Ian Campbell (WA, Liberal Party, Minister for the Environment and Heritage) Share this | Hansard source

I thank Senator Milne for running through the background to the amendments. The senator has outlined a fundamentally different approach to that taken by the government. Quite frankly, I think we are both aiming at the same direction. I think all parties in this place agree that climate change caused by the emission of greenhouse gases into the atmosphere is an incredibly serious problem for Australia and for the world. All parties would agree that urgent action is required to address that.

The government would reject the allegations made or propositions placed in the speeches of a number of senators in the second reading debate that the government is not acting. The record shows that under the leadership of John Howard—and, quite frankly, three successive environment ministers and resources and energy ministers—the government has taken actions across a portfolio of emission sources and through a number of programs to provide in many areas leadership to the whole world and to create a framework that sees the levels of emissions as a proportion of GDP significantly reduce. That is the first thing you need to do if you want to address greenhouse issues within a growing economy. The major parties would agree at least that you need to keep the economy strong and expanding to keep job security, jobs growth and prospects for people who are coming into the workforce within Australia and within developed countries and, at the same time, to see reductions in greenhouse gas emissions.

From a global point of view, there is a moral imperative to see strong economic growth continue and to see the benefits of that growth go to developing countries so that the very many millions of people on our planet who live in a situation of poverty, malnutrition and susceptibility to disease receive the benefits of strong worldwide economic growth. Opportunities such as getting an education and access to good health care and nutrition to keep us alive are things that we take for granted, but they are things that people in many parts of our own region and many parts of sub-Saharan Africa cannot dream about or even contemplate. In fact, mortality for many people in those parts of the world is still at an age of only five.

All of us would want to make sure that the measures that we put in place to save the planet from dangerous climate change do not harm the prospects of a strong economy. Simply put, that means that the measures that we put in place to deliver energy efficiency or greenhouse gas abatement—any of the measures that we put in place to effect a policy—need to obtain a dual objective. That was the very clear message of British Prime Minister Tony Blair to his G8 colleagues. A very strong theme throughout the Montreal meetings of the United Nations Framework Convention on Climate Change, the first meeting of the members of the parties to the Kyoto protocol and the 11th meeting of the conference of the parties to the UN framework convention was that the measures that we put in place must address those realities.

The Australian government, by any sort of objective assessment—and I cannot be objective because I am a part of it; I am clearly quite biased—across a whole range of areas, including energy efficiency, is providing a lot of leadership that many other countries are following. That is why Australia, particularly through the Australian Greenhouse Office—which is a part of my portfolio that I am particularly proud of—is sought out around the world for policy advice and assistance for so many things: energy efficiency, particularly the programs to do with appliance labelling; much of the work that we have done in terms of measurement and design of tools to measure efficiency in buildings; and the work we have done with water efficiency labelling, which has a significant greenhouse benefit. All those programs are things that Australians should in fact be proud of.

I do not think there is any difference between our position and the position of Senator Milne and the Greens on achieving the outcome. What she has described in her amendments is a more interventionist approach—one that would have significantly larger costs to industry and therefore to the economy and, more specifically, to consumers, but with potentially much lower benefits.

The way I explain how we should be going about this policy is that, with the money that is available in the government sector and in the private sector—be it within the corporate sector or the household sector—we should be achieving the greatest greenhouse gas reduction outcome for a given level of investment. We do not need to set up under legislation, as Senator Milne has proposed, a whole new energy efficiency target task force structure to guide us in how to design a new energy efficiency measure. We have actually done the homework over a period of years to create what we believe is a sensible energy efficiency framework for the country—and it does build on work that is being done in the states. A lot of the state governments, to their great credit, have done work with varying degrees of success in building energy efficiency into their own regimes through legislation, regulation or a mix of voluntary measures.

Of course, at this week’s meeting of the Council of Australian Governments, where climate change cooperation is on the agenda, a number of quite specific measures will be discussed by first ministers on Friday. This is an incredibly important step forward for Australia, because although I think all governments have been putting in place many constructive and positive measures, trying to get more uniformity, cooperation and information exchange across governments, a clearer guide for industry—a clearer set of policies where they can be agreed where there is a coming together of the policies—means that there will be more efficiency from a government point of view. Our proposition applies to larger companies. It targets 250 companies, but these companies consume about 60 per cent of business energy use, so it is incredibly efficient if we can address the activities of these companies.

We often have what I think is a slightly surreal debate with Labor and the Greens. We had a debate last night on a television program that will go to air down the track. The opposition and the Greens’ spokesperson, Senator Milne, accused us of having everything that we are doing as voluntary. She said that we are relying on the goodwill of business in our greenhouse measures. That is simply not true. This measure is a mandatory measure. We are requiring for the first time, and in many cases for the first time anywhere in the world, that companies go through an incredibly expensive process to identify energy efficiency and to put into place plans. We have also put in place a whole range of other mandatory measures which are part of our greenhouse strategies. The mandatory renewable energy target scheme was one of the first of its type in the world, and it remains our policy. There is nothing voluntary about it. It requires energy producers to buy renewable energy certificates or to produce a certain percentage of their energy output from renewable sources. It is far from voluntary. It was one of the first mandatory renewable energy programs in the world, and many others have been copied. This is another mandatory measure.

What the Greens and other critics of this bill are saying is that we need to enforce on companies some overall efficiency measure. This of course ignores the fact that all of the companies that we are targeting have very different operations. What, no doubt, the implementation of this bill will show, when all of these companies go through the mandatory efficiency audits, is that the capacity for efficiency improvements from company to company is likely to be quite different. The bill’s effects are similar to those of the Greenhouse Challenge Plus program, which allows companies voluntarily to sign up to a greenhouse strategy, to report their greenhouse gas emissions, to report on plans to reduce those and to report performance against those plans—and, again, that is a world-leading program for corporations; I think we have signed up about 770 companies to that program. Under this bill it will be mandatory for companies to go through this process of identifying their operations and energy efficiency using sophisticated tools and, quite often, sophisticated online reporting tools.

Of course, under the implementation of this legislation we will be harmonising the company energy efficiency reporting with that under the Greenhouse Challenge Plus program. So we are not putting more red tape on companies; we are ensuring that their energy, effort and financial support go into reducing greenhouse gases and improving energy efficiency and are not spent on just compliance and red tape. We are trying to make it a lot easier for companies to go through their reporting.

However, what we have found in pursuing the Greenhouse Challenge program, and now the Greenhouse Challenge Plus program, is that when companies go through that process and identify where the emissions are coming from—and, in this case, where the energy efficiency is—they find it to be very much in their best interests to reduce emissions. There are huge financial benefits to companies from reducing waste and reducing emissions they do not need to make. In the case of energy efficiency, the department believes, through previous experience and investigation, that there are savings of 10 to 30 per cent across many companies. On average each of these companies spends around $3 million per year on energy. If you can get a 10 to 30 per cent saving, that is up to nearly $1 million a year. I am sorry to sound like a Treasury person again, but if you do the net present value of a $1 million a year saving it is a huge increase in the value of the company.

I heard Senator Milne and others talking about the importance of having a price signal in carbon to get companies to reduce their carbon emissions, a proposition that is quite right. I have always agreed that a price signal and ultimately a broad based market trading system would be a desirable way for the economy to invest in reducing greenhouse gases. It is just a matter of designing a system that is efficient, that has low transaction costs and that does not adversely affect employment and the economy in Australia. That is the challenge—that has always been the challenge.

What we have here is a price signal to companies to improve their energy efficiency. We are requiring them to do an audit and find what they can do in terms of improving energy efficiency. As a result of this bill, they will be able to put a price on it and calculate exactly what the financial benefits to them will be. I do not accept the criticism that this will not create a good outcome. Companies will find it in their best interests, just as they have done under the Greenhouse Challenge Plus program, through which Woodside have reported savings of 350,000 tonnes a year, Cement Industry Federation have reduced greenhouse gas emissions by 1.5 million tonnes a year, Queensland Rail have achieved greenhouse gas abatement of approximately 229,000 tonnes a year and Godfrey Hirst Australia have achieved a 60 per cent reduction in greenhouse gas emissions through recycling initiatives. These companies have done this under a regime where they analyse their emissions, look at how they can reduce them and then report on them. It is about transparency and customer advice and it has proved to be effective.