placing a cap on imported units and does the Minister agree with the comments of another Government Minister Tim Groser in his speech to the Climate Change Iwi Leaders Group national hui in April 2012 when he said: “The Government also proposes to enable in legislation the introduction of a mechanism that would place a restriction on the proportion of international units a participant can surrender to meet their ETS obligations. Under current settings there is a serious danger of New Zealand essentially exporting capital for no good reason resulting in a loss of economic welfare.”? 
Hon BILL ENGLISH 
: Yes I do agree with the Minister and the Government is considering the policy issues related to both the capital export issue and the environmental integrity of some of the international units. The iwi leaders group made a very constructive contribution to what has been a series of challenging issues around the emissions trading scheme. That has been a positive engagement and we acknowledge their persistence and their patience in dealing with these issues. 
Dr Russel Norman 
: Does he accept that the changes his Government is making to the emissions trading scheme are at complete odds with the advice from his own Green Growth advisory group which reported earlier this year that many of our exports have very high carbon intensity and that if nothing is done to address this long-term damage will be done to our export sector in terms of market access and in terms of the premiums received for our exports? 
Hon BILL ENGLISH 
: No we do not completely agree with the Green Growth advisory taskforce. The Government thinks that an emissions trading scheme with its price signal is a useful policy. However we have through the last couple of elections promised to moderate it and those are the steps that we have taken. The member cannot have it both ways. On the one hand he says we should print money to lower the exchange rate in order to make our exporters more competitive; on the other hand he advocates ramping up the emissions trading scheme in a way that will make them less competitive. 
Dr Russel Norman 
: How will eliminating a price signal for agricultural emissions help agriculture become a world leader in sustainability and product integrity as demanded by the Riddet report’s transformational strategy to treble the value of our agricultural exports by 2025; and is not the key point that if we want our agricultural exports to be successful they must perform well environmentally and his emissions trading scheme does the exact opposite of that? 
Hon BILL ENGLISH 
: I believe that—and the Government does—New Zealand agriculture is a world leader in sustainability. We are probably the world’s most efficient producer of grass-produced meat wool and milk products and we intend to maintain that. The agricultural sector is incurring very substantial costs through the traceability of all animals in the National Animal Identification and Tracing System currently and over the next few years through substantial investment in the control of effluent so that we can maintain that environmental record.