Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Hansard source

It gives me great pleasure to speak on the report of the Senate Select Committee on Climate Policy. This is the inquiry that the Labor Party was not prepared to have. This is the inquiry that Wayne Swan initially set up, but when the political pressure got too hot he decided he had to withdraw it. This is a committee the government could have controlled had it been managed through the House of Representatives committee, where it was initially set up. But I think that in the overall context it was probably better that it was not controlled by the government and that we were able to hear from witnesses across the country in an unfettered way.

A bit over 14,000 representations were made to this inquiry, which gives an indication of how it was viewed in the community. We travelled across the country and went to nearly all states. More than 200 witnesses appeared before the committee over the weeks of hearings. We were prepared to hear from witnesses whom other committees were not prepared to hear from. We placed no restrictions. We allowed industry to come and tell us their story firsthand. We spoke to the environment movement and we spoke to individuals. What we found was that we are being presented with flawed legislation to deal with this important issue—a flawed approach and a flawed scheme. It is a scheme that is designed around the Kyoto protocol, which was determined back in the 1990s. So we have a CPRS that looks backwards to the 1990s not forwards to the 21st century. In fact, even Wayne Swan admitted last week that the scheme may have to be changed after Copenhagen.

One of the key weaknesses in the approach that the government has taken to this is the modelling, and our reports deal with that quite extensively. One of the key concerns that came up consistently through the inquiry was the transitional approach—the transitional impacts and the regional impacts. The government has done no modelling at all on the regional impacts of this CPRS that it is proposing. It claims that modelling would not be reliable. We know that the New South Wales government have done some research—and we understand that some of the other state governments have too—but they are not prepared to release it. So we do not have the advantage of considering that information. But we do know that there will be significant transitional impacts. Industry has told us that. In fact, Treasury even told us that when they said:

What happens is that there is a shift between industries and that means a movement of capital and labour between industries in response to relative price.

So even Treasury acknowledge that there will be transitional impacts, but nobody knows—least of all the government; it has no idea—where these transitional impacts are going to take place or what kind of effect they are going to have. It is interesting that the government continues to quote the Australian Industry Group. Ms Heather Ridout said to our committee:

… some people think that we will get in the Tardis booth in 2010 and get out in 2020 and everything will be hunky-dory …

Treasury’s modelling acknowledged that they could not fully capture those transition costs. I go back to what I said after the Treasury modelling came out: it is not easy to capture transition costs. And we are not in a Doctor Who Tardis box. The government has absolutely no idea of what the transitional costs of this scheme will be. They have not been modelled. The government has not done any work. Treasury have admitted that. The Australian Industry Group—one of the groups that the government continues to quote as supporting its scheme—acknowledges that there are severe impacts to be had from the changes to the scheme, and the government has absolutely no idea where they are. There will be jobs lost now—there is no question that that is going to occur—but we have no idea when or where the new jobs will appear.

For my portfolio area, which is agriculture, this scheme is absolutely diabolical. The government say that they will not bring agriculture into the scheme until 2015 and they will not make a decision on that until 2013. But tucked away in the white paper is a clause that says that, even if the 2013 decision excludes agriculture, mitigation measures should still be applied in agriculture which result in costs of emissions similar to those under the scheme. In other words, if the government put agriculture into the scheme or they do not, the measures will still impact on agriculture.

This scheme—again, a scheme modelled for the 1990s not for the 21st century, looking backwards not looking forwards—does not allow the agricultural sector to take advantage of the many opportunities that there may be to store carbon. The Leader of the Opposition has indicated his preference for some work on biochar, and we heard in our committee a large number of witnesses talking about soil carbon, but unfortunately under the CPRS as it is designed these are all locked out, because we have a backward-looking scheme.

Then we go to the modelling on agriculture. Late last year, when ABARE released the modelling it had done based on instructions from Treasury, you had to smell a rat. Agriculture was truncated at the farm gate and there was no consideration at all of the impacts on agriculture from the processing sector. New modelling was released in March that indicated that there was an impact, and it was not until June—in the last couple of weeks—that ABARE released information that concurs with what the farmers and the farm groups were telling us: that there will be a significant impact on agriculture from the CPRS.

The minister came out saying, ‘Don’t worry; for dairy in the first year of operation it is only 1.9 per cent’—quite deceptive, given that in the first year of the CPRS the carbon price is capped at $10. The real impact is more like nine per cent, which is where it will be when the carbon price goes up to $28. That is for the dairy industry. There will be a 13.2 per cent reduction in returns for the beef industry when the carbon price gets to $28. There has been no attempt to get this work done at the outset. It is just a disgrace that the agriculture sector has been absolutely left out in the cold in respect of this scheme.

Similarly, in the forestry modelling there are extraordinary impacts on rural lands across the country from what was suggested as reafforestation, and yet now ABARE are starting to resile from their comments on that. They say:

Given the modelling framework and assumptions, ABARE’s projections should be considered as an upper bound for afforestation potential.

Again, there are concerns about the scheme and its design.

There are so many reasons not to pass this legislation now. There are so many weaknesses in it. There are so many elements that are not complete. A large proportion of the bill comes in regulations which we have not seen. The government have not finished negotiating with industry. In fact, they have not even finished defining some industries. The negotiations on assistance measures are not completed and the government are absolutely nowhere near designing the complementary measures that were a feature of our discussions and that need to be designed to work alongside the scheme. The government are also nowhere near being able to understand the global position on this issue. As I have said repeatedly, this CPRS looks backwards, not forwards past Copenhagen. There are opportunities in complementary measures in the built environment, transport and, as I have discussed, the land and agriculture sector.

In one of our hearings we heard from ERM Power, who talked about the impact on their business. What they told us effectively was that, because there was a question mark around the whole electricity sector, their capacity—as a winner under the CPRS—to attract investment was diminished. That is quite an extraordinary impact. The government does not seem to understand what it is actually doing here.

In the few moments I have left—and I am sure there will be plenty of opportunity to debate this further in coming weeks—can I commend the recommendations of the majority report to the Senate. A lot of work has gone into this report. It is vitally important. Can I thank in particular the secretariat staff, who worked an extraordinary number of hours. I would also like to thank my colleagues on the committee. (Time expired)