Monday, 16 November 2009
Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 [No. 2]
Consideration in Detail
I thank the member for New England for the amendment and will make some commentary about that in a moment. I also acknowledge the contributions by the member for O’Connor and the member for Wide Bay. The member for Wide Bay made one observation, that no other scheme internationally includes agriculture. It is worth correcting the record: New Zealand has legislated an emissions trading scheme that does include agriculture, which is of course a very important sector of the New Zealand economy.
I note the important comments of the member for New England on the Carbon Pollution Reduction Scheme legislation in the event that agriculture is excluded and there is an offsetting credits arrangement put in place. I acknowledge the importance of those observations because they also acknowledge the significance of the announcement the government has made in the last day or two. The proposed amendment from the member for New England would have the effect, as we comprehend, of preventing regulations under the CPRS from declaring that greenhouse gas emitted in connection with the production of agricultural food commodities are covered by the CPRS. In effect, this would remove CPRS liability from all activities leading to the production of food. Removing any emissions associated with food production from the CPRS would mean that emissions reductions would need to be made in other sectors of the economy, self-evidently, and would increase costs across the economy. That is something that the government has been very cautious in approaching. In relation to the issue generally, as has been adverted to by a number of contributions, the government has already addressed the impact of the CPRS on food production through a range of measures. I recognise that they are not universally accepted; however it is worth identifying them.
Firstly, in the legislation before the House agriculture is excluded from the CPRS and it is in the context of a policy position that it was noted by the member for New England that the government was intending, or had the intention, that by the year 2013 a decision would be made following consultation with peak organisations and members of the agriculture community in this country to consider its inclusion in the scheme from 2015. But it is not contained in the sense of agricultural emissions within the bills that are before the House at the moment. Furthermore, in the context of negotiations with the opposition over the legislation the government has now indicated—and I think this is probably one of the earliest occasions that the government has had the opportunity to put this on the record in either place in the parliament—that we will agree to exclude agricultural emissions from coverage under the CPRS indefinitely in the context of a package negotiated with the opposition that secures passage of the legislation.
Furthermore on this issue generally, food processing firms may be able to apply for funding for abatement activities under the Climate Change Action Fund. That is also a policy position that the government has on the record. And also, in relation to this issue, the CPRS fuel tax offsets will help protect the agriculture and fishing industries and the general community from the impact of fuel prices for the first three years of the scheme. The Treasury modelling demonstrates that the price impact of the CPRS is small, that the impact on farm production costs will be modest with expected increases of between 0.5 and 1.3 per cent for most farms between 2011 and 2015, and it is expected to raise household prices generally by only 0.4 per cent in 2011-12 and 0.7 per cent in 2012-13. So we are providing household compensation to help assist with these modest cost rises. For all of these reasons, plus the fact that we believe the amendment put forward by the member for New England would be extremely difficult to implement and administer, the amendment is not supported by the government. On that note, Mr Deputy Speaker Sidebottom, I think the question is that the amendment be agreed to and I move:
That the question be now put.
Question agreed to.
That the amendment (Mr Windsor’s) be agreed to.