House debates

Tuesday, 11 October 2011


Clean Energy Bill 2011, Clean Energy (Consequential Amendments) Bill 2011, Clean Energy (Income Tax Rates Amendments) Bill 2011, Clean Energy (Household Assistance Amendments) Bill 2011, Clean Energy (Tax Laws Amendments) Bill 2011, Clean Energy (Fuel Tax Legislation Amendment) Bill 2011, Clean Energy (Customs Tariff Amendment) Bill 2011, Clean Energy (Excise Tariff Legislation Amendment) Bill 2011, Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment Bill 2011, Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2011, Clean Energy (Unit Shortfall Charge — General) Bill 2011, Clean Energy (Unit Issue Charge — Auctions) Bill 2011, Clean Energy (Unit Issue Charge — Fixed Charge) Bill 2011, Clean Energy (International Unit Surrender Charge) Bill 2011, Clean Energy (Charges — Customs) Bill 2011, Clean Energy (Charges — Excise) Bill 2011, Clean Energy Regulator Bill 2011, Climate Change Authority Bill 2011, Steel Transformation Plan Bill 2011; Second Reading

Debate resumed on the motion:

That these bills be now read a second time.

4:43 pm

Photo of Dan TehanDan Tehan (Wannon, Liberal Party) Share this | | Hansard source

I stand here today absolutely outraged. I have to speak on 1,200 pages of legislation and I have been allowed five minutes to do so: five minutes on legislation which is going to have a detrimental impact on serious industries in my electorate. It is an absolute disgrace: five minutes for 1,200 pages. That is all this government will give me to speak on this legislation. The clock might be showing 15 minutes, but if I speak for longer than five then other people on this side of the House will miss out on speaking on this legislation. It is a disgrace. This is a deceitful piece of legislation which strikes at the heart of Australia's international competitiveness. The other side stands condemned for putting through this bill. Climate change is a global problem. It deserves a global solution. It does not require a solution that will send jobs and industries overseas, yet that is exactly what this carbon tax will do. It will not only do that. After we have sent their jobs and industries offshore, we will then buy the carbon permits from the countries that have benefited from this exporting of jobs and industries. They will benefit handsomely—by $3.5 billion in 2020 and by $57 billion by 2050. So we export the jobs and the industries with this carbon tax and then we export taxpayers' money. It is an absolute disgrace.

I go to three key points that need to be made about this legislation. Climate change is a global problem that needs a global solution. What have the government done to try and get that global solution? They are absolutely asleep at the wheel. What have they done to try and get some sort of consensus in South Africa at the end of this year? Nothing. What type of coalition or consensus have they built to try and get action in South Africa? Nothing. What is our No. 1 foreign policy objective at the moment? Trying to get a seat on the UN Security Council. The Minister for Foreign Affairs, Mr Rudd, is leading this charge even though he said that this is one of the greatest moral dilemmas of our time. Why is he not putting the same effort and energy into trying to get an outcome in South Africa to protect Australia's international competitiveness? This is an absolute disgrace.

What will it mean for my electorate of Wannon? What will it mean for the agricultural sector in my electorate? For the dairy industry, a $5,000 to $7,000 hit per dairy farm. For the meat industry, an extra cost of 24c to 37c per carcass that goes through an abattoir? What will it mean for grain? Approximately $36,000 will be put on each and every grain farmer. It is an absolute disgrace. What about the 358 local manufacturers? How can they deal with this? These are small manufacturing businesses that compete internationally. What can they do when they get hit with this? They cannot pass the costs on; they have to absorb them. It is hard enough for them at the moment without having an additional cost imposed.

The No. 1 issue in my electorate is the state of the roads. The last federal budget gave not one extra dollar for roads, yet we are putting a five per cent cost on road construction across my electorate and the federal government is doing nothing to compensate local government or state government. This is a disgraceful piece of legislation which is built on deceit.

What is it going to mean in paperwork for those small businesses? What will they have to do with these 1,200 pieces of paper. It will add red tape to every one of those businesses. Businesses have already seen a sixfold increase in paperwork and red tape. This is just going to make it worse.

I will have more to say on this this evening, as I only have five minutes now so that the member for Higgins has a chance to say something. It is a disgrace, but this is not the last you have heard from me on this issue.

4:49 pm

Photo of Kelly O'DwyerKelly O'Dwyer (Higgins, Liberal Party) Share this | | Hansard source

Like the member for Wannon, I too am being silenced in this debate. I too only have five minutes to represent the issues and concerns of the people of Higgins. It is a disgrace and I endorse his comments. I will not get my allocated less than one minute per clean energy bill—19 bills for the carbon tax. I will get much less than that. Far from throwing open the curtains to let the sunshine in, this government is guillotining debate; it is silencing dissent. There was no mandate from the Australian people for this carbon tax bill. The Prime Minister told an untruth before the last election, saying, 'There will be no carbon tax under the government I lead.' She will be judged by history for that, just as those people who support her in breaking the trust of the Australian people will be judged.

Today I would like to highlight four issues with this very flawed legislation: first, the global economy and the lack of a global move to introduce an economy-wide carbon tax, whether as a tax or an emissions trading scheme; second, the flaws in the figures and modelling of the government; third, the very real impact of the government's legislation will have on the people in my electorate of Higgins; and, fourth, the fact that at this point in time, and despite the lack of global consensus, there is an alternate way to reduce carbon emissions that will not damage our economy or export jobs while still allowing us to meet our target of a five per cent reduction in emissions by 2020.

I will concentrate on the first and third points and put my full speech on my website so that the people of Higgins know that I have had a chance to represent their concerns. In September, the IMF released dire warnings for the world's economy. It prompted the Treasurer to issue the following statement:

The IMF has issued a stark warning for the global economy highlighting that it has entered a dangerous new phase. Global activity has weakened and has become more unbalanced. Downside risks are also intensifying.

He went on to say

The report cautions that global financial risks remain very high, particularly in regions like the euro area, the United States and Japan.

At the same time this government is introducing a carbon tax, even claiming in the words of the Treasurer that it is the next crucial frontier in economic reform. Does this sound like an economically prudent and responsible course of action—to explore new frontiers in a deteriorating global economic environment, an environment that has been described as dangerous? Of course it is not. Moreover, if Australia introduces an economy-wide carbon tax, we will be moving on this ahead of the rest of the world. The Productivity Commission informs us that:

… no country currently imposes an economy-wide tax on greenhouse gas emissions or has in place an economy-wide ETS.

When you look at the partial schemes that are in place throughout the world and analyse the figures there, they also tell a very cogent story. The European ETS collects just $500 million a year, which equates to roughly $1 per person per annum. In Australia, though, under this carbon tax, the first year alone will raise $9 billion, or $400 per person per annum. This number only grows as the carbon price increases. Yet the emissions, according to the government's own modelling in Australia, will go up from 578 million tonnes to 621 million tonnes by 2020. To achieve the carbon abatements that the government say the carbon price will achieve, on top of their $9 billion a year tax for the first three years they will need an extra $3.5 billion of carbon credits to be purchased each year from foreign carbon traders until 2020. To achieve their target by 2050, $57 billion worth will need to be purchased from foreign carbon traders.

There is a meeting in Durban in November this year to discuss the global response to climate change post Kyoto, yet we have heard nothing about that in this debate. In fact, if global consensus is something that the government truly believe is going to happen, then that would be the focus of our attention. But they do not discuss it because they know it is a great big con: there will be no global consensus coming out of that meeting in Durban next month. It will confirm what we all know to be a fact: Australia will be going it alone. We know that China's emissions will continue to increase, by 496 per cent by 2020, and that India's will also continue to increase, by 350 per cent—some world consensus!

I held a carbon tax forum in my electorate of Higgins and I spoke with my constituents about their concerns—concerns from self-funded retirees, who know that they are not going to be compensated; concerns from small businesses, who know that they are going to have to shed staff and jobs—and I will speak more about this later on. I spoke with small businesses throughout my electorate, and they are very much against this carbon tax.

Now, I do not have any more time available to me if I want to give my colleague an opportunity to speak, because of this disgraceful act by this disgraceful government that refuses to allow us to properly debate these bills.

4:54 pm

Photo of Michael McCormackMichael McCormack (Riverina, National Party) Share this | | Hansard source

The Prime Minister introduced her carbon tax into this parliament on 13 September 2011 in a speech lasting 23 minutes and comprising 2,678 words. On 28 occasions, the Labor leader used the words 'a price on carbon', 'carbon price' or 'carbon pricing'. Not once did she use the expression 'carbon tax'. Why is she in such denial? Australians are renowned for telling it as it is, not beating around the bush, not gilding the lily. Australians expect their Prime Minister to do the same—to be upfront and honest, to tell the truth always. On 16 August 2010, the member for Lalor, having just ousted her first-term predecessor, the member for Griffith—the man popularly elected by the people—had this to say: 'There will be no carbon tax under the government I lead.' On 24 February this year, the now Prime Minister, in the position but not by the choice or the will of the people, held a media conference to announce that she was going back on her word; she and her Multi-Party Climate Change Committee would be burdening Australia with a carbon tax; and she was reneging on her deal with the Australian people—tearing up her verbal contract with the job-creating factories, the families, the farmers who grow the food and fibre to feed and clothe us, the small business men and women who are the engine room of our economy, the truck drivers who keep our nation on the move and the workers she falsely espouses to represent. We well remember the media conference, and, make no mistake, so too will the people of Australia at their first available opportunity: the next election.

The body language and the positioning of those at that media conference were telling. Standing at the back was the Minister for Climate Change and Energy Efficiency, flanked by the Independent members for Lyne and New England. Out front—for a while, at least—was the Prime Minister and, next to her, were two people to whom she is now beholden: Greens leader Senator Bob Brown and his deputy, Senator Christine Milne. But it did not take long for Senator Brown to hijack the show. His opening line said it all:

We feel very happy to be here in a process which is moving forward for this nation's future.

'Moving forward'—wasn't that Labor's 2010 election campaign line? And there is the rub. The Greens and Labor are one and the same, certainly in this parliament. You can lump in the Independent members for Denison, Lyne and New England as well; they are all Labor by any other name. The one Green in the House of Representatives and the three Independents keep this illegitimate Labor government in power, hanging by a thread, in spite of a $200 billion plus deficit, in spite of cost overruns and in spite of botching everything it touches. It is worth noting that the one Green, the member for Melbourne, was the only member of the 150 elected to this House on 21 August who was in favour of a carbon tax—one out of 150, which is hardly representative. Yet here we are, nearly 14 months later, about to embrace a massive taxation reform without first having put it to the people of Australia.

The complexity of this tax will mean a massive increase in the size of the Public Service, to administer the nondelivery of an invisible, odourless product to no-one. At the same time, it will drive up grocery prices, and electricity and gas bills for ordinary, everyday Australians, and will see our jobs and industries sent offshore. Having to buy billions of dollars of carbon credits offshore is akin to sending a scam emailer your bank details.

A carbon tax will hurt the Riverina. This is a region already reeling from this government's abject failure to bring about certainty in the water debate, thereby causing all investment and hope in the Coleambally and Murrumbidgee irrigation areas to grind to a dead halt. This is a region which is proudly home to Wagga Wagga based airline Regional Express, which says a carbon tax will add $2 to the price of every ticket and the impost on aviation fuel would cost the company $2 million in the first year. Abattoirs at Wagga Wagga and Yanco, employers of hundreds of locals, will bear a huge burden under a carbon tax, as will the Hyne timber mill at Tumbarumba. A carbon tax will cost Visy, which has a state-of-the-art, already eco-friendly pulp and paper mill at Tumut, at least $12 million in its first year. The Southern Cross newspaper editorialised:

It will force Junee businesses to adapt, pushing many to the edge of viability and others to downsize their operations. Starting a business in this climate might not seem like the wisest of ideas, with what you might call 'dark clouds' on the horizon.

There is a better way. The coalition's direct action plan is a strong and effective policy which will reduce carbon emissions by five per cent by 2020 without a new tax. We need to invest in renewable energy, improve soils, ensure we have enough productive water to meet the global food task while maintaining healthy rivers, and fund research and development in new technologies to bring about outcomes to help the environment. It is possible. It is happening now. It needs to happen in the future. But this carbon tax should be rejected. It is wrong. It is a fraud. It will harm Australia, it will do nothing for the environment and it is based on a lie. If the minority Labor government did the decent, honest thing now and took it to an election, the voters would no doubt overwhelmingly reject it, as well as this flip-flop Prime Minister and those who back her.

Photo of Bruce ScottBruce Scott (Maranoa, National Party) Share this | | Hansard source

In accordance with the resolution of the House on 13 September this year, I call the Minister for Climate Change and Energy Efficiency.

5:00 pm

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

I thank the more than 120 members for their contributions to the second reading debate on the Clean Energy Future legislative package. I particularly thank those who have made a constructive and supportive contribution. I would also like to thank the members of the Joint Select Committee on Australia's Clean Energy Future Legislation, in particular the chair, the member for Chisholm, and the secretariat, for all their hard work examining the legislation and for preparing such a comprehensive report. It is important to record that the majority report fully supports the passage of these bills.

The 19 bills comprising the clean energy legislation and the Steel Transformation Plan Bill represent one of the most important environmental and economic reforms in this nation's history. The science demonstrates that atmospheric and oceanic warming is occurring, that the climate is changing and that greenhouse gas emissions must be reduced to mitigate the environmental, economic and social risks that we face. Climate change is a threat that must be tackled internationally, but in which individual countries, including our own, must play their part.

The government's clean energy legislation addresses the science. It will reduce emissions and drive investment in clean energy. It will also ensure that Australia does play its part internationally. The centrepiece of the legislative package involves the introduction of a carbon price to our economy through the implementation of an emissions trading scheme. The largest emitters of greenhouse gases will be required to purchase a permit, called a carbon unit, for each tonne of carbon pollution they emit that is covered by the scheme, thus creating a powerful incentive to cut their pollution. This is a long overdue reform that will reduce the emissions intensity of our economy over time. It will drive innovation, productivity and competitiveness and it will create jobs. Investment in clean energy and low-emissions technologies has been stalled awaiting this reform. It is critical therefore that the parliament pass the clean energy legislation to provide certainty to business so that this investment can be unleashed.

I will address some of the specific arguments raised in the debate in order to correct the record and then briefly foreshadow some amendments that the government will move. Firstly, to address issues that have been raised concerning the Treasury modelling, I note that on the 21 September, last month, the Treasury released updated modelling confirming the Australian economy will continue to grow and grow strongly while emissions are reduced. The additional results in particular demonstrate that there will be no further impact on electricity prices in 2012-13 from the introduction of a carbon price compared to the original modelling.

An argument has also been put that Australia would be acting ahead of the rest of the world in pricing carbon. This argument conveniently ignores the action that is occurring around the world. It also disregards our own national interest in reducing carbon pollution and improving the competitiveness of our economy. One cannot ignore the fact that Australia is the highest per capita emitter amongst developing economies and that our future prosperity will be enhanced by making this reform. Delaying cutting carbon pollution will increase climate change risks, lock in more emissions-intensive investments and defer new investments in clean technology, industries and jobs.

The fact is that 90 countries, representing over 80 per cent of global emissions and over 90 per cent of the global economy, have now made pledges to undertake mitigation action. The European Union, for example, has for six years had an emissions trading scheme covering 30 economies. Australia's top five trading partners—China, Japan, the US, the Republic of Korea and India—have implemented or are piloting carbon trading or taxation schemes at national, state or city level. China, which is our major trading partner, plans to pilot by 2013 emissions trading in several major provinces and cities with a combined population of around 150 million and a combined GDP significantly larger than our own.

A number of members have also spoken to the specific impacts of the legislation on households, industries and jobs. The government is committed to supporting Australian households, Australian industry and Australian jobs as we reduce our emissions. The Treasury modelling shows that the Australian economy will continue to grow strongly at the same time as we cut pollution to reduce the risks of dangerous climate change. Real national income will continue to grow under a carbon price. Average incomes per person, in fact, will increase by around $9,000 from today's level to 2020 and by more than $30,000 to 2050. National employment will increase by 1.6 million jobs by 2020 with or without carbon pricing. All state economies will continue to grow strongly.

The government is proactively assisting heavily affected industries and regions to transition into the scheme, including through its jobs and competitiveness program, the steel transformation plan, the coal sector jobs package and programs to support clean technology. In fact, many emissions-intensive industries that are trade exposed will receive an average of 94.5 per cent of their carbon units for free in the first year of the scheme. This means that their carbon liability generally equates to less than one per cent of their revenue. There is therefore very significant support for jobs and competitiveness at the same time as a continuing incentive to cut pollution.

Some members have also falsely claimed that assistance to households will not be sufficient or long lasting or permanent. Let me be clear on behalf of the government in relation to this point. The household assistance payments and tax cuts will be ongoing and permanent. The clean energy payments will be indexed to keep pace with the cost of living. A second round of tax cuts in 2015-16 will provide assistance to cover the projected impact of the carbon price out to the end of the decade.

To meet the modest price impact of a 0.7 per cent increase in the CPI, nine out of 10 households will receive some combination of tax cuts and increased payments. Almost six million households will receive assistance that covers their expected average price impact and, importantly for a Labor government, over four million low-income households will receive assistance that is at least 20 per cent more than their expected average price impact. That is extremely important to pensioners and low-income earners in our society. The changes to the personal income tax system, which include a trebling of the tax-free threshold, will deliver genuine and enduring tax reform in addition to assistance for a carbon price.

The second reading debate has also included consideration of the $300 million Steel Transformation Plan, which will provide certainty to the steel industry so that it can invest and innovate to transform into a more efficient and competitive industry in a low-carbon economy. The plan will also promote positive environmental outcomes. Eligible corporations will need to provide an annual report to the government specifying the activities, including workforce skills development, that have been undertaken and are planned to be undertaken to reduce emissions and improve the environment. The Steel Transformation Plan will be additional to assistance provided under the Jobs and Competitiveness Program.

Some members have also commented on the cost of the package. The Productivity Commission's report earlier this year which analysed the comparative costs of climate change action across a range of countries found that all emissions reduction policies impose some costs, with implicit costs per tonne of emissions ranging from below $10 to above $400. The Productivity Commission are very clear in their analysis. An explicit price on carbon such as through an emissions trading scheme is the most cost-effective way for nations to reduce their emissions, and the fact is that the government's carbon price mechanism is the most cost-effective way that Australia can reduce its emissions by at least five per cent over year 2000 levels.

Some members have pointed to alleged discrepancies between the size of revenue collected by the carbon pricing mechanism and other countries' schemes. These comparisons that have been made are not valid as they simply do not compare like with like. A direct comparison of the equivalent market size of the EU scheme and the government's mechanism over the same time period of 2013 to 2015 shows clearly that the EU scheme is more than five times the size of the Australian carbon pricing mechanism.

A number of opposition members have also made absurd claims concerning the purchasing of emissions reductions on overseas carbon markets. The clean energy legislation does provide for linking with other international carbon markets and it does so to achieve the lowest cost emissions reductions in our economy. Let us be clear: a tonne of emissions validly reduced overseas has the same environmental benefit as a tonne reduced in our own economy. The atmosphere does not have national boundaries. Through international linking of carbon markets Australian businesses can source the lowest cost emissions reductions and we can also establish a common carbon price between our economy and that of our trading partners over time, thereby ensuring that carbon pricing does not disadvantage our industries. Opposition to international linking is economically reckless. It would more than double the cost of emissions reductions in our own economy and it represents an appeal to economic xenophobia.

On the issues raised concerning fraud and other types of crime, there are comprehensive oversight and strong compliance provisions in the legislation. Emissions units will be classed as financial products under the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. ASIC will be able to investigate and prosecute market misconduct and the ACCC will have the power to address anticompetitive behaviour. Emissions units will also be regulated by AUSTRAC under the anti-money-laundering legislation. Where the Clean Energy Regulator is given powers they are wholly appropriate and consistent with powers given to similar regulators.

In light of the joint committee's report and ongoing consultation on the government's plan, I will be moving some amendments on behalf of the government. In particular, the government has responded to the views of landfill operators, including local councils, by allowing landfill operators to surrender 100 per cent of their liabilities by using Australian carbon credit units created under the Carbon Farming Initiative during the fixed-charge years. This will allow many operators to acquire or generate inexpensive carbon credit units to meet liabilities, and I believe this will be welcomed.

Other amendments include further clarification of liabilities in relation to natural gas and drafting clarifications in relation to the residency requirements for household assistance. A number of companies in the consultation process have also expressed interest in having liquid petroleum gas included in the carbon pricing mechanism. The government is open to considering this in a similar manner to the way in which large liquid fuel users may opt into the scheme and we will consult on options for achieving it. No amendments however are proposed in relation to this at this time.

In conclusion, I would like to thank everyone who has worked with me and my colleagues in the development of this policy and the formulation of this legislation, including the Prime Minister, my parliamentary and cabinet colleagues, my staff and departmental officers. It has involved a tremendous amount of work and I have been very fortunate to be supported by many talented and committed people.

Australia does need to tackle climate change and as a parliament we have a responsibility to respect the scientific evidence and advice and to respond with an environmentally effective, economically efficient and socially equitable policy. The clean energy legislative package discharges this responsibility and will achieve these outcomes. I commend the bills to the House and I do urge members to put aside partisan politics and to vote in the best interest of our country and of future generations. Question put:

That the bills, not including the Steel Transformation Plan Bill 2011, be now read a second time.

The House divided. [17:18]

The Speaker (Mr Harry Jenkins)

Question agreed to.

Bills read a second time.

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

Order! Pursuant to the resolution agreed to by the House on 13 September 2011, I will now put the question on the Steel Transformation Plan Bill 2011. The question now is that the Steel Transformation Plan Bill 2011 be now read a second time. The House divided. [17:32]

The Speaker (Mr Harry Jenkins)

Question agreed to.

Bill read a second time. Messages from the Governor-General recommending appropriation for the Clean Energy Bill 2011, Clean Energy (Consequential Amendments) Bill 2011, Clean Energy (Household Assistance Amendments) Bill 2011 and Steel Transformation Plan Bill 2011 announced.