Smith Nick: Climate Change Response (Moderated Emissions Trading) Amendment Bill — Procedure Second Reading In Committee 
Text is incorporated into the Bound Volume 
Smith Nick: Climate Change Response (Moderated Emissions Trading) Amendment Bill — Procedure Second Reading In Committee 
[Sitting date: 24 November 2009. Volume:659;Page:7940. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (Minister for Climate Change Issues) 
: 
 I want to expose for the Committee some of the double standards in the contributions that have been made by members. I start with Mr Cunliffe who said that the allocations to industry are a subsidy. Did I hear him correctly? 
Hon David Cunliffe 
: Oh indeed they are. 
Hon Dr NICK SMITH 
: Well that is very interesting. Let us go back a year. Just 12 months ago the Green Party was criticising the previous Labour Government for the amount of allocation it was making to industry. Do members know what the then Minister Mr Parker said? He said that these allocations are not a subsidy. Well that is interesting. I have the numbers here of just how many units are allocated under the existing law so when Labour allocates 654 million units of carbon—that is what its law does—that is not a subsidy. But when a change of Government occurs and we do an allocation then it is a subsidy. I want a member to explain why it was that when Labour’s legislation provided for an allocation Mr Parker very specifically said to the Greens that it was not a subsidy but now it is. I think Labour members have to explain that. 
The second point is that members have said there has been no analysis. Those were the specific words that Mr Cunliffe used. Well I have a report from 20 May 2009 by the New Zealand Institute of Economic Research and Infometrics. This joint report very specifically recommends that the most economically efficient way to deal with the issue of leakage is a production or intensity basis. In all the debates around the economy that I have heard in my 20 years I have heard those two firms quoted more often than any. In fact we said that there was some contrary advice. Last year we had one report from the New Zealand Institute of Economic Research saying one thing and we had Infometrics saying another. We said that this was an important call and a really big decision. We wanted to get the best advice possible so we sought a joint report. So when members say that there has been no analysis I say that they have to look at the detail of that report which recommends exactly the approach that is being taken in this bill. 
The third point is around the issue of allocation. The first point to understand is this: the costs no matter what way we cut them for the first 10 years of the emissions trading scheme under the existing scheme and the new scheme are no different. Let me go through this very specifically. We have a softer transition regime. The Government said that there is a recession and the last thing we want to do is for an emissions trading scheme to snuff out the fragile recovery. We said that in those first few years we do want to take a softer approach. That means that New Zealander’s petrol bills will go up by half the amount rather than a bit over 7c a litre. It will be a bit over 3c or 3.5c a litre. In respect of power prices rather than the price going up by 10 percent it goes up by 5 percent. There is a cost involved; that is quite true. The analysis shows that the cost of the change is $400 million. 
For the next period from 2013 to 2018 this revised scheme costs less. Let me explain why. The members were very keen to quote Comalco earlier. When they talk about the phase-out rate we should remember that in the current scheme there is zero percent phase-out of industry support from 2013 to 2018. So why is zero percent OK but suddenly then it is 8 percent? This scheme starts the phase-out at 1.3 percent per year and that does result in some savings. So over the first 10 years of the scheme there is absolutely no difference in terms of the balance. 
The thing I find most interesting is this: I am pretty confident that this John Key - led Government will be in office for 10 years. 
Hon Members 
: What? 
Hon Dr NICK SMITH 
: I am quite confident of that. 
Hon David Carter 
: It will be more than that. 
Hon Dr NICK SMITH 
: My colleague Mr Carter says it will be more than that. But it is interesting that the most controversial point in this bill is not about what the rules are for the next 10 years but what they are after that period. There is not much controversy about the next 10 years. Where are all the members’ debates about what we are doing incorrect in that first 10 years? [ 
Interruption 
] Mr Chairman? 
The CHAIRPERSON (Eric Roy) 
: No. The Minister has had two consecutive calls. You get only one opportunity for that.