Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill

Hon Dr NICK SMITH (Minister for Climate Change Issues) Link to this

I move, That the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill be now read a second time. I first thank the special select committee, the Emissions Trading Scheme Review Committee, chaired by the Hon Peter Dunne, for at short notice giving consideration to this bill. I also thank the members of the select committee, who have made constructive changes to the bill, and also members of the House for agreeing to allow this bill to progress through the House today, 30 June.

I want to quickly recite what this bill does in respect of the broader debate around emissions trading, the forestry sector, and the huge issue of climate change. There are three particular provisions in this bill. The first amends the date on which foresters are able to report deforestation and to surrender units. The intent of this bill is to put forward the dates by which that reporting and the surrendering of the relevant units are required. In the original Act, it was required on 31 January this year. It is intended to push that out to 31 January next year because the level of awareness of the obligation is not high—I am embarrassed to say that even some Government agencies did not meet their requirements to do so by 31 January, and I am sure that many other New Zealanders who own forests that may have been removed last year did not meet that reporting requirement. To give another year, given the complexity of emissions trading, makes good sense.

Two further substantive dates are changed as a result of this bill. The first is the date by which the Government is required to provide for an allocation plan of units under the emissions trading scheme for owners of forests that were planted before 1990. The reasons that it would be unwise to publish an allocation plan at this time are that there has been a formal review of the emissions trading scheme, there have been many topical issues around forestry before the Emissions Trading Scheme Review Committee, and it would be somewhat contradictory and confusing for the Government, at the very time when those key provisions are being reviewed, to proceed with an allocation plan. The bill that I introduced provided for that date to be extended by Order in Council. I note that an amendment for the date to be 1 July, which was advanced by Labour and Mr Charles Chauvel, has been included in the bill as it has come back from the select committee. I think that is a reasonable timetable. I also think it is good to have the flexibility whereby it could be done earlier than that. In my view, the timetable will provide a sensible transition for the issues around the allocation plan.

The third issue that is developed and addressed in this bill is in respect of the timing by which owners of forests of a smaller area—fewer than 50 hectares—apply to have them exempted under the emissions trading scheme. It was to be a requirement that all applications for an exemption be lodged by today. Again, it is the view of the Government that, given the review that has taken place in the select committee and the low level of public awareness of that obligation, it makes sense for that date to be put out into the future. Members opposite propose that the deadline for applications for exemptions be extended to 1 July 2010. Again, that is a sensible change, and one that I am happy to support. We will bring that amendment through into the final bill.

I stress to the House that none of these three changes being made affects any requirements and obligations that foresters have under the emissions trading scheme. It is only a shifting of the dates by which they are required to report, and a shifting of the dates by which the Government is required to provide for an allocation plan. It is the Government’s view that introducing forestry into an emissions trading scheme is a very complex and challenging task. We are the first country in the world to attempt to bring forestry into an emissions trading scheme, and it needs to be done in a considered and careful way.

We should note that in recent years the loss of significant areas of forestry has contributed to quite negative numbers for New Zealand around the issue of climate change. We should acknowledge that the emissions trading scheme has proved successful in stopping a large increase of deforestation since the scheme came into effect on 1 January 2008, but we need to work through these detailed issues in a considered way to ensure that it works.

This is a minor bill. The House will need to consider later this year a more substantive emissions trading amendment bill, to make it into a scheme that is workable and that can carefully balance New Zealand’s environmental and economic interests. The Government awaits with great interest the work being done by the Emissions Trading Scheme Review Committee. When that work is complete, our intent is to bring in a bill that will enable New Zealand to introduce and to get up and running the other parts of the emissions trading scheme.

Again, I thank members of the House. I thank the select committee for its work, and the officials who have supported that select committee work. I commend the bill to the House for its second reading.

CHARLES CHAUVEL (Labour) Link to this

As noted by the Minister for Climate Change Issues, the Hon Dr Nick Smith, the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, as reported back from the Emissions Trading Scheme Review Committee, includes two changes recommended by the select committee. The first change is to new section 168(1)(ca), which is to be inserted in the Climate Change Response Act by clause 4 of the bill. This provision deals with the forestry sector. The committee has recommended that rather than having a final date for the deadline under that section to be set by Order in Council, there ought to be a firm date set by legislation as to when the actions required under the clause should be taken. Those actions cannot be taken any later than that date.

There is a similar amendment to new section 183(3)(a), which is to be substituted in the Act by clause 5(2), where the plan put in place in the original bill to allow a deadline to be set administratively is replaced by the firm deadline of 1 July 2010. This amendment is an appropriate exercise in parliamentary oversight. Rather than allowing these sorts of things to run on at the pleasure of the Minister, Parliament is asserting its right to set a final deadline in the legislation. I think members of the select committee were unanimous in agreeing to that amendment, so the bill has been reported back on that basis.

As the Minister said, the bill, by agreement of the parties in the House, will be advanced through its stages today to meet the deadline of 30 June. I will address a few comments on the Minister’s assertion that there are deadlines in the Climate Change Response Act that could not have been met in any event, and that this bill would have been necessary no matter what had happened, whether or not we were having an emissions trading review. Unfortunately, I do not think that the facts bear out what the Minister has said. The industry’s reaction is quite telling. When those in the forestry sector were asked about this legislation last week, they said they were not surprised by the delay, because of the state in which climate change policy currently sits in New Zealand. However, they were disappointed. The Forest Owners Association chief executive, David Rhodes, said: “The market depends on supply and demand and if we don’t have demand, we don’t have a market, and that follows on into forest investment.” That comment has been echoed by the forestry sector throughout the history of the emissions trading scheme.

It is as well to remember that forestry, as the Minister said, was bound by this scheme right from the beginning. Yes, we were the first country to bring forestry in, but we have not done well by the foresters in this Parliament. That is why we have 8 million seedlings rotting in the ground. There may well be a halt to deforestation, as the Minister has suggested, but we need to look to whether that is as a result of the recession we are currently in, rather than because of any benign effect of Government policy. The truth probably is that because of the uncertainty in the sector, with the lack of incentives to plant and the lack of profitability—because there is no ability to trade carbon credits, which the foresters all hold—there is no incentive for those foresters to be able to maximise the value of their plantings.

We might have had an end to drastic deforestation. We always expected there would be a bit of deforestation before the coming into force of the emissions trading scheme legislation. Hopefully, that is over, but let us not suggest that that is anything to do with anything other than economic conditions. Let us not suggest that it is a legislative consequence or a consequence of the actions of Parliament.

I will now say a word about the wider state of climate change policy. The Minister rightly says that we can probably look forward to further legislation in this area. I said on the introduction of this legislation that we were trying to assist the Government to get to a position where it could go to Copenhagen at the end of the year with an emissions trading scheme bill intact, with proper targets in place not only for the longer term but for 2020, and with the ability to look forward with confidence to a scheme that would have integrity and would internally hold together well for the sectors to be included—all sectors and all gases. That is still the aim of members on this side of the House, but we must avoid making excuses for not complying with the law.

If officials had been told back in November, when the Minister took office, that they were to get on with the requirements of the law—because it is open-textured legislation; it is an Act that says the Minister and his officials are to get on and make rules for the various sectors that are bound by the legislation—I do not think we would be in the position we are in now; I think we would be in a position where departments would have been compliant with the law and the sectors would have been doing what they should have been doing under the legislation. But, of course, they have had this false sense of security—insecurity, perhaps—about the reality of the forestry sector. They believed that because there was a review by the select committee, somehow there would not be a requirement to comply with the law. This has been a top-down belief; it has come right down from the Minister’s office and through into the industry, and of course it is wrong. When the legislation says that administrative action is required, then administrative action has to be taken. It is a completely unnecessary exercise for this Parliament to now be stepping in and rescuing the Minister, his Government, and the departments involved, let alone the forestry sector, for non-compliance with the legislation. The legislation should have been complied with from day one. Had it been complied with, we would not be spending time in Parliament applying this fix.

The lesson that has to be taken from the situation we are in now is that we cannot let this happen to the further sectors that are to come under the legislation. We have the stationary energy and industrial processes sector due to come into the emissions trading scheme on 1 January next year. It is well known that no allocation plans are being put in place in that sector. No work is being done on the thresholds at which the members of those sectors are to come into the scheme and have units allocated to them. Those sectors have to plan their businesses on the basis that they will be bound by the law on 1 January next year, because that is what the law says, but continual statements by the Minister and others are leading them to believe that we are going to have to pass some sort of legislation to give them some comfort that that will not be the deadline. That puts industries in an impossible situation, as submitters told the Emissions Trading Scheme Review Committee. They cannot plan their businesses on this basis, they cannot make decisions about whether to build new generation plants, and that is very serious for the country.

We have been in situations of electricity shortage before, we have planned assets in the pipeline in the generation sector, and we want those assets to continue to be built so that we can keep the lights on. But in the climate that those in the industry are in at the moment, they do not know whether they are going to be bound by the emissions trading scheme on 1 January or 1 July next year. The Minister cannot give them that certainty, because there is not the political agreement that he thought there was. They are in a real bind.

It is interesting that New Zealand Steel, when it heard of today’s delay, said that it was surprised to hear about it. It has been proceeding on the basis that the scheme would come into force on 1 January, and although there is this uncertainty it is just getting on and doing the best it can. I know that members around the Chamber will reflect on the fact that although the ACT Party supposedly stands for certainty and private property, its contribution to policy in this area is the Emissions Trading Scheme Review Committee, which has destroyed property rights for the forestry sector and created huge uncertainty elsewhere. There is a huge irony there. But here we are: we are where we are, and the legislation is what it is. We will do our best to get on and make a good job of it.

CRAIG FOSS (National—Tukituki) Link to this

I rise for a short speech on the second reading of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I agree with the point the previous speaker, Charles Chauvel, noted regarding deforestation. I agree wholeheartedly and totally, and I hope that deforestation has, in fact, ended. There are many reasons why it may have ended—the member alluded to some of the possibilities, it is true—and the consequences of deforestation for New Zealand, our obligations, and the larger economy are very, very serious indeed. So I acknowledge and agree with that particular point from the previous speaker.

I am a member of the Emissions Trading Scheme Review Committee, and I take this moment to thank all the members of that committee, who I believe will be participating in the debate in its various stages tonight, assuming the bill passes each stage. I was also on the Finance and Expenditure Committee last year when the various emissions trading scheme bills came through, and I think that it is fair to acknowledge that all participants have moved on a fair bit, from some of the debates of last year to the point we are now at. We are here discussing an amendment to some detail of existing legislation and not actually debating the need for the legislation, full stop. Many submitters who submitted a second time around—admittedly not on this bill but on the emissions trading scheme bills themselves—have also moved quite a long way, and are debating and submitting on implementation and execution of the scheme rather than on whether we should have it. Of course, there are some exceptions, and I am sure I will be receiving emails from many of the submitters as I speak, but I am very encouraged that across Parliament the debate is, I think, down to the details. Yes, there may be some political points to be made, as the previous speaker did a little, but there is a very good focus on the greater good. So I acknowledge the genuine effort and cooperation in getting to where we are now, with regard to all things in this Parliament to do with emissions trading and climate change.

I acknowledge that in relation to the bill we have before us, much discussion was had leading up to the time the bill came into the House, and before it went to the select committee. I also acknowledge the initiative of the Opposition and Mr Chauvel in regard to the Supplementary Order Paper he brought in, which the committee discussed and accepted without amendment. The bill we have before us is slightly different to the one that arrived before the select committee, which is a credit to the work of the committee and an acknowledgment of the Supplementary Order Paper from Mr Chauvel.

This is the first piece of legislation to go through the Emissions Trading Scheme Review Committee, albeit a somewhat small piece of legislation about moving some dates out, as the Minister for Climate Change Issues alluded to. But it gives worth and value to the work of the committee. We have heard from many, many submitters on all things to do with emissions trading, but particularly, as both the Minister and the previous speaker noted, on very, very contentious issues on and around forestry: pre-1990 and post-1990 forest land; land less than 50 hectares, or 50 hectares or more; and the issues that many Māori landowners, forestry owners, and managers have raised. I note also that the Minister has signalled there may well be a more substantive piece of legislation towards the end of the year. I am hopeful of a continuation of the cooperation across Parliament that we have seen thus far.

To pick up on one point of the previous speaker, I note that the National-led Government put before the electorate last year its intentions and principles on the emissions trading scheme. There was nothing too controversial about those. They provided some certainty as to where a National Government would go, and about the framework with which the National Government might review or have a look at issues around climate change and emissions trading. Again, I celebrate and acknowledge that point. I just cannot say enough about the buy-in and cooperation across the parties.

I make one final point before I close. The previous speaker also noted that some things have changed, and that there is existing legislation, of which this bill amends a small part—although a very important part, of course. But we are moving towards the Copenhagen conference, and there is a need for New Zealand to confront and really address some of the harder issues and to supply some certainty where there is uncertainty, which is not just around forestry but also on where the Crown and all the other participants such as liquid fuels and stationary energy—you name it—sit in relation to the emissions trading scheme, as the previous speaker alluded to. It is very important that by the time we get to Copenhagen and appear on the international stage we can hold our heads high and stand proud because we are making substantive, sensible, and pragmatic solutions and doing our bit for the world and for climate change, and we are doing it right here in New Zealand, with a constant look at what our competitors are doing. We compete with our friends just across the Ditch in Australia, but on many things we can sit together and, perhaps, start to align as to where we will end up, and where we will be by 2020.

Much information came out of question time today. There was even a new discussion arising from a question from the Greens, which again points to the fact that we are now taking the debate much further than the question of whether we should have an emissions trading scheme. There has been some quite sensible, considered, and pragmatic thought as to how New Zealand can do its bit, have an emissions trading scheme, and fit with the unique features of our economy. I look forward to the Committee stage and to hearing other speakers on this bill, and I acknowledge again the cooperation of all parties so far. Thank you.

Hon PETE HODGSON (Labour—Dunedin North) Link to this

I will give just a wee reaffirmation that Labour members will be supporting the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. We consider it to be minor, we consider it to be sensible, and we consider that the firm deadlines that the Emissions Trading Scheme Review Committee has put into the legislation are the appropriate things to have. And we signal the obvious—that this legislation represents for part of the emissions trading scheme a delay of 12 months, or thereabouts.

I say a little acerbically that it needs to be put on the record that had there been the necessary cooperation during the 9 years of the Labour Government—cooperation that we think we might be starting to see now—we would not be in this position. We would not be in this position if we had matured earlier. But we did not. We got off to a great start even before then, in the days of Simon Upton, who, by the very nature of the man, was inclined to want to reach out across divides and to have chats about this and that. And those were the days when we signed the Kyoto Protocol. We did not ratify it in that time, of course, but we signed it and got started. Simon Upton never did get to make a lot of progress, because of his own Cabinet and its opposition to the things he was seeking to do. But under the 9 years of the previous Labour Government—and I remember some of these matters well—the National Party routinely opposed everything. It opposed every piece of legislation, and it engendered opposition in society as a whole. It declined to promote alternative plans with any detail. It even had one of its idiot members of caucus ride a tractor up the steps of Parliament. It was only 3 years ago that the Prime Minister—today’s Prime Minister—said he was not sure of the value of the Kyoto Protocol, and, indeed, he was not sure whether climate change was a real matter.

But, you see, in 2002 the Kyoto Protocol was ratified, and at that point an environmental issue became an economic one. That is what the Kyoto Protocol does to climate change. It takes it from being an environmental issue and turns it into an economic issue—at least, for those countries that have targets. If we look a little further along, we see that it immediately becomes a fiscal interest, and, therefore, at the point of ratification, as soon as Treasury has woken up to that in whatever jurisdiction one is in, then the Minister of Finance wakes up to that, and a bit of go-forward is created because of that. But we did not get it right even then. People did not like the carbon charge, and after the 2005 election that was voted down and we went straight to an emissions trading scheme, not via a carbon charge but directly. My predecessor, David Parker, put in place an emissions trading scheme, with support from many parties in this House but not including the National Party.

National could have supported the emissions trading scheme, and then gone and amended it later on, but it did not.

JEANETTE FITZSIMONS (Green) Link to this

By tonight the Government will be in breach of the law, and so will some foresters, unless we pass the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. As I indicated in my first reading speech, the Greens will help get the Government off the hook here. We will support this bill. That was conditional, initially, on the Government agreeing to put firm dates for the obligations in the bill, rather than open-ended opportunities to pass dates by Order in Council. The select committee has done that and the Minister responsible for Climate Change Issues has agreed, so we are supporting this bill, and we are also offering our support to the process of giving leave for the bill to go through all stages today.

We had an interesting debate at the select committee about the “no later than 1 July” clause. Some of us wanted to know why we did not just set a firm date of 1 July and reduce uncertainty even further. It was pointed out to us that if in fact that date can be moved forward, then the allocation plans can get under way earlier as well, and that is entirely a good thing. We are comfortable with the degree of flexibility that “up to 1 July 2010” gives us.

However, the forestry industry is still not very impressed with what is happening under the emissions trading scheme. Foresters have no one to sell their credits to and many of them are not convinced that they ever will have. Charles Chauvel and Craig Foss have expressed the hope that deforestation has now ended, but I do not think we can guarantee that. Those who own forests but are interested only in dairying are pushing extremely hard for rules that make it as easy as possible to deforest and convert their land to dairying. They are expecting to get the ability to offset on to different land from this Government, even if it is not accepted under Kyoto. Many people hope that the whole thing will just fall over and go away, because it is not clear how the Government will proceed in terms of getting a majority in the House for whatever it wants to do.

In Opposition, National attacked Labour—justly, in my view—for taking 9 long years to get any economic instrument in place. Now, the National Government itself has delayed and created new uncertainty for 7 months and counting, and we may be counting for a while yet. As the previous speaker said, this has been going on since the mid-1990s, when the Cabinet of the day first tried to get an in principle decision about an emissions trading scheme or a carbon charge, and, for God’s sake, either would have been better than neither, by a very long way. But the fact is that nothing happened for a very long time. If this Government goes to Copenhagen at the end of the year with no clear plan or agreed majority of the House for a way forward, New Zealand will be a laughing stock. It would be extremely bad for our trade and our international relationships.

These last 7 months, when officials should have been able to get busy writing the rules and the allocation plans for the emissions trading scheme, they have instead been spending countless hours servicing a select committee going over old ground and writing yet another summary of the science for the disbelievers showing that, yes, climate change is real, yes, the Intergovernmental Panel on Climate Change has done its job properly, and, yes, climate change is a real and present danger. I think that is a huge waste of the valuable time of our skilled officials, and of many of us on the committee, as well.

Meanwhile, just today, my colleague Metiria Turei tabled in the House the summary report that will be used by many countries as the latest authoritative statement on the science, even if it is not an official Intergovernmental Panel on Climate Change document, during the Copenhagen conference, showing that on many measures we are already above the worst scenario ever put forward by the Intergovernmental Panel on Climate Change. It put forward a range of scenarios showing that it could be this bad, or this much worse, or even, if things are really bad, this much worse, and we are already worse than that, particularly on predictions of sea level rise and predictions of the rate at which Arctic sea ice is melting.

There is no sign so far that the Government actually intends to reduce New Zealand’s emissions by very much, and I find that a tragedy for us and for our descendants. First of all, the Government would like to align with Australia. Of course it makes some sense if we could have similar rules with the country with which we trade so much across the Tasman Sea, but the Australians have just failed to get a majority in their Senate for a scheme that was so weak it was worse than useless. The Australian proposal was worse than useless and that is why the Green members of the Senate did not support it; not because they are against emissions trading, but because they are against a scheme that gave billions of dollars to the worst polluters and was going to have very little effect on emissions. There may never be anything to align with in Australia, so we need to develop our own scheme.

We know that the Government is looking seriously at softer rules than the existing emissions trading scheme, which was only just strong enough for the Greens to agree to its support last year. We know that the Minister said this afternoon that we do not really need complementary measures like standards because we will have a pricing signal instead. We know that transport behaviour is extremely sticky when it comes to following pricing signals because it takes an awfully big increase in the price to induce a little bit of change in transport behaviour. By far the most cost-effective measure for the whole economy for transport is to set some standards, as other countries have done.

Although fuel efficiency standards for the average of the vehicles coming into the country from now on is part of the Energy Efficiency and Conservation Strategy, I cannot see any sign that the Government intends to proceed with it. I hope the Government will think again about that, because our vehicles use on average about twice as much fuel to go 100 kilometres as the European fleet will use when it moves to the new standard already announced. US cars will not meet the fuel economy standards in China, because China has set its horizons higher than what the US is doing. We are left taking what every other country wants to dump because they no longer meet their standards, and it is not the old vehicles that are the problem; it is the new ones because they are bigger, thirstier, and release more carbon than the old ones. There are many areas where a price on carbon will not be enough to solve the problem. It is an important first step and it is a vital first step, but we have to have complementary measures as well.

Returning to this bill, it deals with the timing of coming into force of various parts of the emissions trading scheme but it deals only with forestry. A number of people are now pointing, as I did myself in the first reading debate, to the fact that the coming into effect of the rules for the energy sector, on 1 January, poses some difficulties because there are no allocation plans, and there will not be by 1 January. The sector is just automatically assuming that the Government will legislate a big delay in that, and I am concerned that Labour appears very willing to help it do that. That is not the only way of doing it, and I urge people to think about the fact that companies should have been preparing for the 1 January date for a long time, and that there is no reason why the scheme cannot still come into force on 1 January, provided that by that time the Government is in a position to announce its intentions in terms of allocation plans, and the companies do not become liable to pay for those units until well into the following year. So it would be possible to start without an allocation plan, provided the Government can make its intentions clear by 1 January, and those companies can still comply with the law when the time comes. Let us not fall over backwards to delay even longer doing something about climate change.

Hon TARIANA TURIA (Co-Leader—Māori Party) Link to this

Tēnā tātou katoa. In December last year the Government told the United Nations climate change conference in Poznań that far from stepping back from the Kyoto Protocol, the emissions trading review was “a means to find a more politically durable way of moving forward by building a wider policy consensus.” This bill, then, is the first stage of building that wider policy consensus.

Consensus was never a given. For Māori, there are two key issues at hand. The first is related to the emissions trading scheme. We know that many iwi wanted a Treaty provision to be included in order to protect the value of their settlements, and that they were happy for the introduction of the scheme to be delayed in order to achieve that. The second issue is related to the forestry sector. Settlement of the “Treelords” claim has meant that the iwi involved have settled on a price value for their carbon trading units. Delay, through the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, will mean there will be a delay in those credits being transferred to them, which means they cannot commence trading, and that by the time they do, the market value of those units may well have decreased. This bill therefore potentially penalises them, but there has been agreement given to it because there has been an assurance from the Crown that they will be no worse off.

We always supported the need to review the emissions trading scheme, while, at the same time, supporting the need to address climate change. But we are also mindful of the views of iwi, who, from all accounts, supported this decision to delay the implementation date. Although the emissions trading scheme was passed into legislation in September 2008, its application was effectively backdated to 1 January 2008. The forestry sector, which is already a significant store of carbon, was the first sector to enter the scheme, effective as of 1 January 2008. So for iwi with forestry interests it became a complex picture, as they faced the challenge of emissions trading scheme compliance. For some iwi, the bottom line was to achieve an undertaking that whatever the reason for the delay, they would not be worse off. So in the context of uncertainty for those directly and immediately affected by the emissions trading scheme, we held on to that commitment.

This bill, in its most basic form, delays the reporting requirements and the publication of an allocation plan while the review process in the Emissions Trading Scheme Review Committee is still under way. As the current law stands, foresters would have been required to report any deforestation during 2008 by 31 January 2009, and to apply for exemptions for small forest blocks by today, 30 June 2009. During the process of the select committee hearings, the iwi leaders group told the committee that the bulk of Māori forest land is pre-1990 forest and is subject to significant deforestation liabilities. To give an idea of the scale of those, they suggested that Kāi Tahu could face deforestation liabilities of between $40 million to $120 million, while Morikaunui Incorporation, in my electorate, would be faced with a liability of $16 million for 11,000 hectares. The major milestone in this bill, therefore, is that it delays the timing of the Government’s obligation to transfer carbon trading units to pre-1990 forest owners, who include iwi. Although we are aware that many iwi are comfortable with the delay, because it comes so late in the piece groups such as Ngāi Tahu have already invested considerably in preparing for the 30 June compliance date.

I return to the focus from iwi: that nothing should be included in this bill that would make them worse off, in relation to setting the eventual date of the first emissions returns. Morikaunui Incorporation, established over 50 years ago near Rānana on the Whanganui River road, spoke on behalf of its 5,500 shareholders about the impact of the emissions trading scheme on their holding, which includes 2,000 hectares of native bush and two small blocks of exotic forest. Morikaunui Incorporation submitted that Māori land should be excluded from the bill, and that a timetable should be set to consult with Māori in order to develop a robust framework within which Māori land can fit without transgressing the basic principles set out in Te Ture Whenua Maori Act 1993. The incorporation stated that whatever was proposed in the bill should require no greater contribution or sacrifices from the owners of Māori land than from the owners of privately owned non-Māori land. That would, after all, represent justice being seen to be done in legislation that will have significant impacts for Māori.

The Wairongomai Incorporation from Ruatōria took the “no worse off” concept to its natural conclusion, and suggested that there needs to be a clause included in the bill that confirms that nothing in the legislation is to be inconsistent with the Treaty of Waitangi. That recommendation was endorsed by the full support of the Federation of Māori Authorities.

Te Rūnanga o Ngāti Awa devoted considerable thought to how the expression of due justice would be demonstrated for those iwi who have already signed Treaty settlements without the impacts of the emissions trading scheme being taken into account. Te Rūnanga o Ngāti Awa acknowledges that there was no consideration of any impacts of an emissions trading scheme during its settlement negotiations, because the scheme did not exist then, nor was it contemplated. The rūnanga’s submission advised the select committee that back in 2001 the worst assumption one could have made would be based on general knowledge at that time, which was that forests absorb carbon dioxide, and therefore any impact would be positive. Based on those instructions, Ngāti Awa therefore paid full market value, in the expectation of an unfettered property right.

If the bill is passed in its current form, restrictions will be placed on the choices that Ngāti Awa can currently make, thereby resulting in significant devaluation in that iwi’s asset value. It was Ngāti Awa’s guidance that those iwi that are in the same position as Ngāti Awa should be eligible for a one-off adjustment to choose how they wish to use their land in the future without reference to the emissions trading scheme. Such an option would mean that they can make the choice that they originally envisaged they would have when they purchased the forest, and thereafter they would be required to comply with the emissions trading scheme.

The process of guaranteeing stability and allaying the concerns of iwi will be critical in assuring iwi that they will be no worse off as a result of this delay. We were pleased to see the range of iwi that made submissions and representations to the select committee, and to see the advice put forward by both the iwi leaders group and the Central North Island Iwi Collective. We continue to believe that the liability for emissions should be shared fairly across all contributing sectors at each stage, with all starting at the same time and with free carbon credits being allocated to sectors on the basis of need. We will continue to support these important dual goals: to advocate for a Treaty clause to be included in the bill, and to protect the integrity and the durability of settlements for iwi affected by the emissions trading scheme. It is never too late for change to occur, and it is on that basis that we will continue to support this bill.

NICKY WAGNER (National) Link to this

I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill at its second reading. As we have all heard today, this bill is mostly a technical bill to deal with the timing of emissions trading scheme provisions as they relate to forestry. At the first reading I was extremely heartened to see the support across the House for this bill. All members of Parliament appreciate the need to get the climate change emissions trading scheme right, and the reason to postpone the dates for these forestry requirements. We all know that the cross-party special Emissions Trading Scheme Review Committee is still debating the issues, and that the process is not yet complete. We have heard much debate from foresters and about forestry in that committee. We look forward to presenting that report in the coming few weeks.

It would not make sense for foresters with pre-1990 forest land to have to meet legal obligations before the completion of the final allocation plan for the sector. As today is 30 June, the requirement is unreasonable, considering that the Emissions Trading Scheme Review Committee is still in session. We do not want forest owners to find themselves acting in breach of the law, nor will the Minister, so we are passing this bill today.

I acknowledge also the Supplementary Order Paper from Charles Chauvel that sets the date for foresters to register deforestation and to apply for exemptions, and the requirement for the Minister to produce an allocation plan by, as 1 July 2010. It is an absolute date, and it is now set, rather than as in the original bill, which allowed the date to be set by Order in Council. This date will give more certainty to foresters, although it is an end date and it is possible for the chief executive to bring it forward.

Including forestry in an emissions trading scheme is an interesting challenge. New Zealand is the first country in the world to attempt it, and it is a very complex process. We must take the time and do the work to get it right. We are all well aware of the enormous financial and environmental importance of forestry to New Zealand and our economy, and we must understand that these decisions are critical.

There are roughly 1.8 million hectares of plantation forest in New Zealand, and about 650,000 hectares were planted post-1987. We know from looking around us that the vast majority of those forests, about 90 percent, are Pinus radiata, but we also have increasing amounts of other varieties, the most common being Douglas fir. Foresters are becoming even more innovative in their choice of species. I was surprised to see recently in North Canterbury just south of Kaikōura that a redwood forest is being planted. It is good to see trees being planted again, after years of dramatic deforestation, and it is important for the industry that we get some certainty around emissions trading scheme policy so that more planting can get under way. Of course, we are working towards a substantive climate change amendment bill later in the year, and that is where the final shape of the forestry scheme will be spelt out in detail.

It was very interesting to listen to speakers on the bill last week. There is a strong understanding of, and commitment to, New Zealand’s “clean, green” brand. Like most New Zealanders, parliamentarians are enormously proud of our beautiful natural environment, and we want to make sure that New Zealand does its bit when it comes to dealing with climate change and reducing our greenhouse gas emissions. We understand the importance to our economy and environment of getting this right. We want to be good international citizens, and to make a valuable contribution to the global response to this issue. We want to work closely with other developed countries so that we can all deliver for the environment.

New Zealand’s most important industries are agriculture and tourism, and the success of both is predicated on a clean, green, and beautiful natural environment. Tourists come to see our “100% pure” country, and overseas buyers of our food want to be very sure it is grown in a safe, clean environment. So it is clear to all of us that environmental and economic health go hand in hand. Forestry contributes significantly to the health of our economy, and to the well-being of our environment. It is a significant part of our response to climate change. This bill will ensure that we have time to get the forestry policy right so that it becomes an integral part of an effective, long-lasting, and sustainable emissions trading scheme.

Hon MITA RIRINUI (Labour) Link to this

It is my intention to take only a brief call on the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, and to reiterate the position of the Labour Opposition by saying that we will support this bill. I listened very carefully to the previous speakers, and I heard the Minister for Climate Change Issues describe this bill as being a minor bill and one of his Government colleagues describe it as being a technical bill that deals with time frames. That is, essentially, the case. But it is also important to point out that although the Government is discussing issues around amendments and is describing the bill as being minor and technical in nature, this bill has the potential to create considerable uncertainty for the forestry sector, given that for a number of weeks there has been considerable to-ing and fro-ing on the future of the emissions trading scheme. I put that down, perhaps, to a lack of information being circulated throughout various communities.

I want to talk about the issues for Māori foresters and, particularly, Māori landowners. Māori Party co-leader the Hon Tariana Turia highlighted a number of key concerns for Māori who are already involved in forestry or considering the utilisation of multiple-owned Māori land for forestry. As the Emissions Trading Scheme Review Committee works its way through the review and considers the wider issues, on which I am sure the Minister will report back to the House, it will be interesting to see just how much certainty there is around the emissions trading scheme. As the House is aware, a number of Treaty settlements have included vast areas of forestry, particularly in the central North Island, and we will see the same in Northland, on the East Coast, and in other areas of the country. The issue for many of those settlement groups that are looking at forestry really is the balance between economic opportunity and environmental protection, as they invest in forestry.

As the House is aware, Māori have assets of somewhere around $16.5 billion, and about 52 percent of that is in the primary sector. I do not think it will take much of a calculation to determine the percentage of forestry in the primary sector that is under Māori control. So there are issues around certainty, and whether Māori are satisfied that investment in forestry in the future will be a worthwhile investment, particularly as there are issues around Māori land. I picked up on Tariana Turia’s comments around Te Ture Whenua Maori Act, but there are issues around unlocking the potential of Māori land so that it could be developed in a number of ways, whether it be for forestry, farming, horticulture, or agriculture. There is a smorgasbord of options.

This leads me to the point regarding the barriers to Māori land development. Although forestry might be one potential avenue for development, in my view and in my experience most of the main barriers are in the Te Ture Whenua Maori Act itself: in attempting to comply with the Act’s requirements, in terms of reaching consensus and agreements on investment in Māori land—in other words, in unlocking that land. We have seen that in many parts of the Bay of Plenty, of Northland, and of the East Coast—and, I am sure, many of other areas—large areas of Māori land are underutilised. I look forward to the debate on the wider issue of unlocking Māori land for future development.

As I said earlier on, I really do not intend to take a long call on this particular matter. This bill, described as being minor or technical in nature, has created quite a high level of uncertainty as to where the Government is heading in terms of the emissions trading scheme. I have some questions that I would like to put to the Minister, and I will do so during the Committee stage. His responses to those questions will be very important.

I was in the Taranaki region on the weekend, and I spoke to one particular group about Māori land development and suggested the issue of forestry. I was surprised at the quick response to my suggestion. The group said there is too much uncertainty around the future of forestry and the emissions trading scheme, and, that being the case, there is too high a risk in terms of investing in forestry where Māori land is concerned. As the Minister said, a wider review is taking place, and in time there will be a report back to the House. I, along with a lot of Māori landowners and forest owners, will be looking forward to what the select committee reports back to the House.

That is all I have to contribute to this particular part of the discussion, but I will certainly put some questions to the Minister during the Committee stage of the bill. Thank you.

NIKKI KAYE (National—Auckland Central) Link to this

I rise to support the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. Climate change is very important to many young New Zealanders. In terms of the numbers of letters and emails I have had from young people, one of the highest-priority issues that comes through is the environment. A lot of young people have written to me regarding the environment, and I acknowledge them in the House this afternoon.

Our Government is very committed to reducing our greenhouse gas emissions and to coming up with sensible climate change policy. Many members today have noted that this legislation is a technical change, and it is supported by most members in the House today. I acknowledge some of the comments made from members on the opposite side of the House that, hopefully, this is a new era for New Zealand in terms of climate change policy and that we will be able to work across different sides of the House on the issue. Many people are watching this debate—both young and old—who are very keen for us to work in a cross-party way on climate change.

The key purpose of this bill is to amend the Climate Change Response Act 2002 in order to delay a number of requirements, including reporting requirements for foresters, allowing applications for exemptions for certain land holdings, and the publication by the Government of an allocation plan for pre-1990 forest owners. The requirements are applicable to the forestry sector under the New Zealand emissions trading scheme. As a result, the sector with pre-1990 forest land would have had to meet legal obligations before the completion of the final allocation plan for the sector. It is very positive that we are here today introducing these three amendments, because it would not have been right to allow a situation to occur whereby the final allocation plan for the pre-1990 forest land would have had to be passed by 30 June 2009.

I acknowledge the work at this point in time of the Emissions Trading Scheme Review Committee, which has been reviewing climate change in this area. Some good work has happened, but part of the reason we are here today is that the work has taken longer than expected. I think part of the reason for the work taking longer than expected is that there is quite a bit of complexity in terms of some of the issues around the forestry sector. But if we look at some of the issues we have had around calculating our Kyoto liability, then we start to see some of the complexity in terms of determining some of the issues on climate change.

The review has taken longer than we expected, and the committee is likely to report back to Parliament in early August, but one thing we have made very clear is that the use of a financial instrument to introduce a price on carbon is central to our climate change policy. The adoption of an amended emissions trading scheme is our preferred financial instrument. We believe that it will be important for our future efforts to ensure as far as possible that any amended emissions trading scheme is harmonised with the Australasian Carbon Pollution Reduction Scheme. It is really important to make that point. There has been a lot of debate recently, particularly in the media, about what our target will be in the future. We should ensure that we are not moving at a pace that is out of step with other nations, but we should also ensure that when we have a discussion around what our targets may be, we first consult with the public. That is exactly what we are doing. I am pleased we are holding nine public meetings on our target.

The second thing that is quite crucial, in my view, about that target is being very clear about how we will get there. It is all very well to talk of having ambitious targets, but if we do not have a plan about how we will get there, then, in my view, it is just hot air.

I am very pleased that we are here today to pass very sensible legislation. Some people are calling the bill a technical bill, but from my point of view I think it is an opportunity to raise the issue of climate change and recognise that many New Zealanders out there care about our environment and about our target in this area. It is important to realise that unless we have a plan as to how we will achieve that target, then it is hot air.

We should also recognise that for any target we must make sure that we are very clear on the impact on our economy. I think it was my colleague Nicky Wagner who made the point that our economic health and environmental health are very closely aligned.

The final point I will make regarding climate change is that we, as a country, are recognised for our expertise and research and development ability in the agriculture and forestry sectors. In my view, apart from the discussion about targets, one of the key areas of focus we need to get right is on agricultural emissions. I know that our Government has moved forward and I am very pleased that we have established a Centre for Agricultural Greenhouse Gas Research. We are leading the development of an international research centre that will be focused on greenhouse gas emissions from the agricultural sector. I believe that it will be crucial for us in making headway in the area of climate change, moving forward.

I will just touch on a couple of other things we are doing, because I think we can get a little bit lost in some of the academic debate around things like targets. It really is important to recognise what we are doing now to reduce emissions in New Zealand. In the Budget we announced the home insulation fund, for which we have allocated $323 million. That will assist us in terms of moving to reduce emissions, particularly in our homes, and making sure those homes are the most energy efficient.

We have also allocated $36 million to a biodiesel grants programme. We are introducing changes to streamline the Resource Management Act processes, including the renewable energy consent process. We are working on a national policy statement for renewable electricity generation. And also, in terms of transport, which is another key area where are emissions are high, we will be introducing legislation to exempt light electric vehicles from road-user charges.

I support this legislation. It is technical legislation but it has given me the opportunity to recognise the many New Zealanders, particularly young New Zealanders, who care about this issue, and to really send a message to them that we want to have a target, we want it to be achievable, and we want to make sure we have a good plan behind it. But at the moment, at this time, we will have to delay some of these provisions because we cannot move forward until we get good, sound policy right. That will be partly through the Emissions Trading Scheme Review Committee, but it should also be recognised that we are doing a number of things to reduce emissions. I am grateful for the opportunity to speak on the bill.

STUART NASH (Labour) Link to this

I rise in support of the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill. I speak in favour of the bill because there absolutely needs to be some certainty in the forestry sector. This industry requires 30 years of certainty in order to get anything done. Without that certainty, we will have no investment. That is what this bill provides.

I heard the Minister stand up and say this amendment to the principal Act needed to happen because the forestry industry was not ready for the emissions trading scheme to come into place when it was scheduled to this year. I do not agree with that. I think the Minister undervalues and underestimates the professionalism of the industry and the people who are involved in it. Those people have been ready for a long time. The Minister heard them speak about that at their annual conference, which I attended. The theme of the annual conference of the New Zealand Institute of Forestry, which is the premium professional body for foresters, was forestry in a climate of change. It dealt with the issues and questions that are salient to this very issue. For example, the institute had a 1-day workshop on the emissions trading scheme, and it included things like “Procedures for Applying and Registering for the ETS”; “Applying for an NZEUR Holding Account”; “ETS Mapping Standard and Mapping Guide”; and “Use of Carbon Look-up Tables and Filing Emissions Returns.”

There was a very large attendance at the conference. The Minister was there, and he spoke to the attendees. The people at the conference were the consultants, the investors, and the people who know the forestry industry. They were industry leaders, and they were students—a whole range of people. The institute is the professional body that represents foresters right across New Zealand. Its members are ready for the emissions trading scheme. When the Minister announced that the scheme was going to be delayed for another year, there were howls and cries of “Oh my God! Here we are again.” I personally think the industry was well ready for it. I think the Minister and the ministry were not ready for it, because they had not done the work. The forestry industry wanted the scheme, and all the people in the industry understood it. The questions and the discussion at the 1-day workshop were informed. It was an intelligent debate, and intelligent questions were asked. The people whom I spoke to all walked away, saying “We want the emissions trading scheme. Thank goodness for this scheme, because it will allow the forestry industry to refocus and revalue its value proposition for the whole of the country.”

Now, as a consequence of the delay, and as my colleague Mr Chauvel noted, 8 million seedlings are rotting in the ground at the moment—8 million seedlings that have had to be ploughed in. The nurseries are in huge trouble. It will be interesting to see what Mr Key and Mr English will do for those companies, because they will be very, very important going forward. This delay is a huge disservice to the forestry industry. This bill may be technical in terms of the legislative change that it makes, but its impact on the industry is significant.

We all know that Labour developed a programme of global leadership on climate change, and we did that for a number of reasons. First and foremost, as Nikki Kaye mentioned, climate change is vitally important to the people of New Zealand. But the reason Labour developed the emissions trading scheme and the reason Labour took a global overview of, and a leadership role on, climate change is that we were aspirational. Instead of just talking about the issue, we decided to do something about it, I say to Nikki. We decided to go out there, lead the world, and promote our clean, green image. We went out there and told people what we wanted to do. The Labour Party tells New Zealanders what it wants to do, and it does it—it goes and does it. We were in the process of doing that when we were in Government. Labour was acknowledged as a global leader on this issue, I say to Nikki—and she knows that.

I completely agree with Nikki Kaye when she says there has to be a plan. That is why I am standing here with a sense of disappointment, because there was a plan in place. The forestry industry had a plan in place. It was ready to go. Come June 2009, the industry was ready to be off: its marketing plans were in place, and New Zealand was going to become the carbon-farming nation of the world. The plan was there and it was ready to go. All it required was sign-off. But the Government has delayed the emissions trading scheme for a year. The industry is saying “Oh my God! Why didn’t we vote for Labour? We need Labour back to implement a very strong forestry sector.” Finally the industry has realised that Labour is the party of the agricultural sector. It has taken a while, but finally people have opened their eyes and are saying “We need Labour back. Labour had a plan, and the Nats haven’t got a plan. There is no plan.”

Nick Smith was asked a question at the institute’s conference about why he had cut the East Coast reforestation scheme. He said it was because it was undersubscribed. About 50 people jumped up and said it was oversubscribed. Labour knows about forestry, the foresters know about the forest industry, and the foresters were ready for the emissions trading scheme. I can say that is true, without a question of doubt.

Let me look at some of the initiatives Labour put in place, such as carbon neutrality. What a fantastic programme that was. I heard the head of a Kiwi wine company, a really innovative company, say it had gone carbon neutral. The company’s products were sold overseas, in Marks and Spencer, and were gaining a huge competitive advantage because the European market loved the fact that the wine was carbon neutral. This is an example of New Zealand leading the world. Why do we lead the world? We need to understand where our competitive advantages lie in the 21st century. I will tell members where one of them lies.

CHRIS AUCHINVOLE (National—West Coast - Tasman) Link to this

Following the previous speaker in speaking to the Climate Change Response (Emissions Trading Forestry Sector) Amendment Bill, I say that I am not sure we will be able to manage the same degree of commercial expertise in terms of promoting the aspirations of the previous Government. I am afraid it did stay just at the aspirational level. I cannot match that member in his master’s degree in forestry science, but I used to plant a hang of a lot of trees. I think the most significant point he made was that we are talking about an industry with a 30-year economic turnover. That is very, very significant, because what happens today will not have an effect for some considerable time. I understand that this is the first piece of legislation that has gone through the Emissions Trading Scheme Review Committee. I congratulate the committee on it.

There is something here that I gain great confidence from. When I prepared for this speech I read through all the first reading speeches that were given on this particular piece of legislation, and I sensed something that is very important. It is a technical bill; it is not a bill of huge consequence, people say, but it is part of something—