Twyford PhilHon PHIL TWYFORD (Minister of Transport): Thank you Mr Speaker. It's a pleasure to stand here and make a contribution on the Maritime Transport (Offshore Installations) Amendment Bill first reading and support the work of my colleague Associate Minister of Transport Julie Anne Genter in bringing this bill to the House. This is a Government that is committed to tackling the difficult long-term challenges that New Zealand faces. Last year the Government announced an end to new offshore oil and gas permits while allowing existing permits to run their course and for those operators to continue operating. We took that action as a way of confronting climate change and managing a just transition to a low-carbon economy and this bill is part of our very deliberate planned and managed transition that we are making to ensure that the risks of a spill from oil and gas operations are well managed and properly mitigated.We know and I think this House agrees going by the comments from the previous speaker Jonathan Young that the current requirement for operators to hold insurance of just $27 million is way too low. It's a piece of regulation from another age and the modelling shows that the cost of an oil spill in New Zealand could be in the worst-case scenario in the order of hundreds of millions of dollars. It's not so long since we saw the grounding of the Rena and the spilling of oil into the Bay of Plenty. We saw the very real effects of an oil spill offshore on our treasured marine ecosystem and the thing that left such a bad taste I think in the mouths of the communities that were affected by the Rena spill was that taxpayers and local communities were utterly exposed in that instance and left to foot the bill for the clean-up—Jonathan Young: But that's not the same as an oil installation. It's not the same. Ships are not the same as oil installations.Hon PHIL TWYFORD: —a completely unsatisfactory situation. That experience is raw in the memory. Whether it's a ship or whether it's an offshore installation Mr Young the effect is potentially the same on the ecosystem and the biodiversity and the lives of so many New Zealanders who live on and daily rely on our coastlines.It's only fair—and this is the principle that underlines this bill—that those who profit from oil and gas exploration are able to cover the clean-up costs of an oil spill in the event of that happening and particularly in the event of a worst-case scenario.The bill aims to strike a fair deal both for New Zealanders and the oil and gas industry. It requires operators to hold insurance scaled to the risk that their installations pose. This bill and the accompanying rules will ensure that the major costs of a worst-case scenario oil spill the clean-up and the well control measures are properly insured against.Now I said that it aims to strike a balance and the reason it has to strike a balance is that obviously you want to protect communities and the taxpayer against having to pick up the costs of a spill from an offshore installation but it's also important to ensure that this regime is insurable on the international market. We are right now experiencing the difficulties of an international reinsurance market that in the wake of various seismic events in this country in recent years sees this country as challenging in that respect.The bill also addresses concerns raised by industry about the insurability of the regime that was first developed under the previous National Government. It clarifies that operators rather than the insurers hold unlimited liability for the cost of the clean-up and pollution damage associated with an oil spill. So it's the operators who are responsible for that unlimited liability. It also clarifies that marine protection rules may specify the types of liability that will need to be insured against and allow for insurance to cover the cost of well control measures in the event of a well blowout.People will also remember the blowout in an oil well in the Gulf of Mexico one of the worst marine disasters associated with the international offshore drilling industry. People saw the massive ecological damage and the immense difficulty of capping that well and limiting the damage. I think that the former Government in the rules that it drafted prior to the last election basically looked at setting the limit—the proposed upper limit in the rules that they were considering was $600 million. The advice from the officials that led to that upper limit being doubled was that the $600 million upper limit simply would not have futureproofed this regulatory regime against the risk posed of a large deep-sea installation operating in New Zealand waters. Now currently there aren't any but it's quite possible that they will be and so this regime—Jonathan Young: How is that going to happen?Hon PHIL TWYFORD: Because there are current permits that are allowed to run their course for the next what 25 years. So that's what this change is insuring against. Anyone who watched the unfolding of the disaster in the Gulf of Mexico will know that a $600 million limit is simply not enough to deal with the effects of a spill at scale on an offshore installation.So there is risk modelling for all of the existing operations and I think that the modelling that's been provided indicates that the upper limit for the current installations in Taranaki would be between $170 million and $360 million for the existing operations in Taranaki. So you can see that's the scale of it.The bill also as well as providing the basis for regulations to be set by Order in Council changes the—it's not just a regulatory change; it also changes the Maritime Transport Act of 1994 and that's necessary in order to bring in the new rules that provide the new settings.So that's it. I look forward to seeing what the select committee comes up with. I'm sure the risk modelling for the different kinds of installations will be worked through in detail and there'll be plenty of time to question and scrutinise those. Thank you.