Foss Craig: Climate Change (Emissions Trading and Renewable Preference) Bill — In Committee 
Foss Craig: Climate Change (Emissions Trading and Renewable Preference) Bill — In Committee 
[Volume:650;Page:18626] 
CRAIG FOSS (National—Tukituki) 
: 
 I want to speak about something that has not been raised in recent speeches. In an earlier speech I talked about the fungibility of the New Zealand system; the word was looked up and everyone knew what the word was. I will talk about the financial side of this legislation because a previous speaker talked about how the rest of the world will suffer a carbon tax or there will be one implemented in some way shape or form. Well if that is true it actually reinforces the point because it is about the timing of New Zealand racing forward and doing what it is doing now under the form of this current legislation. 
Let us say this bill goes through as designed here given all these amendments and whatever else is about to be flopped on to the Table. We have to think about others who might want to do business in New Zealand. They will look at New Zealand’s supposed carbon neutrality or Kyoto compliance and at the balance sheets of New Zealand institutions—be they farms businesses or businesses possibly looking to migrate here and start up—and they will look at the cost of doing business in New Zealand. On some of those balance sheets they will see an item—a credit or a liability—and then on those particular balance sheets they will see various items of New Zealand units etc. Well first they will see those items and will ask their accountants what on earth that means. Then they will try to get someone to explain it so that will cost them money to discover what the value will be of whatever it is that they are looking at to invest in New Zealand. 
But then they will think: “OK but is that bankable?” which I spoke about in a previous speech. If I am buying a company in New Zealand or looking to invest into capital-deficient New Zealand which is screaming out for foreign capital which we need to build our future then when I am pricing up something in New Zealand I will see these carbon credits or debits or some units on a balance sheet. They may have been used with a bank to provide security—for example if someone is buying a dairy farm. Members opposite keep saying that agriculture is not coming in until 2013 2018 or whatever. However they forget about the time value of money. The moment we know that something is coming in in the future we discount it back and look at the value today. So this legislation right here is impacting on balance sheets—today right now. 
We need certainty. We have just had 780-odd amendments to the bill. That is uncertainty which makes the value of doing business in New Zealand harder and the cost of investing in New Zealand less worthwhile. The larger financial institutions around the globe on the starting grid in particular I know are looking to see what will happen in New Zealand and to see what opportunities there are for arbitrage down here where things have been mispriced legislation has been rushed through and there are arbitrage opportunities. I know they are and by racing this legislation through right now and being in front of whatever the rest of the world designs New Zealand is opening itself up to be gouged out and we will be left with some businesses having some assets on one side of the balance sheet and some liabilities on the other but not being able to be matched because offshore entities will not recognise them. They cannot be banked against because no one knows—and I ask the Minister in the chair to define these—under what international financial banking agreements credits will be recognised. Will it be the International Swaps and Derivatives Association? Will it be the International Swaps and Derivatives Association master agreement between financial institutions? Will the credits be used as credit collateral? I ask the Minister in this economic situation we have right now whether I will be able to use my carbon credits to get further funds from my bank in the US or from a bank in Europe. These are the kinds of questions that need to be asked and answered before this legislation is thrust upon New Zealand. 
This is not party political; it is for the good of New Zealand to get this right as I said previously. Issues environmental issues of sustainability are bigger than one party. The arrogance of some to claim the matter is theirs speaks absolute volumes. If this legislation right in front of us here goes through as currently designed I tell members that unless those issues have been explored and looked at from outside New Zealand—and remember New Zealand is a debtor nation; we borrow much money from offshore—and unless this stuff can be used as credit against what we already have this legislation will put New Zealand on a hiding to nothing. Believe you me we will not be at place No. 22 in the OECD for much longer; we are heading further south faster unless the banking side of this has been agreed and unless the banking and financial sides have been investigated. Not one Labour speaker has got up to tell me how this will work in a macro sense. Not one Labour speaker has got up to tell us how this will work in a global financial sense and in recognising New Zealand’s balance sheet.