Climate Change—Statement

The question has been asked; members are entitled to hear the reply.

The Minister responsible for Climate Change Issues has always known that he has feet of clay, unlike the member opposite, who believes he can walk on water.

To the Minister—[ Interruption]

Right, we are back to silence. The question will be heard in silence, as will the answer.

Was it a mistake or the intent of the emissions trading legislation that the Government would get a windfall gain, as advised by officials, of between $6 billion and $22 billion from the sale of permits, at the expense of consumers and businesses, over the design period of the scheme; and of what benefit will any tax relief in the Budget be if it will be taken back through the emissions trading scheme?

The answer to the second part of the question is that the member will need to wait until next week. The answer to the first part of the question, I regret to advise, is that I do not know.

I raise a point of order, Madam Speaker. The issue of whether the Government makes a profit of between $6 billion and $22 billion was included in the Cabinet papers around the design of the emissions trading scheme. The member concerned is a member of the Cabinet, and I find it extraordinary for a Minister to say he simply does not know.

Dunne Hon Peter Dunne Link to this

The Minister did address the question.

Do the mistakes the Minister referred to include yesterday giving the House information on increased household costs arising from the emissions trading scheme that was based on a carbon price of around $25 per tonne, when the current secondary price is already around $35 a tonne and rising; and will he now concede that the figures he gave the House were less than half the actual increased costs that households are likely to bear, and that the real figure is nearer $25 to $30 a week rather than the $2 to $4 a week he told the House yesterday?

I doubt that the figure will be anywhere near as high as that. But in respect of the future price of carbon, I would simply offer that at the moment there is more than one price around the world for carbon. This Government prefers to rely on Treasury advice in respect of the price of the carbon, and $35 is higher than that advice.

Was it a mistake, or was it intended that the emissions trading scheme require domestic refrigeration and heat pump manufacturers to have to pay for the considerable cost of synthetic refrigerants, but importers of overseas manufacturers’ fridges and heat pumps with exactly the same synthetic refrigerants do not have to pay, which is a policy that will put at risk thousands of New Zealand jobs in companies like Temperzone, Fisher and Paykel, and Skope Industries; if so, why?

Mackey Moana Mackey Link to this

The legislation is before the select committee. The member is on the select committee. The member may wish to take up that argument with other members of the select committee. That would be the best way for him to earn his salary.

What reports has the Minister received regarding support for action on climate change in the form of an emissions trading scheme?

Support for emissions trading continues to grow in New Zealand, and, in fact, continues to grow around the world. Only a day or two ago I was pleasantly surprised to learn that the likely Republican presidential candidate, John McCain, proposes a “cap and trade” system, and wants to take it—should he be elected to the presidency—to the American political apparatus. And, of course, the recent change of Government in Australia means that Australia is now moving to an emissions trading scheme, which is scheduled to start in about 2 years’ time. Federated Farmers, who are long-time opponents of many aspects of climate change policy, are now firmly of the view that they will support an “all gases, all sectors” approach to emissions trading. It is the National Party members who have not yet made the shift. They say they want to, but they always say that it is not perfect yet and more time is needed. They have been doing that since 1997, and it is time they stopped.

Was it an error, or was it intended that Holcim, a cement company that operates 27 cement plants within the European emissions trading system and one in New Zealand’s emission trading system, would have to pay 16 times as much per tonne of carbon in New Zealand than it does under the European system; and what does he think the impact of this detailed design issue of the emissions trading scheme will do to that company’s proposed half-billion-dollar investment in a far more efficient cement manufacturing facility in New Zealand?

There they go again. The National Party members say they want to do something about climate change, only there is this problem that they say we need to fix, so that they can come up with the next problem for us to fix, and actually we never get anything done! Let me answer the question. The cement industry will face a reduction in its allotment of, if you will, freedom to emit emissions from 2019. That is 11 years from now. I suggest that members opposite, if they were fair in their thinking, would agree with me that by then we are almost certain to have a sector by sector approach globally in areas such as cement, because unless we do it that way, we almost certainly will never be able to bring in enough of the Third World in time. Only a week ago we pushed it out a further 5 years, to give more certainty to companies such as the one the member has just mentioned, but still he cannot stop bitching and grizzling about it, because in his heart he does not want anything to happen.

Can the Minister explain how the global environment would benefit from the closure of the Bluff smelter, when 100 percent of the electricity used there is renewable, and if the plant was relocated to an area like South-east Asia, where the electricity is most likely to come from the burning of coal, we would have the scenario of New Zealand losing 1,000 jobs and an increase in global emissions—how is that going to help things?

Brown Peter Brown Link to this

I have pretty much the same answer. I agree with the member that carbon leakage does not do anybody any good. I agree with the member; I understand that. But, you see, that is why the attempt has been made to strike a balance, so that the smelter does not begin—begin—a reduction in its free allocation until 2019. The smelter has been improving its efficiency for some years now, and it is doing a really good job of it. If it cannot make further efficiencies between now and 2019, I would be surprised. But, almost certainly, by then the aluminium smelters of the world will be subjected to some form of agreed regulatory world best-practice. One can smell it coming. So we can move ahead with the emissions trading regime now, wait until it starts to bite in 2019, and around about 2017 check back on the 2008 comments I have just made to see whether they were right. I reckon they will be.

Noting the Minister’s earlier answer that John McCain, if he became President, would look favourably at an emissions trading scheme, that Kevin Rudd in Australia—

Brown Peter Brown Link to this

Would the member please just ask a question. You are prefacing it with statements.

Noting the Minister’s earlier answer along those lines, does it not make sense that New Zealand work in tandem with some of these countries, rather than try to lead the field; if not, why not?

Hide Rodney Hide Link to this

I have just been invited to work in tandem with Australia and the US. Here is a fact: only three Western countries have signed but not ratified. They are Monaco, Australia, and the US. They are the laggards. We were the 102nd country to ratify—hardly leaders of the pack—yet the member invites us to delay our progress still further. It is time we came to a decision.

Does the Minister agree with the analysis by the Federation of Māori Authorities that the emissions trading scheme will provide a hit on the balance sheet of Māori of $2 billion; if not, what does he suggest the hit on the balance sheet of Māori will be, given that it has to be a positive number?