Gas (Market Transparency) Amendment Bill

Second Reading Hon SIMON WATTS (Minister of Climate Change) (23:42): on behalf of the Minister for Energy: I move, That the Gas (Market Transparency) Amendment Bill be now read a second time. As previously noted, this bill amends the Gas Act 1992 and introduces new regulation-making powers to improve information collection and transparency in the gas market. It will enable the Government to improve the availability and quality of gas market information, supporting better informed decision-making by market participants and Government, and helping to keep the lights on for Kiwi households and businesses. Improving gas market information will also support participants in the electricity market to make better decisions. As gas reserves decline and production falls, the market is becoming more volatile. In this context, access to high-quality information is even more critical to support market investment decisions, inform Government policy responses, and, importantly, to protect Kiwis from higher power bill prices and the kind of avoidance of economic shocks we saw in 2024. Given the urgency, this bill is being progressed through all stages today and tomorrow. Progressing the bill now will allow regulations to be developed in consultation with stakeholders and implemented sooner, ensuring both industry and Government have access to the information they need at this critical time. It’s all part of our focus on fixing the basics and building the future. I commend this bill to the House. DEPUTY SPEAKER: The question is that the motion be agreed to. Hon Dr MEGAN WOODS (Labour—Wigram) (23:43): Thank you, Madam Speaker. As we have the second reading and prepare for the committee stage of the bill, I think it is important that we acknowledge some of the reasons why we’re here. Indeed, it came up in some of the first reading contributions around this bill. When Labour was in Government, we kicked off a workstream which was around putting in place a disclosure regime around the gas industry. What we knew, through that period of time, was that there were some absurd outcomes. There was one winter when the electricity sector did not know how much gas was coming out of the fields, and in lieu of having access to proper information, they put up drones to see if they could work out what was happening in terms of production out of a pipeline. This is not a way to run an energy system in New Zealand. Electricity and gas, as we transition, need to be seen as part of a system and how it is that they can work together. Having better information is critical. That work was started under Labour, and we are supporting this legislation because it is good to see that work progressing. But I think we do have to face the fact—and, indeed, it is in the general policy statement that is included with this piece of legislation—that “This approach is necessary because much of the information available about gas markets is incomplete or out of date”. The voluntary regime that has been in place has not been able to get all the information that is required, and that is why we are here tonight on Tuesday—or Wednesday or Thursday or whatever day it is at quarter to midnight—debating a piece of legislation. It is because a voluntary regime has not got the information we need out of the gas industry. We are here putting in place a tougher regime to get the information that is required for New Zealand’s energy security. I think we need to be honest about that as we progress through this debate. What we know, in terms of what is being put in place here, is it is an option that has been chosen by Cabinet and by the Government and by the Minister, which will put in place regulatory powers. It seems very technical, but new sections 56AA and 56AAB are sweeping. Instead of spelling out in the legislation what those disclosure requirements are going to be and what gas companies must disclose about reserves, outages, contracts, and security of supply risks, the Government is giving itself the open-ended ability to do this by regulation and to do this on a case by case basis. As we get into the committee stage—there is some discussion in the regulatory impact statement—that, obviously, is a question we are going to want to know. I think one of the things we can do is look across the Tasman, and we can look at the regime that sits around the Australian gas industry. What we know is that, currently, our gas market transparency is far weaker than the one that the Australians have in place. Even after we legislate for these changes, our transparency regime will be far weaker than what the Australians have in place—far weaker and far less formalised than that system, which is far more extensive and has legislated disclosure especially via its gas bulletin boards and transparency measures. Anyone in Australia can look at this and understand exactly what is happening in the gas market. They can make decisions based on that, and they can make good decisions based on that. It is in the legislation, they know what to expect, and it’s not at the whim or the mercy of Ministers to decide what their disclosure will be. The Australian system requires real-time standardised data, while New Zealand will rely on relatively light, partly voluntary arrangements. Even after this bill and the follow-on regulations are in place, New Zealand will be closer to Australia but will still have a lot lighter touch than the Australian system and be a lot narrower in scope than the Australian full bulletin board and the Australian Competition and Consumer Commission and Gas Market Reform Group regime that is in place there. That is something that as a House, in the committee stage, we need to understand. We need to understand why it is as legislators that we think that New Zealand companies, the New Zealand energy system, and the New Zealand public deserve less transparency and deserve less information than those people in Australia can get when making the same decisions. These are important questions, and we will need to come and look at what it does because this bill is in the national interest. We know that our gas reserves are dwindling, and we know these have been dwindling since the early 2000s, and we know, even in the last three years, that there has been some quite radical re-evaluation of what New Zealand’s known gas reserves are. The New Zealand public and New Zealand businesses need to understand that. They need to understand that in order to make choices. We also, in a time of such volatility around the known reserves in our gasfields, need to know that we’re getting real-time data and that there is good information there, because that balance between electrons and molecules is going to be the way in which we balance our economy over the coming decades. We know that it is electrons that will provide the economic growth and be the engine of New Zealand. It is electrons that will keep our people healthy, and it is electrons that will keep our people in work. But we have to have a way to smoothly move away from the expensive fossil fuels—in this case, molecules—that have, for decades, been driving our economy. We have to ensure that workers aren’t left behind. We have to ensure that people have well-paid, meaningful, and good jobs. It is only through having access to data that we will do that. On this side, we feel passionately that that has to be the very best-quality data that New Zealanders can get their hands on. I’m not convinced as to the reason why we should be settling for a weaker, lighter version than the Australians have. If we hear arguments that it might introduce uncertainty, it might drive away investment—well, I think let’s be grown-ups in this discussion, because what we can look at is we can look at an Australian gas industry that is going through similar pains as New Zealand at the moment. We look at the Bass Strait and what is happening in the state of Victoria in terms of the rising price of gas. And that is when you haven’t even mentioned when you hook liquefied natural gas (LNG) into this system and what that does to things as well. But what we need to know— Hon Members: Oh! Hon Dr MEGAN WOODS: And we’re hearing “Ohs” from the other side—what that does to price. What we heard in the Monetary Policy Statement that the Reserve Bank put out only this week is that it showed that European countries relying on LNG had seen 60 to 90 percent increases in energy prices. The Reserve Bank hasn’t even bothered modelling yet what the impact on inflation—the increased inflationary figures we saw in the Monetary Policy Statement—the increased inflation that LNG is going to add into that for New Zealand. If this Government goes ahead with introducing LNG into the system, watch bills rise. That’s what we can see. We saw it in the Monetary Policy Statement in the kind of inflation that is being seen overseas. This is the kind of information that is needed as we go through this transition, because, since we are now talking about LNG, just about every analyst out there is saying that LNG will set the marginal price for gas in New Zealand. When we are looking at contracts, when we are looking at price, it is that international price—a volatile geopolitical world, where we know LNG is inflated by 60 to 90 percent in Europe at the moment—that will be setting the price that our businesses here pay. What does that mean for ordinary New Zealanders? That means less jobs, that means factories closing, and that means people not being adequately able to transition through and for the changes to be made. So we support this bill. We support having more disclosure and more transparency, but we do ask the question of why we are settling for a lighter-touch version—one not as good as the Australian Government has put in place across the Tasman. SCOTT WILLIS (Green) (23:53): I rise here not only to support the Gas (Market Transparency) Amendment Bill but to support transparency in general. Wouldn’t it have been helpful if we’d had transparency on the visits by Fonterra and Z Energy to the Prime Minister’s office and transparency on the documents they provided? DEPUTY SPEAKER: It’s not related to the bill, Mr Willis. SCOTT WILLIS: Just as the lack of confidence in the gas market has been reflected in shorter gas contracts for gas users, so has the lack of transparency in the Prime Minister’s dealing with lobbyists—that’ll be reflected in a shorter political contract. DEPUTY SPEAKER: Mr Willis, I said it’s not related to the bill. Come back to the bill. SCOTT WILLIS: Thank you, Madam Speaker. We’ve heard how opaque the gas market is. The problems have been readily identified. We do have declining gas supplies—that’s a fact. That’s been known for 26 years, because there isn’t any more gas. We’ve had over-rosy projections. That’s a feature of the gas industry the world over. The gas industry is known for misleading the market the world over. We have had— DEPUTY SPEAKER: We’re not going to go down that track again. If the member wants his 10-minute speech, do not break the rules that I’ve already talked about tonight. SCOTT WILLIS: Thank you, Madam Speaker. We have had volatility in production, and that has been very, very visible. We’ve had surprises on the downside leading to very high forward prices, as the Minister talked about earlier. We’ve had a very poor utilisation of our other energy assets as a result of the inaccurate information that has been provided and the opaqueness of that information to the market. We’ve also heard the myths propagated by members of the Government that the oil and gas ban was responsible for the lack of fossil gas, when all the experts know that the drilling has come up dry. There just isn’t the gas, no matter how often the members of the coalition would wish that there was, would say that it’s there, would hope like hell that they could find some, they’re just not there. The Government can be as Trumpian as they like, it isn’t there. Records show that even before 2018, most of the major oil companies had given up their exploration permits and left New Zealand, citing bad data—bad data—high technical risk, or better opportunities elsewhere. This is what this Government’s operating on: bad data. The more we know, the better we can plan. For this reason, we support this bill—yes, we do support this bill—to improve the visibility and transparency of the remaining fossil gas supplies, as we undergo the inevitable transition to a fully renewable energy system and energy independence, based on our fantastic wind, our solar, our great hydro lakes, and our geothermal. Which brings me to my second point. Transparency is one thing, and we would like it—we would dearly like it—but the other thing we need is a national energy strategy to provide greater certainty. This is something that the energy sector is calling out for. I know the Minister for Energy has cancelled work on a national energy strategy, but on Wednesday evening, when we met, I made the offer. I made the offer to work together on a national energy strategy. I took along Bill Birch’s energy strategy of 1979 to show that there have been times—do you know this?—when the National Party could show some leadership in energy; they could do it. Look at this: this is the energy strategy from 1979—47 years ago. Simon Court: Madam Speaker, point of order. I invite that member to table that document, if he would like that to go into the record of the House. DEPUTY SPEAKER: Well, if the member wishes to do so, he can seek leave to do that. SCOTT WILLIS: I think I may be able to. It’s actually from the Parliamentary Library. If I’m able to table it, I’ll table it as well. DEPUTY SPEAKER: It’s public information, so I’m sure Mr Court can go and get it from the library if he needs it. Thank you. SCOTT WILLIS: Just for the member’s education, I can summarise the key points from 47 years ago, the national energy strategy. First point: to reduce New Zealand’s dependence on imported oil. Second point: to increase diversity in New Zealand’s energy supply system. Third point: to ensure that energy is used efficiently through the reduction of waste and by using appropriate energy types. Fourth point: to transfer energy supplies from non-renewables to renewable sources in the long term—47 years ago. National knew what they were talking about. Where the hell have we got to? Fifth point: to establish a framework for energy planning, which provides for changing social and economic circumstances. My goodness, Bill Birch had it right. Where have you gone wrong—[Interruption] DEPUTY SPEAKER: There is too much noise over here. Despite Mr Willis’ speaking loudly, he’s having to do it to speak over top of everybody over here. SCOTT WILLIS: Thank you, Madam Speaker. We are certainly in the midst of changing economic circumstances now, with the Government’s mean little Budget, killing off Ara Ake—New Zealand’s energy innovation centre—cutting the Energy Efficiency and Conservation Authority’s baseline funding, cutting the Warmer Kiwi Homes programme back. We’re not just changing and challenging economic circumstances that we’re facing, we’re facing it because of the Government’s economic incompetence. But we also face an orange narcissist who squats in the White House, along with a genocidal criminal Benjamin Netanyahu— DEPUTY SPEAKER: Just be a little careful with your language, Mr Willis. SCOTT WILLIS: —with the warmongering, killing innocents, and throwing the global fossil fuel supply into disarray and chaos. We do face some global shock waves. While we are right behind the need for transparency and much more comprehensive information about our declining fossil fuel reserves—note, they’ve been declining for 26 years. Note that if we burn them, we’ll be in a climate chaos. We want to ensure that we do that to allow better management and planning. I’ve also made a very genuine offer to work constructively with the Government to evaluate a system-wide supply and demand scenario and develop national and regional transition plans to electrify the nation and to gain energy independence. I made that offer several times and I will continue to make that offer, because, for goodness’ sake, we are in an energy crisis at the moment, and we should be able to rise above politics and make this work. The more we know, the more we can plan. Two winters ago, if we’d realised then the gas situation, we would not have had such high prices that have been part of the cause of the deindustrialisation that this Government has overseen. This Government— Andy Foster: I think it was the last Government. SCOTT WILLIS: I hear the comments that this may have been the last Government. Well, actually, what’s happened in the last two years, Andy Foster? The deindustrialisation of our nation is under this Government. Knowing the real situation will enable better planning investment. Alongside the greater transparency through the Gas (Market Transparency) Amendment Bill, we need a gas transition plan, because there isn’t any more to find. It’s not the hopium that Simon Court thinks is there for future generations. There’s no more hopium. But, firstly, we need a gas transition plan to help those households. They only consume 4 percent of our gas supply, but they are very vulnerable, because these are stranded assets. The networks are turning off, and they’re looking at where they turn off next. They may only consume 4 percent of our gas, but they’re very exposed to the risk of being switched off as those gas networks become uneconomic. DEPUTY SPEAKER: This debate is interrupted. The House stands adjourned until 9 a.m. tomorrow, which will then be yesterday. Debate interrupted. Sitting suspended from 12.04 a.m. to 9 a.m. (Saturday) Urgency