Climate Change Response (Removal of Transitional Measure) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeClimate Change Response (Removal of Transitional Measure) Amendment Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 26 May 2016. Volume:714;Page:11359. Text is incorporated into the Bound Volume.]Climate Change Response (Removal of Transitional Measure) Amendment BillFirst ReadingHon PAULA BENNETT (Minister for Climate Change Issues): I move That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a first time. This bill phases out one of the temporary measures we introduced in 2009 to manage the initial impacts of the emissions trading scheme (ETS) on businesses and the wider economy.The one-for-two surrender measure means that non-forestry ETS participants have had to submit just one emissions unit for every 2 tonnes of carbon dioxide or equivalent greenhouse gas that they emit. That was extended in 2012 while New Zealand continued to recover from the global financial crisis. As I have been subtly signalling for some time—Chris Hipkins: Ha!Hon PAULA BENNETT: —yes I know; I do not do subtle—it is now time to start removing this measure.The Paris climate agreement marks a new era when all countries are expected to take action on climate change. New Zealand has announced an ambitious target to reduce emissions by 30 percent below 2005 levels by 2030. As a result our ETS must send a strong signal that we need to reduce our emissions and transition to a low-carbon economy. Businesses recognise this. Three-quarters of submitters to the first phase of the ETS review supported removing the measure. However the strongest message I received from business was that they wanted certainty from the Government about what was happening with the ETS so that they could plan and make investment decisions.By taking this bill through all stages under urgency we are giving the market certainty about how and over what period the one-for-two surrender measure will be removed. From 1 January next year the one-for-two surrender measure will start to be phased out evenly across all relevant sectors over 3 years. The current 50 percent surrender obligation will increase to 67 percent from 1 January 2017 and to 83 percent from 1 January 2018 and by 1 January 2019 all sectors in the ETS will be at 100 percent—in other words they will be expected to pay the full surrender obligation.The current price ceiling of $25 per unit will remain. This will ensure businesses have certainty that the price of carbon cannot be more than $25.The free allocation of units given to emissions-intensive and trade-exposed industries will remain. These will be increased proportionately with the phase out to protect our competitiveness. For example if a company receives 90 percent of free allocation now it will still get 90 percent once the one-for-two surrender measure is removed. It is important for this free allocation to remain in place. To put too much financial pressure on some businesses could mean that they close their doors. Alongside the obvious loss of jobs and the hit to the economy it would make no sense for the products they are making to simply be made in another country with no ETS. That would make them less efficient and it may actually risk contributing more to global emissions in the end and that just would not make sense.Why is removing the one-for-two surrender measure important? Removing the one-for-two measure sends a strong signal to businesses that they need to invest in low-emission technologies and in forestry. It encourages the planting of more forests by increasing the demand for emissions units which will be worth more. It takes 5 to 7 years for trees to start absorbing a decent amount of carbon so we need that tree planting to start now. It will also reduce the potential fiscal risk that the Government may have to purchase international units at unknown and possibly higher carbon prices over 2021 to 2030. That will happen if the ETS and our other initiatives do not deliver enough domestic emissions reductions removals and international units for us to meet our target. It will also ensure that there are sufficient New Zealand emissions units available so that the markets function properly.The phased approach I think is fair. It strikes the right balance between moving too fast and too slowly. It incrementally increases costs across the whole economy and supports a stable market. Removing the one-for-two measure will have a broad impact directly affecting the waste transport energy electricity and industry sectors. Households may see a small increase in costs as those energy prices and petrol prices are passed to them. Modelling has shown that for low-income families it could be around $30 for a year and for median households it could be around $40 to $45 but everyone thinks that is actually on the high side and it is likely to be less.The fiscal impact that is in the Budget of $360 million of positive fiscal impact over the next 4 years is based on having a unit price of $12. The unit price right now—I was just looking—is $14.48 so already actually there will be more in the Government’s coffers than it budgeted for which is what we locked in a couple of months ago when that was the price it was at. So where we are looking at is—we think it is a minimal cost to households at the moment.With the rise in benefits that this Government has done being the first one there is perhaps a little bit there so that sectors can actually accept that. We actually think there is enough competition in the energy market so that hopefully they will not pass the whole cost on. We think we are being fair to the farmers and to businesses that do emit by giving them plenty of time so that they can phase out. Farmers will have an increased cost to them not because we are bringing agriculture into the ETS of course but because they are high users of electricity and transport and actually Fonterra is one of the biggest emitters. So as a consequence of that we could see there being some cost to farmers. That 3-year phase-in for us was making sure that we were being fair and keeping that as low as possible at a time when they are doing it pretty hard.So it is with pleasure that I introduce and commend this bill to the House.Dr MEGAN WOODS (Labour—Wigram): I am happy to take a call on what I am sure will be one of many calls over the course of the next couple of hours on this bill. This is to signal that Labour will be supporting this legislation and that we think this is a positive tentative baby step in the right direction. In fact we feel quite honoured to see this Government stand up and take its first steps in front of us in terms of doing something about addressing climate change. I only wish we had a polaroid camera here so we could have captured it for posterity.What this bill does is a positive thing but it cannot be seen in isolation. The message we want to give to the Government is that this cannot be a cherry-picked idea from the emissions trading scheme (ETS) review that exists in isolation. What we fear is that the Government sees the ETS as a strategy and not as the tool that it is in terms of managing our emissions. The Minister for Climate Change Issues outlined the job that New Zealand has ahead of itself in terms of meeting its international emissions reduction targets. It is a large job that New Zealand has ahead of itself in order to do this. The Minister seems to realise that we simply cannot trade our way out of this in the way that the previous Minister thought we could and that we do actually have to do something.Getting rid of the one-for-two subsidy within the emissions trading scheme cannot exist in isolation. If we truly want to address New Zealand’s emissions there are some other thorny issues that we must grasp. We must grasp the issue in agriculture and the fact it is still remaining outside our emissions trading scheme. When we have an emissions profile that 50 percent of our emissions come from a sector and we fail to include it in the tool that is charged with moderating our emissions in our economy and reducing our emissions in our economy we are not going to have an effective tool.I also note the price cap that is remaining there at $25 a tonne means this great free-market Government is not prepared to put a price floor of where a price cannot fall below but it is willing to put a cap of where it cannot go. I note this figure of $25 is out of kilter with what business and industry have been saying. The BusinessNZ Energy Council put together a very good report around energy consumption in our future modelling in 2050 on a price somewhere between $60 and $115 a tonne for carbon.We cannot have a Government that continues to put in place these kinds of ceilings on the price of carbon because quite simply it is this kind of thinking—this kind of 20th century thinking from this Government when it comes to climate change—that is going to fail to see us transform our economy in the way we need to. It fails to see the opportunities that a low-carbon economy puts in front of us the kinds of opportunities it provides for jobs if planned correctly. The failure to put together a comprehensive range of changes to the ETS illustrates this very clearly. What we see here also is the ceiling of $25 a tonne. I would ask the Minister to think about putting in place an amendment when we get to the Committee stage of this bill to also put in place a price floor.Let us face the elephant in the room around the hot air credits this Government let in around the same time it decided to put in place this one-for-two. It let dodgy fraudulent credits into our emissions trading scheme which crashed the price of carbon in this country and made it absolutely ineffective in reducing our emissions made it absolutely ineffective in terms of doing the things it needed to do as an effective means of being a lever in our economy to make those changes. I know we are putting this legislation through under urgency but I really do ask that the Minister think about an amendment she could put up at the Committee stage that would see that we will never return to that place. The Minister has said that it is wrong and can never happen again but I would like to see a commitment—a legislative commitment—that that will never happen again.This is a Government that knew exactly what it was doing when it let fraudulent hot air credits into our emissions trading scheme. It is a Government that sat back and let it happen and crashed the very thing we could be doing to reduce our emissions trading. One of the implications of allowing those fraudulent credits into our system is that we now have a backlog and we have a lot of banked Kyoto credits within our emissions trading scheme. These have to be used before the Paris Agreement comes into force in 2020.This is make-up on what this Government knows it has done wrong. It cannot simply enter into the post-2020 world—when the world must show a commitment and New Zealand has to lift its game with the number of banked credits it has sitting there. The Government has to remove around 250 million tonnes of carbon dioxide between 2021 and 2030 under the Paris Agreement and will at best get 50 million tonnes of that removal out of new plantings. The Government knows the emissions trading scheme. The ability to trade is something it absolutely has to have in place and it has to be in there.One of the things when we are talking about the price of New Zealand Units and we are talking about the $25 cap—which of course the Government now speaks of with great pride saying that you cannot buy the dodgy fraudulent hot air credits that it previously let into our system. This was not because the Government changed its mind and decided it was wrong and we should stop the trade in this kind of dodgy credit it is simply because New Zealand did not enter into Kyoto II the second protocol. But in a post-Paris world what we will see happening is that New Zealand will once again start trading on the international market in terms of carbon credits.New Zealand had a highly conditional target when it agreed in Paris what was going to happen. One of those conditions around our agreement was the transparency work that needed to be put in place to ensure that international credits both were environmentally sound and would reduce carbon within the atmosphere somewhere in the world which is what the dodgy credits we were buying in simply did not do. For New Zealand the Minister has gone to New York and she has signed the Paris Agreement and she is now saying that we can ratify that treaty. But we have to be absolutely sure that transparency work is done if we are going to have a functioning and effective ETS.For Labour climate change and addressing climate change offer real opportunities. If we do this right and do not put in place false mechanisms we have an opportunity to transform parts of our country to create industries and to create jobs. And most importantly if we start doing the planning now and we do that planning right we have the opportunity to put in place the skills training that is going to be required for a low-carbon economy. A free-market approach that just waits to see what happens which we are seeing from this Government in regard to climate change is going to leave ordinary people high and dry. What we are committed to is a just transition when it comes to climate change to make sure we seize the opportunities and that not one person gets left behind.We need to do more on climate change. New Zealand must reach its targets. This is a positive first step but it is in no way enough. It needs to be accompanied by far more action on climate change and I look forward to the contributions from speakers coming up to tell me what other parts of the ETS review they will be putting in place. Why not a carbon floor as well as a carbon ceiling? What are the things we are going to do around agriculture to finally address the issue that will see a real reduction in New Zealand’s greenhouse gases? These are the hard questions New Zealand must face and these are the hard questions Labour is willing to face.SCOTT SIMPSON (National—Coromandel): Buried in amongst that bluff and bluster and hot air from the Labour member Dr Megan Woods who has just resumed her seat was an endorsement of this bill. I am delighted that the Labour Opposition has seen fit to support this legislation. It is important legislation. This afternoon we have had Bill English deliver his eighth Budget. It was pragmatic it was sensible and it was good for New Zealand. This too this transitional bill that we will put through the House under urgency is a phased pragmatic practical approach that is so much the hallmark of this administration.I listened very carefully to the introductory speech the first reading speech made by the Minister the Hon Paula Bennett and I thought that she made excellent points about how it came to be that this transitional arrangement was put into effect in the first place. It is worth just reminding the House about why it is that we are here today changing out of the situation that was put in place in 2009. Back then of course we were right in the very deepest darkest phase of the global financial crisis and it was a troublesome and very concerning period of time not only for New Zealanders and New Zealand business people but indeed for the whole global economy. At that stage this Government took some very pragmatic and sensible steps many of which we have seen the rewards reaped today in the reading of Bill English’s eighth Budget. This was one of them.This was a measure that was taken back in 2009 to ensure that businesses that were struggling to ensure that they kept people employed that they kept the economy ticking over and that it kept going were not put in an unreasonable position of being pressured so that jobs would be at risk. The time now has come when the economy is ticking along very nicely. We have heard from the Minister of Finance Bill English today that we have got growth at 2.8 percent and it is projected to be 3 percent for the next several years. That is a time when this transitional phase can properly and sensibly be removed.This is a Government that takes its obligation to our environment and our obligation to world affairs in terms of commitments that we make to climate change very seriously. We also take very seriously our role in ensuring that we get the balance right between ensuring that our business people can create jobs and build an environment where people can prosper grow and thrive—so it is about being pragmatic about being balanced and about having an approach that is right for the times. From tourism through to agriculture and horticulture our natural environment supports almost all of the things that we do. So protecting the environment and protecting jobs is part of what this Government sees as very important.I want to go back just for a minute or two and reiterate what the primary purpose of the original creation of this situation was. The current 50 percent unit cost was established to ensure that businesses were not going to be unduly put at risk. So now from 1 January next year the current 50 percent unit cost will increase to 67 percent then to 83 percent from 1 January 2018 and then all sectors in the emissions trading scheme will pay the full cost from 1 January 2019.It is fair to note that the Government had options in terms of how it would approach this transition. Many of those options were considered before this piece of legislation was brought to the House. One of the options was just simply to go from the current situation back to a full cost situation in one big leap. But we are as I have said a pragmatic sensible Government and we think this phased approach will be good for business good for the economy and good for our environment.The Minister made I thought a very good point in noting that currently the unit cost for units is $14.48. The expectation is that the Government’s books will benefit by about $356 million over the next 4 years. That is a figure that is based on a unit price of just $12. The expectation is that that current price of $14.48 will probably get to somewhere in the region of $16 to $18. It is at that point that there will be an absolutely terrific incentive for our foresters to start planting trees—to start creating forests and growing trees. That is really what all of this is about. It is about making sure that we get the balance right that the pragmatic approach is right that it is sensible and that it is practical.Last year the Government undertook a submissions process. A series of meetings and consultations were held around the country and 75 percent of the submitters who were involved in that consultation process said that the one-for-two model should be ditched. Those meetings of course included iwi business people and the full gamut and range of New Zealand enterprises. Most of them said that the price was too low. Part of the reason that we want to change this is that the current price is too low. The Minister has made it very clear right from the first day of her appointment to her new ministerial role that this phase-out would occur. It was really just a question of how the phase-out would occur what the nature of it would be what the structure of it would be and now in this legislation we have that ready to go.This is a good piece of legislation. I am looking forward to listening to other speakers. I will be interested to see how other parties in the House decide to jump on this legislation to see where they want to put their support or not. I will be listening carefully to other speeches. I commend the bill at its first reading to the House.Dr DAVID CLARK (Labour—Dunedin North): This bill warrants the Government a tiny pair of flip-flops. It is a U-turn but with a small “u”. It is a tentative first step. As my colleague Dr Megan Woods noted it is like the first steps of a child and it is a shame we do not have a polaroid camera here to catch the moment when that first tentative step is taken. We support the idea that a tiny pair of flip-flops for that tiny first step should be issued from this side of the House.It is a way for the Government to signal that maybe one day—one day maybe but let us not rush—it may develop a plan to transition to a low-carbon economy. It may signal a tentative—a tentative—tiny incremental signal that it wishes to increase the value of New Zealand’s economy over time by stepping into the high-value space and away from what we have always done. Hopefully—hopefully in the future—the Government is thinking there is another way but it is not really signalling in any strong or assertive way that it is going in that direction.Let us not forget that the emissions trading scheme when it was introduced was the first “all gases all sectors” emissions trading scheme in the whole world. New Zealand once had ambition. New Zealand once wanted to lead the transition to a high-value economy that was low carbon. We wanted to lead. But now we have a Government that has stepped away from that. It has said: “No let’s sit with the status quo. Let’s look after the entrenched interests. Let’s not let the costs lie where they fall. Let’s subsidise polluters.”Well here we have a small step saying: “We’re not going to step away from the $25 cap. We’re not actually going to have a real market. We’re not going to step away from intensive-style agriculture. We’re not going to have a real cap-and-trade scheme. We’re not going to put a cap on it for goodness’ sake. Let’s have a cap-and-trade scheme without a track. We don’t really believe in the market because then we wouldn’t be able to support existing interests.” This is a Government that is taking a tentative first step. It is making a tentative signal that is saying: “One day we might send some stronger signals that we really believe this stuff.”But we will be supporting it because it is important to support those first steps. It is important to get behind them. They may be a precursor to something more significant. We know of course on this side of the House that the way to get to that more significant step is to change the Government. That is the plain and simple way. These few tiny tentative steps are certainly not a big sprint in the right direction.This Government no longer seems to be ambitious for New Zealand. It seems to have lost touch with the aspirations of middle New Zealand. The Government seems to have focused only on the interests of the wealthiest few. We have seen that of course in the Panama Papers. We have seen a Budget that does very little to address the increasing gap between the cost of schooling and the money that comes in from taxpayers to support it. We have seen in this Budget a cap on the operations grant. We know that the real effect of that is that parents will be paying more “donations”—voluntary donations—to keep schools afloat. That is what this Budget means. That is what this Budget means for middle New Zealand. It means more costs for schooling.Of course we know that this Budget also means fewer operations. We have seen a health spend that is below the increase in health costs. Here we have in the space of carbon emissions again something that really does not go the whole way. It is not even addressing the current issue in a serious fashion.The interesting thing if you look through the regulatory impact statement on the bill looking at the analysis that the Government has done on this is that it signals that the cost of this is 0.1 percent of GDP in 2020. That is the level of ambition—0.1 percent of GDP in 2020. Eight hours’ worth of GDP will be sacrificed—8 hours’ worth of GDP. That is the signal we are sending as a country. We are prepared to sacrifice 8 hours of GDP to move our country in the right direction. But in fact it really is not a sacrifice at all because of course we know that as we shift away from that old economy and into the new economy there are some real advantages that could be taken advantage of. There are some real opportunities I should say that can be taken advantage of.But this Government just does not seem to get that. It does not seem to see the opportunities. It seems much more comfortable with managing decline. Of course in the last year we have seen what has happened to wages in New Zealand. Per person wages in New Zealand were absolutely flat last year—absolutely flat. As costs rise there was no wage increase for 43 percent of New Zealanders last year. Across the board per person we have seen absolutely no increase in wages. The only thing that is pushing our economy along right now is immigration—it is the only thing that is pushing our economy along. That is not a plan. That is simply not a plan.Here we have from the Government little timid steps; this is not a Government that will push us in the right direction. As my colleague Grant Robertson has said this Budget is like applying a sticking plaster to a compound fracture—that is what this Budget is. I do not think that he is understating it. In this area it is much the same. We have got a serious issue where we need to transition New Zealand’s economy to the high-value future that is on offer. Instead we are getting further and further and further behind our Western competitors who are out there in front developing the intellectual property rewarding their innovators and seeing the opportunity and grasping it.They are not stuck in the past like New Zealand seems to be under this Government. They are not protecting vested interests and they are not protecting those who are already mega-rich. They are out looking for the brighter future looking to reward those who innovate and looking to make sure the incentives are right for those who innovate. They are looking to take their economies forward so that they can afford the kind of health care they would want so that they can afford the type of education they would want and so that they can afford a secure society with a good rule of law—all of those things that taxes pay for.But is this Government doing that? No. It seems content to manage decline and that is out of line with the aspirations of middle New Zealand who actually want to see themselves better off. We know for example that of the proportion of wages that middle New Zealand received under the last Labour Government as the economy grew—which it actually did in real terms by 25 percent under the last Labour Government—more than 50 percent of the gains went to working people. Under this Government it is down to 37 percent—just 37 percent of the returns from the limited gains are going to working people. The gap between rich and poor is growing. This Government seems in the emissions trading space determined to protect entrenched interests. It seems completely unwilling to help shift to the new economy and to the opportunity that is out there for new technologies.Labour will support this first step but we cannot say that it fixes the emissions trading scheme which the Government broke. Let us remember that as soon as it got into Government it got rid of the renewable preference for new generation because it was not comfortable with the thought that fossil fuel plants might not be added to our energy-generation mix. It got rid of the minimum obligation target for biofuels which was not going to cost the country any more but was going to secure a future for the biofuels industry. Then of course it diluted the emissions trading scheme. Here we have a small step towards reinstating a small part of it.This is a Government that is failing to invigorate the economy. We have seen also today of course in terms of invigorating the economy another Byzantine grant scheme from Steven Joyce that will be about him selecting who gets what for his photo opportunities. The Government simply does not have the gumption to put in place a research and development tax credit scheme like the rest of the world recommends—like the literature recommends. It does not want real innovation; it wants to control where the money goes. Is that not the story of this Government? It wants to control where the money goes and it certainly is not going to middle New Zealand.Most New Zealanders will not find themselves better off as a result of this Budget. Most New Zealanders in the future will not have the opportunities that they could have if this Budget and this bill actually moved us towards an innovative new economy if it gave the right signals about shifting away from our old dependency on carbon and if it rewarded those in the agricultural sectors rewarded those in the forestry sector rewarded those in the technology sector and rewarded anybody who wants to innovate and look toward the new world. Instead it seems intent on preserving existing interests: the interests of the wealthiest few. That is the story of this Government.We will as I said be supporting this but on the basis that it is a tiny tentative first step. It is 0.1 percent of GDP in 2020 that is up for grabs here. The opportunity of course is much bigger if we were to send a stronger signal than this Government is prepared to send. The majority of our emissions are in agriculture. This measure here is a tiny first step. Although we will be supporting it we could be doing so much more as a country that would provide great opportunity for New Zealanders in the future.SARAH DOWIE (National—Invercargill): I rise to take a short call on this Climate Change Response (Removal of Transitional Measure) Amendment Bill. I would like to follow on from my colleague Mr Scott Simpson who is the chairman of the Local Government and Environment Committee when he referred to this piece of legislation and this wonderful Budget recently delivered by the Hon Bill English as “pragmatic”. I would like to add a word to that that word being “balanced”. I think that this is a very balanced piece of legislation. It is a balanced way to move the emissions trading scheme (ETS) forward and to meet our international obligations without shirking our duties to our own people.What I want to say is that the members opposite seem to fail to remember that this scheme was brought into play—the one-for-two scheme—because of the global financial crisis. The reason that we brought it in was we wanted to support our people and we wanted to make sure that they had jobs during that time and could generate money for their families to support them. So this was a very pragmatic approach. It was a very balanced approach to allow businesses to move to meeting their obligations in respect of the ETS but not to be militant in a scheme that would mean that people would lose their jobs. At the end of the day this is now a balanced way of phasing out the one-for-two scheme that allows businesses to move themselves forward to meet their obligations over that 3-year period. I think that that is a positive way forward because this is about protecting the environment acknowledging climate change and moving us forward in respect of our international obligations given that we are an Island nation with a very large coastline but we do need to remember our people.If you look across what this Government is doing we are being balanced. We are a Government that cares about people. We care about our people having jobs being productive members of society and having money to spend on their families. If you were to be militant with an ETS jobs would just not be on the table. We would not be providing all of these jobs for our people out there in our sectors with the growth in tourism with the growth in manufacturing and with the growth in agriculture. We simply would not have that. Look this is a pragmatic approach to phasing the one-for-two scheme out but businesses have time to adjust. I think that is a balanced way forward and I support this bill.JAMES SHAW (Co-Leader—Green): I am always fascinated to listen to Government members speak about their balanced and sensible approach. This is the approach where they are just weighing up expanding the economy and jobs versus destroying the planet and coming down somewhere in the middle so that they have a sensible balance between half the jobs and burning half the planet. This somehow gets the balance right as if those two things were somehow isolated things that were not in same biosphere.Let me give Government members just a quick insight into how this works: jobs happen on the planet right? So when you have an enormous drought like the one that we had in 2013—the worst drought that we have had in 60 years which wiped $1.5 billion off our economy—jobs were lost. That is the cost of climate change. When the worst storm in 70 years happened—in the same year that that drought happened—30000 houses in Wellington lost power and 6000 of those houses lost power for a week and there were small businesses going under because they did not have electricity. That is jobs that are lost. There was $31 million worth of insurance claims as a result of that storm.Last year Whanganui and Dunedin South were under water—huge floods. Every single year there are increasing numbers of droughts and storms and fires and floods. All of those come at an enormous cost to the economy and to these jobs that the Government says it is protecting while taking this somehow balanced approach to destroying the atmosphere.Let us just be really clear: we have an emissions trading scheme and the purpose of an emissions trading scheme is to reduce emissions. In the time that we have had the emissions trading scheme which coincides with the time that this Government has been in office New Zealand’s net greenhouse gas emissions have increased 19 percent. They have increased faster than most other parts of the planet in one of the few countries that has an emissions trading scheme designed to do the precise opposite. It is a massive and total failure of public policy.It would have been more honest Mr Simpson if you had come to office and simply canned the scheme completely and said: “We don’t believe in it. It’s obviously garbage and we’d much rather jobs than a biosphere that we can continue to live on.” You hide behind this idea that you are somehow pragmatic and sensible.Let us just get clear what this bill would do. In removing the two-for-one subsidy the New Zealand Institute of Economic Research the Government’s own research says that this will lead to a reduction in emissions of 0.7 percent in the year 2020. That is against a business-as-usual scenario which the Ministry for the Environment projects will see our emissions increase by 96 percent above 1990 levels by the year 2030. Let me just restate that: our emissions—gosh the Government benches have gone very quiet—are projected to increase 96 percent above 1990 levels by the year 2030 and what this bill does is it seeks to reduce them by 0.7 percent. So this bill will make an infinitesimal difference to an extraordinary expansion in our greenhouse gas emissions because nothing else is going to change. This bill does nothing except remove the two-for-one deal. So it is not even a half measure; it is a 0.7 percent measure. It does not get us halfway. It is not even a half measure.If you actually wanted to reduce emissions here are some things that you could do. You could have not made the decision to allow the Huntly coal-fired power station—I beg your pardon Mr Speaker; here are some things that the Government could have done if it actually wanted to reduce emissions. Since the Government made the decision to allow the Huntly coal-fired power plant to continue until after the year 2020 it has been burning coal every single day. And every day that Huntly burns coal it makes up 5 percent of our emissions profile.So what this bill will do is that in the year 2020—4 years from now—it will reduce our emissions by 0.7 percent at the same time as the Huntly power station adds 5 percent to our emissions on a daily basis. This is a pathetic measure. It is not even close to the scale of what needs to happen if New Zealand is actually going to reduce its greenhouse gas emissions.The Government wants to reduce our greenhouse gas emissions by 11 percent below 1990 levels by the year 2030. The Government’s own agency says that our emissions are going to continue to increase to the point where they are 96 percent above 1990 levels by the year 2030. This bill—all it will do is reduce them a tiny tiny amount. So it is an absolutely pathetic measure.Last year when we were trying to work out—the Government did its faux consultation exercise around the nationally determined target which led to the 11 percent target of reducing our emissions below 1990 levels by the year 2030. In that exercise the Government looked at only the cost of doing something about climate change. It did not look at the benefit at all and it did not look at the cost of doing nothing. Those costs which I have already outlined: $1.5 billion wiped off our economy from that drought and millions and millions—tens of millions—of dollars’ worth of insurance claims from floods and storms. And that is just up until now. You accumulate those costs over the course of the coming decades. It is a massive risk to our economy.Furthermore the economy carries a risk of something like $3.5 billion to $7.5 billion if we fail to meet our emissions reduction target. We will have a fiscal cost to Treasury—they are all looking down at their knees now—of $3.5 billion to $7.5 billion of risk if we fail to hit our targets.Scott Simpson: What were the numbers?JAMES SHAW: They are in the regulatory impact statement. There is a $3.5 billion to $7.5 billion economic risk if we fail to hit our targets and—get this; I am going to say it again—a 96 percent increase in our emissions above 1990 levels. So there is a colossal risk to the New Zealand economy that is not being addressed by this bill.If you actually wanted to reduce greenhouse gas emissions you would close the Huntly coal-fired power station. If you actually wanted to reduce emissions you would do something about the way that we make decisions about land use and forestry and agriculture in New Zealand. The Minister in introducing this bill did talk about spreading the cost across all sectors but it still subsidises and excludes the single most polluting sector from the emissions trading scheme. So there is still an enormous subsidy going towards agriculture and other polluting industries and that is putting all of the cost on to the other productive sectors of the economy. There is a huge cross-subsidisation going on and a massive skew in investment as a result of that subsidy to that portion of the economy.If you actually wanted to reduce emissions you would not have a cap of $25; you would have a floor price of $25. The maximum amount should not be $25 per tonne; it should be the minimum amount. I note that France is just putting in place a NZ$50 per tonne price on carbon. So France is actually leading the way and once again New Zealand is trailing around in the background going: “Oh isn’t it so hard. We can’t possibly do anything. We’re just so small.” It is really quite pathetic.If you actually wanted to reduce emissions you would have good policy. We should have an independent non-political climate commission as was set up in the United Kingdom so that good public policy is decided or guided by the hand of good science not by politicians who are out protecting vested interests from the sectors that they represent. And the third thing you would do is you would deliberately lead on investment innovation and research and development in the green economy. You would be doing again what other countries have done—what the United Kingdom and Australia have done—in setting up green investment banks which have seen a huge inflow of private and public investment into the green economy which is of massive benefit to those countries.The Green Party will of course be supporting this bill. We do hope that the Government listens to some of the arguments that we have outlined and actually does something serious about climate change in the very very near future.DENIS O’ROURKE (NZ First): New Zealand First will also support this bill because it is acceptable as far as it goes and in fact it does not go very far. I accept what James Shaw has just said and the figures that he gave. In particular the less than 1 percent contribution that it will make by 2020 to New Zealand’s emissions profile is very sobering. The reality is that the bill simply brings to an end a transitional provision that has come to the end of its useful life and should probably never have been there in the first place. So this is hardly the leap forward that some members opposite me here tonight have said it is.Today’s Budget actually is overall best described I think as a “band-aid Budget”—a boring band-aid Budget at that. It is a boring band-aid Budget. The protests from the other side of the House are not appropriate because that is how the people of New Zealand will see this: a boring band-aid Budget. This bill is the smallest band-aid in the package that is put forward in this pathetic Budget. In fact this particular measure could hardly be smaller and could hardly be more minor. New Zealand First actually has little faith altogether in the effectiveness of the emissions trading scheme (ETS) as a means of genuinely addressing New Zealand’s climate change obligation now committed to as a result of the Paris accord. We know that as a result of that accord what we need to do now is urgent and what we need to do now must be comprehensive. That is the obligation we have and that is what many people expect from the Government but so far it is just this very minor pathetic little band-aid measure.If the ETS is to have any chance at all in making any contribution to the Paris obligations then of course this bill is necessary as an extremely minor less-than-one step forward to phase out the unfortunate transitional one-for-two surrender obligation measure of 2009 from the emissions trading scheme so that realistic pricing can ultimately be achieved. That is what the original measure did; it actually put a block on that. This will help to free that situation up so that at least we will get a move towards realistic pricing.The reason however why this bill is just one of the minor bandages in this band-aid Budget—a very minor step forward—is that it is actually hugely outweighed by several very large steps backwards that this Government is currently involved in. These include first of all a failure to act at all in any genuine way towards taking real steps to carry out our Paris obligations. The target as the Minister said is 30 percent below 2005 emissions by 2030. That is a fairly big bite for New Zealand to take and I am glad that we are making that attempt but if we are going to get there we actually have to do something about it and all we hear from the Government is that it is planning to plan for it—planning to plan for it. That is pathetic. The Minister gave no indication of any real steps to be taken at all while at the same time there is a failure to act to reduce dependence on fossil fuels in New Zealand apart from a rather pathetic package announced by Simon Bridges recently to encourage the take-up of electric cars that was universally regarded as pathetic and inadequate.In addition to that there is no encouragement for New Zealand freight to move from clogged roads towards an underutilised and under-maintained New Zealand railway system. That is pathetic as well. In fact all we have got in this Budget is a very minor $190 million tranche of funding for rail in the near future. That is an absolute drop in the bucket compared with the huge programme of reinvestment that is needed to reinvigorate New Zealand rail and to make it competitive with the road transport industry. So those are the steps backward. That is the neglect that this Government is guilty of at the same time as it takes this extremely minor band-aid step forward.New Zealand First’s climate change policy seeks a much more comprehensive strategy than that. Planting trees can help and we would certainly encourage that but it will never be enough. We think that transport is the first major area that New Zealand needs to be taking as a step towards achieving its Paris obligations but we are getting nothing from the Government about that—nothing other than a pathetic $190 million provision for New Zealand rail in the current Budget.We all know—every party and every person in this country—that agriculture is the emissions area that must be addressed early and comprehensively by New Zealand if we are to have any hope at all of meeting our targets. For that we need a strategy-based approach based on good research. People—farmers and others involved—will need to know the actions they can actually take as a result of Government leadership and Government investment and research so that real and effective measures can be taken as far as agricultural emissions are concerned. This is New Zealand’s most critical and urgent matter as far as the need for action on climate change is concerned but we are getting nothing at all from this Government other than this pathetic measure.New Zealand First wants a much more strategic approach with clear targets backed by a comprehensive raft of regulation so that we get a level playing field and so that we get a science-based approach that will be effective for New Zealand business and New Zealand agriculture. That has to be done in consultation with them. That has not happened either as a result of Government inaction and it does need to happen.New Zealand First will support this pathetic little bill which is necessary but what we wanted to see and what New Zealanders want to see from the Government is much much better leadership and real and effective actions—real and effective actions—and genuine plans strategies and targets towards achieving New Zealand’s Paris obligations for climate change. I hope that in the future we will see that and I hope that we will hear from Government members opposite something better than we have heard so far in their speeches something that will indicate some genuine commitment and some real actions rather than just a pathetic little bill like this.PAUL FOSTER-BELL (National): E Te Mana Whakawā Tuarua tēnā koe. Tēnā koutou katoa e ngā mema o Te Whare. It is a pleasure to follow on from Denis O’Rourke who has just resumed his seat. I was surprised that he brought such a level of modernity to the debate given that he generally adheres to Victorian views on most of the subjects he intervenes on in this House.This Climate Change Response (Removal of Transitional Measure) Amendment Bill is a very good one and I would like to congratulate my colleague the Hon Paula Bennett the Minister for Climate Change Issues who has introduced this piece of I think positive legislation.We take the environment and our commitment to it very seriously on this side of the House. It is a blue-green approach and it represents I think a very sensible balancing act in that we are not immediately launching with the full force taking effect; we are in fact phasing in a reduction in the two-for-the-price-of-one that currently exists for carbon units in certain industries. We are phasing that in over a 3-year period at a rate of 67 percent next year 83 percent in 2018 and 100 percent in 3 years’ time.I would point out that agriculture is still not included in the emissions trading scheme but there will be a few costs from this measure for those who are participating in our vital agricultural economy. For instance although dairy farmers will not be paying for emissions from their animals Fonterra does have some emissions related to the coal-fired drying units for instance the electricity consumed in its plants for producing the dairy products—which are such valuable export commodities—and also for transport and trucking. So we have some estimates here for the costs that might be imposed of around $265 a year in 2017 for sheep and beef farmers going out to $795 and perhaps a little more for dairy farmers with $690 in 2017. But I think this is a relatively small price to pay for something that will cement New Zealand’s clean and green reputation on the world stage and allow us to continue to be a powerhouse in tourism to attract those high-value tourists who really do value a clean and green environment which is what we have to offer here.I welcome the support from parties opposite who will be supporting this bill through and I commend it fully to the House.The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Dr Kennedy Graham—5 minutes.Dr KENNEDY GRAHAM (Green): The stated purpose of this bill is to amend the Climate Change Response Act 2002. The stated purpose of the Climate Change Response Act 2002 is to enable New Zealand to meet its international obligations under the UN Framework Convention on Climate Change. The stated purpose of the UN Framework Convention on Climate Change is to stabilise carbon concentrations in the atmosphere within a time frame that will prevent dangerous climate change. It is demonstrably clear that the logical flow of those stated purposes will not be met by this puny bill before us on climate change.The Government members across the floor in receipt of their notes which were handed out just before the speech have used the following phrases designed to capture the hearts and minds of the voting public: “get the balance right” “pragmatic sensible Government” “balanced measures” and “policies right for the times”. The balance is not right it is not pragmatic and it is not sensible. It is imbalanced when it comes to climate policy and it surely is not right for the times that a quarter of a century after the UN framework convention we have these baby steps as Megan Woods put it—baby steps removing a one-for-two obligation set up “as a transitional measure” to quote the bill to get businesses through tough times from the global financial crisis in 2008 and 2009 and then it was continued in 2011.If the purpose of this Government’s climate policy is to calibrate policy in a way that businesses particularly do not feel any obligation to move in reducing carbon whether it is the global financial crisis or the new crisis in 2 or 3 or 4 years’ time it will by definition not succeed. It is not pragmatic. Let me assure members that your policies colleagues will lose jobs will hurt businesses and will hit the families—the three objects that you state the Government’s policies are designed not to do.The global emissions in that period of time have increased from 32 billion tonnes to 50 billion tonnes a year. New Zealand’s emissions over that time have increased from 67 million tonnes to 83 million tonnes or so. Since this Government took over they have increased by 19 percent. Why have they increased by 19 percent? It is because of those transitional measures taken in 2009; because of the switch from a one-for-one obligation to a one-for-two obligation in 2009; because of an insistence on continuing with free allocations subsequent to 2009 resulting in 65 million units being freely allocated; and above all because of the insistence this blind devotion against all logic—as was pointed out to Ministers through question time for 6 years—to insist on allowing the hot air coming into New Zealand by way of credits emission reduction units from Ukraine Estonia and Russia which reduced the international price from $20 to 45c.Yesterday—and I will finish on this if I may—we were assured by the Minister that only 26 percent of the credits surrendered were of those and that the rest “had environmental integrity”. So we are at the moment under the Government only 26 percent corrupt in our policies.CHRIS HIPKINS (Labour—Rimutaka): As I sat there listening to the Government’s Budget speech this afternoon all I could think was: “Is that it? Really is that it?”. Here we are under urgency debating two bills and now I am thinking: “Is that it?”. Is that all that those members can really come up with when we have a housing crisis—no we are not debating the housing crisis. We have got critical funding shortages in health and education—no we are not doing anything about any of those. We are here talking about increasing the price of cigarettes—which we will get to later on—and this bill the Climate Change Response (Removal of Transitional Measures)—or “Measure”—Grant Robertson: Only one.CHRIS HIPKINS: —Amendment Bill. That is it. It was one measure and that is it. That is the total extent of the Government’s urgent agenda following this year’s Budget. There is nothing—nothing—about those critical issues that matter to New Zealanders. The “compilation Budget”—it is like a compilation album. That retro album with the same old tunes you have heard time and again—that is what this Government’s Budget was. Of course compilation albums normally come out before the band folds because it has run out of new material and it is about to—Grant Robertson: Out of ideas.CHRIS HIPKINS: It is out of ideas and it is about to pack up shop. The one surprising thing about this is that the Government is doing anything about climate change at all because of course we know that there is still a bunch of flat-earth believers over there who fail to accept that climate change is a reality. Of course they are propped up by the ACT Party which makes it its central thesis that climate change is not a reality. It has voted against most of the measures in this House that would actually do meaningful things to address the challenge of climate change. I know that personally because the first member’s bill I introduced into the House would have stopped new electricity generation in New Zealand coming from non-renewable fossil fuels. And what did the National members do? They voted against it. A bill that would have had a meaningful impact on New Zealand’s emissions because it would have reduced the prospect of new emissions coming from electricity generation—they voted against it.Every significant piece of legislation that has been proposed by Labour or by the Green Party or by any other party National has opposed it. The emissions trading scheme—the first thing it did when it became the Government was to water it down. It watered down the emissions trading scheme in its very first year in office. That says everything about its commitment to dealing with the challenge of climate change. This is a Government that still fundamentally does not believe in climate change. It does not accept the realities of climate change. So although it is welcome that it is doing this one small thing which will make a difference but not a very big one there is still nothing in this year’s Budget that will address the really big issues around climate change.But then National does not have anything in this year’s Budget that addresses the really big issues around just about anything else so why should we be surprised by that? There is very little in this Budget. There are no surprises and no substance actually in the Budget of any great note. It is just those members continuing on ignoring all of the major problems and major challenges facing New Zealand burying their heads in the sand for as long as they possibly can and hoping that someone else will fix up the problems. Well actually someone else will. It will be the next Labour Government and that will happen in 2017 after the next election.JOANNE HAYES (National): I just want to disagree with that member’s point that this Government does not believe in climate change. Of course we do—that is why we are in here today. We are taking a pragmatic a sensible and a responsible approach to climate change. It is a balanced view. I know that there are people in this House who do not like those four words. They do not understand that if we went out and put in a very harsh process to the phasing out of and eliminating the one-to-two obligation then we would wipe out a lot of businesses and it would not be very good for the economy would it? No it would not be.When we start looking at the dairy farmers if we went in and took a hard approach to them they would be paying and paying and paying. So far we have not heard from anyone on the Opposition benches about the value that the dairy industry adds to the economy of this country. As we start going through if we look at the phased approach in the first year we are looking at 67 percent by 1 January 2017 and then 83 percent by 1 January 2018 with all sectors paying full price for the emissions trading scheme by 1 January 2019.As I say—and I am going to keep driving this home—this policy our view to climate change response is a pragmatic sensible responsible and balanced approach and I have no problems in commending the bill to the House.Su’a WILLIAM SIO (Labour—Māngere): I was expecting to debate some of the crises that we have had and I was expecting a substantial contribution from that particular member Joanne Hayes and so I was surprised when there was not anything about that and then she sat down. On this side of the House we were expecting that we would spend tonight and tomorrow debating urgency legislation that was going to fix the housing crisis and that was going to ensure that everyone who needed an operation in our hospitals would get one and that people who were living in garages or cars would at least have some hope that they would be moved into a decent house. Instead what we are hearing is that they are getting moved out of Auckland and instead of being homeless in Auckland they will be homeless somewhere else.I come to this bill and as my colleague Dr Megan Woods has said we are supporting it. We are supporting it on the basis that those members have finally recognised the error of their ways because—let us be straight up—this Government introduced this scheme of a one-for-two subsidy in 2009. What does that mean? It means that a business can pollute all it wants and instead of paying the full cost it will pay half of the cost. That is what this scheme means—businesses can pollute and instead of paying the full cost they pay half of the cost. That does not show that this Government is serious about climate change—it certainly does not.If this Government was serious instead of phasing out the scheme as they are doing it would take the issue seriously and address it right now. Instead it is not doing anything about it today it will not do anything about it this year and it will do something about it next year. It does not get phased out completely until 2019. It is a signal again—in the same way that those members have treated the housing crisis as if it was made up—that they do not recognise how serious the error of their ways is and how serious climate change is.I do want to acknowledge the fact that the Minister for Climate Change issues has at least taken this baby step. But if the Minister were to take it seriously she would need to consider the fact that a whole suite of other activities need to take place. We have got to take seriously the reduction of our own emissions—of transitioning this workforce into a workforce of green clean climate-changed jobs. That is what this Government has got to do.In recognising that she has taken this baby step I would ask the Minister to go further and work on the fact that we have also got to repair our reputation. Once upon a time we could be proud of talking overseas about a “clean green” New Zealand; we cannot do that anymore. At the Paris meeting last year delegates from the Pacific said that they were disappointed that when New Zealand Government officials turned up they were not supportive of what the Pacific was advocating for. In fact it was only because Obama and some of the other countries’ delegates dragged their feet that the New Zealand delegation then agreed to the 1.5 goal.I say to the Minister: take this seriously. If she had heard the reports from the Parliamentary Commissioner for the Environment she would have seen that the environment commissioner has recognised and has put up evidence to show that already our coastal regions are under erosion because of climate change. We cannot ignore that—that is serious stuff.Two months ago I had the opportunity of visiting Kiribati and Tuvalu. Those islands are under serious threat. In the international arena their representatives have spoken passionately saying that they are the canary in the tunnel a warning to every other country in the world that what is happening to them is going to happen to us. The United Nations Development Programme report of 2010 identifies that among the most low-lying atolls of the Pacific—which include Tokelau which include Tuvalu which include Kiribati and which include the Marshall Islands—many of those countries will be underwater by 2050.The ASSISTANT SPEAKER (Lindsay Tisch): Come back to the bill.Su’a WILLIAM SIO: I am making the point that if this Government were to take seriously the issue of climate change then this step is not enough. It must go further. This issue is so serious that I would not even mind if those members stole Labour Party policy. I would not mind if they were to establish an independent climate commission that would establish a carbon budgeting process. I would not mind if they stole those policies because those policies are sensible and they take the issue of climate change seriously.I heard the member who spoke before talk about business and the value of business. We certainly do value business and I tell you if businesses themselves do not start planning and taking into consideration the effects of climate change on this country they are going to have issues with where they grow their crops. They are going to have issues with transitioning the types of energy facilities that they have now into more renewable and cleaner energy sources. They need the plan but this Government does not seem to take it seriously. It is more than just giving them the legal right to pollute; it has to be much more serious with a whole suite of other activities.I go back to the issue I tried to raise which I think is the key to this: the Pacific is facing this on a day-to-day basis. Here is why it is important for us. I was asked by a young person in Kiribati what New Zealand would do if Tuvalu or Kiribati were hit by Cyclone Winston which hit Fiji. What would we do with those islands—remembering of course that a report was released last month showing that five islands of the Solomon Islands are now underwater? What will we do with those?The ASSISTANT SPEAKER (Lindsay Tisch): Come back. Come back—Su’a WILLIAM SIO: But this is the point Mr Assistant Speaker.Grant Robertson: I raise a point of order Mr Speaker. I apologise to my colleague for interrupting in the middle of his speech but that is the second time that you have asked him to narrow his contribution down to the bill. It is a well-understood convention in this House that when a piece of legislation is dumped on the table by the Government with no notice there is some latitude certainly in the early readings of the bill. The member is speaking about climate change—The ASSISTANT SPEAKER (Lindsay Tisch): I thank the member for his comments. To talk about the Solomon Islands and Kiribati with water levels rising is a far stretch from talking about the emissions trading scheme (ETS) and this. I did give the member some warning earlier on. I will ask him to come back to the bill.Chris Hipkins: I raise a point of order Mr Speaker. This is a bill that deals with climate change. The emissions trading scheme is the Government’s response to climate change.The ASSISTANT SPEAKER (Lindsay Tisch): Exactly—thank you.Chris Hipkins: This is a—The ASSISTANT SPEAKER (Lindsay Tisch): The member will sit. Exactly—and this is about the ETS and what is in the bill. It is all very well—and I have allowed the member to talk about the other islands; I understand those issues just as he does—but I have asked to come back. And now I am asking him to come back to what is in the bill.Su’a WILLIAM SIO: I will continue to raise that particular point because this is important and it does refer to what this Government is doing based on this legislation. It is not enough—that is the whole point—and if we do not take climate change seriously what is happening in the Pacific will also affect this country of ours. So far this is baby stuff; this is small stuff. This issue will affect New Zealand in a significant way. I am glad that the Minister has taken this step but I ask the Minister now to look more broadly than she is doing here and take into consideration that we need more than just what she has put in this piece of legislation.But here is the point: we have waited with bated breath all of this time for this particular Budget thinking—and we were all thinking—that they were going to take seriously some of the crises that this country is facing. Climate change is certainly a future crisis but it is coming. It is coming and it is here if you listen to the reports of the environment commissioner. Our coastal regions are being affected and local councils are trying to figure out how they pay for the roading restructuring that we need to deal with. This Government does not seem to really care about what will happen because it thinks that it will pass those costs on to somebody else.So again here is the thing: giving business the right to pollute but pay only half the cost was wrong at the outset when this Government introduced it in 2009. It is wrong now to focus on this only when it needs to take a broader approach in addressing this problem. But I tell you that the Pacific is relevant to what this country does because if those islands are underwater I would ask those Ministers and that Government there to show me where the tent city where they are going to house 110000 people from Kiribati should be. Show me where they want to put up the tent city where they need to house 10000 Tuvaluans. If we approach climate change with these baby steps we are never going to get anywhere we are not going to address the issue and it will continue to harm not only our physical infrastructure but also our reputation.MATT DOOCEY (National—Waimakariri): It is an honour and a pleasure to rise in support of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. Can I first just acknowledge my colleagues on this side of the House for their debate contributions so far. I think it has been a very balanced debate. I think they have taken small steps and if I had been able to bring in a polaroid camera I would have photographed them.Can I just pick up on some comments from my Green Party colleagues who said we were repeating lines to appease our voters. I think what is more important is when their colleagues their friends over in the UK the Green Party of England and Wales decided that our lamb had a bigger carbon footprint than UK lamb so it spread out its propaganda and said our lamb did not have a smaller contribution—James Shaw: I raise a point of order Mr Speaker. I think that if one member is not allowed to refer to islands in the Pacific another cannot refer to an island in the North Atlantic.The ASSISTANT SPEAKER (Lindsay Tisch): I thank the member for his comments. The point I made earlier was that there was quite a long dialogue on the Pacific Islands and I did bring the member back to that and we have dealt with that matter. Now I am listening closely to what this member is saying and if he goes on and spends all his time on that I will be on my feet again. To mention a country in passing is fine. Other than that I will move on it.MATT DOOCEY: I commend this bill to the House. [Interruption]The ASSISTANT SPEAKER (Lindsay Tisch): Order! We are going to have a vote and it will be done in silence.Bill read a first time.Second ReadingHon PAULA BENNETT (Minister for Climate Change Issues): I move That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a second time. I think we covered quite a lot in that first reading as far as being quite clear about how the transition is happening and why we are kind of phasing it in goes.We looked at a whole lot options to be fair on that. In some respect we looked at the price of fuel at the moment and the fact some of those costs might be passed on and we felt at that time that actually households were in a situation where they might take that bit of a lift. Would we look at 100 percent? But we then looked at businesses and certainly read those submissions we got and equally I think most importantly we looked at farmers. The additional cost that potentially goes to our farmers from the emissions that Fonterra itself emits and then of course its increased costs with the amount of fuel and electricity it uses—we did not want to be putting an undue burden on farmers at a time when they could probably least afford it with prices at the moment.So what we got from businesses the most was that what they wanted was certainty and the opportunity to do their outward projections obviously and take this into account. There were things like local government where they had already looked at what their spend would be. This has an effect on them particularly in their waste and so actually they would not have the money to pay for the additional cost if we actually rushed it in too quickly when they had already done their accounts and things as you can imagine. We needed to bring it in over time.I think when it comes to climate change for me I reckon—well for anyone who doubts it—I just do not think there can be any doubt at all. With all respect you do just need to look at some of our Pacific neighbours and it is pretty stark. You can see what is happening there. Equally I think this response through the emissions trading scheme (ETS) and us reducing can play a big part. It plays a part in respect of upping the price obviously for those businesses that are exposed to the ETS and as a consequence cost does affect behaviour. Our main reason for actually removing the one-for-two measure is that we believe it will actually affect businesses and how they are looking at their own emissions and the cost of them and we want to be encouraging them to work towards that lower-emission economy. It makes a big difference to us.The other aspect of it is that in putting in this cost and imposing it more back at business we wanted to do it in a way that did not affect jobs. I heard in the first reading people sort of talking about how we should have never brought it in. Well actually those were also people who were saying that jobs at that time were most important and there was a real risk back in 2009 that if we were having imposed costs that were beyond what people could actually cope with then they would be laying more staff off. That is certainly why it was introduced but we are at a very different—if you just look at the Budget today. What a fantastic Budget. If you look at the forward economy and what is happening if you can see the 3 percent growth coming our way if you can see another 170000 jobs coming in—Grant Robertson: What about the bill?Dr Megan Woods: The bill.Hon PAULA BENNETT: Well that is exactly the point—the 170000 jobs coming in mean businesses can actually afford now to pick up a bigger share of their costs of what they are doing and I reckon that is equally important in why we are looking at this measure.To say it is good for the Government’s books is pretty obvious. We are budgeting $356 million that is positive for the Government’s books over the next 4 years. But as I say that was based on $12 a unit which is what it was when we set this in place a few months ago. Well we are already at nearly $15 a unit today and everyone you speak to says it will not go back.The other point I am not sure has been made and another reason for removing the one-for-two measure is the fact that you have got 140 million New Zealand Units (NZUs) that are currently stockpiled. To be quite blunt with you I want to see some of them spent and this will mean some of those businesses that are stockpiling NZUs will actually spend them to pay for their share of the cost and that sort of thing. As a consequence that will have I think a positive effect on some of that behavioural change and put some challenges to us.I just want to say that on climate change as I sort of said my opinion if anyone is kind of doubting whether there are effects and if they are doubting that this will make a difference is that it will. But equally I reckon this is about our identity. Our identity actually is set in our land. It is set in our mountains in our beaches and in who we are. It does not matter if you are Māori or non-Māori. Actually that is for me what my identity as a New Zealander is quite encompassed of. So we need to look after this land. We can argue that our contributions globally are at you know 0.15 percent but actually this is about our economy. It is about who we are as a country and we have to be putting things in place further than what we already have. I really note the Minister of Transport and the difference he is making with electric vehicles and introducing other transport ways.This ETS removal of the one-for-two measure is one step and I do not say it is the answer but it is an important step in really letting businesses and the public know that change is coming and that we want to see that continuing as it does. I commend this second reading to the House and thank you very much.Dr MEGAN WOODS (Labour—Wigram): It is so soon to be taking a second call on this bill. It is comforting to hear from the Minister for Climate Change Issues that the measure may be joined by another measure to address climate change. Although we are supporting this single measure it simply is not going to be enough. The Minister told us that our identity is bound up in our natural landscapes in our mountains in our rivers. It is those mountains and those rivers and those glaciers that are being put under threat by the risk we are posing to our planet by climate change. Until the Government can join up its thinking on that we are going to get nowhere. I would like to put it to the Minister that actually this Government’s action on climate change is slower than the glacial retreat in this country. Glaciers are retreating in this country in our own country at a faster rate—on islands here at a much faster rate.The Minister talked about the great difference that this piece of legislation is going to make. Well the regulatory impact statement for this legislation tells us it is going to make a 0.7 percent reduction of net emissions in New Zealand in 2020 at each price. In terms of the efforts that New Zealand has to make to meet its post-Paris and its pre-Paris commitments around emissions reductions this is a tiny drop in the bucket. This is simply not enough. If this is all the Government has got we are in trouble. A 0.7 percent reduction in our emissions is simply tiny. This Government took to Paris and put on the table a 30 percent reduction on 2005 levels of emissions—an 11 percent reduction on 1990 levels. More action—The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.Sitting suspended from 6 p.m. to 7.30 p.m.Dr MEGAN WOODS: I am happy to take another short call on this piece of legislation. Before the dinner break we were talking about the very small contribution to our overall target that this piece of legislation will make in terms of the emissions trading scheme and the wider options in terms of the ways in which we can reach our pre-2020 targets and also our post-2020 targets. Remember this Government has signed up to a 50 percent reduction in our emissions by 2050 and we are simply not on a pathway to meet that in any way shape or form.So when members of the Government get up and they talk about their pragmatic sensible balanced view on climate change they treat it like it is something that they can choose to do or not. Rather than just reading the pap notes that they have been given they could have even flicked through the regulatory impact statement that sat alongside this bill where paragraph 6 on page 43—you might want to flick through now and have a little look—tells you that “Current NZ ETS policy settings do not put the New Zealand economy and Government in a good position to meet climate change targets and international obligations in the future.” The stark reality is that we are not doing what we need to do in order to protect our planet or to protect our economy into the future. So when the Minister says that they are having to balance jobs I say that by not acting on climate change this Government is putting our economy and the security of jobs at risk.Last year 232 people lost their jobs in my electorate in Wigram. They lost their jobs shelling mussels and they lost their jobs because the water in Northland was too warm for the mussel spat to grow and that plant was shut down. The research and development needed to do the breeding under new conditions simply had not kicked in. The response of the Minister Gerry Brownlee—in this case that Minister—was “Ah there’s plenty of work in Christchurch in the rebuild.” To go from shucking mussels to picking up a paint brush requires something in the middle and that is the role of Government. It is called skills training and it is about transition pathways and we are not seeing this.So when the Minister says that there are other measures coming to join this Climate Change Response (Removal of Transitional Measure) Amendment Bill we would like to see some other measures that do put us on a good clear pathway where we can protect our economy where we can futureproof it and where we can ensure that the security for workers in the 21st century is there and that their jobs are not going to move from under them. Avoiding any kind of shock in an economy requires careful planning and this Government simply is not doing that.The Government speakers when they are talking about their pragmatic sensible and balanced view on climate change might actually want to address what this bill does not do. They might want to address what the official advice says is the current state of our emissions reduction pathway. They may want to consider that there is going to be a 0.07 percent reduction in New Zealand’s net emissions through the piece of legislation that is being passed tonight. It is a tiny drop in the bucket and much more needs to be done. Labour supports this bill but it would like to see other measures join this measure. Thank you.SCOTT SIMPSON (National—Coromandel): It is a pleasure to take a quick call in the second reading debate of the bill which is designed to phase out in a very pragmatic very balanced very measured sensible and reasoned way the one-for-two transitional arrangements that were set up back in 2009 in the very depths of the global financial crisis. That was a policy that was set about quite deliberately—very carefully with a lot of considered thought—to ensure that businesses and jobs were protected.I know that it upsets Opposition members to talk about being pragmatic and being sensible and being balanced but that is the nature of good governance and good government and that is something that we have seen today expressed in Bill English’s eighth Budget. He has done it very very well in my view—pragmatic balanced and sending the right kinds of signals.The phasing out of the one-for-two emissions trading scheme (ETS) structure is actually really important. What is more it comes with the support of a very wide range of businesses. Last year there were some nationwide submissions consultative meetings that took place around the countryside. They included iwi and a whole wide range of interested parties and at those meetings 75 percent of submitters were in favour of phasing out the one-for-two.Paul Foster-Bell: How many?SCOTT SIMPSON: Seventy-five percent of submitters were in favour of phasing it out. So the Government did have options in terms of how that transition might take place. It would have perhaps been possible to simply start from where we were in 2009 and literally go cold turkey but we are not a Government that wants to do that. We are very keen to ensure that businesses and others have time to make the adjustments that are required and that is what this bill is about. Gradual phasing-out of the one-for-two is a really significant step in meeting our target to reduce emissions. I know Opposition members do not like to hear that but the simple reality is that that is so. Our target is to reduce emissions by 30 percent below 2005 levels by 2030.Earlier this year we were very pleased to sign up to the historic Paris Agreement and at the time parties from around Parliament thought that was a very good idea. That was because the Paris Agreement really does amount to what is the first global agreement on climate change. New Zealand was actually one of the very first countries outside Europe to set up an emissions trading scheme and this bill is about reviewing it about changing it—transitioning it to make it stronger to make it more effective—and about strengthening our ETS. If we can as a result of this legislation make the ETS more robust and help reduce emissions even further then that is a good thing and it does assist us to get to where we want to be in 2030. But in this space we have got to be smarter than other countries. We have to be more nimble and more clever and the reason for that is that already 80 percent of our electricity comes from renewables for instance. So our emissions profile is quite different to that of most other countries in the world; 80 percent of electricity coming from renewables is very very impressive. We would like to get it to 90 percent and I am confident that we will get it to 90 percent. We are committed to getting it to 90 percent but in Europe only about 12 percent is generated from renewables—only about 12 percent; only about 12 percent.So our emissions profile is completely different from that of most other developed countries. Ours is made up of agriculture for instance at about 49 percent as good as 50 percent; other energy at about 40 percent—non-transport at 23 percent transport at 17 percent—industrial processes at 6 percent; and waste at 5 percent. So our make-up is a different sort of model and style to other countries. That is why we do have to be more nimble more flexible and more smart actually in how we meet that target for 2030.This is a good and practical pragmatic reasonable balanced bill. I know that Opposition parties do not like that. They are going to be heartily sick of us talking about these things because we are a sensible reasonable pragmatic Government. I commend this bill to the House.GRANT ROBERTSON (Labour—Wellington Central): We will thank Scott Simpson for his version of Fox News that he just gave us there—reasonable and balanced. At this point in the proceedings I would like to spend a little bit of time reflecting on the select committee submissions that we had on this piece of legislation.Dr David Clark: I didn’t see those.GRANT ROBERTSON: Oh that is right—there were none because the Government has decided to put this bill through under urgency tonight. The Government knows that it has widespread support across the House for this measure so here would have been an opportunity. Do a first reading by all means; you have announced it in the Budget. Good on you! Then send the bill to a select committee so that New Zealanders can actually have a say about what is happening with one of the most significant issues facing the planet.Paul Foster-Bell: Already had a say—already had a say.GRANT ROBERTSON: Paul Foster-Bell says that they have already had a say. It is not good enough Mr Foster-Bell. It is a piece of legislation. It has got clauses in it. It has got things in it that might not be quite right. It would not surprise me if we were back in the House sometime in the next few months correcting this piece of legislation because there will be a mistake. That is what happens when we move in haste—we make mistakes. So that is what could well be happening.Right now I should be standing here saying: “Well I would like to thank Generation Zero for their excellent contribution to the select committee process. I would like to thank the business organisations right around the country that have come in and said: ‘This is a really interesting change. We can see why the Government is doing it but we want to see more to help create sustainable jobs.’ ”. I could be talking about all of those select committee submissions right now today and I cannot because the Government has decided that it had better do something important on Budget day; it had better look busy.It is very important to look busy on Budget day if you are the Government even if your Budget does not actually do anything to make the economy more sustainable to allow us to transition to a low-carbon economy and to allow us to help find the path to sustainable jobs right around New Zealand. That would be a fantastic thing to be debating today in the Budget but it is absent. It is not in the Budget. The Budget does not deliver a pathway forward to adjust the transition away from fossil fuels to a low-carbon economy. We all know we have got to do it. I even think members on the other side know that they have got to do it but there is no plan in the Budget for this.Is it not interesting that this bill is entitled the Climate Change Response (Removal of Transitional Measure) Amendment Bill? That really sums it up—just the one; just the one measure. It would be good to have seen something about measures perhaps but no just the one measure.As I have said everybody in this House certainly in the first reading supported this bill. I am sure that will continue to be the case as we go through. The one-for-two subsidy has had its day. It is quite clear that we need polluters to take more responsibility for what they do for the emissions that they have and this is one small step in that regard.I do note that in the Budget documents this will net the Crown about $356 million—not an insignificant sum of money you might say. Would it be good to see some of that money translated into some of the other initiatives that might actually promote a more sustainable New Zealand that might actually allow us to meet our climate change goals and targets? That would be a good thing. Sadly lacking in that regard.I see the Warm Up New Zealand funding is now $18 million over the next 2 years in comparison to the $100 million over 4 years that came before. I heard Simon Bridges say that the Warm Up New Zealand subsidies are now more targeted. Well that is an interesting idea because we are only about one-third of the way through retrofitting New Zealand homes for insulation so I do not think we are quite up to the targeting stage. I think we probably have a bit more work to do in New Zealand to get our housing stock up to the state of being both healthy and energy efficient.It would have been good to see some of the $356 million that the Government pockets today as a result of this change that we are passing in this legislation actually go on to being used to help create a more sustainable New Zealand but again there is no plan for that whatsoever in this piece of legislation.On this side of the House and I think this actually goes for all of the Opposition parties we have been calling on the Government for some time now to step up with a real plan on climate change—a plan that actually acknowledges what is happening in New Zealand today and what is happening in the world today. Members of the Government might care to take a trip down to my old home town where I grew up down in south Dunedin and check out what is now effectively a flood plain that has been created in south Dunedin.Large insurance companies are going to stop insuring the residents of south Dunedin within the next 10 years possibly even shorter. This is also going to be replicated in parts of Christchurch as Mr O’Rourke knows and in other parts of New Zealand as well. This is happening now. One single measure in a bill today is not enough. It is not even close to enough. It is a tiny little baby step.Our responsibility is to meet the targets that we have said are not being met. New Zealand’s emissions per capita are the fifth-highest out of 40 developed nations in 2012 and we have got a 19 percent increase in emissions since 2008 since National came in. They are not doing the job and they are selling out New Zealanders by not doing the job. Not only are those residents of south Dunedin—incidentally it is important to know that the community of south Dunedin is low-income and elderly. The most vulnerable people in New Zealand are living in one of the most vulnerable areas in New Zealand. This is what is happening with climate change. This is what is happening with sea-level rise and the Government just sits there and says: “Well we will put up one measure. We will do one measure today. We will try to do just enough to be seen to be doing something.”Just enough is not good enough. It is not good enough. We have got to be doing better than that. On this side of the House what we are seeking is a just transition to the change to a low-carbon economy one where we support communities through the change. We are not seeing enough action from the Government to deal with those industries that are changing and deal with those communities when things are changing. We have seen Huntly having a small extension. I think the Government should be in a community like Huntly right now today saying: “What are we doing to train and retrain people to give them new skills and to give them opportunities to generate wealth themselves?”. Those polluting industries are gone now; we know that.It is important for New Zealand as a country in terms of our image in the world and how we sell our products in the world that we lead the way on this. John Key has gone from being a fast follower or whatever it was he said he wanted to be to being a bewildered bystander. He has got no idea what to do when it comes to climate change. But he found this one. I am sure he found this measure because it earns him $356 million in a year where he needs to prop his surplus up a little bit. I am sure that is what he did here.We welcome the fact that the Government has taken this tiny little baby step but it needs to get into its big-kid clothes get out there and start taking proper steps towards a sustainable future for New Zealand and one where we take climate change seriously.The Labour Party would have liked today to see the Government with a clear pathway forward—not just a working group or a review or anything like that but an independent climate commission that actually starts setting proper carbon-budgeting goals that starts setting proper pathways forward for New Zealand and that puts out there in front of New Zealanders every single day what it is that we need to do to make this transition.This is not all doom and gloom. There are massive opportunities for New Zealand in transitioning to a low-carbon economy to build up our regions to create wealth for small businesses and to create wealth from innovation but this Government comes to us with one small simple tiny measure. Well under such urgent circumstances we commend and support this bill.SARAH DOWIE (National—Invercargill): As a balanced pragmatic sensible and reasonable MP and one who represents Invercargill and parts of Southland I am very pleased to take this call in support of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. I say again that this is a balanced pragmatic bill which looks to phase out in a staged way the one-to-two subsidy. The bill phases out the subsidy in the emissions trading scheme that allows some businesses to pay one emission unit for every two tonnes of pollution they emit and that is over a 3-year period.If I come back to Southland and what Southlanders believe we are a primary industry - driven economy and we are an export-driven economy. We have a lot of manufacturing in our region. Our region is one that is doing well: it is holding its own and it is one that is creating jobs for our people. In fact we have one of the lowest unemployment rates in New Zealand.My businesses in Southland are going to be very pleased about the staged process of redaction of the one-to-two scheme in this bill in the way that it is set out. It is a measured bill. It is a measured process of reducing this measure to make it sustainable for businesses to build that into their processes so that the money spent is not too onerous. As such I again say that this is a balanced and pragmatic bill and I commend this bill to the House.The ASSISTANT SPEAKER (Hon Trevor Mallard): James Shaw—I am hoping he has a different set of notes.JAMES SHAW (Co-Leader—Green): Mr Speaker—The ASSISTANT SPEAKER (Hon Trevor Mallard): I hope the speaker has a different set of notes.JAMES SHAW: Balanced pragmatic reasonable and robotic! Southland businesses I am sure will be delighted about this bill because it does not do anything. One of the previous speakers I think it was Mr Scott Simpson said that this is a really significant step in our challenge of meeting our global emissions reduction target. It is a 0.7 percent—0.7 percent—reduction in emissions. Is it significant? Give me a break. This is against a business-as-usual scenario. I thank Grant Robertson for pointing out again that all of the other measures are staying in place—all of the other measures—which means that the business-as-usual scenario of a 96 percent increase in our emissions above 1990 levels by the year 2030 is on track. This measure this single measure will reduce emissions by 0.7 percent from a 96 percent increase and that is against a target of reducing emissions by 11 percent. I mean it is absurd to think that this bill does anything to get us anywhere close to our actually frankly pathetic target of reducing emissions by 11 percent. I mean it is a pathetic measure against a pathetic target and business as usual is going to carry on.There are so many more things that we need to do if we actually want to do something about climate change but clearly this Government is far more interested in looking as if it is doing something about climate change. It has pulled one of the most acceptable measures from the current emissions trading scheme (ETS) review in order to get it into the Budget in order to be able to talk about it as if it was committed to doing something about climate change.I think it has occurred to the Government that after seven other Budgets it has not actually mentioned climate change and it is still a thing. It has been hiding away from it pretending that it is not happening business as usual is carrying on and let us just hope that if we do not mention it then you know no one will call peek-a-boo and say that it is actually happening. Well I think that after seven Budgets Government members have finally got to the point where it is like: “Oh actually no we do need to mention it; we do need to do something. What is the weakest-tea approach that we can take that enables us to talk about it during a Budget?”. And they have pulled out the two-for-one subsidy.It is great because this is of course the party of business—that pragmatic free-market party that likes to crow about how good it is for business—busy subsidising business under the cause of the emissions trading scheme with subsidies that apply to certain sectors over other sectors and subsidies in the form of the two-for-one deal. So the two-for-one deal is about to die a very deserved death even though by itself removing it is not going to fix New Zealand’s challenge of reaching our commitments on climate change right? It is not going to get us there but it does allow the Government to talk about how good it is and how much it is doing to fix climate change.The other thing that Grant Robertson said that I wanted to pick up on of course is that many many many years ago the Prime Minister said that we did not really want to be a leader on climate change; we wanted to be a fast follower. I think it would be great if we followed actually. I think that following would be a massive improvement on where we are now which is walking in the opposite direction from where the rest of the planet is going.If you look at what France is doing right now it is putting in place a NZ$50 minimum price per tonne on emissions and we are maintaining a price cap a maximum price of $25. In other words we can have a market in emissions as long as the price does not get above $25 which is about the minimum level that most economists think it would need to be for people to start making decisions about how they allocate land use what to invest in whether to get into the green economy or stay in the existing polluting economy and so on. In other words everything else that the Government is doing is going to make sure that our emissions continue to rise inexorably over the course of the next 15 years.The decision to keep the Huntly coal-fired power station open until 2022 means that there are millions of tonnes of carbon dioxide being poured into the atmosphere. It completely wipes out any gain that this bill will be making. The decision to continue to leave out agriculture and other subsidised polluting industries from the ETS means that you continue as Westpac economists have said to see a skew in the economy of investment towards those sectors that are being subsidised. That is what happens when you subsidise industries—investment flows subsequently. So we are incentivising people to move their money away from the high-value clean-tech green economy and into polluting industries that we subsidise under the existing and remaining measures of the emissions trading scheme. So as I said it would be nice if we actually did follow. Following would be good. It would be even better if we started following fast because the world is definitely moving in this direction.One of the other previous speakers said that this was about strengthening our emissions trading scheme. It would be amazing if our emissions trading scheme developed a spine of any description actually. It is a jellyfish. The purpose of an emissions trading scheme is to reduce emissions. Why would you introduce an emissions trading scheme if you did not want to reduce emissions? There is no point in having it. And yet in the time that our emissions trading scheme has been in place our emissions have gone up 19 percent. It is actually having the reverse effect that it is supposed to have because we continue to subsidise industries. We actually create an emissions trading scheme in which we pay people to pollute and we are taking money away from those industries that are cleaner and greener. It is a busted mechanism and it needs to be replaced forthwith.One of the other speakers previously said that you know New Zealand has a unique emissions profile. Well guess what? So does every country. Every country has a unique set of conditions that mean that its emissions profile is different from every single other country. Our emissions profile happens to be weighted towards agriculture. There are several other countries in the world that also have agriculture and they also have to deal with the same problem that we do.The United States is saying: “A majority of our energy comes from coal-fired power stations so it’s incredibly hard for us it’s so difficult for us to get out of coal-fired energy and into cleaner forms of energy. You know the United States is somehow unique.” It is an absurd statement to make. Every country has a unique profile. Every country needs to do what it can to reduce its emissions.One of the other things that people say about New Zealand’s emissions profile is that we are so small that we cannot make a difference. I was very encouraged at the beginning of this reading to hear Paula Bennett the Ministerfor Climate Change Issues put the point which people have argued in this country that we should not really do anything because we are such a small country. I am pleased to see that the Minister acknowledges that that is an absurd assertion. Actually over 40 percent of all global emissions come from countries that each individually emit less than 1 percent of global emissions. So to say that we are too small to make a difference is actually to let off all of those other countries in the world that like us emit less than 1 percent of global emissions or about 1 percent of global emissions. That means that you would have 40 percent of total global emissions going nowhere—well continuing to increase. So every single country needs to do its part based on an allocation of what is the total global carbon budget and how we derive from there on a per capita and development basis what our responsibility is.As Grant Robertson said before we are the fifth-highest per capita emitter of greenhouse gas emissions in the world. That is a staggering statistic. What we would need to do to even get to close to our share is well north of our target of an 11 percent reduction by the year 2030 which is the Government’s target. This bill is just—I mean it barely scratches the surface in terms of getting us there.Having said all of that as I have said before the Green Party will be supporting this bill. We will be introducing some amendments at the Committee stage in order to strengthen the bill and with any luck increase the percentage by which this bill will help to reduce New Zealand’s greenhouse gas emissions and get us even just a tiny bit closer to the target that the Government has set for itself. I commend the bill to the House.DENIS O’ROURKE (NZ First): Here in this bill is one small step for “Kiwi-kind” but one massive trip-up for climate change targets as far as New Zealand is concerned. Here is one small step in a complete absence of any genuine plan or strategy for New Zealand to achieve or even make any significant progress towards achieving its Paris commitments to climate change and the reduction of emissions. That is the truth of the matter there.I recently attended a forum in Christchurch on climate change. Chatham House Rules applied so I cannot quote anybody who was there but I can say that there were business people there. I was encouraged by the positive attitude that they had to taking some real steps towards the reduction in emissions for climate change purposes in New Zealand. It was very good to see that because they were enthusiastic and wanted to get things done. They had a pretty good understanding of what would be expected of them and they actually saw it as an opportunity for many of them to get a competitive advantage over other businesses that were not taking the actions that would be required.Other people present were from local government. They were calling out for central government leadership on these issues. In fact local government was champing at the bit. They wanted to hear from central government what its plans were so that local government could do its bit towards tackling climate change through the reduction in carbon dioxide emissions in particular. All we get in response from the Government is not only no leadership but no genuine action at all or vague commitments that actually amount to nothing much more than planning to plan for the future. All these months after the Paris commitments were given that is as far as we have got and now there is this minor insignificant step forward.I heard today from Government speakers about consultation and how wonderful it had been that 75 percent of those consulted would support this measure. But the truth is that there has actually been no consultation at all on the much more important question about what specific steps New Zealand will take to achieve its climate change commitments. There has been no talk about that no consultation at all and yet these people are waiting ready and waiting to be talked to to make a contribution to find out what is expected of them and then to take those actions that are expected of them.Business agriculture and local government are looking for Government leadership because they want to act. They need to know how they should act. Business people in particular need to know that there will be a level playing field that has to be achieved by a comprehensive raft of regulation. There is no other way of doing it. They want to see that in place so that they can take the actions they want to take. They need the benefit of research factual material that can be put in front of them by the Government so that they can back up the actions they are taking and get confidence that they are doing the right thing.But we are not seeing any of this from this Government. It is a complete void. There is a complete lack of consultation a complete lack of communication and actually a virtually complete lack of action other than this pathetic little measure we are seeing in this bill. In fact you could accurately call it nothing more than window dressing because that is all it is. It is such a minute contribution that it will actually make little or no progress at all towards a reduction in carbon dioxide emissions in New Zealand.I want to mention now some of the things I have read in Paula Bennett’s news release today. The first thing she says is: “The subsidy will be phased out over three years to give businesses time to plan and adjust to support a more stable market.” She then says: “The current 50 per cent unit cost will increase to 67 per cent from 1 January then 83 per cent from 1 January 2018 with all sectors in the ETS paying the full market price from 1 January 2019.” The third thing she says is: “The current price ceiling which caps units at $25 will remain.” And then for some strange reason she says: “This is a significant step in helping New Zealand meet its ambitious target of reducing emissions to 30 per cent below 2005 levels by 2030.”We are expected to believe that these measures are a significant step when in fact they are going to take 3 years to implement. As I said business people including those in the agricultural sector and in local government across the board in New Zealand are desperate for much more significant measures than these. They are willing to play their part but the Government is not telling them what to do. Instead it is telling them that as far as the emissions trading scheme is concerned it will take 3 years to get there. That is absolutely pathetic. The measure itself is pathetic enough but to actually take 3 years to get there is even more pathetic.Furthermore the current price ceiling that caps units at $25 will remain. So what that means is that we are going to have to wait for a very long time before we get a genuine market for the price of units in New Zealand. Without that actually being allowed to happen—because it will take 3 years for this measure alone to be implemented and even then there will be a price ceiling of $25—we are not actually going to see a genuine market in New Zealand emerge for a very long time. That time frame is totally unacceptable. It makes this measure as I have said nothing more than window dressing.The people of New Zealand especially the business people of New Zealand the people in the agricultural sector of New Zealand the people in local government and the public generally all deserve much stronger leadership from that Minister and this Government than a pathetic measure like this that will take 3 years to implement and in the absence of any genuine plan or strategy for the achievement of New Zealand’s climate change target as committed to in Paris all those months ago. Frankly if this is as good as this Government can deliver then it really deserves to be voted out of office at the next election. Let us hope that happens.PAUL FOSTER-BELL (National): That was a very tiring contribution from that member Denis O’Rourke who seems to have only two settings in any debate. Every bill that is put up before this House according to that member either is pathetic and window dressing or is the end of the world as we know it. It is just a great tragedy that he is not capable of taking a more sophisticated and nuanced approach to what I think is very balanced reasonable and pragmatic legislation that has been put up by this—The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat. I think we have now reached the point of relevance and repetition. I have warned members before that reading out the same set of notes is not allowed in the House and the member is I think the fourth person to do that.PAUL FOSTER-BELL: I raise a point of order Mr Speaker.The ASSISTANT SPEAKER (Hon Trevor Mallard): You are not going to argue with me Mr Foster-Bell are you?PAUL FOSTER-BELL: I am not going to argue with you Mr Assistant Speaker but I just wanted to point out I suppose that I was engaging in a response to points raised by the previous speaker.The ASSISTANT SPEAKER (Hon Trevor Mallard): Well I was pointing out to the member—and I think he is aware—that he was repeating the words that had been used by three other people in this debate and in fact I think he was actually reading them as well if he—[Interruption] Well maybe he has got them memorised.PAUL FOSTER-BELL: Thank you Mr Assistant Speaker. I am not actually reading from my notes at all; I have them here for convenient reference.But in any case this is a Government that is focused on protecting the environment—something that the previous Labour Government seemed to give very very little interest to. We have an excellent Minister for Climate Change Issues. This measure will cost New Zealand households—low to moderate income households—around about $30 to $40 per year. If the member wants more sweeping measures that are not window dressing in his words what sort of cost is he wanting to impose on New Zealand households? Would $300 or $400 a year or $3000 or $4000 a year—in Mr O’Rourke’s world—be sufficient to implement the sweeping and significant measures that he seems to want as opposed to what I think are utterly timely and very appropriate measures from this Government which has put considerable effort into retaining a position that is well-balanced?I commend the bill to the House.Dr KENNEDY GRAHAM (Green): Reflecting on the comments made in the second reading as opposed to the first reading and starting with the remarks by the Minister for Climate Change Issues commencing the second reading let me take the opportunity to pay tribute to the Minister. I think that her tenure in office is offering a whole new positive approach to climate policy in New Zealand and I think that we can all be hopeful that we can build more of a national consensus the kind with scope for respectful disagreement that exists in Europe. I am very hopeful that we can develop that as the months go by.The Minister from my recall in commencing the second reading made two fundamental points. I want to just comment and critique them. The first was—and it is there in the explanatory note—that the reason for the switch to the one-for-two measure back in 2009 was essentially in response to the global financial crisis (GFC) and a protective maternal concern for business in New Zealand which we all share; then again it was essentially extenuated in 2011 because things had not quite recovered sufficiently. In response I suggest that that was a missed opportunity on the part of the Government to seize the moment for a real conscious and cohesive national effort at a transformational pathway to a low-carbon economy. That was missed because the protective action of calibrating that surrender obligation in a way that the business people made it clear they felt comfortable with by definition meant that they were not going to change. You might have wished to have modified it a little bit but you did need to keep it in store such that the business community would move along the transition that Grant Robertson and James Shaw and others have mentioned.I do not hear the words much: “transformational pathway”; I do not hear the words “just transition” coming from National colleagues. I invite them seriously to start using those words so that we can start sharing in the framing of a future national climate policy. I would love to see a cross-party dialogue informally in advance of the implementation no doubt of the treaty examination of the Paris agreement that allows for both a just and effective transition in the next few years.Her second point was as she put it about identity. It was about identity of New Zealand and the way in which as individuals we Ministers and MPs and citizens identify with the land. Of course we all share that—no question about that. But I would toss it back and say that in caring about our land we are going to just have to recognise the magnitude and urgency of the climate crisis. If we go back to 1992 it was regarded as a major problem coming down the track but not a crisis. Well that was a quarter of a century ago when the framework convention established that. The principal Act of 2002 is already 14 years old. The Paris agreement reflects a qualitative change in the nature of the crisis. It is now upon us; it is a global crisis. New Zealand is not immune from it.We have to identify—and I will be putting forward a Supplementary Order Paper that tries to link the traditional framework convention obligations that inspires in the explanatory note the removal of the one-for-two and links it to the 2002 principal Act and links the 1992 framework convention to Paris and basically modernises it. Let us do that on a cross-party basis as well.To reiterate my final point is that I still am not sure that our colleagues across the aisle here recognise the magnitude of the problem. The current pledges guarantee 2.7 to 3 degrees. That is teetering between dangerous and catastrophic climate change. If the best we can do tonight is take these pragmatic principled baby steps to catastrophic climate change then we can flag it away. But I do not think that is in the intent of the Minister or her Government or her colleagues and so I put out the challenge to our National colleagues to work with Opposition members—Labour Green and New Zealand First—on a cross-party basis to develop a consensus in the future.Dr DAVID CLARK (Labour—Dunedin North): I want to share the sentiment that Dr Kennedy Graham has brought to this conversation. We know this measure is nothing but window dressing on behalf of the Government and we would push them to go a little further. We are supporting the bill—Ian McKelvie: Stop reading your notes.Dr DAVID CLARK: —because we think that—thank you for your advice. We support the bill because we support some baby steps towards a future where emissions reductions are a real part of it and where we can shift our economy towards a low-carbon economy that has real opportunity for New Zealanders.The regulatory impact statement which sadly is about all we have got in terms of submissions because we have skipped the stages that we would normally have in the debate tell us the direct cost is worth about 8 hours of GDP. That is pathetic as a signal. The opportunity on the other side of this is what is being lost. There is an opportunity. Grant Robertson raised the issue of re-educating those in Huntly to give them the opportunity of new skills development. That is what we would like to see on this side of the House.We believe that there is a real upside to the climate change downside where if New Zealand gets involved in developing new intellectual property and is on the upside of the technology we can seize an opportunity and raise living standards for New Zealanders instead of managing decline in a world that is facing catastrophic climate change.MATT DOOCEY (National—Waimakariri): Can I start where that last speaker Dr David Clark left off. I would like to congratulate all the parties in the House on getting behind this bill. At the end of the day we are aiming to move forward to get a target of reducing emissions to 30 percent under the 2005 level by 2030. If there is going to be a Minister who will do that in this House it is the Hon Paula Bennett who is driving this agenda forward.Picking up the themes around working in a globalised world I think we need to think about that and the role that we play in a globalised world. New Zealand has a significant part to play. I think we take our obligations about reducing climate change very seriously. We know that the Government has done a lot of work. This is just one tool in that work about uncoupling emissions to GDP growth. We know that since 1990 the GDP emission unit has reduced by 34 percent. So we have done some work—hey nothing is perfect—but we are moving forward. I commend this bill to the House.Su’a WILLIAM SIO (Labour—Māngere): It used to be that this country of ours used to look forward to Budget day. Both business and the workforce would look forward to it in the hopes that Budget day would somehow give them hope to achieve some of their own individual goals. But today was not such a day. I think the last day that people sort of had hope on Budget day was when the words were uttered in this House of the promise made by Mr Key—Scott Simpson: A decade of deficits.Su’a WILLIAM SIO: No—of a brighter future. The words were uttered about 8 years ago that New Zealanders would have a brighter future. We have fallen away from the track of that brighter future—so far away that it is just not laughable any more. I agree with some of my colleagues who have spoken that it is time for New Zealanders to start thinking about changing this Government; that things will only get better if there is a change of Government.You know it also used to be that on nights such as this the Government would be producing legislation under urgency that would implement something significant in that particular Budget. But tonight we have got only two pieces of legislation. There is this one here the Climate Change Response (Removal of Transitional Measure) Amendment Bill and this one does not take effect until 2017. I do not know why we have not had the benefit of forwarding this piece of legislation to our select committee process—a select committee process that is admired worldwide.Climate change is an international issue. It is a global crisis in which I do not believe that the information the intelligence or the knowledge that is required for us to find the right solution for us to move forward on this is found in this House least of all in that bunch over there. And so I would have thought that this Government would take the opportunity to send this piece of legislation to a select committee after the first reading and ensure that New Zealand as widely as possible had the opportunity to make submissions on it. But alas that is not the case. I do not know why we prolong this particular debate. It simply reduces—Paul Foster-Bell: Well don’t then.Su’a WILLIAM SIO: Well we are going to try to drag this out for as long as we can to punish that group there for not taking seriously the issues that New Zealand wanted to hear them fix tonight. That is not what happened tonight.I do want to come back and acknowledge the Minister for Climate Change Issues because as baby a step as this is it is an important step and the Labour Party is supporting it. And in fact by acknowledging the mistake that they made in 2009 it also puts in a bad light Mr Key the Hon Simon Bridges and that other fulla who is no longer a member of Parliament who went to the Paris meeting last year. They went to that meeting with all of our hopes and aspirations and we were thinking that they were going to come back and make a real commitment—real commitment—to the Paris agreement. This is all we get—this baby step.I want to challenge the Minister: this is your time. This is your time to take over the reins from Mr Key. This is your time to present a comprehensive plan about how we take seriously the issue of climate change. We are not immune from what is happening. She said earlier in her first reading speech that the Government introduced the temporary measure in 2009 because it did not want to see farmers hurt. Nobody wants to see farmers hurt. But she needs to take seriously that the issue here is about reducing significantly the fossil fuel emissions that we emit and sending a signal to the rest of the world that we are serious.The fact of the matter is this baby step suggests that she is going to do as little as possible with regard to our commitments to the Paris agreement because she knows that none of that matters until 2020. She knows that it is on a voluntary basis. She knows that as long as the Government kowtows to business and to the fossil fuel industry it will continue to receive the support that it has so far received in being elected for the past 8 years. But it does not resolve the issue that if we want to be able to position New Zealand in a far better position and reclaim our brand of a clean greener New Zealand then we have got to come up with much more than simply this.We have got to come up with a comprehensive plan—a plan that is going to reduce our fossil fuel emissions significantly a plan that is going to encourage innovation and encourage investment in cleaner fuel and a plan that is going to transition business into the kind of workforce that we need to ensure that we meet our international obligations. It is much more than just doing the right thing for the rest of the world. We have also got to do the right thing for our own country.Twice now this House has been presented with reports by the Parliamentary Commissioner for the Environment. In those last two reports this House should take note of how seriously she points out that we are now under threat from coastal erosion and that local governments around the coast of New Zealand are in fear of the kinds of costs that they are going to have to bear. This little action here actually increases that. It increases the threat that we have to face. It increases the threat that businesses have to face. It increases the threat that our workforce has to face. And so far we just seem to be thinking that this is going to be all right. It is not all right. It is not all right.The Minister might laugh when I say that it is her time. But I genuinely believe that. I genuinely believe that this is her time provided that she is genuine about going further than what is presented tonight. We are here to pass this legislation under urgency—and I agree with Grant Robertson that it almost appears as if we are trying to fool the rest of the country by appearing to be busy by appearing to do something because the Budget was lacklustre and did not address any of the significant crises that this country of ours faces. So I would encourage the Minister: look if you have taken this baby step go further. Take a giant leap. Take a giant leap and do the right thing. Come up with a comprehensive plan a plan where we encourage all of the great minds of this country to participate in formulating a plan that shows that we take seriously climate change we take seriously the impact of coastal erosions on our own country we take seriously also our obligation to stand in solidarity with the Pacific.The Pacific countries have said time and time again in the international arena that they are the canary in the tunnel. They are forewarning us of what is coming. What is happening to them is going to happen to us and so far we just seem to think that that is so far off. Islands are now underwater—as stated in the report that was released from Australia a couple of weeks back. Islands are underwater. More and more of those people living in the outer islands in the Pacific are moving into the main islands putting pressure on already pressured resources. Similarly we are going to have to decide what we do what our role is when those main islands come under threat. What do we do? Surely this Government can begin to think long term and come up with a comprehensive plan that realises how important this issue is for us and for the rest of the world.NUK KORAKO (National): Kia ora e Te Mana Whakawā e mihi atu ana ki a koe. It is my pleasure to be the final speaker on this bill. I have two very important points to finish off on. The first thing is that the bill does reflect the Government’s commitment to a low-carbon economy. The other one is that this also is a piece of legislation that is very grounded and if I dare say very pragmatic that shows the Government will not sacrifice our economy it will not sacrifice our businesses it will not sacrifice our people and economy on the altar of environmentalism. So on that note I would dearly commend this bill to the House. Kia ora.Bill read a second time.In CommitteeJAMI-LEE ROSS (Junior Whip—National): I seek leave for all questions in this debate to be taken as one debate and voted on separately.The CHAIRPERSON (Hon Trevor Mallard): Is there any objection to that process? There appears to be none.Parts 1 and 2 schedule and clauses 1 to 3Dr MEGAN WOODS (Labour—Wigram): As is the custom when we are under urgency the Committee stage is an important part of the legislative process in which to ask some of the questions that may have otherwise been asked in the select committee stage. I would like to put on the record that although Labour is supporting this legislation it is committed to cross-party approaches to climate change to produce enduring political solutions. I think all of us in this House understand that our response to climate change is going to outlast any Government. These are plans that we have to put in place that will take decades and I do think it would be preferable that we could do this kind of legislation in a way other than under urgency which is without a proper way for us to have good cross-party discussions about what good plans and good legislation would look like. That is something that we do hold dearly—to put in play our commitment to those enduring cross-party solutions.Some of the questions that I have for the Minister in the chair Paula Bennett and which I would appreciate some answers to are around the $25 cap that has been signalled with this legislation. The $25 price ceiling that was in the principal legislation is going to remain under this legislation. I would ask the Minister whether there is a time frame around that cap whether there is a time frame around lifting that cap and whether you have a plan in play for that to rise because we know that industry and business are planning for a far greater and higher price on carbon than that. We know Business New Zealand’s energy report that came out showed that it was modelling on a $60 to $115 price of carbon per tonne by 2050. So this is certainly not what industry is banking on—a $25 cap. I would be interested to hear from the Minister the kind of time frame that she has around that.I would also be interested to hear from the Minister whether or not there was any consideration of a price floor to be put in place to sit alongside the price ceiling because if we want to avoid a situation such as we got into with the hot air credits—with the dodgy credits that made their way into our emissions trading scheme (ETS) in an earlier part of our history which could have been avoided—a further protection we could put in place is by enacting a price floor. I would like to know whether the Minister received any advice on that and whether that was a consideration that she took on board.I would also like to now turn my attention to clause 7 of this legislation which is repealing the temporary suspension of allocation entitlement for eligible agricultural activities. I ask the Minister what the time line is for the anomalies that exist within the ETS. Forty-nine percent of the emissions in New Zealand come from agriculture and yet clause 7 is entrenching the idea that we have eligible and ineligible agricultural activities. If New Zealand wants to address its greenhouse gases then we have to address nitrous oxide and we have to address methane. There is very very sophisticated work going on around the world about how it is that we might account for different gases. Under the Kyoto Protocol it was one gas one price but we know that there is significant scientific work happening around the world about how the short-run and the long-run gases behave and how we may account for those differently.I would like to know the advice and the thinking from the Minister around when we are finally going to grasp the nettle of agriculture in our ETS because this legislation entrenches the giant subsidy that industry is handing out to agriculture. We are continuing to subsidise agriculture through our other productive industrial sectors in New Zealand. That is not something that can continue if New Zealand is ever going to meet its emissions reduction targets. To claim that we have a unique profile is not a “get out of jail free” card. Our unique profile means that we must act quickly. Waiting for the silver bullet of science and technology to develop some way where when you put carbohydrate through a ruminant it is not going to somehow produce methane or nitrous oxide is sheer folly. The science is not going to solve this—we simply have to put in place some other measures—and clause 7 is a further entrenchment of that. Those are some of my initial questions for the Minister in the chair.The CHAIRPERSON (Hon Trevor Mallard): Before I call the next member I think it is probably appropriate to inform the Committee that it is my intention to rule out one of James Shaw’s amendments and that is the one to insert a new clause 4AA. It is—and I think the member is probably aware of this fact—outside the scope of the bill. All other amendments so far received are in fact within scope.JAMES SHAW (Co-Leader—Green): I raise a point of order Mr Chairperson. Recognising that it may be unusual the original 2002 Act does not actually state in its purpose that we need to reduce our emissions in line with commitments because it predates our commitments. So the purpose of this amendment would be to amend the original Act because otherwise it would not give any effect to this bill. The purpose of this bill as stated in the preamble to this bill is to give effect to our commitment but the 2002 Act gives no effect to our commitment so we actually need to change the 2002 Act in order to give effect to this bill which is why we have put this amendment into place. I recognise that is kind of circular but the problem is that the current bill before the Committee would not actually have any force because the original 2002 Act is for a business-as-usual scenario not a reduction in our emissions by 11 percent below 1990 levels by the year 2030 which is the Government’s commitment. Is that clear?The CHAIRPERSON (Hon Trevor Mallard): I can hear what the Minister said. I am told by someone beside me that she would like to say something.Hon PAULA BENNETT (Minister for Climate Change Issues): If I am reading the amendment correctly then what the member is proposing is that it actually align with New Zealand’s nationally determined contribution. As the member would know we took an intended nationally determined contribution to Paris and that is still an intended nationally determined contribution until that is ratified and it has not been ratified and as a consequence of that we do not actually have a nationally determined contribution as per the Paris agreement yet.The CHAIRPERSON (Hon Trevor Mallard): What I am going to do is reiterate my ruling. If the Government becomes convinced that the scope of the bill needs to be widened by the inclusion of a clause such as this I am sure the Government will bring it back and seek the leave of the House to extend the scope of the bill or if it is possible for it to amend it. I have ruled it out on the basis of the advice that I have received from my right and left—although of course it is my decision—and if that as the member says renders the bill ineffectual then that is a problem that the Minister will have to sort out.Dr MEGAN WOODS (Labour—Wigram): I raise a point of order Mr Chairperson.The CHAIRPERSON (Hon Trevor Mallard): A new point of order Megan Woods?Dr MEGAN WOODS: It is seeking your clarification Mr Chairperson. Regarding the point the Minister made around that she is quite correct when she says that New Zealand does not have a nationally determined contribution at this stage until the Paris agreement is ratified by New Zealand. If that amendment was changed to an intended nationally determined contribution would that make a difference?The CHAIRPERSON (Hon Trevor Mallard): I thank the member for her contribution and I will go back to my original point and that is that it is not the responsibility of the Chair to sort out the scope of a bill—to extend the scope of the bill—to make it effective. This amendment even with its circular explanation is outside the scope of the bill and if the Government wants to sort it out that is something that it will have to do and we cannot do it by moving an out-of-scope amendment from the floor.Dr KENNEDY GRAHAM (Green): I take it Mr Chair that we are now all accepting your ruling that James Shaw’s amendment on the purpose—his particular amendment on the purpose—is out of scope?The CHAIRPERSON (Hon Trevor Mallard): Yes.Dr KENNEDY GRAHAM: So it is on the basis of that discerning understanding on my part that I had thought it was probably worthwhile to put forward a separate amendment which does not seek to amend the purpose of the principal Act. What it does is seek to elaborate upon clause 3 or amend clause 3 to ensure that it is more explicitly clear—because what I have done here is look to the explanatory note and the explanation in the explanatory note. The specific purpose is removing the one-for-two obligation but the broader purpose of doing that is to improve New Zealand’s ability to fulfil its international obligations and then with a view—and so what I did was I took the thrust of the explanatory note and entered it into clause 3. The original wording is: “This Act amends the Climate Change Response Act 2002 (the principal Act).” So this—Grant Robertson: Yep keep going.Dr KENNEDY GRAHAM: Well I am just craving the attention of the—I am insecure enough to crave the attention of the Chair and the Minister but I am confident that I can keep going. To improve the ability of—The CHAIRPERSON (Hon Trevor Mallard): I just want to make it clear to the member that we were having a discussion as to whether your particular amendment is in scope—Dr KENNEDY GRAHAM: Yes.The CHAIRPERSON (Hon Trevor Mallard): —and I have ruled that it is.Dr KENNEDY GRAHAM: Oh good—thank you. Then that saves me 30 minutes of elaboration as to why I think it is in scope. So the purpose now is to amend “(the principal Act) to improve the ability of the … ETS to fulfil its statutory purpose of helping New Zealand meet its international obligations under the … Framework Convention … (1992) in light of the Paris Agreement signed by New Zealand on 23 April …”. The point of doing that is to make it more explicitly clear what the purpose of removing the one-for-two obligation is—namely to improve our ability to meet our obligations under the 1992 framework convention but in light of the updated conditions that are reflected in the Paris Agreement of only 6 months ago. So I put it to the Minister—through you Mr Chair—and to colleagues that this is well worth doing because even if it were to just stand by itself independent of Mr James Shaw’s other proposed amendments which have some substance it would still none the less register the point that the one-for-two obligation is one aspect designed to improve our ability to meet the 1992 obligations updated in 2015. I think that stands by itself as being self-evident and worthy of doing.My interpretation would then be—and this now becomes a personal challenge—that the one-for-two obligation is inadequate by itself and that there is a range of other measures that will be needed for us to do that stated purpose but I do recognise that if the Government is determined this evening to confine it to just the one-for-one obligation we would support that. We have said we would support it and I would accept that as well but in doing so I would make the point that in our view it needs to be more than just the one-for-one obligation. As we develop more of a dialogue in the course of this year leading up to Marrakesh and the implementing legislation—the treaty examination of the Paris Agreement—we will be making that point in respectful dialogue with the Government. So on the strength of that I just recommend this amendment to the Committee.Dr DAVID CLARK (Labour—Dunedin North): I rise to speak to the amendment that has been put forward by Dr Kennedy Graham. I think it is a thoroughly sensible amendment and it brings the legislation into line with the need to start a process of carbon budgeting—of actually working towards our climate change goals. It specifies very clearly that that is where we intend to move and currently the Government does not have that explicit link in its own legislation. So this seems like a very sensible way forward and I want to thank Dr Graham for proposing the amendment. I think it is very helpful Dr Graham. It is very helpful to this Committee.Of course we on this side of the Chamber have long advocated for an independent climate commission that would establish such a carbon budgeting process which would shift us on to a path to achieving significant emissions reductions which is what we all agree needs to happen. The rhetoric on that side of the Chamber is about achieving emissions reduction targets but there is no plan. There is no way to get there. There is no intention expressed in the legislation to have a budgeting process or to actually align the spoken intention with any action whatsoever. So that is why I think Dr Graham has done us all a service in putting that down in very simple terms that the Government I hope can agree with because if the Government really is wanting to prove that it is true to its word then it will have no objection to this amendment. I cannot see how it could object to this amendment that Dr Kennedy Graham has put forward if it is true to its word.Dr Megan Woods: If they mean to meet it.Dr DAVID CLARK: If it means to meet the targets it will sign up to this amendment. So I am very interested to see whether the Minister for Climate Change Issues rises to her feet seizing the moment of opportunity to speak in favour of this simple amendment because then she would be saying that what the Government has said is credible and it understands that this is a way of getting there and of course the amendment leaves it the discretion to set out the carbon budgets and the targets itself. It leaves the Government the freedom of course to do that in the way it sees as being most meaningful but it says: “Actually we intend to back our words with some actions.” So that is why I wish to speak in favour of Dr Graham’s amendment.Su’a WILLIAM SIO (Labour—Māngere): I do not intend to take a long call. I just have a couple of questions that I would like to ask Minister Bennett and I hope that she can answer them. Clause 6 makes reference to “an eligible industrial activity”. I am just asking what the definition is for that term because in the principal Act there is not one. What is the meaning of “an eligible industrial activity”? My concern there is whether it is anything to do with burning coal or anything to do with diesel-generated activities. That is the first question.The second question relates to the regulatory impact statement. It makes reference to a number of organisations that the department consulted but it does not name those organisations individually. It just lumps them all together. I am interested to know whether the Minister would be prepared to reveal who the market intermediaries would be and who the individuals are in the non-governmental organisations and community groups concerned.I want to get a sense as to who was consulted by the organisation. Like I said there are no individual names from the organisation and because we have not been able to forward this to a select committee I am interested in whether the Minister would be able to make that information available. If she cannot tonight then she might like to table it before the final reading.Dr DAVID CLARK (Labour—Dunedin North): On a not completely dissimilar note—and I shall be very short in my contribution; I can see my colleagues looking at me wanting to make sure that I am indeed adding something substantive to the debate—as my colleague Su’a William Sio has pointed out there has not been a select committee process. I am interested in knowing—clauses 4 5 6 and 7 all refer to the date of 1 January 2019. That date is I suspect something that has been consulted on in the emissions trading scheme review. I am wanting to know what business has said about that date and the particular transition that is on offer. Obviously we have not had a full select committee process so we have not had feedback from business on the concrete proposal at the end as best I know but Minister Paula Bennett may have consulted in some capacity or may have had a separate process previously. I am interested to know the process and what the feedback was as to how this measure this timing was received by business as compared with other timings on offer—which could have been anything—and other transitional measures. We have got only one in this bill and that point has been made many times but how was this transitional measure and this timing received as opposed to others?Hon PAULA BENNETT (Minister for Climate Change Issues): This is just a response to a couple of things. One in response to the member David Clark is that certainly 75 percent of submitters supported the one-for-two measure going. In general what we got from business was that they wanted certainty. That was the most important thing and most definitely their ideal was that it was phased out over time—over 3 years and beyond to be quite honest. From their perspectives it gave them time to budget it meant that they could really look longer term and for a lot of them—we did look at all the options to be quite frank. I think I had three that I looked at very carefully: one was just all over in one shot to 100 percent; another was phasing out over 2 years; and then there was the 3-year option. Businesses were certainly interested in the 3-year option and the biggest reason that we went with what we did was in line with dairy to be quite honest. Dairy farmers do take a percentage of cost because of their transport and electricity usage and also because of Fonterra. Fonterra has still got a couple of coal-fired drying units in the South Island in particular that really do make it one of the biggest business emitters. It would pass that cost I am sure on to farmers and so we wanted to be considerate of that. At this time when we can see so many under so much financial pressure we did not want to be putting undue pressure on them in addition to that.The other thing is in response to the member Dr Megan Woods who earlier asked a couple of questions around the price caps and the price floor. Certainly the advice I have had on the price floor was that it is highly highly unlikely that the price will go down again and that is because of the markets how many are out there and the different prices that are going on. To the kinds of questions that the member had on when we will look at the cap again and when we will look at a whole lot of other measures: to be quite frank a lot of that is about when the world starts coming a bit more on board. At the moment as members know we have got only a few countries that have got an emissions trading scheme (ETS) and some different states in America.What I will say is that when I was in New York for the signing of the Paris Agreement there was a lot of talk about emissions trading schemes what they meant and the lessons that they learned from ours. Members in this House and in this debate have raised the point that ours ain’t perfect and there have certainly been times when the price has been so low that it has actually made no difference to be quite fair. So we have learnt some lessons—we have learnt lessons in what we will accept as units. We have learnt some lessons and we will take a hit for that I suppose in this debate but at the end of the day (a) we will not make them again and (b) I hope that we can pass on some of those learnings to other countries that are now seriously looking at introducing an ETS. But while you have businesses that are seriously trade exposed—I must admit before I started learning about this I was in one boat about how you wear the cost of what you do and you make decisions like that. Some of our businesses may not be perfect but actually the way they produce some of their goods is more efficient and less emission-polluting than some of their counterparts overseas and putting so much cost on them that they close down here would not mean that we would not have those goods still manufactured but that they would be manufactured in a less healthy way if you like—or a more polluting way—overseas and actually do more damage to our planet.I want to encourage other countries to look at an ETS. I want them to learn from some of the things that have happened as we have progressed it. It started under Labour and I am sure the architect who is not here right now would have a look and say there are things you would do differently. But we need to encourage other countries to equally take this really important step.JAMES SHAW (Co-Leader—Green): I want to respond to a few points of the Minister Paula Bennett’s just then. She said that only a few countries have an emissions trading scheme. This is correct but one of them is China which—as we all know—is a pretty big market and should be able to sustain any kind of interaction with it that we want. There are more countries that have got carbon taxes in place than have emissions trading schemes in place and one of the things that we have argued for some time is that a straightforward carbon tax where you recycle all of the revenue in the form of tax cuts to people and to businesses would actually be a far more transparent and predictable model. It does not necessarily exclude countries from working cross-border with each other to try to work out ways to reduce their emissions.There is a growing number of countries that have either carbon taxes or emissions trading schemes in place. This is moving at extreme speed so if we wanted to introduce this we would ask why we have to take 3 years to do this because in 3 years’ time the world will be a much much more different place than it is now in reference to these kinds of mechanisms. I mean it is a very different place now than it was 3 years ago—3 years ago China did not have an emissions trading scheme or any carbon taxes in place and it does now.I also want to just mention in reference to the question about a floor price that yes the advice is that it is unlikely to drop below where it is now. If that is the case why not put a floor price in place to be sure and to absolutely secure it—to remove that likelihood completely? You would only not put one in place if you felt that actually there was a chance it would drop below the current price. Of course the current price—I think it is trading at about $14—is not yet enough for farmers foresters and other businesses to be making investment decisions about putting their money into lower-carbon and therefore cheaper forms of industry so the price has to rise if it is going to have any real effect. I cannot remember the study but there was one in the last 6 months that said that the price would need to be about $50 a tonne before people started really making major choices about where they directed their investment in the economy. I just want to note again that France last week put in place a NZ$50-a-tonne price for 2017 which is just next year. They are moving very very quickly so it is disappointing that we are not.I do accept the difficulty of trade-exposed industries and of course New Zealand Steel is a really obvious one. It is a major employer in South Auckland. It has got 1000 people working there and I think an extended community running into several thousands of people and it is in very difficult times with or without a price on carbon. But one of the options that the Minister could explore is to remove the subsidy and bring trade-exposed industries into the emissions trading scheme and then put a border adjustment in place so that imported steel—in this case—was subject to the same carbon price as domestically produced steel and that would mean that they could compete on an even basis. It would mean that the consumer of that steel actually has to carry that price and the consumer is therefore making decisions about whether they can get more efficient with their use of steel or could they be looking at other lower-carbon goods for example laminated wood beams which are as good as steel in some circumstances.So we would argue that there are ways of managing those kinds of considerations which would actually move us in the direction of a lower-carbon economy whereas continuing to leave those sectors out of the emissions trading scheme and continuing that subsidy actually continues to fuel growth in emissions and it does not move those industries towards actually doing anything to reduce their emissions.JULIE ANNE GENTER (Green): I thought one of the interesting admissions from the National Government today in reference to the Climate Change Response (Removing of Transitional Measure) Amendment Bill was when the Minister of Finance Bill English admitted in his speech that closing this loophole in the emissions trading scheme is going to have an impact on the Crown’s operating surplus to the tune of about $300 million over 4 years. Effectively what we are learning from this is that any deferral of payment that we grant to industries that are polluting—whatever they are—so that they do not have to pay the full price means that taxpayers are picking up their tab.So now taxpayers are going to benefit from the closing of this loophole which is great. I thank the Minister for Climate Change Issues for bringing this small change to the House today—we absolutely support it—but we need to go further than that and we need to be honest about the fact that there is a cost involved in this pollution and that if the polluters themselves are not facing that cost there will be more pollution than there would optimally be. It is taxpayers but not just taxpayers here in New Zealand; it is actually all of us as inhabitants of planet Earth who are paying this cost particularly future generations.What I notice in the regulatory impact statement work on this bill which we have not had much time to look at—I regret that this legislation is having a shortened process because it would have been interesting to see whetherin going through a more full select committee process we could have made additional improvements to this bill—what I see in here is this fundamental tension that I think the National Government is facing which is how to make the emissions trading scheme work when it is supposed to put a price on pollution and how to make it work without making polluters face the cost of their pollution. That seems to be embedded—the risk and cost associated with actually putting a price on pollution. That has been the fundamental problem with the whole approach.If we want to truly take action on climate change and if we want to reduce carbon pollution and transition to an economy that is not reliant on increasing carbon pollution polluters are going to have to face the cost and that is what is going to drive the innovation. Yes the Government can supplement that with investment in low-carbon infrastructure that gives businesses and households more choices and ability to avoid paying the cost—which unfortunately I do not think this Government is doing enough of. Yes the Government can help smooth the transition but we should have started sooner. We have to be more ambitious now because we are running out of time for this transition to take place and the longer we put it off the more expensive and difficult it is going to be.It is wonderful that we have this tiny move in the right direction by closing the subsidy. I personally think phasing it in over 3 years is too long. It is too slow and it is too much of a concession to polluting industries which have fought paying the true cost of their activities for over a decade now. They will continue to do so and they will continue to say they are going to be disadvantaged but just because they are disadvantaged does not mean the economy is disadvantaged because there will be new jobs created in clean industries and that is what every piece of environmental regulation and legislation that has been put into place has shown. Everybody screams bloody murder and says that there are going to be job losses left and right that it is going to be the end of the world as we know it and that it is going to be the end of the economy.No. What happens? People in business adapt and they innovate. If we really backed New Zealanders to innovate then we would not be deferring a price on pollution for industries that are polluting. We would be putting it there and saying: “How are we going to now fix this problem and reduce our pollution and provide real options to consumers?”. That is the real world—that is how it works. That is entirely in line with economic theory but it does not work I think for this National Government because ultimately it is defending the status quo and it does not believe in change and transition enough. It does not back New Zealand enough to say: “We will rise to the challenge of climate change and come up with better solutions.”As my colleague James Shaw said earlier a better way to deal with trade-exposed industries is border tariff adjustments but another thing to do is to be leading in our international trading negotiations and making a fair price for carbon pollution a priority in any international trade negotiations because the fate of the world rests in our hands. If we are sitting around talking about the future of trade the future of the economy and negotiating deals like the Trans-Pacific Partnership agreement and other trade agreements the Government needs to be responding to climate change first.Dr KENNEDY GRAHAM (Green): I just want to pick up perhaps where Julie Anne Genter has left off and just draw the attention of the Committee to the regulatory impact statement in a little bit further detail. We have not had much time as has been pointed out to explore it. But the Minister for Climate Change Issues has said—and probably only she could say it with the grace that she did—that the Government is no doubt about to take a few hits here and there along the way to restoring the one-for-one. That is all good fun in the Chamber here but I do not think she needs to look to Opposition members necessarily for those hits. She has got it right there in the regulatory impact statement I suggest.The Ministry for the Environment has not spared the Government much in its own analysis of things. The ministry’s regulatory impact statement does recall in paragraph 10 what we all ourselves recall which is that the transitional phase and the changes to the original emissions trading scheme back in 2009 did a number of things. It introduced the one-for-two it deferred agriculture—the primary ones—and it continued free allocation. Those were probably the three and then the fourth which was not changed but should have been was that it allowed the continuation of these semi-fraudulent credits which lack environmental integrity to come in allowing this country’s policies to become one-quarter corrupt.I think that is arguably in terms of our own integrity the single biggest mistake in our policy over the last 7 or 8 years. That has got us into the strife that we are in but if we then turn to page 43 and look at the heading that the ministry has identified here “NZ ETS design and operation is inefficient in light of changed circumstances” that to me is the single most significant point made in the regulatory impact statement.What it is saying is that whatever the merits of those transitional phase changes we did to the original Labour emissions trading scheme back in 2009—whatever they were whatever the merits—they are obsolete now in light of the changed circumstances and especially with what is encapsulated in the Paris Agreement. And if you look at paragraph 7 the ministry is essentially scolding the Government: “In the absence of clear aims for the carbon market established by the Government this means unit supply for the NZ ETS over the long term is unclear. This does not allow participants to form expectations about the future emissions price path and factor this into investment decisions.”In paragraph 8 it talks about “the NZ ETS being over-supplied by 150 million units over the period 2021-2030. On the demand side one-for-two undermines the principle that one unit should equal one tonne of emissions. Its presence is a barrier to aligning the NZ ETS level of ambition with the national target which is on a one for one basis.” We could probably get a common denominator across the parties here and just conclude that the benign interpretation is that things have changed so fundamentally that those 2009 transitions are now immediately rendered archaic and obsolete.I sense that the Government and especially the Minister is recognising some fundamental things have to happen. OK—restoring one-for-one tonight is a very good first step and we are going to vote for it but it is a baby step and there is a need—hence my amendment. But beyond my amendment I would just implore the Government through the Minister when the time comes for the Paris Agreement to come down the track and into this House to recognise that that is the ultimate and arguably the most critical opportunity for this House cross-party to get its act together as a country and to move forward.I am sure I speak for the Green Party when I say that we will be very much prepared to bring a constructive and positive approach to a cross-party dialogue pertaining to the Paris Agreement including the implementing legislation. Let us not shy away from that challenge. Let us do it altogether and let us take a constructive approach to it. Thank you very much.JAMES SHAW (Co-Leader—Green): Just following on from what my colleague Dr Kennedy Graham was suggesting I would like to introduce two further amendments in my name. One of these is to amend the title of the bill so that the title clause would read: “This Act is the Climate Change Response (Removal of one Transitional Measure) Amendment Act 2016.” It has been noted on a number of occasions during the debate that there are in place a number of transitional measures that are not being removed as a result of this bill. What we are suggesting is that a more accurate title for the bill would be that this is the removal of one transitional measure rather than all of them or rather than several measures. If the Government is not comfortable with that I would be happy to have that changed to “Removal of a Transitional Measure”. The point is that it is a single measure rather than a plurality of measures and of course that it is a specific single measure which is to remove the one-for-two subsidy transitional measure under the emissions trading scheme.Related to that I have a further amendment which is to change clauses 4 5 and 8. What that would do—if we were to do it as read and I am happy to read it out—is instead of phasing in the removal of the two-for-one subsidy it would essentially bring it back to its original starting point which is that it would simply happen immediately. So the two-for-one deal would be removed immediately rather than get phased out over the course of 3 years. I know that there has been a number of very similar speeches tonight about how it is pragmatic and reasonable and responsible—and some other adjectives—to phase it in because of the woeful burden apparently that business will have to suffer as a result of removing the two-for-one deal. But of course what we know is that the removal of the two-for-one deal will carry a total cost to the economy of 0.1 percent of GDP. I think it was said that it is essentially 8 hours of productivity. In other words we can all take a day off for climate change.If we were to remove it immediately that would mean that those 8 hours of productivity—we would carry that cost immediately rather than a third of that each year which is I guess just under 2½ hours per year. It is a minor cost and the reason I am suggesting it is the urgency with which we need to act on climate change because we have done nothing about it for 2½ decades. It has been 24 years since the introduction of the United Nations Framework Convention on Climate Change. We have been negotiating globally for more than half my entire life about what to do about climate change and we came up with the Paris Agreement last year as a result. Earlier today somebody asked why it was that we needed to introduce this bill under urgency and I wanted to say that it was urgent 24 years ago when the world created the framework convention. It was urgent 2 decades ago when National Government Minister for the Environment Simon Upton proposed to his Cabinet that there be a price on carbon and his Cabinet voted that proposal down. It was also urgent when Bill English in Opposition drove a tractor up the steps of Parliament to protest the introduction of a—Hon Members: Shane Ardern.JAMES SHAW: —sorry—Shane Ardern drove a tractor up the steps of Parliament to protest the introduction of a levy that would have paid for research into how to reduce agricultural greenhouse gas emissions. It was urgent last December when we signed up to the Paris Agreement and so it is urgent tonight.The Chinese have a saying which is: “The best time to plant a tree is 20 years ago but the second-best time is today.” We did not take action over the past 2½ decades. New Zealand’s emissions and our contribution to climate change have grown inexorably over the course of those 2½ decades and so we would suggest strongly that this amendment to the bill because it is such a minor contribution to what we need to do should be introduced immediately rather than phased in over 3 years. Thank you.Dr DAVID CLARK (Labour—Dunedin North): I do want to speak briefly to the title and the amendment put forward by Mr James Shaw. The suggestion that we call it the “Climate Change Response (Removal of one Transitional Measure) Amendment Bill” is entirely accurate and emphasises the point that this is a timid first step by the Government on a journey to address climate change. As we have seen there seems to have been universal agreement breaking out around the Committee about the need to take some measures. We have got a strong disagreement about how much should be done and on this side of the Chamber of course we would like to see real and genuine progress but the suggestion that we change the name of the bill to be “Climate Change Response (Removal of one Transitional Measure) Amendment Bill” is something that we could support. We could insert words like “Merely” or “Not More Than” or a number of other phrases to emphasise the point but that would certainly be a more accurate way of stating it. So in that vein I would like to support that very sensible suggestion put forward by Mr Shaw. Thank you.Hon Members: Mr Chair.The CHAIRPERSON (Hon Chester Borrows): Oh here we go! I call Denis O’Rourke.DENIS O’ROURKE (NZ First): Mr Chairman thank you—good choice. I rise to take just a brief call to comment on the three amendments that I have before me from the Green Party. The first one is the simplest one which just refers to the change of title. It is a very good suggestion that it should refer to the “Removal of one Transitional Measure” simply because that is actually what it is so I expect that everybody in the Committee would want to vote for that. New Zealand First would certainly support it.I wanted particularly though to speak in support of James Shaw’s amendment that effectively would abolish the phase-in period. I spoke to that in my second reading speech in which I said that I saw no reason for such a very long phase-in period or indeed any phase-in period at all. I also said and I say again now that many businesses local government and the people of New Zealand generally want to see strong leadership on this. They will not understand or accept or wish to support a 3-year phase-in period for any of the reasons that were given by the Minister for Climate Change Issues when she spoke about this a few minutes ago. There is in fact no justification that I can see for such a very long delay in implementing this actually very simple measure.The reason for that is quite simply that businesses have known for a long time now that the current arrangements were transitional so if they have not seen the writing that is on the wall then the fault is theirs. But I think they are ready for it. I said that I have been recently to a forum in Christchurch in which I was pleased to hear businesses talk about their readiness to take actions that they can to assist in the achievement of New Zealand’s objectives in reducing greenhouse gas emissions to avoid sea-level rise and all the other adverse effects and to achieve the obligations that this country has signed up to in the Paris Agreement. So the upshot of all that is that actually no time is really needed. All it does is show the Government’s weakness when it comes to the implementation of even this very minor very straightforward and obviously needed measure to end those transitional arrangements. No more time is needed and in fact a little bit of a shock to the business community would not do any harm because it would galvanise it into action. I do not accept that there would really be any significant harm to those businesses or to New Zealand’s trading position as a result of doing that. So for those reasons New Zealand First would have no hesitation in supporting this amendment to abolish the phase-in period.The other amendment which we would also support is Kennedy Graham’s one relating to clause 3. The alternative words that are used there “to improve the ability of the NZ ETS to fulfil its statutory purpose of helping New Zealand meet its international obligations under the United Nations Framework Convention on Climate Change (1992) in light of the Paris Agreement signed by New Zealand on 23 April 2016.” are a good and proper statement of the purpose for this measure and point to the way things need to go in the future. So I will end it there but New Zealand First for those reasons will have no hesitation in supporting all three of those amendments and I hope and expect the Government will see the light and do so as well.EUGENIE SAGE (Green): Tēnā koe Mr Chair thank you. It is bizarre that we are debating this bill under urgency when it does not come into force until 1 January 2017 and Part 2 does not come into force until 1 January 2019. Why are we debating it under urgency? Is that because the Government was too scared to call for submissions and have a public debate on the lack of any decent progress towards tackling our emissions to reduce climate pollution? Because one of the most inspiring Government-organised meetings I have been to about climate change was the Government’s consultation meeting last year on New Zealand’s emission targets before we went to Paris. It was not inspiring for the video that the Ministry for the Environment showed which was incredibly defeatist about the obstacles to a low-carbon future but it was inspiring because hundreds of people came and hundreds of people there were still wanting to speak at the end of the 2-hour meeting. They had plenty to say about what we could be doing to reduce climate pollution in New Zealand.That is where the Government totally fails to get it. As James Shaw said it does not get climate change. It also does not get the desire of New Zealanders all around this country of ours to do something definite—to have a plan about reducing our emissions. People want a stable climate. They want to protect our future and the future of their children and their children’s children. They want to protect the basis of our economy. People want a plan. This Government with this damp squib of a bill is failing to provide that leadership. People all around New Zealand are getting loud on the climate. We have seen that with the break-free actions to move away from fossil fuels that we have seen over recent weeks. Yet this bill will reduce our emissions by only 0.7 percent. That is not good enough when we have got a target of reducing emissions by 11 percent.It was really interesting to have a look at the regulatory impact statement. One of the reasons for this delay in implementation is because of what has been described as the risk of increased cost to the dairy sector. Because agriculture is totally exempt from the emissions trading scheme those costs of course are to the processers—Fonterra and the milk processing companies—because they use coal to dry the milk. Those costs are passed on a wee bit to the suppliers. The regulatory impact statement estimates that there will be an increase of costs between $1500 and $5000 a year for the average dairy farmer. Because of the losses that dairy farmers are expected to make in the current season this is seen as one of the factors in delaying the implementation of the bill. But that sums up what is wrong about the Government’s whole approach to climate pollution. It is not giving the incentives to change.There was a very good presentation in Parliament last night—or in the building outside the Chamber—from Apiculture New Zealand. Its plan is to actually plant mānuka over large areas to increase our bee industry to increase the income we get from honey exports and make that a billion-dollar industry. Yet this bill and the Government’s failure to lead on climate mean that we are not getting that encouragement for a change in land use—to move away from climate pollution - land uses such as agriculture and dairying with the major methane and nitrous oxide emissions that we get from cows. Bees do not produce nitrous oxide or methane. If we had a decent climate plan we would get a shift in land use away from dairying to much more sustainable land uses across Aotearoa New Zealand but by failing to lead the Government is stifling innovation. It is leaving us stuck with climate-polluting activities like intensive dairying. That is why this bill really fails.We are supporting the bill in the Green Party because it is a baby step but it is completely timid and it fails to listen to New Zealanders around the country who want leadership on climate change in the same way that we have led in terms of being nuclear-free and have led in terms of women getting the right to vote. This bill fails to lead.JULIE ANNE GENTER (Green): I wanted to stand up and take another call to just reframe this a little bit for the Government perhaps in a way that National would understand better because I think it is very easy—[Interruption]—I am sorry I am not saying that—The CHAIRPERSON (Hon Chester Borrows): Yes you are.JULIE ANNE GENTER: No I am not. I am not trying to be condescending. I am really not—nobody believes me!In the Green Party it is natural for us to say that we want to protect the planet and we care about future generations. We really care about that. That is a core value. I know that is an ancillary value for some National Party people like the Bluegreens but core values for the National Party I think are doing well competition and being successful in business. If I could just put it this way: climate change is the biggest economic opportunity of the 21st century—responding to it that is. It is also potentially the greatest economic threat to human civilisation—the entire history of it. You can look at it as a threat or you can look at it as an opportunity but either way if humans are going to continue to thrive in the future we are going to have to change the way that we do things.The economy is not something that we serve; the economy just describes how we spend our time and how we allocate resources. Right? We cannot continue to allocate resources and spend our time in ways that continue to put carbon emissions into the atmosphere. It is just not possible. The scientists have told us that. If we went to a doctor—you go to the doctor and the doctor tells you that you have got to change your lifestyle because you have got diabetes and you are at risk of a heart attack and you are at risk of dying. You might like to continue doing the things you are doing—that might be more comfortable in the short term—but if you want to save your life you are going to have to do some things that in the short term are a little bit difficult but in the long term are going to enrich your life and give you a better quality of life. They are things like changing your diet or your exercise regime or whatever it is the doctor is telling you. Basically it is exactly the same thing right now. Scientists are telling us that we cannot continue to put carbon emissions and greenhouse gases into the atmosphere.It is a false dichotomy to say we cannot afford to do what we need to do to reduce emissions. We cannot afford not to. We needed to start 20 years ago but we still can start today. Maybe if you consider it as an economic opportunity—the sooner New Zealand moves the better off we are going to be because we are going to seize this transition to a low-carbon economy. We are going to seize that opportunity because we know we have to do it. We know we have to do it. So why do we not start now? It is not the industries who are going to you saying: “We cannot afford to pay this yet. We are trade exposed. We cannot do this. We cannot do that.”—they are not the ones who are going to lead us into the economically successful future.The CHAIRPERSON (Hon Chester Borrows): We are in the Committee stage. It sounds like a third reading speech.JULIE ANNE GENTER: Completely understood Mr Chair.The CHAIRPERSON (Hon Chester Borrows): A number of us wish it was.JULIE ANNE GENTER: Completely understood. I just think that within the regulatory impact statement for this bill it demonstrates the kind of to and fro that the Government is having with the business community. The reality is that this bill is not going to reduce emissions more than 0.7 percent which is not enough for us to meet the Government’s weak target let alone the target we need to meet to avoid dangerous climate change. We have got a choice here as a country about how we confront climate change and this bill is leading us down the path of doing nothing meaningful and waiting too long and ultimately we are going to pay the cost for that.Dr KENNEDY GRAHAM (Green): I just want to if I may conclude my remarks in support of my typescript amendment with the following comment. At the end of the typescript amendment I do make the point of explicitly saying “in light of the Paris Agreement signed by New Zealand” and I think that is the critical point I want to bring to the attention of the Committee. The Paris Agreement dated December 2015 is the one that is directly relevant to how we as a global community and a national community now plan our transformational pathway to a low-carbon economy over the next 15 years and the next half century.But the Paris Agreement makes one other thing very very clear and that is that the current intended nationally determined contributions are insufficient. I do not have it in front of me but the wording is pretty close to “current intended nationally determined contributions fall well short of what is required for a 2 degree pathway”—well short of what is required for 2 degrees. The agreement also says that global emissions need to get down to neutrality sometime in the second half of the 21st century. The experts tell us that that really means—because it was fudged a bit by the governments at Paris—that we are really taking about 2060 to 2080 and the general agreement consensus is that it is the 2070s. So we are talking about global neutrality by 2070.The Paris agreement also says that notwithstanding the universality dimension of Paris which was the major and qualitative step forward “developed countries must continue to take the lead”. Most almost all experts recognise that that means that developed countries have to get close to carbon zero around about 2050-60 so that the developing countries can follow. I have heard one breath-taking theory that New Zealand could allow itself carbon neutrality around 2090 and still be consistent with the 2 degree pathway—it is true—thereby implying if that were the case for all developed countries that the other 160-odd States parties would all fall into line brilliantly in the 10 years 2090 to 2100.But set that aside for the moment. The general consensus is that the developed countries have to aim for carbon neutrality—and some are formally stating that now—by the middle of the 21st century and then the developing countries in the latter part of the 21st century. If you take that we have to then recognise in all humility and I will share the humility with the Government that a 50 percent target for New Zealand in 2050 is demonstrably inadequate.For what it is worth I will conclude on this: the Green Party did make it clear last year that we believe that a 40 percent cut by 2030 is entirely possible. That rests on research that we have commissioned from experts around the country that makes it clear that if you adopted a set of benign assumptions if you assumed the best of all worlds in New Zealand—policy optimality political consensus private-public collaboration linear improvements in technology best practices in the farms the firms and the households; just an optimal benign scenario for New Zealand—you could get way beyond that. “So what would be the theoretical maximum potential mitigation in that situation?” the experts say and then you bring all those figures together and you can go way beyond 40 percent. You can perhaps get as far as 60 or 70 percent.In the real world we are all realistic enough to know that that may not happen but it is worth exploring the theoretical potential in the best of all worlds and then challenge ourselves—every political party every individual MP the Government every individual Cabinet Minister and every individual New Zealand citizen—to aspire to that. Let us start the dialogue. Thank you.The CHAIRPERSON (Hon Chester Borrows): Members James Shaw’s tabled amendment inserting new clause 4AA is out of order as it is outside the scope of the bill.The question was put that the following amendments in the name of James Shaw to clauses 4 5 and 8 be agreed to:replace clause 4 with:(4)Section 63A repealed (Modification of liability to surrender units to cover certain emissions);repeal section 63A;replace clause 5 with:(5)Section 64A repealed (Modification of entitlement to receive New Zealand units for removal activities);repeal section 64A;replace clause 8 with:(8)Section 84A repealed (Temporary suspension of allocation entitlement for eligible industrial activities) andrepeal section 84A.A party vote was called for on the question That the amendments be agreed to.Ayes 58New Zealand Labour 32; Green Party 14; New Zealand First 12.Noes 63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Amendments not agreed to.The question was put that the following amendment in the name of James Shaw to clause 1 be agreed to:Replace clause 1 with:(1)TitleThis Act is the Climate Change Response (Removal of One Transitional Measure) Amendment Act 2016.A party vote was called for on the question That the amendment be agreed to.Ayes 58New Zealand Labour 32; Green Party 14; New Zealand First 12.Noes 63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Amendment not agreed to.The question was put that the following amendment in the name of Dr Kennedy Graham to clause 3 be agreed to:Replace clause 3 with:(3)Principle ActThis Act amends the Climate Change Response Act 2002 (the principal Act) to improve the ability of the NZ ETS to fulfil its statutory purpose of helping New Zealand meet it international obligations under the United Nations Framework Convention on Climate Change (1992) in light of the Paris Agreement signed by New Zealand on 23 April 2016.A party vote was called for on the question That the amendment be agreed to.Ayes 58New Zealand Labour 32; Green Party 14; New Zealand First 12.Noes 63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Amendment not agreed to.Parts 1 and 2 schedule and clauses 1 to 3 agreed to.House resumed.Bill reported without amendment.Report adopted.Third ReadingHon PAULA BENNETT (Minister for Climate Change Issues): I move That the Climate Change Response (Removal of Transitional Measure) Amendment Bill be now read a third time. First of all I want to thank the Government support parties—ACT United Future and the Māori Party—for their support of this bill. But I also want to recognise the rest of the House Labour New Zealand First and the Greens—that they are supporting this bill through the House and the removal of the one-for-two model.It is important that we pass this bill through all stages tonight so that there is business certainty and so that they can get on with it. There was some concern as to what it might do with the markets but actually I think that has all been fine.I want to just say that I do not think this is the answer to certainly climate change. I do not think this is the one thing that is going to make the biggest difference if you like. I think there are certainly more steps that we have got to take. We have got to be careful that we do them in a concerted way that is in the best interests of New Zealanders and New Zealand and that I think looks really longer term. Like most members of this House I care about the country that I will leave for my grandchildren’s children. I think quite a lot about the differences that we can be making now that will actually make a huge difference to them. Thank you to the House. Thank you to those businesses out there to the individuals who make a difference and to all of those who see the work that we do in protecting this planet as being important.Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a short call on the third reading of this bill. It was comforting to hear the Minister say that this is one thing that the Government is going to do to combat climate change. Although Labour is supporting this legislation we do look forward to a suite of measures that are going to meaningfully address New Zealand’s emission reductions and how it is that we are going to meet the targets that we have set ourselves especially when we consider that we are going to have to get more ambitious.One of the features of the Paris Agreement is that ambition is built into it and the ability to ratchet up each country’s contribution will increase—each meeting on meeting. At the moment New Zealand’s rather timid contribution of 11 percent on 1990 level reductions from 2021 onwards is something that we are going to have to get more ambitious about. We are going to have to front up to the international community and we are importantly going to have to show that we are meeting our targets. We are currently not meeting our targets. We are not on the kind of transition pathway to a low-carbon economy where we can or will meet our targets.This piece of legislation—although it is something we welcome let us bear in mind the 0.07 percent reduction in our greenhouse gas emissions from this piece of legislation. That is what the Ministry for the Environment has calculated. So let us get real about what this legislation does and does not do. It is a good thing. It needed to happen. But make no mistake: this is not a plan to limit climate change. So when the Minister says that this is over one thing we look forward in the coming days and weeks to hearing the Minister roll out her comprehensive plan for how New Zealand is going to reduce its emissions. We would welcome seeing a real commitment to carbon budgeting but the fact that the National Government voted against aligning our targets and our emissions trading scheme just here tonight in the House does not give me great faith.But most other countries set carbon budgets. If we think about it as a household—if we want to save money what do most people do? They set a budget. They write it down. They make a commitment. That is how they meet it. New Zealand does not do that and guess what? It fails to meet its targets too. It is no great surprise. It is just something that we do have to address and we have to address it fast.In the Committee stage of this debate I thought the Minister in one of her responses made a very telling contribution and it is within the regulatory impact statement. The reason for the long phase-in period of this through to 2019 is to protect dairy. It is to protect dairy—its industrial gases not its agricultural gases. Dairy is still being protected in terms of agricultural emissions but in terms of its industrial usage what we cannot do is address our greenhouse gas emissions while we continue to favour one sector and subsidise that through other productive areas of our economy. Our economy is out of kilter because this Government has not used the levers that the emissions trading scheme gave it to transform our economy to diversify our economy to add more value and to move to the kind of 21st century economy that New Zealand is going to need to survive in the world. It is a trick that has been missed and it is a trick that this Government is continuing to miss.Listening to the Government speakers through the course of this debate tonight just shows how out of step they are when it comes to the issue of climate change. In other countries politicians are realising the opportunity that transitioning to low-carbon economies gives us. There are the opportunities for us to create higher-value economies with better-paying and more secure jobs. That is the kind of vision that we in Labour have for New Zealand and climate offers that opportunity.At the Paris climate talks one of the standout side events that happened was the international business community getting together and saying that Governments were not doing enough. Business was pushing Governments to do more. So we have here the business community in New Zealand realising that more needs to be done. But the Government is out of step with business. Businesses realise the threat that inaction on climate change poses to New Zealand. It poses the fiscal risk of New Zealand thinking it can just buy its way out by buying credits for evermore. I know that that is not something that Grant Robertson is looking forward to. Business also recognises the real reputational risk of New Zealand failing to meet its climate change targets. New Zealand simply cannot continue to trade on some kind of clean green image and turn up to climate conference after climate conference and earn itself Fossil of the Day awards which make no mistake New Zealand excelled in in Paris.This is not the kind of image that we want for New Zealand on the global stage. We want New Zealand to be seen as somewhere where we are doing the right thing and that we are not an international laggard. The legislation we have today and tonight in front of us is an important start but it cannot be a cherry-picked part of the emissions trading scheme (ETS) review. The Minister when she was in the chair admitted that the ETS was broken that the ETS was so broken that it allowed something like the hot air credits to come into play. We are not putting the ultimate legislative protection around that in terms of a price floor to sit alongside a price ceiling but we have to have a commitment to an ETS to be a mechanism that puts a real meaningful price on carbon that will work as a lever in our economy to move us on to a low-carbon transitional pathway because we do not have that at the moment.We cannot simply continue with business as usual and we have to see the opportunities that are contained in that transition for us. Labour supports this bill and we would equally support more measures from the Government to finally start addressing New Zealand’s rising greenhouse gas emissions.SCOTT SIMPSON (National—Coromandel): It is a pleasure to take a brief call in this third reading of this bill before the House to transition the emissions trading scheme (ETS) from the one-for-two model that we have had since 2009 to a phased change and through to a new and more sustainable objective for us as a nation and for our ETS system.This has been a really interesting debate. It has been very useful to hear opinions from across the House and to hear members expressing their views. Although I think it is fair to say that as a House we probably differ about the size of the step we all agree that this is a step in the right direction. On that basis I commend the bill to the House.Dr DAVID CLARK (Labour—Dunedin North): I was heartened to hear Minister Bennett speak of the failures of the system in an honest way in the Committee stage and heartened also to hear her speak about the certainty that an emissions trading scheme should provide for business. That was something that the Minister spoke about and it showed an understanding of what needs to happen next. As my colleague Megan Woods has already said we on this side of the House want to see more action and we want to see it soon. We want to see more than this timid step which is a U-turn on a policy that National put in place some years ago when it came into Government and gutted the previous emissions trading scheme which did already give certainty to business. To hear that it is back on that track is heartening but with my colleague Megan Woods I want to reiterate the concern that things are sped up and that the action and the plan is put in place.For a long time we have called for the removal of this one-for-two provision. For years the Labour Party has called for this action that is happening in the House tonight and now it is happening. We support it—we support it—but we want to see more. We have called for other things that would be sensible steps like putting in place an independent climate commission to set up a carbon budgeting process so that we can actually achieve significant emissions reductions targets—so that we can have targets and then have a plan to meet those targets. It is not rocket science; it is the logical thing to do if the Government believes the things it is saying in this House. It needs to put a plan of action in place because we know that New Zealand has per capita emissions that were the fifth-highest of 40 developed nations when they were measured in 2012.If New Zealand cannot do this who on earth can? Our electricity sector has the potential to be completely renewable. The last Labour Government put in place a ban on new generation coming from fossil fuels because we knew that that was quite possible to do. The last Labour Government put in place a biofuels sales obligation because we knew that it would cost nothing extra but it would give an emerging biofuels industry certainty. And we put in place the first “all sectors all gases” emissions trading scheme in the world because we knew that that would be good for New Zealand business long term. We knew that the small extra cost the few cents extra on a block of butter would be well worth it in marketing that butter as a premium product from a world-leading country that actually cares about its environment.Instead we have had 8 lost years—8 lost years. It has been 8 lost years until the Government finally agreed that giving business some kind of pathway and certainty is the answer and that actually having some meaningful action in this space is a good idea. Yet it is not really certain yet. We have heard the Minister tonight say that there needs to be more—with no plan no indication of what that is. How can business plan in an environment where things change from year to year? It claims to be a business-friendly Government but it changes its plans all the time. It is very hard for any sensible business to plan in that kind of environment. What business can go off—and unfortunately what it has been going off—is the kind of tacit nudge that the Government is not really that serious about it. We are reaping the consequences of that as our emissions rise and rise year after year as foresters choose not to plant because there are disincentives in place and as people choose to burn fossil fuels because there is a guarantee that there will be no cost above $25 per unit.This situation that we find ourselves in is one of the Government’s making. We commend it for taking a small step in the right direction but the problem that we find in front of us is one that the Government could have addressed long ago. It could have outlined a more bold plan. It could have outlined a plan that was in line with the aspirations of ordinary middle New Zealand. Those people out there battling every day who would like to see a little increase in their take-home pay who would like to see their education be of a world standard instead of dropping who would like to get to hospital and know that they do not have to pull out a chequebook—all of those things of course we have seen deteriorate in this Budget.We have seen a Government that does not have priorities aligned with middle New Zealand and that is unfortunately where this Government sits. It seems content to manage New Zealand’s decline. We have heard it talking about paying off debt—it is a Government that has borrowed more than Muldoon. Here in the space of climate change we know that it is borrowing from future generations. It is a pattern under this Government: borrow and hope borrow and hope. It has done it with our money. It has borrowed more than Muldoon. Here it is doing it with our future by borrowing emissions that do not allow for such a gentle transition in the future.This is getting more and more urgent and there is no excuse for it. The facts are clear. The latest Intergovernmental Panel on Climate Change report says that without additional mitigation we are now facing average global temperature rises of 3.7 to 4.9 degrees Celsius—that is compared with pre-industrial levels—by the end of this century. We know what the issue is. We must have targets that are more ambitious at least in line with the EU and its overall target of a 40 percent reduction in carbon dioxide emissions by 2030.We know there is space for ambition. We know there is space to expand New Zealand’s brand as a clean green country if we just do the right thing. It is not hard. If we just do the right thing it will be good for our businesses as they spy the opportunity in becoming high-tech clean and future-oriented. If we make polluters pay rather than every other citizenbearing the costs—if we do what is right it leads to a more prosperous future for our country. We hope that the Government after taking this first tepid step forward will look more closely at this picture. I take some hope out of what the Minister said that she intends to do that. I only hope that those words will be followed with action.SARAH DOWIE (National—Invercargill): We are a Government that is committed to transitioning to a low-carbon economy and as such we are phasing out the 2009 transitional scheme. That was a transitional scheme—we are keeping true to our word on that. As such I commend this bill to the House.JAMES SHAW (Co-Leader—Green): It is my pleasure to rise in this third and final reading of the Climate Change Response (Removal of Transitional Measure) Amendment Bill. The Green Party is of course supporting this bill because it does move us one tiny timid step closer towards reducing our emissions. When I say “tiny” and “timid” I am of course referring to the Government’s own analysis that this will reduce our emissions by 0.7 percent in the year 2020 3 years from now. That is against a rise over the course of the next 15 years of 96 percent in our emissions over 1990 levels. So it is going to shave a tiny amount off the enormous growth that is projected in our emissions over the course of the coming decade and a half. It really does not slow down the supertanker of New Zealand’s emissions as we head towards frankly global catastrophe.To give you some context our emissions are projected to increase 96 percent above 1990 levels by the year 2030. They have already risen 24 percent above 1990 levels and since this Government came to office they have risen 19 percent above 1990 levels. They are now at the highest level that they have been since 1990 which is when we actually started counting. It is also the period of time that the emissions trading scheme has been in place for.I just want to reiterate the point that the purpose of an emissions trading scheme is to reduce emissions. What has happened has been the precise opposite. Our emissions have increased by 19 percent in the time that we have had the emissions trading scheme and that is because when this Government came into office it gutted the emissions trading scheme it changed the settings and it crashed the price.One of the things that Government members have said several times tonight is that the reason why they are phasing in this tiny measure over the course of 3 years is the cost to business. Well they thought nothing of the cost to business when the Government changed the settings on the emissions trading scheme and crashed the price of units. Hundreds of millions of dollars were wiped off the value in the forestry sector overnight by this Government. There were stranded assets up and down the country—hundreds of millions of dollars. The cost to the Māori economy alone was half a billion dollars. You had iwi businesses up and down the country that lost half a billion dollars because this Government changed the settings on the emissions trading scheme and crashed the price.So when Government members get up and say “Oh well it is going to take us 3 years to phase in the removal of the two-for-one subsidy because of the cost to business.” they have got no idea of the catastrophic damage that they caused to the forestry sector and to iwi businesses around New Zealand when they introduced that policy. They say that they are friendly to business but the cost to business of this bill will go nowhere near the cost to business that they created when they crashed the price in the first place 8 years ago.During the course of the debate tonight there have been a number of speeches from the Government benches that have not just talked about the cost of implementing this bill but have shown that Government members have no comprehension of the cost of not implementing the bill no comprehension of the cost of doing nothing as we have done nothing over the course of the past two and a half decades to arrest climate change.When you look at the costs to our businesses that are mounting up already they are staggering. It is millions upon millions of dollars in costs that are already occurring. We have always thought I think about climate change as this thing that happens in the future to somebody else—to polar bears in the Arctic in the future. In fact the costs are being felt now by us here in this country and in our closest Pacific neighbours where people are already having to relocate to higher ground because rising seas are swallowing up their homes. We will see the same kind of thing in New Zealand—in South Dunedin and in Napier and in Tauranga and on the Kāpiti Coast and in many many other low-lying areas around the country.The idea that trying to do something to reduce our emissions carries with it some kind of unacceptable cost is not stacked up on a business case basis against what is already starting to happen and the costs that are being imposed as our infrastructure gets flooded as roads go underwater and as we have extended longer deeper and more frequent droughts. The cost to our agricultural sector of that—Mr DEPUTY SPEAKER: I am sorry to interrupt the member but the time has come for me to leave the Chair. The House will resume tomorrow morning at 9 a.m. Nō reira good night and good luck.Debate interrupted.