“Gone by lunchtime”… If only the same could be said of the debate that wouldn’t die: carbon tax vs emissions trading

The post has been updated, to address the Atomic Energy Act. Hat tip: Graeme Edgeler, the Legal Beagle.

The fizzle of Patrick Gower’s yellowcake story was about as surreal as the story itself.

TV3's Gower broke a story last Wednesday about yellowcake shipping via New Zealand ports. It’s been happening once in a while, for a very long while — over twenty years — and weekly, more recently.

Even with both governments implicated, the lack of fallout was astonishing. No one but Gareth Hughes and Russel Norman seemed to care. It’s inconsistent with New Zealand’s anti-nuclear policy, they said, to be even tangentially supporting the uranium industry.

New Zealand Nuclear Free Zone, Disarmament and Arms Control Act 1987
On the matter of this Act, Nick Smith spanked the Greens quite nicely: nuclear-free policy is not a radioactive-free policy, he said [question 9], and by the way, what are the Greens' views on cancer treatment?

He was happy to rely on Australian policy and assurances, that their uranium is used only for non-violent purposes; plus ERMA assurances that the yellowcake poses zero risk to environment or health.

And he’s right: ours is, as it has always been, an anti-nuclear powered or armed warship policy, not all anti-all civilian use of the technology. In that sense, this is a sideshow.

Yet Don Brash, Geoffrey Palmer, and John Key have all mis-stepped, in the not so distant past, over not dissimilar logic. (There are differences between the three: one of them is not like the others, in my view; over to you to figure out which.)

We — or David Lange, on our behalf — stood up against the big guy, on the world stage, and won. When we dust off that iconic memory, bound up with pretty ‘no nukes’ ribbon, I wonder if we sometimes misremember what the policy must have been.

Perhaps, the lack of interest in Gower’s story is a measure of our new maturity, perhaps a newfound clarity about the policy scope. But I’m not sure either is true. Gower’s story was the best, non-politicised chance we’ve had to debate this thing at the core of our national identity, and we’re randomly passing it up.

“Yellowcake undermines no nukes policy”: dumb argument. Unprincipled argument: if environmental champions were defending nuclear power generation as a global green good (and some do), and if they were right, it would just not be good enough for New Zealand to pontificate and wring its hands and refuse to help.

But as a global leader now, on nuclear non-proliferation, is this an opportune time for our policy to be extended? Even in civilian contexts, arguably, the net security, health and safety, and environmental hazards make nuclear not worth the risk, for any country, anywhere.

[Update: The Green Party is seeking a review of the existing legislation, to include a ban on uranium shipping, according to this report in the Nelson Mail:

"The Green Party wants a review of the legislation banning nuclear weapons and nuclear-powered ships from New Zealand waters to include a ban on uranium being shipped through Nelson and other ports.

Green MP and oceans spokesman Gareth Hughes is to draft a member's bill in an effort to have uranium shipment bans covered by the New Zealand Nuclear-Free Zone, Disarmament, and Arms Control Act 1987."]


Atomic Energy Act 1945
However, under the Atomic Energy Act -- arguably, part of the fabric of our anti-nuclear protection, although it arrived a lot earlier -- the government, and Ministers from previous governments, may have questions to answer. At least, they ought to be asked them.

Section 7 of that Act provides that "no person shall, without the prior written consent of the Minister, import any prescribed substance" in excess of 5 pounds in weight. Under the Act, "prescribed substance" means uranium. "Uranium" includes all chemical compounds of uranium. Wikipedia classifies yellowcake as a uranium compound. "New Zealand" includes any territory subject to the authority of the government of New Zealand.

So, was the yellowcake "imported"? The Atomic Energy Act doesn't define "imported". But the Customs and Excise Act does.

The Customs and Excise definitions are for the purposes of that Act ("In this Act, [x] means [y] ..." it says in section 2). So there is room for argument about whether "importation", defined for Customs control purposes, can or should be translated to the Atomic Energy context.

However, the definitions are quite clear. "Importation" means "the arrival of goods in New Zealand in any manner, whether lawfully or unlawfully, from a point outside New Zealand". "Arrival", in relation to a craft, which includes ships, "includes the arrival of the craft, whether lawfully or unlawfully, in New Zealand from a point outside New Zealand whether or not the craft ... berths, moors, anchors, or stops at ... any place within New Zealand". "New Zealand" means "the land and the waters enclosed by the outer limits of the territorial sea of New Zealand", which extends, roughly, 12 miles offshore.

Shipping yellowcake through our waters is "importation", in Customs Act terms.

That means it requires the prior written consent of the Minister responsible under the Atomic Energy Act.

The government may be doing this; now that it knows about the practice, in all likelihood, it is. Gerry Brownlee hasn't been asked.

However, if shipments (ie, imports) proceeded from time to time without that Minister's knowledge, under this government or a previous one, they would have been in breach of the Atomic Energy Act.

As such, they would also have been "unlawfully imported", as defined in the Customs Act.

Unlawfully imported goods are forfeited to the Crown: section 225 of the Customs Act. According to this Law Commission report, that means title vests in the Crown. To my understanding, there is no discretion about this. It just happens, by virtue of the imports' unlawful status.

Whether we knew it or not, or benefited from it, chances are, NZ has at one time or another over the last twenty years been party to the yellowcake trade, as the holder of the property right in some shipments ...

I wonder how much Aus owes us? 


Reports on Carbon News and, apparently, Radio New Zealand [question 3], that Labour is reconsidering a carbon tax, followed hard on the heels of hints from Green sources.

If either party is sticking a pre-election finger in the wind, neither can do so with any credibility.

When the ETS Review Select Committee reported, almost all were persuaded of the merits of a carbon tax; even ACT is now persuaded of the merits of a carbon tax, for heaven’s sake. But we kept the ETS. And Phil Goff’s Federated Farmers’ speech last week talked of replacing National’s legislation, but also a “market based emissions system”; when he laid out his policy choices for the farmers, carbon tax was not among them.

But just in case:

Prior to its rushed ETS, Labour proposed — then cowardly canned — first the ‘fart’ tax (2003), then a so-called comprehensive, except agricultural emissions, carbon tax (2005).

The Greens ummed and ahhed about supporting Labour’s Climate Change (Emissions Trading and Renewable Preference) legislation, which brought in the ETS. In the end, they supported it, making clear their ambivalence — it had the same problems as National’s, on a bit smaller scale. Here’s one among many quotes from Jeanette Fitzsimons:

“Since 1993, the Green Party has been advocating a carbon charge, with corresponding reductions on the bottom band of income tax. So we welcomed the Labour Government’s 2002 policy that among other things promoted a carbon charge. But because the Government did not say what it would do with the money, it lost the political battle and … abandoned the charge in 2005. That was 4 years wasted. We now have a second-best system of an emissions trading scheme, and economists and a number of business people have recently come out in support of the view that it is a second-best system. Too late, those who now regret their opposition to the very much simpler and fairer carbon charge, with lower compliance and administration costs and real revenue to recycle, must accept their role in killing the better scheme and accept the second-best. It is here, and we have to make it work.”

That was in September 2008. A few months later, post-election, the Greens were outraged by the ETS review, and spent a lot of time defending the status quo. Fitzsimons again, on the establishment of the ETS Review Select Committee:

We are not apologists for the current emissions trading scheme. We are sceptical that emissions trading creates an opportunity for many people to create markets in buying and selling carbon where they do nothing except leverage the market. But it’s the only thing going to put a price on carbon. We need to get on and do it.”

It’s never too late to change one’s mind, perhaps. A carbon tax was always the simplest and best option, and would be an improvement on National’s revised scheme.

But, invoked by the Greens many times in response to others’ delays, is an argument about uncertainty, and its hazard to responsible investment. Starting again from scratch is an impulse even Nick Smith has resisted.

The risk is that the public, business investors, and our export markets lose patience entirely, and politicians all credibility, on this issue.

If Labour and the Greens are seriously considering this, which I really cannot quite believe, they ought to stop, and breathe, and ask themselves — can you see a future in which any National-led government would prefer your carbon tax to an ETS market mechanism? — and be guided by that answer.

Comments (12)

by Graeme Edgeler on June 28, 2010
Graeme Edgeler

Do you think it accurate to say that the yellowcake has been "imported" into New Zealand? It left pretty quickly, certainly, but if the transit involves (albeit temporary) importation, then health and safety/ERMA isn't their only concern.

I put an OIA request to the MED last week in respect of compliance with the Atomic Energy Act 1945. It will be interesting to see what if anything comes up.

by Claire Browning on June 28, 2010
Claire Browning

Crikey. Technical legal question. Uh ... [long pause, formulating non-technical stab at an answer ...]

As long as the ship is only either (a) in transit through NZ waters, or (b) tied up at one of our ports, with the stuff still on board, isn't it, arguably, kind of like the pre-Customs clearance amnesty bit, at airports -- or indeed, the pre-Customs clearance amnesty bit for arrival in NZ by sea? See here, for example, where the border cash report and other documentation are presented on arrival.

If you were going to try to argue that import happens at the point of entering NZ waters, or something, or even the point of docking, I don't think that works, unless you want MAF, Customs, et al, to relocate all of their border processing for sea containers, etc, offshore.

Are you saying that's just a convenient fiction?

I probably wouldn't dream of arguing with you about it, just trying to understand what the argument in fact would be ...

"Border" must be defined in an Act somewhere, from which I assume definitions of "importation" and so on would follow, just can't find it at the minute ...

by Claire Browning on June 28, 2010
Claire Browning

PS: it does kind of go to the point of the post, though. Good question. Great question. Just like, on the other side of the issue, the Greens ought to be pulled up hard on whether their understanding of the no nukes policy is incorrect, or their representation of it merely dishonest; what do they want the policy to be (presumably, no nukes means no nukes); and have they thought through the wider global implications, or just wholly NZ-centric. 

Why so little interest? What am I missing here? I mulled over it all weekend, off and on, trying (and failing) to convince myself it is a total non-issue ...

by Tim Watkin on June 28, 2010
Tim Watkin

Claire, I think I'm with Jeanette on this one. If only farmers hadn't been such idiots... if only Labour hadn't lost its nerve... but in politics, an imperfect solution is better than none at all, so long as it doesn't close the door to improvements. (Actually, as I write that I'm sure there are a dozen of cases where I would disagree with such a premise and say it's better to fight for a proper solution, but anyway...).

It seems to me that global emissions trading is very likely, admittedly with a lot riding on Obama's ability to introduce it in the US (although states have set up their own and could yet force the federal hand, although that'd take much longer). So we lose nothing but some short-term costs by being part of that and setting a high (all gases, all sectors) threshold.

And, with a price on GHGs introduced, who says the door's closed and we can't then look at a carbon tax as well? An ETS ain't going to cut gases sufficiently on its own, so maybe a tax is stage two.

by stuart munro on June 29, 2010
stuart munro

Then we can use the carbon tax topay for the ETS :)

by Claire Browning on June 29, 2010
Claire Browning

Claire, I think I'm with Jeanette on this one ...

Tim, as am I. As usual!

If (and it is an 'if', ie, speculative on my part) the Greens now consider the ETS broken beyond repair, they should never have voted for it in the first place. The differences between Labour's and National's are degree rather than kind. Second, if ETS's are a failure as a climate change policy tool, we're screwed anyway, frankly -- as you say, that seems to be becoming the global preferred method for pricing carbon. Third, I do think that you can fix it, to make it a proper or better solution: even though it is always going to be more complex and bureaucratic than a straight tax, lots of the problems are to do with policy design, not policy failure. Fourth, if it's the only hope of securing any NZ cross-party accord, that in itself has to be a very desirable goal, therefore a quite strong argument.

I'm not sure about this, but am wondering if some sort of carbon tax-plus type arrangement would even be necessary: if we think that, domestically, the world price on carbon is too low, to act as a proper signal, presumably we can set and enforce a higher minimum price, just as National has presently set a $25 (or $12.50, once you factor in the half obligation) maximum.

Graeme, I daresay you don't want to steal your own thunder, on incipient future post! Just thinking about cruise ships, though. When they're parked in port, surely, border authorities aren't taking the beagles through all the rooms, and confiscating Parma ham and melons from the kitchen? Why should yellowcake, in sealed containers, in a cargo hold, be treated any different?

Of course, if you are right about the importing, I would be wrong about the Greens: there would indeed have been a breach of NZ law and policy.

by Graeme Edgeler on June 29, 2010
Graeme Edgeler

Why should yellowcake, in sealed containers, in a cargo hold, be treated any different?

Different statutory schemes. The Customs and Excise Act (and by extension, the Atomic Energy Act?) deals with importation, which includes anything coming within New Zealand (including its territorial waters), the Biosecurity Act deals with arrival in New Zealand, which means to reach land (in respect of a person), or anchor or berth (in respect of ships). I haven't gone through the rest of the Act, but I anticipate that our Border Control could indeed search a cruise ship. I imagine they've gone through the correct channels to ensure they're not breaking the law, however, and that Biosecurity NZ choose to focus their energies elsewhere.

But thanks for the questions: I'm sure I'd have gotten around to it, but on looking up the definitions of Goods, Importation and New Zealand in the Customs and Excise Act, it seems reasonably clear that the yellowcake is being imported. That doesn't mean the Greens are right of course, they've been focussing on the Minister for the Environment, who didn't know about the shipments, that doesn't mean the Minister of Energy hasn't given the required written permission under the Atomic Energy Act - we may well have been following the law.

by Claire Browning on June 29, 2010
Claire Browning

Yes, we've been working in parallel. I've been doing the same, just logged in to update the post ... clearly Customs can, in relation to cruise ships; as to whether they do in practice, that's a separate matter.

by Claire Browning on June 29, 2010
Claire Browning

Shipping yellowcake through our waters is "importation", in Customs Act terms.

That means it requires the prior written consent of the Minister responsible under the Atomic Energy Act.

The government may be doing this; now that it knows about the practice, in all likelihood, it is. Gerry Brownlee hasn't been asked ...

I have asked him:

Good afternoon,
Further to TV3's news last week, that yellowcake shipments are proceeding via New Zealand, can the Minister confirm that he is providing his prior written consent to its "importation", as required under section 7 of the Atomic Energy Act?

Can he also confirm that consent, in terms of the Act, was provided for any and all such shipments for which he was responsible?

by Claire Browning on July 01, 2010
Claire Browning

Two corrections, and an update. First, the Green Party is seeking a review of the existing legislation, to include a ban on uranium shipping:

"The Green Party wants a review of the legislation banning nuclear weapons and nuclear-powered ships from New Zealand waters to include a ban on uranium being shipped through Nelson and other ports.

Green MP and oceans spokesman Gareth Hughes is to draft a member's bill in an effort to have uranium shipment bans covered by the New Zealand Nuclear-Free Zone, Disarmament, and Arms Control Act 1987."

Second, Patrick Gower didn't break the story; the Nelson Mail says that it:

"reported last month that uranium ore concentrate, known as yellowcake, was being shipped through Nelson, after the Environmental Risk Management Authority (Erma) approved an application by Energy Resources of Australia to routinely ship the product from Adelaide as part of a general cargo run. The concentrate is coming through the ports of Nelson, Napier and Tauranga [and Auckland, according to Gower] en route to Philadelphia, United States via Cartagena, Colombia and Manzanillo, Mexico."

The same Nelson Mail article refers to "approval to bring the concentrate through New Zealand [that] runs until the end of 2014".

By contrast, Gower reports that "MFAT also said that because the shipments were only transiting - staying aboard the ships in port - there was no requirement for them to get any consent at all".

That would seem to suggest that an approval of some sort has been granted, although considered unnecessary, out of an abundance of caution.

However, I haven't heard further from Mr Brownlee's office; so, under the OIA, I have requested copies of the MFAT advice referred to above, and the approval. (Graeme's request, mentioned on the thread above, is similar, but a bit broader.)

And that's a big call, from the Greens: New Zealand, as a corollary of its anti-nuclear policy, won't facilitate uranium shipping, for any purpose, anywhere. Really? I mean, it's a viable argument, as I said in the post; and I've a fair amount of sympathy for the argument, but are we sure that any global benefits are always always outweighed by the risks and costs?

by Claire Browning on July 09, 2010
Claire Browning

Gerry Brownlee’s office says they have no information to release within the scope of my request, and may they now consider this matter closed?

Yes, I said. Of course.

Apparently, therefore, that office hasn’t been involved, either in providing consents or receiving any written advice on the issues.

This is confirmed by MED officials' response to Graeme, with a foretaste of government advice about why.

MFAT is responding under the OIA to my other questions.

According to MED: “Section 7 of the Atomic Energy Act regulates the importation of uranium for the production of atomic energy or research matters. However, the imports of yellowcake you refer to were transhipments, and were not for energy or research in New Zealand”.

They were, therefore, says MED, regulated under the HSNO Act, and it is ERMA only that has been providing consents; permits issued by ERMA for transhipment are available on their website.

Handy. But … correct?

Section 7 of the Atomic Energy Act says: “No person shall, without the prior written consent of the Minister, import any prescribed substance” in excess of 5 pounds weight. Fullstop. Nothing about the reasons for import.

Sounds conclusive. But an Act has to be read in the light of its purpose. The long title of the Atomic Energy Act says that it is:

An Act to make provision for the control in New Zealand of the means of producing atomic energy and for that purpose to provide for the control of the mining and treatment of the ores of uranium and other elements which may be used for the production of atomic energy, and to provide for the vesting of such substances in the Crown”.

Its purpose is to control, in New Zealand, the means of producing atomic energy -- not, as MED would have it, the control of production of atomic energy in New Zealand.

Another rule is that the specific overrides the general. Since the Atomic Energy Act is specifically directed to prescribed substances including uranium, I doubt there is any defensible argument along the lines that HSNO says transhipment of hazardous material is okay if regulated in that way, therefore the Atomic Energy requirement, if any, can be glossed over.

Semantics? Next stop Hansard, 1945, see if that sheds any more light on Parliament’s purpose at the time of passing the Atomic Energy Act … [Update: the current series only starts at 1958.]

I'm sure government would have had a whole proper legal argument about it, not my cursory hour or two, and taken good advice.

But it's just that both Graeme and I asked for the advice on why the Atomic Energy Act didn‘t need to be complied with, from different sources, and neither MED nor Min Energy have anything formal of that kind to release.

MFAT, perhaps.

Let's say, just to humour and flatter myself, I am right -- or at least that it’s arguable. Would it matter? Do we really think it makes a material difference whether Brownlee consents, as well as ERMA? Are we really worried about some legalistic definition of importation, relying on a Customs Act that might or might not apply in these circumstances, when any normal person -- ie, me, originally -- is more likely to think of an import in terms of passing through Customs?

Seems not ...


by Claire Browning on July 27, 2010
Claire Browning

MFAT, like MED, confirms in a letter to me dated July 27 that the approvals given were ERMA approvals. MFAT consent was also required, and given, in terms of the Customs Export Prohibition Order 2008.

On the subject of the Atomic Energy Act, and "importation":

You further asked for official advice relating to the Atomic Energy Act 1945, section 7 ... no such advice exists as there has been no request seeking to import uranium, nor is the Ministry for Economic Development aware of any such importation.

Finally, you requested information regarding the checks undertaken by Foreign Affairs officials to ensure yellowcake transiting New Zealand is only used for non-violent civilian purposes. The government accepts Australian policy as an assurance these shipments are only used for non-violent civilian purposes ... Because of the strict conditions imposed by the Australian government, transits of Australian-origin yellowcake present no proliferation risk.

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