Henare PeeniFUEL INDUSTRY (IMPROVING FUEL RESILIENCE) AMENDMENT BILLSecond ReadingHon PEENI HENARE (Acting Minister of Energy and Resources): I present a legislative statement on the Fuel Industry (Improving Fuel Resilience) Amendment Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon PEENI HENARE: I move That the Fuel Industry (Improving Fuel Resilience) Amendment Bill be now read a second time.I want to thank the Economic Development Science and Innovation Committee for the work that they've done on this particular bill. While I note that sadly they were unable to come to a full agreement on that particular committee they still however made some rather good suggestions to ensure that this bill is a strong bill moving forward. Therefore I think it's important that we cover off what some of those suggestions were and how those suggestions will continue to make sure that this bill is a good bill into the future.Just by way of background though the Fuel Industry (Improving Fuel Resilience) Amendment Bill is designed to help ensure that we have sufficient petrol diesel and jet fuel in New Zealand to weather major disruptions to our fuel supply. Many of us in the House here will recall when there was significant disruption to our jet fuel supply. And in particular myself and other MPs based in Auckland were subject to a number of those rather huge disruptions. In order for our country to be productive it needs strong infrastructure and it needs the ability for people in particular of the great city of Tāmaki-makau-rau of Auckland to be able to get around the country. The disruptions were significant and sadly very costly. That's why it was important that this Government take action on how we might be able to create resilience in the supply of fuel—petrol diesel and jet fuel in this country.What we noticed too of course was that with the more frequent severe weather events that we've been experiencing here in New Zealand it's become even more apparent why we must create resilience. While I already gave the example of Tāmaki-makau-rau I can already tell the House that in my visit to the Hawke's Bay region and the Tairāwhiti region after Cyclone Gabrielle one of the biggest challenges was getting supply of fuel in there in order to operate the heavy machinery to clear roads to clear pathways to clear houses; it was clear to all of us that we needed to do more here.Therefore the Government made an announcement that looks towards how we might create more bulk-storage facilities to ensure that we have national levels set in order for us to have confidence in our resilience that we can have a stockholding level that we can all agree upon at a minimum to make sure that our country isn't severely impacted by these. To meet the obligations though fuel importers will not necessarily have to make significant investments in fuel storage facilities; however some of them may need to change their stock management practice to reduce fluctuations in their stock levels.Some of the changes that the select committee recommended we consider to be very good changes on behalf of the Minister. So I'm going to cover off a couple of those. The bill obviously was referred to the Economic Development Science and Innovation Committee on 6 June 2023. There were a number of submissions; 11 in total and eight of those were heard in oral presentation. So a big thankyou to those who did make a submission to the select committee. One of the ones that we feel I think is important to amend in the bill as it progresses is the commencement date. The bill as introduced provided for the bill to come into force by Order in Council no later than two years after the date on which it receives Royal assent. That means if the bill was passed as introduced and the regulations were made by early 2024 the minimum stockholding obligation could come into force in early 2024. Some submitters were concerned that this date was too short and that they needed a bit more time to look towards the infrastructure and what they'll need to do to become compliant with this particular legislation. So therefore the select committee recommended that the commencement date be amended to give certainty to oblige parties by bringing the information disclosure provisions in the bill into force on 1 July 2024 and the remaining stockholding obligation provisions on 1 January 2025.It also became clear during the select committee that the bill as introduced caused some confusion as to how the calculation method of the obligation works. Some submitters did not understand that the minimum level of cover for the initial period is intended to be met on an average basis and that this is an average of daily stock level estimates for a month. The committee recommended amending the definition of a variable a" in the formula which is the obliged person's stockholding obligation to clarify that the required minimum stockholding volume must be met on an average basis. In the bill as introduced "average daily demand" which determines the obliged person's stockholding obligation is the average over the 12 months immediately before the compliance period. Some submitters noted that fuel imports are typically ordered three or four months ahead of delivery which means that an obliged person would have to order fuel up to four months before knowing with certainty what its stockholding obligations were in the compliance period afforded by the bill. So the committee recommended that the obliged person's average daily demand be based on the obliged person's average daily offtake from bulk storage facilities over the 12-month period four months before the compliance period.One of the other recommendations from the committee was one that this Government agrees with. As the bill was introduced the penalty was for half a million dollars—$500000—for each act or omission. In response to some of the concerns from the submitters the committee has recommended that the maximum pecuniary penalty be set at $100000. On behalf of the Minister the Minister is satisfied that this lower penalty will continue to be a significant deterrent in order to bring people into compliance.The select committee also recommended several amendments to clarify processes that could apply when an obliged person is temporarily unable to meet the stockholding obligation. Exemptions to the minimum stockholding obligations may be granted by the Minister with some conditions in exceptional circumstances of course. This would provide the Government with more tools than just prosecution through the courts.To provide more clarity and flexibility about how these provisions on exemptions and enforceable undertakings are used the select committee recommended a number of changes. I'll just list them very briefly: providing for the Minister to grant an exemption if a series of events or circumstances prevent an obliged person from complying with their obligations allowing regulations to prescribed circumstances that will be grounds for an exemption clarifying that other instances of non-compliance or potential non-compliance may be addressed by enforceable undertakings and clarifying that obliged persons can seek agreement from the chief executive for a path to compliance in circumstances where they are unlikely to meet the obligation by the commencement date. All I think pretty pragmatic and sensible recommendations.So through the select committee process we now have a more robust bill. The bill has been carefully designed to increase our fuel resilience in a way that will limit potential price impacts on our consumers.Recent jet fuel disruptions as I discussed earlier were really significant and as our country reopens to the world after the pandemic of COVID-19 it's important that there is the resilience in our infrastructure to make sure that the visitor numbers that come to New Zealand can get out and about across our beautiful country. It's a lifetime dream of them coming here and I can tell you Madam Speaker that the raw data from the Auckland Airport through the FIFA Women's Football World Cup has already proven that we must make sure that the resilience is there to cater for the thousands and thousands of visitors that came during that particular amazing event.This bill will mitigate the extent to which New Zealand is exposed to fuel-disruption scenarios. On behalf of the Minister and this Government I'm pleased to commend it to the House.ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to."