Speech on the Review Of The Emissions Trading Scheme And Related Matters to Parliament

Parliament is an interesting place. I came down to the House at 20 to eight this evening to do 50 minutes in the house before taking leave of the House at 8.30pm to walk across the road and appear on the Back Benches television programme.

I have appeared in the show three times in about seven weeks. No sooner had I arrived in the House than I was told that the House would not be rising early but going to debate the report of the Commerce Committee on finance company failures.

I sat down to prepare a speech into the enquiry into finance company failures. I am a new person in this chamber and I understood that the Government was going to move a motion that the House defer the debate on finance company collapses until a later time. That motion was not moved and I missed my chance to speak, and there is much I could have said.

However, I was then informed that if we did not debate the report on the finance company failures, we would be debating the Emissions Trading Scheme. That is also an issue that is of real concern to the ACT Party. I intend to use the remaining time in my speech to debate that issue and to respond to some of the comments made by Jeanette Fitzsimons.

Unfortunately because of my other commitments I will not be able to stay in the Chamber to hear the continuation of that debate, and to the speakers that follow me, I apologise. But let us come to the comments made by Jeanette Fitzsimons. She quite correctly said that the Government has gone through a review of the ETS and she said that the review was instigated by the ACT Party. Well, why is that?

First of all, the National Party campaigned on amendments to the ETS, which was passed into late last year. The ACT party, very much a minor party compared to National, a smaller party in terms of the confidence and supply agreement, campaigned on scrapping the ETS. One of the concessions that we negotiated in our confidence and supply agreement was for a full review of the ETS. The Government agreed to a review and it established the Emissions Trading Scheme Review Committee, which Jeanette Fitzsimons referred to. But why is it necessary to review the scheme? Let us look at the reasons why it was necessary?

It was necessary because the ETS is a massive tax on all consumers, all businesses and all taxpayers in New Zealand. It is a massive tax and I will explain. When New Zealand signed the Kyoto Protocol it agreed to limit its emissions during the period 2008 – 2012 to the levels that prevailed in 1999. It is called the ‘first commitment period’. For that five-year period between 2008 and 2012 we agreed that we would emit no more than our 1999 level of carbon dioxide or carbon dioxide equivalents. We further agreed that if we exceeded that level, we would be prepared to pay some money to those who managed to limit their emissions.

In actual fact, in the calculation of that figure we were allowed to take into account the extra absorption of carbon dioxide or the absorption of carbon dioxide by plants and forests. At this stage it loos as though New Zealand will have no net liability for the period up until 2012. The question then becomes what will we have to pay after 2012? Well, we do not know because we have signed no commitment to do so.

It would seem that National is hell-bent on recklessly pushing ahead with its amendments to the scheme with the intention that its proposal should be in law before the Copenhagen conference next month. It has become obvious in recent weeks that no agreement will be reached in Copenhagen – not next December, not next year and probably not even before the Kyoto Protocol expires at the end of 2012.

But let us say that we did reach an agreement to reduce our emissions to this theoretical mystical figure of a 50 percent reduction in 2050, and that we were to commit to that. There are many reasons why we should not, and I will come back to those shortly. But let us say we do. It would mean that New Zealand would essentially have to pay for its excess on a sliding scale. So we start in 2013 and by 2050 we would have to reduce our emissions by 56 percent the following 37, 38 years.

Well what did the Labour scheme say? The Labour scheme said that we will give industry a short time to adapt but we expect them to achieve massive reductions such that they will reduce their carbon emissions to zero by 2030. This means that once those industries allowances reduce to zero, they then have to pay for those extreme emissions above zero, even though the Government does not have to pay that money offshore. If we agreed to that target of 50 percent reduction by 2050, we will still be allowed half of that carbon discharge. So this means that the reductions that companies, industries and emitters are required to achieve are very excessive. They will be paying huge amounts for those emissions despite the fact that New Zealand is not liable for them.

It is then calculated by Treasury that on the basis of Labour’s existing scheme those businesses will be paying in excess of $2 billion a year extra from every year from 2030 onwards. So National wishes to reduce that massive over-taxation. The Labour Party has made much of the fact that Treasury acknowledged to the Emissions Trading Review Committee that the cost of what is being given back is $105 billion. That is a massive figure.
The reason it is given back is that Labour’s scheme took it in the first place. National is trying to achieve with its legislation – making the costs on those higher emitters and those medium intensity emitters more akin to what the taxpayer has to pay.

I would like to come back to that 50 percent target. Jeanette Fitzsimons said that New Zealand was the fourth-highest emitter in the world on a per capita basis. So, shock horror! We are the fourth-highest emitter. One would think that was pretty bad.

Jeanette Fitzsimons did not tell the House that half of those emissions result from agriculture. They result from growing food for the rest of the world. So it is not emissions that are generated by New Zealanders for New Zealanders use. It is not as though New Zealanders drive around in Hummers and 5-litre cars with coal-fired power stations puffing emissions and soot into the air.

We have some very efficient industry; we have some very efficient agriculture. Out emissions profile in unique because half of our emissions are generated as feed the world. We feed the world very efficiently. If we close down our agriculture or we substantially reduce the output of our farmers, that food would have to be grown somewhere else in the world, and I expect that the carbon emissions of those outputs or that production will be far greater than it would have been in New Zealand.

It also means that it has a big bearing on the 50 percent target. The reality is that if our farmers, on the basis of the current science , were to do everything humanly possible - such as nitrogen fixation and the schemes that are available right now – the could reduce their emissions by 13 percent. To achieve that 50 percent target by 2050, it would mean that the other half of the country would have to reduce its emissions by 87 percent. That shows us what an unrealistic target it is for New Zealand to try and achieve a 50 percent reduction by 2050.

It is all very well setting 2015, 2020, 2030 as targets if our scientists can develop a technology, if they can breed grass, if they can reengineer the genetic engineering of sheep and cattle so that they do not burp and they do not discharge methane – well fair enough. In my view it is very, very foolish to sign up to a commitment that we know we cannot meet and to incur huge costs for all New Zealand taxpayers.