Thank you, Mr Chair. I am taking my first call, and I want to go straight to clause 12. I’d also like to preface my contribution to say that the reason I haven’t been in the Chamber is that I have been upstairs working furiously through the regulatory impact statement (RIS), which is an incredibly important document to enable us to scrutinise what is a highly technical bill, and it is a bill that includes an amendment this morning that has quite a few changes in it. Without the RIS, we have not been able to do that effectively.
Clause 12 gives us that opportunity to do it, because clause 12 has a fundamental impact on the system in that it, basically, moves the system from annual compliance to multi-year smoothing. It encourages importers to bank and skim compliance obligations, and that does raise questions which we have not been able to interrogate properly because we’ve not had the regulatory impact statement to support that, and there are a number of other things. We will move through it, but other colleagues, including my colleague Helen White, has been doing the same thing—and I understand Tracey McLellan has, too—and so we want this opportunity to be able to ask questions. There are 14 specified risks that have not been able to come out.
Now, just to give members some context to this, I worked on this bill late last night. I looked for the latest update of the RIS. I couldn’t find it anywhere online. I was watching the proceedings in the committee of the whole House this morning and I was about to come down to contribute very early, and I heard the Minister quite glibly say, “Oh, there’s one on its way.” When we look at the 18-page document and we look at page 3, there are even annotations in red on the side of the document that make it almost look like a draft. It has been produced in a hurry. I went and checked with the Clerk of the House to make sure it wasn’t anything to do with me not being able to find the document and they confirmed that even though this is dated a few days ago, there can be issues with the links, and they could not confirm that the RIS would be available. Now, I can say hand on heart that I have not seen it until this morning.
I just want to point out, first of all, that although the Minister has said that clause 12 is technical, given some of the issues, the impact of it is not technical and is worthy of scrutiny, because what it does is it amends regulation 17 of the Land Transport (Clean Vehicle Standard) Regulations 2022, which is around credit expiry and use. Regulation 17 governs how credits expire, how they can be applied across years, the hierarchy of credit usage, and transferability rules, and what can happen is there can be penalty interactions. There can be a retroactive application to existing credits, which is really unusual in regulatory design, and it’s quite easy for the Minister to sort of say, “Oh, this is just about regulations.” when we know that regulations are worthy of scrutiny, particularly in a rushed process like this, and particularly where they could have a retrospective impact. That is what has been raised in the RIS because credits previously set to expire in 2025-26 now suddenly remain valid until 2028 or beyond, and so the fact that it does have retrospectivity is a problem. It’s also potentially inconsistent because it’s not amended precisely to reflect the new section 178(3) of the Land Transport Act 1998, and so there could actually be statute or regulation clash grounds for challenge.
That makes it administratively weak under law, and so I’m going to ask some questions specifically on that. Then—if I may, Mr Chair—I may take another call just to point out the 14 specific risks that have come up in the RIS, now that in the last couple of hours we have been able to actually see it, and some of them have quite a lot of public interest.
My first direct question on clause 12 is: has the New Zealand Transport Agency Waka Kotahi run system simulations to ensure that amending regulation 17 will not cause credit accounting errors? This goes to the amendments that my colleague Arena Williams had suggested, which were to get much more precise modelling so that there could actually be some evidence base, because at the moment we are having to rely on the Minister’s assurance that all his numbers stack up.
The second question: how will regulation 17 deal with multi-year bridging credits, especially those generated before 2026? Does the retroactive application of the extended expiry breach any principle of regulatory predictability, and is he concerned about that? Has Crown Law confirmed that extending the life of existing credits is legally safe, and is it consistent with the zero carbon Act budgeting framework?
My fifth question is: does the Minister accept that regulation 17’s amendment, effectively, weakens the constraint that the Clean Vehicle Standard was designed to impose year by year? So that is looking at one of the first risks that has come up in the RIS, and my colleagues will be asking more detailed questions. But that is around the gaming of the system, essentially.
There are 14 risks. There’s the gaming of the system. There’s the surge of high-emitting vehicles, which has been mentioned. This one—I think is maybe why the Minister was trying to get us out of the House so quickly—is a specific risk that mentions potentially higher fuel costs for New Zealanders of $115 million. There is the potential for increased national emissions. There are perverse incentives—now, Julie Anne Genter managed to ask a question about that, but without having the analysis of the RIS and being able to interrogate further, it is absolutely a valid point. I should think that she and my colleagues should be given the chance to actually look at what is the real risk of those perverse incentives and what will the outcomes be. Are they medium risks with high impacts—in which case, should we be taking this gamble?
We have other risks around reduced fuel savings and our emissions reduction pledges. We haven’t even touched on equity and fairness—and that seems to be a continual theme in this House—for communities that are going to be impacted by this. The Minister himself has tried to suggest that this is helping ordinary New Zealanders and that it’s only those who are in a privileged position who are going to going to have to worry about it, but, in fact, the RIS would suggest the opposite, and this side of the House is very interested in equity and fairness, particularly when it’s hidden in regulations.
We see a risk around the declining value of credits. Now, why on earth would we have a regulatory system that purports to support a bill that actually makes the value of credits decline, which ultimately could also lead to higher vehicle prices? It flies in the face of what this Government has said it is trying to do, and I can provide a couple of quotes from some of the Ministers who have talked about our emissions trading scheme and how we’re wanting to meet our climate targets. I mean, Christopher Luxon said, post-Cabinet in April 2024, that “We remain absolutely committed to meeting climate targets.” and Simon Watts said on Radio New Zealand that “New Zealand will not step back from its climate commitments.”, and yet we see, hidden in the regulations and the impact of the regulations through the lack of modelling and through this Amendment Paper, which was dropped at the eleventh hour and which is very, very technical, and we did not have the facility of the RIS to be able to understand what its impact was, including with the regulations—we are seeing a bill that is flying in the face of our climate commitments and what the Government says that it intends to uphold.
We also see risks about the slower uptake of lower emissions and about the potential restriction of the supply of vehicles that have cleaner emissions, and also there is a risk created by the undermining of the system by the provision of interim relief. There have been no questions on that, because we were not able to look at the RIS and understand that that actually was a risk. How big is the risk of that interim relief?
This comes down to the incomplete modelling. We do have technical questions not only on the RIS but also just to pinpoint on clauses 10 and 11, as well, which may sound quite technical, but they have only come to our attention and they are the result of the architecture of the regulatory system that Part 2 of the bill brings into place.
Although the Minister might like to look bored and act like this is all very technical, I think that New Zealanders will understand that this has been so rushed that we’ve had the most important document, really, for our ability to scrutinise properly, as the Opposition, dropped on to the Table during the debate. We now have the opportunity to get some real answers to the Minister about the modelling and about the unintended consequences of some of the maths that we are seeing come up through the RIS.