Smith Stuart; Shaw JamesSTUART SMITH (National—Kaikōura): Thank you Madam Chair. In the first reading speech I mentioned concern about whether this was a tax or not. I actually asked officials for advice; never really got a satisfactory answer. I would really like to know if the Minister has had advice or sought advice—any advice at all—on whether this is actually a tax or not. If it is a tax or could be construed as a tax—I know it's a bit pointy-headed but it could be—then Parliament must set the tax. By yourself the Minister of Climate Change the Minister of Finance and the auction monitor setting the methodology which doesn't directly set the price but it actually is linked to the secondary market price—so it does effectively set a price if that is a tax—then constitutionally it should be Parliament that sets that and what this bill does would usurp that right. I think it's actually quite an important issue to get ticked off at this stage one way or the other—and I see someone's rushed out the back to get something whether it's just a pen to write down or some statute book to look through. I think it would be very interesting for the House to have confidence that we are not passing a piece of legislation that trammels over a long-held principle going back to our Bill of Rights that it is in fact Parliament that sets taxes not Ministers by Order in Council. If anything is done that way without Parliament setting it then it has to be validated by Parliament by the end of the session which would be the end of the year. That could be done for this bill; there's no doubt about that. We could be back here after the last auction then validating the methodology for the confidential reserve price. And as is probably likely to be the case it is unlikely it will be needed from that point on in which case we would require legislation as this bill has introduced to remove the methodology once it's been put in place. So I'd be very interested if you've had that advice and I think we should all hear it. So I look forward to your response. Thank you.Hon JAMES SHAW (Minister of Climate Change): Thank you Madam Chair. Clearly no it is not a tax; it is a market. The Hon Dr Nick Smith talked about and exchanged words with the Hon Dr David Clark about the debates that were had in the 2000s when there was an attempt to introduce a carbon tax which because National pushed hard on it said that No we wouldn't introduce a carbon tax as a country; we would in fact have an emissions trading scheme." So what we have is an emissions trading scheme (ETS) and not a carbon tax.For clarification a tax is where the value of the charge or the price per unit is set by the Government in advance and your activities determine the extent of the liability. The primary purpose of a tax is to raise revenue for Government purposes. The primary purpose of the emissions trading scheme is not to raise revenue; it's to drive down emissions. In fact people actually say "What do you think the price of emissions should be?" Now as Minister I have to be aware that anything I say would influence the market but in an ideal world the price of an ETS unit should be zero because there would be no demand and there would be no demand because New Zealand would have reduced its emissions down to net zero right? So that is actually the demonstration of whether or not it's a tax because if you wanted a tax you would put something in place that was essentially raising revenue for the purposes of raising revenue over an extended or in fact a permanent period of time. That is not the purpose of this emissions trading scheme. I have to say once again that that is not a question in the scope of this bill which is to examine whether or not there should be a confidential reserve price. To use another analogy: we were talking about house auctions before. One way to think about this is that the Government essentially establishes and regulates a number of markets. One of those is the electricity market. There are a number of mechanisms which are very similar between the way that the electricity market operates and the way that this operates. So you could no more argue that the price of a New Zealand Unit is a tax than you could argue that your price of electricity is a tax right? You would be saying "Well I'm being taxed on my use of electricity." Well that's just the price that you pay for the service that you receive of electricity. So I think the distinction is very clear."