Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Hansard source

This debate is not about us. This debate has been used by many to try to define themselves or their opponents. Sadly, it has all basically come down to politics. For those who are passionately devoted to the climate change cause, you have a right to be disappointed with what is taking place here. Those who feel equally strongly the other way—and there are many who do—also have a right to feel aggrieved. I believe they have been used in this debate also. The truth on all of these matters always lies somewhere in between. For my sake, and for the sake of my children, I will give the planet the benefit of the doubt. This does not constitute a blank cheque for any action but rather sensible and reasonable action, measured action, balanced action, action that is always looking at the emerging science, action that is always looking at the modifications that need to be made. So I will not allow my good faith towards this issue to be appropriated and to be misused.

But again, it is not about us. It is not about whether individual politicians here in this place, members of parliament, believe in climate change or not. That is not the debate. That is the debate I believe the government wants us to have, and as I have listened to those speaking opposite about this matter, that is principally been the theme of the presentations they have made. The scheme we debate here should not be about even what the government is doing, because ultimately it is about what individuals do, what choices they make, what investment they undertake, what sort of future they envisage and how they plan to get there. It is not just about our decisions here as individuals in this country; it is about the decisions that billions of people around the world are going to make today and in the future and for many years to come.

An ETS, properly designed and calibrated, can send an efficient and effective market signal to encourage and justify investment by individuals in low-emissions technologies and behaviours. This is a true statement. But that is not a blank cheque or a licence for any ETS at all. The question before the Australian people is: what are you as individuals, not necessarily the government, prepared to do? Because it is you, the Australian people, who will be paying the price. The previous speaker, the member for Mitchell, made a valid point: this is a tax. We should call it a tax—it is a tax. It is a tax that is going to be on every grain of carbon that moves through our economy and through our society. As the community becomes more aware of the costs of taking action in this debate to reduce carbon emissions, so too to do their expectations rise of the environmental outcomes they expect. This bill will not meet these expectations.

A false premise has been put out amongst the community over many years as this debate has become intensely popularised. If there are people out there listening tonight that feel that the Carbon Pollution Reduction Scheme Bill 2009 [No. 2] and related bills, as proposed, will save the Great Barrier Reef, make the rivers flow, make the tide drop or make the sea levels not rise, they have been sold a falsehood. What we are debating here is some action, a scheme. It is a scheme that has many flaws, and we are debating those flaws in relation to the legislation this evening. But we should not allow Australians to believe that this is a silver bullet, that it is the only action that can be taken to reduce carbon emissions both today and in the future. That is a debate to which we do not know all the answers at present. To imply that all the answers are wrapped up in this tome of bills that we are debating tonight is incredibly misleading to the Australian people and, frankly, takes a loan of them.

I feel that we are cheating the Australian people somewhat with the timing of this legislation before the parliament. We are being asked to sign up to a process when none of us—those who have written this bill, those who have brought this bill into this place, those who have undertaken, I am sure, extensive consultations, those who have made submissions to those consultations and those on both sides of the debate who have laboured over many, many years on scientific research—yet understand or appreciate the issue in its entirety. We do not know what solutions and actions will be effective or what is an appropriate trade-off for undertaking those actions. We simply do not know, and I think anyone who pretends they do is misrepresenting themselves to the Australian people.

There are many aspects of this bill that, if passed, we will all greatly regret. I have no doubt about that. Even if this bill is passed in the weeks that lie ahead, and even with the amendments that we have proposed, there will be things in this bill that will leave a very poor legacy. There are sleepers in this bill that we do not yet understand. There are things that will present themselves in the years, let alone weeks and months, ahead that will drastically change the environment in which these measures operate. I also believe that whatever is passed here is unlikely to survive to its implementation date—such is the fluidity of this issue and how quickly it is moving.

There has been much talk of the event that will take place in Copenhagen when people from around the world will gather in literally tens of thousands and take over that city for yet another international meeting. But we are kidding ourselves if we think that what comes out of that meeting will give us any greater guide, in terms of what the rest of the world is doing, than what we know now. There may be some great emergence of sentiment; there may be some commonality of view. But I am not very optimistic that we will see any great conclusion of matters in Copenhagen. We are, again, kidding ourselves if we think that may inform us greatly.

What we will see in Copenhagen will be yet another step. There have been many steps; there will be more steps. It may begin a process which will take another five years to conclude in terms of the actions that may be put in place. I do not know whether Copenhagen will provide us with much of a guide. But it is an important meeting. It is important for us to frame the decisions we make in this place on the best information available to us. Frankly, I do not believe we yet have that, and I am continually puzzled by the government’s rush in terms of these bills.

As I said at the start of my remarks, I believe this is all about politics; I do not believe it is about policy. This debate does not do this issue justice, and I think many Australians are fed up with how it is being pursued. I do not think it endears us to the Australian people. Many Australians in my electorate and right around the country have many doubts on this issue, but a great number also have a great resolve to address whatever is happening out there and are looking for some sort of direction from us in this place. So we will debate these matters, we will negotiate the specifics of these bills, and hopefully that will provide some level of direction. But at all times we must be prepared to ensure that our response, as we consider these things in the weeks ahead and here this evening, is flexible. We must be prepared to admit that none of us have the complete wisdom on these matters and, as we learn more, we should have the humility to come back to this place and fix the mistakes that will undoubtedly be made as soon as we know about them.

The question before us now is: what do we need to fix now? The coalition have engaged in good faith in this debate. We have raised a number of issues, which the Leader of the Opposition in particular outlined in his address earlier today. I would like to focus more specifically on the absolutely critical issues from my perspective. The first is the overall nature of the scheme that the government has put forward. This is a big-government answer to the problem. It very much matches the sentiment and philosophy that the government has had on many issues, which is to put the government at the centre of things. This scheme will put the government at the centre of everything—every living being, every ounce of carbon that finds its way around this planet, particularly in this country. This is a big-government scheme that seeks to control all of that. It seeks to count and tax every gram of carbon, collect all of that revenue and then be the arbiter of who gets that revenue back. By definition, that is big-government tax and spend. That is the model that this government has adopted.

This is not the only model of an emissions trading scheme available. There are many other ways that this can be attacked, and the Frontier Economics report that was released several months ago was very clear about the alternatives. As we look around the world and as, I am sure, will be debated in Copenhagen, many countries are looking at schemes very different to what we are talking about here. There are schemes that have been in place; there are schemes that are yet to be introduced. But the big-government scheme that seeks to count and collect tax on every gram of carbon and then arbitrate as to who gets the revenue on the way back out is very much an old-fashioned Labor scheme.

It will involve enormous bureaucracy. It will generate tremendous churn in processing and compliance, which will put an incredible burden on businesses around the country that as yet is not completely understood. Certainly not understood is the impact it will have on the daily operations of those businesses. There will be, in that process of introducing such a massive scheme, extraordinary transitional costs in getting across the detail of this and in complying with it. I think we are being quite naive in how we are engaging with what is going to be, if passed—if approved by this parliament—the single biggest change in our history to how we do business in this country. But we rush apparently headlong into it with not enough detail, with not enough thorough thought.

I should stress that the concerns about the flawed nature of the scheme and the matters the coalition have raised have been echoed by many outside of this place. The second largest refinery that Caltex operates in this country is in my electorate in Kurnell. They have made submissions on this matter. It goes very much to the heart of their operations. Caltex will be the single largest purchaser of emissions permits under this scheme. They will spend up to $1.6 billion per annum. They said in their submission that the current package of the CPRS legislation was flawed and required substantial amendment to ensure it was environmentally effective, equitable and economically efficient. Caltex believes government should take whatever time is necessary to get the design of the scheme right. There is considerable work still to be done in this regard. They say a substantial amount of regulation should be tabled so that it can be debated and voted on with its enabling legislation.

It is proposed that significant issues—including the treatment of the emissions-intensive trade-exposed industries—be the subject of regulation. Eligible emission units being defined as financial products and deferred to payment arrangements for auction and a whole range of other things should be more the subject of the debate. But those things will not be debated as part of these bills because the regulations sit as completely separate matters. Caltex is the largest business in my electorate and they will be the single largest purchaser of emissions permits, and they are concerned. Hundreds of thousands of jobs will hinge on how effectively this is designed and implemented.

The coalition has argued very strongly that the agricultural sector, in terms of its emissions, should be excluded from this scheme and that the opportunities for abatement should be included. This is a very sensible proposal. It is consistent with international practice. We called on the government to do that. Even before our engagement in the good faith negotiations and up until those negotiations commenced, those calls were rejected. There is an opportunity for the government to do the right thing here and I am hopeful that they will do that. If they do do that, it will not be as a result of their desire or intention to do so when they designed this scheme or because they went out into the Australian community and defended their scheme over many months. If they do it, they will have done so only because of the coalition’s insistence that they see common sense and the best international practice to ensure that our agricultural sector not only is not penalised—and our food production basin is not penalised—but has access to commercial incentives to play a significant role in the abatement opportunities that exist for companies like Caltex. They have hit their heads on the ceiling in what they can do to minimise their emissions in operating with their own plant at Kurnell. The only opportunity they have now is abatement. Without the opportunity for abatement—or to pursue things such as biodiesel or whatever—there will be serious limitations on what the agricultural sector can do to do their bit. They are keen to do their bit, but with the way the scheme is designed in denying them the opportunity for agricultural abatement the government will not allow them to do that.

Others have talked about the emissions-intensive trade-exposed industries and the coalition’s proposals. They are all about putting Australia on the same wicket as our competitors around the world. That again is just simple common sense. The exclusion of fugitive emissions in coalmining is another common sense proposal that I am hopeful the government may see the wisdom of. It is electricity generation that greatly concerns me. The Business Council of Australia just this week released a significant report, which focussed on Australia’s infrastructure challenges into the future and was highly critical of many of the government’s approaches in this area. I have spoken about those on other occasions but tonight I want to focus on the warnings they have given on the government’s emissions trading scheme. They make the obvious statement:

… there is a desire to move from around 85% coal-fired generation to largely emissions-free generation in a short period of time.

They describe this rightly, I believe, as a revolution. It continues:

This revolution raises at least two key questions:

• How will Australia’s electricity market and also reliability of supply cope with the low emission transition challenge?
• What will the effects on Australia’s longstanding international competitive advantage in low energy costs be, and what can Australia do to preserve this advantage?
• The report goes on:
• Given the nature and speed of the desired revolution in our electricity sector continuing reliability cannot be assured …
• The Commonwealth’s coming Energy White Paper needs to address the issue of Australia’s future relative energy costs, the competitiveness implications for Australia and what policy response is required

The report also talks about the increased need to continue with other major energy, particularly electricity, sector reforms. It is quite clear that under the proposals put forward by the government baseload coal-fired power plants that were built for continuous operation will have to run as intermediate plants, and it is unclear whether this is technically possible. At the very least it will be incredibly difficult and not without costs. The value of loss of brown and black coal generators due to the CPRS will be around $10 billion over 10 years. This will reduce their value below their debt and some $19 billion of existing debt will need to be refinanced by the generation sector by 2015.

In short, this simply means that the lights will go out. We cannot expect a transition where our economy literally goes from 85 per cent of coal-fired power generation to effectively zero over a short period of time not to have some significant impact on our coal-fired electricity generators. The balance sheet impact of this issue alone will put extraordinary pressure on these generators to continue to do their job, which is quite simple: to keep the lights on. In the government’s rush to embrace and pursue this agenda, I believe this is an issue they have seriously overlooked. Not only will they have to meet this transitionary challenge but, in addition to that, they will need to meet the rising demand that has taken place and will take place in the years ahead because of our growing population.

Finally, there is the issue of electricity prices. My colleagues have rightly pointed that out, particularly the impact on small business. Also, landfill for the local government sector will be affected by a cap where, above 25,000 tonnes of CO2, there will be a need to buy permits, but there is ambiguity around the issue of proximate sites and whether they will be included. That needs to be resolved.

In conclusion, I am confident that we can meet the challenges, but we must approach the challenge humbly and honestly and be prepared to fix the mistakes that are here. The mistakes that we know today are in this legislation need to be fixed. The mistakes that will be made in the future as a result of this legislation will need to be fixed also. I call on the government to ensure they do that. (Time expired)

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