Shaw James; Dean JacquiThird ReadingHon JAMES SHAW (Minister of Climate Change): Thank you Madam Speaker. I present to the House a legislative statement on the Climate Change Response (Extension of Penalty Transition for Forestry Activities with Low Volume Emissions Liabilities) Amendment Bill.ASSISTANT SPEAKER (Barbara Kuriger): The legislative statement is published under the authority of the House and can be found on the Parliament website.Hon JAMES SHAW: I move That the Climate Change Response (Extension of Penalty Transition for Forestry Activities with Low Volume Emissions Liabilities) Amendment Bill be now read a third time.Firstly I want to begin by thanking those who have worked to progress this bill through to this stage within the condensed time frame that has been required. I appreciate the considerable effort from members of the Environment Committee and I thank the members of this House for their engagement with the bill during the recent committee of the whole House stage.As I said before this bill represents a simple and pragmatic approach to ensuring that small forestry participants in the New Zealand Emissions Trading Scheme—the NZ ETS—continue to be safeguarded from the impacts of the three for one penalty if they fail to pay units on time while a revised and more proportionate penalty is finalised. The three to one penalty for failure to pay units by the due date is set at three times the price of carbon with no discretion to be reduced. For forestry participants in the NZ ETS this penalty usually arises when forests are harvested deforested or deregistered from the scheme and the resulting unit liability is not paid back in time. While the three to one penalty came into force for most NZ ETS participants at the beginning of 2021 its application was deferred for small forestry participants until the end of this year due to concerns that it could cause serious financial hardship if a small forestry participant were to incur the penalty by being unable to pay their unit obligations on time. To put this into perspective a small forestry participant with 10 hectares of forest land might be required to pay units valued at say $500000 after they were harvested; if they failed to pay those units on time they would then be subject to a penalty of around $1.5 million over and above the $500000 that they were originally required to pay. The scale of this penalty puts them at risk of serious financial hardship meaning that their home or farm may be at risk.The transitional arrangement was initially set up as an interim solution to protect small forestry participants from risk of serious financial hardship. Instead it was decided that the excess emissions penalty would continue to apply to small forestry participants who failed to pay units on time. This is set at $30 per unpaid unit and unlike the three to one penalty may be reduced in size by the regulator in certain circumstances. The transitional arrangement has been instrumental in mitigating the risk of serious financial hardship to small forestry participants whilst officials develop an alternative penalty that is more appropriate for these participants which will be effective from 1 January 2025. However as the year end approaches so too does the expiry date of the current transitional arrangement. As acknowledged previously by members of the House the NZ ETS is complex and it is important that we get the settings right for small forestry participants in the future. This bill ensures that it is possible by extending the expiry date of the transitional arrangement to cover unit liabilities arising from forestry activities carried out before 1 January 2025. The two-year extension recognises that the risk posed to these participants by the three to one penalty remains and ensures that they continue to be safeguarded while a revised penalty that is more proportionate to them is finalised and that there will be sufficient time for officials to educate small forestry participants on what a revised penalty will mean in practice.The title of this bill is undoubtedly long for the very simple legislative change that it proposes. However the benefits that it delivers which I have discussed today should not be underestimated. I commend this bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.