House debates

Tuesday, 9 February 2010

Carbon Pollution Reduction Scheme Bill 2010; Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2010; Australian Climate Change Regulatory Authority Bill 2010; Carbon Pollution Reduction Scheme (Charges — Customs) Bill 2010; Carbon Pollution Reduction Scheme (Charges — Excise) Bill 2010; Carbon Pollution Reduction Scheme (Charges — General) Bill 2010; Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2010; Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2010; Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2010; Customs Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2010; Carbon Pollution Reduction Scheme Amendment (Household Assistance) Bill 2010

Second Reading

Debate resumed from 8 February, on motion by Mr Combet:

That this bill be now read a second time.

5:14 pm

Photo of Roger PriceRoger Price (Chifley, Australian Labor Party) Share this | | Hansard source

by leave—I move:

That standing order 76 (exceptions to confining debate to the question) be suspended for the duration of the first speech by the Member for Bradfield on the second reading debate on the Carbon Pollution Reduction Scheme Bill 2010.

Question agreed to.

5:15 pm

Photo of Julie OwensJulie Owens (Parramatta, Australian Labor Party) Share this | | Hansard source

The International Energy Agency predicts that it will cost an additional $500 billion to cut global emissions for each year that effective action is delayed. We on this side of the House make no apology for wanting to act or for stressing some urgency. We know that there will be a cost of action. Even if we use the most cost-effective mechanism, which is an emissions trading scheme, we know that there will be a cost of action. That is why, in putting our plan together, we were mindful of making sure that the vast majority of households were compensated for areas where prices will rise.

The costs associated with action are different to the costs of inaction. Inaction will cost the future through lost jobs in tourism areas and result in increased health costs, more extreme weather events and declining agricultural production. And those costs are imposed on our children and grandchildren. They are the costs of a declining economy, and the children in primary schools and the young adults in my electorate know it and will hold us to account if we do not meet our election commitment in this regard. The costs of action, on the other hand, are the costs of growing a clean economy and reducing pollution. They go to reducing the damage to the environment, investing in a new, cleaner industry and preparing for change we cannot avoid. It is true that most of the costs will be borne by us now; but, then again, we are the ones that have benefited from not having to pay for cleaning up our waste all those decades.

Some of that cost in the government’s plan will be felt by families as modest price rises, and those projections are in our papers. Treasury estimates that price rises will be as much as 1.1 per cent by the end of 2012-13. But a significant proportion of money paid by polluters for permits will go back to families to compensate them for those modest price rises. Of Australia’s 8.8 households, 8.1 billion will receive direct cash assistance—that is around 90 per cent of Australian households—and all low-income households will be fully compensated. Contrast that with the opposition’s so-called policy, which will slug taxpayers $10 billion without reducing emissions. And it will exclude Australia from the world debate on emissions trading schemes, the preferred model for governments around the world. The world has decided that emissions trading schemes are the most efficient way to go. So did John Howard, the Rudd government and, until very recently, the current opposition. We cannot stay in the carbon age while the rest of the world moves into a new, clean energy age. Innovation and research is what we do well and this continent of ours is superbly placed to benefit from new ideas on generation of power—wind, waves, geothermal and solar. Compare the capacity of Australia with others—some small European countries, for example, have minimal spare land, little coastline and a relatively cold climate. This country should lead the world on the development of new technology. We should already be doing so. Again, we will live to regret the wasted decade.

When we took office at the end of 2007, we started with a blank page. In spite of some 30 years of debate around the world on the need to act on climate change, there was still no modelling. There was no history of significant investment in renewables. There had been no real consultation on the structure of an emissions trading scheme. We very much started from scratch, and it has been a very busy two years to get to the position that we are in now. Let us hope the opposition’s wish for a brawl—no matter what the consequences—does not result in more wasted years. They have had their time in office, and now it is time for them to meet their own election commitment and allow us to meet ours and meet our obligations to future generations.

There are also great opportunities for developing new jobs in clean industries if we use the market mechanism to stimulate the tens of billions of dollars in investment that Australia needs to position itself to benefit from a move to a cleaner environment. Labor’s plan will move us down that path; the opposition’s plan will not. Treasury predicts that even throughout the introduction of a CPRS—which the opposition chooses to fear—average income is projected to increase by at least $4,300 per person over the 12 years from 2008 to 2200, with a strong trend in real GDP and GNP growth. Treasury modelling also projects that by 2050 the renewable energy sector will be 30 times larger than it is today.

A 2009 Climate Institute study showed that $31 billion worth of clean energy projects are already underway or planned in response to the government’s climate change policies. These will generate around 26,000 new jobs, mostly in regional areas, around 2½ thousand permanent jobs, 15,000 construction jobs and 8½ thousand indirect jobs in supporting sectors. This does not include the thousands of jobs that will be created by the government’s $4 billion energy efficiency programs and over $2 billion investment in carbon capture and storage. Only an emissions trading scheme will unlock the tens of billions of dollars in investment that will drive the move from a carbon economy to a clean economy. And only by taking that path with the rest of the world will our businesses be able to benefit from the massive growth in the international clean technology market.

In contrast, the opposition’s plan will freeze our economy in the carbon age, and I know that is not what our community wants. We all remember that, going to the last election, the community was looking for action after a decade of inaction. They knew we were late. They wanted action on Kyoto. They wanted action on climate change. Both parties went to the election on a policy of introducing an emissions trading scheme. So the opposition might like to reflect on the last hour they have spent accusing us of not meeting our election commitments and get out of the way and let us meet this one. The opposition have had considerable time to consider their position—their several positions—now.

It has been more than 30 years since the first World Climate Conference when governments were called to act and guard against the consequences of dangerous climate change. It has been 20 years since the Intergovernmental Panel on Climate Change was formed and produced its first report. It has been 17 years since the international community acknowledged the importance of tackling climate change at the Rio earth summit and created the United Nations Framework Convention on Climate Change. That is where the global consensus has been emerging over the last 20 to 30 years.

In 1999, over 10 years ago now, the Australian Greenhouse Office released six discussion papers on climate change and emissions trading. That was within the Howard era. In 2000 and 2002 two further discussion papers were released on how we could bring about an emissions trading scheme. That was still within the Howard era. In 2007 the then Secretary of the Department of the Prime Minister and Cabinet, Mr Shergold, produced the report of the Prime Ministerial Task Group on Emissions Trading. And, of course, at the last election both sides of politics committed themselves to introducing an emissions trading scheme.

Since the election the government has sought to make this election commitment a reality. We began in June 2008 when the CPRS green paper was released, the Garnaut review was released in September 2008, the CPRS white paper was released in December 2008 and then in March last year, nearly nine months ago, we produced draft legislation for the Carbon Pollution Reduction Scheme. It went through the House of Representatives and it was rejected in the Senate. It went through a Senate inquiry and it came back to the House. There was considerable negotiation with the opposition and an agreement was reached. Then they decided that they had not been given time to consider the issues and launched a leadership challenge over their internal problems.

This is an election commitment. While you are running around the country accusing us of not meeting them, you might consider who is actually standing in the way of this one. I get the impression—I could be wrong—that the opposition think they are on a winner if they can invoke the big scary T word: tax. They think that if they can convince people that an emissions trading scheme is a tax, which of course it is not, then they will frighten people so much that they will all swing over to their side. Again, I have the impression—and, again, I could be wrong—that they want people to think it is not just a tax but a great big tax. I think I am right on that.

Clearly, they do not like the idea of a tax. Neither do we and neither does the world. That is why the option of a carbon tax was rejected by the world and by Australia many years ago. The world rejected the idea of direct action as the principal mechanism to reverse climate change and has since chosen emissions trading schemes as the way to go. We did as well and so did the Australian people at the last election. The opposition know we are not introducing a big tax on everything. They just like saying it with gusto and aggression, some of them with a bit of embarrassment, some of them threateningly and some of them with fierce expressions that certainly make me quake in my boots, because it reminds me of their great big new tax on everything: the GST in 1998. It was a great big new tax on everything.

Opposition Members:

Opposition members interjecting

Photo of Julie OwensJulie Owens (Parramatta, Australian Labor Party) Share this | | Hansard source

I can see you guys are still living in the past. We in Labor are not the opposition. We make sure that families are looked after. We have made sure that if there is an increase in the CPI a compensation package will be in place, in full, for low-income families and to support the vast majority of families.

This new world of climate change with all its new acronyms—RETS, ETS, CPRS—is very hard economics. Its sophisticated and simplified explanations do not do it justice, but I am going to attempt today to explain the basics because I do know that there are still many people out there who are not familiar with the basics. For 200 years through the industrial age, manufacturers and electricity producers have spewed their waste into the atmosphere. We all know that. In fairness, for many years they probably did not know they were causing a problem, but they were. It has now reached a stage where the whole world will bear the costs of the damage done by the waste. If it is not borne by us, it will be borne by our children.

All the economic theories say that if those businesses had been required to pay for the cost of cleaning up their waste when they were producing it they would have found ways to reduce it, and cleaner forms of manufacture would have become more competitive and consumers would have looked around for cheaper options. You could say that, because they have not had to pay for the cost of waste removal, their prices have been lower than they should have been and we consumers have been paying less than we would have if waste removal was in the price.

The CPRS does two things, and that is why it is called a cap-and-trade scheme. First, it sets a cap on the amount of emissions that we as a nation can make. It does that for the biggest polluters—not for everybody, but for the biggest polluters. That cap reduces over time. It has to do that because we have to stop increasing our emissions and instead reduce them in order to have an impact on climate change. Without a cap and without reducing emissions, temperatures will continue to rise. That is why our plan will be effective and the opposition’s plan is pure nonsense.

The carbon price, as we call it, is actually the price of the permit. The polluters can use the permits themselves or they can sell them or buy more if they choose. The additional cost to production will encourage companies to reduce their emissions. If the price of permits is high because the demand is high, that will encourage even more businesses to find ways to reduce their emissions, to reduce their costs or to free up permits for sale at a high price.

Meanwhile, the government will use some of the money from the permits to compensate families and to ease the transition for industries that are exposed to international markets. But the real advantage of the price on carbon is that it encourages innovation to reduce emissions, which is necessary. It stimulates investment in alternative technologies. Government, through the kind of direct action suggested by the opposition, simply does not achieve that. Climate change is a problem that needs real action and only the government plans that action. (Time expired).

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

Order! Before I call the honourable member for Bradfield I remind the House that this is the honourable member’s first speech. I therefore ask the House to extend to him the usual courtesies.

5:29 pm

Photo of Paul FletcherPaul Fletcher (Bradfield, Liberal Party) Share this | | Hansard source

Mr Speaker, I rise to speak in this chamber for the first time. It is a great privilege to be able to do so. I owe that privilege to the people of Bradfield who chose me to represent them in this parliament. I aim to live up to the trust the electorate has put in me, and to the high standards set by my predecessors. Prior to me, there have been only four members for Bradfield since the seat was created in 1949. I pay particular tribute to my immediate predecessor, Dr Brendan Nelson, who is in the gallery today. He served Bradfield and Australia with great distinction, and has been warmly supportive of me.

Like all who live in Bradfield, I cherish the natural beauty of this area of Sydney, including the magnificent national parks. In Bradfield we attach similar importance to our built heritage. We are proud of the gracious homes and beautifully tended gardens. But the distinctive built heritage of Bradfield is changing rapidly. High-rise apartments are spreading throughout the upper North Shore. A state Labor government with little sympathy for our area has imposed a dramatic growth in the number of dwellings. Decisions are made by appointed officials, not locally elected representatives. Ku-ring-gai Council is one of only three councils in New South Wales to have had its powers largely removed and handed to a planning panel. In my view these powers should be returned to the council as soon as possible. Decisions about development in our area should once again be made by people who live in our area and care about our area.

On this and other issues, I intend to be a strong advocate for the interests of the people of Bradfield. They face governments, state and federal, which are profoundly unsympathetic—governments with an instinct to regulate and intervene, governments with a misplaced conviction that they know best. Most people in Bradfield live their lives according to a different set of values: hard work, personal discipline and self-reliance. These are the same values that the Liberal Party stands for. That is why the Liberal Party has always received strong support in Bradfield.

Despite that history of strong support, we did not take last year’s by-election for granted. We ran a vigorous campaign. I was helped by a great many people. Let me express my particular thanks to the magnificent Bradfield Liberals—many of whom are also here in the gallery—under FEC President Alister Henskens. The support our campaign received from the Liberal Party, state and federal, both the parliamentary and organisational wings, was superb. It was a fantastic feeling to visit the booths on by-election day, 5 December 2009, seeing them all well-manned by an enthusiastic crew of Liberal Party volunteers, some local and some from out of the area.

I was also touched that so many personal friends and family members rallied to the cause, many of them having their first ever experience of standing on a polling booth. You do not get to this place without stalwart support from many quarters. But there is one source of support more important than any other: your family. My wife, Manuela, has been the bedrock of my life for nearly 10 years. Campaigning is a family business and our boys, Gabriel and Hugo, also made their appearances from time to time. To all three of them I say: thank you.

Manuela and I are typical Australians. We are both the children of immigrants who arrived in the fifties and sixties. Clive and Mary Fletcher came from the UK. Ignazio and Maria Zappacosta came from Italy. Australia had much to offer them, and they had much to offer Australia. Through hard work and the application of their particular skills and talents, both families prospered over time. When I say that Australia has been greatly enriched by immigration, I speak from personal experience.

Mr Speaker, I have been fascinated by politics since my teenage years. Tragic but true, I remember my excitement when political journalist Richard Carlton came to speak to a fathers and sons dinner at school. From the outset the Liberal Party was my natural home. It stood for the values of hard work and self-reliance that I had seen in my parents and in other adults I admired. Other life experiences steered me in the same direction. As a part-time teenage shop assistant, joining the union was compulsory. It was ‘no ticket, no start’. I thought this was just wrong. So, at the age of 16, I joined the Young Liberals. Later, I was active in student politics. Being a Liberal student on campus in the eighties could be very character-building. I think we had only three seats on the 21-member SRC.

I was strongly influenced by Mark Heyward, the leading Liberal at Sydney University in the eighties. He was a courageous advocate for personal and economic freedom in an often hostile environment. Mark would have made a significant contribution to national politics had he not died tragically young.

Unusually for a student politician, I also went to lectures. Studying economics in the mid-eighties, my political views were further developed. I saw that Australia had an outdated economic model, with rigid labour markets, high tariff walls and heavy government ownership and control of many areas of the economy. But I also learned about the changes being made—floating the dollar, opening up the banking sector to foreign competitors and reducing tariffs. This reform process would continue for 25 years. I am proud of how the Liberal Party drove these reforms—from the Fraser government laying the groundwork with the Campbell report, to the Liberal opposition supporting key changes in the Hawke years, through to the stellar reform achievements under John Howard and Peter Costello. It took hard work and real political courage—for example, going to the 1998 election promising a goods and services tax. But Australia today is vastly better off. Our economy is more competitive, more flexible and more efficient.

I think it is no coincidence that we have broken down social barriers at the same time as we have economic ones. For example, in the last 40 years the role of women in the workplace has grown enormously. And Australia has become much more ethnically diverse. The White Australia policy is long gone. My electorate reflects that trend: at the last census over 10 per cent of Bradfield residents reported a Chinese background. In fact, the diversity of Bradfield is one of its most attractive characteristics. We have a vibrant Jewish community and significant populations from India, Korea and South Africa, amongst many other nations.

17:37:19 When it comes to economic issues, my instinct is for open markets, free competition and as little state interference as possible. And when it comes to social issues, I start with the same preference. I am a believer in the rights of the individual and I am suspicious of the state seeking to exercise control over personal choices. Of course, it is not always easy to brand an issue as social or as economic and it is hard to get good social outcomes unless you have the money to spend on them. I disagree with the frequently stated criticism that there is too much focus on economics in Australian political debate. I find it absurd that ‘economic rationalist’ is used as a term of abuse by Bob Ellis and other woolly-minded dreamers and utopians. What alternative approach do they recommend in allocating resources fairly and efficiently?

When a government commits, for example, to a $43 billion national broadband network without a cost-benefit study, that is a travesty. I say that coming to this place after nearly 15 years working on public policy in the communications sector, as an adviser to communications minister, Richard Alston—a valued mentor and friend—and later as a senior executive at Optus. This experience has reinforced my belief in economic reform and in the consumer benefits which flow when a protected sector is opened up to competition. Let us not forget that it was only 20 years ago that Telecom had a monopoly and there was no pay television, no internet and a tiny number of mobile services. The change today is extraordinary, with some 25 million mobile services and services that we did not have 20 years ago—broadband internet, pay television, wireless data and so on.

There are always voices raised against reform, and it takes political courage to introduce change. That is why the politicians whom I admire are the reformers—people like John Howard, Peter Costello, Nick Greiner and Jeff Kennett; people who have invested their political capital to deliver better outcomes for the people they were elected to serve. I do not admire politicians who see their objective as upsetting as few people as possible, who manage to do a daily media message rather than long-term objectives and who avoid at all costs any meaningful reform.

My motivation for entering public life is clear. I want to help make Australia a fairer, stronger, more prosperous, more secure, more inclusive nation. I want to be a voice for rational policymaking which recognises some basic realities—the reality that we are a small country in a large world which does not owe us a living; the reality that the prosperity we enjoy today is not guaranteed but needs continual work; the reality that our prosperity depends much more on the efforts of the private sector than the public sector; the reality that, as the government’s debt rises, its capacity to respond to external shocks reduces. Fundamentally, I want to be a voice for continued reform. Of course, I arrive in parliament at a time when the Liberal Party is in opposition. I will do everything I can to help in the work of getting us back to government as quickly as possible. But, until that happens, the reform momentum of the last 25 years has ground to a halt.

We face a government which have boldly commissioned many reports. They have been unstinting in their courageous setting up of inquiries. When it comes to establishing task forces, this government’s unflagging determination knows no peer. But we have simply seen no action. Even minor reforms get squibbed—like removing the parallel import restrictions on books. In fact, we are going backwards. Labour markets are now more heavily regulated after Labor’s so-called Fair Work Act took effect, and already we are seeing evidence of workers suffering as flexibility is lost. There is a new hostility to markets, to competition and to economic freedom. In his 2009 essay, the Prime Minister called for a new phase of social democracy in which markets would be ‘unambiguously regulated by an activist state’. I think this is going in precisely the wrong direction.

As a Liberal, I do not share the unbridled faith in the omniscient capabilities of government which unites those opposite. I do not admire their massive, complex, bureaucrat-administered spending programs in sector after sector. In just two years the federal government’s outlays have risen from $280 billion to $338 billion—an increase of over one-fifth—and debt will peak at over $150 billion. There are billions of dollars for pink batts in roofs and for school halls. There is a hugely complex emissions trading scheme proposal. There is a $43 billion plan for government to do what no private sector company could see a business case for—build a fibre-to-the-premises network to 90 per cent of the nation.

Let me comment on that specifically. I am a strong believer that, having high-speed broadband widely available is socially and economically desirable, but I think this plan is ill-judged. On the cost side, the network design is hugely expensive when compared to alternatives like fibre to the node or wireless. But the revenue side is even riskier. How much will be charged per customer per month for the service? Will it be $40, $100, $200? What will be the retail services that drive take-up? Will it be high-speed data? Will it be pay television or video on demand or something else? How many customers will take up the service, and how quickly? How sensitive are the take-up assumptions to whether there is a competing, Telstra-owned network also delivering services? What will the cash flows be in year one, in year five, in year 20? Remarkably, the government did not know the answers to any of these questions before it committed to this venture. Where I have come from, if you took such a sketchy proposal to a board not only would the proposal be rejected but you would be fired on the spot.

Twenty years ago, state Labor governments in Victoria and South Australia learned the painful lesson that banking was not as easy a business as it looked—and squandered billions of taxpayers’ dollars as a result. It seems very likely to me that the federal Labor government is going to learn the same lesson about building new telecommunications networks.

On these kinds of issues there is a fundamental difference between the Liberal Party and our opponents. We put less faith in government; we put more store in the private sector. It is the private sector which generates the wealth on which the incidents of a civilised society depend. Without a strong private sector, we cannot afford our health system; we cannot afford our education system; we cannot afford our welfare system. There are plenty of people in government and in NGOs who are suspicious of, or even actively hostile to, business. I come with the opposite bias. I see the business sector as a force for good. I believe Australian business has hugely lifted its game in the last 30 years due to that reform process.

To me, the sweet spot in public policy is when government identifies the objectives and sets ground rules and incentives to achieve those objectives—and then gets out of the way to let individuals and businesses do the work. To take an example from the sector I know best, in 1991 the government issued new licences to Telstra, Optus and Vodafone to operate mobile networks using the new GSM digital technology. The result has been the spectacular growth in the mobile market that I talked about earlier and tangible consumer benefits. This is a simple and effective division of labour: government establishes the market structure, private sector players compete in the market and the competitive pressure each puts on the others drives the best possible price and service.

Let me mention some specific policy areas in which I hope to be a voice for change. I believe our higher education and research sector is a vital national resource. In the United States, the great research universities have been a critical source of innovation and intellectual capital. I would like to see an aggressive push to choose amongst our leading universities a select few whose scale and brand can be built to a world standard.

A second, closely related priority is the process of commercialising innovation: moving smart ideas from the lab to the marketplace. That means closer ties between research institutions and industry. It means choosing key areas of research where we can build real scale and leverage that into a national competitive advantage.

My third area of focus, inevitably, given my background, is building a society which makes the best use of modern information and communications technology.

A fourth interest is making government more efficient and productive. That includes more use of contestability and contracting out in choosing the providers of government services. It means better use of information technology in delivering government services. In the private sector there is a huge focus on giving customers a simple one-click approach to completing a transaction. Where is the one-click mentality in government? In the way that government deals with citizens, let us have less compulsion and more persuasion. The recent book by American scholars Sunstein and Thaler, Nudge, is full of examples, in areas as diverse as retirement incomes and healthy eating.

Let us get serious about evidence based policy, using randomised trials to test whether specific programs actually work. Let us look at using the price signal more extensively to best allocate scarce resources, be it capacity on roads or water for irrigation. I think there is great scope to set lighter, less intrusive regulation which uses the power of incentive rather than the power of compulsion to secure outcomes which make people’s lives better.

I feel very privileged to be in this chamber and to have the opportunity to influence, through my vote, the course of legislation which will impact our nation. Like all who come here, I will draw on my own particular skills, experience and beliefs. I aim to be an effective advocate for the people of Bradfield and a thoughtful champion of long-term reform which improves the lives and wellbeing of Australians.

Honourable Members:

Honourable members—Hear, hear!

5:49 pm

Photo of Sid SidebottomSid Sidebottom (Braddon, Australian Labor Party) Share this | | Hansard source

I too welcome the new member for Bradfield. I had a very good relationship with the former member for Bradfield and I hope I have an equally good relationship with the new member. I thank him very much for his lessons on the market economy and the importance of price signals. I will be using them extensively to justify support for the legislation before us today, the Carbon Pollution Reduction Scheme Bill 2010 and related bills. Everything he said endorsed it, so I congratulate him. Mr Speaker, you are leaving me! Madam Deputy Speaker Vale, you have a much better visage. Thank you.

I am very pleased to be able to speak again on this legislation. What puzzles me is that until quite recently this House agreed that there was a serious problem caused by climate change. Essentially there was agreement on how to deal with it. At the heart of that was a determination to implement an emissions trading scheme—until quite recently. Now that has turned around, as there is a collective memory loss on the part of those opposite. There is also a view, I believe, that the problem has somehow gone away, that we do not have a problem. It seems that, somehow, because the Copenhagen summit did not appear to produce 100 per cent acceptance globally for the implementation of an international ETS, the problem has gone away. The view seems to be that, because people have discovered that there are flaws in both the behaviour and ethics of some scientists involved in the climate change debate, somehow or other the problem has gone away.

There is almost an indecent obsession, amongst some opposite, with the idea that raising some of these unfortunate instances of ethical misbehaviour and scientific flaws somehow or other completely dilutes the scientific argument of thousands of other reputable scientists in the area of climate change. We have some commentators, particularly in News Ltd, frothing at the mouth in their attempts to regurgitate some of the instances of some of this unethical behaviour and some of the flaws in the scientific conclusions—regurgitating it, day after day, in the hope that the Australian people will believe that the problem of climate change has gone away, and in the hope that the general consensus worldwide that an ETS is the best, cheapest and fairest means of dealing with this problem has somehow gone away. And we have those opposite now prepared, almost to a person—bar one—to vote down this legislation which had been agreed to through an onerous, grinding process of consensus that has led to this amended legislation.

That person is the member for Wentworth, who most eloquently presented the argument for an ETS and a carbon pollution reduction scheme for this nation yesterday on the other side. And I congratulate him for that and acknowledge his courage in doing so. He knows what is right and he did what is right. And, you know, the only difference was one vote. The member for Wentworth lost the leadership by one vote. So I suspect that 99.9 per cent of them—although my maths is not that good—essentially were going to accept the emissions trading scheme and the amended legislation. But all of a sudden, all of them—bar one—essentially rejected the science and rejected the mechanism of the ETS. And now they will oppose this amended legislation. So this legislation—agreed to through a consensual process, ground out under the auspices of the member for Wentworth, the member for Groom, Senator Wong and Greg Combet, the Minister for Defence Personnel, Materiel and Science and Minister Assisting the Minister for Climate Change—has now gone by the wayside.

I want to remind this House, and those people who are listening to this broadcast—I hope they are still awake!—that we do have a problem. Let me restate what that problem is. I return to some good old evidence that was put out in the public domain. I say this particularly to those opposite. It is called the green paper; it was followed by the white paper, by lots of other papers and by this legislation and the legislation before it. You can all read it. But those on the other side, essentially, have said: ‘We don’t know what you’ve been talking about. We don’t know what’s going on. You’d better get out there and flog it to the public because we don’t know what it means.’ What a load of nonsense!

Page III of the foreword states the problem. With your indulgence, Madam Deputy Speaker Vale, I will look at what that says:

Carbon pollution is causing climate change, resulting in higher temperatures, more droughts, rising sea levels and more extreme weather.

Well, we know that is true in Australia; we are one of the driest continents on earth, and getting drier.

The 12 hottest years in history have all been in the last 13 years and IPCC scenarios project temperature rises between 1 and 6.4 degrees over the next century relative to 1980–99.

Without action, scientists predict—

that is, the massive scientific consensus is that we will see—

up to 20 per cent more drought months over most of Australia by 2030, more intense and damaging cyclones and rising sea levels with serious impacts on:

  • coastal property in Australia—

which is where the greatest majority of Australians live and where the greatest number of our houses and properties are. There will also be serious impacts on low lying Asian megacities and on the Pacific Islands. The cry of the Pacific Islands was well registered at Copenhagen—in fact, embarrassingly so, for those who listened and were not prepared to do much about it. The foreword goes on:

With one of the hottest and driest continents on earth, Australia’s economy and environment will be one of the hardest and fastest hit by climate change if we don’t act now.

Professor Garnaut, in both the draft and his final report, emphasised that point. The foreword goes on to say that climate change:

… threatens Australia’s food production, agriculture, water supplies, as well as icons like the Great Barrier Reef, the Kakadu wetlands and the big tourism industries they support.

… we are already beginning to feel the economic and environmental costs of inaction on climate change. But if we delay action any longer, these costs will be felt even more by not only our generation, but also our children and grandchildren.

That is part and parcel of the problem.

Professor Garnaut, in his review, got far more specific about the impact and the costs of climate change for Australia. He believes they would be relatively greater than for any other developed countries. He gave a significant list of some of the impacts of unmitigated climate change in Australia, and it was very sobering reading indeed, and something, I hope, most members in this House would have read when they looked at the green paper.

There are some who would have us believe them when they say: ‘All right—there’s a problem. But we don’t need to be acting too hastily on it now. We need to be waiting for others. We need to have absolutely incontrovertible proof that climate change is in the state that many believe it is.’

However, Nicholas Stern—an economist, I admit, rather than a climatologist—in his report The economics of climate change in 2007 clearly demonstrated the high environmental, social and economic costs of delay and the likelihood of higher mitigation and adaptation costs and more climate change if action is undertaken at a later date. In other words, the costs now will be far less than the costs later. So there is an economic imperative to this, an obligation, a responsibility to act.

The Leader of the Opposition has flipped and flopped on this, along with a lot of his colleagues—indeed, it is just about all his colleagues if you believe what you are hearing them say on the other side—except for the member for Wentworth, who virtually positioned the environment in opposition to the economy. This is an absolutely false dichotomy. The Stern review clearly argues that stabilising greenhouse emissions at acceptable levels would cost on average one per cent of annual global GDP by 2050, whilst ‘the business-as-usual approach’—the term used by the Leader of the Opposition in presenting his so-called alternative—‘would cost between five to 20 per cent of global GDP’. So on economic imperatives alone there is argument to act now, to act comprehensively now, not in a piecemeal fashion.

There were those on the other side who were in some cases reluctantly drawn to this conclusion but drawn nevertheless when former Prime Minister John Howard established an emissions trading task group headed by Dr Shergold, then the secretary of his department. It contained a cross-section of people who would be most directly affected by the possible implementation of an emissions trading scheme. In 2007 the Howard government adopted the Shergold task group’s recommendation to establish an emissions trading scheme. The interesting thing about that was that the recommendation was to act now ahead of and in advance of many other countries, that it was irresponsible to wait and that Australia would have far more efficient, effective and cost-effective results if we were to act earlier rather than later. I quote from the Shergold report of 2006:

An Australian emissions trading scheme—

said the secretary, and adopted by Mr Howard and his government and accepted by those in this House at this very moment—

with a carbon price set by the market, would improve business investment certainty—

one of the great weaknesses of the current Abbott scheme. The report continues:

This is particularly the case for projects with a high degree of carbon risk. There is growing evidence that investments are being deferred due to uncertainty about the future cost of addressing climate change. Without a clear signal on future carbon costs—

note the member for Bradfield’s maiden speech extolling price indicators in a market economy and their central importance—

these investments will not be optimised. There is a risk that a higher carbon profile will be locked in for the life of the capital stock.

So we had the former government, the former Prime Minister, reluctantly drawn—like my son’s wisdom teeth will soon be—to the conclusion that an ETS was the most sound scheme to deal with climate change, supported by Dr Shergold and his task force and reinforced by the member for Wentworth, by the Prime Minister, by this government and, I suspect, by the majority on the other side up until quite recently. Indeed, through a grinding process we arrived at the amended legislation which is before us today, which I am proud to support.

However, on the journey to this point, supported by so much of the evidence, lots of passengers on the other side fell off or never caught up because they never intended to anyway, and we were left with a shambles which is the con job which has been announced recently by the Leader of the Opposition. Immediately the Leader of the Opposition put forward his proposal, if I could call it that, which essentially says that the largest polluters may continue to pollute—and I think the term ‘business as usual’ is used. Where I come from they say: ‘Go for it. Don’t hang around; just go for it.’

So the polluters who pollute now can continue to pollute. But what we might do, says their scheme, is offer some incentives for you not to pollute. We will help you not to pollute but, in the meantime, you can continue to pollute at the level at which you are polluting. What we will do is grow a few more trees and hope to heavens that the science on the capture of carbon in soil can be much more scientifically proven—and, boy, I too wish that that could be the case but, let us not kid ourselves, that is far from conclusive, particularly with the soil types in Australia. So we will plant lots of trees in urban areas and hope to heavens that the soil can capture most of the carbon. In the meantime the polluters can keep polluting and we will drop a few solar panels on some rooftops. Amen, that will solve the problem. Ah, but what if there is an international trading scheme in carbon? ‘Well, we may have to rethink it,’ they say. I predict that if this sham of a scheme was ever to be realised you would see a fairly consistent drive from industry saying, ‘Please introduce an ETS and do it quickly.’

The other thing I object to about the proposal on the other side—and I want to talk about our legislation, quite frankly—is their assessment that the CPRS is a great big tax when we know that the taxpayer, not the polluter, will be paying for the opposition’s so-called climate change policy. In our scheme the polluters will pay, and every single cent paid for those permits will be returned to the community so that those who need financial support to offset any increase in costs, and generally speaking that is going to be in the energy sector, will be compensated, and in some cases to 110 or 120 per cent.

So what we have on the other side is a sham. It is a politically motivated solution opposed to legislation which is fair and economically and environmentally responsible. It will compensate and it will allow us to take part in an international carbon trading scheme. It is sham versus responsible action—action that those opposite were quite prepared to follow until quite recently. It is only the member for Wentworth now who will see through what he regards as his responsible policy. (Time expired)

6:09 pm

Photo of Rowan RamseyRowan Ramsey (Grey, Liberal Party) Share this | | Hansard source

This Carbon Pollution Reduction Scheme Bill 2010 and related bills are amended versions of the bills we last saw in this House. On that occasion I did not support the bill and while I acknowledge the amendments as an improvement, if anything my opposition to the bill has increased since that time. My opposition has increased because having spent the last two months back in my electorate, and as the full ramifications of the bill slowly trickle down to individuals and industries in our local communities and the impacts on our economy are slowly factored in, it is becoming increasingly obvious that there is an absolute distrust for, and noncomprehension of, the scheme. In short, my constituents simply do not understand how the Kevin Rudd-Penny Wong ETS works.

While the member for Braddon is still in the chamber with us, he mentioned that we on this side of the chamber did not understand how the scheme worked despite the fact we had the green paper, the white paper and then the bill. In fact, the problem the member for Braddon and the government have on this issue is not that I should be able to explain their scheme but that they themselves have been incapable of explaining it to the people of Australia. This is because the government has failed to take the public into its confidence and has failed to explain the issue to them. I join those who quote former Prime Minister Keating in saying, ‘If you don’t understand it, don’t vote for it. If you do understand it, you’d never vote for it.’

Photo of Sid SidebottomSid Sidebottom (Braddon, Australian Labor Party) Share this | | Hansard source

Did you think that up?

Photo of Rowan RamseyRowan Ramsey (Grey, Liberal Party) Share this | | Hansard source

I actually credited the former Prime Minister with it, Member for Braddon. The government have failed miserably to explain the ETS, and they have not done so because they cannot explain how this scheme will have any measurable effect on world emissions. Australia is responsible for 1.4 per cent of world emissions. The government’s scheme plans to reduce this amount by five per cent, or seven one-hundredths of one per cent. Clearly, that kind of reduction in world emissions is meaningless except as sending a signal to the rest of the world that we are prepared to do our bit. And if the rest of the world will join us, we will do more. So if we are to make a commitment to reducing our CO2 emissions over the next 10 years by five per cent as the government’s bill proposes—as, indeed, the opposition also proposes—and its purpose is to show the rest of the world we are serious about reducing emissions, we should do it by the lowest cost measure so as not to disadvantage our economy any more than is absolutely necessary.

Let us have a look at the government’s ETS. There are some astonishing figures here if you have a bit of a dig around. The government has nominated a reduction in CO2 emissions of five per cent by 2020. Without any change in our current trends it is predicted our CO2 emissions will rise by about 70 million tonnes by 2020. By contrast, a five per cent reduction in emissions by 2020 amounts to a cut of 70 million tonnes on current emissions. So to meet the nominated five per cent reduction we actually have to do much better than that. We have to reduce our emissions on ‘business as usual’ by about 140 million tonnes a year.

Over the full seven-year period the ETS will be in operation through to 2020 the accumulated reduction would be about 560 million tonnes. So by 2020 the total amount of foregone emissions or abatement will be about 560 million tonnes. The Rudd-Wong ETS is planning to charge industry $114 billion for the purchase of permits through this period. This equates to $203 per tonne for carbon abatement. Apart from diamonds this would be about the most expensive carbon in the world. This $203 per tonne will be splashed around to householders and big business and the rest will be chewed up in the churn of financial and government sectors.

So here we are with the Rudd-Wong ETS where we are told carbon may trade for $20 per tonne—of course, no one really knows—but the government will tax industry $203 per tonne to achieve that target. You have to come to the conclusion that everything above the assumed trading price of $20 per tonne is nothing more than a gigantic ‘money-go-round’. It is a massive tax that will cause the price of everything to rise—a scheme to tax industry to raise revenue for the government to buy electoral favour. The Prime Minister knows that if, for instance, he causes the price of electricity to rise by 18 per cent as predicted then the only way he will keep his job is to send cheques in the mail—hence the $900 handouts to buy votes. This is not a CPRS; it is a vote-buying exercise.

18:14:27 Admittedly, there will be one sector in the economy which will do very well. This scheme offers to be an innovative employment program for the financial services sector. The ETS establishes a whole new financial sector for the desk jockeys to play and speculate on. Indeed, that this scheme should be proposed by the same Prime Minister within six months of him publishing a 7,000 word condemnation of free markets is more than remarkable; it is astonishing. Markets are all fine when they are doing things which are entirely necessary, but this gigantic money-go-round has no reason to be except that the government has said that its way is the only way. It is the same conceited manner in which it said that a vote against a ‘cash flash’ is a vote against all stimulation of the economy or that a vote against the uncosted no-business-plan NBN model is a vote against technology—that to propose an alternative path is to do nothing. It is a dishonest argument and it must be of great concern to the Prime Minister that more and more people are beginning to see that. As I said at the beginning, the last two months in my electorate have provided me with overwhelming evidence that the general public have little understanding of how the Rudd-Wong ETS will work. But they are beginning to understand that Australian households will be slugged $1,100 a year for something which will reduce world emissions by seven one-hundredths of one per cent.

I often say it is my responsibility to bring to parliament an understanding of what it is like to live in a regional and rural electorate. Every member in this place is committed to their electorate, but it is a demographic fact that most of our federal representatives live in the city and they do not always appreciate the different effects policy has on regional populations. Nowhere could that be more apparent than on the ETS debate. Assessment by the New South Wales Department of Premier and Cabinet has confirmed that regional Australia will wear the worst of the economic damage. That is because the heavy industries that the nation depends on are overrepresented in regional areas. It should go without saying—but I will anyway—that these industries are built near the resource, near the port, near the energy source and often away from the major cities because in more enlightened times governments could see the value in developing the regions and were not encouraging the continual expansion of their major cities. There is much we can learn from those times.

I have three major centres in my electorate of Grey which stand to be heavily impacted by the government’s ETS. I would like to take some of the House’s time and explain a little about all three and their importance to each community. Port Pirie is the home of a complex smelter, concentrating predominantly on lead and zinc production but also producing significant quantities of gold, silver and a number of other metals and acid. The smelter, operated by Nystar, employs more than 700 people. Indirectly, it is responsible for around 1,800 jobs. Port Pirie has a population of 14,000 people, so 1,800 jobs would be more than 25 per cent of the workforce in Port Pirie or around 30 per cent of the employment. It is important that everyone understands what it would mean for Nystar should the government manage to pass this bill. The bill stipulates every tonne of carbon emitted by the country’s top thousand emitters will require a permit. Depending on the level of emissions per million dollars of production, each industry is rated as high or low intensity.

High intensity will be granted 95 per cent of their permits; low intensity will be granted 60 per cent. After the first year of operation, the level of permits granted will be decreased every year. In effect, industries pay to be allowed to pollute, because the government’s theory is that they will seek to avoid paying this tax by reducing emissions. In Nystar’s case, their industry is broken up into different segments, some rated high and some low. The effective rate across the range is around 75 per cent. That means Nystar will have to buy permits for 25 per cent of their emissions. In practice, this means they will be required to pay $7 million in the first year of operation for emission permits, with that amount rising every year after that. Only Nystar know if the business can afford this, but they will certainly be $7 million closer to the point of nonviability. One thing we do know is that Nystar will not be able to pass on the increased cost of doing business because metal prices are sold into a world parity market. Whether the metals are to be consumed in Australia or overseas, Nystar will be forced to meet the market.

This is exactly what the coalition, industry and industrial commentators have been warning about ever since the publication of the green paper, which the member for Braddon referred to—that is, we have been warning about carbon leakage. If the $7 million annually make this plant unprofitable, then the writing is on the wall. While it may be gradual, eventually if profitability cannot be found rundown and eventual closure will occur. The question then is just how much room for efficiency there is in the Port Pirie operation. The smelter has over the years been faced with financial pressure. It has had a number of owners. Energy costs have risen and we can be fairly certain that every chance to cut operating costs have been explored. There are unlikely to be quick or easy fixes to reducing CO2 emissions.

Let us take the case of steelmakers, which in this case is represented in my electorate by OneSteel situated in Whyalla, a city with 22,000 people. As with Nystar in Port Pirie, OneSteel is the prime generator of jobs in Whyalla, with nearly 2,000 employed directly and at least another 3,000 employed indirectly. If Whyalla were to lose the steel-making industry from the city, the withdrawal of the ship-building industry more than 30 years ago would look like a picnic. Whyalla’s population reached 35,000 in the 1970s prior to the loss of shipbuilding. Subsequently, the population dropped below 20,000. It has been tough. Only in the last five or seven years has the city been able to grow again. To say OneSteel is the major employer in Whyalla is a significant understatement.

While it is difficult to calculate OneSteel’s liabilities for the Whyalla plant from their published material, there is no doubt it will be well in excess of $10 million. The Australian steel industry is no licence to print money. It has been under international pressure for many years and the public is well aware that Australian steel has lost ground to cheaper imported steel for many years. Disturbingly, the Prime Minister and the Minister for Climate Change and Water, Senator Wong, seem to have little understanding of the process of making steel. An essential part of the process of making steel is the addition of carbon. In fact, more than 70 per cent of the carbon emitted in the process is incurred when coke is added to the blast furnace.

You cannot turn iron into steel without using carbon in the furnace. Why then would you design a scheme which raises the cost of using carbon in the process to send a price signal as an incentive to seek an alternative? There is no alternative. All this can do is raise the cost of production; all it can do is make our steel uncompetitive. What it does is provide an incentive to buy cheaper steel from a nation which does not add in a price for carbon. The most important issue here for my electorate is jobs and the economic viability of our communities, but it is not the only issue. The loss of the Australian steel industry would be an A-class threat to our security.

We belong to a world economic community and Australian industry is a world away from the protective barriers which feather-bedded certain sectors of the economy a generation ago. Modern Australian industry is lean and competitive—it has to be. However to think that it has the ability to absorb artificial cost increases which its competitors will not face is madness. Plainly put, any new tax which our competitors will not have to pay could well be remembered as the straw that broke the camel’s back for these industries.

In Port Augusta we have a coal fired power station which provides 40 per cent of South Australia’s electricity. The power station was built in the fifties by the Playford Liberal government and was designed to provide an economic electricity supply to enable the state to power competitive manufacturing industries. Flinders Power now operate the Northern Power Station and the Playford Power Station at Port Augusta and employ 500 people in the city and at Leigh Creek where the coal is mined. By any multiplier—and let us be conservative—at least 1,000 to 1,500 local jobs are dependent on the power stations. Their closure would see around 15 per cent of the jobs in Port Augusta lost. The combined power stations provide 4.2 gigawatts or about 40 per cent of South Australia’s electricity.

Under Kevin Rudd’s ETS, Flinders Power will have to spend $122 million in the first year to purchase permits to emit carbon, increasing each year after that by 1.3 per cent. Flinders Power expects to be able to pass on somewhere between 30 per cent and 70 per cent of this massive tax in higher electricity prices, resulting in a 50 per cent rise in wholesale prices. The extra $30 million to $80 million will have to be absorbed by the business. Taxes of this level must bring the viability of the power station into question.

As I said before, the company operates two power stations in Port Augusta: the older Playford Power Station, being the least efficient, producing 1.5 megawatts per tonne of coal and the newer Northern Power Station, operating at near world’s best practice, producing 1.05 megawatts of electricity per tonne of coal. Millions of dollars have been spent upgrading the Playford station to extend its life through to 2025. The ETS threatens its viability. Flinders Power needs to make a decision in the very near future on whether to open up a new mine at Leigh Creek. The current mine will expire in 2016. Much of the cost of generation at Port Augusta is absorbed in the mining operation. Flinders Power mines eight million tonnes of coal a year at Leigh Creek. The costs of a new mine development are significant. If the fundamental economics for generation do not stack up then they will not develop the new mine. If they do not, coal fired power generation will cease in the medium term, the Playford station will close and the future of the Northern station will be uncertain.

In the larger debate, I suggest that, facing the threat of a complete collapse of power generation capacity in Australia and the associated ‘brown-outs’, it is likely that governments would have no choice but to grant extra permits to pollute. In turn this would be likely to seriously affect the market for permits, putting at risk other industries who have invested on the basis of a high price for carbon. The government plans to compensate low-income households for electricity rises. Instinct suggests that taxing one entity and giving the proceeds to someone else to avoid electoral backlash because your taxes forced up the price of electricity in the first place is all about elections and has little to do with the environment.

The opposition has proposed an alternative policy. It will give us the same result: it will reduce emissions by five per cent by 2020. It will cost just a fraction of the government’s scheme. It will reward good practice and penalise poor practice. It is a scheme which will not export jobs out of Australia. It is a scheme which will assist landholders who control half of Australia’s land mass to adopt new practices, raising production and benefiting the environment. It will not threaten local business by ramping up the price of electricity by 19 per cent but rather offer them incentives to reduce their individual footprint. It will protect the jobs at Nystar, OneSteel and at Flinders Power. Critics say it picks the low-hanging fruit. That is unashamedly so. Only a fool would start at the top of the tree. We should adopt a positive direct action policy which will get us to the same place without the enormous risks of the ETS. Without global action, this ETS threatens to do nothing for the environment but offers to sink Australian industries—industries in my electorate.

6:28 pm

Photo of Jason ClareJason Clare (Blaxland, Australian Labor Party, Parliamentary Secretary for Employment) Share this | | Hansard source

I rise to speak on the Carbon Pollution Reduction Scheme Bill 2010 and cognate bills. This is the third time that this legislation has come before this House. It has now become a debate of two competing plans: the plan detailed in this legislation and the plan announced by the Leader of the Opposition last week. The plans are very different but ultimately the objective is the same: to cut carbon pollution by five per cent. This is no easy task. The key question here is whether they will work. This legislation puts a cap on carbon pollution. It makes polluters pay. It compensates working families for the 1.1 per cent increase in the cost of living. For the average family that is $12 a week or $624 per year. Nine out of 10 households will receive assistance. On average they will get $660 a year. Pensioners, carers and people with a disability are fully compensated. This legislation works because it puts a cap on the amount of carbon dioxide that the economy will produce, and that ensures that we can cut emissions.

The opposition’s plan, the Abbott plan, involves spending about $10 billion over 10 years on an emissions reduction fund, soil carbon, tree planting, solar panels and hot water systems. It sounds simple, but it has some problems with it. The main problem is it does not work. It does not work because it does not have a cap on carbon pollution. It has some other problems. It does not make polluters pay. It makes taxpayers pay—something like $1,000 a year per household—and it provides no compensation at all when the companies that they fine under the Abbott plan pass on these costs to consumers. Instead of capping the amount of carbon pollution that we will produce, the alternative plan, the Abbott plan, tries to cut emissions by picking projects to subsidise. This is a fundamental flaw. In his contribution, the former Leader of the Opposition yesterday said that that was ‘a recipe for fiscal recklessness on a grand scale’ and ‘a slippery slope which can only result in higher taxes and more costly and less effective abatement of emissions’. That is not the government saying that; that is the former Leader of the Opposition, Malcolm Turnbull, the member for Wentworth.

The main problem with the Abbott plan is it will not work. It is like a brand-new car without an engine: it looks good but it will not work. It will not get you anywhere. It will not even get out of the driveway. That is the basis upon which these two competing plans must be judged. Which one will work? Which one will cut emissions? On that basis, the Abbott plan fails because it cannot cut emissions by five per cent. In fact, it will not cut emissions at all. The advice of the Department of Climate Change is that under the Abbott plan carbon pollution will go up, not down. It will go up by something like 13 per cent. To work, the Department of Climate Change advises that the opposition would have to triple the amount of taxpayers’ money they spend on their plan. Instead of slugging taxpayers $10 billion, they would have to slug taxpayers $30 billion.

The department are not the only ones saying this. We heard in question time today from the Minister Assisting the Minister for Climate Change, where he quoted David Pearce, the director of the Centre for International Economics, who last year conducted a review of greenhouse policy on behalf of the coalition. He said this:

… the apparent simplicity of the coalition plan would soon disappear if it were ever implemented … The cost of the scheme could also rise significantly once details such as penalties and assignment of risk were taken into account …

That is from David Pearce, former adviser to the coalition on climate change. In his analysis in the Sydney Morning Herald last week, Ben Cubby also outlined problems with the opposition’s plan:

By failing to address the sources of rising greenhouse gas emissions, even the federal government’s minimum target of 5 per cent cuts by 2020 would be likely to spiral out of reach, potentially exposing Australia to punitive action from other nations that are able to meet their targets. A 15 or 25 per cent cut by 2020 could no longer be contemplated, passing on much steeper costs into the following decade.

We have heard from the Department of Climate Change, which says the Abbott plan would not work. We have heard from former advisers to the coalition on climate change who said it would not work. But perhaps the most important contribution to this debate in determining what plan would work is the comments of the former Leader of the Opposition in this place yesterday, where he said this:

This legislation is the only policy on offer which can credibly enable us to meet our commitment to a five per cent cut to emissions by 2020 …

This is the important thing. This is a debate about which plan will cut emissions by five per cent by 2020, and that is the basis upon which in the first instance we need to compare these two plans. What the former Leader of the Opposition told this place yesterday is that there is only one plan that will do this, and that is this legislation. The Abbott plan will not.

The former Leader of the Opposition, the member for Wentworth, is not the only Liberal who realises the best way to cut carbon pollution is with an emissions trading scheme. This is the great irony of this debate: the Liberal Party are now opposed to the same thing they voted for under John Howard and promised to do if they won the last election. On 3 June 2007 John Howard said:

Australia will move towards a domestic emissions trading scheme … beginning no later than 2012. Australia will continue to lead internationally on climate change, globally and in the Asia Pacific

John Howard said this, John Howard did this and John Howard got his party to support this for two simple reasons: (1) because it works and (2) because it is the cheapest way to do it. This is the advice of Dr Peter Shergold, John Howard’s most trusted and senior adviser. The Shergold report, the report of the task group on emissions trading which John Howard commissioned, said this at page 6:

The Task Group is firmly of the view that the most efficient and effective way to manage risk is through market mechanisms. An Australian emissions trading scheme would allow our nation to respond to future carbon constraints at least cost.

Emissions trading focuses on the ultimate environmental objective: to reduce emissions in the most efficient manner.

That is what we are trying to do here: reduce emissions in the most efficient manner. I do not see this as a debate on whether climate change exists or not. You have two plans here whose objectives are to cut emissions by five per cent, and the basis upon which you have to judge them is whether they are effective in meeting that and which is the most cost-effective way to do it. Here you have the Shergold report giving advice to the former Prime Minister saying the most effective way to do it, the cheapest way to do it and the best way to ensure that you do do it is with an emissions trading scheme. It goes on:

Emissions trading enables the market—not government—to decide which new or existing technologies will reduce emissions at least cost.

That is why the Liberal Party promised hand on heart at the last election that they would introduce an emissions trading scheme. That is why a few months ago John Howard, when asked about this legislation, said it was ‘not all that different from the one I took to the last election’. That is why the member for Wentworth, when he rose in this place yesterday, said:

At their core, therefore, these bills are as much the work of John Howard as of Kevin Rudd.

Who would have thought the Liberal Party thought John Howard was capable of such a despicable act? I am forced to ask myself why all this has happened. What explains this big shift in the view of the Liberal Party since John Howard left this place? What explains the shift in the last few months? It is to do with politics not policy. If you want to find the origins of this shift you have to go back to 3 June last year. This is when the national accounts data came out for the March quarter and it showed that Australia, unlike the rest of the major advanced economies around the world, did not go into recession. The economic ramifications of that, as we all know, were enormous—the political ramifications were even greater. It proved that the government had made the right decision to stimulate the economy and the Liberal Party had made the wrong decision to vote against it. That was the economic debate—it changed everything in this place. If you want proof of that, have a look at the number of questions the opposition asked on the economy before and after that event. Between 3 February and 2 June last year, the opposition asked the government 154 questions without notice on the economy. In the rest of last year after 3 June—five months—they asked only 51 questions on the economy—so before the data came out 154 and after the data came out 51.

Instead of asking questions on the economy, they had to look for something else and it did not take long for them to find it. On the very next day, 4 June, the former Leader of the Opposition asked his first question about a ute and we all know where that ended. The data which came out on 3 June shifted the whole debate in this country. The opposition had to look for something else to scare the Australian public. They moved from fear to smear. It also affected the way the new opposition leader approached this topic and this legislation. We all remember that in July last year the member for Warringah, now the Leader of the Opposition, was advocating a vote for this legislation. He said it should be passed. A couple of months later though he changed his mind. What explains this? Have a look at an opinion piece that the Leader of the Opposition wrote in October last year which explains why he changed his mind. He said:

A few months ago—

before the 3 June data came out—

the Liberals’ best bet seemed to be getting the ETS off the agenda and concentrating on debt and deficit.

What changed? One thing changed—the economy. Australia did not go into recession, the stimulus plan worked and so the Liberals needed something else to campaign on, something else to give people a reason to vote for them, something else to scare the Australian public about. They chose this legislation. That is why this legislation is still here and why we are debating it for a third time. It is also why Malcolm Turnbull, the member for Wentworth, was killed off. It is not about policy; it is all about politics.

If you want another example of this, more proof of why the Liberal Party have shifted positions on this legislation, have a look at the first speech of Senator Mathias Cormann in the Senate in 2007. We have just had a first speech. We all understand how important those speeches are and how they articulate your policy views. When Senator Cormann stood in the Senate for the first time in 2007, he said:

The government’s recent announcement of a national emissions trading scheme, including offsets for trade exposed industries, is a positive and sensible approach to addressing global warming.

When John Howard announced this, he said it was a great idea. A couple of years later he quit his job and knifed his leader over exactly the same thing. It has nothing to do with policy; it is all to do with politics. It is about finding another issue, another reason to try to scare the Australian public and give the opposition something to campaign on. That is why this legislation is still here and why it was not passed by the Senate in December last year.

One of the arguments that is always put up in this debate is that this legislation will cost jobs. As Parliamentary Secretary for Employment it is an issue that concerns me, but it is also an argument that I have heard many times before. It reminds me of the debates that happened in this place in the 1990s about universal superannuation, when the Liberal Party would come in here and fight tooth and nail trying to stop the implementation of universal superannuation. They said it would cost jobs because businesses would have to sack people to survive. What happened? People did not get sacked; new businesses and new jobs were created. It proved to be one of the most important economic reforms of the last century. It created new industries which now have more than $1 trillion in funds under management, making Australia’s superannuation savings the fourth largest capital pool in the world. It also created jobs. A report released last year by the Association of Superannuation Funds of Australia estimated that 60,000 people are now directly employed in the superannuation industry. The fact is structural reform creates new industries and new jobs. This legislation is no different. Treasury modelling shows that employment will continue to grow strongly under an emissions trading scheme and that the scheme will create new industries and new jobs. Modelling published in the Intergenerational report projects that by 2050 the alternative energy sector will be 30 times larger than it is today. The Climate Institute has estimated that this will create about 26,000 jobs, mostly in regional areas.

A lot is also being said in this debate about Copenhagen and what it means. I have always said, irrespective of Copenhagen, one thing is certain—there will be a price put on carbon. If you assume this, there are strong reasons to support this legislation and there are strong reasons for this country to act now. Treasury’s advice is that, the longer we wait to set up an emissions trading scheme, the more it will cost. That is why it is in our interest to pass this legislation now and why both sides of parliament have agreed to a five per cent reduction in emissions by 2020 without international agreement. The longer we wait to do this, the longer businesses have to wait to find out what rules will govern their investment decisions. They want to know what the rules are so they can make long-term investment decisions that will create jobs. That is what leaders in the business community are saying.

When these bills were voted down in December last year, Carl McCamish, the head of policy and sustainability at Origin Energy, said:

Ongoing uncertainty risks delaying both the investment necessary to meet Australia’s long-term baseload electricity needs and the investment in lower-carbon technology required to gradually reduce Australia’s emissions.

That is why this legislation is so important. If you accept that there will eventually be a price put on carbon then the longer we wait the more it will cost, the more it will delay these important investment decisions that business want to make and the more jobs it will cost.

I will end my contribution where I began. The Australian people have now been offered two plans to cut carbon pollution. Only one will work. Only one will cut carbon pollution by five per cent. That is an important difference. I will repeat what the member for Wentworth said yesterday:

This legislation is the only policy on offer which can credibly enable us to meet our commitment to a five per cent cut to emissions by 2020 …

These are the words not of the government but of the bloke who was once the Leader of the Liberal Party, the person that they once wanted to become the Prime Minister of Australia. He says that this legislation is the only plan that works. If you apply this test, the question is an easy one. It is like choosing between DVD and Beta. Only one will work. The other one will not.

Of course, why would you expect a plan put together by a bloke who thinks climate change is ‘absolute crap’ to work? Why would he do anything about something if he did not even think it existed? What the Leader of the Opposition has presented here is a pretend plan for what he thinks is a pretend problem. I am reminded here of an article I read two years ago, in July 2008, by Phillip Coorey in the Sydney Morning Herald, where he quoted an unnamed Liberal MP explaining why he voted for John Howard’s emissions trading scheme:

We were staring at an electoral abyss. We had to pretend we cared.

I have often wondered who that unnamed Liberal MP was. Who could it have been? I wonder whether it was the current Leader of the Opposition, who does not believe that climate change is real but suddenly has a plan to tackle it. This is a pretend plan by somebody who does not even believe that climate change exists. They were pretending then and they are pretending now. That is why the member for Wentworth has said that this is ‘a con, an environmental fig leaf to cover a determination to do nothing’.

The last speaker quoted what a former member for Blaxland, former Prime Minister Paul Keating, said about John Hewson’s GST: ‘If you don’t understand it, don’t vote for it.’ As the current member for Blaxland, let me say this: if you do not believe in climate change then do not vote for this legislation. But, if you believe that climate change is happening—as most Australians do—and you want to cut carbon emissions, you will vote for this legislation, because it is the cheapest way to do it and, in this debate, it is the only plan that will do it. For those reasons, I commend these bills to the House.

6:48 pm

Photo of Bob BaldwinBob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | | Hansard source

I rise today to speak against the Carbon Pollution Reduction Scheme Bill 2010 and related bills. It is now apparent, more than ever before, that this CPRS is an indirect tax, a tax that will affect hardworking Australians who are struggling to keep family budgets in check and who work hard to limit their impact on the environment. The Rudd Labor government’s great big new tax will impose massive cost burdens on working families and small businesses, yet the government will not say how much the price of a loaf of bread or a litre of milk will rise under this big new tax—because either they do not know or they are too frightened to say.

The Newcastle Herald reported in October 2009 that the typical Hunter household power bill has risen by more than 20 per cent and could rise by as much again, if not more, with the cost of carbon trading. Last year the New South Wales Labor government commissioned a report through Access Economics on the impact that the CPRS would have on state economies. It concluded that the CPRS would severely affect the Hunter economy. An article by Ian Kirkwood in the Newcastle Herald, published on 11 June 2009, said:

The Access Economics report into the scheme’s impact on disadvantaged regions says that by 2025, it could cost the Hunter 17,000 jobs and cut its commercial output by more than $1 billion a year.

Coal, predictably, would be hardest-hit with at least one in three Hunter coalminers likely to lose their jobs as industry output fell by 37 per cent “relative to the [no carbon scheme] baseline”.

It would also be felt at Tomago Aluminium and Hydro’s Kurri Kurri smelter, with national aluminium output predicted to be at least 50 per cent less than without the scheme.

The Hunter’s coal-fired electricity industry is also expected to suffer.

Overall, Access Economics says the proposed carbon scheme will cut the Hunter’s output by 3.7 per cent and take 2 per cent from employment.

Things become dramatically worse if Australia’s carbon permits are not part of an international trade.

In this case, employment is hit by 7.8 per cent and output by 10.2 per cent.

That is perhaps one of the most damning articles I have ever read about the impact of an emissions trading scheme on a region—an impact that would be hard, if not impossible, for many to recover from.

The question to ask now is: from whose electorate will these 17,000 jobs be lost? Will they come from the seat of Hunter? Last night, Joel Fitzgibbon, member for Hunter, declared to all that he is willing to vote to sacrifice those 17,000 jobs in the Hunter region. Given that he has Hydro’s Kurri Kurri smelter, most of the state’s coal-fired power stations and most of the state’s coalmines in his electorate, that is a very bold statement to those who have elected him to represent them in this parliament.

Will they come from the seat of Newcastle? Sharon Grierson, member for Newcastle, is the icon of hypocrisy. On the one hand she calls for and praises the investment in rail and port infrastructure in Newcastle to export more coal, yet on the other hand she condemns anything to do with coal power energy. With the Kooragang Island and Port Waratah coal loaders and Tomago Aluminium in her electorate, her hypocrisy knows no bounds. She is prepared to export our emissions overseas, but what she has not realised is that, by supporting Rudd’s massive big tax that will affect coalmining and aluminium, she will be exporting local jobs overseas.

Will they come from the seat of Charlton? The member for Charlton, Greg Combet, as assistant minister for climate change, who is one of the architects of the great big tax, also has coalmines and coal-fired power stations in his electorate. If the members from the Hunter, Newcastle and Charlton had listened to their constituents, they would have heard the concerns on the CPRS expressed with the following theme. Gerry said in an email:

As the Minister Assisting the Minister for Climate Change and as my local member I feel confident you can answer some concerns that I have about the climate change debate. I am not too interested in the argument as to whether the climate change is man made or a natural event because, in the short term, not a lot can be done by Australia to fix a global problem.

No Greg, my concern is how much your proposed ETS will cost me. In your response I don’t think it will be necessary to quote the ready available figures bandied about of $600+/-. I am concerned that the media’s figure of $1100+/- might be a possibility.

Where I have a major problem with all of this Greg, is that I have been told that big polluters will get a refund as well as low income earners. That leads me to wonder who will be buying carbon credits to provide the funds that are to be allocated. There has, as far as I can tell, been no mention of these people. Are they suppliers of goods that consumers usually buy? Will the price of these items rise? As electricity will rise 19% in the next 2 years, can you guarantee that businesses that use electricity (I can’t think of any that don’t) won’t pass on the increase in their overheads to us consumers?

I must say that I am disappointed with Mr Rudd who told us almost daily before being elected that his Government would be ‘open and transparent’. He now refuses to release the Treasury figures on the proposed ETS, figures that should allay our fears unless there is something to hide. What is even more disappointing is Mr Rudd’s childish excuse that he is doing the same as his predecessor.

I await your response and I trust you won’t ignore this email as you have with some of my past questions.

Page 3 of the Access Economics report names the Hunter Valley and the Latrobe Valley as the regions most disadvantaged by the Rudd Labor Government’s CPRS. The Hunter Valley has become a hub of growth and activity. In 1996, when I was first elected as the member for Paterson, the unemployment rate was 11.2 per cent in my region; it is now about four per cent. This is in no small way due to the boom in the mining and aluminium sectors and the industries that support them. Research prepared by Access Economics concluded that there will be 23,510 fewer jobs in the mining industry by 2020. Frontier Economics identified 45,000 jobs lost in high-energy-intensive industries. Australia’s 750,000 small businesses will receive no compensation for the massive jump in electricity prices from the ETS. This means that jobs will be lost and the price of consumer goods will go up.

Paterson families will also be hit hard by the latest increase in household costs foreshadowed recently by the Independent Pricing and Regulatory Tribunal, or IPART, on 15 December 2009. The determination recommends further increases to power prices ranging from 44 per cent to 62 per cent over three years starting in July 2010. This IPART recommendation has revealed the true cost of the Rudd Labor government’s proposed CPRS. Because there is little competition between our energy retailers, there is no incentive to reduce costs or emissions. So, if energy producers are forced to pay this great big tax for carbon under the Rudd Labor government, these costs will simply be passed on to the consumer, so where is the great environmental benefit Mr Rudd talks of from penalising electricity generators?

According to IPART the average Energy Australia consumer will pay an extra $727 by 2013, while those with Country Energy will pay $893 extra. IPART has also said that electricity prices will rise by up to 62 per cent over the next three years—a third of which will be as a result of Kevin Rudd’s great big new tax. A massive hike in power bills will hit all businesses hard as they battle through the financial downturn. If employers are forced to pay more, they may have to sack workers just to survive, meaning even more local job losses, or they will simply pass on costs to consumers as clarified by Minister Combet in an ABC interview today. This is simply unacceptable.

Kevin Rudd wants to tax Australian industry in the absence of global action—meaning both Australian jobs and emissions will go overseas. This would be harmful to our economy whilst doing absolutely nothing for the environment. The Prime Minister says he will make polluters pay—but what he will not tell you is that he plans to give Australia’s polluters up to $40 billion in handouts even if they do not reduce their emissions. According to the Access Economics report, on page 16, the annual impact of the CPRS on the New South Wales budget is estimated to reduce the net operating balance by $0.9 billion in 2013-14, increasing to $1.7 billion in 2020-21, with revenue losses from the downturn in mining royalties, reduction in profits from government owned enterprises and losses in payroll tax from job losses—just to name a few.

Prior to the 2007 election Mr Rudd promised to introduce an emissions trading scheme that would produce deep cuts in CO2 emissions but would not disadvantage Australia’s export and import industries. The current CPRS bill offers little to no protection to Australian businesses; they will actually be left out in the cold. Paterson’s businesses will be left out in the cold and Australia’s trade exposed businesses will be left disadvantaged against other competing countries in the market, as they will not be on a level playing field with their competitors. The current ETS proposal poses a significant threat to the continued competitiveness of Australian businesses operating in those trade exposed industries. Recently Access Economics stated that, without the trading of permits internationally, carbon prices in Australia will be much higher. Page 20 of that report states:

Without the trading of permits internationally, carbon prices in Australia will be much higher for the target of a 5% reduction in emissions by 2020 to be achieved. This would result in deterioration in State and Territory budgets by 2013/14 of $7.3 billion, increasing to $9.1 billion by 2020/21 …

Unfortunately for working families, the Prime Minister has no plan B to cut emissions by five per cent. He has a plan that he is too stubborn to drop and which he cannot deliver. In the space of 24 hours the Prime Minister, Julia Gillard and Penny Wong were all asked to explain the impact of Labor’s great big new tax on working families, and they all failed to do so. Only this past week, the junior climate change minister, Greg Combet, struggled to explain how a single person earning $80,000 a year will be $545 a year worse off under the Rudd Labor government’s planned ETS. Despite having a pile of tables detailing compensation arrangements, Mr Combet was unable to refute that some middle-income Australians will be out of pocket after the scheme’s start in July 2011. Mr Combet, to support this scheme, is to support 17,000 job losses in our Hunter region. How could you possibly be representing your constituents when so many thousands of these same people will lose their jobs, their livelihoods and their way of providing for their families under your big new tax? Clearly you are only representing your own interests, the interests of the Labor Party, rather than those people who put their faith in you when they voted for you in 2007.

Kevin Rudd talks about punishing the big emitters but the reality is that all of the penalties will flow down to the end consumer. Kevin Rudd said that 92 per cent of all households would be compensated or overcompensated, which then leaves eight per cent of the people to pick up the burden—and $140 billion to 2020 is a lot of burden. The reality of compensation packages is that they never amount to the full cost.

As the shadow minister for defence science and personnel and as a member who represents many ADF personnel in my electorate of Paterson, I would now like to briefly outline the impacts that the Rudd Labor government’s great big new tax will have on defence, and in particular defence personnel. It is disappointing that the Prime Minister has given so little thought to those who will be affected by his great big new tax, not least of all the men and women of Australia’s Defence Force who put their lives on the line every day to defend our nation. This great big new tax will cost the men and women of the ADF hundreds, if not thousands, of dollars a year. Let us take, for example, a RAAF flight lieutenant based at Williamtown who is single with no children: this person has three years experience at the rank of flight lieutenant and is paid at approximately the middle of the pay band. This flight lieutenant would be on a salary of about $69,100 per annum. When you include the $11,355 service allowance with the flight lieutenant’s total annual salary, not counting any additional allowances for overseas duties or dangerous duties, this flight lieutenant would receive approximately $80,500 per annum. Under the Rudd Labor government’s CPRS, this flight lieutenant would be slugged $545 per annum. So much for the Prime Minister’s claim of no-one being worse off!

Let us consider for a moment another situation, a family with two children and two working adults, one of whom is a sergeant based at Singleton Army base with five years experience at that rank. This sergeant would have an annual salary, including the service allowance, of approximately $74,000 per annum. This family, a family that has had to live with the constant deployments and relocations synonymous with serving in the ADF—a family that has sacrificed time together for the benefit of this nation—will now be slugged a whopping $668 per annum more because of the Rudd government’s big new tax. Again, how can the Prime Minister state that 92 per cent of households would be no worse off when two examples involving Defence Force members—and I might stress these two examples would be considered average circumstances within the ADF—will be slugged $545 and $668 per annum respectively? So I say to the Minister for Defence Personnel, Materiel and Science, who also just happens to be the Minister Assisting the Minister for Climate Change: how can you possibly explain to the men and women of Australia’s Defence Force, who put their lives on the line to defend this nation, that your great big new tax will be good for them?

There is, of course, another dimension to this great big new tax, and that is how the Rudd Labor government plans to pay for the Defence Force of the future. Let us not forget for one moment that the Rudd Labor government will strip $20 billion from defence over the next decade. Furthermore, the Pappas report, an independent audit of the defence budget, states on page 7 that defence will require a 4.2 per cent real cost increase to fund future defence acquisitions. Yet this government has only promised a three per cent, decreasing to 2.2 per cent, real cost increase to the defence budget. Here is a government that cannot even manage to pay its personnel on time or get the amount right, yet it wants to introduce a great big new tax on defence personnel. Given this government’s sloppy record of managing defence, this can only end in disaster—a disaster that will damage the morale of ADF personnel both now and into the future.

Photo of Gary GrayGary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Western and Northern Australia) Share this | | Hansard source

Mr Deputy Speaker, I raise a point of order on relevance. The bill is on the Carbon Pollution Reduction Scheme, and I have been in the chamber and I have not heard it mentioned a single time.

Photo of Sid SidebottomSid Sidebottom (Braddon, Australian Labor Party) Share this | | Hansard source

The member for Paterson is aware of the legislation before us. He may continue and make it very relevant.

Photo of Bob BaldwinBob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | | Hansard source

It is always relevant, Mr Deputy Speaker. The Rudd Labor government has no clue as to the costs its CPRS will have for the administration and operations of Defence. Furthermore, it has no idea how it will pay for the offsets that it will have to fund in order for Defence to continue with its operations and training. For every flight of an FA18, for every hour of sea time for an Anzac class frigate, for every kilometre a Bushmaster travels, there will be a new cost imposed to pay for their emissions—a cost that will be directly passed on to taxpayers. Let me reiterate: this government has no idea of the notional costs involved in running Defence equipment, let alone the increased costs associated with its great big new tax.

By stark comparison, the coalition’s direct action policy provides incentives for Australian families and businesses to reduce their carbon emissions and focuses on meaningful, effective and direct action to improve Australia’s environment. Our incentive-based approach will reduce emissions as well as address some of Australia’s serious environmental problems. The Prime Minister is not sure how to react to the recent admission by President Obama that he is considering an incentive-based approach. In the President’s own words:

… incentivising clean energy so that it’s the cheaper, more effective kind of energy, is one that’s been proven to work, and it’s a market-based approach.

This must be quite an embarrassment for the Prime Minister. No longer has he got the excuse that action in the form of an ETS is the only way forward. I congratulate President Obama for moving towards a direct action plan. Our intransigent Prime Minister has now become the emperor with no clothes. Everyone but the Prime Minister is beginning to see the nakedness of his argument, and it is not pretty.

The coalition’s proposed scheme seeks to reduce carbon emissions by five per cent. Labor’s emissions trading scheme, or emissions taxing scheme, seeks to reduce carbon emissions by five per cent. But that is where the similarity ends. The coalition will take direct action which will take advantage of Australia’s natural advantages, soil and sun, both of which we have in abundance. The coalition’s direct action plan is careful, costed and capped, reducing emissions without a tax on everything. Under the coalition’s plan there will be no job losses; there will only be job opportunities. Under the coalition’s plan, there will be no increases in energy prices—only incentives to reduce emissions. Under the coalition’s plan, we will match the five per cent reduction.

On behalf of my constituents, I have to ask: if you can get the same cuts to emissions as the Rudd Labor government scheme through direct and practical action, why would you proceed with a $140 billion money-go-round that will raise the cost of living for Australian families and cost jobs? At a time when we need to grow our economy to get out of the global financial crisis and pay off this Rudd Labor government’s massive debt, we do not need to penalise the economy further. The only thing that is clear is that, no matter what the cost of the Rudd Labor government CPRS, that cost will raise prices for virtually all consumer goods and services, it will hurt working families and small businesses by drastically increasing electricity costs and it will cost local jobs, all by ignoring real environmental concerns which should be passed onto the Australian—(Time expired)

7:08 pm

Photo of Robert OakeshottRobert Oakeshott (Lyne, Independent) Share this | | Hansard source

Whilst we are visiting the Carbon Pollution Reduction Scheme Bill 2010 and related legislation for a third time, I will be moving the same amendments as previously, but also, this time around, I will be making something called a reasoned amendment in the second reading stage. So, with the indulgence of the House and, hopefully, with the support of the coalition, if they listen closely, I move:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House:

acknowledges that the bill does not adequately answer the following critical topics:
the energy security needs of Australia;
Australia’s regional stability and Asia-Pacific security needs;
whether Australia’s international climate change obligations have the potential to inhibit or enhance our competing land management policies;
possible protection and compensation for small businesses that are light emitters, given they are unable to access free heavy emitter permits or reach the 25,000 tonnes per financial year to gain support;
possibilities for farms, small businesses and households to make and save money through abatement, carbon credits, offsets and small-scale production;
the favourable position of heavy emitters compared with households, and whether this should be adjusted given the low 5 per cent emissions target that is likely to be met without any policy through this place;
the workforce restructuring that it will cause and the need for retraining;
the accuracy of the scientific data published in the Garnaut report and the Shergold report, and by the Intergovernmental Panel on Climate Change; and
calls on the Government to urgently conduct these reviews, audits and analysis and thereby begin engaging the Australian community in a detailed, serious and factual debate”.

In Camden Haven, on the mid-North Coast of New South Wales, we recently had a heated debate about whether the community would like to have a diesel-fired peak load electricity generator at a beautiful location close to water called Herons Creek. A previous local council had signed off on the right to allow a private company to put this facility on council land. As expected, the community reacted strongly and comprehensively, saying that they did not want such facilities to be part of their future. Quite rightly, they argued that we can all do better.

At two seaside locations in the electorate of Lyne, at places called Old Bar and Lake Cathie, we see some quickening in erosion that is right now jeopardising the houses and the savings of many within the region. The front page of a local paper, the Manning River Times, described this issue last year with the chilling headline ‘1000 homes at risk’.

I start this evening with these two practical examples from the mid-North Coast as evidence that this is not some global world government issue or some Copenhagen junket issue. Rather, the issues of how we minimise the impacts of climate change and how we maximise the natural advantages we have in Australia on the related issue of energy security are both at the core of this debate, and they are both directly relevant to my region and to my nation.

It is therefore with sadness, with frustration and with a bit of fury that I speak this evening, for the third time, on a variation of the same theme called the CPRS bills. Each time I have been provided with a bill that has some changes that seem to arrive at the eleventh hour, with these changes buried deep in the 440-page document. Each time we sit down as an office team and work our way through the changes, and each time we see areas we think should be changed to improve the bill. Again, for the third time, I will be doing this tonight, and once again I encourage the government to consider those same amendments, which attempt to bring greater independence in the decision-making process of the future and to lessen the amount of ministerial discretion in decision making in the future, something that will politicise the process of the future and will lessen the process of the future.

But rather than, like a broken record, explain these amendments again, I think it is now time to call some others to account, because at the moment we have neither the government nor the Liberal-National opposition talking the truth about the problems or about the solutions. Neither look focused on a national outcome on climate change and energy security. Rather, we have what I perceive as a focus on an election and a parade of self-interest as a consequence.

The joke that is presenting itself as national politics at the moment is that all sides of politics are really a lot closer on this topic than they care to present to the Australian community. Importantly, if the national interest were the priority of the major parties, we could have something for the Australian people by the end of this week. Unfortunately, however, we are witnessing a disgraceful failure of so-called leaders in this country to tell the story of climate change and energy security, and a failure to explain in context why it is in the national interest to put in place a range of energy measures, with one being a price on carbon leading to true pricing in the energy market. As a consequence of this failure, Kevin Rudd and Penny Wong have lost the pub test and lost the barbecue test within Australia, and in my view, in its current form, with the current strategy and the current personalities in charge, an emissions trading scheme in Australia in 2010 is dead. It will pass the House of Representatives but it is highly doubtful whether it will pass the Senate.

Most importantly of all, with so much heated division and confusion within the Australian community, it is now a policy that will become increasingly unwelcome to the voter-sensitive decision makers—not, mind you, because the concept of an ETS is wrong but because timely information has not been forthcoming throughout 2009 and 2010, leaving so many questions unanswered by a government that got caught with its pants down in bed with the opposition and that had spent its time cutting deals in the hallways of parliament with lobby groups and alternative parliamentary parties in an all-too-clever attempt to ram through a policy, and leaving behind the key to all policy in this country, the Australian community which is outside this building.

RIP CPRS 2007-2010. On reflection, all I can say is: a pox on both the major parties, Labor and the Liberal-National Party coalition, for placing the game of politics and the self-interest contained within it over and above the national interests of this country and the oh-so-close potential outcome on climate change and energy security policy. From here, I think we can all expect to hear less and less about climate change from the media-sensitive government and the Prime Minister over the coming months as the expected political strategy of retreat takes place in the lead-up to the national ballot. This is disappointing. The Prime Minister can be called many things, but, like a fish called Wanda, I do not think we can call him stupid. For an intelligent man with a strong mandate in 2007, it is an incredible disappointment that we now see such a central policy for our country’s energy security fall over. The question needs to be asked: what went wrong within the ranks and why so silent?

The failure to tell the story of why a price on carbon is so important has yet again been highlighted by the very odd and scatty responses we have seen to the coalition’s so-called direct action plan released last week. The focus by government has been to continue to highlight the Leader of the Opposition’s comments recently that the science was, in his words, ‘crap’ or to focus on a throwaway comment about an ironing-board today. They have chosen to continue to paint the opposition as a bunch of deniers of the science. They have chosen to push Tony Abbott away in an effort to park him in some loony bin. It is an unsuccessful and ill-thought-through strategy. If anything, this says more about government than opposition. It does nothing to enhance the government’s position on this topic. It shows only a weakness of character, strategy and intellect and continues to lose people from the main game of getting an outcome on climate change and energy security, which is, without doubt, the national interest that they should be focusing on.

The failure of this position is hidden in the sensible words from the member for Flinders on the first day of parliament last week, the day after the coalition’s climate change policy was released. He made reference to three critical things in his speech. He said the coalition policy is a market response. He said it is a trading scheme based on the New South Wales GGAS. He also said it contains a cap. I encourage anyone trying to do their homework to go to the GGAS website and look at the information. I will read the very first two sentences you will come across. It says:

The NSW Greenhouse Gas Reduction Scheme (GGAS) commenced on 1 January 2003.

And—here it is—it says:

It is one of the first mandatory greenhouse gas emissions trading schemes in the world.

This has been identified as the backbone of the model that the coalition has placed their faith in for their so-called different response. It is a market based response which involves a cap and trading scheme similar to the GGAS scheme in New South Wales—a market based trading scheme with caps. This is dripping with irony. The Liberal-National Party coalition have modelled their alternative to an emissions trading scheme on—lo and behold—one of the first emissions trading schemes in the world.

I therefore welcome the choice we now have between the Labor ETS and the coalition’s ‘ETS lite’, because the one critical point of difference, the one factor missing in the coalition’s scheme, is a price on carbon. But make no bones about it: we now have a choice between two emissions trading schemes, and these two policy positions are a lot closer than either side would be comfortable admitting by being truthful. If the coalition scheme is somehow an easier, simpler scheme, I ask anyone interested to google GGAS. Go to page 8 of the GGAS summary and see exactly what the coalition has modelled their ETS on. I encourage them to look at the five rules of the game. For example, figure 6 of the compliance rules overview looks something akin to Barry Jones’s spaghetti revolution of five years ago. Maybe they should then read some of the detail of how such a scheme runs. For example, if the coalition, as they have stated, are basing their ETS on the New South Wales GGAS then I warn businesses and households of what is involved. For example, the GGAS rules say:

Benchmark participants complete a standard calculation spreadsheet with relevant input data in January/February of each calendar year for the previous calendar year. The completed spreadsheet is then audited by an appropriate auditor and submitted to the compliance regulator—

who in New South Wales is IPART but in this case is unknown in the coalition plan.

So much for sexy, direct action. This alternative market based cap and trade system also has an accounting scheme, a scheme administrator and a whole lot of bureaucracy attached—no different to what the government version of an ETS has. So the coalition has thrown up nothing more or less than a variation of an ETS, one that caps and trades and is based and modelled on one of the oldest ETS schemes in the world, the New South Wales GGAS; one that is equally complex on reporting and accounting, as can be seen in the GGAS paperwork; and one that, importantly, based on their own definitions and logic, will therefore be an equally great big tax—that is, of course, if they define a tax as anything that might increase consumer costs without an examination of the benefits or the compensation. But the point still stands: the coalition ‘ETS lite’ is just as much a great big tax as the government’s ETS is a great big tax. Brrng, brrng: ‘Hello, Pot? This is Kettle.’ Once again we have the major parties serving up exactly the same tray of policy disguised with different words. We might call it heated agreement at the moment over climate change.

We now have a clear choice between an ETS and an ‘ETS lite’—one emissions trading scheme that places a price on carbon and one that does not. I do not say this as a negative, by the way; I say this as a positive. I say: ‘Finally, coalition, welcome to the party. Welcome to recognising a market based response as a sensible response to a problem in a market economy.’ I certainly welcome the focus on trees and I welcome the idea of solar panels. I welcome the idea of underground cabling being put in. But I also would welcome some honesty about your very own policy, as was shown in the House by the member for Flinders in his speech last week and by the former Leader of the Liberal Party earlier this week. However, the issue is being sidestepped by so many others, which makes me wonder if they have even read and understood their own policy.

Despite the concerns and disappointments of both positions in this debate—summed up best last week as Labor government lip-service versus a coalition con job—I do believe a compromise exists and I do encourage a compromise being found. We now have two emissions trading schemes on the community table. We have form from as recently as late last year, when the government and the opposition decided to enter into negotiations in the national interest, under a Rudd-Turnbull agreement. We have lieutenants such as Macfarlane and Wong ready to negotiate an outcome. We also have on the table a sensible Greens option for a temporary solution over the next two years that deserves real and valued consideration by all.

Critically, as well, this time, if we are serious, let us think about bringing people with us. Let us not forget the importance of constituency. With community understanding, with all sides recognising the science as a base and a platform for policy, we can do something. We can do something good. I seek the will of various leaders to make this happen and I urge the community to push for information and push for an outcome other than a good old election fight.

My point is that, despite the hype, despite the rhetoric, despite the question time antics and despite the trips to laundromats and school playgrounds for political positioning, the reality and the facts are that 150 House of Representative members are a lot closer in their positions than they dare to give themselves credit for. The test, therefore, is whether people want a national outcome or a political outcome. If we are serious about a national outcome, this place will start to negotiate in and around this CPRS Bill to find a compromise that works.

The other critically important point about the current state of play, where we now have all the cards on the table regarding policy, is the question of science. Both sides are now in heated agreement that the science is sound and a policy response is warranted. This is a welcome and important breakthrough, and the challenge is now for all of us to reaffirm the soundness of the science. To start the process of reaffirming the science, I previously put to the Prime Minister the importance of hearing from him an expression of his confidence in the foundation documents produced by Shergold, Garnaut and the IPCC. To be polite and diplomatic, it has been unhelpful that the fourth IPCC report has shown itself to be so skinny on scientific process and is failing to stand up to scrutiny. This needs to be explained so that the other reports are protected for their scientific base and so that the reason for an Australian policy response is kept very clear in the pub and around the barbecue. In my view, this is a critical time, when both the Prime Minister and the Leader of the Opposition must defend the foundation for policy. That foundation is the science—the good science and the overwhelming science that says that policy makers around the world must do something. I invite both men to take up that role over the coming months. Indeed, I think it is in the national interest to do so. I encourage all members of this place to do likewise.

Whilst blowing the candle on the death of the CPRS tonight, I also see a flicker of hope within the community. I see the community doing what politicians and the two-party-dominated parliamentary system could not. I will give four examples on the mid-North Coast. Lincoln Brickworks is spending $308,000 to improve its kiln techniques. A company called Edstein Investments Pty Ltd, in Taree, is improving its water harvesting and recycling plant. A third company, Hydro Photographics, in Port Macquarie, has just spent $165,000 to get some more solar panels and to access the gross feed-in tariff changes in New South Wales. I also want to quickly read this message from Malcolm McNeil, who is an architect in Port Macquarie. He says:

There is a huge push to build new (coal fired?) power station(s) to cater for increased demand. Yet recent statistics indicate a significant reduction in power consumption during 2009. My personal experience at home has been a 25% reduction in electricity consumption …

He wants to aim for 50 per cent. It can be done. So there are four local examples that give hope. There are examples in big business as well. They are almost naming and shaming all of us who are involved in the political process. They are showing what can be done to get an outcome, rather than just talking about it.

I will not oppose this bill tonight, but I will be moving a third reading amendment. I started by moving an amendment to the second reading in an attempt to drive the right outcome and make sure that this is the start, not the end, of a discussion between government and community. My amendment looks to capture the concerns of my region and my nation. I urge both sides to consider these concerns and continue working on them. This is too important an issue not to. I urge this place to catch up to the community. The business community are, for economic reasons, making changes already and could benefit from some carbon credit support to bring forward plans for renewable options. As well, the forgotten households of Australia want to be part of an honest response to this scientific dilemma and, to date, seem to have been shut out of an overly political process. It is time for this change to happen.

Photo of Sid SidebottomSid Sidebottom (Braddon, Australian Labor Party) Share this | | Hansard source

I thank the member for Lyne for his contribution. Is the amendment seconded? There is no seconder for the amendment. The amendment therefore lapses. The question is that this bill be now read a second time.

7:28 pm

Photo of Mrs Bronwyn BishopMrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | | Hansard source

I must say that I was rather disappointed when I listened to the member for Lyne, who I usually find a reasonable and sensible chap. Tonight I found his inability to distinguish between the two policies really quite astounding. Might I say to the member for Lyne: it does not sound any more true just because you yell. I think points can be made perfectly sensibly by simply arguing them in a moderate tone.

I point out to the House that there certainly has been a change in the climate. The climate has changed dramatically, away from support for Mr Rudd and his ilk. There is now a genuine debate taking place between two opposing points of view and two opposing plans to deal with what the member for Lyne calls ‘the science’. I always understood that the word ‘science’ meant knowledge, and that is knowledge in its current state, and there are myriad examples where the prevailing science of the time has had to change its mind because further knowledge has come before us. I guess we can say that, with the revelations of the way in which information has been manipulated by certain scientists of a particular persuasion and with other scientists who have a differing point of view now being heard as well, there is a genuine debate.

The thing that is important about the opposition’s plan is very simply that it offers direct action that will be of benefit to the nation in any event. Those people who like to argue, ‘Well, perhaps it is all correct; therefore, we must do something’ make a fair point, and that is precisely what the opposition’s direct action plan does. It makes improvements for Australia without crippling the nation. It does so without imposing a great new tax on everything, which the ETS or the CPRS—call it what you will; the Rudd plan to tax the Australian people—imposes.

If we go to some of the quotes that the Labor Party like to use to authenticate their position, we see that one of their favourites concerns former Prime Minister Howard, and they keep quoting the Shergold report. I think it is very important that I put on the record what Mr Howard had to say on 10 December 2006 when he appointed his Prime Ministerial Task Group on Emissions Trading. He said:

Australia is blessed with abundant coal, gas and uranium reserves and significant renewable assets. In assessing Australia’s further contribution to reducing greenhouse gas emissions these advantages must be preserved.

While there is no single solution to the global climate change challenge we need to maintain the prosperity our abundant fossil fuels have given us while at the same time exploring options for global climate change solutions and accelerating the development and deployment of low emissions and clean coal technologies.

The No. 1 point in the terms of reference he established was:

… that Australia enjoys major competitive advantages through the possession of large reserves of fossil fuels and uranium. In assessing Australia’s further contribution to reducing greenhouse emissions these advantages must be preserved.

In other words he was expressing that there was a need for government always to consider the welfare of the nation as a whole. That means preserving jobs for people, seeing that there is a continuing growth in GDP, seeing that there is a continuing growth in wages for people and seeing that there is an increasing standard of living. That is what the opposition is offering with its direct action plan. On the other hand, the Carbon Pollution Reduction Scheme Bill 2010 and cognate legislation, which we are debating now for the third time, is legislation that penalises and punishes the Australian people and that relies on that punishment and pain to attempt to persuade them to have a lesser standard of living.

I have even seen a government handout that contains the phrase, ‘Things that you can do at home that will help in this process.’ They say, ‘Don’t use the drier; hang out the washing.’ I have got a vision in my head of Mr Rudd at the clothesline pegging out the sheets and the various pieces of washing whilst he is thinking of, shall we say, 50 per cent of the rest of the male population doing likewise—I think not. What about those people who live in very hot parts of our wonderful country? They are being told, ‘Use less air conditioning.’ Those living in very cold parts of the country are told, ‘Use less heating.’ In other words, lower your standard of living.

The opposition’s plan does none of that. It does not rely on pain; it relies on incentive. It says that we want to give the businesses that produce the standard of living that we enjoy right now the ability to do business as usual. That means that power stations will continue to generate power for the lights that are on in this building and for the street lights that are on in the cities that enable people to walk through those streets without being mugged in the dark. It is part of our safety provisions. The fact that we have air conditioning, heating and all those sorts of things are part and parcel of our way of life and, dare I say it, so is the drier.

When we look at what the ETS does we have had some interesting admissions in this place from various ministers. I particularly like the one from Mr Combet this morning when he was on Radio National. He was asked about the now well-known dry cleaner, who is facing a $3,000 a year increase in his electricity bill, up from $15,000, and who will get no compensation. When Mr Combet was asked, ‘How is he to cope?’ he answered this way:

Costs faced by such a business will be passed on through the prices and the dry cleaning business and consumers will meet that cost.

In other words, the cost of the dry cleaning will be increased by the amount that the dry cleaner himself has to pay for the electricity, and that cascades all the way through the system. It means that the consumer pays more, it means that the consumer in his or her business then has to up their prices so that they earn more to pay more for the things that they are consuming, and the cost of living and the cost to them of this new tax becomes an increasing burden.

Mr Combet made another interesting point today when he told us about Bloomberg’s, a part of the finance industry. The finance industry is the one industry that is desperate to have an ETS because, for them, trading in carbon derivatives replaces the old CDOs that brought us the great financial crisis. I was interested to hear Mr Combet say just before question time that a press analysis of coalition policy had been issued by Bloomberg New Energy Finance. Part of the reasoning in that analysis, which he said was a stunning assessment of the cost of our policy, is that the CPRS will be more cost effective because it is a market based mechanism.

But then, if you bother to go and look at some of the arguments—which you can pick up on the web—that are put forth in the United States, you can find a very good description of why these finance trading firms are so anxious to have such a scheme. For instance, Matt Taibbi, writing in Rolling Stone magazine in a very lengthy piece—dare I say longer than the essay of the Prime Minister’s when he said that capitalism was such a disgraceful and discredited system; and this is of far more depth than that piece of work—explains that this is how the new carbon credit market would work. He says:

… if the bill—

in the United States—


and of course we now know that Mr Obama has walked away from it and that it will not happen, but this is what the Australian government wants to foist on us—

there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy “allocations” or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billion worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.

He then goes on to say:

The feature of this plan that has special appeal to speculators is that the “cap”—

and you will remember that the boast of the Prime Minister is that the CPRS has a cap, and he is very proud of that—

on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison’s sake, the annual combined revenues of all electricity suppliers in the U.S.—

that is, the people who are actually generating it for people to use—

total $320 billion.

In other words, the trade in paper will far exceed the value of what is currently in the United States produced for people’s consumption. He certainly says that Goldman Sachs, and other like firms, desperately want that scheme. It is also well to the point to note that Nobel prizewinner Al Gore, who is intimately involved in the planning of cap and trade, which Prime Minister Rudd wants, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management called David Blood, Mark Ferguson and Peter Harris. What is their business? Investing in carbon offsets—the new derivative market.

Now I will go back. This is indeed a tax, and it is a cascading tax. It is a tax which will eat into every aspect of your life whether it is the dry-cleaning bill, the grocery bill or the petroleum bill. Then the Prime Minister makes his second point in saying that you can avoid his cap because, if you go over your cap under this scheme, you can give some money to the likes of Mr Mugabe and buy a few trees and you are off the hook. So the cap is meaningless, except to escalate the price.

Under our scheme it is business as usual and, if you do not go above what is your emission rate right now, there is no payment for you to make. You can continue to generate power and energy—the essence of our life—in order that we can continue to have our standard of living. But if a business wishes to lower its emissions, and it finds it can through technology, innovation or whatever mechanism, it can be rewarded for that lowering of emissions. And it will be a real lowering of emissions, not a pretend one where you can buy your way out with Mr Mugabe or his ilk.

Our policy has a plentiful scheme to benefit farmers who, under the ETS tax scheme, are simply penalised. They are due to come in under the scheme in a couple of years time where they would be penalised for the emissions that their sheep and cows make. I did read in the paper this morning, however, that domestic camels would be counted but not feral camels. I found that an interesting sideline to the peculiar nature of the ETS that is being put forward by this legislation.

Mr Rudd then says that 92 per cent of people will be compensated for this additional rise in their expenditure. Yet we have had people come to this dispatch box again and again and ask questions of ministers and of the Prime Minister about what is the precise loss to an individual in a particular category in their defined cameos. No answer has been forthcoming. But the bottom line is this: a new tax is forever. The new tax will go on for year after year. The compensation is temporary, and it is inadequate as well as being temporary, and the Australian people are coming to see just what a con trick the Labor Party has tried to pull on them.

Mr Rudd and his ministers have been lazy; they have relied on the fact that there was some way that the opposition could be brought under their plans and be here to support the Labor Party. What the Labor Party is proposing with a new tax and a diminution of the Australian living standards is the anathema of what the Liberal Party stands for. The Liberal and the National Party are parties of lower tax. The Liberal Party is a party of enabling individuals to keep more of their own money because they will always spend it more wisely than the government who wishes to soak up as much money as they can from the Australian people and then pretend to spend it for their benefit. That is precisely what this ETS—tax on everything—is all about. It is designed to collect $120 billion in tax. The government will then try and use it for a redistribution of wealth—as they see it—to try and sure up their vote in certain areas of Australia. There can be nothing more despicable than such a plan. And for it to be done in the name of virtue, with a rather sanctimonious Prime Minister who seems to enjoy using words that are, shall we say, of a slightly off-colour nature—and seems to rejoice in repeating them—I find quite off, and I am sure the Australian people do as well.

The Australian households will be spared the ETS, because we will vote against it in the Senate. But, it is important that we go on and win the next election to ensure that it does not come back. That is the task we will be pursuing from now to election day, whenever it might be. I remind this House of the whole purpose of the direct action plan of the coalition’s, which we are taking to the people and which will allow Australians to take advantage of our national and natural advantages, such as our soil and our sun. It is a careful policy; it is costed and it is capped. The cap is real, because you cannot buy your way out of it. If you do emit above your ‘business as usual’ cap then there will be a penalty. Business accepts that. Contrary to the words of Mr Combet, when he said today that business was running away from us, they are not. The truth of the matter is that even a member of one of his main critics through this debate—the Wentworth Group of Concerned Scientists—actually admitted on radio the other day that, in fact, our scheme would meet the five per cent reduction target. It does not matter what he went on to say after that; he said that our scheme would do precisely that.

My position is quite clear, just like the coalition policy: I will be voting against this bill. I have expressed this continually, and I will go on expressing it because this ETS—big tax on everything—is bad for Australia. It is bad for the Australian people. It is our responsibility to put forward an alternative plan, which we have done. We have to let the Australian people know what the Labor Party really has in store for them so that when they come to vote they will truly know that they have been led down the proverbial garden path and into the blackwoods and darkness by Mr Rudd and his ilk.

7:48 pm

Photo of Patrick SeckerPatrick Secker (Barker, Liberal Party) Share this | | Hansard source

It seems to me that this legislation is an admission by the Rudd Labor government that they got their first legislation quite wrong. We came along with some suggestions to improve it, and that is what they have now introduced. They have admitted, by putting this legislation before the parliament as amended by our side of politics, that they got it wrong in the first place. That gives a very bad message out there that Labor cannot even get their original legislation right.

There are two arguments that I have heard ad nauseam from the Labor Party, although I do note that so many speakers from the Labor Party have actually dropped out of this legislation. I hope they have not just gone out for dinner, because there was a whole heap of Labor members who were to speak on this legislation but now are not doing so. There are two arguments that Labor have been trying to put to us. The first argument is that the ETS is the most efficient and effective way to reduce emissions. I will speak later on that part, because the examples in Europe have clearly shown that it has not been efficient or effective in reducing emissions. The second argument is that, apparently, business needs the certainty of an ETS. The only certainty that businesses will get with this ETS is that they will be slugged with a great big new tax that will vary enormously with trading. You have seen that with the voluntary market in the United States, which has clearly collapsed. There is no certainty to business with an ETS. Frankly, if the government were looking for certainty they would put up legislation that said, ‘It will be $10 a tonne in the first year and rising a dollar for every tonne per year afterwards’ or something like that. That is the only way you could get certainty. Were you to do it that way, you would not have property rights problems, which you would have with an ETS. Once an ETS is passed as legislation—which I hope it will not be—you can never get rid of it. It is like getting rid of the share market. Of course, there is no way you can get rid of the share market now, because of the entitlements and the property rights that are involved.

I rise tonight to speak for the second time on the Carbon Pollution Reduction Scheme Bill 2010 and cognate legislation. I was prevented from speaking on the CPRS the first time the legislation was debated but certainly was able to put forward my point of view the second time it came before the House. Of course my point of view has not changed. This is the third time that the Rudd Labor government has tried to get some sort of flawed legislation through this House. I hope that Labor likes disappointment because this time round is going to be no more successful than the last.

The Prime Minister has produced legislation that penalises the Australian public, forces a great big tax on them and does nothing to actually improve the environment—whereas our scheme does, and I will explain it later. Labor claim that they are compensating families. But they have already admitted that 50 per cent of middle-income families will not be fully compensated, and of course there will not be any compensation for those on quite modest wages, both single people and married people with children. A married couple with one person earning $35,000 and the other working part-time and earning $15,000, a very modest income—and I would consider that to be quite a low income in terms of a family—will actually be worse-off according to the figures that have been produced by the government. The government have produced legislation that penalises the Australian public, forces a great big new tax on them and does nothing to actually improve the environment. We all know that the only reason the Australian public need this compensation is that the government will have penalised them in the first place. Over the last couple of days Labor have been trying to say to us that under our scheme we have not got any compensation. We do not actually need compensation under our system because we are not imposing on the Australian public the penalties that there are under the ETS.

Under the coalition’s direct action plan there is no great big tax, there is no forcing the Australian public to pay for this government’s mismanagement of money and there are no job losses. Labor’s policy is unsubstantiated, it is expensive and much of the detail is unclear—or has in fact not even been produced when it comes to the regulations. In fact, Labor themselves are as confused, if not more so, as the general public on their policy. Even the Prime Minister has to date been unable to explain his own policy. It would seem that his Minister for Climate Change and Water, Penny Wong, has no more idea, admitting in an interview last week that she was unsure what would happen to electricity prices under the proposed CPRS. There is a complete lack of knowledge of the detail of the effects of the CPRS on everyday Australians.

We have even had the absurd situation where emissions from the one million feral camels do not count but the emissions of the camels used in the tourist industry in Broome do. I was part of an inquiry—along with you, Mr Acting Deputy Speaker Adams—on this with the standing committee on agriculture. We actually recommended a very severe cull of the camel herds running feral—not because of the CO2 emissions but because of the danger they pose to the environment in very marginal lands and the desert. A very severe cull of those camels would not only reduce the CO2 emissions—even though, apparently, the CO2 emissions from those camels do not count under the Kyoto agreement—but also be of very great help to the environment.

Kevin Rudd has been struggling to come to terms with the cost of his ETS. He is so afraid in fact that he does not even want to calculate how much a litre of milk or a loaf of bread will cost under his ETS. What we are certain of is that an ETS will have devastating effects on small business, on families and on the farming sector. This policy will destroy regional Australia, it will destroy Australian industry and it will destroy jobs. It will send farmers bankrupt if they are forced to buy carbon permits, and it will shift market share to other countries. No other country in the world has yet put agriculture into the system; and frankly I do not trust this government, if it is re-elected, to make a decision in 2013 or later to actually include agriculture. Agriculture cannot pass on the cost of buying carbon permits, unlike other large companies and retailers, and therefore will be left with the financial burden. Given that there is very little scientific research on emissions produced by agriculture—and they vary so much—it is unfair to include them in the scheme. Frankly, Labor have never really cared for fairness where rural and regional Australia is concerned.

The arguments over the ETS have certainly captured the imagination of Australia. One has to wonder when Labor will stop with the fluff and make with the facts. I have heard just about every Labor speaker refer to ‘crap’, and I note that the member for Mackellar found that a bit off. I actually wondered when I first heard it in this parliament whether it was unparliamentary, but apparently it is not. Indeed ‘CRAP’ would be a good acronym for something called a ‘carbon reduction and pollution scheme’.

For a government that is so concerned with saving the environment, or so they say, Labor have really got it wrong on this one. If the Prime Minister is prepared to sell himself as a greenie to the Australian public then it would probably be a good idea to put forward policy that is actually pro environment, not pro tax. Labor has exerted much effort to package this policy up to appear to be environmentally friendly yet the Greens will not back it. No-one in the parliament will back it, bar Labor. Now it seems that the latest person to start questioning an ETS is the US President Barack Obama. He has decided to side with the coalition’s direct action plan.

The first time I stood in this place to debate what a sham Labor’s ETS is, I quoted some figures on the failure of an ETS overseas and I will reiterate that point now. Europe has had an ETS since 2005, and I will give you some examples of what happened there from 2005 to 2007. In Cyprus the level of emissions rose to 5.396 million tonnes in the two years from 2005 to 2007. In the Czech Republic, it has actually gone from 82.454 million tonnes to 87.334 million tonnes, and that is over five million tonnes more. In Germany, with an ETS, it has gone from 474.99 million to 487.004 million tonnes. That is over 12 million tonnes more with an ETS. In Denmark, it was 26.475 million tonnes in 2005 and it rose to 29.407 million tonnes in 2007. That is three million tonnes more. Estonia has gone from 12.621 million tonnes to 15.329 million tonnes in 2007, another increase of three million tonnes, or about 23 per cent more—not less, more. In Spain, a country that has probably done more than most to bring in the so-called green revolution, it rose from 183.626 million tonnes in 2005 to 186.495 million tonnes in 2007, nearly three million tonnes more. Finland went from 33.099 million tonnes in 2005 to 42.541 million tonnes—quite a substantial increase, in the order of 30 per cent or nine million tonnes more. Poland went from 203.149 million tonnes in 2005 to 209.601 million tonnes, 6½ million tonnes more. In the United Kingdom, where we all hear about their Prime Minister, Gordon Brown, saying that we have to do something about CO2 emissions—he is a great believer in it—they had an increase from 242.513 million tonnes in 2005 to 256.581 million tonnes, or 13 million tonnes more. Those are all countries that have an ETS in place, and yet their CO2 emissions are rising. So what the Australian public can look forward to under a Labor government are increases in emissions and a great big tax.

Food prices are predicted to rise, although in my experience as a farmer—as I had been all my life before coming to this place—the prices paid to farmers will be less, as the extra costs for food retailers and wholesalers will mean they will pay less to farmers rather than absorbing the extra costs of the ETS tax. Unfortunately, the primary industries are price takers, not price makers. It is interesting to note that farming is probably the only industry in Australia that has already reduced its emissions. Farmers have done that through such things as zero or minimum till sowing of crops. They did not do that to reduce CO2. It was actually about reducing costs, using less moisture and having better control of weeds. These are things farmers have achieved by using that sort of new technology. There will also be severe effects for farmers even if they are not included in the system. University submissions have shown that the costs for farmers are estimated to increase by 14 to 27 per cent even if they are not part of the system because of the extra costs for transport, manufacturing and so on.

There has been so much hysteria caused by the Labor government. Many people are worrying about global warming, worrying that the ocean might rise so much that it engulfs them. I have even heard Tim Flannery say that the oceans will rise by 100 metres. According to the present theory expounded by the IPCC, under the present conditions that would take 34,000 years. So it is no wonder that I might be somewhat sceptical about what Tim Flannery writes and says on this issue. I have heard people saying that global warming might cause deaths from heatwaves. I can assure you, in fact, that more people will die from global cooling, because coldness causes more deaths than heat ever does and ever will. I have no doubt there will be believers and nonbelievers in anthropogenic climate change. But the question you have to ask is: does an ETS actually reduce global emissions? Well, it has not so far. It has not in Europe, and I gave those figures earlier. I make no apology for the fact that I oppose an ETS. It would be disastrous for my electorate. It would be disastrous for Australia.

I have always been amused by the title of this scheme: the Carbon Pollution Reduction Scheme. Are we are talking about carbon or are we talking about carbon dioxide? The relationship between carbon and carbon dioxide is no closer than the relationship between hydrogen and H20, water. They are completely different elements. But this government thought it would use the name ‘CPRS’ as a marketing tool, rather than ETS, emissions trading scheme. I believe it is called the CPRS in the hope that people might think that we are improving the health of our environment, as CPR does in medicine.

I believe that the coalition’s direct action plan is careful, costed and capped, reducing emissions without a tax on everything. These measures are based on incentives rather than penalties and include initiatives such as an Emissions Reduction Fund to provide direct incentives to industry and farmers to reduce CO2 emissions, and a once-in-a-century replenishment of our soils through investment in soil carbon. The plan also includes a New Solar Sunrise for Australia: a $1,000 rebate for either solar panels or solar hot water systems for Australian homes, $100 million for our Solar Towns and Solar Schools Initiative and $50 million for the Geothermal and Tidal Towns Initiative. In fact, I believe that we could invest more in research into wave technology. I believe there is a huge potential for wave energy, not only to produce energy but to desalinate water for our future.

We will also have a green corridors initiative that will: see 20 million trees planted by 2020 to establish urban forests and green corridors; develop the Latrobe Valley, Hunter and Central Queensland regions as clean energy employment hubs; commission a study into replacing high-voltage overhead cables in our cities with underground cables; and support large-scale renewable energy generation and emerging technologies through the RET. If you can reach the same five per cent target as the government through direct action which is carefully costed and capped, why would you proceed with a great big tax on everything? If you can get the same cuts to emissions as the government through direct and practical action for less than a tenth of the cost, why would you proceed with a $120 billion ‘money-go-round’ that will raise the cost of living for Australian families?

In summary, our policy costs substantially less than the ETS. Our policy will cost $3.2 billion over four years whilst the ETS will churn $40.6 billion over the first four years. Our policy will achieve the agreed target of a five per cent reduction in carbon emissions by 2020. It focuses on practical, effective and direct action on climate change within Australia and it provides tangible environmental benefits, provides incentives to reduce emissions within Australia and it is not a new tax on Australian families, businesses and industry. It will not cost jobs or hurt Australian businesses and it will not increase electricity and grocery prices.

8:08 pm

Photo of Warren TrussWarren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | | Hansard source

Many have remarked on the fact that this is the third time that this House has debated the Carbon Pollution Reduction Scheme Bill 2010 and related legislation. Many people have said that they are speaking on the issue for the third time. Frankly, when I was listening to members opposite, I thought most of them said exactly the same thing three times. Their message has been just this: the climate is changing, the climate is warming, Australia needs to solve this problem, the only way to do it is to introduce a carbon pollution reduction scheme and anyone who disagrees with them is a climate change denier. Each one of those points is dishonest and reflects an unwillingness on the part of the government to explain to the Australian people why they want to have a carbon pollution reduction scheme, how it is going to work and what it is expected to achieve for Australia and indeed our planet.

My first major speech on emissions trading was more than 18 months ago at a function in Brisbane. I made a similar speech at a major function in this building a couple of months later. Right back then I was asking these sorts of questions: how can Labor’s proposed Carbon Pollution Reduction Scheme actually deliver lower emissions? How is it going to change the climate? How is it fair? I started asking questions about the anomalies in the scheme. For instance, why should someone choosing to fly to North Queensland for a holiday pay Labor’s carbon pollution tax, but if you fly to Vanuatu for a holiday you do not pay? Why should somebody who goes to work on an electric train pay for Labor’s CPRS, but if you drive to work you do not? No answers were provided at that time.

In spite of the fact that the Prime Minister has on 22 occasions described climate change as the great moral issue of our time, he has never attempted or been able to explain to the Australian people why we have to have a carbon pollution reduction scheme. Neither the Prime Minister and Deputy Prime Minister nor the Minister Assisting the Minister for Climate Change, nor Senator Wong, have been able to answer even to this day simple questions like: how much will the price of electricity go up? How much more will it cost to buy milk and bread? How many families will be affected and how are they going to be compensated? What is going to happen to the small businesses in Australia which have to meet extra costs? What is going to be done to stop the jobs that can no longer be economically undertaken in Australia from going overseas and our simply importing products from other parts of the world?

Labor has never been able to explain to anybody how this tax slug will improve the environment. Never in my life have I heard of a tax that was able to save polar bears and yet that has been the simple message the government has attempted to portray. A tax cannot save the Barrier Reef. I have never seen a tax that lowers the temperature. The Prime Minister has never been able to explain to the Australian people how having bankers and traders in a multistorey building selling one another pieces of paper is going to lower the sea level. It simply does not pass the commonsense test. Nor has he been able to explain how Australia, with 1.4 per cent of global emissions, is able to fix a problem like this even if no-one else in the world is prepared to move. He has never been able to explain why trading something like $1 trillion worth of paper, maybe even more, will deliver a better climate for future Australian generations.

The reality is the scheme has always been fundamentally flawed. No other country in the world is proposing to embrace a scheme like Labor’s Carbon Pollution Reduction Scheme. That became abundantly clear at the fiasco in Copenhagen. We were told when this was last being debated in this House that this legislation had to be dealt with before Copenhagen, that it was absolutely essential for the success of Copenhagen that this legislation was dealt with and passed by the Australian parliament. But when it came to Copenhagen, no-one mentioned a CPRS, and no-one was advocating the introduction of Australia’s proposed emissions taxation scheme. When the communique was finally written there was no mention of a CPRS. Indeed, our Prime Minister, who was a friend of the chair and, we were led to believe, one of the key movers at this conference with his delegation of 114, was not even invited to the drafting of the communique. That is how important the rest of the world thought Labor’s CPRS would be.

Now around 90 countries have made commitments to reduce carbon emissions around the world, but not one of those 90 countries is proposing to introduce a scheme like this one. Only Australia thinks that it is necessary to solve the world’s problem through a Carbon Pollution Reduction Scheme like this. Minister Wong is fond of saying that there are 35 countries that have an ETS. Most of those are in Europe, and we have just heard the honourable member for Barker explain how successful the European schemes is. It also needs to be remembered that that scheme has such a feather touch that it actually makes no impact. The scheme that Labor wants to impose on Australia is 500 times harsher than the scheme in Europe. Is it any wonder that no-one else in the world wants to embrace a scheme like this? The reality is that Australia is alone. We seem to be the only people who think that this is something we absolutely have to have.

Labor has generated a mountain of paper in relation to this scheme. Mike Steketee said in the Australian last weekend that the Department of Climate Change holds 210,507 different documents to help inform its minister, Senator Wong, about the government’s emissions trading scheme. So she has over 210,000 documents but she still cannot explain it to the Australian people. Of course, it may actually be a bit more than that, because we now have one extra document that seems to have been circulated widely. It is marked ‘in confidence’. The last time a cabinet-in-confidence document leaked like this, there was a police investigation, but this one has been provided to newspapers all over the place. The reality is that, even with that document, there is no explanation that can be understood by the Australian people about how this scheme will effectively operate. Indeed, most of these documents are not being made available to the public at all. Freedom of information requests are being rejected. If Senator Wong were to start today and spend 10 minutes considering the information in each of these 210,507 documents for eight hours a day, it would take 12 years to read them all. She has this mountain of paper. The Prime Minister no doubt has access to it as well, but he still cannot, and will not attempt to, explain this scheme to the Australian people.

Last November, I asked 21 questions of the Prime Minister about the CPRS which I felt needed to be answered, basic questions like:

How many jobs will be lost in regional Australia under Labor’s CPRS? 

What impact will the closure of mines under Labor’s CPRS have on the economy of regional communities?

Will Mr Rudd explain why it is necessary to tax families and businesses and pay billions of dollars in compensation to industry to reduce the temperature?

Will Mr Rudd explain what will be the impact of the CPRS on inflation as prices and household costs increase?

How much more will pensioners and self-funded retirees pay for electricity, groceries and transport under Labor’s CPRS tax?

…            …            …

How will Labor’s CPRS tax stop global climate change since Australia only produces 1.4% of carbon emissions?

How will the CPRS help the environment if it forces Australian industry to move to other countries where environmental regulations are not as strict as our own?

The Prime Minister has not been able to answer any of those questions. Neither have members opposite in their contributions to this debate. They have never been able to explain to the people of Australia how the Carbon Pollution Reduction Scheme will lower the sea level and change the climate. There is only one line that has actually cut through to the Australian people about Labor’s scheme, and that is that it is a great big new tax on everything. We should in fact call it the GBNT, great big new tax, not the CPRS, because that is what it is. It is simply a tax, a way for the government to collect another $140 billion—money taken from the Australian people that they can ill afford. The tax will not do anything for the environment. It is simply yet another Labor revenue-raising measure.

The coalition, and the Nationals in particular, have been very critical of this scheme right from the beginning. We could not see that it would deliver any good for the environment, but we knew it would do a great deal of damage to Australia. But it is not enough to criticise; you have to have an alternative.

So last week the coalition has released a significant new option for the Australian people, a direct action plan that will deliver results. It is a scheme built around an Emissions Reduction Fund to provide direct incentives to industry and farmers to reduce CO2 emissions. Instead of inflicting pain, we propose to deliver a result by offering carrots. There will be a once-in-a-century opportunity to replenish our soils, so we will end up with a more productive country through an investment in building the fertility of soil structures. There will be a new solar sunrise for Australia, with a larger rebate for solar panels. There will be a solar towns and solar schools initiative; $50 million to a geothermal and tidal towns initiative; a green corridors initiative; and the development of the Latrobe Valley, the Hunter region and the Gladstone area as clean energy employment hubs. We are looking at large-scale renewable energy generation and emerging technologies through the renewable energy targets. There will be a total cost of $3.2 billion, delivering direct results.

Since the release of the direct action plan, we have had the government flailing around trying to find faults in the scheme, trying to criticise it and coming up with all sorts of different reasons why it is not appropriate, why our direct action plan will not work where their GBNT does work, why their program of pain is something that we should have rather than our approach of carrots. Let me go through a few of their arguments. One of the arguments that the Prime Minister used right at the beginning was the claim that the coalition’s direct action plan does not cap carbon emissions. Labor’s GBNT does not either. It does for about a thousand companies, who will pay fines if they do not effectively restrict their carbon emissions, but other companies are not covered under Labor’s plan. There is no cap under Labor’s carbon scheme either, and yet they criticise ours for not having any absolute cap.

The Prime Minister said initially that we had no price on carbon. Then, later, he said that the price we were putting on it was too low. Then today we had the Minister Assisting the Minister for Climate Change saying that our price was going to be $84 a tonne. So it has gone from nought from the Prime Minister two days ago to $84 a tonne now, from the minister. The reality is that Labor does not understand our scheme. If they think our price on carbon is too low, effectively $15 a tonne because that is the budgeted rate we had used for our fund to encourage these new investments, they have set the price at $10 a tonne. So if there is something wrong with our price for carbon there is a lot more wrong with Labor’s price at $10 a tonne.

They say that our scheme will cost more to administer. How could you possibly say that administering a grants program is going to cost more than their giant new tax scheme—hundreds of millions of dollars, we have heard in Senate estimates, spent already on public servants to set up this new bureaucracy. It is going to be a new tax office, and yet they suggest that our scheme will be more costly to administer. It is simply a nonsense.

Labor also says that our scheme relies on mechanisms that have not been approved by the United Nations. By that, of course, they are referring to the Kyoto accord. We always argued when we were in government that the Kyoto accord was fundamentally flawed. This is another example of that. Here we have things that you can do to actually sequester carbon, things you can actually do to improve the environment, but Kyoto says they do not count—they work, but we will not count them. For some things they say, ‘Yes, we know they work, and you can count them if you live in China or India, but you cannot count them in Australia.’ This is the nonsense of this agreement.

A classic example is forests. Certain forests meet the Kyoto definition; others do not. That does not mean that the others do not sequester carbon, they are just not allowed to be counted. We have the classic example that the member for Barker referred to a few minutes ago about the camels. If you shoot a camel that is domesticated, the emissions saved count. But if the camel is in the wild, it does not count. What is the difference between the camels? They still have the same number of humps and legs and tails, but one counts and one does not. If an Australian industry sets up a generation facility using gas from a closed coalmine, the credits do not count. If the same Australian company went to China and did it, they would count. What is more, they could buy them back and they would get credit for them in Australia. This argument that our scheme does not meet all of the United Nations requirements is a shocking indictment on the United Nations requirements. The reality is that our objective will be to actually deliver CO2 reductions; to deliver real sequestration and not simply entertain the United Nations.

Labor’s other favourite criticism is that our scheme does not make polluters pay but Labor’s GBNT does. Who are these polluters that Labor wants to penalise? They are actually the job creators in this country, the manufacturers—they are the people who employee the union members; they are people who make the wealth of our country. They are the electricity generators, whom we all depend upon during our daily lives. These are the people Labor says are the polluters and they should pay. But under Labor’s scheme they do not pay either. They get compensation. Any person who has to meet the extra cost of Labor’s GBNT will either pass it on to consumers—in which case the polluter has not paid anyhow; the consumers have paid—or they will close down or will move overseas and we will import the product from some other part of the world. So these polluters that Labor is trying to make its target in reality will not pay under their scheme.

Labor also say that our plan does not penalise polluters who increase emissions. That is wrong—it does. They will be penalised if they emit more but, under our scheme, those who emit less get a reward. Under Labor’s scheme, if you emit less you do not get a reward and so there is not much point in trying to take that kind of positive action.

Then they say our plan costs more. How could Labor possibly say our plan costs more? Their scheme is $140 billion in the first 10 years, and going upwards continuously from there. Our plan is a $3.2 billion plan over four years. We will deliver our plan for one twelfth the cost of Labor’s scheme. And yet they say our scheme will cost more.

The classic is that they say our scheme will not reduce CO2 emissions. Our scheme will reduce emissions by 140 million tonnes—exactly the same amount of emissions that Labor says its scheme will reduce and over the same time frame. So if our scheme is not good enough, neither is Labor’s . We both deliver the same amount over the same period—but ours is for a twelfth of the cost.

Their final criticism is that we do not pay any compensation to low income earners. We do not because we do not have to. We are not putting up their cost of living. We are not putting up the price of electricity. We are not putting up the price of everything they do, as Labor is proposing under their GBNT.

They might also say that our scheme is not capable of delivering the carbon sequestration that we say it can. You need go to no other authority than Ross Garnaut, Labor’s guru on climate change. He in his report identified at least 850 megatonnes of carbon sequestration gains that could be made from land management activities for between 50 and 100 years—many, many times what we are proposing to achieve. Ross Garnaut has identified these measures and considered them to be a priority.

So there is an alternative scheme to Labor’s GBNT—their great big new tax. What’s more, it delivers results. Our direct action plan will achieve the same targets in the same time much cheaper, without hurting Australian families, without destroying Australian jobs and without causing havoc in the Australian economy. Is it any wonder that our direct action plan cuts through with the Australian people where Labor’s complicated great big new tax dismally fails?

Photo of Harry JenkinsHarry Jenkins (Speaker) Share this | | Hansard source

I call the honourable member for Moncrieff on indulgence.

8:29 pm

Photo of Steven CioboSteven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Youth and Sport) Share this | | Hansard source

At question time earlier today when questioning the Minister for Sport I referred to the Treasury modelling of the government’s emissions trading scheme and in particular table 6.14, whereas my question ought to have referred to table 6.15.

I would like to confirm now that, according to the government’s own Treasury modelling, the Nottinghill Pinewood Tennis Club in Victoria faces a 23 per cent increase in electricity costs by 2015 and a 30 per cent increase in electricity costs by 2020, thanks to the government’s ETS. However, according to the Prime Minister’s press release of 4 May 2009, and despite comments by the Minister for Sport, only $80 million of the $200 million Climate Change Action Fund will be available to assist business and community organisations with capital investment grants. I once again call on the minister to correct the record.

Debate interrupted.