Simpson ScottHon SCOTT SIMPSON (National—Coromandel): Thank you Madam Speaker. I think the Minister has given a very fulsome and good outline of the two major changes that this piece of legislation seeks to achieve. Indeed in listening to the Minister I couldn't help but think that they are exactly the kind of pragmatic sensible practical changes that a National Party Government would do if we were in the position to be able to do that. So I'm pleased to advise the Minister that we will be supporting this piece of legislation at first reading and we're looking forward to the work that the select committee will do. I'd like to thank the Minister for giving direction to the select committee in terms of questions that he wants answered. I think that's a useful process and it helps create the dynamic that select committees are good at doing and I'm sure that we'll be able to do it. My only concern is that the select committee has got a wee bit of work on at the moment and the report-back date of 20 July—let's see how we go on that. The committee is completely immersed at the moment in resource management reform legislation and that's likely to be the case for the next several months. But anyway notwithstanding all that let's see how we go. So as the Minister said this bill essentially focuses on two areas. One is the rules relating to the penalties that apply when small forestry participants of less than 25000 units fail to surrender or repay those emissions trading scheme units. And as the Minister has said in that respect the previous regulatory situation was that those penalties were a matter of strict liability and the potential for undue hardship to be inflicted upon those small forestry lots and the owners and operators of those small forestry lots was out of kilter with the misdeed or the wrong that had been achieved. The so-called three to one rule set a three times the price of carbon for each unpaid unit and that was as I said an absolute strict liability penalty. Now that may well be a good and proper arrangement for large commercial foresters but for the smaller operators it would have potentially created a very heavy-handed approach to the penalty that was in place.So we think that the decision that is being proposed in this piece of legislation that the Environmental Protection Authority have an ability to waive that absolute liability to pay a penalty if the participants can prove a total absence of fault then a revised penalty formula would be applied—we think as I say that that is a sensible pragmatic and prudent thing to do. The Minister spent most of his time on the second leg of this piece of legislation which relates to the industrial allocations that are given out to protect actually New Zealand jobs New Zealand manufacturers New Zealand businesses that are high emitters and that is in order to essentially protect those businesses from a carbon leakage situation. So when we get to 2050 and we have achieved our net zero goals and ambitions we will still need aluminium for instance. We will still need glass. We will still need steel. We will still need to have fertiliser and we will still need to have a range of other products that are currently manufactured here in New Zealand. But if the industrial allocations were not provided those businesses would then be very susceptible and very vulnerable to offshore businesses that would be able to compete on the basis of less strict rules than we have. And those businesses would then in New Zealand be very vulnerable. So the concept of the industrial allocations is in our view sound but as the Minister has said does need tweaking because since the passing of the original legislation back in 2002 the businesses that have been receiving the industrial allocations—many of them have actually really improved and changed the way that they do their business. I had an opportunity to visit New Zealand Steel at Glenbrook not long before Christmas and to see the focus that they have there on lower carbon emitting production of steel in South Auckland is very laudable. Similarly the aluminium smelter in Invercargill is also making progress about reducing their emissions footprint in the processes that they use to create and manufacture very high quality aluminium that is exported in the most part.So those are businesses that in our view are worth protecting and ensuring that they are viable and that they are profitable and that they continue to employ large numbers of New Zealanders in an important sector. But because the allocations were set quite a number of years ago some of those businesses now because of their improved systems and manufacturing and way of doing business actually don't need as many allocated units as the Government is currently giving them. So this is a piece of legislation that refines that formula. The Minister didn't quite use the term winners and losers" but there will be ups and downs as some businesses' allocations are reduced and some other businesses have their allocations increased. And again on our side of the House we think that is sensible prudent and practical and we think that that is something that is only reasonable and sensible to do. So at select committee we'll be looking forward to hearing submissions from stakeholders businesses interested parties and I'm sure that there will be some who will come and say "Well look we think this is going to have this kind of impact on our business." And there will be others who say "Well we think our business will have that kind of impact." and they will want to tell us about changes and improvements they've made to their business. And they will also want to highlight the underlying foundational principle that is the reason for providing industrial allocations in the first place. I think that's going to be a useful commentary. It will be useful exercise and the committee I know will turn its attention to the questions that have been posed by the Minister. And I'm sure that in our report back whenever that may be we will be able to provide hopefully some clarity some answers and some insights into the questions that he has posed for the committee.So on that note I'm happy to reconfirm that the National Opposition will support this legislation at first reading. We're looking forward to the select committee process and to hearing from submitters and indeed to providing hopefully some guidance and answers to the Minister in due course. So thank you very much Madam Speaker."