Senate debates

Monday, 30 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

8:45 pm

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | Hansard source

by leave—I move Australian Greens amendments (10), (11), (19), (20), (23), (28), (29), (34) and (62) on sheet 5786 together:

(10)  Clause 13, page 33 (line 17), omit “; and”, substitute “.”.

(11)  Clause 13, page 33 (lines 18 and 19), omit paragraph (c).

(19)  Clause 82, page 128 (line 15), omit “; and”, substitute “.”.

(20)  Clause 82, page 128 (lines 16 to 18), omit paragraph (c).

(23)  Clause 88, page 131 (lines 17 and 18), omit paragraph (d).

(28)  Clause 93, page 137 (line 3), omit “and”.

(29)  Clause 93, page 137 (lines 4 to 6), omit paragraph (1)(c).

(34)  Clause 129, page 173 (lines 8 to 12), omit paragraph (5A)(a), substitute:

             (a)    an Australian emissions unit was issued in accordance with the emissions-intensive trade-exposed assistance program; and

(62)  Clause 382, page 460 (line 6) to page 460 (line 32), omit subclauses (8), (9) and (9A).

These amendments go to one of the most unjustified and toxic aspects of the carbon pollution reduction scheme. This is the issue of free permits to coal fired electricity generators. The issuing of free permits to the very industry that has caused the greatest problem, that as a sector generates the greatest number of emissions in Australia is the coal fired electricity sector. Professor Garnaut, in his review, said:

There is no public policy justification for $3.9 billion in unconditional payments to generators in relation to hypothetical future ‘loss of asset value’. Never in the history of Australian public finance has so much been given without public policy purpose, by so many, to so few.

That is a big call, and I wonder what Professor Garnaut is saying now that the $3.9 billion has been massively increased to $7.3 billion? I repeat: there is no public policy purpose for these free permits going to coal fired power stations. Of course, they are not just bits of paper; they have monetary value.

It will be very interesting to hear the government first of all justify why you would give free permits to coal fired generators, let alone the deal that the government and the coalition went into to increase that to $7.3 billion. When that figure was announced everyone assumed that was the extent of it. But no, the figures show that the $7.3 billion for no public purpose, given to the biggest polluters in Australia, is based on a cut of five per cent. If the cut in emissions goes to 15 per cent, then from our calculations it is well in excess of $10 billion. I would like the minister to actually specifically put on the public record what the cost is if this goes to a 15 per cent reduction in emissions, and what the cost is if it goes to a 25 per cent reduction in emissions.

This is extraordinary, and there is not one economist—you will not find one single economist—who will tell you that this is justified. This is robbery, in my view. There is no justification for it whatsoever. These companies have known for 20 years that a carbon price was coming, just like the tobacco industry knew for years and the asbestos industry knew for years. They have all employed the same tactics, whether it is tobacco, asbestos or coal: they have known about the greenhouse effect in all that time and they have known that a carbon price was coming. They have done everything in their power not to reduce their emissions, not to transfer out of coal fired power but, rather, to spend the money on expensive lobbyists here in Canberra, rent seeking.

Never have we seen a government cave in like this government has. At the weekend in the Australian Financial Review Brian Toohey called it ‘Carbon cop out: Rudd’s craven cave-in’, and frankly that is exactly what has happened here with the big polluters. The article says:

The biggest slice of the extra payments to polluters—$4 billion—

bear in mind that this is going straight out of compensation to households to the big polluters who have caused the problems, for no reason at all; not an economic justification can be found—

goes to the dirtiest of the coal-fired electricity generators. The only condition attached to the total payment of $7.3 billion to these generators is that they must not close down, although this would stop them from pumping out huge quantities of carbon dioxide (CO2)—

that is, if they were closed down. Interestingly, Citi Investment Research and Analysis director Elaine Prior said yesterday that the deal has secured the immediate future of coal-fired electricity. Well, how ridiculous is that? We are meant to be taking action on climate change to drive transformation in the Australian economy—to get rid of coal-fired generation and to transform to the new low-emission technologies—and what do we have? We have a guarantee on coal-fired electricity. As Ms Prior said:

One of the things that the package has done is provided more surety for the coal-fired generators to keep generating until roughly 2020 or beyond … So one might say in that sense that it’s on the one hand created more stability in the electricity market, but perhaps reduced the urgency for people to look at change.

If there is one component of the CPRS, apart from the targets, that demonstrates this is not about transformation but about entrenching coal-fired power, it is this completely unjustified wealth transfer—ripping it out of the pockets of Australians and into those of the coal-fired generators. There has never been a more disgraceful example of unjustified policy.

It is not going to be good enough for the minister to say, ‘This is the decision the government has taken,’ or ‘This is government policy,’ or ‘We have a different view.’ Let us hear from the minister what the economic justification is for sandbagging coal-fired power generators out to 2020 and what Brian Toohey meant when he said that the only condition is that they must not close down. If you go to the government’s own press release this is what you get:

… the Government will increase the quantum of assistance available under the Electricity Sector Adjustment Scheme …

… the Government will extend the period over which—

that assistance—

is provided from five years to ten—

so doubling the length of time in which the generators will be sandbagged—

… meaning that generators will be required to comply with the existing ‘power system reliability test’ over this period to continue to receive assistance—

that is, you only get the compensation if you keep on agreeing to pump out that much coal-fired power. That is why in Western Australia some consideration is being given to actually recommissioning decommissioned coal-fired power plants. How stupid is that? This is utterly and absolutely ridiculous.

This requirement—


supports energy security by preventing the exit of a generator from the energy market where this would be likely to breach power system reliability standards.

So on the one hand there is no money for geothermal, no money for wave power, no money for solar thermal, a renewable energy target which does not support those emerging technologies and no money in the scheme for research and development in those new technologies but, on the other, all the money going to coal-fired power generators on the condition that they keep churning out emissions. Even worse, the government will delay the windfall gains test that applies to this assistance to apply to the last three years of 10 years assistance rather than to the last two years of five years assistance and apply the test to only half of a generator’s allocation.

Come on! If the government thought it was reasonable even when there was no justification for this to apply a windfall gains test in the last two years of a five-year period, on what possible basis are they taking out this assistance to 10 years, applying the windfall gains test in the last three years and then only to half of a generator’s allocation in this three-year period, which will give generators greater certainty over their allocations? Of course it will, and that is what they set out to do. Wasn’t it a great investment in those lobbyists? Haven’t they done incredibly well out of all of this to the detriment of the whole community? This is a disgraceful, unjustified wealth transfer. The Labor government and the coalition are all under the influence of the lobbyists who came here to Canberra. How they must be laughing all the way to the bank.

This allocation is really the Achilles’ heel for the government. They can go out there and say, ‘We are taking action on climate change,’ but when asked, ‘How is that?’, they will have to say, ‘We are giving compensation to the coal-fired power industry and keeping them operating out to 2020. In fact, we are penalising them such that, if they cannot produce the level of coal-fired power, they will not get the compensation.’ So the only condition to the $7.3 billion is, ‘Keep on pumping out those emissions.’

When does the government think we are going to get carbon capture and storage, which you will remember was going to be the saviour of coal-fired power? It was around the corner. It was only a matter of years away. Then it was decades away. Now it is more than decades away under the Treasury’s own modelling. It shows that electricity generation emissions are not going to fall in Australia until 2034. Why 2034? It is 2034 because that is when the government and Treasury assume carbon capture and storage will come into its own. Everybody knows that is a joke. Nobody in their right mind now believes that carbon capture and storage is going to be real. So all we have here is a guarantee that the biggest polluters will get the most out of this scheme. Money is being taken out of the pockets of households. The compensation provisions for households have been changed. Billions have gone out of households and straight across to the polluters. It is $7.3 billion to keep on polluting. So those people who are saying, ‘Just pass this and we will improve it,’ should think again. You cannot improve it. You are locking in $7.3 billion for nothing. It is nothing for householders and, worse still, it is locking in failure by guaranteeing that these coal-fired polluters will keep on polluting out until 2020 at least and beyond.

Remember—and we will get to an amendment on the science very shortly—the IPCC has said global emissions must peak and come down by 2015. We are talking about less than six years from now and yet the government has sandbagged coal-fired power and locked in a guaranteed failure in terms of transitioning the electricity sector at least out until 2020. So do not let us hear any of this talk about transformation in the Australian economy. Every one of you that supports this package is supporting the transfer of $7.3 billion into a situation where, as Professor Garnaut describes:

Never in the history of Australian public finance has so much been given without public policy purpose, by so many, to so few.

There is no justification for this hypothetical future loss-of-asset value. That loss-of-asset value was already calculated in the share price and in the investment. Those companies had already calculated that into their activities. That risk was already there.

This is just a windfall gain. It is for nothing at all other than to give multinational companies a massive gain at the expense of the Australian community and at the expense of transformation in the electricity sector. I really look forward now to hearing from the minister and from the coalition. What is your justification? What is the public policy explanation for this appalling handout to multinational corporations in return for nothing, other than the fact that it is a craven cave-in to the coal-fired electricity sector?


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