Parker David: Settlement Systems Futures and Emissions Units Bill — Second Reading 
Parker David: Settlement Systems Futures and Emissions Units Bill — Second Reading 
[Volume:658;Page:7606] 
Hon DAVID PARKER (Labour) 
: 
 I thank the previous speaker on the Settlement Systems Futures and Emissions Units Bill Katrina Shanks. I thought her contribution was thoughtful and useful in terms of the way in which carbon markets could evolve. I agreed with the comments she made. 
I think it is probably timely to reflect on why we are creating carbon units in New Zealand. The world has to reduce carbon emissions if we are to avoid some of the catastrophic changes that are predicted by many scientists to occur if carbon dioxide and other greenhouse gases continue to build up in the atmosphere. We have changes in temperature rising sea levels changes in patterns of food production acidification of oceans loss of reefs and loss of species in the sea that produce calcium for shells—they will not be able to produce that calcium because of higher levels of acidity in the ocean. These are very serious matters. The theory that lies between the creation of carbon rights and emissions pricing is that we need to create an economic incentive for the businesses that produce the goods we all consume so that businesses are encouraged to produce goods and services for us to buy that do not cause carbon emissions and to make it more profitable for them to produce a different product where those carbon emissions are absent. 
We do that by charging emitters for the cost of their emissions. We put a price on carbon dioxide methane and other greenhouse gas emissions and that price is avoided by those who produce goods and services in a way that does not produce carbon dioxide and other emissions. So those emitters that are going down the clean route have a price advantage compared with those that are producing carbon emissions and then suffering a price disadvantage. In that way we bring forward renewable electricity instead of coal-fired electricity. We change lots of little decisions in society. It becomes cheaper to run a light car so an aluminium car becomes more viable compared with a heavier steel car because the aluminium car uses less fossil fuel and therefore has lower carbon emissions. All of these complex pricing decisions which we will never notice happen because we price emissions. This bill sets up some of the regulatory framework to make sure that those carbon obligations can be dealt with in commerce in the way that other securities can so this bill is worthy. 
The bill was introduced by the previous Government over a year ago and it has taken a year for this Government to get it back from the Commerce Committee which is a bit long. Why did the New Zealand Exchange as the previous speaker said come to the Government with a sense of urgency a year and a half ago to get this legislation progressed? The answer to that is that at that time there was an opportunity for New Zealand to lead in this way given that emissions pricing was clearly on the way in New Zealand and around the world. Given that that was going to happen our stock exchange figured that it might as well take advantage of the commercial opportunities that arose in any way that it could. It spent quite a bit of money on developing a business plan to take advantage of the fact that New Zealand was leading in this arena so that it could take advantage of the service industry opportunities that would arise from New Zealand being at the forefront of developing this new market. 
That did not mean that New Zealand was going to slay the economic interests of emitters. We were not going to cause aluminium smelters to shut down or farming to go broke. We were not going to cause the steel mill to go broke or anything like that. But we were going to start pricing emissions because since the start of 2008 New Zealand has already had to face the cost for increasing emissions. It was important that that reality was reflected in the economy and that we sent the signal to emitters in New Zealand to stop producing increases in emissions at a cost to the country. We do that by making them pay for some of their emissions. 
Unfortunately in the last year since we have had a change in Government the impetus has been lost. Nowhere is this clearer than in respect of what has happened with the New Zealand Exchange. It has now effectively abandoned its efforts to be a leader in this field. It has given up on the business opportunity that had arisen as a consequence of the previous Government’s actions. That has had a real economic effect on New Zealand: instead of New Zealand having an additional profit centre as a consequence of our leadership in this area New Zealand has a Government saying that somehow we should not lead in this area despite the enormity of the environmental challenge. It says that we should just sit back and be a follower of the rest of the world. One of the prices of being a follower rather than a leader is that we cede the economic opportunities of being the advanced guard in running the related service industries for other jurisdictions. Instead of New Zealand having that economic opportunity it is falling instead to other countries around the world including Australia. It is with sadness that I reflect on the fact that although this bill is still necessary it does not provide the point of advantage it would have had for the New Zealand Exchange and the service industry because New Zealand has lost both its moral authority in this area and the business advantage it accrued from the fact that the previous Government was treating these issues responsibly. 
I do not think there is much more to say than that. Fewer units will be traded than would have been the case because of course the softening of the emissions trading scheme on major emitters is such that billions of dollars of units will now be paid for by taxpayers over the years rather than by emitters. They will have to buy fewer emissions units in the market therefore there is less of a need for this bill than would otherwise have been the case. That is another reason why the business opportunity will not be as great for the service industry. With those comments I say that the Labour Party is happy to support the bill but I feel that it is sad that the business opportunities that surrounded the service industry have been lost to New Zealand because of the short-sighted measures the National Government has taken. Thank you.