Gavin Pearce (Braddon, Liberal Party, Shadow Assistant Minister for Health, Aged Care and Indigenous Health Services) Share this | Hansard source

If the recent supply chain disruptions during the COVID-19 pandemic and the evolving geopolitical tensions that we're seeing in the Indo-Pacific region have highlighted anything, it's that sovereign risk associated with the loss of local manufacturing is ever present. Cement production is an important part of that. Cement is, of course, the key ingredient of concrete, and concrete is a critical material that underpins our residential and commercial construction industry. If you're talking about nation-building projects—if you're talking about anything to do with the construction industry—then you're talking about cement and concrete. Concrete is the most consumed human-made material in the world and will continue to be crucial in supporting a modern decarbonised world. Without cement and concrete there would be no dams, no bridges, no wind turbines, no hospitals, no apartment blocks, no offices, no schools—and on and on it goes. Even this place is made of good old concrete.

Lime is also an essential product when it comes to this critical industry. It's used for a number of environmental and industrial applications, including the refinement of critical minerals and as a purifying agent that allows Australians to have clean drinking water. And, of course, lime is an essential part of managing soil pH in our agricultural soils and improving the soil biome in order to grow the nation's food.

Cement and lime are critical to Australia's sovereign capability, but the Safeguard Mechanism (Crediting) Amendment Bill 2022, as it stands, is putting those sectors in jeopardy. What makes the Australian cement and lime industry unique is that 100 per cent of what's manufactured in Australia is used in Australia. But it's also an import-competitive industry. This means that our cement industry directly competes with imported goods. This is basic Business 101, but it's obviously beyond the Albanese government. For the cement and lime sector to remain competitive, to remain viable, the cost of manufacturing domestic clinker cement and lime cannot be higher than the landed imported price. This means that this legislation, which is proposing a mechanism that imposes a cost on domestic manufacturing that is not imposed on the imported product, is going to create an incentive for the production of cement and lime offshore. Let's be clear: in putting forward this legislation, the Albanese government is saying that it wants to shut down our local cement and lime production to support overseas companies and to force us to rely on imported materials.

I cannot believe what I'm seeing in this bill. It's not as if the cement sector isn't moving towards decarbonisation all by itself. Since 1990, the emissions arising from the cement sector have been reduced, by the industry itself, by 25 per cent. That's a fantastic achievement, and we should be celebrating it, not demonising it. Despite cement and lime being classified as one of the most difficult-to-abate sectors, the industry is 100 per cent committed to decarbonising its products by 2050. However, the number of decarbonisation pathways available during the next decade presents the real challenge for this industry. This is because the technologies required are currently not viable in Australia.

Around two-thirds of cement scope 1 emissions—that is, emissions that are sourced from their own and direct control—cannot be addressed until technology such as carbon capture, use and storage, hydrogen and oxyfuelling become viable technologies in Australia, along with the associated infrastructure and transport requirements. So, to me, the solution is to support the industry not demonise it to the extent that this bill does. Unlike Labor, we in the opposition know that we have to be right behind our industries, and cement is certainly one industry that has our back. They have our confidence.

We'll continue to invest in this crucial sector over the next two decades. These technologies will support the cement industry to fully decarbonise that over time. It's a win-win: a win for the environment and our need to decarbonise the industry and secure the future of cement and lime, like our Railton plant, on the north-west coast of Tasmania, and its continuance for the next 100 years. What the sector needs from government is long-term assurity, over-the-horizon market indicators. But, again, 'Business 101'—they're not seeing it in this bill.

For the cement industry to invest significant capital in new processing technologies as well as supply chain components, there must be surety that that market will supply and return a dividend to that investment, and we're not seeing it. This bill before us right now is not doing what's intended. The unintended consequences of this are going to fall at the feet of the cement and lime industry.

Fundamental to each investment decision the industry makes is the degree of certainty associated with key elements such as demand and relevant regulatory settings. The safeguard mechanism must clearly define how domestic production will not be disadvantaged relative to imported product. Only then will the sector have the certainty required to underpin ongoing capital expenditure in what will be required in order to decarbonise the industry.

In conclusion, it is in all our interests to better this, when it comes to reducing emissions. We need to be proactive and aggressive when tackling the challenge of climate change in Australia but we also need to recognise that Australia doesn't live in a bubble. This is a global issue that requires a global response. There is no doubt that Australian industry is onboard to play its part. There's no question in my mind that our large emitters clearly understand the significant responsibility they carry in decarbonising their products in their industries, if we are to meet our emissions reduction benchmarks. But globally they must also be on a level playing field.

Addressing carbon leakage is critical for Australian cement manufacturers and this is not addressed at all in this bill. Australian manufacturing is one of the most trade exposed sectors. Over 40 per cent of clinker is used to produce cement, and that's imported product. Up to 10 per cent of that cement is now being imported already, so we're seeing the signs. The end the nigh. This bill is eroding the international competitiveness of Australian cement and lime facilities, and if Labor continues down this path it is likely that domestic production will, increasingly, be replaced by lower cost imported product with a higher emissions profile. Great Australian companies will close down and we will receive our cement from high-emissions-producing overseas companies.

That's why I'm opposing this bill and that's why the coalition will strongly oppose this bill.

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