Monday, 7 November 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; In Committee
I want to talk to this issue of targets for a couple of moments because it is a critical component of this legislation and one of the key differences in the design of this scheme compared with the Carbon Pollution Reduction Scheme. What has been set up here, which goes to Senator Xenophon's question about what a future government might do, is a climate change authority which is independent and which, if you look at the requirements in the legislation for what the climate authority has to do, has to take into account the latest science. It has to take into account how effectively the current legislation, whatever it might be at that time, is working, in terms of reducing greenhouse gas emissions. And it has to set out a trajectory to meet the scientific imperative. It has to have regard to the government's target, and the target that has been set down by this government is an 80 per cent reduction by 2050. The Climate Change Authority, having regard to the latest science and the government's 80 per cent trajectory, will set down, for the first five years of the scheme, emissions reductions per year that are consistent with that objective. In my view, a climate change authority that is taking into account the latest science will be setting down a trajectory that is much more ambitious than would constitute a five per cent reduction. In fact, we would hope that this climate authority, taking into account the latest science and what needs to happen by 2050, will be setting a quite substantial trajectory in those five years.
How it will then work is the Climate Change Authority will provide its report to the government of the day about what that trajectory will be and what those emission reductions will be per year. Having taken that into account, the government of the day will then make a recommendation to the parliament by way of a regulation—and that regulation will be disallowable. In the event that the parliament of the day determines that it does not support whatever the recommendation of the government it will disallow that instrument. Obviously, what Australians would not want to see is a situation where there was no reduction target in place in such a circumstance—and not only people concerned about climate change; all those businesses that have established on the basis of ongoing reductions and have a business plan associated with that want to have some certainty. So the default position in the event that a parliament disallowed is for a five per cent equivalent reduction target expressed in tonnage. So whatever the Climate Change Authority recommends goes to government and the government then puts to the parliament a regulation and the regulation can be disallowed.
There is also the scenario—which I think is the one Senator Xenophon may have been referring to—where a climate change authority may make a recommendation to a government and a government may decide that it is not prepared to give effect to that climate authority recommendation. The recommendation will become public and it will be up to the government of the day to justify to the community and to the parliament why it is making a recommendation that is contrary to what the Climate Change Authority may have recommended. It will be up to the government of the day to make that case.
There is no way that you could see a professional climate change authority, based on its mandate to take account of the latest science, would be recommending a trajectory on a yearly basis that would take us back to a lesser target than the ones that it had recommended previously, because the ones it had recommended previously go to that trajectory. So it would only be in a situation where a Climate Change Authority's recommendation to a government was rejected by that government and that government decided to put in a regulation that gave effect to a much lesser ambition in terms of greenhouse gas reduction. It would then depend on the parliament and the make-up of the parliament as to whether that instrument was disallowed. In the event that it was disallowed, because it absolutely undermined the emission reduction effort, the five per cent would kick in.
Unless a particular party which was a climate denier and did not support emissions reduction had control of both houses of parliament, it is difficult to see a scenario where such a low ambition represented in a regulation would actually be accepted by a parliament and not disallowed. So I think Senator Xenophon's concern about the reduction is not something that we could see expressed—certainly for the foreseeable future, because of the make-up of the parliament.
But in terms of the question as to whether the trajectory can be higher than the five per cent, it absolutely can be higher than the five per cent, because that climate authority is tasked with recognising the climate change impact, and we would certainly be expecting that the trajectory of emission reduction in the first five years and then annually thereafter would be consistent with the kind of reduction you need to get to, at least 80 per cent by 2050. Of course, the Greens would be hoping that it would get to net carbon zero by 2050 but, nevertheless, you could expect that trajectory to become steeper.
Having said that, giving the climate authority that independent power is critically important. That is why the Greens are saying that we need to put in place the Climate Change Authority and let the Climate Change Authority understand its mandate, as presented in the legislation, to take into account the latest science and to have regard to all of the other matters in its mandate and then set the trajectories. That is why we do not want meddling with the independence of the climate authority. In the same way, we have said the ARENA and the Clean Energy Finance Corporation need to be independent of the politics, they need to be overseen, they need to have the decisions implemented by people who have expertise and who are there for their expertise, and they need to deliver on their mandate, rather than to respond to which electorate may need investment at a certain time on the basis of what polling results might show.
I think the real strengths of this package is the establishment of a climate change authority to take this into account; the connection with the Productivity Commission in terms of the Productivity Commission working with the climate authority to assess over time whether the compensation to industry is such that it compromises our ability to meet the targets; and that we have an independent authority set up, with ARENA, and an independent authority, with the Clean Energy Finance Corporation. These are the real strengths of this particular package, because for the first time you get expertise-based leadership—based on science, economics or investment and finance expertise.
Senator Xenophon, I understand where you are coming from, and I can assure you that the Greens thought very carefully about the extent to which a future government might be able to try to undermine what is the strength of this package—and that is upward flexibility in terms of ambition—and I am satisfied that the checks and balances are there.