Senate debates

Thursday, 26 November 2009

Carbon Pollution Reduction Scheme Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 [No. 2]; Australian Climate Change Regulatory Authority Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme (Charges — Customs) Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme (Charges — Excise) Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme (Charges — General) Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]; Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009 [No. 2]; Customs Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009 [No. 2]; Carbon Pollution Reduction Scheme Amendment (Household Assistance) Bill 2009 [No. 2]

In Committee

7:53 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Hansard source

Thank you for the courtesy, Senator Xenophon. I will take those questions on notice but I actually can answer some of them now and, if you could bear with me, I would not mind responding just briefly. You asked about the parameter changes. The parameter changes were standard budget assumptions which were also standard MYEFO assumptions. We can provide you with what additional detail we are able, but they were standard budget assumptions used.

Second, I think your questions 4 and 5 related to the household assistance package and to what extent that would change. The government’s white paper commitment remains. We are committed to providing the assistance that was described in the white paper. The package that we have negotiated with the opposition does that. It includes assistance equal to 120 per cent of the overall cost increase for low-income Australians and a very substantial amount of assistance to middle-income Australia. We have said we will review the adequacy of that assistance every year in the budget context. In other words, that would enable the government to consider whether or not the carbon price impact was higher than previously anticipated and adjust upwards the household assistance to take that into account. We are very clear about that. This is not a one-off; this is ongoing assistance, because the government have a very clear principle that we do not believe low-income Australia should be asked to bear too much of the cost of action on climate change. We do not believe low-income Australia should bear the brunt of action and we are committed to providing low-income Australia and middle-income Australia with assistance. The largest single part, in terms of expenditure, of the scheme goes to households.

You asked why the MYEFO figures adjusted the revenue source but did not adjust the household compensation. The first is as a result of the MYEFO assumptions to which you referred earlier—in other words, the assumption changed from a $29 carbon price to a $26 carbon price. That automatically flowed through the revenue assumptions. There needed to be a government decision to alter the dollar figure of the household assistance. That did not occur until after MYEFO and that is now reflected in the revised figures which have been put forward. What I would say in relation to that is that the reduction in the carbon price in fact has meant that the cost impost on Australians has reduced in terms of the forward assumptions, in terms of the years ahead; therefore, we have adjusted the household assistance package to reflect more accurately the actual cost impact of the carbon price.

You asked also about modelling assumptions about increases to electricity prices. I think in one of your questions you in fact conflated two years worth, but I will look at that on notice. You asked about the difference between Australia’s low pollution futurethe Treasury modelling—and more recent figures about the impact over the first two years of the scheme. I just remind you that the Australia’s low pollution future Treasury modelling was undertaken prior to the decision by the government to have a fixed price for the first year. Clearly, a lower fixed price for the first year meant a lower carbon price than had been anticipated under the Treasury modelling.

You asked about the assistance for small and medium enterprises. This is outlined in the offer document. It is $1.1 billion over a number of years and a transitional electricity cost assistance program. It is a transitional measure, not an ongoing measure, and will apply for two years. It is going to be targeted to corporations in the manufacturing and mining sectors. The reason the government is assisting corporations is obviously that there are some difficulties—as a lawyer you would know this—in the Commonwealth legislation in relation to non-corporate entities. The minimum threshold was 300 megawatt hours per year, and the distribution of that transitional assistance was agreed as up to 50 per cent of the projected increase in retail electricity prices in 2012-13 and, subject to available funds, 25 per cent of the projected increase in electricity prices in 2013-14.

In relation to the proposition COSBOA put, I make the point that we established under our original scheme—and it is retained in the scheme that is before the chamber—the $2.75 billion Climate Change Action Fund. There is a stream in that which is open to small and medium enterprises—and others, but primarily to those businesses—which do not receive free permits through the other transitional programs of assistance. That is for things such as assistance to invest in energy efficiency measures. What we want is the incentive for people to become more energy efficient, and we are willing to allocate revenue through this program to fund those sorts of grants.

That is a broad overview of some of the issues raised in your questions. I am advised that the quantum I gave you for the Climate Change Action Fund has been adjusted under the offer because some aspects were utilised to fund, I think, the food processing and some contribution to the electricity component that I just spoke about.

In relation to households, I again emphasise that it has been an absolute priority for this government to support low-income and middle-income Australians through the transition as we move to a low-pollution future and a lower carbon economy. We think that all should make their fair contribution, and it is very important that we support Australian households through this process. We have retained that as a key priority, and the percentages and the commitments outlined in the white paper have been maintained in the package that is before the chamber.

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