Wednesday, 26 March 2014
Environment and Communications References Committee; Report
Pursuant to order, I present the report of the Environment and Communications References Committee on the Direct Action Plan, together with the Hansard record of proceedings and documents presented to the committee.
Ordered that the report be printed.
That the Senate take note of the report.
I am grateful for the opportunity to speak today as the chair of the Environment and Communications Committee on the inquiry and report into the government's Direct Action Plan. This is an important report because it addresses what may be the single greatest environmental issue facing the planet today—climate change.
Climate change is an issue that will test the mettle of the human race and our ability to work together to find solutions to reduce carbon emissions and ensure we pass on a healthy planet to our children, our grandchildren and all the generations that will follow. While there is enormous value in individual and group efforts to effect change in local areas, the heavy burden of responsibility for solving this problem must lie with governments. There is absolutely no doubt that governments across the globe must act—and we must act now.
Over the past months the Environment and Communications References Committee has heard from experts across the country about the government's proposed climate policy, direct action. We did not hear just from environmentalists, but also from academics, investors, scientists, doctors, farmers, economists, think tanks, business groups, and climatologists. And almost to a person, they told us the same thing: direct action is expensive, inefficient, and, more than likely completely unable to address climate change in any meaningful way. In fact, not one witness was willing to support direct action as a credible stand-alone means of addressing the climate change crisis that may soon be on our doorstep.
Many told us that direct action is little more than a government gift to polluters and that it will do little, if anything, to reduce Australia's emissions. Others pointed out that direct action throws away the well-established legal and ethical principle of 'polluter pays' in favour of setting up a taxpayer funded slush fund for big emitters. This approach is particularly bizarre when you learn that environment minister Greg Hunt wrote an award-winning graduate thesis entitled A Tax to make the polluter pay, which championed this very cause. Pollution is a waste output of business just like any other. Just as we would not expect someone else to pay to dispose of the skip bins of rubbish that a construction company might generate, it is quite unfair to require the taxpayer pick up the tab for big business and their carbon outputs.
The committee also heard that Direct Action is riddled with design issues. Establishing baselines will be difficult and administratively onerous, not to mention the fact that it will be virtually impossible to determine if a project would happen anyway, potentially opening up the scheme to be gamed by companies who could charge the taxpayer for emission reduction projects they were going to undertake anyway. Perversely, companies that have acted early to invest in emissions reductions may be penalised because they will be starting from a lower baseline.
Also, many witnesses pointed out that soil carbon sequestration, which is the major abatement strategy in Direct Action, is highly inefficient. In a hearing in Canberra, the CSIRO confirmed that it is likely to take a land mass two-thirds the size of Australia to achieve the sort of abatement the government says it will get from soil carbon. Other witnesses pointed to the extremely short time horizons as a threat to business confidence and investor certainty. For these and many other reasons the report recommends that the centrepiece of Direct Action, the emissions reduction fund, is fundamentally flawed and, thus, should not proceed. Another overriding message we got from submissions to the inquiry was that Direct Action will be an expensive and unnecessary burden on the taxpayer.
To meet our commitment of reducing Australia's carbon output by five per cent by 2020, the government has allocated $1.55 billion over three years, but independent work done by SKM MMA and Monash University shows this falls $4 billion short, even using the most generous modelling parameters. The government has been very clear that there will be no more money in the bucket, so it is virtually a foregone conclusion that the government will fail, probably spectacularly, to meet our emissions reduction target. This is not surprising when you consider evidence from the Climate Institute that, if other countries were to follow the Abbott government's policy lead, the world would be on track for a catastrophic rise of up to 6.5 degrees Celsius by the end of the century. For Australia, this would mean a five-fold increase in droughts in southern Australia, the virtual destruction of the Great Barrier Reef, forced abandonment of many coastal communities, and a 90 per cent reduction in agricultural production from the Murray-Darling region. In fact, the government has virtually admitted failure already by removing the national cap on carbon emissions, because Mr Hunt and Mr Abbott both know that, if no goal is set, it cannot possibly fail to meet it. This is an outrageous omission and one which the committee strongly recommends be rectified immediately.
On the subject of targets, the committee was also convinced by the weight of evidence toward greater reductions, and supports the adoption of the targets recommended by the Climate Change Authority, namely that Australia's 2020 emissions target be set at 15 per cent below 2000 levels in addition to the four per cent carryover from the first commitment period of the Kyoto protocol. So it is clear that Direct Action is undeniably the wrong way to go about effecting meaningful carbon emission reduction.
What did the experts recommend as the most effective solution? What has been most notable about the inquiry is the consistency of evidence we have heard from witnesses in this regard. Again and again the committee heard that the single most effective and efficient means of achieving carbon abatement is to put a price on carbon. Carbon pricing provides a positive incentive for businesses and consumers to change their behaviour and embrace low-carbon alternatives. It provides a boost to renewable industries and encourages investment in low-carbon technologies. It also encourages business to invest in areas that will ultimately make them more efficient and profitable as energy costs grow in the future.
Of course, it is not just the witnesses and submitters to the inquiry who understand the importance of pricing carbon. There are currently more than 30 countries across the world and many subnational jurisdictions that already have a price on carbon. These schemes cover the enormous number of 880 million people. In fact, while countries across the globe are embracing market based mechanisms to address this global challenge, Australia stands alone as the only country in the process of dismantling carbon pricing. Not only that; the Abbott government is also systematically trying to abolish each and every tool Australia has to protect ourselves from the potentially devastating impacts of climate change. This irresponsible action is not supported by today's report. Instead, it unreservedly recommends that Labor's clean energy package remain and that Australia move to a fully-flexible carbon price under an emissions trading scheme on 1 July this year.
The report notes that Labor's package 'presented a comprehensive set of policy instruments to reduce Australia's carbon emissions, invest in renewable energy and provide assistance for businesses and households to transition to a clean energy economy'. It also recognises the 'significant time and effort' that was spent on 'ensuring that Australia adopted an effective and credible way to address climate change in the long-term'. The committee concurred with many witnesses that the institutions that sit under the clean energy package should be maintained. This includes the Climate Change Authority, which is a crucial means for the government to obtain independent and transparent advice on climate policy. The committee was also convinced by the arguments of witnesses that the profit-making Clean Energy Finance Corporation needs to stay. This organisation has clearly succeeded in its goals of encouraging private sector investment in the renewables sector and reducing carbon emissions while still returning a healthy multimillion-dollar profit to the Australian taxpayer.
Likewise, we need to retain funding for ARENA, and the Renewable Energy Target must be maintained in its current format. If the government persists in its perverse determination to adopt an expensive, inefficient policy solution at the expense of the considered, effective and forward-thinking policy framework that we already had, it risks relegating Australia to become an environmental and economic backwater, unable to compete in the low-carbon global economy of the future. It also threatens not only our international credibility but our ability to take a leadership role in the global climate change response. This is an alternate future that we simply cannot risk and I urge the government to consider the findings of this inquiry very seriously.