Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Climate Change and Energy Efficiency. Would the minister outline the government's plan to use a market mechanism to move Australia to a clean energy future? What other options have been put forward, and what would be their impact? Finally, I ask the minister: how much does a tonne of carbon weigh?

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

I thank the member for Melbourne Ports for his question. Of course, the government's plan to cut pollution is centred on a market mechanism, and that will ensure that we fight climate change in the most cost-effective manner. Using a market mechanism is unquestionably the most efficient way of reducing our pollution. That is the conclusion shared by the OECD, the IMF, the World Bank, the Stern report, the work undertaken for the Howard government by Dr Peter Shergold, the Garnaut review and the recent work of the Productivity Commission and every other reputable economist who has considered the issue.

Treasury modelling concludes that the Australian economy will continue to prosper while we do cut carbon pollution through a market mechanism. Employment is projected to grow strongly with a carbon price, with 1.6 million jobs added to our workforce by 2020. This is supported by modelling that has been released by the Queensland government today that found that Queensland employment will grow strongly, on average, by two per cent per year, with or without a carbon price, with an extra 474,000 jobs created over that period. Of course, since the government has announced its carbon pricing policy, we have seen billions of dollars committed to the coal industry in Queensland and the LNG industry.

In contrast to the efficiency of a market mechanism, the opposition's 'subsidies for polluters' scheme is inefficient, ineffective and very, very costly. That cost is increased greatly by the opposition's refusal to allow trading in international carbon permits. An emissions trading scheme to achieve the five per cent emissions reduction target through domestic only measures, with no access to international carbon markets, would result in a carbon price at least double the carbon price under the government's scheme. Keep in mind that that costing reflects an emissions trading scheme which is significantly more efficient than the opposition's 'subsidies for polluters' policy. Under that scenario, the 'subsidies for polluters', without access to international permits, will cost the budget $48 billion to 2020, almost five times the stated cost of the coalition policy. That is the equivalent of not paying pensions for a year and a half.

It would mean that the average Australian household will have to pay an extra $1,300 in taxes. That is a conservative estimate of the cost. The Grattan Institute has had this to say:

… if government were to rely on grant-tendering schemes in order to reduce annual emissions by 160 million tonnes, then based on past experience, government would need to announce an abatement purchasing fund of at least $100 billion to meet the 2020 emissions reduction target.

Whichever way you look at it, the self-declared $70 billion hole—

Mr Hockey interjecting—

I would not be smiling if I were you, Joe, coming up with that. A $70 billion hole is added to significantly by this issue. But he has come up with a novel way of dealing with it. He has decided that carbon pollution is weightless and therefore it will not cost anything to cut it.