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Jim Sutton presses on with Research Levy

Ladies and Gentlemen: we live in a small world, don't we? A political stunt, a catchy if misleading slogan, can travel round the world as Mike's Spanish anecdote shows.

Contrary to all the amusing schoolboy humour, we are not taxing animal farts. We're not even taxing animal belches or exhaled methane, the source of the emissions we're most concerned about either.

We're talking about a research levy, not related to the level of emissions, but targeted at ways to mitigate New Zealand's major contribution to stuffing up the atmosphere of our planet. It's not our most preferred option. We are still holding out for the possibility of some in agribusiness stepping forward to meet the sector's commitments on a commercial investment basis.

Pastoral agriculture is the biggest industry in New Zealand, our major export earner. This is recognised, not just by the Government which has the Growth and Innovation advisory body working hard on measures to introduce to boost production, but by many others around the world. This week, it's Time Magazine.

There has been much play lately about 17 so-called extra taxes this Government is purported to have imposed on rural communities. I've scanned the list ? they are mostly changes to various excise and userpays charges, and they apply to all our citizens actually, urban as well.

In response, I would like to tell you about what this Government has done specifically for rural people.

We have established the Heartland Services Centres, returning essential government agencies back to rural areas.

We've provided extra funding to help retain and recruit GPs in isolated rural areas, providing for a rural premium, a Rural Locum Support Scheme and the Rural Practice Support Scheme. We have funded mobile surgical units to reinforce services in rural areas.

We're facilitating and promoting the provision of broadband internet services to rural communities and remote regions.

There is the Sustainable Farming Fund, which has funded several projects in Hawkes Bay, including the LandWise minimum tillage, maximum productivity project which has been very successful. This fund works with community funding as well, but would not have been possible without the Government's funding.

Since Labour became government in December 1999, we have often provided money to help farmers deal with the adverse effects of climate on their businesses. Some of that came to your region last year.

We've facilitated farmer-supported restructuring in the dairy, kiwifruit, and hops industries, with work ongoing in the wool, meat, and wine industries.

There are many other things this Government has done that help rural people, at the same time as helping urban people too.

Why has the Labour-led Government done these things specifically for rural people?

Because pastoral agriculture, forestry, horticulture, the whole primary production sector is important to us and to New Zealand as a whole. To ensure that rural economy is sustainable, we support the sustainability of the rural environment and social services.

We also work hard outside New Zealand to maintain and improve our market access in other countries.

Next month, there is the next full ministerial meeting of the World Trade Organisation, where I hope decisions will be made to advance the Doha Development Round. New Zealand is a small country, and our delegation won't be as large as some there, but we'll be working extremely hard on New Zealand's behalf.

For international issues, we need those multilateral organisations, such as the WTO in trade, and we need them for other issues ? such as climate change.

Again, we are a small country. On our own, we can only have a small impact. We need the international community to act together if we are not to be adversely affected ? and the mechanism for achieving that in climate change is the Kyoto Protocol.

New Zealand was the 101stcountry to ratify, joining up after our significant trading partners and forest industry competitors the European Union and Canada.

For us, industrial emissions are not our main contributors to the problem as they are to other countries. Just over half our emissions are from pastoral agriculture ? the by-products of ruminant digestion and the addition of nitrogen to soil.

Pastoral agriculture is also responsible for more than half of our export earnings, and being a living system, it is hard to make changes quickly.

For these reasons, the Government has itself undertaken to meet on behalf of pastoral agriculture the emissions charges on non-carbon dioxide emissions for at least the first commitment period of the Protocol, which runs through to 2012.

Instead, farmers are being asked to help fund research into ways of reducing the emissions. If this research is successful - as it is certainly promising - it is likely to improve animal productivity at the same time. And it could avoid the need to reduce sheep and cattle numbers in sensitive catchments, such as Lake Taupo.

In our assessment of the Kyoto Protocol, the Government has separated land-based industries. So pastoral agriculture is considered separately from forestry, even though in the case of farm foresters, these are the same people in some cases.

As you know, Cabinet decided in October last year to retain all forest sink credits that will be generated under the Kyoto Protocol by forests planted since 1990, the liabilities associated with those credits, and the further possible liability for deforestation of up to 10 per cent of our forest area.

After consultation with forestry, we raised the cap on the liability the Government will assume for deforestation from 5 percent to 10 percent of forests expected to be harvested during the Protocol's first commitment period (2008-2012). This equates to 21 million tonnes of carbon dioxide emissions.

In recognition of the forest sector's role in creating the sink credits, the Government and the sector have agreed to develop a "forestry industry framework agreement" for further policy development.

Basically, this FIFA is a mechanism whereby Government can allocate finance into the forestry sector to protect and enhance the Government's sink credit assets and also to recognize and incentivise the creation of these assets by the forest industry. The FIFA is essentially a list of what the forest industry would like to see funded by Government and it is being analysed by officials who will report back to Ministers later this year.

I think I need to repeat a part of the Government's Kyoto Protocol implementation policy announced last year that has disappeared into the

ether: There will also be incentives for the establishment of permanent forest sinks. The preferred option is for forest owners who establish permanent (non-harvest) forest sinks - for example by regenerating indi



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