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

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

The committee is considering the Carbon Pollution Reduction Scheme Bill 2009 [No. 2] as amended. I will now put the remaining element of Senator Milne’s amendments, the rest of which were negatived last night. I put the question that part 9 stand as printed.

Question agreed to.

10:03 am

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

I move Greens amendment (12) on sheet 5786:

(12)  Clause 14, page 34 (lines 22 to 33), omit “99%” (wherever occurring), substitute “95%”.

This is a very straightforward amendment and it is not one I intend to call a division on, so we should be able to deal with this fairly quickly. This is basically an amendment to the government’s legislation, as agreed to by the coalition, where it indicates that if regulations are not set then there is a default one per cent reduction in the cap for each year. The Greens are saying that a reduction of one per cent to 99 per cent is not enough. There should be a five per cent reduction to 95 per cent. In the unlikely event no regulations were set and this bill becomes law, the government wants to tighten the cap by one per cent per year. We think it should be tightened by five per cent per year.

10:04 am

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

Once more we go to the premise of the effect on the Australian working family of this amendment and amendments such as this going through. It has been clearly shown that we will be looking at an effect that causes the demise of working families’ jobs, an increase in costs to pensioners, an increase in costs to farmers. There is a paucity of information that actually sits underneath this on the economic effects on our nation as a whole, with a discrepancy compared to other nations regarding how Australia will maintain in an open economy and a competitive environment a position that keeps people in work and that allows benefaction of our nation as represented in our mineral wealth to be delivered back to the Australian people in such a way as to increase their standard of living or basically keep the standard of living represented by simple things, such as keeping an air conditioner on or keeping the price of food affordable. (Quorum formed)

The whole modus operandi of this legislation, taking place merely days before Copenhagen, the place where the world will meet, is such that if we are truly looking for a global solution we will find it. But, if people are in fear of Copenhagen not delivering a global solution, I can say that the only reason that we would vote on this legislation now would be to force the issue, to actually undermine Copenhagen. After lauding Copenhagen, it is a statement that you do not believe. You have a lack of confidence in Copenhagen being able to deliver an outcome. So, far from being part of a global solution, it is part of inciting and undermining Copenhagen.

If we truly believe in keeping Australia as a competitive nation in a global economy with open borders and open trade, we cannot unilaterally go down this path. It would be the height of self-indulgence by a government in Australia to take us down a path that would put at risk Australian working families and those pensioners who have been contacting us not in their hundreds but in their thousands. We have also received tens of thousands of emails. Today the weather is remarkably cold—maybe that is a sign where we are going with this—but no doubt summer will come. One of the big things people will want is the capacity to be able to pay for the air conditioning in their house. Pensioners who are on the breadline do exist. We have to remind the Labor Party that they are doing it terribly tough, and they will be the people who will be afflicted by this scheme. We know that at the start there is compensation, that there is a bit of sugar on the table to help those who are doing it tough, but that all passes, that all finishes, and people will then be left with the cost.

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

Mr Temporary Chairman, I have two points of order: one is that the senator is deliberately misleading the chamber. He knows I have made it clear to this chamber on a number of occasions that household assistance is ongoing. The second point of order is in relation to relevance. We are currently discussing the Greens amendment—an amendment with which the government does not agree—in relation to a default reduction in the cap. How is this contribution relevant to that?

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

Senator Joyce, do you wish to speak to the point of order?

The Temporary Chairman:

On both points of order, I rule that they do not exist.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

I remind the chamber of what the minister has just said, that in these amendments there is a $5.5 billion reduction in household assistance. That is the money that goes from the pensioners. That is the money that goes from the working families. That is the money that makes life harder. We hear that things will go along as per normal, but these amendments actually speak to the reduction in household assistance.

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

Mr Temporary Chair, a point of order: Senator Joyce himself negotiated that $5.5 billion rip-off from pensioners. Now he is complaining about it. He should be consistent if not relevant.

The Temporary Chairman:

Senator Brown, you know that is a debating point.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

The National Party was not in any way part and parcel of the $5.5 billion reduction in household assistance. In fact, we want to exempt households completely and make sure that those working families, those pensioners, those who live in the quiet streets in the weatherboards and the brick-and-tiles do not have to pay anything for this ludicrous, unilateral attempt to change the temperature of the globe by Minister Wong’s office. That is what is being inspired here—a unilateral attempt by Kevin Rudd to change the temperature of the globe. Is the temperature of the globe going to change from the Prime Minister Kevin Rudd’s office? Is the temperature of the globe going to change because of a piece of legislation that is inspired by Minister Wong? No, it is not. Even now we would have to query the extent to which they are actually going to reduce carbon emissions. We have still got this confusion where we are looking at 2008 modelling on a 2009 proposition. We take in piece and parcel bits and pieces of it. We have had an appreciation of the dollar, yet the modelling stays the same. Frontier Economics has been talking about a $3.7 billion hole. This is where this modelling leads in 2020. There is currently a $2.5 billion hole. This just goes to show the paucity of economic acumen in the Labor Party and also the self-indulgent position that they would inflict on Australian working families, on pensioners, on farmers and on small business. This sort of tax—

Government Senators:

Government senators interjecting

The Temporary Chairman:

Order! There is too much audible interruption going on in the chamber. I would appreciate it if senators allowed Senator Joyce to make his contribution in silence.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

People listening will acknowledge this. Senator Cameron is supposed to be in here looking after working families. He is supposed to be looking after his rank-and-file union members. What was he going to deliver to those rank-and-file union members? He was going to take those working families out of work. He was going to make the pensioners poorer. He was going to put the farmers off the farm. This is the sort of outcome we will have.

What will we have if this ends up in a double dissolution? It is going to be quite easy for us to define. If you understand the tax, vote for it. If you do not, vote for us. It will be quite clear. We borrowed that line from a former Prime Minister, Paul Keating. If you understand this massive new tax, you vote for it. If you want to make working families poorer, you vote for the Labor Party. If you want to put families off the farm, you vote for the Labor Party. If you want to take working families out of work, you vote for the Labor Party. It is quite clear how we can define this line for an election. It is quite clear now for the tens of thousands of Australians who have contacted our office and have said emphatically that they do not want this to go forward.

I listened to talkback radio last night as people pleaded for this chamber not to go forward with this massive new tax. Did the Labor Party hear them? No, they did not. What did the Labor Party do? They became self-indulgent in a fit of pique that they would just pursue this course, that they would demand that the Australian people have to comply with the globetrotting benevolence of our Prime Minister as he sets the most massive carbon footprint in air travel of all time. He is over there now speaking to President Obama. I do not think President Obama is going to turn around the US Senate. Let us be realists about this. There are environmental solutions that we can deal with, but it does not have to be your massive new tax. We as a nation can be smarter than that. We can be smarter than that and deliver a better outcome for our nation than this massive new tax. The National Party and the Liberal Party will be at one in fighting this massive new tax because today there has been a change of direction.

Now we have the capacity to fight the Labor Party, to drag them into this chamber day after day and, piece by piece, pull apart this ridiculous tax and show the Australian people exactly how much the price of food is going to go up by, exactly how much the price of electricity is going to go up by—exactly how much every section of their life is going to be afflicted by it. We will drag the Labor Party in. Now the problem has become the Labor Party’s. It is now on the Labor Party’s lap. They have to convince their working families how they will keep them in work, and the only way they can keep them in work is to walk away from this ridiculous tax. We say to the people of the Hunter Valley: it is the Labor Party who are going to put you out of work. We say to the people of the Hunter Valley: it is Mr Combet who is one of the grand architects to reduce your standard of living. We will say to the people of Dawson: it is the Labor Party who wish to take your standard of living down the tube; they do not believe that you are entitled to the standard of living and the wages you have been getting. The Labor Party do not believe in truck drivers getting paid up to $100,000. No, they are going to take you back to green jobs. They are going to have you building duck ponds, they are going to have you building concrete paths around duck ponds—they are going to have all these fantastic schemes—but they will not give you a decent living. That side of politics will not give you a decent living.

Today is a great day, because today you will see a unified opposition that will take you on, and you know that, because now we have got the capacity to take you on, day after day. From the front benches of this side of the political chamber we will deliver the questions that you will not be able to answer. It will be a great day.

We have this ridiculous proposition that if we pass this bill we are going to be borrowing money from China to send back to China to help develop China. We will be borrowing money from China and from Saudi Arabia to send to African despots. That is not the form of politics that we believe in. We will be able to fight this piece by piece. This is going to be an interesting time. From now on we have the capacity to unify this show. This side of the chamber will be as one. This side of the chamber is, as you speak, working out the questions to ask you about how on earth you are going to be able to pay for this.

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

Bring it on.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

And we will. We are looking forward to it, Minister Wong. We are looking forward to talking to construction, forestry and mining workers about your outcome for their world. We are out to try to get them more money. We are out to protect the dignity of their lives. You are out to take them on some fantastic trip, for what is left for them at the end of the day is poverty, destitution and an economy that is completely out of kilter with the rest of the world. That was your outcome. That is what you are going to deliver them. And they are a wake up to you. We are going to drive this agenda and we will drive it persistently and without query and without equivocation. Today is a good day, because the Australian people are going to see the debate, the debate on the technicalities, and how completely implausible this whole tax was. Today is the day that we start pointing out that you had this unitary outcome, a unitary decision on the price of a permit with apparently a multiplicity of baseline preambles.

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

Er, er, er.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

I take the minister’s interjection because she is an angry lady today and therefore she goes for the ad hominem type of approach. That is disappointing, Minister, because I thought better of you than to do things like that. But if that is the approach we are going to have—where they start ducking back to the ad hominem type of attack—and that is what you want to deliver, it just goes to show you the implausibility of your argument.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

Senator Cameron interjecting

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

This is going to be a period of time where we will listen to Senator Cameron, and he will talk about—

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

You are absolute rabble!

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

The only rabble, Senator Cameron, will be your support base. Your support base will be scattered across the Hunter Valley and across the Illawarra as we tell the workers of the Illawarra that we kept them in a job, as we tell the workers of Dawson that we kept them in a job, as we tell the workers of the Hunter Valley that we kept them in a job. What did they give to the Australian working family? The promise that they would put them out of work. That was the delivery that the Labor Party gave to the Australian working family. They said they would ease the squeeze. What a joke! They ease the squeeze for working families by putting up the price of power, putting up the price of food, putting up the price of everything in their life—and they have got no choice but to pay the tax. This tax comes from every corner of the house, and they know it. That is them easing the squeeze for working families!

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

When you give them Work Choices, Barnaby!

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

As we go forward with this approach we will look forward to Senator Cameron explaining to working families how their massive new tax—

Photo of John WilliamsJohn Williams (NSW, National Party) Share this | | Hansard source

Mr Temporary Chairman, I raise a point of order. Since the arrival of Senator Cameron into this chamber it has been nothing but a rabble. I ask you to call him to order and let Senator Joyce continue his speech.

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party) Share this | | Hansard source

On the point of order, I think Senator Williams frankly has a bit of a cheek after the performance of the National Party when various other people have been speaking in this debate, particularly the minister, in trying to rationally answer questions and having a filibuster going on here for days and days. We are 25 hours into this debate and we are about 15 per cent through the amendments. Senator Williams has the temerity to say that there is an interjection taking place to that absolute diatribe, which has got nothing to do with the amendment before the chair. Frankly, if you uphold the point of order I understand, but it is a point of order which is based on hypocrisy.

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

All senators should conduct themselves at all times in an orderly fashion.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

This amendment speaks to an increase from one per cent to five per cent. It follows the same rule and method as the Labor Party. You could think of it as an increase from one per cent to five per cent in unemployment or maybe a 20 per cent to 40 per cent increase in costs. Everything the Labor Party do, every suggestion they make, is an increase in costs to the working families of Australia, an increase in the probability that working families of Australia will lose their job, an increase in costs for farmers in Australia. It is the complete obstruction and letting go of pensioners in Australia, and you should be disgusted in yourselves. (Time expired)

10:21 am

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

That was one of the louder contributions we have had in recent days, and the tone of it really underlines what has occurred inside the Liberal Party, which is that the extremists and climate change deniers have taken over the Liberal Party. Senator Joyce cannot disguise his triumphalism. The extremists who deny that climate change exists, the same extremists who delivered this country Work Choices, are now in control of the Liberal Party. If people want to talk about hypocrisy, Senator Joyce, who voted for those extreme industrial relations laws which stripped wages and conditions from working Australians, coming into this chamber and lecturing the Labor Party on protecting working families has got to be the height of hypocrisy. In this government’s term, of course, it was Senator Joyce and his colleagues who voted against the stimulus package, which was about supporting jobs and supporting continued economic activity in Australia at a time when we knew that the global financial crisis was threatening our economic growth. This is the man who now fashions himself as the defender of working Australians, the man who voted to strip wages and conditions from working Australians with Work Choices. You have no answer, Senator, on that point.

What is quite clear also from that rant—and I will come to the issue of climate science shortly, because what the senator is proceeding from is not a concern for working families. What he is proceeding from is that he does not believe that climate change is real.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

I do not believe you can fix it.

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

That is what he believes, and he should be more honest and come into this chamber and simply say that, rather than lying to this chamber.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

Point of order—

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

Minister—

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

I withdraw.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

Thank you very much. You should withdraw that.

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

I just withdrew. He has put forward to this chamber facts which are incorrect, over and over again, after I have told him on a number of occasions they are untrue. He says he is going to oppose what he calls this tax. Senator, do you know who pays most under this scheme? It is the big polluters. We are actually taking money from the big polluters by charging them for the first time in history for polluting, and then we are giving more of the money back to low- and middle-income Australia than it will cost those families. So we are taking from big polluters and giving to Australian families as we address climate change. So really the senator should be coming in here and explaining why he is standing up for the big polluters, because that is who is going to pay under this scheme.

He talks about pensioners, and I will put this on the record again, because if we are going to have this debate we should do so on the basis of facts, not fear and ranting. He claims that we are slugging pensioners. This is what the government has calculated this scheme will cost pensioners and this is what we are giving them. For a single age pensioner on the maximum rate, we calculate the average cost of living impact to be $286. The amount of assistance we are giving is $455. So, Senator, either you did not hear that the five or so times I told you that or you might simply not be putting what is factually correct on the record because you want to run a scare campaign.

There are three tactics that this senator and all those in the coalition who deny that climate change exists have engaged in. They either deny the science, they try and delay or they run a scare campaign. There are really only three tactics, and what we have seen over this last week and a half in the parliament is the same tactics over and over again. Senator, if you are going to talk about the level of assistance, you could at least do so on the basis of what is correct rather than continuing to put forward facts which I have now told you on many occasions are untrue.

I again say this: what is wrong with making the polluters pay for their pollution? That is the key question. What is wrong with that? Why has the senator got such an issue with trying for the first time to start to reduce the amount of pollution we put into the atmosphere by charging people for it? Why does he think people should be able to pollute for free? That is the question. Who is he really standing up for in this place?

We have had a lot of discussion in this country for a long time about climate change. I have said before that it has been 10 years since the first report was given to the Howard government on the prospect of an emissions trading system. As the senator knows, at the last election there was a policy supported by Mark Vaile, his then leader, Prime Minister John Howard and Mr Costello as Deputy Leader of the Liberal Party to introduce a scheme of the sort that is before the chamber. Is he saying that somehow John Howard before the last election was a rabid greenie? Is that really the proposition? Or is it just that Senator Joyce has decided that it is in his political interests to run this scare campaign to differentiate himself from the Liberal Party as it previously had a position on this issue?

I just remind the senator again why we are acting. He says we should not act because we cannot do anything. Well, I can tell you something: if we do not do anything, what we know is climate change will worsen. That is a fact. If we do not do something, climate change will worsen. If we do not do something, we are making an active decision to increase the risk for our children and our grandchildren. That is what this generation of political leaders and community leaders would be doing—making an active decision to ensure our children and our grandchildren face higher risks. I do not think that is a responsible course of action and I do not think most Australians think that is a responsible course of action.

We know what the science tells us. We know that we face the prospect of irrigated agricultural production in the Murray-Darling dropping by over 90 per cent by the end of this century. We know that we have extended droughts and that the current extended drought in south-eastern Australia has been linked with global warming by the Bureau of Meteorology and the CSIRO. We have been told by those two agencies—Australia’s own Bureau of Meteorology and the CSIRO—that there will be up to 20 per cent more drought months over most of Australia in the next 20 years and up to 40 per cent in the next 50 or 60 years. We know that exports of our agricultural commodities, in the absence of action on climate change, are projected to fall by 63 per cent over the next 20 years. That is a 63 per cent reduction in Australia’s agricultural exports in the next 20 years. I do not understand how it is that a party that claims to represent regional Australia can come in here and argue for a do nothing policy on an issue that is going to have such an impact on the livelihoods and communities that they purport to represent.

The fact is that climate change is real and that we have an opportunity as a nation to contribute to confronting it. We have never said this scheme will fix everything. We know climate change is a global problem, but this plan enables Australia to be part of a global solution. It is about doing our fair share, because we can never get what we need—which is global action on climate change—if we simply sit back. It is just a sense of logic. If everybody in this world sits on their hands and says, ‘I will wait until the next bloke or woman acts,’ are we going to act? Is that the Australian way? As a nation we have always been prepared to do our fair share, and what we are putting forward is a plan that will enable Australia to do our fair share on an issue that we have such self-interest in.

I remind the senator again that of 8.8 million Australian households we will provide assistance through this scheme to 8.1 million—that is 90 per cent of Australian households. And yes, we are making polluters pay, and that is an economic change. That is a cost that is not there now, but why do we have to do that? Because we will not change, and we will not reduce what we are putting into the atmosphere unless we start to put a limit and a price on it. We know that if we continue business as usual we are making an active decision to make things worse for ourselves, our children and grandchildren. We are making an active decision to ensure climate change worsens. How is that responsible?

This generation has lost the opportunity to stop any climate change. We have lost it. We needed to act earlier than we have done. We have a small opportunity as a generation of political leaders to reduce the risk and it is a very small opportunity, because if we do not act within the next few years as a globe we will not be able to hold temperature rise to close to two degrees, and we know what the scientists tell us will happen if that occurs. How is it possible that we should simply turn our backs on that responsibility? That is what Senator Joyce is advocating, and he is advocating it not on the basis of sound science and sensible policy discussion but on the basis of that rant—that scaremongering and fearmongering campaign. It is always easier in politics to scare people. It is always easier in politics to run a scare campaign to frighten people. It is much harder to say, ‘No, we want you to do something hard because it is the right thing to do by the nation and for the country’s future.’

But that is where this government stands. We are focused on doing the right thing by this nation and the right thing for the future. Those over there are the extremists who brought us Work Choices and who do not believe that climate change is real. They have demonstrated by their actions in these last days that they will do and say anything, including tearing their own party apart, rather than act on climate change. That will be forever to their shame.

10:33 am

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

Let us just deal with the minister’s misrepresentations on behalf of her party. They talk about a 90 per cent reduction in irrigated agriculture. Is the Labor Party’s massive new tax going to fix that? No, it is not. They talk about a 63 per cent fall in agricultural exports—because they just say it. Is the Labor Party’s massive new tax going to fix that? No, it will not. They talk about extended droughts. Will the Labor Party’s massive new tax for pensioners, farmers and working families fix that? No, it will not. They always ignore the science that Australia cannot do anything by itself, and every time they get themselves into a corner they come up with the calamitous statement and the extrapolation to try and justify what is only a massive new tax on Australians.

This is what will be fleshed out. We will ask the questions and it will go on and on and on. Every time you say a calamitous statement, Minister, we will say, ‘Are you going to fix it?’ Because they are not; they are just going to collect the tax. Let us look at it: they are talking about a five per cent reduction, in a nation that only produces 1.4 per cent of emissions, on anthropogenic carbon emissions which are only three per cent—the other 97 per cent coming from natural sources—from carbon dioxide, which itself is only 380 parts per million. So they are going to change the air you breathe by this factor: 0.0000000978 of one per cent. That is why you are going to get this massive new tax that will make your families poorer.

It is interesting to note that throughout the minister’s speech the rest of the chamber was quiet, because we have dignity and we will conduct this debate in such a way—

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

With dignity? You’ve got to be kidding.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

as to clearly explore the facts. And once more Senator Cameron launches in. The Labor Party talk about unilateral action.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

So much dignity! You’re carving each other up!

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

That is Senator Cameron, for all of you out there listening. He interrupts all the time. They talk about unilateral action as if Australia has to do something by itself. Is the Labor Party now saying that they are going to take unilateral action against the atrocities in Zimbabwe? Is Australia going to conduct unilateral action against the Janjaweed in the Sudan? Is Australia going to conduct unilateral action against the junta in Burma? Is Australia going to conduct unilateral action in removing nuclear weapons from North Korea? What other sorts of mad unilateral action is the Labor Party implying we need to take? The fact is that these actions have ramifications. It has huge ramifications for our nation when you are so conceited and so self-indulgent that you would go down a path without taking the globe with you. That is what the Labor Party is doing, and every time they get into a corner the minister pipes up with some calamitous statement to try, with guile and cunning, to take the Australian people away from the scientific facts that I have just given you—that we cannot change anything by ourselves. We have to be part of a global solution, if a global solution is what you want.

The minister talks about the scare campaign on this side of the chamber. Who has been the grand architect of scare campaigns, of fear mongering? It has been the Labor Party. Who has been telling you the stories about Greenland thawing and then trying to imply that Australia’s new tax is going to fix it? The Labor Party. Who has talked to you about extended droughts and then implied that its tax would fix it? The Labor Party. Who has talked about bushfires and then implied it has some connection to Labor’s massive new tax? The Labor Party and Minister Wong. Who has talked about icecaps melting and then tried to imply to the Australian people that its massive new tax will have any hope—whether it is correct or not correct—of ever changing it? The Australian Labor Party.

It is the Australian Labor Party who have been the grand architects of a fear campaign, and they are doing it to try, with guile and cunning, to get the Australian working family to accept this massive new tax in their lives in perpetuity—because that is one thing that will not change. This tax will be there forever. It will become a property right and you will not be able to compensate those who have purchased the property right. So the tax is there forever. The climate will go along on the same trajectory regardless of this infliction of self-indulgent, unilateral action by the Labor Party, brought on board by the left wing of the Labor Party—because we know that within the Labor Party itself there are many in the right wing who just do not believe in this.

It is not a case of believing or not believing in climate change. That is another debate entirely. It is a debate for the scientists. This is a debate on economics and this is a debate on reality. It is a debate on the economics of whether the nation can afford this. Are we prepared to put these people out of work? Are we prepared to put these costs on pensioners? I note with interest the Labor Party’s modelling. But we have been pulling holes in that already. The Labor Party’s modelling is hopeless. Their modelling as it stands, as espoused by Frontier Economics, is $2½ billion wrong right now. With the amendments it is $3.7 billion wrong. The Labor Party modelling has holes all through it, and these holes will become more present. You would have noted through this debate with the Labor Party that when they cannot answer a question the minister just sits down. She does not bother getting up to answer it; she just sits in her seat and lets it go through to the keeper. She does not believe that the Australian people deserve the respect of an answer. So when the questions are too tough she just ducks for cover.

Let us ask the minister some very simple questions. Minister, what amount in parts per million will the Australian scheme reduce carbon dioxide in the atmosphere by? I will ask again: what amount in parts per million, Minister Wong, will the Australian scheme reduce carbon dioxide in the atmosphere by? Now, you watch while the minister does not answer this question. She cannot. She is the one who says that the mantra of her debate is one of science. Surely we would expect the minister to be able to answer a simple question like that. She will be able to tell you how much the tax is going to be. She will be able to tell you how much the permits are going to be. She will be able to tell you how much money she is going to rip out of your pocket. But she cannot tell you how many parts per million this scheme will reduce carbon dioxide in the atmosphere by.

Let us ask the minister: how much will the Australian scheme cool the temperature of the globe by? There are many things I could say about the minister. I respect her as a person. I think she is a decent person. But her premise is that this is an argument about global warming. We would all agree on that. Therefore, I ask the minister this: how much will the Australian scheme reduce the temperature of the globe by? Surely we should be able to answer that. But you wait and you listen very closely to her answer. She will not answer that question. It will become yet another answer like this: ‘I’ll give you the answer. It all depends. The fact of the matter is that there are other nations that are part of the scheme. If A becomes B and B becomes a carrot and we all go home on Friday afternoon and go to the beach on the weekend, things may be different, but that depends.’ That will be the answer. But there will not be the decisive answers that these questions require.

They lack the decisiveness to give answers. That is the Labor Party’s problem. They are very good at the guile and cunning, the art of the serpent, to try and inflict you with a sense of moral outrage, to inflict you with a sense of turpitude and to inflict you with a sense of impending cataclysmic disaster—which somehow the Australian people are solely responsible for, and therefore, we must solely be afflicted with this tax that the Labor Party will place on us to fix it. But, as I said before, the gig is up. The Australian people have woken up and said: ‘Minister, you cannot answer the decisive questions and Kevin Rudd cannot answer the decisive questions. You can give us speeches of soaring rhetoric about the inflictions of climate change and you can roll out the reports of all the calamitous things that are about to happen, but you cannot answer the decisive questions, the core questions.’ How many parts per million will the Australian scheme reduce carbon dioxide in the globe by? No, they will not answer that. How much will this reduce the temperature of the globe by? They will not answer that. Surely the Australian people would have to think that is the crucial question that must be answered to give validity to the Australian Labor Party’s massive new tax. But these things do not happen.

They go back to the issue of our policy at the election. Might I remind the Australian people and the Australian Labor Party that we lost the election. Therefore, if the premise of the election was our ETS, it was not accepted by the Australian people. I might say that it did not do much good, because we lost the treasury bench. When you lose an election, surprisingly enough, you change your policies. That is not unusual for a party that loses an election. But I concur with you. If you believe that the premise of our election was an ETS and that was a vote by the Australian people then it would follow that the Australian people have voted against the ETS. It would stand to all reason.

The Liberal Party and the National Party have changed our positions. We recognise the mistakes that we have made. We made a big mistake. We recognised that. We have changed. We recognised the great mistake of the self-indulgent policy of inflicting a massive new tax on Australian working families, on pensioners, on people who are struggling and on business and putting Australia at a disadvantage. That is what an ETS unilaterally imposed on Australia would create. So we reacted and changed.

The minister talks about the modelling. Do you know that we have not had one day on modelling? There is an $8.5 billion increase in costs and a $5.5 billion increase in savings in these amendments—and those savings came off households; they came off working families. That is where the $5.5 billion came from: the money that they were going to give in compensation to pensioners. That is where it is coming from. But we have not had one day of an economic inquiry into this—not one; not one hour. With $8.5 billion worth of extra costs and $5.5 billion worth of savings—a quantum of $14 billion that we should investigate—we have not spent one hour in an economics committee to look at it. Acting like that is a profligate waste of the money of Australian taxpayers. You cannot do that.

Why do we have to pass this now? We are merely days away from Copenhagen. We have the capacity to have an inquiry. But they do not want an inquiry. Do you know why they do not want an inquiry? So they can stand behind and say that the figures are right. But we have never gotten the chance to check the figures, because they will not allow us to check the figures. They vote against the inquiries; they vote against getting truth, honesty and transparency into this debate. But in approximately 2½ minutes, you are going to hear another rendition of statements on galactic calamity. They are going to come. At the back of them will be the idea that the Labor Party must inflict on you all this massive new tax. We need to keep the Labor Party honest and drill down to one thing: will their tax change the temperature of the globe and, if so, by how much? If they cannot answer that question then they are not being honest with you. That is the position.

That is why the National Party from the word go has been so vigilant in trying to protect the Australian people from this. That is why our Liberal Party colleagues have been coming on board with us. That is why we will have absolute unity here on the coalition side of politics as we hold the Labor Party to account and deal with this issue. We are quite happy with whatever dice you decide to roll. If you go to the Australian people in an election, we will use Paul Keating against you. We will say, ‘If you don’t understand the tax, don’t vote for it.’ The Labor Party cannot tell you exactly how this tax is going to do anything to the temperature of the globe by itself. They aspire to grab America and China. There is a very good argument for us to do this if America and China bring in something—not a statement or targets but a legislative outcome. You have to remember that, of all the people who signed up to Kyoto, hardly any of them abided by it. It is all very well to make soaring rhetorical statements; it is something completely different to abide by it. What happens if they do not is that we will go way out on a limb where the people who will be afflicted will be Australian working families, Australian farmers, Australian pensioners and Australian small businesspeople. We cannot do that to them.

In closing, I ask the minister two very simple and decisive questions: what amount in parts per million will the Australian scheme reduce carbon dioxide by and how much will the temperature change as a result of the Australian Labor Party’s emission trading scheme?

10:48 am

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

This scheme is about Australia doing its share to tackle climate change. The senator may laugh and roll his eyes, but this is about us doing our part. We will not tackle climate change without a global agreement but we will not get a global agreement if Australia is not prepared to stump up. The reality is that what the senator is actually arguing for is Australia not doing our part. The reason that he is doing that is that he does not think that action on climate change is important.

I can tell you what we know absolutely for sure, Senator—apart from the fact that you will vote against this legislation no matter what. We know that without action by Australia and by everybody else, we face the risk of temperature rises in excess of six degrees this century. Professor Garnaut’s no mitigation scenario—that is, no action; the ‘do nothing’ scenario—had the globe in excess of 1,500 parts per million in this century. So in excess of 1,500 parts per million in this century and in excess of a six degree temperature rise. In the face of that, you say, ‘Do nothing.’

The senator also suggested—again inaccurately—that the government has not been willing to have inquiries. Since our election, there have been some 13 inquiries by the parliament either into the CPRS or into related climate change matters—some 13 in two years on one topic, climate change. We put a paper out in June or July 2008, the green paper, proposing what the government was going to do. We consulted widely. We put out a white paper, which is a policy position, in December 2008. We put out draft legislation in March that went to a Senate committee. In May, in the budget session, we brought the legislation that is now before the chamber into the parliament. There have been many inquiries and there has been a lot of talking. One thing that everyone knows for sure is that no amount of talking, no number of facts and no amount of discussion or argument will change Senator Joyce’s mind. He simply does not want to take action.

We have never pretended that we can wave a magic wand to fix climate change. He knows that. This is hard work. This plan is about Australia doing its part. And, yes, we absolutely need a global agreement. But he also knows that other countries are acting. He does not like to remember that. He has tried to dismiss the targets announced by the President of the United States by saying that it was only a press release. This is a statement from the President of the United States. He knows that Europe has committed to targets. He knows that Japan has committed to targets. He knows that New Zealand has a scheme in place. He knows that other countries are acting. But that is not a fact that he wants to cloud his diatribes.

The reality is that this generation has to decide whether it is simply going to handball the problem down the track. We do not believe that that is the responsible thing to do. I notice Senator Joyce scribbling over there. I am going to keep my remarks short in an attempt to allow Senator Milne, who has an amendment before the chair, to speak to her amendment, given that he and I have had a fair go at this. After some 25½ hours in the committee stage of the debate, I respectfully suggest we could move to discussion on the amendment.

10:53 am

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

Give me two minutes and then, to assist Senator Milne—

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

I rise on a point of order. Mr Chair, with respect, I do not think this has been handled in a very fair way. It is now 55 minutes into my amendment. I was very brief in moving my amendment—five minutes at most—and there has been a filibuster on both sides, with one responding to the other. Either we have a filibuster, and I get my 20 minutes to filibuster, or we move this amendment and debate the science, where we might have a more lengthy discussion. I do not think it is fair to just keep going backwards and forwards between the coalition and the government.

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

There is no point of order, Senator Milne; you know that.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

With respect, I will be very brief. I just want to get a few things clearly on the record. There you have it: we asked two simple questions about how much, in parts per million, the Australian scheme will reduce carbon dioxide in the atmosphere by. And you saw it: the minister did not answer the question. She did not answer it. I told you that she would then go on to make calamitous statements. And what did she do? Precisely that: she went on through a whole diatribe of calamitous statements.

We asked another simple question on behalf of the Australian people: how much will this reduce the temperature of the globe by? I told you that she would not answer the question. I put the question forward and you all heard it. Of course, she did not answer the question. Ladies and gentlemen, members and senators and whoever is listening out there, that is the course of this debate. Now you are starting to understand how we see it. Now you are starting to understand how the Labor Party just do not answer the questions. All they give you are emotive statements to try, by guile and cunning, to get this massive new tax in place.

The minister then went on to the statements about Garnaut and the proposition of temperatures increasing by six degrees. I am not a scientist. I am not here to discuss that. I listen to scientists. I listen to the balance of opinion. But now we have also seen, from the East Anglia Research Unit—where we have Professor Trembath, Phil Jones and people who are at the very top, who are the grand architects of the papers that determined the IPCC’s approach—their absolute misleading of people. And when John L Daly died in Launceston in 2004 Professor Phil Jones said that he cheered. He cheered that a sceptic had died.

So this is the other side of the debate that I am happy for the scientists to have. But we have put the questions to the minister and the Australian people now have it on the record. Nothing needs to be said except that the minister will not answer the questions.

The Temporary Chairman:

We are dealing with Australian Green amendment (12) on sheet 5786.

Question negatived.

10:56 am

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

by leave—I now move Australian Greens amendments (13) to (16) on sheet 5786:

(13)  Clause 14, page 35 (after line 8), after paragraph (5)(a), insert:

           (aa)    must have regard to the principle that reducing the atmospheric concentration of greenhouse gases to 350 parts per million of carbon dioxide equivalence as quickly as possible is in Australia’s national interest;

(14)  Clause 14, page 35 (lines 14 to 17), omit subparagraph (5)(c)(i).

(15)  Clause 15, page 37 (after line 8), after paragraph (4)(a), insert:

           (aa)    must have regard to the principle that reducing the atmospheric concentration of greenhouse gases to 350 parts per million of carbon dioxide equivalence as quickly as possible is in Australia’s national interest;

(16)  Clause 15, page 37 (lines 14 to 17), omit subparagraph (4)(c)(i).

I did not call a division in that last vote but I note that it was only the Australian Greens supporting that amendment.

This is an absolutely critical amendment and it goes to the heart of the discussion that Minister Wong and the Leader of the Nationals in the Senate, Senator Joyce, were having a moment ago. It relates to the science, because this amendment inserts into the legislation a mandatory requirement to take into account optimal atmospheric concentrations of greenhouse gases. The actual amendment inserts that the minister ‘must have regard to the principle that reducing the atmospheric concentration of greenhouse gases to 350 parts per million of carbon dioxide equivalence as quickly as possible is in Australia’s national interest’. So the minister must have regard to that principle that 350 parts per million CO2e is in Australia’s interests.

This is absolutely critical because, tragically, what we have in this debate in Australia are the climate sceptics who deny the climate science. They are deniers, actually, not sceptics, because sceptics ask the questions to test the substance of the argument and then, if they are persuaded, they change their minds; if not, they have a sceptical position. Deniers are people who cannot challenge the science but just deny its reality. Tragically, the media has confused the notional view of scepticism with climate change denial. What we have here is climate change denial, because if you really believed in climate change then you would know that we are in a global climate emergency and we have to take emergency action.

Equally problematic—in fact, more insidious, I think—are the people who know the science and who do not have the courage to do what the science demands. That is the position of the government. And it is not just the Australian government; it is the government of the United States and most governments in the developed world. They use the rhetoric of the climate crisis and they use it very well. The minister is quite right to say in the chamber this morning that there is a small window of opportunity to reduce the risk of catastrophic climate change. Absolutely right—there is a small window of opportunity to reduce that risk. But symbolic action out of step with the scientific projections of looming climate tipping points does not cut the mustard. None of the targets are anywhere near the minimum effort required to reduce increasing emissions and deforestation globally.

The government should have the honesty to say to the Australian people that the science demands that we reduce greenhouse gas emissions in the atmosphere to 350 parts per million CO2e to reduce the risk of going beyond two degrees above pre-industrial levels to less than 50 per cent. That is not a matter of opinion; that is what the science says. It is what Graeme Pearman and James Hansen say. Scientists throughout the world are now saying that 350 parts per million is what we should be aiming for, and our policies should reflect that.

We have national leaders standing up and saying: ‘We have a climate crisis. The Great Barrier Reef is at threat; the Murray-Darling Basin is at threat.’ That is all absolutely true, but the action they are proposing will not do what it takes to prevent a climate catastrophe. That is the issue. Would you get on a plane if there was a more than 50 per cent chance of it crashing? Of course you would not, yet the government is asking us to believe that locking in targets out to 2020 which deliver us a greater than 50 per cent chance of going beyond two degrees, driving us into the high-risk scenario of going over the tipping points, is an acceptable response to climate change.

I do not know whether it is more dangerous to have climate deniers or to have people who say climate change is real and try to pretend that the action that they are proposing is anywhere near what is required to address the problem. You might say: ‘Well, at least they acknowledge it is real. That is a start. And they are doing something.’ But what they are doing is locking in failure to reduce emissions by the level that is required to avoid the tipping points. That is not just my view; it is the view of Sir David King, adviser to the British government; Sir Nicholas Stern, who brought out that incredible report on the economics of climate change; and Kofi Annan. All of those people are now saying that it is better to give ourselves a chance of getting a realistic target than to lock in a weak target and guarantee we go over the tipping points.

Let me go through the tipping points. The first tipping point that people think we are very near, if we have not already passed it, is in relation to the Arctic summer ice. We are going to lose the Arctic summer ice sometime between 2015 and 2025 if things continue as they are. That means we will have increased warming of the oceans through thermal expansion, and we do not know what it will do to the great ocean conveyer, the thermohaline conveyer. We cannot know that. If you lock in weak targets and massive compensation to the coal-fired power stations such that there is not the transformation to 2020, you are locking in failure. You are locking in going beyond those tipping points, and we cannot take that risk.

I want the minister to acknowledge to the Senate and to the Australian people that her target of a five to 25 per cent reduction on 2000 levels, which is actually a four per cent reduction, gives us more than a 50 per cent risk of going beyond the tipping points, pushing us over into catastrophic climate change. That honesty is required here. The hypocrisy of the government position was highlighted by the Prime Minister at the Pacific Islands Forum. The Pacific Island countries wanted to put in the communique a 40 to 45 per cent reduction in developed country emissions by 2020, and the Australian Prime Minister blocked it, as did his New Zealand counterpart. They did not want the Pacific Islands to put that in, and the Pacific Island countries have adopted a 350 parts per million CO2 target.

Also, we have just had CHOGM. At the CHOGM meeting there was a communique again. What happened there was a rerun of the Pacific Islands Forum. I read from an open letter from 26 environmental groups, and I agree with their position:

The most recent credible assessments of climate change impacts make it clear that reaching climate temperature goals by 2050 is decades too late …

They are arguing for the 350 parts per million. The communique that came out from the Commonwealth Heads of Government Meeting said:

We stress our common conviction that urgent and substantial action to reduce global emissions is needed and have a range of views as to whether average global temperature increase should be constrained to below 1.5 degrees or to no more than two degrees Celsius above pre-industrial levels.

That difference of views reflects the difference between the developing countries in the Commonwealth and the developed countries in the Commonwealth, in particular Australia and New Zealand. I do not know what Prime Minister Rudd’s contribution was, but I can tell you now: he would have been blocking the 1.5 degrees being the consensus position out of that communique, and would have been arguing for no more than two degrees, because that is the position that he has taken here with his legislation.

I really want to stress here that what we are looking at is a question of risk. It is not about making the perfect the enemy of the good; it is about making the necessary the enemy of the convenient or the politically expedient. That is the point here. We have political expedience rather than science. And I think it is time we heard the government actually acknowledge that. Instead of standing up and saying, ‘Your party has a view; the government has a different view,’ why don’t we just have a straight exchange on what the scientists say? Let us have an acknowledgement from the government that to aim for 350 parts per million reduces the risk of exceeding two degrees to less than 50 per cent; that the government’s commitment of a minimum five to 25 increases the risk of going beyond two degrees—in fact, I would argue, it drives it over two degrees and drives us towards the tipping points.

The second tipping point that I am going to mention, after the arctic ice, is ocean acidification. That is the next one that the scientists are worried about. They argue that 450 parts per million is the tipping point for acidification. That is what the government thinks is a safe level, but it is a tipping point where you have the oceans turning acid to a point. Microscopic creatures that have shells lose their calcium carbonate shells and cannot form new shells at atmospheric concentrations of 450 parts per million or greater. There is scientific proof that is occurring. If you cross that tipping point, you lose the ocean food chain, you lose biodiversity and millions of people around the world—billions, in fact—who rely on the oceans as their source of protein will suffer as a result of that shift.

This is a critical tipping point. We cannot take these risks of exceeding what the scientists tell us gives us a chance—not a guarantee, a chance. Three hundred and fifty parts per million CO2e gives us a greater than 50 per cent chance of avoiding catastrophic climate change. I for one would not get on an aeroplane with a 50 per cent or greater chance of it crashing. And I am not prepared to get onto a piece of legislation that gives us a 50 per cent or greater chance of going to catastrophic climate change and locking that in, when we know what we have to do and we know we can do it.

James Hansen, a very well known scientist in America—he was the one who really blew the whistle on the fact that 550 parts per million was completely useless, that 450 increases the risk way too much and that we should be going to 350—has just put out an opinion piece, which is basically talking to the future. In that piece he quotes his five-year-old grandchild, who says: ‘I don’t quit, because I have never-give-up fighting spirit.’ The Greens have that never-give-up fighting spirit, and we will not run up the white flag, as the government is doing in the Copenhagen negotiations, as President Obama is doing. They have run up the white flag of political expediency. They know what the science is. They know what they need to do to address the science. But they do not have the political courage to actually tell people the truth about the fact that we are in an emergency, that we need emergency action and that what they are proposing locks in fossil fuel power till 2020. In the Australian context it locks in coal fired power and billions to the polluters to keep them there, and it takes us beyond the tipping points. (Time expired)

11:12 am

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

The Senator urges me not to try and do what I usually do in terms of courtesy—acknowledging we have a different point of view—and just wants me to debate the issue. I will do that. She says this is about locking in failure. I say to the Greens party: locking in failure is voting with the extremist right, the extreme climate change deniers in the coalition and in Senator Fielding, against action on climate change. Senator Milne says she would not get on a plane with a 50 per cent chance of crashing. You do not even want to start, Senator. You know that, without this legislation, Australia’s emissions will continue to rise.

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

Madam Temporary Chairman, I rise on a point of order. The minister has misrepresented the Greens by saying that we do not wish to make a start. I would like her to withdraw that, because she has opposed every effort to get strong targets.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

That is not a point of order, Senator Milne.

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

I will not withdraw that, Senator, because you sat on the side of the chamber with Senator Fielding and Senator Joyce against action on climate change. You can talk all you like about all the bad things about the Labor Party and the government, but that fact is a fact of history—and you will do it again, no matter what we do in relation to this bill. You are so focused on not giving money to the electricity sector, and you brush aside the issue of energy security. You are so focused on trying to differentiate yourself from the government that you refuse to vote for action on climate change. We can debate about this endlessly, if you wish. We do have a view as a government. As a government we acknowledge the science, which is why we are acting. We also believe we have to put forward targets that are ambitious, credible and achievable.

I will remind you what we are debating just so that people are clear on it. The government’s legislation—and we are talking about a parts-per-million clause in the objects clause, and as people will know that is an indication of how much carbon is in the atmosphere—talks about an objective of 450 parts per million of carbon dioxide equivalent or lower. Senator Milne says that if we do not put in the word ‘350’ she will vote against the bill. Just to be clear what we are talking about: we are saying 450 ppm or lower; Senator Milne and the Greens want 350 ppm, which is in fact, and regrettably, an atmospheric concentration the world has already passed.

In terms of the advice to me, or the position of the government, I will just make a couple of points. The only factor to which the minister must have regard under the current legislation is to the international obligations that the nation has agreed to through the United Nations Framework Convention on Climate Change and the Kyoto protocol. It is the government’s view that it would be problematic to place a legal duty on the minister to have regard to other matters on a mandatory basis, such as the stabilisation of atmospheric concentrations of greenhouse gases. This may suggest that these other matters are equally significant to, or can be balanced against or limit the implementation of the international agreements. It is also the government’s view that this would weaken constitutional support for the bill.

The proposed amendment may also create a precedent to have other factors mandatorily taken into account when setting the scheme cap, which could also weaken constitutional support for the bill. Further, amendments that oblige the minister to have regard to other factors will increase the risk of judicial review. This would be undesirable given the importance of certainty in relation to scheme caps.

That is the view of the government. We will not be supporting this amendment. We have already clearly stated as a government that stabilisation at 450 parts per million or lower would be in Australia’s national interest. That obviously can only be achieved through ambitious global action. We again say that what is critical in terms of the legislation before the chamber is that Australia starts to reduce emissions. Every year of delay makes more ambitious targets more difficult. Every year of delay makes the economic change that we have to engage in more expensive. Every year of delay means that we are less likely to reduce our contribution to climate change.

11:17 am

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Can I indicate that I will support this amendment. I understand the minister’s arguments, but I think that from a risk management point of view we ought to do everything possible to reduce emissions. I note that there is a growing body of scientific evidence that says that you need to go below 450 parts per million. I note what the minister has said in terms of every year of delay making the task more difficult. I think that is pretty axiomatic—it is quite clear. The fact is—and this is not a criticism of the minister or the government—the government made a policy decision earlier this year to delay the implementation of the scheme until 1 July 2011. I think we do still have a window in terms of the policy framework. The minister knows and will hopefully discuss this later today in terms of the best model to achieve those reductions. But I think that if the scientists are saying 450 parts per million will not reduce the risk anywhere near enough then we ought to aim for a more ambitious target. If the wording was ‘may have regard to the principle’, so that it is a guiding principle and not a mandatory one, I wonder whether that would in any way change the government’s view in respect of that. If it were ‘may’ rather than ‘must’ it would at least be something that is considered in a policy framework. I ask whether that would make any difference to the government’s position in relation to that.

11:19 am

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

That has never been put to me, Senator—

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

I do not think that is the Greens amendment. But I make the point that the position is already 450 parts per million or lower. I again ask this: given what has to occur for us to reduce our emissions, it requires action. Writing numbers down on a piece of paper without a scheme being in place has no effect on the climate.

11:20 am

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

I remind the minister that she said ‘I will be sitting on the same side with Senator Fielding and Senator Joyce.’ That is quite right. It is the same as the fact that she will be sitting on the same side with Senator Fielding and Senator Joyce in rejecting the words ‘must consider a 350 parts per million target’. She did sit there in rejecting the 25 to 40 per cent range that the Bali roadmap suggested. She also sat with them in rejecting the Greens gross national feed-in tariff for renewable electricity. She has sat with them on every single action the Greens have taken in terms of stopping the logging of the greatest carbon stores in the Southern Hemisphere. The Greens have been moving time and time again by way of amendment, by way of private member’s bills and by way of every which way to get action on climate change.

This exposes the problem here for the government. They say that action on climate change equals the Carbon Pollution Reduction Scheme, and that is what is completely and utterly wrong. Action on climate change is a whole-of-government approach and it does not exist in the Rudd government. You have Minister Ferguson out there wanting to liquefy coal as a transport fuel. How outrageous is that in a greenhouse world? You have him giving extra exploration permits to the company that is responsible for the largest oil leak off the Australian coastline in Western Australia. You have no mandatory vehicle fuel-efficiency targets, which the Greens argued for until we were blue in the face. That has been rejected by the government, by Senator Fielding, by Senator Joyce and by the entire coalition.

The Greens have argued for a massive investment in public transport. In the stimulus package the Greens got $40 million for cycleways around Australia and an undertaking from the Treasurer that we will get more money for cycleways, because they are essential. It is the Greens that moved for the retrofitting of all Australia’s homes with full insulation, double glazing and solar hot water. It is the Greens bill on energy efficiency for commercial building that has been picked up by the Rand Corporation in the US and identified as the best legislation in Europe and Australia in terms of responding to energy efficiency. So do not let us have a complete and utter nonsense statement that action on climate change is represented by the Carbon Pollution Reduction Scheme and therefore the Greens are opposed to action on climate change.

The Greens want appropriate action on climate change. Let me put it to you this way, Madam Temporary Chair: if you have a cancer patient in front of you and you say, ‘I’m going to give you an aspirin and you take that for six months and you’re not to take any other treatment—that will do the trick’, that person will probably get themselves into a position where their disease is so advanced there is nothing you can do about it and you realise it is beyond repair. That is the point for the planet—what the government is doing is proposing an aspirin when we have an emergency that requires emergency action. If you say, ‘You may only take this aspirin, we do not intend doing anything else and you cannot do anything else till 2020’, then you are guaranteeing failure.

That is the point here—the minister is ruling out protecting Australia’s forests, dead flat; gone are all of the opportunities for carbon stores. She has voted against a gross national feed-in tariff that would bring on geothermal, solar thermal and wave power; that would see renewable energy come into its own. She has refused to fix up the renewable energy target. When I moved to bring it back here it was rejected by the government—sitting with, I might add, Senator Fielding and Senator Joyce. Apparently that is untenable, but she sat with them in relation to the renewable energy target and now we have a scenario where half of that target will be met by solar hot water, heat pumps and the multiplier on photovoltaics, and you will not have the expansion in renewable energy that everybody thought you would have—and, what is more, we will lose jobs.

The Greens again pointed out the problems with the Green Loans Program. We have a government that is not prepared to act on transport. What have they done in this scheme? They have put transport in and then taken it out again; put it in and then neutralised the price signal. That is not action on climate change. Let me look at coal-fired power. They have given the industry $7.3 billion on a five per cent reduction below 2000 levels and refused to tell this parliament how much more they will get if we go to a 15 per cent reduction or even to a 25 per cent reduction. If you extrapolate the figures you are talking mega-dollars. As many of the analysts have said, this provides Australian coal-fired power with a surety out to 2020. Why does that matter? It matters because 50 per cent of emissions in Australia come from the electricity sector and we are talking about coal-fired power. On the very same day that the Carbon Pollution Reduction Scheme was introduced into the House of Representatives, was the Prime Minister there talking about the climate emergency? No, he was not. He was in the Hunter Valley turning the first sod on the coal railway and new port so that we can expand coal exports by three times.

So, Minister, before you come in here and try to suggest that your scheme represents action on climate change, explain why you are supporting a trebling of coal exports; explain why you went and did a deal with the coalition that guarantees coal compensation when there is not one skerrick of economic argument to support it—not one. Not one economist would put their name to a document in any shape or form that argues it was a reasonable thing to give those free permits to the coal-fired power stations. Minister, I heard you ask earlier, in response to Senator Joyce, what is wrong with polluters paying for their pollution; why should they pollute for free? Well, absolutely, and so why are we giving free permits to coal-fired generators when there is not one skerrick of argument for it? We are giving them $7.3 billion and that is taking money out of household compensation that has been adjusted downwards to completely compensate for the increase. As I said, this is for only a five per cent reduction, which is the only thing the government realistically has on the table. The minister’s legislation says the minister may take into account 450 parts per million. I say the minister must take into account a trajectory of 350 parts per million.

This again comes back to the Copenhagen talks. People say Australia must have this legislation before Copenhagen. As Sir Nicholas Stern, Kofi Annan, David King and the Greens say—all of us on the record as supporters of action on climate change—it is better not to lock in something bad; it is better to give ourselves time to agree on something good. Copenhagen needs to agree to ambitious targets, and those targets have to represent the science and be real. That is why developed countries need to have 40 per cent emission reductions by 2020 below 1990 levels on the table in Copenhagen to give enough headroom for the developing countries to expand. The minister acknowledges the principle that developing countries need the headroom to expand. Yes they do, and in order for that to happen we have to take the deeper cuts—we in the developed countries who are historically responsible for the emissions, who have the capacity to take the cuts and in whose interests it is to take them as well, not just in a climate sense but also in an economic sense. It will drive the new manufacturing, the new jobs. By locking in the old economy there is a huge opportunity cost to Australia that rips out the potential for manufacturing in the whole of the new green jobs economy that we were all so excited about developing but which will not develop, will not occur, under the minister’s legislation.

On the issue of the science, again I put to the minister: will she concede that scientists—including James Hansen and Graham Pearman—are all now saying that 350 parts per million is what we should be aiming for to reduce the risk of going beyond two degrees and therefore catastrophic climate change? If so, isn’t it true that she has taken a politically expedient position—not a courageous position and not a position on the action that is required—that will undermine an agreement in Copenhagen? Why will it undermine it? It is exactly because of what I said on the Commonwealth communique of the weekend. If you have the developing countries saying, ‘We want 1.5 degrees and 350 parts per million,’ and the developed countries saying, ‘We are not going to do that because we are not prepared to commit to those cuts,’ you are very unlikely to get a global treaty. Secondly, if you do not have specific amounts of money on the table for the developing countries for mitigation and adaptation, you are also undermining Copenhagen.

Australia has taken both of those positions. We have not set what money we are going to put on the table for the developing countries. Minister Wong sat with Senator Fielding and Senator Joyce in voting down part of the object clause that said we had an obligation to pay money to those developing countries. We did not put a figure on the table. President Sarkozy and Gordon Brown have put money on the table. Prime Minister Rudd is happy to say, ‘Yes, there should be a fast start-up fund,’ but will not say what Australia is putting on the table with regard to its fair share, will not say how we are going to fund our fair share of a fast start-up or long-term financing and will not say whether that is in addition to our overseas aid and Millennium Development Goals money. We have to say, and put it on the table right now, that it is additional to that.

This is the pointy end of the business now. Copenhagen will not get a treaty unless the developed countries get real about the level of emissions cuts and about the money on the table. If we lock in this scheme before Copenhagen, Australia will undermine the capacity to get a global treaty with targets that give us a chance of reducing our risk to below 50 per cent of going beyond the two degrees. That is the reality of this. You cannot dodge the science. As I said before, I am not sure which is worse: people who deny climate change or people who use the crisis rhetoric of climate change but refuse to take the crisis action that will deliver the outcomes.

11:32 am

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

I am going to follow up on what Senator Milne has so cogently put. Because we have had a change in the coalition leadership today, which is extremely important not just to this clause but to the whole bill that we are dealing with, the question I would also like the minister at this juncture to answer is: now that the opposition no longer agrees to the deal made with the government last week, is the government reverting to its original legislation or is it going to continue pursuing the huge windfall for the polluters that is involved in the coalition-amended legislation that we now have before us?

I would expect that later today we are going to get motions from the coalition, which has largely been missing from the chamber today, to try to move towards what Mr Abbott says is his course of action, which is, firstly, to move for a delay of these proceedings for a Senate committee to look at this legislation over summer. That means that the coalition party room, which spent eight hours coming to this deal with the government to give the polluters the windfall, including $6 billion transferred out of households across to the big polluters, is going to say: ‘Yes, we made that decision. Every one of us took part in the decision, including Senator Joyce of the National Party, but having made that decision we are now going to have a committee look at it to give us time to try to reassess where we go from here.’ This is the new leader of the coalition, who is reported to have said that ‘climate change is crap’, if you will excuse me, Temporary Chair.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

I think that is unparliamentary, Senator Brown. I would ask you to withdraw that.

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

It is a quote that the Leader of the Opposition is said to have made and in which he said he was using hyperbole.

The Temporary Chairman:

Quoting something still does not make it parliamentary.

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

Then I withdraw. If the first reference to an asseveration of the new Leader of the Opposition is unparliamentary then I will pursue that no further and I withdraw the alleged reference from Tony Abbott.

But you can see where we are going here. The fact is that we are now debating a circumstance which arose with a different set of leaders. We are in the quite farcical situation where the new leader, Mr Abbott—who is a climate change sceptic now dressed up as a person who wants to act on climate change but does not want this legislation and does not know what he does want—will move for this whole proceeding to go across to a Senate committee so that we start again. We have such a disorganised opposition that the only thing we do know is that we are simply paddling time in here. I do want to seriously ask the minister: under these circumstances, is the government going to pursue the windfall arrangement, where polluters get billions, made with the then Turnbull coalition now that we have an Abbott coalition that no longer supports that deal? The new leader, Tony Abbott, has said that if the opposition do not get a delay mechanism in place through a reference to a Senate hearing—and a delay is all it would be; it would not really be looking for information, because he has made it clear he opposes this course of action from the government—then they will vote against it. The presumption must be made that the coalition which was voting for this yesterday will vote against it today.

We have seen this huge swing in the camp of science scepticism by a client coalition which is now, in truth, owned by the first four letters of that word—the ‘coal-ition’. It is going to be out banging the drum, as we have heard from the Leader of the Nationals here this morning, about a carbon tax effectively being applied. As Senator Milne was making so cogently clear, the National Party, which is now an almost wholly owned subsidiary of the coalmining industry, wants to keep featherbedding this fossil fuel consumption and export industry. If you add the exports to Australia’s own consumption of fossil fuels, you would double or triple the per capita amount of coal being burned and greenhouse gases going into the atmosphere from Australia.

There is a central question to the validity of this debate that we are now in. It is reasonable for me to ask the minister if the arrangements she and Prime Minister Rudd made with Mr Turnbull last week to transfer billions of dollars from the Australian public across to the big polluters still stand, or is she reneging on that, now that the coalition is reneging on it, and going back to where the original legislation was? If that is the case, what is the point of proceeding with this debate? It is a complete mess, just as the coalition is a complete mess.

Senator Milne referred to Dr James Hansen. Dr Hansen is a physicist by training. He directs the NASA Goddard Institute for Space Studies, a laboratory of the Goddard Space Flight Centre at the Earth Institute at Columbia University. He gave a speech at the National Press Club and at a briefing to the House Select Committee for Energy Independence and Global Warming in the United States last year, 20 years after he first told congress about the need for urgent action on climate change in 1988. As we know, governments in his country have been as remiss as governments in this country in failing to take the appropriate action that is required.

This particular amendment is to alter the terms of reference of this legislation to 350 parts per million—because that is what is safe—rather than 450 parts per million, which the minister herself said is a 50 per cent gamble with the security of this nation and the future of the planet. Dr Hansen said:

The disturbing conclusion, documented in a paper I have written with several of the world’s leading climate experts, is that the safe level of atmospheric carbon dioxide is no more than 350 ppm (parts per million) and it may be less. Carbon dioxide amount is already 385 ppm and rising about 2 ppm per year. Stunning corollary: the oft-stated goal to keep global warming less than two degrees Celsius (3.6 degrees Fahrenheit) is a recipe for global disaster, not salvation.

These conclusions are based on paleoclimate data showing how the Earth responded to past levels of greenhouse gases and on observations showing how the world is responding to today’s carbon dioxide amount. The consequences of continued increase of greenhouse gases extend far beyond extermination of species and future sea level rise.

Arid subtropical climate zones are expanding poleward. Already an average expansion of about 250 miles has occurred, affecting the southern United States, the Mediterranean region, Australia and southern Africa. Forest fires and drying-up of lakes will increase further unless carbon dioxide growth is halted and reversed.

Mountain glaciers are the source of fresh water for hundreds of millions of people. These glaciers are receding world-wide, in the Himalayas, Andes and Rocky Mountains. They will disappear …

I interpolate here that in Sydney yesterday His Holiness the Dalai Lama poignantly made a plea to the world to act on climate change because of the disaster unfolding in Tibet where the glaciers are melting. As Senator Milne has said a number of times in this debate, the great rivers of Asia which go to more than a billion people are simply not going to have that glacier melt in coming dry seasons. It is going to have an enormous impact on people’s livelihood and their ability to get water, let alone their ability to grow food.

The glaciers are receding. This is not a future forecast. This is what is happening under current levels of carbon dioxide in the atmosphere, which are well short of the 450 parts per million target the government has written into this legislation. We are at 386 or so parts per million. This is happening now and the government says, ‘Oh, it’s okay to go to 450 parts per million.’ Dr Hansen says the glaciers ‘will disappear, leaving their rivers as trickles in late summer and fall, unless the growth of carbon dioxide is reversed.’ That is, unless they are reversed from the current levels of 386 parts per million. Minister Wong says, ‘Well, we can go to 450 parts per million and there is a chance that it will be all okay.’ That is not the case. Here we have an Abbott opposition now that thinks that this is not happening; it is okay to keep going business as usual and we must not take action on this. Dr Hansen, who has been looking at this for decades now and warning the US congress, has a much more sober take on it. He says:

Coral reefs, the rainforest of the ocean, are home for one-third of the species in the sea. Coral reefs are under stress for several reasons, including warming of the ocean, but especially because of ocean acidification, a direct effect of added carbon dioxide. That is, greenhouse gas ... Ocean life dependent on carbonate shells and skeletons is threatened by dissolution as the ocean becomes more acid.

I remind you, Chair, that these are the CEOs due to receive billions of dollars from the Australian people under this formulation from Minister Wong and Prime Minister Rudd, worked out with the coalition, including the coal oriented National Party. Dr Hansen continues:

CEOs of fossil energy companies know what they are doing and are aware of long-term consequences of continued business as usual. In my opinion, these CEOs should be tried for high crimes against humanity and nature.

       …         …         …

Conviction of ExxonMobil and Peabody Coal CEOs will be no consolation, if we pass on a runaway climate to our children. Humanity would be impoverished by ravages of continually shifting shorelines and intensification of regional climate extremes. Loss of countless species would leave a more desolate planet.

If politicians remain at loggerheads, citizens must lead. We must demand a moratorium on new coal-fired power plants. We must block fossil fuel interests who aim to squeeze every last drop of oil from public lands, off-shore, and wilderness areas. Those last drops are no solution. They provide continued exorbitant profits for a short-sighted self-serving industry, but no alleviation of our addiction or long-term energy solution.

He goes on to say a lot more in this address to the US National Press Club and the House select committee.

This is the reality of the situation we face, yet we have government legislation here which is going to pour an estimated $60 billion over coming years into the pockets of those very CEOs and those very corporations. I ask you: can this nation afford this prescription for fostering the very people we need to tackle and for draining those funds from the very enterprises—renewable energy, energy efficiency; this is common sense—to which we should be giving that largesse that government has. It is a Faustian bargain that the government has got here and the minister should be supporting these amendments from the Greens.

11:47 am

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party) Share this | | Hansard source

I know I have not taken part in the debate up until now, but in terms of the process, I want to have something on record. Certainly the issue of targets has been one that has concerned all of us in this chamber absolutely over a long period of time. There has been a range of opinion. I have been talking with so many people in my electorate and also through the deluge of emails that have been coming through, from people within my own state and elsewhere. The issue of targets comes up consistently, along with the debate about the issue of jobs.

I have listened to Senator Brown and other speakers from the Greens and I know that in many parts of the electorate there are concerns about the targets. I think that is something that we and the government have listened to, and we are very much needing to talk to those within our electorates and also to other people about getting an effective balance. I know those terms are used so often in this debate and others—trying to come up with a balance which will engage the community, engage business and engage people, who all have their role to play. A lot of work still needs to be done in talking with people about what they see as being their own individual as well as crucial targets.

I note the comments made by Senator Brown and Senator Milne about how we can move forward in this process, but the government’s position, after going out and speaking with people, has consistently been about having a range. That range is dependent on what happens across our community, particularly across our business community, as people make efforts to take on their role in what is going to happen and to look at the way the system is going to work in the future so that they understand exactly where each business and each community play a part. The National Party has been ramping home the issues about coal areas, and I know that a range of areas in my state have been part of this in terms of where they fit. There is a concern about jobs. This affects not just new workers but people who have been working in the coal industry for generations. Throughout this whole process the government has been very keen to ensure that we come up with an agreement that has an acknowledgement that there will be changes that have to be made—absolutely—and that acknowledgement is the information that the National Party have been putting out about where business, and particularly industry, will have to make changes as they put in place their process.

Looking at the specific issue of targets, we are looking at how we can get something that will work within our community and that we can take to the international community and say that Australia is taking some part. We do not claim that we will be able to do it by ourselves but we say that we will be able to take some part in the process and move it forward. Whilst I have listened very closely to the arguments about why we do not jump in immediately with a higher targeted level, the government’s position is that that is not what we are prepared to take up at this moment. What we have and what we thought we had was discussion and agreement across all parts of this debate at the Senate level. After months of discussion, months of taking note, months of interaction and several Senate community hearings, we nonetheless had a process that we thought we would be able to take forward sometime before the Copenhagen process so that the other nations, both developed and developing, would all see that there is a commitment at least to take some action. In terms of where we move forward I think that is an important thing to at least have on the record and that we at least have some process whereby we can agree. Each of us has to make some degree of compromise in the way we move forward.

The target argument will certainly continue to be had. What we put on the table now with the first round is exactly that, and senators from the Greens, the Nationals, the Liberal Party and the Independents know that just signing up to the deal that is before the chamber now is not the end. It cannot be the end. It is part of an ongoing process. We have to have some acknowledgement that these debates have been had and some acknowledgement that across communities people will have differing degrees of commitment, even differing degrees of pain, but we have to have some intent that the understanding that is there is something that people can understand how they fit in with.

People will not stop their own aspirations because, once again, when you have an agreement such as the one we have on the table at the moment, it does not mean that that is going to be the end result and there will be no further negotiation and no form of development. In fact, one of the things that is most clear in the deal that the government has put forward is that there will be extraordinary efforts made in areas of research, in my state in particular, where I know that there are a number of key research areas dedicated to moving forward.

But there are things that we can do better in all areas of industry, in all areas of community activity, even down to the household level, rather than being caught up in the outrageous scare campaigns that have been put forward in some elements of the media—coincidentally, particularly leading up to this week of debate in this place, where we have seen allegations about what the individual costs of the proposal before this parliament are going to be. Nonetheless, we should not be drawn into that debate, getting touched by the scare campaigns that are so clearly being put out there.

I think the thing that scares me most is that we are once again pressing the fear button and getting caught between this debate about doing better—having greater targets, putting a greater position forward—as opposed to what this will cost. Then we see the media attacks that have been so targeted. They are quite clearly targeted at causing fear and causing distress in the people who do have goodwill, as I think we have seen over many years of discussion about what we can do for a better environment process in this country. There are a large range of people in our community, mostly led by young people, who have a real sense of goodwill about what they want to happen. But people are trying to turn that around with the fear, anger and bitterness so that it is seen as a one-size-fits-all scheme, and that has never been the intent. So I want to say that we deeply acknowledge the moves that have been put on the table. I think what we need to do is acknowledge that we have a responsibility here and that we will meet that responsibility together.

11:54 am

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

In relation to these amendments, let’s note what Professor Will Steffen, the Executive Director of the Climate Change Institute at the ANU, said:

If you keep concentrations of carbon dioxide down to 350, then you’ve got a higher probability of avoiding some of the major risks of climate change, such as losing big polar ice sheets or putting stress on coral reefs.

I think that any approach to policy ought to be evidence based. There are leading scientists saying that 350 parts per million is the gold standard that we need to go for.

I have to take issue with what Senator Moore said, though I have great regard for her. She said that we can go further on this down the track. My concern is this: if you lock in this particular scheme and if this bill receives royal assent, you will have hedging contracts signed between generators and retailers worth hundreds of millions of dollars. They will be locked in, so if we do have an alternative approach—for instance, for deeper cuts—there will be claims for compensation or, alternatively, significant commercial losses and commercial risk. We will have the worst of both worlds. So my concern is that we need to get this right. Let us at least aim for a higher target. I note what the minister said, that it is a question of numbers in terms of what we are aiming for, but I would have thought that if we were at least aiming for 350 parts per million that would drive the policy framework to be more ambitious in what we do and how we do it in achieving deeper cuts.

11:56 am

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

I just want to indicate to the Senate that the coalition will be voting against the Greens amendments. I also want to note that after days of berating us for delaying the debate, I see the Labor Party has now brought on the cheer squad. It is quite clear to me that we are now going to have more filibustering from the Labor Party. Labor Party senators have obviously had no interest whatsoever in this debate in the last four or five days, as many of my colleagues have been seriously debating and looking into this bill, exposing its flaws and constructively trying to find out why it is so absolutely essential that this parliament remain here after time to rush through this bill, just several days before the Copenhagen climate change conference will convene to indicate to the world what the world is doing. I think, and many, many Australians think, that it is essential for Australia to know what the rest of the world is doing before Australia commits itself to a course of action which may well be irreversible.

As I have said many a time, of course the climate is changing, but we still have Labor Party senators pointing the finger and saying that, because you vote against Mr Rudd’s legislation, you are a climate change denier, suggesting that to be a sceptic on anything is suddenly a criminal offence. Good heavens! We live in Australia, which encourages expressions of different views and different opinions, and yet people from the Prime Minister to the minister and down to backbenchers, if we do not happen to agree with them, are accusing us of being deniers. I for one do not deny that the climate is changing—I was going to say I remember, but I do not remember; I was not around—but there was a time when Australia was covered in ice. There was another time when the centre of Australia was a lush, tropical jungle, and there was a time when dinosaurs roamed around Australia because of the climate of the time. But things have changed. Whether man was around when the earth was covered in ice, I do not know. I certainly was not here then!

So the climate has clearly changed. Is it man’s problem? Has man contributed to it? Everyone on the other side, from their very scientific background, has the view that it is man. Good luck to them. I did not realise so many of them had such scientific knowledge. I am one of those who clearly confess that I do not have the scientific knowledge. So I, as we always do in this business, look around. We take advice, and we go to lectures and forums. We talk to people, we meet in groups, and we welcome people into our offices to give us their opinion. We ask scientists—who should know what they are on about. But, regrettably, the scientists that have come through my door are sort of evenly divided.

Government Senators:

Government senators interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

And they are not nut cases, as is alleged over the other side. These are respected scientists, some of them coming from James Cook University, where I come from, up Townsville way. The fact is that they have a scientific view that is different to the scientific view of other scientists—and it makes one wonder when you consider the recent revelations in email traffic about the thoughts of some of the scientists who are leading the charge for anthropogenic greenhouse emissions as a scientific fact. I have spoken to many scientists that I respect who assure me that the problem is made worse by man’s actions. But, equally, I have spoken to many scientists that I respect who tell me quite differently. So, quite frankly, I do not know.

I have, however, always had the view that if the world is going to do something then, sure, Australia should be part of it. But why would Australia lock in a position three or four days before world leaders get together to tell us what their countries have legislated to do? I heard the argument from Senator Wong the other day that we know what the Americans are going to do because we saw a press release from President Obama, and that we know what the Japanese are going to do because we saw a press release from their Prime Minister. Kevin Rudd has issued a press release saying what he is going to do, so if it is good enough for the Americans, the Chinese and the Japanese, why is it not good enough for Australia? Why do we have to legislate ourselves into a position where, if the rest of the world decides in a few days time to do absolutely nothing, we are locked in, Australian jobs are put at risk and we become uncompetitive in some of the big industries that keep an income earner in our working families?

I cannot for the life of me believe that the so-called workers’ party, made up in this chamber of people who have made their living out of the workers by being paid union organisers for those workers—

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

Senator Cameron interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

That is what they are here for. How can they ignore the interests of those working families by voting three days before we know what the rest of the world is going to do for a scheme which, if nobody else does it, may well cost the jobs of the people that those union organisers were supposed to be looking after?

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

Senator Sterle interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

I can tell by the way that those former union organisers are trying to prevent me from having my say that what I am saying is a bit close to the mark. I am sorry if I have upset you, colleagues on the other side, so close to Christmas, but the point I am trying to make—and I am appealing to you all—is: why can we not wait? Why don’t we wait a few days until we see what the rest of the world is going to do? Why don’t we have a look at what comes out of Copenhagen? Maybe we will learn something. Maybe we will come out of Copenhagen agreeing with the Greens that we should increase our targets very substantially.

Quite frankly, if all those at Copenhagen with whom we compete—for example, China, Russia, the United States, India, Japan, Indonesia, South Africa and Columbia—came out and said, ‘Yes, we are going to do it and we can guarantee that our legislatures will endorse this,’ then I would be the first one on the side of the argument that said: ‘Yes, Australia, let’s do it. Let’s do the same. Let us give our agricultural industries the same concessions as everybody else is getting. Let us penalise or favour our coal industries exactly the same as everybody else is doing.’ I would say the same about those industries that are very important in my state of Queensland: our aluminium refineries, zinc refineries, copper refineries, cement industries and all of our manufacturing industries. If our competitors are doing this, let us do it. But why are we putting those jobs at risk in order to have this decided in the next couple of days before world leaders meet to determine the world’s approach to this?

We should be part of the world approach but having a position before the rest of the world is, in my view, just untenable. You have only to look at Australia’s contribution to greenhouse gas emissions. Australia emits less than 1.4 per cent of global emissions. Under Mr Rudd’s scheme, even if it were adopted in its entirety in the way it was originally put up, we would be reducing our emissions by 0.2 per cent of total global emissions. Even those who say it is a man-made problem would, I think, acknowledge that the man-made part of emissions is only a very small part of the total carbon emissions in the world. Things like natural calamities, bushfires and volcanoes exude the most carbon. There is nothing we in this chamber can do to stop volcanoes or to stop fires. I am sorry about that. Some on the other side think that we can stop the world, but most of the carbon emissions are certainly naturally occurring.

Accepting for a moment—and I do not necessarily, as I explained before, particularly have the scientific knowledge to make that conclusion—that man is the cause of some of the emissions of greenhouse gas, and looking at the facts that Australia’s total greenhouse emissions are less than 1.4 per cent of global outcome and this legislation will reduce that by 0.2 per cent, it just seems crazy for us to move before the rest of the world.

I do not want to dob people in—no names, no pack drill—but I happen to know two or three Labor senators who agree with me entirely. But are they allowed to cross the floor and have their view? They know what happened to former senator Shayne Murphy when he had a different view. He was expelled the next day. That is the Labor Party. You agree with what Mr Rudd says or you are expelled. In the Liberal Party I am delighted that sometimes it makes us look a little bit messy but we are people with strong views and a passion for what we believe is right for Australia, and we have the inalienable right to cross the floor—something you in the Labor Party will never, ever understand. We are individuals. We believe that we are put here by our constituents to follow their wishes and not just the wishes of one man who many suspect is embarking upon this as part of his push to become Secretary-General of the United Nations.

I have gone on a little longer than I expected, because we want to get these things to a vote. But, as I mentioned before, it seems the Labor Party are bringing in the cheer squad. As I have highlighted that, I see some of the cheer squad have left, so perhaps they did not like the exposition of the fact that they were going to start talking just for the sake of talking. I know I speak for all on this side when I say that we would like to have a vote on this particular motion before the chamber at the present time. We do not agree with it but we think that the Senate should vote on the Greens amendments so that we can get on to the next amendment. It is a very important one which, I am delighted to say, we have always championed, dealing with agriculture. Congratulations to Minister Wong. She has agreed that we should be treating our agriculture in the way other nations are treating theirs. Let us get on to that debate. Let us have that debate and hopefully get that amendment passed as soon as possible. But I would urge senators at this stage to deal with these amendments. I think we have had a lot of discussion on them and it would be useful to have the vote at this time and move on to the next amendment.

12:10 pm

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

I will be brief. First, in relation to the assertion on the other side of the chamber that they want to progress this matter, I do not think anybody listening or observing this debate over the last number of days would be under any illusions that the coalition—particularly the extremists in the coalition, the people who brought us Work Choices and who want no action on climate change—have not been delaying this vote until they deposed a leader. I do not think anybody would be under any illusion about what happened. So the senator’s comments about wanting to progress this legislation simply are at odds with and fly in the face of the actions of him and his colleagues. It has not been the moderates in the Liberal Party who have been in the chamber. It has been the extremists, by and large—people who have views on climate change which are out of step with the consensus science, which are out of step with where Australians want us to go. That is, they want action.

Senator Back, you look at me like that. You are entitled to your view. I accept that and I respect that. But it is not a view with which this government agrees and it is not a view with which many of your colleagues agree. I will agree with Senator Macdonald on one thing. He said that the Liberal Party can look a bit messy sometimes. I think that is probably a bit of understatement this week. I did have a feeling in this debate of the dual reality that we seem to have in the chamber. When the Greens are on their feet they say that somehow this scheme is so incredibly brown, it is dreadful, it is not going to deliver action on climate change, it is so bad it needs to be voted against. Then we hear the coalition, who say this scheme is so radical and so dreadful because it is going to do too much to change our economy. As always in this debate, those two propositions cannot simultaneously be true.

We have traversed this, and I think in my first response to Senator Milne I have really dealt with, insofar as I think it is necessary, the issues before the chamber. The government believes if you set a target you have to be able to meet it. The government believes that you do not tackle climate change by talking about it. We also believe that you do not tackle climate change by voting against the first scheme, the first plan, to reduce Australia’s emissions that the national parliament has debated.

The reality is that what we see at the moment is the coalition in a complete mess. I was asked by Senator Brown to comment on what my response was to their latest press conference. I would say this: we are the government. We have a policy that has been worked through our party, through our caucus room, with community, with stakeholders—both industry and environment—and then negotiated with the opposition in good faith. We do not change position simply because there is yet another rumour about what the latest position of the coalition is. We will press forward with this package. We will press forward for action on climate change. We know, because the Greens have made it clear, that they will vote against this bill. We know that the National Party will vote against this bill. And we know now—we have always known—that there are a number of coalition senators who will vote against this bill. But we will do what is in the national interest and what we told Australians we would do when we went to the last election. So the government does not support the Greens amendment. There has been a lot of debate. If we can bring this amendment to the vote and move on to the next one, that would be appreciated.

12:14 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I have to take issue with what the minister said in reference to me—I will not take issue with her on what she said in reference to others. I have sat for as many hours as possible because I want to avail myself of all information pertaining to this legislation. The minister has acted with great propriety, and it is disappointing that she would decide to make personal attacks on the motivation of somebody who has sat here wanting to understand it. The Liberal Party is not a rabble. The Liberal Party is indicating what its responsibility in this Senate is under the requirements of the founding fathers who wrote the Constitution. Those who wrote the Constitution made it very clear, particularly for those from smaller states, that we would represent the interests of our states—not an electorate and not a political party—and the wider community in this place, particularly on issues that were contentious. There has probably never been another issue more contentious than this one to come before this Senate. It is pleasing that I have two of my Western Australian colleagues opposite me, because they too have that responsibility in terms of representing the state of Western Australia in this particular debate.

Photo of Don FarrellDon Farrell (SA, Australian Labor Party) Share this | | Hansard source

They do it very well.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I certainly hope that they do do it well, Senator Farrell, as I hope that you do. I make this point as a person who has come out of the emergency services industry: the Australian and New Zealand standard on risk management is pertinent to this debate. What is that? It simply looks at the question of what the risk is in this particular issue. The risk is that we make a mistake; that we get it wrong. That is why I have sat here for four days, because I am concerned about the risk of us getting wrong. This is legislation that, if passed, can never be revoked. We cannot get it back. With every other piece of legislation that has come before this parliament, however long it has been debated, it is always possible for a future parliament to reverse it. This one, because it relates to international carbon trading permits, can never be reversed once passed. Remember that: we cannot reverse it.

When we come to look at the issue of risk and risk management, there are two issues that we consider. The first on one axis of a graph is, ‘What is the likelihood of us getting it wrong?’ On the other axis the question is, ‘What will be the impact on our country if we do?’ If the likelihood of us getting this wrong is high, then we must look at it more closely. If the impact of getting it wrong—

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

This is pathetic. You can do better than this.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I shall engage with you later on on a personal basis if you do not understand these two, Senator. The impact on this country of getting it wrong is horrific. Therefore, we must act.

There are another two issues. First of all: do we have time? Is it life threatening? The answer is no. Does the minister want to introduce it on 1 January? The answer is no. Therefore, time is on our side; it is not against us. The second question is: do we have sufficient information to look at all these amendments? We have not had that time. We have the opportunity to get it.

There is information required in two areas. The first is in the science. We could have argued up until some time ago that the science was not decided and that there were as many for as there were against. Only in the last week and a half have we had the acknowledgment of a complete fraud out of the Climate Research Unit at Hadley. I have spoken to the people in regard to this. I understand that the director, Dr Philip Jones, has not refuted that range of emails that have now been circulated round the world and that show clearly that the data that has come out of that institution has been filtered, doctored, changed or poorly reviewed. Why does it matter? Because it is the outcome from Hadley upon which the IPCC has based so much of its science. That is now questionable.

We have some scientists in this particular chamber. There are six of us who have some qualifications in the sciences: Senator Hurley, our President, Senator Siewert, Senator Brown, Senator Eggleston and I—six out of 76 have some scientific tertiary training. Why aren’t all six of us standing up here and saying, ‘If the science is in question then we must do no more until such time as it’s resolved’? We have not even heard that. The science is not resolved. Up until a week and a half ago, there were two groups of credible scientists who were arguing this. If the accusation of Hadley fraud is correct, it now seems as though we have a situation that has to be addressed. The second issue that we need information on apart from the science is the economics, and the economics is not decided.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

You are a conspiracy theorist. It is a fear campaign.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

The economics is not decided. You know that, Senator; I know that. We have the opportunity to get that resolved. Certainly we want to see action on climate change. Anyone who says that we do not is an idiot; a complete idiot. We want to see sustainable environmental development in the future. This is not it.

Let me ask a question about the issue of timing and information. Go back to the horrific and regrettable bushfires in February this year. Why was my colleague so roundly criticised in the royal commission? Was it because of time? No. We all knew that time was not on his side. Was it because there was a fire and there were deaths? No. The reason that he was criticised—

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

I rise on a point of order on relevance. There is an amendment before the chamber about the 350 parts per million carbon dioxide. I also invite the senator, as a matter of courtesy given the length of time that has been spent on this amendment, to finish in time to hold the division, which will be required before that 12.30 break.

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

Thank you, Senator Wong. Senator Back.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

The point that I was making is that the reason the CEO of the Country Fire Authority was so roundly criticised was that there was information available to him which he did not avail himself of. That is the criticism, and that will be the criticism of us in this chamber if we make this decision precipitously. We have the time and if we do not avail ourselves of the information we will quite rightly be criticised by this community. To move before the rest of the world is not the right way to go.

The Temporary Chairman:

We are dealing with Australian Greens amendments (13) to (16) on sheet 5786.

Question put:

That the amendments (Senator Milne’s) be agreed to.

Sitting suspended from 12.30 pm to 1.30 pm

1:30 pm

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

by leave—I move government amendments (6) and (7) on sheet BE242 together:

(6)    Clause 24, page 70 (line 22), before “For the purposes of”, insert “(1)”.

(7)    Clause 24, page 70 (after line 30), at the end of the clause, add:

Exclusion of agricultural emissions

        (2)    For the purposes of this Act, an emission of a greenhouse gas from the operation of a facility does not include any of the following emissions:

             (a)    an emission of methane from the digestive tract of livestock;

             (b)    an emission of:

                   (i)    methane; or

                  (ii)    nitrous oxide;

                      from the decomposition of:

                 (iii)    livestock urine; or

                 (iv)    livestock dung;

             (c)    an emission of methane from:

                   (i)    rice fields; or

                  (ii)    rice plants;

             (d)    an emission of:

                   (i)    methane; or

                  (ii)    nitrous oxide;

                      from the burning of:

                 (iii)    savannas; or

                 (iv)    grasslands;

             (e)    an emission of:

                   (i)    methane; or

                  (ii)    nitrous oxide;

                      from the burning of:

                 (iii)    crop stubble in fields; or

                 (iv)    crop residues in fields; or

                  (v)    sugar cane before harvest;

              (f)    an emission of:

                   (i)    carbon dioxide; or

                  (ii)    methane; or

                 (iii)    nitrous oxide;

                      from soil.

        (3)    Paragraph (2)(f) does not apply to an emission that is attributable to the operation of a landfill facility.

This is consistent with the position that the government has announced. We negotiated an agreement in good faith with the opposition. We remain of the view that action on climate change is a critical and key challenge for the nation’s future. We are extremely disappointed that the opposition appears to have chosen again to delay or oppose action on climate change. I suggest that that is not only contrary to the position they took to the last election; it is contrary to the position former Prime Minister Howard took and to the aspirations and hopes of the many Australians who have continued to press for action on climate change.

The government will continue to stand ready to honour our agreement with the opposition. We will honour it because we believe it is in the national interest for whole-of-economy reforms such as this to be delivered with bipartisan support. We will honour the agreement because it has been supported by a broad range of environment, community and industry groups, including the Business Council, the Australian Industry Group, WWF, the Climate Institute, ACOSS and the Aluminium Council, to name a few. We will honour this deal because we agreed to amendments that had to meet a test of environmental effectiveness, economic credibility and fiscal responsibility. Most of all, we will honour our part of the agreement because it delivers on the government’s commitment to the Australian people, and we call on the opposition to deliver on the commitment they made at the last election. The amendments before the chamber are to exclude agricultural emissions from the scheme and to make clear the position of the government as previously announced.

1:33 pm

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

The Nationals are supportive of the amendments to exclude agricultural emissions. Given our very significant involvement with the farming community, it is obvious we would be doing so. I have had it put to me that excluding agriculture is simply a no-brainer. I do not think anybody would say that agriculture should not be excluded.

It needs to be pointed out, though, that agriculture was never included. We need to be mindful of that fact. From the many appearances of the department before Senate committees, we are very well aware that it is almost impossible to measure emissions from animals. So, while we welcome the exclusion of agricultural emissions, it is very important to place on record that they were never included in the first place, and it is quite likely that the government was never going to include them anyway.

I also take the opportunity to point out that, while agricultural emissions are excluded, there are significant costs embedded within the emissions trading scheme that will still fall right into the laps of farmers, including fuel, transport, electricity, chemicals and fertilisers—and the list goes on and on. As we all know, our farmers are the ones doing it toughest. They are the ones that are out there day after day, working from dawn till dusk, to feed this nation, and now they are faced with an emissions trading scheme that is going to significantly increase their costs. The Nationals, and, I know, my coalition colleagues, feel that our farmers and our agricultural community deserve to be supported. It is also important to recognise that food processing is still in the ETS and all the costs from that sector will still be passed down to farmers.

There has been an indication from the government about the offsets that they indicate will offset a number of those input costs. To date, we have not been able to get any kind of indication from the government—the minister has actually said there has been no modelling—of how much on average a farm would receive to offset the ongoing input costs they are going to have. It is important to keep in mind that some of those offsets do require an audit process and a reporting process, so they will need auditors. The minister has indicated to the chamber that those positions are not in place yet—indeed, they do not know how many there are going to be. We are talking about 137,000 farms across this country that may well want to go down the track of an offset in the future.

I know the minister will stand up and say, ‘But you’re going to oppose this anyway,’ but it is very important to place on record—for people out there listening to and watching the chamber—the impacts this legislation will have on the farming community. Again, the minister will ask why I am bothering to speak when I am going to oppose it, but the Australian people have the right to have their concerns voiced. They are certainly making those concerns apparent—they are coming through loud and clear—to all of us here in this parliament, and they have been doing so for some time now. It has been a grassroots uprising, the like of which I do not think I have ever seen before, of people saying no to this ETS.

This amendment to exclude agricultural emissions is obviously a no-brainer. We would suggest that it was never going to be included in the first place, but the most important thing to place on record at this point in time is those costs that I mentioned that will still fall in the laps of our farmers. While we are agreeing to the amendment, we need to put on record absolutely clearly that the Nationals recognise the very severe impact that the introduction of this ETS is going to have upon our farmers.

1:38 pm

Photo of Julian McGauranJulian McGauran (Victoria, National Party) Share this | | Hansard source

I rise to fully and utterly endorse the comments of my colleague. She has had that position from day one, and I congratulate her for it. I will reinforce the comments that she made, and I reinforce them by saying the rural sector, the farming sector—the farm gate—was never in this scheme to begin with. We do not want the other side to be selling this as a great concession. The truth is, if farmers were ever going to be in, the decision would not have been made for several years and they would not have entered the scheme until 2015. As my colleague said, it really was a no-brainer because it had reached a point where no other country in the world—what we will call the draft scheme in the United States is locked up in the Senate at the moment—included the rural sector. So how could it ever have been that the rural sector, the farm gate, was ever going to come into this scheme when a major competitor such as the United States would have had an incredible competitive advantage over our farm sector and our exports right across the board?

The ability to measure the emissions has become farcical, quite frankly—not just impossible, but farcical. I remember going to a Wimmera field day where the state government’s agriculture department had a display stand which the state government had given research dollars, believing that in the future there would be some way of measuring the main emitter, which is cattle. We all know what that is. They had this farcical box that you strapped on the cow. Even the person at the stand, who was representing the state government and had been part of this research, could not keep a straight face when I spoke to him. And this was at a Wimmera field day!

Photo of Catryna BilykCatryna Bilyk (Tasmania, Australian Labor Party) Share this | | Hansard source

What a font of information you are!

Photo of Julian McGauranJulian McGauran (Victoria, National Party) Share this | | Hansard source

You can’t keep a straight face about it at all! I am not even sure that you have ever been past the metropolitan area. But that is the farcical position it had reached. It was not easy to measure; it never was going to be easy to measure it. If they are going to walk around with a box—

Government Senators:

Government senators interjecting

Photo of Julian McGauranJulian McGauran (Victoria, National Party) Share this | | Hansard source

I am serious! My other rural colleague from Western Australia will endorse how difficult it is to measure a cow’s emissions, but our state government in Victoria was going to make a very valiant attempt, putting valuable research dollars into a box that you strapped on to the cow. That is how farcical it had become. Of course, such is the case.

What the rural sector fears from this government is not so much that it was ever going to be drawn into this scheme as it stands today but that down the track it would be easier just to place a levy or a tax on the rural sector to draw out some contribution from them. I am sure this is still in their minds. While the government may concede this point, what is still in their minds is that they are never going to let the farmers get away with anything. They are always looking for ways to tax, levy and hurt the farm gate income. While they make this concession because they have been mugged by reality, I also believe that down the track they will simply seek, should the bill pass, to place a direct levy or direct tax on the farm gate.

As my colleague rightly said, the rural sector still pays for this in a very big way. Research body after research body, report after report and Senate report after the Senate report has come to the same conclusion about the farm gate: they are going to get all of the knock-on effects from the increasing costs of food processing. The decrease in prices at the farm gate will compensate for the increasing costs of all of the energy that is used in food processing. Think of the abattoirs, Murray Goulburn milk producers and the dairy farmers and the energy they use day in day out. These increases in electricity costs are going to find their way right down to the farm gate. Research shows that for the dairy industry—and my state has the largest dairy industry in the country—costs will go up $10,000 a year permanently. I daresay that would be conservative as the years roll on under this scheme. That is unbearable. It is unsustainable for the dairy farmers that they take on an extra $10,000 a year in energy costs. They burn up energy with their plants, equipment and lighting.

The rural sector, the food processors, the farmers and the farm gate all have a great deal to fear with the structure of this legislation. The farming sector deal with climate change every day. They watch the climate every day. Those opposite have never conceded that. And have they ever factored in the natural change of climate? Has this been in any way factored into this scheme at all? Do they even believe there is natural change of climate, or is it just all man made in their eyes? They would not know; they are all just going along with the flow.

What the rural sector and farmers want to know is this: Australia has 1.4 per cent of world emissions and this scheme is calculated to reduce it by 0.2 per cent, but if there is no international agreement in place when this was to be introduced then what effect would it have on the overall reductions in emissions? Their own cabinet minister Martin Ferguson placed it in perspective when he talked about the fact that every four months from now until 2020 China will build new coal fired power stations, each possessing the same capacity as Australia’s entire coal fired power sector. What he was saying was: whatever reduction comes from this scheme, 0.2 per cent will be made up by China in a matter of months. That is what the rural sector wants to know about, and this is where the revolt started, by the way. Farmers are not idiots. The revolt started in the rural and regional areas which would be deeply affected by this scheme. It certainly got my attention.

If you do some polling in the rural and regional areas exclusively you will find they are against this scheme by the greater majority—whatever poll you want to produce, whatever seat you want to go by, marginal or safe. The rural and regional areas are where the National Party picked this up very early. And so did the Liberal Party rural representatives. Is that not right, Senator Back?

Photo of Julian McGauranJulian McGauran (Victoria, National Party) Share this | | Hansard source

They know where the true revolt began on this issue. It began with farmers asking the simple, direct, down-to-earth question: how is this scheme going to affect me and why are you introducing it now anyway?

1:46 pm

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

I am sure everyone in the chamber is trying to imagine Senator McGauran at the Wimmera Field Day in his RM Williams and his chinos. Did he wear a blue shirt too? Did he swagger and did they believe he was one of them? It is hard to know. But, jokes aside, that was a contribution against Australia acting on climate change. That was a contribution against an emissions trading scheme. This is the question I would pose to the coalition, who say, ‘We do not want an emissions trading scheme.’ We say: ‘That was your election policy. That is what you told the Australian people you would do.’ Prime Minister Howard stood up in front of the nation and said, ‘We will have an emissions trading scheme.’ Your policy said it would be the most comprehensive in the world and it would be no later than 2012. The way they try to deal with it is by saying, ‘Oh, not this scheme.’ Well, what are the changes you would make? You are very quiet over there. If your proposition is that we should not act because Australia’s—

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

I do not know if you were elected at the last election, Senator Nash, but if you were there was a policy there with it marked on the front of it that you were committed to an emissions trading scheme. Was this another non-core promise? Just a fake promise to get you through the election, because the Australian people cared about climate change and were prepared to vote for action on climate change? Is that what it was: a fake policy just to get you through the election?

The proposition that we should not act because we are a small nation in terms of emissions is an argument against any action. That argument would have applied to John Howard’s scheme. The fact is that you have no answer to that, because all of the debate from that side has been a cover for one proposition: those in the coalition who have extreme views, whether it is on Work Choices or on climate change, will not stop until they do all they can to stop action on climate change. That is the only proposition. Maybe Senator Nash is a bit sensitive on this issue, but it is the truth. You went to the Australian people with this policy.

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

I rise on a point of order. I am not the slightest bit sensitive, Minister. But I do think the minister is misrepresenting the previous Prime Minister, Mr Howard. My understanding is that those issues were around a global agreement, and the minister would know that.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

That is a debating point; it is not a point of order.

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

I will take that point of order. So, is the proposition that we do not act until everybody else acts? Let’s have a think about that. If every nation on this plant said, ‘We are not acting until everybody else acts,’ why don’t we just give up now? Why don’t we just say, ‘Let’s consign our children to the sorts of temperature rises that we know are coming if we do not act’? It is an illogical proposition. It is why sensible Liberals have seen the need for action on climate change. It really does show how the map of Australian politics has, in these last days, been redrawn. We now have the Liberal Party putting a position that is browner than former Prime Minister Howard’s. That is what is occurring.

This is an amendment that is part of what we negotiated with the opposition before those in this party with extreme views took over the Liberal Party. It really is quite extraordinary, isn’t it? These people would rather tear apart their own party than take action on climate change. They come in here and they talk about the impact of putting a price on carbon. They do not want polluters to pay. That is their proposition. They want people to be able to pollute as much as they want for as long as they want without any cost. That is the policy proposition. They want to ensure that we maximise the risk for our children and our grandchildren and they dress that up as responsible economic policy. Even John Howard recognised the ridiculousness of that position. The fact is you went to an election with this policy. You have not put forward anything—other than that it was just a convenience—that suggests why you have walked away from that. They will come in again and they will say, ‘No-one else is acting.’

On a number of occasions I have gone through all the action that has been pledged by other nations—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

By media release.

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

This is interesting; I will take that interjection. Senator Macdonald’s proposition is that we should not have regard to what the United States is doing because it was only President Obama who said it. Can someone explain to me how that is a logical position. Are we really saying we will conduct public policy in the Australian parliament on the basis that we do not trust what the President of the United States has committed his nation to? That is extraordinary.

We know that every year of delay increases the price tag for the action we know we have to take. We want this scheme passed because we want to start to send a signal to investors to make the sorts of investments we know are needed to change our economy. That is the only way to tackle climate change, not through smoke and mirrors or tricky little policies. It is hard economic reform: it is about changing the nature of our economy. That might be why we have the Business Council of Australia, the Australian Industry Group and other significant Australian companies saying we should pass this and we should provide certainty. We can no longer delay sending a signal to investors. The passage of this bill is about giving that signal to investors and to business, because we know that all we will do by delaying it is increase the cost.

The policy proposition on the other side of the chamber is this: ‘We’re going to walk away from former Prime Minister Howard’s commitment because we really didn’t want to act all along, or some of us didn’t, and now we have the numbers.’

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

If you sit down we’ll tell you what our policy is.

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

Senator Macdonald says, ‘Sit down and we’ll tell you what our policy is.’ I am sure the Australian people would like to know that, because it has been an interesting proposition to consider over the last few days.

Honourable Senators:

Honourable senators interjecting

The Temporary Chairman:

Order! Interjections across the chamber will cease.

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

That side of the chamber says, ‘We do not want to deliver on Mr Howard’s policy—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

Tell us what you’re saying and we’ll tell you what we’re saying.

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

I can understand your being sensitive about this because, frankly, it is a ridiculous position. Let us traverse through what the Liberal Party are now saying: ‘We went to the last election saying to the Australian people we have learnt our lesson and we think we have to act on climate change.’ John Howard said that. Second, the Liberals said: ‘We will introduce an emissions trading scheme before—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

Before everyone else does.

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

No, what you said was before 2012—

The Temporary Chairman:

Order! Senator Macdonald, you will have your chance to respond if you wish to. The minister is speaking.

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

I will start again.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

Why not filibuster some more?

The Temporary Chairman:

Are you taking a point of order?

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

The minister stopped speaking, so I wanted—

The Temporary Chairman:

No, Senator Macdonald, you know very well the minister sat down while I was speaking to you. The minister has the floor.

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

As I was saying, the Liberal Party are saying to the Australian people: ‘We know we went to the last election under John Howard promising action on climate change. We know we went to the last election promising to introduce an emissions trading scheme, but we didn’t really mean it. And now what we are going to do is run as much of a scare campaign as possible, or a delay campaign or any other form of campaign, to avoid action on climate change even if that requires us to tear apart our own party and change leaders.’ That is clear for everyone in Australia to see. I think the single question that they can never answer is: what is the action on climate change that they would support? There is none. They will play with a whole range of policies that they know will not actually reduce emissions.

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

I take that interjection. The senator says, ‘Solar.’ This government has invested $1.5 billion in the Solar Flagships program, which is more than your government ever did. We have quadrupled the renewable energy target out to 2020—four times more renewable energy in this country than the nation has ever had. Do you know what? Even with those policies Australia’s emissions will continue to rise. They are good and worthy policies, but even with those policies Australia’s contribution to climate change will continue to worsen. There is no easy way to tackle climate change, and the reason you are not up to it is that too many of you do not believe that action on climate change is needed. It would have been better if you had been more honest with the Australian people and fronted up to that.

1:57 pm

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

It is interesting to note that overwhelmingly people are coming to the conclusion that if the rest of the world from this point on—to be very clear—does not take any action then obviously the emissions trading scheme will make no difference to the temperature of the globe. Indeed, the Minister for Climate Change and Water has been asked this question and has not been able to give a satisfactory response to this stage. I want to ask the minister if she could respond to the chamber. I am intrigued with this and I understand that her premise is that Australia has to act first, otherwise the rest of the world will not do it. That seems to be—

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

On a point of order, Madam Temporary Chair. I ask the senator to withdraw that. She knows that is untrue. I have put on the record many times that Australia is not acting first.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

Madam Temporary Chair, on the point of order: that is a debating point similar to when the minister was maligning our position and telling untruths about it, and you quite rightly said, ‘You will have your chance in the debate, Senator Macdonald.’ It is not a point of order, and I suggest that you might want to rule that way.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

The minister has had her chance to put her point, and it is a debating point, so I rule it out of order.

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

I am happy to clarify that I do understand that some countries are currently acting. I was not clear in saying that from this point on for those that are currently not engaged in an ETS.

Government Senators:

Government senators interjecting

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

No, Minister, I clarified that again yesterday, and the Hansard will show that I clarified that again yesterday. I should perhaps be a little more cautious in my choice of words, but the intent was certainly from this point onwards. I am a little intrigued that, from this point onwards, for those that are currently not signed up to a scheme the minister seems to be suggesting that if Australia does not act—that is, pass this legislation through this chamber this week—then other countries will not embark on an emissions trading scheme. I just find that—I am not sure if it is arrogant or—

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party) Share this | | Hansard source

Galling.

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

Yes, galling. I will take that interjection from Senator Barnett. I find it quite extraordinary that Australia has to be the one leading the way for those countries that are yet to do anything about putting in place an emissions trading scheme. I am a little intrigued, colleagues, about how this is actually going to take place. Is the Prime Minister going to pop over to the US with, perhaps, a very good box of cherries from my home town of Young and knock on the door and say: ‘Mr President, I have got everything through the chamber—I have got all the legislation through—so are you right to sign up now? It is all good to go’? Or perhaps, looking from the other perspective, the President might say to his wife: ‘Gosh, I have just seen that that legislation has gone through the Senate in Australia. It’s about time I went down to my little place over here and had a bit of a hurry-up of the legislation.’ It is extraordinary in the extreme to think—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

Arrogant.

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

Thank you. I will take that interjection. It is arrogant in the extreme to think that Australia has to act first of those who have not already committed to a scheme before anybody else will. I just find that absolutely extraordinary.

Perhaps the minister might in a moment enlighten us as to the actual, practical steps that the Prime Minister is going to undertake to convince world leaders, particularly of our major trading partners, to not just commit to but—what was the word?—‘pledge’ action. People out there in our communities are smarter than that, and they want the rest of the world signed up before we do anything. They are not happy with the pledge. They do not want some words on some bit of paper and our government saying: ‘That is fine. They are going to do something.’ They want to see something concrete. They want to see legislation in those other countries before we sign up, because they know the devastating impact it will have on this country if we are doing it alone. So perhaps the minister could advise the chamber on exactly why it is that passing the legislation through the chamber this week will make those other countries, especially our major trading partners, around the world put something through their legislative processes.

2:02 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | | Hansard source

I anxiously await the answer to Senator Nash’s question. But I will give you a tip, Senator Nash: I bet you do not get an answer, because we have been trying to get an answer for a long time. It is a question that cannot be answered. It is all well and good for President Obama to go out and issue a press release and say, ‘This is what America is going to do.’ Sorry, but he has a congress that has to pass his legislation before that is what happens in America. Those who are more expert on American politics than I tell me it will be at least 12 months before the American congress gets around to adopting some form of emissions trading scheme. But this government, this minister and this Prime Minister want us to adopt a legislative position in the next three days before Copenhagen commences. Why wouldn’t you wait until you saw what the rest of the world was doing before you committed Australia to a scheme which could well be irretrievable and which could well destroy the jobs of so many of our fellow Australians?

I am anxious for Senator Nash to get the answer to her question, but I have some questions as well on the amendments before the chair on agriculture. I think they are very important. The minister was giving her view on our policies, quite inappropriately. But our position is that we would like to see this legislation sent to a committee to investigate these very comprehensive amendments—in one of which, I pointed out yesterday, there has been a glaring error in the drawing up of the document. I am sure it was an unintended error, but that is what you find when you start scrutinising these things.

The amendments that the Labor Party have brought forward are good amendments. They are amendments that have come to light because we on this side insisted that this legislation, bad though it was, could be improved with these amendments. Things continue to happen in the political arena, but it is not for me to anticipate what this Senate might do when the vote comes. Whilst we say this is bad and rushed legislation, we are saying that these amendments will substantially improve a bad piece of legislation. They make the existing legislation less bad. That is why, in looking at these agricultural amendments in particular, we decided that, if for some reason the government was going to try and slam through this legislation before Copenhagen in two or three days time when we will know what the rest of the world is doing, we wanted to make sure that the legislation was as ‘least bad’ as possible.

We cannot imagine why anyone would want to commit Australia before all of our major trading partners commit themselves and why you would put Australian industries at a disadvantage against our trading partners by acting and legislating before the rest of the world and the rest of our trading partners do. Our major trading partners, as we all know, are China, India, Japan and the United States. Regrettably, we do not do as much trade with the European Union as we used to. So none of our major trading partners have a legislated scheme. They have aspirational schemes. The presidents, prime ministers and chairmen have all issued press releases saying what they hope to do, the same as Mr Rudd has done. But none of them are insisting that their parliaments sit into Christmas time to pass legislation before Copenhagen. They are all saying, ‘We’ll go to Copenhagen with our view and we’ll see what we can arrange,’ as I understand Mr Rudd is doing. Why do we need it legislated in the next couple of days, rushed through in a way that will give us a conclusion that may well be irretrievable?

I am pleased to say that these amendments do at least start to treat our farmers and our rural families in the same way as other countries. If you had gone ahead with Mr Rudd’s scheme, our farmers would have had a piece of legislation that was bad for them and penalised them, one which no other country was going to have. Any other country that is having an emissions trading scheme had specific provisions for their farmers which allowed them to take advantage of the allowable offsets but did not penalise them directly as this legislation in its original form would have done. In that capacity, our farmers would have been at a severe disadvantage with the European Union, at a severe disadvantage with the United States and at a disadvantage against almost every other nation. The New Zealand position is unique and a little different. But why would you penalise Australia’s farmers in a different way, taking from them advantages that farmers in other countries have got?

With that preamble and an understanding that there are questions from my colleagues that also need answering, I put these questions to the minister as well. Can you tell me how many and which countries currently hold agricultural scope 1 emissions liable under their emissions trading scheme? The looks from the minister’s advisers tell me that they have heard and have understood my question. Also, is the minister aware of any schemes in the world apart from New Zealand that intend to have scope 1 agricultural emissions liable?

2:09 pm

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

On the first question, my recollection is just New Zealand, but only at 2015. I am not sure why the senator regards that as a special case. I think that is at least 50 per cent of their domestic emissions. However, it should be noted that a number of other nations do regulate or apply other policies to reduce emissions from agriculture. I will get some advice about some examples of that.

I make some comments on what was described as the preamble and also Senator Nash’s comments, which I have not had an opportunity to respond to. Senator Nash says, ‘If Australia is going to act first of those that haven’t acted yet, that would be next.’ So Australia will act next—not first, not last but next. There was a lot of talk, as there is in this place from those opposite, about the catastrophe and the disaster that this policy is. They have yet to tell anybody in Australia how it is different to the policy they went to the last election with. I noticed there was an absence of a response on that. They always forget to talk about the effect of climate change on this nation and on the people they represent. We as a government are not doing this because it is easy; we as a government are doing this because it is right. I have said before in this chamber and I will say again: we have a lot to lose from climate change. We have a lot riding on an effective global agreement. It is in our national interests to act because we know what climate change will mean for Australia, one of the hottest and driest nations on earth. We know what that will mean in the next 20 years. It will mean more droughts, more heatwaves, more fires and more extreme weather. That is in our lifetime. Beyond that, it will mean a drop in agricultural production and an over 90 per cent drop this century in the Murray-Darling. How can you look at those facts and not believe we have an imperative to act in the national interest?

What makes this difficult is that we are asking this generation of Australian leaders to do something for those who are younger and for their children. That is a hard thing to do. But what is remarkable is how far the community is ahead of this parliament; how so many people in the community, despite what we are seeing from those opposite, continue to say, ‘We want action on climate change because it is the right thing to do.’

Senator Macdonald asked why we have to pass this legislation now. He accuses us of rushing it through. There is no risk of rushing. There is no risk of rushing in this country, nor with this parliament, on this issue. We have been talking about this for 10 years. In 1999 Prime Minister Howard’s government received its first report on emissions trading. The Task Group on Emissions Trading report was presented to John Howard in 2007 before the election, which led to the then Prime Minister changing his policy position. Both parties went to the election with a policy for a trading scheme. This government went through an extensive consultation process and policy process—a very detailed process because this is a big policy. The draft of this legislation first came before this parliament in March 2009 and it has been before this parliament since the budget week in May 2009. It was debated in this chamber in June where it was the subject of, again, procedural games by those opposite so that they did not have to vote. The opposition voted it down in August and it has been brought back now. It has been through Senate committees. In fact, since this government was elected there have been no less than 13 parliamentary inquiries into either this Carbon Pollution Reduction Scheme Bill 2009 [No. 2] or climate change. So there is no risk of us being accused of rushing.

One of the questions that those opposite never answer when they argue for delay is this: what will change in a couple of months? If the conservative party in this country has got people with such extreme views that they are prepared to tear down a leader and tear apart their own party so as not to act on climate change, why on earth does anyone believe that coming back in February will have anybody changing their mind? It will not.

I am asked why we need to pass this scheme. There is a very simple proposition here. Acting on climate change is in Australia’s national interest. If we know we have to act then all we are doing by delaying is increasing the price tag—that is all we are doing. We are increasing how much it will cost us to make this change. So what the Liberal and National parties are arguing is for us to pay more for a change we have to make. Those of them who are not arguing delay but inaction are actually saying that we in this parliament, all of us, should make an active decision to impose more risk on our children. How can that be responsible?

2:15 pm

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party) Share this | | Hansard source

I wanted to ask a couple of questions about these particular amendments but also to respond to some of the minister’s claims and, I would consider, misrepresentations of the coalition’s position and certainly my position in the Senate chamber. I feel very strongly that rushing ahead with Labor’s ETS, railroading it through the parliament, is the worst option possible for Australia. Let us be frank about it: it is the most significant economic reform of its type in Australia’s history. It is a high-risk and indeed dangerous strategy for us to be going down this track. It makes no sense, especially when Australians do not understand the consequences of it fully and how it will affect them. They have been kept in the dark. Why race ahead and burden Australia’s economy in advance of the Copenhagen conference and in advance of our major trading countries, including the US, Canada, Japan, China and India?

I have said before and I will say it again: the ETS is actually spelt T-A-X. It is a tax on everything that moves—every good and every service. The only question is: how big will it be? We know that Tasmanians will face a 16 per cent increase in their power costs, and the rest of Australia at least 20 per cent. Yesterday, on the front page of the Daily Telegraph, we found that our cousins in New South Wales will be facing a 60 per cent increase, and half of that increase—meaning 30 per cent—will be due to the ETS. That is not according to me or according to any coalition member of parliament but according to the Independent Pricing and Regulatory Tribunal. They have recommended the hefty rise in power bills from next July. That will apparently be released publicly on 15 December. But it has been leaked—it is out there; it is public—and clearly the New South Wales Labor government are very worried that they and their constituents will not be adequately compensated. This has been brought to bear and there are questions that arise. Are they aware of it, have they considered it and what are the consequences as a result of their review of this tribunal report and recommendation? I and all the people of New South Wales would certainly like to know the answers.

Let us make it clear—and I think Senator Back indicated this earlier—that once this bill is passed there is no turning back; it is irreversible. We had a debate a few days ago with regard to compensation, and the minister clearly indicated there was no need to provide compensation if the legislation would have to change. But the minister could not provide any evidence—no legal advice—to be categorical and provide a stamp of guarantee that compensation would not be paid. At the end of the day, if we do not act in parallel, consistent with our major trading partners, additional costs will be imposed on the Australian people, and we are talking about over $100 billion in the lead-up to 2020. That is how sizeable this particular proposal by the government is.

I have said before and I will say it again: I support action on climate change; I support a price on carbon emissions. As a community we should give the earth the benefit of the doubt. But there is no sense in rushing ahead with this legislation in advance of our major trading partners and in advance of the Copenhagen conference. It needs adequate scrutiny in light of this major structural change to our economy, which will be embedded in concrete for decades to come. I think Mr Rudd wants to rush the legislation through, probably—and perhaps for his own ego—so that he can strut on the world stage in Copenhagen. That is the problem.

In terms of full disclosure to the Australian public, the more they learn about it, the more they understand that the ETS is actually spelt T-A-X and the more they worry and get concerned. They are now starting to understand that the billions of dollars that will have to be paid by Australian businesses and the Australian people will not actually start until 1 July 2011. Here we are, 19 months in advance, rushing ahead all because of Mr Rudd’s ego. According to a recent report, the cost to the minerals sector is 23½ thousand jobs by 2020. In Tasmania it is 1,050 jobs by 2020. That is pretty serious. In a state like Tasmania we take that very seriously. So why would we put all of our eggs in Labor’s ETS basket? It makes no sense.

Mr Abbott has made it very clear today that on our side we support strong and effective action on climate change but, in relation to Labor’s ETS, (1) it is flawed and (2) the timing is premature. There is no need to rush. It needs further scrutiny to get it right. We have only got one shot in the locker and we have got to get it right.

Let us make it very clear: the first draft of the government’s bill had no exclusion and exemption for agriculture. We knew very well that the cost to a typical dairy farmer in Tasmania or around the country was about $10,000 extra in power costs per year. We know that, particularly in Tasmania at the moment, the pressure on dairy farmers is very significant. With the price being offered by the manufacturers, it is hard to make ends meet. The fact is that they would have been paying about $10,000 extra under the first draft of the government’s bill, until the coalition came to the party and pressured the government into getting an exemption. We are thankful for that.

I have two questions about agriculture, and they are specifically these. Could the minister please provide greater detail on how the $150 million for the food processing sector will actually operate in practice? I would like the minister to outline and provide a little bit of detail on how that will operate in practice. Secondly, how many meat processing facilities in Australia will be subjected to having to purchase permits from the commencement of the CPRS on 1 July 2011? How many? If we could get some answers to those key questions, that would be appreciated.

2:23 pm

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

In relation to the second question, that will depend on how many of them emit over 25,000 tonnes of carbon equivalent per year.

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party) Share this | | Hansard source

Do you know?

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

I do not have that information. That would be something the companies would be aware of. It may be that some of them have reported under NGERS, the National Greenhouse and Energy Reporting Scheme.

In relation to the food processing sector, $150 million of assistance was established as a result of the negotiations with the opposition. I have tabled the offer document, and the detail of it is on pages 4 and 5. I can read it out or you can get a tabled copy. One hundred copies were also provided to your party room last week to enable you to consider the offer from the government before you endorsed it—before you then walked away from it after your change of leader. I am not sure that there is anything else in that contribution that was asked of me that has not been asked and answered on at least one occasion or many more occasions, so I invite the chamber to consider voting on the amendments.

2:24 pm

Photo of Julian McGauranJulian McGauran (Victoria, National Party) Share this | | Hansard source

I have two questions with regard to the food processing sector. You may well have smiled at my attendance at the Wimmera field day, but I can assure you I have attended the Wimmera field day for some 20 years now, on a very regular basis. I attend all the field days around Victoria. I am very well known, I must say, in those parts of Victoria. I attend the Liberal Party stand and, I venture to say with modesty, I am very popular. It is a very well attended stand. The National Party also have a stand at the Wimmera field days and I pop over to say hello to my colleagues in the National Party stand.

But one thing I notice is that never in all my term has there ever been a Labor Party stand at the Wimmera field days—never. They have never bothered to turn up, not once. They cannot find a country representative anywhere. Why wouldn’t the Labor Party now have a stand at the Wimmera field days, or any of the field days across Victoria? It is obvious why they do not: they do not really have any true rural representatives, and nor do they have any care for the farm gate and the farmers. They never have—not this government, not the previous Labor government and certainly not the one before that, which was the Whitlam government. So I make that point.

My question, Minister, is: are you aware of any other scheme in the world which includes waste water emissions as liable scope 1 emissions for food processors, in particular for meat processors, for which, I am informed, waste water emissions are the greatest emitting element of the sector?

2:26 pm

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

I think it is important to remember that just because another country may not include a facility or a type of emissions within their scheme does not mean they do not achieve emissions reductions in other ways. Europe has a much narrower scheme but requires, via regulation and other policy mechanisms, reductions outside of the scheme. So it is the case, for example, that in Europe agricultural emissions are not included, and I believe waste water emissions are not included. But the policy position within the EU scheme is, I think, that they want a 10 per cent reduction in the non-covered sectors by 2020.

We have taken a policy position, consistent with what we took to the election, that says we believe broader coverage of the scheme is more efficient. It means that a business, rather than simply being regulated, can achieve its reductions in emissions at the lowest cost by working out the best way for that firm to reduce its emissions. So, as I said, in Europe those matters may be out but there is a requirement for a 10 per cent reduction by 2020. I thought it might be useful also, given some of the contributions which are being made by senators, to remind them of what was said on 17 July 2007 by Prime Minister Howard:

I will also be announcing a ‘cap and trade’ emissions trading system that will help Australia substantially lower our domestic greenhouse gas emissions at the lowest cost. Stabilising atmospheric concentrations of greenhouse gases will be difficult, but not impossible.

He then went on to say:

Australia will more than play its part to address climate change, but … in a … balanced way in full knowledge of the economic consequences for our nation.

I remind them of the policy with which they went to the last election—it is baby blue, titled The coalition government: election 2007 policy, with Mr Costello, Mr Howard and Mr Vaile on the front cover. Page 2 reads:

A re-elected Coalition Government will:

               …            …            …

  • establish an emissions trading system …

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

No, let’s read out what your election policy was, with which you were elected, Senator.

Photo of Michaelia CashMichaelia Cash (WA, Liberal Party) Share this | | Hansard source

Details, details!

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

Yes. Details, details—details that you went to the Australian people with. The senator interjects, ‘Details, details!’ That is an interesting way to deal with a political commitment to the Australian people, Senator—‘just mere details’. I am going to just remind those opposite that this was your election policy:

A re-elected Coalition Government will:

               …            …            …

• establish an emissions trading system, the most comprehensive in the world, to enable the market to determine the most efficient means of lowering greenhouse gas emissions;

That is what you went to the election with. You are adopting a position that is more conservative than John Howard’s and you wonder why so many people think that those with extreme views, whether on Work Choices or on climate change, have now got control of the Liberal Party.

Given that we are now closing on 29 or 30 hours of committee debate—

Photo of Annette HurleyAnnette Hurley (SA, Australian Labor Party) Share this | | Hansard source

‘Closing’ is optimistic!

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

Sorry—getting close to. This is, in the context of being accused of rushing it, the second time this has been in the parliament. This is almost more than double what you allowed in debate on Work Choices. I would encourage this chamber to get to the point of voting on this amendment.

Question agreed to.

2:31 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

I move National Party amendment (1) on sheet 6030:

(1)    Clause 24, page 70 (after line 30), at the end of the clause, add:

Exclusion of emissions from non-commercial abatement projects

        (4)    For the purposes of this Act, an emission of a greenhouse gas from the operation of a facility does not include any emissions from a facility operated in connection with a non-commercial pilot project to develop technologies to:

             (a)    remove one or more greenhouse gases from the atmosphere; or

             (b)    reduce emissions of one or more greenhouse gases.

        (5)    The Minister may, by legislative instrument, develop guidelines to assist in the application of subsection (4), including guidelines on the definition of non-commercial pilot project.

I will be brief. I do not intend we should divide on this but that we should gauge the will of the chamber by the voices. This amendment pertains to coal in the Callide Valley. It is a specific amendment. In the Callide Valley in Queensland they have received a grant for $50 million to bring about carbon sequestration of coal. The effect of the ETS on their current arrangement would be a cost, because the cost of their test project would be approximately $8 million. They would obviously say, ‘What is the point of us trying to follow a program of carbon sequestration if the effect of the ETS is to take away from the money that we have been given as a grant?’ So this amendment is to deal with that issue. If it is supported—good; if it is not—well, I will wait on that.

2:32 pm

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

This amendment is not supported by the government. We are concerned that the way it is currently worded could extend beyond the factual circumstances put by the senator. There could be a range of people asserting that they are a non-commercial pilot project and who thereby seek a legislative exemption from the scheme. We do not believe that is the most sensitive or efficient way forward. We have put in place specific grant programs to provide additional assistance to these technologies. That includes the $4.5 billion Clean Energy Initiative, of which just under $2½ billion is for the CCS Flagship Program. In addition, facilities that develop the sorts of technologies which are referenced in this amendment are obviously increasingly advantaged in a world where there is a carbon price. So our policy mechanism is to put in place a carbon price and then to target assistance more effectively. The government does not support this amendment.

Question negatived.

by leave—I move government amendments (8) to (14) on sheet BE 242 together:

(8)    Clause 33, page 82 (lines 12 to 17), omit subclause (2), substitute:

Provisional emissions number

        (2)    For the purposes of this Act, that number is a provisional emissions number of the supplier for the eligible financial year.

Note:   See also section 37A, which deals with the exclusion of exported fuel.

(9)    Clause 33, page 82 (line 21) to page 83 (line 2), omit subclause (4).

(10)  Clause 35, page 85 (lines 14 to 19), omit subclause (2), substitute:

Provisional emissions number

        (2)    For the purposes of this Act, that number is a provisional emissions number of the supplier for the eligible financial year.

Note:   See also section 37A, which deals with the exclusion of exported fuel.

(11)  Clause 35, page 85 (line 23) to page 86 (line 5), omit subclause (4).

(12)  Clause 37, page 87 (lines 18 to 24), omit subclause (2), substitute:

Provisional emissions number

        (2)    For the purposes of this Act, that number is a provisional emissions number of the OTN holder for the eligible financial year in which the re-supply occurs.

Note:   See also section 37A, which deals with the exclusion of exported fuel.

(13)  Clause 37, page 87 (line 28) to page 88 (line 13), omit subclause (4).

(14)  Page 88 (after line 13), after clause 37, insert:

37A  Exclusion of exported eligible upstream fuel

Object

        (1)    The object of this section is to ensure that there is no liability under the carbon pollution reduction scheme for exported eligible upstream fuel.

Reduction of provisional emissions numbers—section 33 or 35

        (2)    If:

             (a)    under section 33 or 35, or both, a person (the supplier) has one or more provisional emissions numbers for an eligible financial year; and

             (b)    the supplier has one or more netted-out numbers for the eligible financial year;

the total of those provisional emissions numbers is to be reduced (but not below zero) by the total of those netted-out numbers.

        (3)    For the purposes of subsection (2), if:

             (a)    during an eligible financial year, the supplier supplied an amount of eligible upstream fuel to another person (the recipient); and

             (b)    as a result of the supply, the supplier has, under section 33 or 35, a provisional emissions number for the eligible financial year; and

             (c)    after the supply, the supplier or recipient exported the fuel; and

             (d)    the fuel has been entered for export (within the meaning of section 113 of the Customs Act 1901); and

             (e)    the supplier has prescribed documentary evidence to show that the fuel was exported; and

              (f)    the potential greenhouse gas emissions embodied in the amount mentioned in paragraph (a) have a carbon dioxide equivalence of a particular number of tonnes;

the number mentioned in paragraph (f) is a netted-out number of the supplier for the eligible financial year.

Reduction of provisional emissions numbers—section 37

        (4)    If:

             (a)    under section 37, a person (the OTN holder) has one or more provisional emissions numbers for an eligible financial year; and

             (b)    the OTN holder has one or more netted-out numbers for the eligible financial year;

the total of those provisional emissions numbers is to be reduced (but not below zero) by the total of those netted-out numbers.

        (5)    For the purposes of subsection (4), if:

             (a)    during an eligible financial year, the OTN holder re-supplied an amount of eligible upstream fuel to another person (the recipient); and

             (b)    as a result of the re-supply, the OTN holder has, under section 37, a provisional emissions number for the eligible financial year; and

             (c)    after the re-supply, the OTN holder or the recipient exported the fuel; and

             (d)    the fuel has been entered for export (within the meaning of section 113 of the Customs Act 1901); and

             (e)    the OTN holder has prescribed documentary evidence to show that the fuel was exported; and

              (f)    the potential greenhouse gas emissions embodied in the amount mentioned in paragraph (a) have a carbon dioxide equivalence of a particular number of tonnes;

the number mentioned in paragraph (f) is a netted-out number of the OTN holder for the eligible financial year.

The amendments are technical amendments. They are to put beyond doubt what the government previously already considered was clear in the bill. They are to put it beyond doubt because it has been raised with us that there is no liability for a person such as a coal exporter for the emissions associated with the combustion of that fuel overseas.

Question agreed to.

2:34 pm

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

I move Greens amendment (24) on sheet 5786:

(24)  Clause 88, page 131 (line 19), omit paragraph (e).

This particular amendment relates particularly to the reforestation aspects of the government’s bill. The Australian Greens have argued that the Carbon Pollution Reduction Scheme should be for fossil fuels and that we should keep all green carbon separate from the scheme. We argue that green carbon should be dealt with by a separate mechanism.

By including reforestation, afforestation and, more generally, the land use offsets, you are creating a carbon credit through the scheme—the reforestation, afforestation and some of these other offsets that were discussed in recent times—whilst not having a current mechanism in place to actually look at water sustainability, food security, biodiversity and resilience in rural communities. The Greens believe it is appropriate for all land use issues to be out of the scheme and that there should be a parallel scheme. We have put that forward in two green carbon bills: our Safe Climate Bill, one which deals with the protection of native forests as carbon stores, and another which sets out the parameters for drawing up legislation to this end. We need to do this because of the distortions that have occurred in picking one set of winners in the landscape and not everything else. In the case of the managed investment schemes—and I am not going to go into this at length because the Senate is familiar with what we have been arguing—you have a situation where you give benefits for forestry that are not there for the rest of the farming community, thereby creating distortions in terms of water and land prices.

It is no surprise that the National Association of Forest Industries is in here pushing to have these credits immediately, whereas what we want to see is appropriate plantings of biodiversity, restoration of existing forestry stands around Australia, ending of native vegetation clearance and a whole range of things. We also would like to see stewardship payments relating to the removal of weeds, the maintenance of biodiversity and improvement in riparian vegetation. We would like to see credits given for feral animal control, credits given for weed control and so on so that you actually set up a stewardship arrangement in rural and regional Australia that maximises the carbon benefits from those things which we can do easily and first, like the protection of native vegetation and forest, and then moves through to a range of other things that you would reward, including soil carbon.

Senator Joyce recently spoke about the work of Dr Christine Jones. I went out to Warren in New South Wales to have a look at a property where she has been working with the landowner. It was quite amazing. You just shove the spade in and have a look and you can see for yourself the huge improvement made by planting native perennial grasses. The landowner said that the enormous benefits from this were in reduced water costs because you have better water retention in your soil; in your perennial grass dying down at the right time in terms of the crop that you are producing; and in being able to reduce inputs in terms of petrochemical fertilisers. All that is an excellent outcome. His margins have improved because of the change in the system that it is operated in. I have said several times in here that Dr Jones was ostracised for a long time. Now, I am glad to say, her work is finally being looked at in a peer-reviewed context. I am really pleased about that, and I am pleased about the role that the Senate Standing Committee on Rural and Regional Affairs and Transport took in actually facilitating that turnaround.

By picking and choosing things which earn credits without looking holistically at the whole landscape we are going to end up with perverse outcomes, no matter what goodwill might come into this, because it is an incredibly complex area. Neither Land and Water Australia nor the Bureau of Rural Sciences nor the Department of Agriculture, Fisheries and Forestry have really sat down and had a look at how you manage this on a landscape scale, how you manage this at a catchment scale and how we make sure that we end up with a sustainable river system and a sustainable food supply. How do we end up with jobs in rural communities by incorporating renewable energy and the like? How do we change our laws in terms of vegetation and management practices? Where do we have to put the R&D in? There is a really big focus here. We need to go on thinking about a mechanism for rural and regional Australia. My preference would have been to set up an income stream from the Carbon Pollution Reduction Scheme, through 100 per cent auctioning of permits. I would have set up an income stream to fund an authority which would oversee the green carbon mechanism. That is basically what we have set out in our proposed legislation.

So I do not think it is appropriate that we simply reward NAFI, and that is what this is about. The plantation forest industry in Australia has had a big win here with the government, and the people who want to protect native forests have got nothing. The largest carbon stores in the country are being logged. You get a credit for replanting, afforesting and reforesting, but you get nothing for protecting a standing native forest. There has to be something entirely wrong by giving the incentives to things that do not store the carbon in the same capacity as standing forests. There has to be something wrong when you prefer plantation forests over biodiversity in the landscape. That is why the Greens take the view that we ought not to be issuing free units, free permits, to reforestation and afforestation projects, as prescribed in the government’s legislation.

This whole area of land use needs an entirely separate mechanism and decent accounting. That is the other problem we have here: the total dishonesty of the accounting. That is why we have been trying to get the maps from the government throughout, and we still have not got them. Under Kyoto accounting, which is separate from this, you can log a carbon-dense native forest and pay no carbon penalty whatsoever. The emissions are not counted under the Kyoto accounting rules. You can transfer the wood that you cut down to a Gunns pulp mill furnace where you can burn it, and you can get credits for that as renewable energy in spite of the fact that at no stage have you had to account for the emissions. This is ridiculous. Emissions are deemed to have been accounted for at the place that the trees were felled and yet they are not, because under the accounting rules you do not have to account for the emissions from logging a carbon-dense native forest providing that that forest is replanted. The assumption is that over time you will end up with carbon neutrality because if you do not change the land use the forest will regrow and over several hundred years you might end up with some equilibrium. But the point at issue is that you never end up with that equilibrium because you have lost a massive amount of carbon from a primary forest, and you are never going to have your forest growing in the ground long enough to take up that amount of carbon.

When I say ‘long enough’, it is in the context of what we have to do to avoid emissions. We have just had the discussion of 350 parts per million, and that whole thing goes to this issue of time. We do not have time to wait for a primary forest to regenerate and, in 200 years or 500 years down the track, have as much of the carbon in it as it has now. That is where we are going horribly wrong with the whole accounting procedures in terms of forestry. The Greens do not support the inclusion of plantations in the CPRS. We want the lot out—not only agriculture out but also those plantations out—and a completely different method for rewarding carbon sequestration in the landscape.

2:44 pm

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

I will not traverse the discussions that we have had in the chamber on these issues over the last few days. Consistent with those, the government will not be supporting this amendment.

2:45 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

Very briefly, although we concur with the remarks on Dr Christine Jones, we do not agree with the extent of this amendment. We believe that there is still a role for carbon credits in the form of plantation.

Question put:

That the amendment (Senator Milne’s) be agreed to.

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

The question now is that part 10 stand as printed.

Question agreed to.

2:53 pm

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

I move Australian Greens amendment (30) on sheet 5786:

(30)  Page 138 (after line 4), after clause 95, insert:

95A  Domestic transfers of Australian emissions units

        (1)    If a person (the first person) is the registered holder of one or more Australian emissions units, the person may, by electronic notice transmitted to the Authority, instruct the Authority to transfer the units from the relevant Registry account kept by the person (the first Registry account) to:

             (a)    a Registry account kept by another person; or

             (b)    another Registry account kept by the first person.

        (2)    An instruction under subsection (1) must set out:

             (a)    the account number of the first Registry account; and

             (b)    the account number of the Registry account mentioned in paragraph (1)(a) or (b); and

             (c)    such other information as is specified in the regulations.

Compliance with instruction

        (3)    If the Authority receives an instruction under subsection (1), the Authority must give effect to the instruction as soon as practicable after receiving it.

        (4)    If the Authority gives effect to an instruction under subsection (1), the Registry must set out a record of the instruction.

        (5)    If the first person is the Commonwealth, the Minister may give an instruction under subsection (1) on behalf of the first person.

95B  Outgoing international transfers of Australian emissions units

        (1)    If            a person (the first person) is the registered holder of one or more Australian emissions units, the person may, by electronic notice transmitted to the Authority, instruct the Authority to transfer the units from the relevant Registry account kept by the person (the first Registry account) to:

             (a)    a foreign account kept by another person; or

             (b)    a foreign account kept by the first person.

        (2)    An instruction under subsection (1) must set out:

             (a)    the account number of the first Registry account; and

             (b)    such other information as is specified in the regulations.

Compliance with instruction

        (3)    If the Authority receives an instruction under subsection (1), the Authority must give effect to the instruction as soon as practicable after receiving it.

        (4)    If the Authority gives effect to an instruction under subsection (1), the Registry must set out a record of the instruction.

        (5)    If the first person is the Commonwealth, the Minister may give an instruction under subsection (1) on behalf of the first person.

In moving the Australian Greens Amendment (30) on sheet 5786 regarding the insertion of some clauses for the international transfer of Australian emissions units.

Honourable Senators:

Honourable senators interjecting

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party) Share this | | Hansard source

Order! Sorry, Senator Milne. There is far too much noise in the chamber. Those who are not participating in the debate, please leave the chamber.

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

The amendment inserts some clauses with regard to the domestic transfer of Australian emission units and, in particular, the outgoing international transfer of Australian emission units. It allows for what is effectively a free trade in those units. We had this discussion last night with the minister pertaining to why the Greens would restrict the import of permits to 20 per cent. We cannot see why the government is opposed to the export. The minister made some remarks in relation to this last night. I do not think it needs any further elaboration.

2:55 pm

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

I did traverse this in a previous amendment and made it clear that we want to maintain the policy position of not allowing export in the initial years of the scheme. It could put upward pressure on the domestic price of units and add complexity. It would also be problematic whilst the cap is in place. I think I have previously discussed those issues.

Question negatived.

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

I do not intend to call a division. I would just like it to be noted that only the Australian Greens supported that amendment.

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party) Share this | | Hansard source

Thank you, Senator Milne. We will now move to amendment (1) on sheet 6023.

2:56 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

I will just briefly discuss this. We do not intend to divide. We will concur with the voices. This is about the commissions collected by major banks and broking houses on the trading of permits. We believe that the position of those institutions on this was guided not by a desire to change the environment but by a desire to make an inordinate amount of money. We realise that they have an entitlement to a return on the work they have done but we call for a limit on the percentage commission that they can ask for. That would mean that their engagement with the environment would be in concurrence with the sacrifices that the rest of the community would have to make. I move amendment (1) on sheet 6023 standing in the name of the National Party:

(1)    Page 143 (after line 23), after Subdivision C, insert:

Subdivision CA—Commissions payable in relation to trading of Australian emissions units

103AA  Commissions payable in relation to trading of Australian emissions units

                 A person must not charge a commission greater than 0.01% of the gross selling price in relation to the trading or auction of an Australian emissions unit.

2:57 pm

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

The government does not support this amendment. We do not consider it appropriate to directly regulate this issue in legislation. It is difficult. I am not sure whether the senator could indicate any area where governments do regulate a cap on this kind of financial service. We also believe that it is impractical. It would be difficult to enforce and, frankly, also easily avoided.

I should indicate that—in relation to the substantive legislation or one of the consequential bills before the chamber—we think having a sound regulatory system in relation to this new market is important. We have put forward a scheme which deems units as financial products and they will be regulated by the same pieces of legislation and regulation that this parliament has already passed or will pass in the future in relation to financial product regulation.

2:58 pm

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

I have some sympathy with Senator Joyce’s amendment because of the appalling experience that people around Australia had with the virtual non-existence of the oversight of the managed investment schemes by the Australian Securities and Investment Commission. We found that ridiculous commissions were being paid and that, contrary to financial regulation, they were not transparent to investors who were discussing matters. The investors were not even aware that often the people that they were talking to had special arrangements with various companies, and so on. However, we also concur with the government that a parliament cannot regulate to this level in the financial market.

I have to put on the record that I do not think ASIC has done a very good job at all in regulating this and I am very fearful that the carbon market will end up with the same sorts of sharks that we have seen wherever complex financial products have been developed—as the managed investment schemes turned out to be. You get middle people who make vast fortunes out of dealing in bits of paper, and there is not very good transparency so it is quite difficult to track exactly what they are trading in. That is what happened with the derivatives market, and I am fearful we will end up with exactly the same thing in the carbon market. That is not just an issue for the Australian carbon market; it is an issue for the global carbon market. How you regulate the carbon market to ensure transparency, proper oversight and so on is a matter that is quite widely discussed in international circles.

I just wanted to put on the record that I completely understand where Senator Joyce is coming from. Poor oversight in Australia has resulted in a lot of people losing a great deal, and the managed investment schemes are a classic case. I think it would be appropriate, prior to the review stage of the establishment of such a scheme, for ASIC to be put on notice about the need to introduce appropriate oversight of the carbon market as it operates in Australia and also in the context of how it operates around the world.

3:01 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I concur broadly with the remarks of Senator Milne. I am quite sympathetic to Senator Joyce’s amendment. Some would say that it is mischievous in the sense that it has such a low level of commission, but I think the intent is good. There is real concern that the spivs might take over the carbon market, that the markets may be manipulated, when this is about reducing emissions. I indicate that I would rather support Senator Joyce’s amendment than not have any other framework in place.

Question negatived.

3:02 pm

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

by leave—I move government amendments (15), (16) and (18) to (21) on sheet BE242 together:

(15)  Clause 97, page 139 (line 2), omit “14 days”, substitute “90 days”.

(16)  Clause 97, page 139 (line 14), omit “14-day”, substitute “90-day”.

(18)  Clause 116C, page 157 (line 11), omit “14 days”, substitute “90 days”.

(19)  Clause 116C, page 157 (line 23), omit “14-day”, substitute “90-day”.

(20)  Clause 122B, page 163 (line 22), omit “14 days”, substitute “90 days”.

(21)  Clause 122B, page 164 (line 4), omit “14-day”, substitute “90-day”.

These are quite simple technical amendments, simply to extend the time frame for transmission of units upon the death of an account holder from 14 days to 90 days.

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

The opposition wishes to support these amendments by the government. They are technical in nature and have our support.

3:03 pm

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

I should be clear that the death of an account holder is one example; there are a range of other circumstances where such a transfer would be required.

Question agreed to.

I move government amendment (17) on sheet BE242:

(17)  Clause 103, page 142 (line 16), omit “The Authority”, substitute “The Minister”.

This is, again, a technical amendment in relation to auctions of emissions units. It provides that the minister can make the legislative instruments to determine the policies, procedures and rules that apply to auctions. It also is an enabling clause to ensure that the government can deliver on its negotiated agreement with the opposition in relation to deferred payment, which was one part of the electricity sector amendments that were agreed.

3:04 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

The opposition concurs with these remarks. We see this as a technicality and therefore, in brevity, we support them.

Question agreed to.

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

by leave—I move government amendments (22) to (24), (31), (32), (34) and (40) on sheet BE242 together:

(22)  Clause 130, page 176 (line 8), omit “more.”, substitute “more; and”.

(23)  Clause 130, page 176 (after line 8), at the end of subclause (1), add:

             (c)    if the current eligible financial year begins on or after 1 July 2012—there is a national scheme cap number for the current eligible financial year.

(24)  Clause 132, page 179 (line 9), before “there is”, insert “if the current eligible financial year begins on or after 1 July 2012—”.

(31)  Clause 226, page 300 (line 16), omit “interpretation”, substitute “Interpretation”.

(32)  Clause 239, page 319 (line 12), omit “projects areas”, substitute “project areas”.

(34)  Clause 241B, page 326 (line 25), before “a chargee”, insert “is”.

(40)  Clause 375A, page 454 (line 2), omit “a State”, substitute “the State”.

3:05 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

We see these as technical corrections of drafting errors in the initial draft. For the sake of brevity, we support them.

Question agreed to.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

by leave—I move the amendments standing in my name, (2) to (7) and (9) to (11) on sheet 5912, together:

(2)    Page 204 (after line 4), after Part 7, insert:

Part 7A—Electricity generation benchmark scheme

Division 1—Introduction

164A Aim and objects

        (1)    The aim of this Part is to create incentives for the electricity generation sector in Australia to reduce emissions.

        (2)    The objects of this Part are:

             (a)    to create incentives for abatement of emissions while mitigating the price impact of electricity wholesale prices on users; and

             (b)    to ensure that any increase in energy costs is a gradual increase for all users; and

             (c)    to promote lower emissions and improved price signals in relation to electricity generation; and

             (d)    to provide orderly transitional arrangements in respect of all electricity generated in Australia until 2030.

164B Simplified outline

                 The following is a simplified outline of this Part:

  • The regulations may formulate a scheme, to be known as the electricity generation benchmark scheme, for the issue of free Australian emissions units in respect of all electricity generated in Australia.
  • The electricity generation benchmark scheme may:
(a)
require a recipient of free Australian emissions units to relinquish units; and
(b)
impose reporting or record-keeping requirements on a recipient of free Australian emissions units.

Division 2—Formulation of the electricity generation benchmark scheme

164C Electricity generation benchmark scheme

        (1)    The regulations must formulate a scheme (to be known as the electricity generation benchmark scheme) for the issue of free Australian emissions units in respect of all electricity generated in Australia.

        (2)    For the purposes of regulations made under subsection (1) the allocation of free units to electricity generators under the scheme is the product of:

             (a)    the electricity production for the year; and

             (b)    the electricity generation allocation factor for the year;

                 where:

electricity production for the year means the total number of megawatt hours of electricity generated by the generation unit in the financial year.

electricity generation allocation factor for a year means the amount specified in the following table for the financial year:

For the financial year beginning...

Electricity generation allocation factor is

1 July 2011

0.86

1 July 2012

0.83

1 July 2013

0.79

1 July 2014

0.76

1 July 2015

0.73

1 July 2016

0.70

1 July 2017

0.67

1 July 2018

0.63

1 July 2019

0.60

1 July 2020

0.57

1 July 2021

0.54

1 July 2022

0.51

1 July 2023

0.47

1 July 2024

0.44

1 July 2025

0.41

1 July 2026

0.38

1 July 2027

0.35

1 July 2028

0.31

1 July 2029

0.28

1 July 2030

0.25

        (3)    The electricity generation benchmark scheme must provide that free Australian emissions units must not be issued to a person in accordance with the scheme unless the person:

             (a)    meets such requirements as are specified in the scheme; and

             (b)    has a Registry account.

        (4)    The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2010.

164D Relinquishment requirement

        (1)    The electricity generation benchmark scheme may provide that, if:

             (a)    a number of free Australian emissions units have been issued to a person in accordance with the scheme; and

             (b)    any of the following subparagraphs applies:

                   (i)    a specified event happens;

                  (ii)    a specified circumstance comes into existence;

                 (iii)    the Authority is satisfied about a specified matter;

the person is required to relinquish a number of Australian emissions units ascertained in accordance with the scheme.

        (2)    Division 3 of Part 15 relating to compliance with relinquishment requirements applies in relation to the scheme as if a reference to the emissions-intensive trade-exposed assistance program was a reference to the electricity generation benchmark scheme.

        (3)    The number of Australian emissions units required to be relinquished by the person must not exceed the number of units mentioned in paragraph (1)(a).

164E Reporting requirement

Scope

        (1)    This section applies to a person if free Australian emissions units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

        (2)    The electricity generation benchmark scheme may make provision for and in relation to requiring the person to give one or more written reports to the Authority.

164F Record-keeping requirement

Scope

        (1)    This section applies to a person if free Australian emissions units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

        (2)    The electricity generation benchmark scheme may make provision for and in relation to requiring the person to:

             (a)    make records of information specified in the scheme; and

             (b)    retain such a record, or a copy, for 5 years after the record was made.

164G Other matters

        (1)    The electricity generation benchmark scheme may make provision for and in relation to the following matters:

             (a)    applications for free Australian emissions units;

             (b)    the approval by the Authority of a form for such an application;

             (c)    information that must accompany such an application;

             (d)    documents that must accompany such an application;

             (e)    the method of calculating the number of free Australian emissions units to be issued to a person in accordance with the scheme.

        (2)    The electricity generation benchmark scheme may provide that an application for free Australian emissions units must be accompanied by a prescribed report.

        (3)    The electricity generation benchmark scheme may provide for verification by statutory declaration of statements in applications for free Australian emissions units.

164H Ancillary or incidental provisions

                 The electricity generation benchmark scheme may contain ancillary or incidental provisions.

Division 3—Compliance with reporting and record-keeping requirements under the electricity generation benchmark scheme

164I Compliance with reporting and record-keeping requirements

Reporting requirements

        (1)    If a person is subject to a requirement under the electricity generation benchmark scheme to give a report to the Authority, the person must comply with that requirement.

Record-keeping requirements

        (2)    If a person is subject to a requirement under the electricity generation benchmark scheme to:

             (a)    make a record of information; or

             (b)    retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

        (3)    A person must not:

             (a)    aid, abet, counsel or procure a contravention of subsection (1) or (2); or

             (b)    induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

             (c)    be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

             (d)    conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

        (4)    Subsections (1), (2) and (3) are civil penalty provisions.

Note:   Part 21 provides for pecuniary penalties for breaches of civil penalty provisions.

Amendments (3) to (7) are consequential to amendment (2)

(3)    Clause 82, page 128 (after line 12), after paragraph (a) under the fourth dot point, insert:

           (aa)    the total number of free Australian emissions units issued in accordance with the electricity generation benchmark scheme; and

(4)    Clause 88, page 131 (after line 14), after paragraph (b), insert:

           (ba)    in accordance with the electricity generation benchmark scheme; or

(5)    Clause 93, page 136 (after line 29), after paragraph (a), insert:

           (aa)    the total number of free Australian emissions units with that vintage year issued in accordance with the electricity generation benchmark scheme; and

(6)    Clause 101, page 141 (after line 23), before subparagraph (1)(a)(i), insert:

                 (ia)    in accordance with the electricity generation benchmark scheme; or

(7)    Clause 103A, page 143 (after line 29), before subparagraph (1)(a)(i), insert:

                 (ia)    in accordance with the electricity generation benchmark scheme; or

(9)    Clause 167, page 207 (after line 10), after subclause (1), insert:

      (1C)    The regulations must determine coal mining to be an emissions-intensive trade-exposed activity.

(10)  Clause 167, page 207 (after line 10), after subclause (1), insert:

     (1D)    For the purposes of regulations made under subsection (1):

             (a)    emissions-intensity must be assessed in relation to whether the industry-wide weighted average emissions intensity of an activity is above a threshold of:

                   (i)    1,000 tonnes of carbon dioxide equivalent per $1,000,000 of revenue; or

                  (ii)    3,000 tonnes of carbon dioxide equivalent per $1,000,000 of value added; and

             (b)    assistance to eligible activities must be set at 100% of the emissions-intensive trade-exposed electricity allocative baseline for activities that have an emissions intensity above the threshold in the assessment period; and

             (c)    the level of assistance to an eligible activity continues to apply to that activity until there is a comprehensive international agreement in relation to carbon pricing.

(11)  Clause 167, page 207 (after line 10), after subclause (1), insert:

      (1E)    The emissions-intensive trade-exposed electricity allocation factor for a year is:

1  –  electricity generation allocation factor for that year.

These amendments are a package of modifications that will adapt the government’s CPRS to an ETS in line with the Frontier Economics recommendations. The Frontier modelling demonstrates that the government’s CPRS model will result in too much churn, will impose too big an impost on the Australian economy and will not deliver enough for the environment.

Specifically, amendment (2) incorporates the electricity generation benchmark scheme, its aims, objectives, formulae and reporting requirements, through a new part 7A. The amendment outlines that the purpose of the scheme is to create incentives for the electricity generation sector to reduce emissions without the steep price rises that you would see in the government’s scheme. We know that the demand for electricity is relatively inelastic relative to price and I consider that this is the most effective way to compensate consumers for the cost of the CPRS whilst reducing the intervention of government through the scheme as proposed.

It also indicates the method through which the majority of modifications will be made through the guidelines, with the minister to create regulations using his aims, objectives and formulae. I draw my colleagues’ attention particularly to part 7A, division 2, section 164C. This provides not only for a number of free units to be allocated each year but also for a formula to reduce the number of permits issued under a benchmark for each year until 2030. This formula relies on the reduction of an electricity generation allocation factor, which is documented in the table included within section 164C, and these changes equate to an allocation of 0.86 tonnes of CO2 permits per megawatt hour of electricity generated in 2011 being progressively reduced to 0.25 tonnes per megawatt hour generated in 2030.

The implication of this benchmark is that it will preserve the incentives for all generators to reduce emissions, but it will reduce the average cost to consumers and provide shielding for a smoother transition to increase energy prices than under the CPRS. The final part of amendment (2) details requirements of relinquishment of permits and reporting and record-keeping requirements, as well as compliance provisions, including several penalty provisions. Amendments from (3) through to (7) are consequential. So this provides for an electricity benchmark scheme. It is something I have had numerous discussions with Senator Wong about. We have a fundamental disagreement, but I think you can still want to do the right thing by the environment but have an alternative policy approach. It is important that we put into context that it is very unfortunate that the information that has been requested previously in terms of the full modelling has not been provided.

Broadly, this debate and this vote are clearly not as simple as a black-and-white choice between those who believe in climate change and those who do not. The other dimension that must be acknowledged is that many people agree with the need to do something about climate change, the need for action, but disagree with the means for achieving this. These people fall on both sides of the parliament, including those interested in minimising the costs of the scheme and those interested in pursuing higher reduction targets. That is something that I want; I want both. This policy needs to be judged on its merits, and to do so we need to be fully informed. So far the government has not provided full and transparent analysis of the costs involved, and I do not think this is excusable for a policy decision of such magnitude. Interestingly, the government did provide some details last week, and I welcome that, but they still do not go far enough in the material that is needed to have a fully informed debate.

I have been transparent about my information analysis because I welcome a debate. The government, and Treasury in particular, have been less than fully transparent about their analysis in response. If the government believe as strongly as they do about the importance of passing this bill, surely they can make the effort to support their case for this policy with transparent analysis so that we can make a fully informed decision in relation to the Frontier model. I note the media reports today—an article by Lenore Taylor in the Australian and one by, I think, John Breusch in the Financial Reviewabout a Treasury analysis about the Frontier model, which was obtained by the Australian. That analysis has not been released publicly. I accept fully that the government was not behind that leak. For some reason it has been leaked, and I would have thought that, now that the material is out in the public domain, the full modelling and analysis ought to be out there.

In particular, the government still has not provided the information on a whole range of key matters to properly consider the Frontier scheme with regard to electricity price projections. This is my main concern, since the government analysis appears both internally inconsistent and inconsistent with all reports of projected electricity price rises, including the reported findings of IPART—the Independent Pricing and Regulatory Tribunal—in New South Wales, which indicated quite significant price rises projected over a three-year period in terms of the CPRS specifically. This raises grave concerns about the government’s claims regarding the level of household compensation on offer and also its purported comparisons with the Frontier analysis.

Last year Treasury estimated a 17 to 24 per cent electricity price increase, of about $4 a week, and 11 to 15 per cent gas price increases resulting from the CPRS. Yet last week the government’s media release on compensation to households, which reports that compensation will be in the order of 120 per cent—and the government has been entirely transparent about that level of compensation—relies on an estimated seven to 12 per cent electricity price increase, about $2 a week, and a four to seven per cent gas price increase. This difference cannot be explained by the capped carbon price of $10 in 2011, since the assumed carbon price is $26 in 2012. The government has not provided anything to support these latest estimates in my view, but it is the cornerstone of the claim regarding the level of household compensation, so this information is essential.

However, the reports are that IPART in New South Wales are projecting electricity price increases in the order of 50 to 60 per cent, of which around half can be attributed to the CPRS. If these estimates are correct then the government claim regarding the level of compensation must be corrected so that we can make an informed decision on this policy. With regard to the growth in emissions-intensive trade-exposed industries, the Treasury has never released full details regarding the projected ET growth and the assumptions underlying its allocated expenditure for this purpose, which is a key component of the budget projections. On the face of it, it appears that Treasury has relied on simple accounting assumptions that ETs will grow at historic rates, which is inconsistent with the intent of the scheme. This remains speculation, because Treasury has not provided the adequate information in relation to that. Again, we need this information to make an informed decision.

The Australian today reports on the secret Treasury analysis of the Frontier model, which I have already referred to, that claims a considerable difference in budget impacts. The lack of transparency is disappointing given the importance of this debate. It is not clear why the government refuses to open its analysis to scrutiny in terms of the full modelling. It is difficult to comment on this secret report, and again I am not blaming the government for releasing it. However, the headline result does not stand up to logical analysis. Both schemes essentially involve a tax that is recycled back to Australian householders, including both businesses and households. It defies logic to suggest that the government scheme can simultaneously take the same tax pie and provide more back to the community and still deliver a larger budget result as claimed. I just do not follow that. The most logical explanation is that the government has relied on its incorrect assumption of low electricity price increases to purport to deliver a higher level of compensation at a lower cost. Of course, this is the danger of relying on analysis based on simple accounting analysis rather than rigorous modelling of the alternative.

Furthermore, the government groups a range of policy amendments under the banner of the Frontier model. To be clear, the government’s purported differences in budget impacts appear to be driven by the treatment of coalmines and easy compensation, and they are only part of the policy package that Frontier modelled and could hardly be described as a core part of the Frontier scheme. Simply put, the government cannot claim to reject the electricity benchmark scheme on the basis of the budget impacts of other policy measures. The government appears to completely ignore the impacts of the CPRS on tax revenue, such as PAYE, company tax et cetera, which is where the main gains of the Frontier model arise from.

On the issue of uncertainty, the government has suggested that it is concerned about the uncertainty of permits allocated to electricity consumers under the Frontier model. This incorrectly implies that the government scheme delivers certainty. That is a fallacy. The government also faces carbon price uncertainty in its lump sum compensation to households, amongst other things. It is already evident that if the carbon price is lower than projected then the government will run out of revenue sooner and run into deficit. No scheme is entirely certain and to suggest otherwise just would not be accurate.

It has also been suggested that the electricity benchmark scheme somehow increases the potential cost for other sectors. The original Frontier report made it clear that this is simply incorrect. Businesses are indifferent about buying permits from the Australian government or from overseas and the domestic cap set in Australia does not limit domestic emissions in Australia. As such, this does not increase costs to other sectors and nor does it provide any certainty around domestic emissions in Australia. The government must concede that they have no control over domestic emissions under their scheme so that any implication of greater certainty is simply not true. That is why I support this particular model and I welcome debate in relation to this.

3:16 pm

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

Senator Xenophon, whom I respect, has made a number of assertions that I am going to have to counter strongly. I admire his loyalty, because I know that he has worked with Frontier and Mr Price on many occasions previously and he has continued to advocate for this scheme when others have dropped off. For a while he had support from the Liberal Party and you may get that again, Senator. You never know, you may be able to convince Mr Abbott to adopt it.

But if you want to accuse the government of not being transparent I do not think that the government has had a fully worked out report with disclosed assumptions from you or from Frontier. In fact, my recollection is that officials from my department met with Frontier not long after the report was released. Those assumptions have not been made clear to us. But leaving that aside—because the government is not going to drop this policy, and I have made that clear—I am advised that the only way Frontier actually balances the fiscal balance is to not pay any compensation to households. So, Senator, if you are going to criticise the government’s scheme for assistance to households could I respectfully suggest that you disclose to the chamber if you propose to provide any assistance to households, because that is the basis on the figures we have provided and tabled in this chamber of the Treasury advice. In fact, from memory, Treasury was actually quite generous in that it modelled a portion of the household package as compensation.

To paraphrase you, Senator Xenophon, you said that there are different ways of taking action on climate change and different plans. That is true. But it needs to be a plan that works. This is not a model that has been put forward and will be operational in this form, as I am advised, anywhere in the world. In your comments you were mixing up figures. You accused the government of saying that electricity prices would rise between seven and 12 per cent. What we have said is seven per cent for the first year and approximately 12 per cent thereafter. So that was a two-year indication. You then also said that the compensation the government has put on the table is inadequate. Again, I say that in a circumstance where neither you nor Frontier has made clear whether or not you would offer any household assistance that would seem to be a little self-defeating as an argument. I say that both the Prime Minister and I have previously indicated that each year in the budget context we will continue to review and monitor the adequacy of the household compensation package. In other words, if the carbon price is higher or if the electricity price rises more than anticipated that is something the government can adjust in a budget context. That is a commitment to which we will be held to account should this scheme pass.

In regard to the higher targets that you wish to achieve—and we have had this debate before—your scheme, and from what we know from the Frontier report, would in fact lead to lesser targets in Australia than the government’s scheme. We are at one in saying that international trade is a good thing. I think we agree on that. But the reality is that I do not think it is logically consistent to say that it is a greener scheme if the only way you get a more significant target is by increasing the number of overseas permits.

I say to you, Senator Xenophon, that whilst I disagree with your policy—and you know that—I do commend you for actually putting something forward and having the willingness to put a different policy forward. It is not one that has gained a deal of support either in this chamber or in the community, but I think it has been a very sound attempt to put a different policy on the table, even if the government and I do not agree with the policy that is proposed.

In relation to uncertainty, when I raised previously the uncertainty issue it was not in relation to the electricity sector; it was in relation to the other sectors. In fact, what the model that you are proposing does is give certainty to electricity generators at the expense of certainty in the other sectors in the economy. I will postulate that that may be why others in the business community have not been supportive.

I have been handed a note by my advisers asking me to clarify my comments in relation to contact between my department and Frontier Economics. There has been contact, but I need to confirm the precise timing of that contact. I think I said the contact was a year ago and that may not be correct. I will get some advice on that and perhaps discuss that with you later, Senator Xenophon. In short, we do not agree with this model. We do not think this is a sensible way forward, but I have to say that at least Senator Xenophon, as a single Independent senator, has done more than the opposition has in terms of putting forward a policy. The other side’s policy appears to be to just say no.

3:22 pm

Photo of Barnaby JoyceBarnaby Joyce (Queensland, National Party) Share this | | Hansard source

We would like to commend Senator Xenophon for the work he has put in, and also the work of Danny Price and Frontier Economics. We concur with a lot of the issues that Danny Price has brought to light, especially with regard to costings—in fact, we have been referring to them as we have gone through. However, to agree to Senator Xenophon’s amendment would be to agree to another form of emissions trading scheme prior to Copenhagen. We do not concur with that; we think that we should be looking for more prominent positions being taken by the major emitters around the globe. At this point in time, merely days before Copenhagen, unfortunately we are disinclined to support Senator Xenophon on this amendment.

3:23 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I thank both Senator Joyce and Minister for Climate Change and Water for their responses. In relation to some of the matters raised by the minister I would like to put on the record that Frontier Economics are willing to show all their modelling and all their analysis to Treasury and to the minister’s department. They have made that very clear. There was a meeting earlier this year between Frontier the department—I think in about April, but I may be mistaken. The minister’s Chief of Staff, Don Frater, was at that meeting and I think it is fair to say that it was discussion on the government’s scheme rather than a detailed consideration of the Frontier scheme. I think that is a fair summary of that meeting. It was useful, but in my view it was not a detailed analysis of the Frontier scheme.

There is a real concern that a number of aspects of the modelling have not been released. I am grateful that the government provided some details last week, a partial response, but it still has not provided details of how the climate change agreement funds will be distributed, how the level and allocation of assistance is determined or how regional impacts are estimated. It also has not given details of how the household assistance will be calculated and distributed—which households are eligible, how the level of assistance per household is to be determined, whether household assistance will vary with the carbon price and, if so, how frequently it will be adjusted. This relates to Treasury’s analysis of the Frontier scheme.

Those are some of a number of aspects that have not been provided. There is an absolute willingness on the part of Frontier to engage with the government and to show all their information, all the details in relation to this. Let us put this into perspective. I think the minister said that she commends me for my loyalty to Mr Price and Frontier. I think it is a question of loyalty to a good idea. I first fought battles with Mr Price against the South Australian Liberal government in 1998-99.

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

I’m not John Olsen.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I think both you and John Olsen would say thank goodness for that! At that time Danny Price and the consultancy he was working for made certain predictions about price rises if the Olsen government adopted a particular model for privatisation. Madam Temporary Chair, I think you were also there at that time. I still remember question times when the then Liberal government would seem to pick on me and Danny Price, much to the relief of some of the Labor members in the upper house. They were quite delighted and I remember being thanked because the opposition ignored the then Liberal government. This does not mean that Danny Price’s predictions will always come to fruition, but his predictions were uncannily accurate. He predicted a 30 to 35 per cent rise in electricity prices and the ultimate figure was 32 per cent. I believe this was because of the way the privatisation was structured.

This firm has form in terms of looking at electricity markets and emissions trading schemes. The first mandatory emissions trading scheme anywhere in the world was implemented by New South Wales Premier Bob Carr 10 years ago. That scheme was designed and implemented by Frontier. It was a baseline and credit scheme. To put it in perspective, this is not a baseline and credit scheme—it is a modification; an intensity based scheme. Given the constraints set by the Carr government, a state government, it was a very successful scheme in terms of abatement. It was a greenhouse gas abatement scheme, a GGAS, that worked to encourage investment in low emission technologies and to encourage landfill gas management and the like. These are good things. Even with the constraints the scheme still took millions of tonnes of CO2 out of the atmosphere—a welcome development. Frontier Economics has form in designing an emissions trading scheme and taking into account the various factors in working out how it will work in practical terms.

The minister says there will be no compensation to households under the Frontier scheme. The minister is right in saying that, but that is because you do not need to compensate households, for two simple reasons: firstly, there will not be the same spike in electricity prices—

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

But there is an increase.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I concede that there is an increase, Minister, but not to the same extent. It is a fraction of the increase from the government scheme. The other factor is that, in Frontier’s model, real wages are $800 a year better off. It is almost like getting a stimulus payment cheque year in and year out. Households are unambiguously better off in net terms. That is a key factor that needs to be taken into account. I do not think you can ignore what the Independent Pricing and Regulatory Tribunal has said. The minister quite clearly said that a draft report was leaked to the media, but anyone who knows how IPART operates knows that it is an independent tribunal which does not put out a draft determination lightly. The fact is there had been a long process before IPART got to that stage. IPART has made it clear that it is predicting rises in the order of 60 per cent, half of that due to a CPRS. That goes way beyond what has been modelled so far. I think IPART has looked at how the marketplace has worked. In terms of compensation to households, it does not have the level of direct compensation to households because there is real wages growth, but there is certainly scope for this depending on the budget effects and other policies put in place if there is anyone left out. But I still think you can say that real wages are better off under the scheme.

There are still some unanswered questions. It is worth putting on the record that the government originally asserted when they lowered the projection for the future carbon price that it would make it harder to afford the proposed coalition amendments. It was the Frontier response to the Treasury critique, which I tabled, that pointed out that required household assistance should also be lower if the carbon price is lower, making it more affordable. Ironically, Treasury picked up on this point to rely on funding for their revised offer to the coalition. I think there is a real issue there.

Also—and I am not sure if this has been raised previously—if comment is made about the importance of a price signal for electricity then how can this be reconciled? I do not know whether Senator Brown or my other colleagues in the Greens take this point. How can the government reconcile this approach with their treatment of petrol, given that they proposed to use tax revenue to offset the fuel price rise? I think there is an argument here about the MMA modelling, which some would say is an outlier in terms of the relative price effects on the elasticity or relative inelasticity of demand.

The other factor in getting to targets is that this approach is all about having a white certificate scheme in place, but if you had comprehensive energy abatement programs in place, something that the Greens and others have advocated for a number of years, you would actually get a better result. It is all part of a comprehensive package to reduce emissions. They are some of the matters that I think need to be considered.

The government said this is not a model that has been put forward elsewhere. I think the only real precedent has been the European scheme, which has had significant teething problems. I acknowledge that the government says that it will learn from that. But, in relation to the government saying, ‘This model has not been put forward elsewhere,’ it has effectively put forward the same plan for fuel tax offsets—in other words, the use of permit revenues to offset price rises. Some would say that it is an intensity based model—you look at the level of emission intensity as a factor of compensation. So, Minister, we will have to agree to disagree. You can want to get to the same destination but choose to get there by a different path.

3:33 pm

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

I just want to congratulate Senator Xenophon. This is very heavy and difficult territory. On balance, the Greens will not be supporting the amendments, but there are areas of quite notable merit in the work that Senator Xenophon has done here. It has been a lot of work, and I know he has been talking with the government a lot about it. But I do think Senator Xenophon deserved to get more information out of the government about the modelling on this. We have supported him all the way down the line on that. We would all be better off today if that information had been forthcoming. On balance, we will not be supporting these amendments, but it is very difficult territory and there is merit in it. It is something that the government needs to look at. It will be interesting to see what the result of this debate is today, but it is something that we will continue to liaise with Senator Xenophon about in the coming times.

3:34 pm

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

It is almost spooky when I can say, ‘Ditto,’ to Senator Bob Brown’s contribution, but Senator Xenophon has done a lot of good work in this area with Frontier Economics. They have credibility in this space in relation to modelling and I must say that there is a lot of credibility associated with their position. I gave the situation, as outlined by the IPART report, an airing yesterday evening. Unfortunately, the minister was not able to respond, simply dismissing the report as a draft. But, as I recall Senator Xenophon pointed out last night and again today, the draft report is usually pretty well a finalised report. The fact that that report has now made its way into the public arena is courtesy of either the independent IPART or the state government of New South Wales. If the state government is responsible for it being in the public arena there is only one real reason for that, and that is its concern about a higher price in electricity charges.

The fact that the government will not engage on this and provide us with the information and responses needed concerns me because I would have thought in simple terms it makes good sense to keep the price down and therefore reduce the need for compensation—in other words, lessen the churn within the economy of the dollars going around. It almost seems to me that one of the reasons the government might be baulking at this is that they would love to have this churn because they could then be handing out the cheques to people saying, ‘What good fellows we are, providing you with all this compensation.’ Whereas I think Senator Xenophon may well have, through Frontier Economics, a very neat solution: if you keep the prices down less compensation is needed and therefore there is less churn and it is more efficient in economic terms with the same environmental outcome.

So in brief, we are very attracted to Senator Xenophon—and I think he suspects that the terrible word ‘but’ is about to be used—but unfortunately the opposition at this stage, like Senator Brown, cannot see our way clear to support the amendments. I say to Senator Xenophon and to the Australian people that the opposition will continue to be very active in this space in ensuring that we have a very good policy to take to the next election. There are many people on this side of the chamber who would be seeking to further explore what Senator Xenophon has put to the Senate this afternoon.

Senator Xenophon is getting quite anxious to respond to something I have said; I am not quite sure what it is, but it might be an appropriate time for me to sit down and find out.

3:38 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Senator Abetz may need to correct the record about being very attracted to me. I think he is referring to the amendment rather than me. I appreciate the comments in relation to this matter. I ask the minister, perhaps more in hope than anything else: is the government proposing to provide any further information in relation to their modelling? Does the government see anything to be gained by Frontier’s offer to sit down with them and for Frontier, at least, to share all their modelling with the government at this stage?

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

I have tabled in this place already quite a significant amount of information about our analysis of Frontier. Whilst others in this chamber have been very courteous towards you, no-one is supporting this policy. I am not sure what it is you are asking the government to do. We have a clear policy commitment. We have considered what you have put to us and we do not think it is the appropriate way forward. We have provided information to you and to the Australian people on the public record on why we do not agree, why we do not think this is a sensible policy. You have acknowledged today that your package does not involve any household compensation; you say that it is not needed. I respectfully disagree. Under Frontier, on the documents we have provided to you, there is an increase in prices and there is no household assistance from what you have just said. That does matter to people on low incomes.

One of the benefits of the scheme the government has put forward is that it enables the government to provide assistance to households to help cover the cost of climate change. Senator Abetz suggests that it is because we want to give out cheques, but it is actually because we want to implement this change in a way that is fair. We want to do this fairly. We do think assisting households is important as the carbon price is introduced. We have unashamedly skewed our assistance to low- and lower-middle-income Australians.

I am happy to continue to discuss with you, Senator, what it is you would want. We have provided a significant amount of information. It is not government policy. We do not intend to go down a path that, with respect, is not supported by the business community or others. If you want to have a discussion about what more you would like to talk about then I am happy to do that. But if you asking me to commit the government to putting a lot of resources into developing this proposal as government policy, the answer is that this is not government policy. We have made that clear. We do not believe it is the sensible way forward, for the reasons I have outlined.

3:41 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I understand the minister’s point about not committing extra resources to the Frontier model, given that the government and the opposition—the alternative government—do not support it. Clearly, resources have been expended in providing engaging modelling for this scheme so it is a case of asking for information that the Commonwealth already has. I will not make it any higher than that—it is not asking for anything new; it is asking for material that would already be in the possession of the government. I can write to the minister about that. I have already alluded to a couple of those issues and it is something that I tabled—but withdrew—last week in the context of a second reading amendment. After consultation with the Greens I rolled in a simpler version of that amendment together with the Greens amendment which, unfortunately, did not get up. What I have said is clear but as a courtesy to the minister I would be happy to write to her about that.

The other issue is about compensation. This is still an issue for the 750,000 small and medium businesses in this country that will receive little or no compensation under this scheme. They would have received no compensation under the government’s original CPRS and some compensation to the tune of $1.1 billion in the package of amendments that were negotiated with the then opposition leader and Mr Macfarlane last week. There is still a significant price rise for businesses in this country. I believe that is an impost on jobs and on growth. We can do better in aiming for higher emission reduction targets. If we can reduce the direct and indirect costs of such a scheme, that is a good thing.

I say to those in the coalition who believe that a carbon tax is the best approach that the problem with a carbon tax is that you do not have any level of certainty in terms of overall emissions; that you do not have any level of business certainty for investment because a carbon tax can be adjusted upwards or downwards at any time; and that, because action on climate change requires a global approach, being able to trade, being able to have permits and the tradability of permits is an integral part of that. I do not think I am saying anything there that the government will disagree with, but for those in the coalition who think that there is an alternative way forward with the carbon tax, I suggest that it is simply too narrow a focus and does not take advantage of the opportunities that already exist with respect to a European scheme. It is inevitable that we will have a whole range of other schemes up and running given the commitments that have been made by a number of developed nations and, for that matter, by a number of developing countries that have gone down the path of saying that we need to take urgent action on climate change.

3:45 pm

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

I might ask the minister one quick question. Following on from what Senator Xenophon had to say, that there is over a billion dollars going to small business—which is something we would support seeing there is $24 billion going to the big polluters—has there been any adjustment made to the amount that was going to non-government organisations under the government’s original scheme? If so, what is it?

3:46 pm

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

There was no change to that aspect of the scheme as a result of the negotiations with the opposition, Senator.

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

So there has been no change in the original amount that was going to non-government organisations at all; they will be getting the amount that was originally on the table as far as the government is concerned?

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

The government did not separately allocate out of the Climate Change Action Fund prior to the passage of the legislation what portion would go to community groups, NGOs or small business. There were a range of grants programs that were flagged. We have not finalised the Climate Change Action Fund in the absence of the revenue stream, which is contingent on the passage of the legislation, and frankly we would not anticipate doing so. But I can say to you that there was never a seeking of a reduction of that component for NGOs. There was an allocation within this agreement of some funds within the Climate Change Action Fund for food processing, from memory, and a portion for small business. So we will obviously have to look at that in terms of the overall functioning of the fund.

Question negatived.

3:47 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I move amendment (8) on sheet 5912 standing in my name:

(8)    Page 204 (after line 4), after Part 7, insert:

Part 7B—National energy efficiency scheme

Division 1—Introduction

164J Aim, objects and intentions

        (1)    The aim of this Part is to promote and recognise efficiency in the production and supply of energy for use in the residential and commercial sectors of the economy by creating a market for energy efficiency savings.

        (2)    The objects of the scheme embodied in this Part are:

             (a)    to create incentives for households and business to choose actions that reduce their carbon emissions; and

             (b)    to deliver energy efficiency that would not have otherwise occurred; and

             (c)    to ensure that linkages between energy efficiency measures and carbon pollution reduction scheme measures are properly monitored, analysed and accounted for in establishing and achieving the objects of the Act and Australia’s long-term greenhouse gas emission reduction targets.

        (3)    The scheme is intended:

             (a)    to complement the CPRS, since it is designed to address activities in regard to which the price signal created by the CPRS may not create a strong enough signal; and

             (b)    to operate separately to the CPRS, so that any emissions reductions that are delivered are additional to those realised through the CPRS; and

             (c)    to build on similar schemes in State and Territory jurisdictions, with a view to developing a consolidated national approach that harmonises approaches to energy efficiency.

164K Simplified outline

                 The following is a simplified outline of this Part:

  • The regulations must formulate a scheme, to be known as the national energy efficiency scheme, to create a market for energy efficiency savings across residential and commercial sectors of the economy.
  • The Minister must, by 1 July 2011, undertake a consultation process on the design of the scheme, including consideration of the applicability at a national level of existing state and territory schemes and consultation with key stakeholders.
  • The Minister must take all reasonable steps to ensure that regulations which reflect the outcomes of the consultation process are made by 1 July 2012.
  • The Authority is given additional functions in relation to the formulation and operation of the scheme.
  • Although the principal link between the scheme and the CPRS is in market influences on the carbon price, the Authority may, in any year, determine an energy efficiency adjustment amount, which is an amount by which the Authority determines the national scheme cap number must be reduced to account for energy efficiency savings.
  • If the Authority determines an amount as the energy efficiency adjustment amount for a year, the national scheme cap number for that year is taken to be reduced by that amount.

164L Interpretation

                 In this Part:

CPRS means the carbon pollution reduction scheme, other than the scheme embodied in this Part.

participant in the scheme means a person who:

             (a)    creates or deals with white certificates or equivalent property rights under the scheme; or

             (b)    is a liable scheme entity.

scheme means the national energy efficiency scheme formulated in accordance with section 164M.

Division 2—Formulation of the national energy efficiency scheme

164M National energy efficiency scheme

        (1)    The regulations must formulate a scheme (to be known as the national energy efficiency scheme) to create a market for energy efficiency savings in the production and supply of energy for use in the residential and commercial sectors of the economy.

        (2)    Without otherwise limiting the design of the scheme, the scheme must encompass:

             (a)    either:

                   (i)    the creation of tradable certificates representing energy efficiency savings (white certificates); or

                  (ii)    another process for creating and trading verifiable property rights over particular energy efficiency savings (equivalent property rights); and

             (b)    the imposition of energy efficiency targets on liable scheme entities, which entities can meet by creating or trading white certificates or equivalent property rights; and

             (c)    the imposition of penalties for liable scheme entities which do not meet energy efficiency targets;

             (d)    procedures for the implementation and oversight of the scheme by the Authority.

164N Consultation on the formulation of the scheme

        (1)    The Minister must, by 1 July 2011, undertake a consultative policy development process, with the aims of:

             (a)    formulating a national energy efficiency scheme;

             (b)    determining a method of setting energy efficiency targets under the scheme;

             (c)    developing the administrative requirements to implement the scheme.

        (2)    The consultation process must, at a minimum, include:

             (a)    consultation with each of the States and Territories;

             (b)    consideration of the applicability at a national level of:

                   (i)    the Greenhouse Gas Reduction Scheme, operating in New South Wales and the ACT; and

                  (ii)    the Victorian Energy Efficiency Target Scheme; and

                 (iii)    the South Australian Residential Energy Efficiency Scheme; and

                 (iv)    the New South Wales Energy Efficiency Scheme; and

                  (v)    any equivalent scheme operating or planned to operate in any other State or Territory jurisdiction during 2010;

             (c)    consultation with key stakeholders.

164O Implementation

                 The Minister must take all reasonable steps to ensure that regulations which reflect the outcomes of the consultation process are made by 1 July 2012.

164P Functions of the Authority—formulation of the scheme

                 The Authority has the following functions in relation to the formulation of the scheme:

             (a)    assisting the Minister in the consultation process;

             (b)    reviewing the operation of the scheme, and reporting to the Minister and the Parliament on the operation of the scheme at least every 2 years;

             (c)    making recommendations to the Minister on matters of policy relating to the operation of the scheme;

             (d)    any other function prescribed by the regulations for the purposes of this paragraph.

164Q Elements of the scheme

        (1)    Without limiting the design of the scheme, the regulations may prescribe:

             (a)    which entities may create and deal with white certificates or equivalent property rights;

             (b)    procedures for the accreditation of such entities;

             (c)    the eligible activities through which white certificates or equivalent property rights may be created;

             (d)    the manner in which white certificates or equivalent property rights may be traded and otherwise dealt with;

             (e)    which entities are liable under the scheme (liable scheme entities);

              (f)    methods of estimating or calculating:

                   (i)    energy efficiency savings made under the scheme; and

                  (ii)    the effect of the scheme on the price of carbon;

              (f)    procedures for the transfer of property rights in energy efficiency savings between the scheme and State or Territory schemes dealing with energy efficiency;

             (g)    reporting and compliance protocols.

        (2)    Without limiting the generality of paragraph (1)(e), the definition of liable scheme entities may include (but is not limited to) entities which produce or supply electricity, gas and oil for use in the residential and commercial sectors of the economy.

164R Ancillary or incidental provisions

                 The scheme may contain ancillary or incidental provisions.

Division 3—Operation of the national energy efficiency scheme

164S Functions of the Authority—operation of the scheme

        (1)    The Authority has the following functions in relation to the operation of the scheme:

             (a)    to certify entities for the purposes of the scheme;

             (b)    to determine, in writing, energy efficiency savings targets to be met under the scheme;

             (c)    to verify energy efficiency savings and ensure that the benefit of property rights in relation to particular savings are not accounted for elsewhere;

             (d)    to monitor, analyse and report on energy efficiency savings;

             (e)    any other function prescribed by the regulations for the purposes of this paragraph.

        (2)    A determination under paragraph (1)(b) is not a legislative instrument.

164T Links between energy efficiency and the CPRS

        (1)    The principal link between the scheme and the CPRS is intended to be reflected in market influences on the carbon price.

        (2)    However, the Authority may, in any year, determine, in writing, an energy efficiency adjustment amount for that year.

        (3)    A determination under subsection (2) is not a legislative instrument.

        (4)    The energy efficiency adjustment amount for any year is an amount by which the Authority determines the national scheme cap number for the following year must be reduced to account for energy efficiency savings made under the scheme.

        (5)    The regulations may prescribe any of the following:

             (a)    factors the Authority may take into account in making such a determination;

             (b)    factors the Authority must take into account in making such a determination;

             (c)    a method of calculating the energy efficiency adjustment amount for a year.

        (6)    The Authority may determine that there is no energy efficiency adjustment amount for a particular year.

164U Adjustment of national scheme cap number

                 Despite any other provision of the carbon pollution reduction scheme, if the Authority determines an amount as the energy efficiency adjustment amount for a year, the national scheme cap number for the following year is taken to be reduced by that amount.

Division 4—Reporting and record-keeping requirements

164V Reporting and record-keeping requirements

        (1)    The scheme may make provision for and in relation to requiring a person who is a participant in the scheme to give one or more written reports to the Authority.

        (2)    The scheme may make provision for and in relation to requiring a person who is a participant in the scheme to:

             (a)    make records of information specified in the scheme; and

             (b)    retain such a record, or a copy, for 5 years after the record was made.

164W Compliance with reporting and record-keeping requirements

Reporting requirements

        (1)    If a person is subject to a requirement under the scheme to give a report to the Authority, the person must comply with that requirement.

Record-keeping requirements

        (2)    If a person is subject to a requirement under the scheme to:

             (a)    make a record of information; or

             (b)    retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

        (3)    A person must not:

             (a)    aid, abet, counsel or procure a contravention of subsection (1) or (2); or

             (b)    induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

             (c)    be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

             (d)    conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

        (4)    Subsections (1), (2) and (3) are civil penalty provisions.

Note:   Part 21 provides for pecuniary penalties for breaches of civil penalty provisions.

This amendment introduces a framework for the minister to create a national white certificate scheme. In environmental policy white certificates are documents certifying that a certain reduction in energy consumption has been attained. In most cases white certificates are tradable and combine with an obligation to achieve a certain target of energy savings. They operate in a similar way to the renewable energy target. I acknowledge the work that the Greens, in particular Senator Milne, have done in relation to the whole issue of white certificate schemes. I know this issue was the subject of a private senator’s bill introduced by Senator Milne. These schemes are common in Australia and they are common in Europe.

Australia already has a number of white certificate schemes successfully in operation. The expertise that is being developed through the implementation of these schemes, along with the expertise in relation to energy efficiency measures around the nation, is a vital resource and that is why these amendments do not seek to dictate what a white certificate scheme must look like; rather, in proposed section 164N, they establish a comprehensive consultation process to guide the minister in establishing the scheme. This amendment introduces a new part 7B to the bill, which aims to promote and recognise efficiency in the production and supply of energy for use in residential and commercial sectors and, as detailed in proposed section 164J, it also aims to ensure that the linkages between energy efficiency measures and the emissions trading scheme are properly analysed and accounted for so that any savings from efficiencies are delivered in addition to those realised through the ETS. The principle here is clear: just as the renewable energy target ensures that Australia raises its domestic abatement by setting a minimum standard, so can the introduction of commercial and domestic efficiency measures take these savings even further through positive incentives. So it is a carrot-and-stick approach: polluters feel the impost of greater costs while people doing the right thing are rewarded.

Broadly, this amendment picks up established energy efficiency initiatives that have quantifiable outcomes and, as detailed in proposed section 164M, it is through the trade of either white certificates or equivalent property rights that a market for energy efficiency saving will be created to reward residential and commercial investment in these measures. It means that, when someone signs up for one of these initiatives, they can do so with confidence—confidence that it will cut their costs while not cutting into the emissions savings being made elsewhere. It would also address the current problem with the renewable energy target where, perversely, energy efficiency measures such as solar water heaters are now supplanting investments in renewable energy such as wind farms.

Proposed sections 164O and 164W address issues of implementation and the functions of the Australian Climate Change Regulatory Authority in relation to the scheme as well as record-keeping requirements, and these provisions mirror those of similar sections in other parts of the bill. I commend this amendment to my colleagues and again I acknowledge the work that the Australian Greens have done on this. We need a white certificate scheme in one form or the other.

3:50 pm

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

The government is not going to support this amendment. As part of the negotiations with the opposition—in fact, this was a proposition put to us by environmental stakeholders—we have said that we will establish a Prime Minister’s task group on energy efficiency which will report to the government next year on options for introducing a new energy efficiency mechanism. That might be white certificates; that might be another type of mechanism. I have raised previously with Senator Xenophon that the discussion I had with the International Energy Agency touched on the fact that there were better ways of achieving this outcome than white certificates. So the task group will consider and advise on the most economically and environmentally effective mechanisms that could be considered by the government to complement the CPRS and the RET.

I would make this point, Senator Xenophon: we should not think that these policies are cost free. I think your amendments impose on a liable party—I think you have called it a ‘liable scheme entity’—a requirement to remit certificates or deal with certificates. Obviously, if that liable scheme entity is somewhere in the electricity supply chain, there will be costs associated with that which would flow on, presumably, to the electricity price. That may be a reasonable proposition, but I just make that point in the context that the impact on the electricity price was one of the discussions we were having previously.

3:52 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I am keen to advance the debate, so perhaps I could put some questions on notice. Minister, I may be mistaken, or I may have blinked and missed some of the debate, but I think I put some questions on notice about 26 hours ago in the debate. This is not a criticism. There were some answers given. I may be mistaken and I am happy to take it up with your office. I do not want to unduly hold up the debate on some of the matters raised. Minister, I am happy to have communications with your office in relation to that. I may put some questions on notice before the end of this debate. The minister indicated that the International Energy Agency suggests that white certificates may not be the best approach. Could the minister provide more details?

3:53 pm

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

I will do that now. As I have said to you privately, this was in a discussion I had with one of the IEA individuals responsible for energy efficiency on his recent visit to Australia, so it may or may not be part of formal IEA policy. My recollection is their most recent document does traverse this in some detail, but this was a discussion which I think was consistent with the speech that was subsequently given by Dr Jollands, I think his name was.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I appreciate that. If there are any further documents that the government has or can direct me or my colleagues to in relation to white certificate schemes, I would welcome that. But, again, I am happy to take that on notice or even for it to be by way of correspondence so that this debate is not held up. Can the minister give an approximate time frame for the consultation that has been referred to with respect to the best way forward, whether it is white certificates or some other energy efficiency approach?

3:54 pm

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

I thought I just did that, Senator. I will read page 15 of the document I have tabled. The government will also develop:

… a new Energy Efficiency Mechanism in 2010 with input from a new Prime Minister’s Task Group on Energy Efficiency.

The Government will establish a new Prime Minister’s Task Group on Energy Efficiency.

The Task Group will report to the Government by mid-2010 on options for introducing a new Energy Efficiency Mechanism.

The Task Group will consider and advise on the most economically and environmentally effective Energy Efficiency Mechanisms that could be considered by the Federal Government to complement the CPRS and the RET.

3:55 pm

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

We will support this amendment from Senator Xenophon. The opportunity for energy efficiency has been there for a very long time. This is the low-hanging fruit that has not been taken up by the government, and it is a real tragedy, not only at the residential level but certainly at the commercial level. The legislation that the Greens have introduced in relation to this is world leading and recognised as such—as one of the most progressive pieces of legislation in the commercial field. I recognise there are people who helped us. It is not as if we dreamt this up ourselves. Several people operating in the field, Lend Lease included, worked with us on it and I would commend it to the government and its task force. But in the meantime I will support Senator Xenophon’s amendment.

3:56 pm

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

If I could just clarify this, Senator Xenophon, you have previous questions which we have not answered. I apologise. I thought I had responded to those, but I will now check. Then you had questions you were going to put on notice about the IEA, but I think I have dealt with them. Is that correct?

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

Yes. I just wanted to confirm—thank you.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Could I just make it clear that some answers have been given. My understanding is that there are a couple of outstanding answers, but I am happy to liaise with your office in relation to that. I do not want to hold up this debate. I do not know if the opposition has a position on this. I do not want to take up time by dividing; I just want to get an idea of where the opposition stands in relation to white certificates.

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I was going to make a contribution, and I thank Senator Xenophon for bringing this amendment to the Senate. I think it is public knowledge that an amendment along similar lines was part of what the opposition was in fact proposing to the government. For whatever reason, the government unfortunately rejected that proposal. At this stage the opposition is minded not to support Senator Xenophon’s amendment, but nevertheless I can indicate that we are attracted very much to the general proposition that he has expounded.

Question negatived.

3:57 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I thank the Greens for their support in relation to that last amendment. I move amendment (1) on sheet 5913:

(1)    Page 204 (after line 4), after Part 7, insert:

Part 7C—Legacy waste or closed landfill facility scheme

Division 1—Introduction

164X  Aim and objects

                 The aim of this Part is to create additional incentives for abatement from legacy waste or closed landfill facilities under the carbon pollution scheme.

164Y  Interpretation

                 In this Part:

CPRS means the carbon pollution reduction scheme, other than the provisions of this Part.

scheme means the legacy waste or closed landfill facility scheme formulated under section 164Z.

164Z  Legacy waste or closed landfill facility scheme

        (1)    The regulations must formulate a scheme (to be known as the legacy waste or closed landfill facility scheme) for the issue of free Australian emissions units in respect of abatement from legacy waste or closed landfill facilities under the CPRS.

        (2)    The scheme must provide that free Australian emissions units must not be issued to a person in accordance with the scheme unless the person:

             (a)    meets such requirements as are specified in the scheme; and

             (b)    has a Registry account.

        (3)    The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2010.

        (4)    The scheme must provide that a person is entitled to apply for and receive free Australian emissions units in respect of activities connected to a legacy waste and closed landfill facility without regard as to whether the infrastructure of the facility:

             (a)    was in place prior to the commencement of the CPRS; or

             (b)    was installed specifically to create offsets under the CPRS; or

             (c)    was installed to meet regulatory requirements which are in force, or may come into force, under any other law or regulation; or

             (d)    meets the requirements of any abatement regime which is in force, or may come into force, under any other law or regulation.

        (5)    The scheme must not apply in respect of any person, activity or facility unless that person, activity or facility meets all of the requirements of the CPRS other than in respect of the matters specified in subsection (2).

        (6)    The scheme may make provision for any of the matters mentioned in sections 168 to 173C, as if a reference in those sections to the emissions-intensive trade-exposed assistance program were a reference to the scheme.

        (7)    The scheme may contain ancillary or incidental provisions.

This relates to legacy waste and landfill facility schemes. This amendment acknowledges innovative technology which holds huge potential for abatement but which some would say has been largely ignored, mainly landfill waste capture. I think there was a good discussion with the minister yesterday in the chamber about this. There is a concern that, while landfill gas energy providers are able to trade carbon credits from the combustion of landfill gas under the NGAS and GGAS programs, this situation will cease with the commencement of the CPRS.

I will not traverse what was raised yesterday, but I will mention very briefly the discussion I have had with Mr John Falzon, the managing director of LMS Generation, who in recent years has sold approximately 850,000 tonnes of abatement under the Australian Greenhouse Office’s Greenhouse Friendly program. There is a concern about the whole concept of additionality and both existing projects and future projects that will be put at risk. I could go on further, but I think it was traversed adequately yesterday and I am hopeful that those genuine projects will still be able to thrive under an ETS.

3:59 pm

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

We had a long discussion about this, I think, Senator Xenophon, in the hazy past, however many hours ago.

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

I am pleased that you truncated it. The government does not support this amendment. The effect of the amendment is to ensure that these particular projects would receive credits or offsets under the scheme even if this activity would have occurred anyway. That is contrary to the concept of additionality, and the reason we have to be very clear about that principle is that offsets enable additional emissions within the cap—so they have to be real offsets. We have an additionality test which I traversed with the Senate yesterday or the day before. Or was it Friday? It was some time ago. But the effect of this amendment is to say that, even if you do not meet the test of this being additional, we are going to give you offsets. We do not think that is a sensible proposition.

4:00 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I guess another aspect of it is that there is a concern that those who are early adopters will effectively be penalised for doing what they did previously. Unless they satisfy the additionality test they will be penalised, as I understand it, because it means that in some regions a plant would have to close down through lack of viability. But as I understand it, Minister, your office has been available to discuss this whole policy issue with those landfill operators so that we do not lose those plants which actually do make a positive contribution to reducing emissions. There is a concern amongst the early movers that they have invested in power generation and abatement infrastructure under existing abatement schemes and that they are unlikely to meet additionality requirements under the new rules. I just hope that the concerns of LMS will not come to fruition, but I think there is goodwill on the part of the government to make sure that will not occur. So hopefully there will be further discussions in relation to this. This amendment was to try and ensure that especially those regional abatement programs, both existing and proposed, can still proceed and can make a positive contribution, in a number of communities, to abatement.

4:01 pm

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

I would just like the minister—and I apologise for not being across the detail of the arrangement between the government and coalition—to explain to me about the offsets allowed for closed landfill under that arrangement. If what Senator Xenophon is proposing is not additional, why is it that the offsets under the government and coalition’s deal are? I may have completely misread that because I am not across the detail as much as I should be.

4:02 pm

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

I thought you were in the chamber for the discussion I had with Senator Xenophon on this issue, but perhaps not. The key difference between us is how you define ‘additionality’. If you read Senator Xenophon’s amendment, in subsection 4, it says that you can ‘apply for and receive units in respect of activities connected to a legacy waste’ et cetera without regard as to whether the infrastructure of the facility was in place before the CPRS ‘was installed specifically to create offsets’, was ‘installed to meet regulatory requirements’ et cetera or ‘meets the requirements of any abatement regime which is in force.’ It is a different additionality test. Our test, which we traversed and passed earlier—and I think you were in the chamber because you were having a discussion about, perhaps, land use—is section 259K(2)(c):

… the project would not have been proposed or carried out in the absence of the issue of free Australian emissions units in accordance with the domestic offsets program …

In other words, that is a general principle of additionality. We had a long discussion about this and, for everybody’s sanity, I would really like it if we did not go back into it again. There will obviously be methodologies that will differ depending on which offset, but the difference between the view of Senator Xenophon and that of the government is in what the overriding principle of offsets is.

4:00 pm

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I indicate, on behalf of the opposition, that we will not be supporting Senator Xenophon’s amendment.

Question negatived.

4:04 pm

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

by leave—I move Australian Greens amendments (37), (38), (40) to (44), (47), (48), (50), (55) and (56) on sheet 5786 together:

(37)  Clause 165, page 205 (line 16), at the end of paragraph (2)(c), add “, only to the extent necessary to offset the loss of competitiveness created by the absence of carbon pricing policies in the economies of foreign competitors of the activity”.

(38)  Clause 165, page 205 (after line 30), at the end of the clause, add:

        (3)    To avoid doubt, transitional assistance under this Part must not compensate for the loss of profits or reduced asset values resulting from the existence of the scheme embodied in this Act and the associated provisions.

(40)  Clause 166, page 206 (lines 1 to 16), omit the clause, substitute:

166  Simplified outline

                 The following is a simplified outline of this Part:

  • The regulations may formulate a program, to be known as the emissions-intensive trade-exposed assistance program, for the auction of Australian emissions units in respect of activities that:
(a)
under the program, are taken to be emissions-intensive trade-exposed activities; and
(b)
are, or are to be, carried on in Australia during a financial year specified in the program.
  • The regulations may provide for assistance under the program in the form of compensatory payments to an emissions-intensive trade-exposed activity, for each unit of production, by way of a credit against the activity’s emissions obligations equivalent to the expected increase in world product prices that would eventuate if foreign competitors had carbon pricing policies similar to those of Australia.
  • The emissions-intensive trade-exposed assistance program may impose reporting or record-keeping requirements on a registered holder under the program of auctioned Australian emissions units.

(41)  Clause 167, page 207 (line 6), omit “issue of free”, substitute “auction of”.

(42)  Clause 167, page 207 (after line 10), after subclause (1), insert:

     (1A)    All Australian emissions units issued for the purposes of the emissions-intensive trade-exposed activities program must be auctioned.

(43)  Clause 167, page 207 (after line 10), after subclause (1), insert:

      (1B)    The regulations may provide for assistance under the program, in the form of compensatory payments to an emissions-intensive trade-exposed activity, for each unit of production, by way of a credit against the activity’s emissions obligations equivalent to the expected increase in world product prices that would eventuate if foreign competitors had carbon pricing policies similar to those of Australia.

      (1C)    The Minister must consult the Productivity Commission before making a recommendation to the Governor-General about regulations to be made for the purposes of subsection (1B).

(44)  Clause 167, page 207 (line 12), omit “free”, substitute “auctioned”.

(47)  Clause 169, page 208 (line 6), omit “free”, substitute “auctioned”.

(48)  Clause 170, page 208 (line 15), omit “free”, substitute “auctioned”.

(50)  Clause 173B, page 213 (lines 14 to 20), omit subclause (2), substitute:

No compensatory payments for 2 eligible financial years

        (2)    No compensatory payments in accordance with the emissions-intensive trade-exposed assistance program are to be made to the corporation for:

             (a)    the first eligible financial year that begins after that time; or

             (b)    the eligible financial year that next follows the eligible financial year mentioned in paragraph (a).

(55)  Clause 273, page 357 (line 2) to page 358 (line 2), omit subclauses (1), (2) and (3).

(56)  Clause 274, page 358 (line 13) to page 359 (line 7), omit the clause, substitute:

274  Quarterly reports about issue of free Australian emissions units under Part 11

                 As soon as practicable after the end of each quarter, the Authority must publish on its website the total number of free Australian emissions units with a particular vintage year issued during the quarter in accordance with Part 11 (destruction of synthetic greenhouse gases).

These amendments go to the issue of the compensation that is being proposed in the scheme to the energy-intensive trade-exposed sector. The amendments we are moving are entirely consistent with Professor Garnaut’s assessment of what is and what should be appropriate. I will make a few comments in relation to this.

As Professor Garnaut said in his review, this is ‘a dreadful problem’. He talks about the potential distortion that arises:

… if an Australian emissions trading scheme is introduced in the absence of, and until such time that there is, an international arrangement that results in similar carbon constraints or carbon pricing among major trade competitors.

He goes on to say that we should compensate the energy-intensive trade-exposed sector for the extent of their trade exposure. He says, particularly, that:

There is no basis for compensation arising from the loss of profits or asset values as a result of this new policy.

That policy is the CPRS. He continues:

The rationale for payments to trade exposed, emissions-intensive industries is different and sound.

That is different from there being no case for the coal fired stations. He goes on to say that that compensation:

… is to avoid the economic and environmental costs of having firms in these industries contracting more than, and failing to expand as much as, they would in a world in which all countries were applying carbon constraints involving similar costs to ours.

His point is that there is an argument for compensation for trade exposure but trade exposure only, and that is precisely the Greens’ position.

I have heard the minister say a couple of times in the media that the Greens do not support any compensation to any industry, and that is not correct. These amendments have been on the record now for several months—a couple of months, at least. We have said that we support the Garnaut position: no compensation to coal fired generators and compensation to the energy-intensive trade exposed to the extent of their trade exposure. We do not support compensation for loss of profits, and we do not support them for loss of asset value. They have known the impact of a carbon price in terms of their profits and their asset value over time, and that has been factored into their share price and all of the decisions they have made. This is pure rent seeking, windfall profit behaviour from them. It is, frankly, despicable.

I look at, in particular, Woodside and Don Voelte’s role in this. If ever there were going to be an industry sector to profit from peak oil, it would be gas. To see him out there rent seeking in the most disgraceful manner is quite interesting. But, then, I do recall that just before the last federal election in 2007 there were not very many companies coming out supporting the Rudd government’s proposals in relation to Work Choices—and then out came Woodside. Out they came, days before the federal election, in Western Australia where the votes were needed. It was orchestrated fabulously. I could not help but smile, recognising, of course, that the former National Secretary of the Labor Party, Gary Gray, worked for Woodside for many years leading up to his preselection for Labor in the seat of Brand. Out comes Don Voelte saying that his company could work with a Labor government. Labor is elected. Gary Gray is appointed Parliamentary Secretary for Western and Northern Australia, where, happily, Woodside works. Now we have the Labor Party in a tight corner again, and along comes Don Voelte. They get their incredible compensation for absolutely no justification in terms of the position that Woodside put for the compensation that they ended up with. Now Don Voelte is out again saying, ‘Support the legislation.’ Well he would, because he knows that it is utterly and completely unjustified and a total try-on, and any real assessment of this will show it in the future, and he might as well lock in what he can get now as long as he can get it. That is basically, in a nutshell, the kind of behaviour you get.

It was identified in the Garnaut review that, unless you have a principled position—a set of principles against which you judge how much you provide for trade exposure—you get completely political decisions being made. They are completely compromised decisions; they do not reflect any real situation in the market at all. They are just about how many lobbyists you employ, how much you have in political influence and how much publicity you can get, and then you end up with a figure. That is exactly what Professor Garnaut warned about, and he said it is just a diabolical situation. He has said over and over again that you will end up with a political compromise that does not reflect the real situation. I recall that in the estimates process I did put this to the government, and it was admitted that all the arguments about leakage, all the arguments about loss of profit et cetera were yet to be proven and there was in fact no evidence for them. There is evidence for trade exposure—of course there is—and that should be looked at.

This proposition is that the compensation for energy-intensive trade-exposed industries should be for their trade exposure; that the minister should set in the regulations a definition of the principles against which you would measure that trade exposure; that the minister would take that advice from the Productivity Commission, which, before the regulations were set, would have done the work on that; and that the compensation be paid in cash after you have auctioned all the permits, which is something the Greens put as a proposition.

I will not take up any more time of the Senate. I would like to indicate here that this is a similar amendment to the next one. But I have moved this set together, and I recommend them to the committee. What we have seen is a disgraceful display of rent seeking and massive amounts of money spent on lobbyists in the last few months. Instead of these companies spending money on actually reducing their emissions, we have had a huge amount of money spent in sending lobbyists to Canberra. It seems that the squeaky wheel has well and truly been oiled in terms of the proposition for compensation for the energy-intensive trade-exposed industries, and it is yet another example of the flawed nature of this particular scheme. I commend these amendments to the committee. It is the economic position that is justified. It is an economic position which is based on a set of principles and not on who can exercise the most political influence. It is what Professor Garnaut recommended, and the Greens agree.

4:13 pm

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

I have spoken at length in this chamber, and I am happy to speak again if the Senate and the senator wants a more detailed response. We do not support these amendments. We do have a different approach. We think that having a measured transition supporting jobs in existing industries is sound public policy. We have put forward a set of propositions which do not shield anyone completely from the carbon price—people still face the carbon price, so people are asked to do their share—but which recognise that until there is more substantively widespread global action some of our industries will face a carbon price where their competitors do not or will face a different carbon price.

So we have been very clear about our policy objectives in relation to providing this transitional assistance. We do not believe that the assistance before the chamber is practical and nor can it be effectively calibrated to achieve the objects of emissions-intensive trade-exposed assistance. More importantly, in many ways it does not provide certainty to business in relation to the assistance that it is going to receive. It is important as we are going through an economic transition that that certainty is provided. Business needs to have a clear sense of how to manage carbon risk and what the level of assistance will be. I do not want to get drawn into another political debate. I have put on the record before my continued rebuttal of the Greens proposition that every time a government or an individual does something it is because they have been corrupted by lobbyists or pressured. It is somewhat tiresome that they simply refuse to believe that people can make decisions that are different from theirs because they have come to a different view. That is the case in relation to a whole range of areas to do with this policy.

4:15 pm

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

Just for the record, the coalition in general terms agrees with the minister’s contribution and will be not supporting the amendments from the Greens.

Question negatived.

4:16 pm

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

I would like it noted that neither the government nor the coalition voted for those amendments.

Moore Sen Scott (the Temporary Chairman):

The question is that clauses 168 and 171 stand as printed.

Question agreed to.

4:17 pm

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

by leave—I move Australian Greens amendments (39), (45), (51) and (58) on sheet 5786 together:

(39)  Clause 165, page 205 (after line 30), at the end of the clause, add:

        (4)    To avoid doubt, the Minister can at any time vary the transitional assistance provided to an activity under this Part in response to changes in the carbon pricing policies in the economies of foreign competitors of the activity.

(45)  Clause 167, page 207 (after line 18), at the end of the clause, add:

        (4)    Any regulations made under subsection (1) which prescribe a carbon productivity contribution that is to apply to an emissions-intensive trade-exposed activity must not prescribe a contribution rate that is less than 4% per financial year.

(51)  Page 214 (after line 3), at the end of Part 8, add:

Division 5—Review of operation of emissions-intensive trade-exposed assistance program

173D  Review by Productivity Commission of operation of assistance program

        (1)    The Productivity Commission must review and report to the Minister on the operation of the emissions-intensive trade-exposed assistance program.

        (2)    The review and report must be conducted in relation to each of the following periods:

             (a)    the 3-year period commencing 1 July 2010;

             (b)    each successive 3-year period.

        (3)    The report in relation to a review must be provided to the Minister within 60 days after the end of the 3-year period to which the review relates.

        (4)    Without limiting the matters to be covered by a review under subsection (1), the review must include an examination of the operation of the program:

             (a)    to determine if there is any evidence of leakage occurring directly as a result of domestic producers facing a higher carbon price relative to major foreign competitors;

             (b)    to assess the impact of any leakage on the level of jobs, production and emissions in the industry experiencing this leakage;

             (c)    to assess the economy-wide case for continuing compensatory payments to individual activities, taking into account the impact of the emissions-intensive trade-exposed assistance program and the Electricity Sector Adjustment Scheme on the competitiveness, job creation, production levels and emissions of other domestic industries;

             (d)    if relevant, to make recommendations about policy options to reduce leakage.

        (5)    The Minister must, within 60 days of receiving a report, review the compensatory payments provided to individual activities under the program and determine whether or not the levels of compensatory payments need to be varied.

        (6)    If the Minister determines under subsection (5) that the levels of compensatory payments to individual activities need to be varied, the Minister must take all reasonable steps to ensure that regulations are made for that purpose within 120 days of having received the relevant report.

        (7)    Regulations made under subsection (6) must not take effect until the beginning of the financial year next after the financial year in which the regulations are made.

        (8)    If the Minister determines under subsection (5) that the levels of compensatory payments do not need to be varied, the Minister must, within 5 sitting days of making that determination, cause to be tabled in each House of the Parliament a written statement setting out the Minister’s reasons for making the determination.

        (9)    If:

             (a)    the Minister determines under subsection (5) that the levels of compensatory payments do need to be varied and regulations are made for that purpose under subsection (6); and

             (b)    on a particular day (the tabling day), a copy of the regulations is tabled before a House of the Parliament under section 38 of the Legislative Instruments Act 2003;

then, on or as soon as practicable after the tabling day, the Minister must cause to be tabled before that House a written statement setting out the Minister’s reasons for making the determination under subsection (5).

(58)  Clause 353, page 439 (lines 5 to 8), omit “having regard to the general principle that industry should be given at least 5 years notice of material changes to the provision of assistance under the program”.

These follow on from the compensation to the energy-intensive trade-exposed industries. The first amendment, for example, is:

To avoid doubt, the Minister can at any time vary the transitional assistance provided to an activity under this Part in response to changes in the carbon pricing policies in the economies of foreign competitors of the activity.

In other words, there will be no notice period for changes to EITE compensation. It is a good opportunity to also get the minister to reaffirm the government’s position. I thought that we had done this the other day, but when I read through the transcript it was not clear. I would ask for the minister to clarify this.

In terms of the EITE compensation, we do not think that there is any reason why a minister ought not be able to immediately change the EITE compensation when foreign competitors change their position. That should be something that is able to be done immediately. I asked the government about the five per cent to 25 per cent target. It is a total hypothetical. I recognise that it is the government’s policy not to go beyond a 25 per cent cut in emissions below 2000 levels by 2020. But if the government did adopt a 30 per cent target, for example, is it possible to change the gateways and caps in the CPRS without incurring any compensation liability? I ask the minister to be clear on this. I thought that the minister had said yes to that the other day, but the transcript does not make that clear. I want to ask the minister to put that on the record while we are discussing this.

4:19 pm

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

I think that I have put our view on the record. It may be that you would like a different answer. What I indicated is that the government’s view is that it is not correct to assert that stricter targets would give a basis for compensation. We had a long discussion about whether or not an acquisition of property was involved.

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

Yes, but there is another issue here. You can certainly have a higher national target. If that did not translate into the gateways and caps, then of course it would not result in any more compensation. It would be done somewhere else in the economy. This question is specifically about if Australia adopts a higher target and that higher target translates into the CPRS caps and gateways. That is the issue that I am talking about, not whether you have a higher target and the effort is made somewhere else in the economy. I just want to clarify that.

4:20 pm

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

I have two responses. I think one is the same answer. I am not sure what the senator is suggesting. Is this some hypothetical world where there is bipartisan agreement around targets changes? Is that the basis of the discussion?

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

I think that it is the same answer, Senator.

4:21 pm

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

It has nothing to do with any negotiation between the government and the coalition. It is purely to do with the issue of a higher carbon task being taken on by a government in the future. If that relates to a tightening of the cap and the gateways, does that result in additional compensation? I understand that the minister is saying that it does not. I want to clarify that with the minister before I move on to the other amendments.

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

We did spend about an hour on this. I will say again that the government does not believe that stricter targets would give a basis for compensation. We do not believe that that assertion is correct. One of the reasons for that, and one that you and I discussed on the last occasion, is the question of whether or not there was an acquisition of property such as would provide a basis for just and earnest compensation.

4:22 pm

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party) Share this | | Hansard source

I will say, very briefly, that this matter was discussed yesterday and the minister read out those comments that had been given to her by the department advising that the government does not believe compensation will be paid. The response from this side is: please provide the evidence to support that claim. This is a critically important matter. It is a matter of sovereign risk, and the issue flows to the compensation that may or may not be payable by governments—this one or a future one. Where is the evidence? That is all I ask. I asked that question yesterday; I ask it again today. This is critically important. Please provide the evidence to back up the claim that you do not believe compensation will be payable.

Once this legislation is passed it is irreversible so I ask: do you have any evidence to support that claim? Do you have any legal advice to support that claim? If you do, could you please table it and provide that evidence to this Senate chamber. Simply saying that the government does not believe compensation is payable is not a guarantee. It is not categorical and this is a very serious issue. Senator Milne has asked a very legitimate question. It came up yesterday and we have not got the answer.

4:23 pm

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

The proposition is: please give us legal advice, if any, that you or a future government might be relying on, in order to defeat a future claim. I do not think anyone in your government would have provided such advice in such circumstances if it existed. As the minister representing the government here, I have put the government’s view to the chamber. We do not believe that the advice provided to Senator Milne is correct—for the reasons I have traversed in quite great detail.

4:24 pm

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

I will just speak briefly to the amendments. I thank the minister for that clarification. The amendment in clause (39) says, as I indicated, that the minister can at any time vary the transitional assistance in response to the changes that foreign competitors might make and that no notice needs to be given. The amendment to clause (45) relates to carbon productivity. Essentially, as we have it at the moment, if the energy-intensive, trade-exposed industries receive permits on the basis of trend carbon efficiency improvements they will be able to sell their cost-effective emissions abatement that goes beyond trend carbon efficiency and make a profit.

We do not believe the 1.3 per cent that is being proposed is adequate. That is why we are moving here to say that any regulation which prescribes a carbon productivity contribution that is to apply to an energy-intensive trade-exposed activity must not prescribe a contribution rate that is less than four per cent per financial year. So we are essentially saying that 1.3 does not give us comfort that these companies will not make windfall gains by being able to sell their cost-effective emission abatement beyond trend efficiency. So we would like to see that addressed.

The next amendment goes to a review period. We are saying here that the Productivity Commission must review and report to the minister on the operation of the energy-intensive trade-exposed assistance program and it must be a three-year period from the commencement of the scheme and at each successive three-year period. And the last amendment takes out the five-year notice for changes to ET compensation.

4:27 pm

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

I indicate that the government does not support the amendments. I can go through them in detail if the Senate would like the reasons—primarily they relate to the issue of certainty.

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

The minister has said that this goes to the issue of certainty, after having just said that you can increase the annual caps and the gateways if there is a change to the national target and that you can flow that back through. If that is the case I do not quite understand what the minister is saying. That surely does not give you any certainty and we are saying that we do not want certainty locked in to the extent that there are windfall gains. We want reviews over a shorter period of time and we want to make sure that the ET industries do not end up with the windfall gains because of that productivity contribution.

4:28 pm

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

In an effort to try and expedite debate I thought I would not traverse again the very many debates we have had about ET assistance but I will if the senator wants me to. I want to make it clear again—because of the way in which the senator postulated it—that I did not indicate, in any way, any move from the government’s targets or gateways at 2020. So nothing I said should be taken as suggesting we are altering our bipartisan agreement—it was bipartisan until this morning; I do not know if it still is—around the targets.

If you want me to go through in detail why we do not agree with the emissions-intensive, trade-exposed provisions here I can. Is that what you would like? In relation to certainty we do not think it is sensible, when you are trying to encourage business to make the transition, to not have a notice period for change to the assistance. This is a recognition of how business decisions are made. They are not made in terms of investments, looking at only one or two years worth of assistance; these are often long-term investments and long-term decisions. We do not think it is sensible, when you are trying to encourage investment, and when you are trying to encourage certainty, to have a situation where you can unilaterally alter the transitional assistance with no notice. We do not think that is an economically sensible proposition. The carbon productivity contribution of at least four per cent per annum is certainly higher than the government’s unconditional target. Effectively, if there was no action by the rest of the world and the government only implemented its unconditional target, you would be asking this traded sector of the economy to do more.

If you look at the review provisions the government has in place, we have committed to drawing upon the Productivity Commission reference and thorough reviews of the EITE assistance program by the expert advisory committee. We have, yet to come before the chamber, amendments for an automatic review in the context of a new international agreement. I think I have dealt with the review of the EITE program, the five-year notice period and the carbon productivity contribution, which were the three issues raised.

4:30 pm

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

I want to go to the productivity contribution. I want to know whether it is possible for new entrants to obtain more permits than they require because they will be allocated on baselines set on industry average rather than industry best practice. If a new entrant is highly efficient compared with the industry average, aren’t they going to get a windfall gain under the government’s scheme? And isn’t that incredibly economically inefficient and damaging because it is essentially providing a windfall gain or a subsidy that offsets the whole point of the price mechanism?

4:31 pm

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

Senator, one of the propositions the government has put forward is to introduce a no windfall gains policy. You may not have had the opportunity to consider that. If you look at page 2 of the offer document, the government has also committed to:

modify the EITE assistance policy to cap EITE allocations to 100 per cent of an EITE entity’s direct and indirect electricity and steam emissions costs to reduce the likelihood that windfall gains will be provided to EITE industries under the program;

In fact, the new entrants issue that you raise is precisely one of the circumstances that we became mindful of. If an industry is very energy inefficient and a new entrant’s energy efficiency is higher than the industry average, you could have that situation, so we have modified the policy to reflect that.

4:32 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

I just indicate on behalf of the opposition that we will not be supporting the Greens amendment. In the interests of time, given this issue was dealt with in some detail yesterday, I do not propose to add any further comments.

Moore Sen Scott (the Temporary Chairman):

The question is that Australian Greens amendments (39), (45), (51) and (58) on sheet 5786, moved by Senator Milne, be agreed to.

Question negatived.

4:33 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I move amendment (12) on sheet 5912:

(12)  Clause 167, page 207 (after line 10), after subclause (1), insert:

      (1F)    The emissions-intensive trade-exposed assistance program must provide that within 2 months of being issued with free Australian emissions units for a year in accordance with the program, the person to whom the units are issued must prepare a business plan in relation to the activity and submit it to the Minister.

      (1G)    A business plan prepared under subsection (1F) must demonstrate:

             (a)    a commitment to reducing carbon emissions in relation to the activity; and

             (b)    that there will not be a net reduction in jobs in relation to the activity, other than as a result of investment in new technologies.

     (1H)    A person who has submitted a business plan under subsection (1F) must submit a progress report on its implementation by the end of 10 months after the day on which free Australian emissions units were issued to the person.

       (1I)    The Minister must within 30 days assess a progress report submitted under subsection (1H) in accordance with assessment criteria specified in the regulations and determine whether or not the objectives of the business plan are being met.

       (1J)    If the Minister determines under subsection (1I) that the objectives of a business plan are not being met, the Minister may determine that the person is required under section 168 to relinquish all of, or a proportion of, the free Australian emissions units issued to the person for that year.

     (1K)    If the Minister determines under subsection (1I) that the objectives of a business plan are being met only in part, the Minister may determine that the person is required under section 168 to relinquish a proportion of the free Australian emissions units issued to the person for that year.

This amendment relates to viability requirements. It provides criteria by which business plans can be used to demonstrate that businesses receiving assistance are both economically viable and environmentally responsible. Any assistance should be linked to these requirements. I believe that, if a business receives assistance, it needs to show the community that it has a plan in place to cut emissions, to protect jobs and to stay in business.

The thrust of this amendment is that businesses who receive assistance will have to produce a plan to perform against; otherwise, they will be liable to relinquish their assistance, either in full or in part. It should reassure regional communities to know that, as part of receiving assistance, entities will be required to keep jobs in the community. This amendment provides a clear incentive to do the right thing. It is a case of mutuality, in a sense—you cannot receive assistance unless you can demonstrate that you have a plan to lower your emissions and also not to shed jobs by virtue of that assistance. I commend the amendment to my colleagues.

4:34 pm

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | | Hansard source

The government do not support the proposed amendment. In essence, the effect of the amendment is twofold. It requires entities receiving assistance to submit a business plan which demonstrates ‘a commitment to reducing carbon emissions’ and demonstrates ‘that there will not be a net reduction in jobs in relation to the activity’. It also appears to empower the minister to order the relinquishment of some or all of the emissions units if ‘the objectives of the business plan are not being met’.

The difficulty with the amendment is that it would create enormous uncertainty regarding whether or not a business would be entitled to the assistance. It would mean that each year’s allocation would be—and this would trouble me somewhat—at the whim of the minister of the day. Effectively, if the minister had the power to order the relinquishment of some or all emissions units, at the beginning of the year you would not know whether or not that was going to occur. In addition, a whole range of decisions made by a business over the course of a year may potentially cause a reduction in, or removal of, assistance. It creates significant business uncertainty. We are about providing business certainty. The amendment also contradicts one of the main purposes of the CPRS, and that is to ensure that the system does not require continuous regulatory intervention.

I am sure, Senator Xenophon, if you turn your mind to the explanation, you will see that the amendment does a couple of things. It provides business uncertainty. It also means that the minister would be in the process more than we intended. One of the problems at its base is that it places a compliance burden on business in receipt of the assistance, and that, I am sure, is not what you are trying to achieve. I can in part see the purposes of your amendment, but for the reasons I have outlined the government opposes the amendment. It does not provide what I would call a beneficial effect for business, neither with certainty nor with the increased obligations there would be on businesses.

4:38 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I thank the minister for his response. Is the minister saying that the government will dole out billions of dollars worth of assistance for industry, but there is no obligation to have a plan to reduce their emissions? That is what this amendment is seeking to do, to say that if you get assistance it ought to be part of an overall plan to reduce emissions.

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | | Hansard source

Clearly what the scheme does is provide incentives to reduce carbon emissions. That is how a cap-and-trade system operates. So there are significant incentives within the system to reduce their carbon emissions, and if they fail to reduce their carbon emissions then the scheme kicks in and the consequences of that are clear within the Carbon Pollution Reduction Scheme. What Senator Xenophon’s system seeks to do is in fact not allow that to work by interposing the minister and providing onerous compliance obligations on businesses in receipt of the assistance, which is not at the heart of what the CPRS is designed to do.

4:39 pm

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

I think what Senator Xenophon has recognised is that the deal that was done between the government and the coalition transfers billions of dollars to coal fired generators, for example, and there is no guarantee whatsoever from those coal fired generators in relation to jobs. We have had many people in the coalition running around telling coal communities that the way to save their jobs and save those communities is to give billions of dollars to multinational corporations when there is absolutely no justification whatsoever for transferring such a vast amount of money across to those coal fired generators. There is absolutely no justification for it in economic terms. It is rent seeking in the extreme, and there is nothing in the deal between the government and the coalition that says those multinational corporations owe anything to their workers.

I disagree with Senator Xenophon in requiring them to maintain exactly the same workforce because, as I understand the plan, if you are going to reduce emissions and you are going to transition to different industries, you might well have a different energy generator who is producing renewables or something as opposed to a coal fired generator. So the issue here is to guarantee communities keep the jobs, have the training and so on and do not just get dumped.

The concern I have, and that Senator Xenophon has clearly articulated in this amendment, is that the government and the coalition have agreed to a plan with five per cent emission cuts. The coal fired generators get $7.3 billion for nothing. There is no justification for it. It is simply because they did a better job than other people in stirring up coal communities, saying that they would shut down, that the lights would go out if they did not get this money, with no justification whatsoever because, as I have said so many times in here, the risk associated with a carbon price was factored into their share price calculation. They have known this was coming for 20 years, and now they can take the money and run—and just watch how some of them do it.

When we come back here in five years time, we will find that $6 billion was taken out of the pockets of the community in compensation and transferred straight across to multinational corporations, laughing all the way to the bank, because at no stage has either the minister or the coalition put on the record what is the economic argument for giving to coal fired generators compensation for the loss of their asset value when that is the whole point of a carbon price—that is, to put a price on carbon such that you bring on alternatives to coal fired generation.

The issue here should have been that this money is not going to coal fired generators but going to the communities in which coal fired generators are located so that there is an industry policy with money so that the structural adjustment in those communities could occur. But, no, that money is not going to the communities. That money is going to the coal fired generators, and just watch them cut and run. And, when they do, all the people who negotiated this deal with the money, the billions, going to them, will say, ‘Oh, they shut down.’ What Senator Xenophon is saying is they should at least have been required to provide a plan of how they are going to cut their emissions.

I would correct the acting minister, Senator Ludwig, who said the point of this scheme is to reduce emissions. The coal fired generators are not going to reduce their emissions out to 2034. They are not going to reduce their emissions. In fact, the deal between the government and the coalition requires the coal fired generators to keep on generating electricity at huge cost to the atmosphere because there will be no carbon capture and storage in that time frame. It requires them to do that or they lose their compensation. It is why it has this ridiculously perverse outcome whereby Western Australia is considering re-commissioning old decommissioned coal fired power plants. It will keep Hazelwood operating, the plant in Victoria long overdue for closure.

What the government and the coalition have done with this scheme is to say, ‘Keep on pumping out coal fired power,’ and that was clearly canvassed on Business Sunday at the weekend. There were any number of analysts saying: ‘What has happened here is that they’ve been paid to keep on polluting rather than being paid to stop polluting, and the communities should have been paid with an industry policy that set up new renewable energy technologies in the Hunter Valley, in the Latrobe Valley and so on. We should’ve gone directly to transfer the benefits to communities, not to multinational corporations.’ So I have got a great deal of sympathy with what Senator Xenophon was trying to do, which was to link the compensation to some jobs guarantees, which are not here. But I cannot concur with the idea that they must retain the same number of employees, because if a scheme worked effectively you would have a transformation out of dirty electricity into the new green jobs in the renewable energy sector and in all the technologies associated with that. In my view that is how the plan should work.

Nevertheless it is an attempt by Senator Xenophon to force some transparency on the multinationals so that they just do not take the money and run, and we still do not have an answer on that from the government. The $7.3 billion that they negotiated for coal-fired generators is for a five per cent reduction. I asked the government to calculate and come back to me with a figure for a 15 per cent reduction in emissions and then a 25 per cent reduction in emissions, but we have not had those figures floating around because I am sure the government and the coalition do not want the Australian people to know just exactly how much they would be prepared to pay multinational corporations, with no economic justification whatsoever. As Professor Garnaut indicated, there is no justification for giving compensation for loss of asset value to coal-fired power stations. We did not do it to the tobacco industry, we did not do it to the asbestos industry and we ought not to be doing it for coal-fired power.

4:46 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I thank Senator Milne for her comments of broad support. If I may direct this to Senator Milne: I envisage that to protect against job losses the idea is that investment must be made in low-emission technologies and alternative industries. That is not inconsistent with the same entity doing that. If a coal-fired generator receives assistance and that goes into co-generation or is invested in alternative energy and that offsets the jobs that are lost as a result of reducing the output or closing down the coal-fired generation aspects of that particular industry, then that is still a win-win in my view. To my coalition colleagues, who I do not think are supporting this, I would have thought that the coalition would be attracted to this since the coalition supported the concept of mutuality in terms of work for the dole. It is a similar sort of approach. If you are receiving assistance you need to give something back for it. Where there is $7.3 billion worth of assistance it is not unreasonable for there to be a business plan in place to say how you are going to reduce emissions as a consequence of the significant taxpayer funded assistance you are receiving in respect of this scheme.

4:48 pm

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I indicate on behalf of the opposition that we will not be supporting Senator Xenophon’s amendment. The principles behind Senator Xenophon’s amendments are important. We believe that we have been able to negotiate with the government, in relation to this aspect, to achieve an outcome that would deliver on this.

In relation to Senator Milne’s comments, I cannot let them go by. The arguments have been well rehearsed over the days. The government’s approach in relation to this is to ensure security of electricity supply. To say that part of an emissions trading scheme is to actually reduce the asset value and do that overnight would of course send shockwaves, and that is why the Victorian state government ensured that the Morgan Stanley report in relation to the viability of Victorian power stations was released. It is a bit like the IPART report, which the New South Wales state government released, dealing with the problems of the energy generators. To simply say: ‘You beauty. This scheme would have this impact,’ when Australian households and Australian industry no longer had certainty of electricity supplies, then you would understand what the impact would be if Green policies—and when I say ‘green’ I mean the Australian Greens party political policies—were to be implemented. So we stand with the government in relation to this. We say that if you do not want Hazelwood operating in Victoria—and I can understand that it is a dated and polluting power station—you actually need an alternative source of power supply, and that is why the government’s arrangements in this area of transitioning are so important. I think Senator Xenophon would not adopt the more extreme approach that Senator Milne was just indicating. So I indicate that the opposition will not be supporting this amendment, on the basis that we believe that an appropriate arrangement has been entered into with the government.

Moore Sen Scott (the Temporary Chairman):

The question is that Senator Xenophon’s amendment (12) on sheet 5912 be agreed to.

Question negatived.

4:50 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

I, and also on behalf of Senator Cash, Senator Back, Senator Eggleston and Senator Adams, move amendment (1) on sheet 6028 revised:

(1)    Page 207 (after line 18), after clause 167, insert:

167A  Application of EITE to liquefied natural gas production

        (1)    The emissions-intensive trade-exposed assistance program must determine that liquefied natural gas (LNG) production is a highly emissions-intensive trade-exposed activity.

        (2)    The activity definition of LNG production for the purposes of the emissions-intensive trade-exposed assistance program must apply to the entire LNG production process, including:

             (a)    the production of the raw natural gas from an underground reservoir; and

             (b)    the transformation of the natural gas, including but not limited to:

                   (i)    pre-treatment of the raw natural gas; and

                  (ii)    liquids (water and condensate) removal; and

                 (iii)    removal of acid gases (such as carbon dioxide and hydrogen sulphide); and

                 (iv)    dehydration and mercury removal; and

                  (v)    any flaring or venting of hydrocarbons and any fugitive emissions (for example from, but not limited to, compressor seals, valves and so on); and

                 (vi)    the liquefaction of the natural gas into LNG; and

             (c)    the short-term buffer storage of LNG, where the volume of that buffer storage is designed specifically for the purpose of enabling efficient loading into the transportation system, such as ocean going tankers, at a frequency and rate determined by the facility’s off-take requirements; and

             (d)    the loading of the LNG into a transportation system such as ocean going tankers; and

             (e)    the supply of utilities such as, but not limited to, compressed air, nitrogen, steam and water where these are used in support of the activity; and

              (f)    the regeneration of any catalysts or solvents used within the activity boundary; and

             (g)    the provision of support operations such as, but not limited to, on-site office, warehousing, and accommodation and the supply boats and aviation services where these are used primarily to support the above activities and in the absence of government supplied support infrastructure.

        (3)    The emissions-intensive trade-exposed assistance program must provide for additional free Australian emissions units (a supplementary allocation) to be issued in respect of LNG production projects at an effective rate of at least 80 per cent.

        (4)    For the purposes of this section, a supplementary allocation of free Australian emissions units is the number of free units required to be issued to a person in relation to a project to bring the aggregate number of free units issued in respect of that project in the previous year to a number equal to the specified percentage rate of assistance.

To put it into context at the outset, we circulated these amendments at a time when it looked as if these bills could well pass the Senate, possibly as early as last Friday. All five of us from Western Australia have been on the record as making it very clear that we thought that this was a very flawed piece of legislation that will not help to reduce global greenhouse gas emissions; that it will be bad for the economy and jobs; that we do not think it should be finalised before the climate change conference in Copenhagen; and that we should defer further consideration until early next year.

Having said that, given the risk we perceived last week that this legislation may well get up, we were very concerned about some specific flaws in this legislation that relate directly to our home state of Western Australia. As senators for Western Australia, standing up for our state, we circulated, in the interests of time, a range of amendments that we will be dealing with today. Given the changes that have occurred in terms of the official position of our party this morning, we will not be going through them perhaps to the same extent that we otherwise might have had to given what I suspect will now happen with the legislation.

Talking about LNG in particular, if there was a truly global scheme the LNG industry would do very well. I note a quote from the economic modelling conducted by Treasury in relation to the Garnaut scenarios:

For the Garnaut scenarios, a single policy measure—a global emissions trading scheme covering all economies and all gases starting in 2013—was used to drive emission reductions across the global economy. This stylised global policy framework allows the greatest flexibility to find and exploit the cheapest mitigation opportunities, rather than prescribe the regions and sectors in which emission reductions should occur.

That is the core criticism that we on this side have of the government rushing ahead with its flawed Carbon Pollution Reduction Scheme. If the Australian ETS was part of a truly global ETS then it could be an effective way of helping to reduce global greenhouse gas emissions and to maximise Australia’s contribution to reducing global greenhouse gas emissions, and the LNG industry in Australia would do very well. Because there is no proper global framework and at this stage no prospect of an appropriately comprehensive global scheme there will be all sorts of negative consequences and, specifically in relation to the LNG industry, some costs would be imposed on the LNG industry in Australia which would not have to be carried by the LNG industry in other parts of the world.

On the basis of the net positive impact that increased Australian exports of LNG would have in helping reduce global greenhouse gas emissions because they would substitute for coal in China and India for example, we think that this should be recognise by having LNG elevated at least to the top tier of emissions-intensive trade-exposed industries—that is, the so-called 94.5 per cent category. The amendment that we move essentially would effect that. We also think that the activity definition that the government has put forward in relation to the so-called supplementary allocation should be locked in as the activity definition for all allocation purposes and it should not be subject to being opened up by the independent expert review through the back door—that is, the government should not be able to wind it back through the back door. Finally, given the important net positive contribution LNG can make to help reduce global greenhouse gas emissions we believe that a floor of 80 per cent should be incorporated for supplementary assistance rather than the suggested 50 per cent.

By way of general summary, if the objective of the government truly was to help reduce global greenhouse gas emissions and to maximise the contribution that Australia can make to help reduce emissions then clearly the LNG industry would be seen as being able to make a significant contribution to that. There is a great opportunity here for a win-win situation where we can go for economic growth at the same time as helping to address our global environmental challenge. From the point of view of my home state of Western Australia this is particularly relevant because we have some significant LNG projects under way and there is the potential for a number of other very significant LNG projects to go ahead in the future. Rather than constraining the growth of this industry by imposing additional costs not placed on our competitors, the government should be facilitating its growth in the interests of both our economy and the environment.

4:55 pm

Photo of Judith AdamsJudith Adams (WA, Liberal Party) Share this | | Hansard source

As a Western Australian senator I too would like to join my colleagues in describing how important the LNG industry is to Western Australia. As most of you know, it is predominantly off the north-west of Western Australia. It is a new generation resource of utmost importance to the Australian economy and we must do everything we can to help it be a profitable industry to ensure the development of new projects to provide a consistent stream of revenue and employment.

Today work has started on the $43 billion Gorgon gas project. This development of Australia’s largest resource project formally started today with a ground breaking ceremony at Barrow Island. The operation is tipped to create more than 10,000 direct and indirect jobs, and more than $33 billion is expected to be spent on local goods and services, which is wonderful news for the northern part of Western Australia. The ground breaking ceremony was held near where the three liquefied natural gas trains will run and the domestic gas plant and the carbon dioxide plant will be built. The greater Gorgon area is estimated to have 40 trillion cubic feet of natural gas resources and is well positioned to meet the growing demand for natural gas in the Asia-Pacific region.

Australia’s natural gas industry is more than one of our best economic resources; it is also a much cleaner energy source than coal. By substituting coal in China and in India with Australia’s natural gas we can play a significant role in helping cut global emissions. Projects which are currently under way will result in 180 million tonnes of global emissions being avoided each year. This equates to removing 40 million cars from the roads, more than three times the number of passenger cars in Australia. These projects are massive. They will create more than 50,000 jobs; 40,000 of these will be in the construction phase and 10,000 will be permanent. The Australian government will get more than $11 billion each year in tax revenues. In fact, the average two-train LNG project delivers a net present value in tax revenues of $40 billion over 25 years. These revenues signify the size of these resources of natural gas. The LNG projects in northern Australia represents the new player our nation has become in the global energy market. These cleaner energy resources are a key part of our transition to a lower carbon economy which also extends to the overseas buyers of our natural gas.

Because Australian natural gas will have such a significant impact on reducing global emissions from our region it should be treated accordingly and recognised by being elevated to the top tier of the proposed emissions-intensive trade-exposed assistance program. The coalition’s amendment will determine in the regulations that the production of liquefied natural gas is classified a highly emissions-intensive trade-exposed activity. LNG should not be classified as a moderately intensive EITE as is currently proposed. It should be elevated to the top tier. Minister, I ask: why is Australian LNG not classified in the top tier; for example, the 94.5 per cent category? It appears strange that LNG is less protected than aluminium or cement.

5:00 pm

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

LNG is very important as a means of reducing carbon emissions and thereby is a preferred source of energy under the new and modern concern about carbon emissions. In Western Australia, the gas industry is very significant and important. Very briefly, I want to say that I support the remarks made by Senator Cormann. We do believe in the interests of reducing carbon emissions in the provision of fuel for electricity generation that putting LNG in the top category of emissions-intensive trade-exposed industries is a very significant step which should be taken, because the outcomes are very positive. I echo Senator Adams’s question: why on earth has LNG not been put in that category? It does, in the overall, mean that carbon emissions will be greatly reduced if LNG is used as a preferred fuel for electricity generation.

5:01 pm

Photo of Michaelia CashMichaelia Cash (WA, Liberal Party) Share this | | Hansard source

As a senator for Western Australia and a joint mover of this amendment, I too would like to place on the record my concerns in relation to the nature of the treatment of LNG as an EITE. In discussions that I have had over the last few days with people within the industry, it has been indicated that the proposed package is going to impose a cost upon these industries. I have to say that it is a rather perverse outcome that is actually achieved by the cost that these industries are going to pay. One of the outcomes of this legislation is allegedly to reduce carbon emissions, but what we find in relation to the treatment of LNG is that the scheme as proposed will actually prevent up to 180 million tonnes of CO2 being avoided each year from gas projects that will not go ahead—perverse, to say the very least.

I echo the comments of Senator Cormann, Senator Adams and Senator Eggleston and again ask the minister why it is that the treatment of LNG as an EITE has not been placed in the top tier—the 94.5 per cent category? In addition to that, one of the questions asked by people within the industry is in relation to the proposed definition of ‘activity’ and the fact that it be confined to particular processing stages only. One of the flaws raised in relation to this approach is that it excludes the initial stages of the LNG production activity. In addition to the question that has been asked, can the minister please explain why the ‘activity’ definition is confined merely to the processing stages only?

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

Senator Sterle interjecting

5:03 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I join my colleagues in their comments and also the question to the minister. I look forward, of course, to support from Senator Sterle and Senator Siewert as fellow Western Australian senators on the question of increasing LNG from 66 per cent to 94½ per cent. I also draw attention to the figures that Senator Adams and Senator Cash have alerted us to—that is, that the Gorgon project will produce annually some 8.5 million tonnes of greenhouse gas equivalent, of which 3.4 will be buried, leaving a net of five—

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

They haven’t proved that!

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

That is what the objective is, Senator; that is where they are funding research and, of course, it will be the first in the world so that if and when successful that will be world-breaking practice that can be passed on to others.

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

World-breaking practice!

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

The important thing is—as I am sure Senator Siewert will be delighted about, and she already knows the figures—that that net of five million can yield a saving of 150 million tonnes per annum.

Because of the brevity of time, I will also make quick mention of the ground-breaking commencement of the Gorgon project today. But, regrettably, we also have another ground-breaking event starting today in the Pilbara at Karratha; that is the first strike for many years in the Pilbara by some 1,500 workers who are striking for 48 hours. Of course, it is a dispute between the CFMEU—and we have our good friend, Joe MacDonald, back up there organising the meeting—the AMWU and the Communications, Electrical and Plumbing Union, taking people out for 48 hours.

All of us travel regularly, so it is important to know why they are going on strike. It is because in the time when they fly home from their place of employment their accommodation will have been used by the time they return. In other words, the analogy would be us coming to Canberra, booking into a hotel and saying to the owner of that hotel, ‘Do not use my room whilst I am away back in my electorate or my state.’ That is the reason that there is a 48-hour strike—the first one for many years.

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

Senator Sterle interjecting

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I know you are probably looking confused, Senator, because it is beyond our comprehension that people would demand that accommodation is left unused.

5:07 pm

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

The government does not support this amendment. What the Western Australian senators who will vote against this scheme and who have campaigned against this scheme are doing is, by legislative fiat, seeking to pick one industry out of a policy and simply say, ‘We are going to give you a different rate even if, due to your emissions intensity, you do not qualify for that rate.’ That is what they are doing.

Here we have a policy framework that gives assistance on the basis of the amount of carbon costs you face—how emissions intensive you are compared to your revenue. We have a coherent policy position, a principle that says we will assist companies on the basis of considering how much in carbon costs they will face and their capacity to pay. That is probably the best way of simply describing it. What they are saying is, ‘We want you to forget about the policy and just put an amendment in that says that, no matter how small the carbon cost and no matter how high the revenue, a particular industry is going to be favoured because we’—this particular group of senators—‘want to make a political point.’ This would increase the cost of assistance for the LNG industry by about $2.6 billion out to 2019-20. So, Senator Cormann, next time you come in here, having a go about debt and deficit, I will ask you to remind us where you were going to fund this amendment of $2.6 billion over the decade from.

We on this side of the chamber are big supporters of LNG, as has been demonstrated by the progress under this government of many activities in the LNG sector, the most important and most recent of which is the turning of the first sod today—I think—by my colleague Mr Ferguson to mark the start of the construction of the Gorgon project. Obviously the activity definition for LNG has not yet been finalised but, in relation to the question from Senator Cash, we will finalise that definition in accordance with the policy, because when you are conducting a whole-of-economy reform you do not pick bits of industries and change your policy just because you want to advantage one or other of your electorates.

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

I beg your pardon. I would ask you to withdraw that.

Photo of Julian McGauranJulian McGauran (Victoria, National Party) Share this | | Hansard source

Yes, I heard that from the chair, Senator Eggleston. I ask you to withdraw.

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

You should stand and withdraw.

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

If it is unparliamentary, I will withdraw, but I do think it is insincere of the government to be objecting—

The Temporary Chairman:

An unqualified withdrawal, Senator Eggleston.

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

I do withdraw.

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

We are big supporters of LNG, but what this amendment does is say, ‘By legislative fiat, we will override all policy.’ That is no way to conduct sensible economic reform. Does that mean that if the Tasmanians get together and decide that a particular industry for Tasmania—

Photo of Michaelia CashMichaelia Cash (WA, Liberal Party) Share this | | Hansard source

It’s the states’ house!

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

I will take that interjection: ‘It’s the states’ house.’ Goodness me! So this is how we will try and conduct economic policy and economic reform—not on the basis of the national interest but on what a particular senator might consider is in their state’s interest! The government expects that—

Honourable Senators:

Honourable senators interjecting

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Order! Give the minister a chance, please.

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

We are expecting that LNG projects will qualify for 60 per cent assistance of the industry average emissions intensity under the standard assistance policy. As I discussed with Mr Macfarlane, your negotiator, there is a policy issue with LNG, which is the wide dispersion in emissions intensities. In other words, some fields are much gassier than others. That is the policy issue here. It is not, for example, like a particular industrial process where you are going to get variations in the emissions intensity of the activity but it will not be an enormously wide variation. There is that issue with LNG, so the agreement that the government made with the opposition through Mr Macfarlane—who I think is a former energy and resources minister, so I do not think you—

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

Senator Cormann interjecting

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

Exactly, and we negotiated the agreement with the opposition that we would enable a supplementary allocation of free permits to ensure all projects received an effective rate of assistance of at least 50 per cent in relation to their production. What this does is ensure that the most emissions intensive—that is, those projects with the highest level of reservoir gas—will be assisted whilst ensuring there are strong incentives for companies to seek opportunities to reduce emissions, such as through the implementation of abatement technologies or developing fewer emissions-intensive gas fields. But for the government’s windfall gains test, the risk of this proposition would be that you would actually be assisting companies for more than their liability. That is not a sensible policy approach. That is not a policy approach supportive of industry. It is a policy approach that reeks of politics rather than sensible policy.

I make the point that we have provided additional assistance to LNG consistent with our policy framework because we believed it was appropriate given the importance of this sector to Australia’s economy and to our exports and because it is true that, in a world where there is a carbon price, this is a cleaner fuel than coal. In fact, it will do better in a world where there is a carbon price. If you were a supporter of LNG, you would support a global carbon price, because that would actually make LNG more comparatively competitive than it is now. But, of course, those opposite want it out but they do not want to include a carbon price.

I make the point—and it is interesting, because I do not often reference him, but Don Voelte has had a lot to say in this debate, and I think even those opposite might have used his words and criticism of me on more than one occasion—that the senators opposite in this place are in fact asking for more than Woodside have publicly declared they can accept. Mr Voelte has urged the parliament to pass the amended CPRS legislation. But I suspect that is not advice that those opposite would take, because they are no longer listening to sensible advice from the business community. They are no longer listening, for example, to the Business Council of Australia, to Origin Energy or to the Australian Industry Group. They are not listening to them anymore. They are listening to some extreme views inside their own party. That is where this debate has now gone.

5:15 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

This is my final contribution to this amendment. The minister used the words that, essentially, these percentages were set based on the capacity to pay. Can she perhaps clarify that point so that I do not mislead the chamber? That is what I heard you say.

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

The policy proposition the government has put forward after consultation with industry over a year is that the thresholds are set looking at tonnes of emissions per million dollars of revenue. I was trying to explain that in a simple way and say that it is essentially a measure of the amount of cost you face and your capacity to pay, which I suppose the economists might call ‘materiality’.

5:16 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

That is what I thought I had heard the minister say—the cost you face and your capacity to pay. So, rather than looking at this on the basis of our objective being to help reduce global greenhouse gas emissions, on the basis of accepting that under a global scheme—if there truly were a global scheme—an industry like the LNG industry would do very well or that we do not want to disadvantage an important Australian industry which can help reduce emissions as well as help grow our economy, before there is a global scheme the minister says, ‘We’ve set the 66 per cent instead of the 94.5 per cent on the basis of capacity to pay.’ That is a tax. It is just a tax. In the absence of an appropriately comprehensive global agreement the additional cost faced by the LNG industry is nothing more and nothing less than a tax. It is not about achieving policy objectives.

The minister says, ‘You’ve just spent another $2½ billion.’ No. What I have said is you should perhaps raise another $2.6 billion less. I remind you that this government is one that is always very good at raising taxes and increasing spending. On coming into government they raised $2½ billion in tax by imposing a tax on the North West Shelf, which of course comes straight out of Western Australia and gets spread around the rest of the country. This is a very eastern-states-centric government, of course, and we have made that observation before.

I will not hold the chamber up much longer. The overall proposition that we are pursuing with this amendment is that, if we are serious about helping to reduce global greenhouse gas emissions, we should be facilitating and encouraging, not constraining, an industry like the LNG industry in Australia. If we expand our exports of LNG into countries like China, Japan and India, where LNG can displace coal as an energy source, we will have a net positive effect in terms of reducing global greenhouse gas emissions, whereas this flawed legislation will help reduce emissions in Australia in a way that will actually see emissions increase in other parts of the world. It will arguably see emissions in other parts of the world increased by more than what we would produce here in Australia. To impose sacrifices on the Australian people—to pursue a policy which will push up the price of everything, cost jobs, put pressure on the economy and put our energy security at risk without helping to reduce global greenhouse gas emissions—is not in the national interest and is not effective action on climate change.

5:18 pm

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

I thought it would be useful to pose this to the chamber. John Howard’s policy at the last election was that the coalition government would ‘establish an emissions trading system, the most comprehensive in the world, to enable the market to determine the most efficient means of lowering greenhouse gas emissions’. If the Western Australian senators now want to say it is a tax, one wonders what their policy was. Was that a tax too?

Question negatived.

5:19 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I indicate that I will not be proceeding with amendment (2) on sheet 5916, relating to agricultural offsets. I move the amendment in relation to emerging technologies, amendment (3) on sheet 5916:

(3)    Page 214 (after line 3), after Part 8, insert:

Part 8B—Emerging technologies offset program

Division 1—Introduction

173M  Aim

                 The aim of this Part is to enable entities to receive Australian emissions units in connection with the use of emerging technologies.

173N  Simplified outline

                 The following is a simplified outline of this Part:

  • The regulations must formulate a program, to be known as the emerging technologies offset program, for the issue of free Australian emissions units in respect of offset activities connected with the use of emerging technologies.
  • The program may:
(a)
require a recipient of free Australian emissions units to relinquish units; and
(b)
impose reporting or record-keeping requirements on a recipient of free Australian emissions units.

Division 2—Formulation of the emerging technologies offset program

173O  Emerging technologies offset program

        (1)    The regulations must formulate a program (to be known as the emerging technologies offset program) for the issue of free Australian emissions units in respect of offset activities that:

             (a)    are connected with the use of technologies that, under the program, are taken to be emerging technologies; and

             (b)    are, or are to be, carried on in Australian during an eligible financial year specified in the program.

        (2)    The emerging technologies offset program must provide that free Australian emissions units must not be issued to a person in accordance with the program unless the person:

             (a)    meets such requirements as are specified in the program; and

             (b)    has a Registry account.

        (3)    Free Australian emission units must not be issued to a person under the emerging technologies offset program in relation to activities in respect of which free Australian emissions units have been issued under any other Part of the carbon pollution reduction scheme.

        (4)    The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2010.

173P  Emerging technologies

        (1)    For the purposes of the emerging technologies offset program, emerging technology includes the following:

             (a)    landfill waste gas capture;

             (b)    algal carbon capture and sequestration;

             (c)    plantstone carbon sequestration;

             (d)    soil carbon sequestration;

             (e)    reforestation for CO transfer;

              (f)    ocean nourishment technology;

             (g)    land management and soil carbon capture;

             (h)    biogas production;

              (i)    biomass conversion;

              (j)    a technology prescribed by the regulations as an emerging technology.

        (2)    A person may apply to the Authority, in a form prescribed by the regulations, to have a technology recognised as an emerging technology.

        (3)    If a person applies to have a technology recognised as an emerging technology, and the Authority is satisfied that the technology is not prescribed as an emerging technology, then the Authority must either:

             (a)    recommend to the Minister that the technology be prescribed as an emerging technology; or

             (b)    do both of the following:

                   (i)    recommend to the Minister that the technology not be prescribed as an emerging technology; and

                  (ii)    publish on its website its reasons for not recommending that the technology be prescribed as an emerging technology.

        (4)    The Authority may, by written notice given to an applicant, require the applicant to give the Authority further information in connection with the application.

        (5)    If the Authority recommends to the Minister that the technology be prescribed as an emerging technology, the Minister must take all reasonable steps to ensure that regulations are made to prescribe the technology as an emerging technology.

173Q  Relinquishment requirement

        (1)    The emerging technologies offset program may provide that, if:

             (a)    a number of free Australian emissions units have been issued to a person in accordance with the program; and

             (b)    any of the following subparagraphs applies:

                   (i)    a specified event happens;

                  (ii)    a specified circumstance comes into existence;

                 (iii)    the Authority is satisfied about a specified matter;

the person is required to relinquish a number of Australian emissions units ascertained in accordance with the program.

        (2)    Division 3 of Part 15, relating to compliance with relinquishment requirements, applies in relation to the emerging technologies offset program as if a reference to the emissions-intensive trade-exposed assistance program was a reference to the emerging technologies offset program.

        (3)    The number of Australian emissions units required to be relinquished by the person must not exceed the number of units mentioned in paragraph (1)(a).

173R  Reporting requirement

Scope

        (1)    This section applies to a person if free Australian emissions units have been issued to the person in accordance with the emerging technologies offset program.

Requirement

        (2)    The emerging technologies offset program may make provision for and in relation to requiring the person to give one or more written reports to the Authority.

173S  Record-keeping requirement

Scope

        (1)    This section applies to a person if free Australian emissions units have been issued to the person in accordance with the emerging technologies offset program.

Requirement

        (2)    The emerging technologies offset program may make provision for and in relation to requiring the person to:

             (a)    make records of information specified in the program; and

             (b)    retain such a record, or a copy, for 5 years after the record was made.

173T  Other matters

        (1)    The emerging technologies offset program may make provision for and in relation to the following matters:

             (a)    applications for free Australian emissions units;

             (b)    the approval by the Authority of a form for such an application;

             (c)    information that must accompany such an application;

             (d)    documents that must accompany such an application;

             (e)    the method of calculating the number of free Australian emissions units to be issued to a person in accordance with the program.

        (2)    The emerging technologies offset program may provide that an application for free Australian emissions units must be accompanied by a prescribed report.

        (3)    The emerging technologies offset program may provide for verification by statutory declaration of statements in applications for free Australian emissions units.

173U  Ancillary or incidental provisions

                 The emerging technologies offset program may contain ancillary or incidental provisions.

Division 3—Compliance with reporting and record-keeping requirements

173V  Compliance with reporting and record-keeping requirements

Reporting requirements

        (1)    If a person is subject to a requirement under the emerging technologies offset program to give a report to the Authority, the person must comply with that requirement.

Record-keeping requirements

        (2)    If a person is subject to a requirement under the emerging technologies offset program to:

             (a)    make a record of information; or

             (b)    retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

        (3)    A person must not:

             (a)    aid, abet, counsel or procure a contravention of subsection (1) or (2); or

             (b)    induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

             (c)    be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

             (d)    conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

        (4)    Subsections (1), (2) and (3) are civil penalty provisions.

Note:   Part 21 provides for pecuniary penalties for breaches of civil penalty provisions.

This amendment would establish an offset program that would make emerging green technologies eligible for offsets. I acknowledge the comments of my colleagues the Greens, who made the comment that they are concerned that the CPRS is too rigid in its operation and could lock out future innovation. It has the potential for further abatement and cuts in the future. I agree that we need flexibility, and this amendment will provide for that.

I met a couple of weeks ago with a number of representatives from the biosequestration industry. These representatives included Dr John White from Ignite Energy Resources, Andrew Lawson from MBD Energy, Professor Leigh Sullivan from Plantstone, Tony Lovell from Soil Carbon Ltd, John Ridley from Ocean Nourishment and Fiona Wain from Environment Business Australia. The general consensus was that it is important that emerging technologies, particularly in biosequestration, ought to be part of an emissions trading scheme. The potential, I think, is quite amazing in terms of what this can do to reduce CO2. These technologies have the potential to produce a future of net zero emissions for Australia. They could help Australia become a regional leader in environmental emissions reductions and add value to carbon emissions sequestration. Rather than pumping our emissions into a hole in the ground, we could be using them to produce feed, fuel, fertiliser and farm produce. Value could be added. We could be enriching our oceans and nourishing our fields. We could be changing our planting practices to change airborne CO2 to cellulose.

My concern is that, under the current CPRS, there is not enough room for this sort of innovation. I think it is important that there be that innovation. As I understand it, the response is that the government is not able to consider these technologies because they are not recognised under Kyoto. However, with Kyoto being 10 years old and with some of these technologies having emerged just in the last few years, it is important that a mechanism be in place to ensure that we can maximise the benefit and potential of new technologies. This is something that ought to be dealt with. I look forward to the government’s response to this. There is tremendous potential with respect to emerging technologies and, at the very least, that should be acknowledged in the context of any emissions trading scheme.

5:23 pm

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

I think I owe Senator Xenophon at least an indication. Can I say at the outset that I think I gave an incorrect figure. The figure I gave was that the government’s calculations were that the cost of the previous amendment was $2.6 billion. I am advised that it is actually $3.5 billion over and above the cost of the amendment already agreed with the opposition.

As I understand it, the senator is seeking to do two things here. He is seeking to enable certain specified offset activities to receive emissions units. I want to come back to the principle, because rather than the sort of ‘every child gets a prize’ approach to this we have to come back to what the policy principle is. This plan is a means to meet our target, and part of what we are doing is setting up a new market. We have to ensure that the market has confidence in Australian emissions units and in the abatement that is represented by them—that is, in terms of offsets. The reason is not because we love markets but because that is how we generate investment.

What is being suggested here is that a range of activities—some of which count towards Australia’s targets and some of which do not under current accounting rules—should be rewarded under the scheme. As a policy proposition, the government does not agree with that. It is not a case of simply saying, ‘We love all these things and we’re just going to give them assistance through the scheme.’ A better policy approach to it is to say: ‘For those things that can be counted towards our target, we need to establish clear rules which enable those technologies to provide offsets or abatement. We need the methodologies there. We need to be able to measure it so that there can be investment through the carbon market or through private finance. For those things that don’t fall within the scheme and that are not counted towards Australia’s target, we should find other ways of supporting them. They might include either the voluntary market’—and we have had a long discussion about that—‘or they might include direct grants or other policy mechanisms such as the renewable energy target.’ The difficulty is that this proposal deals with some things which do and some things which do not count towards Australia’s international target. We have a target already but this would apply in the second commitment period.

The amendment appears to overlap with some of the incentives already provided through direct grant programs or under the renewable energy target. I do not know whether the senator is intending this amendment to work in conjunction with the government’s previous amendments. I am unclear as to how you ensure the integrity of these offsets. You will recall that we had a long discussion about the Domestic Offsets Integrity Committee which was charged with ensuring additionality and methodologies to preserve the integrity of the scheme. I am unclear as to whether this would work in conjunction with that or whether we just decide by legislative fiat that these technologies come in.

I want to emphasise again: it is not that the government is not supportive of these technologies. The question is: what is the best policy mechanism to deliver that support? That policy mechanism should not include either things that are not yet capable of being properly measured and counted such that you start to introduce uncertainty into the new market or things that do not count towards Australia’s targets. The reason is that, if we do those things, particularly the second, we in fact expose taxpayers to risk. If we have reductions in emissions in Australia that are not recognised by the international community then somehow the nation has to find the remainder of the reductions that it has committed to through other means, and the most obvious for that is in the budget. There is a very clear policy proposition here to which we hold. If the senator wants to push me or the government, as he regularly does, for additional assistance to these sectors, it is obviously open to him. However, I would respectfully suggest that these kinds of amendments are not the most sensible way to provide that support.

5:28 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I indicate that in relation to the minister’s response to the integrity of the scheme it is not intended that this be inconsistent with the integrity of any offset. I want to make that absolutely clear. The impetus for moving this amendment is the frustration that has been expressed to me by a number of emerging technology companies who say, ‘Under current accounting rules we are constrained; we’re not getting that fair go.’ I think the minister acknowledges that and I also think the minister will be arguing for changes to those accounting rules so that we can open things up for these emerging technologies. There is a lot of potential there.

For those of my colleagues who do not believe in any form of emissions trading scheme or who do not even believe in climate change, I would urge them to look at the potential of emerging technologies in terms of carbon sequestration. I thank the minister for her answer. I do not think I have ever pushed the government on anything, Minister. I am just so easy to get on with! We can do better in relation to this. I look forward to working constructively with the government so that these emerging technologies can have a greater degree of investment certainty. We need to robustly analyse and scrutinise them, but the potential Australia has to lead the region and the world with some of these emerging technologies is something we should encourage in a responsible way.

5:30 pm

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

I thank Senator Xenophon for raising these issues in the committee stage. The Greens have already put on the record quite clearly that we think all the green carbon issues should be dealt with in a parallel scheme, and that remains the case. Part of the problem and the frustration for these companies is that there just are not R&D grants available; nor is there money for commercialising beyond R&D and then moving from pilot to the small or medium scale. The frustration that is being expressed in this amendment is really a frustration about there not being a pathway for so many of these new technologies to get from where they are to where they need to be. The minister talked about the Solar Flagships Program, and that is a classic case of failure for the same reason. You need the money to scale up to small or medium scale to prove that the technology can work before you then ask investors to take you up to the large scale.

When I moved for the inquiry into Australia’s future oil supply and alternative technologies, one of the very impressive groups of people who came before that inquiry were a company called Microbiogen. They were looking at producing second generation biofuels by converting cellulose to fuel using enzymes. They had patented their technology and it was extremely impressive, but they were leaving the country and going to the US. They had already interested US and UK investors. They came before the committee to say that they wanted to do this in Australia but there was just no mechanism for them to do it here. There were coming to the committee not to ask for anything—they had already made the decision to leave the country and they had overseas investors—but to say that they had a technology which was potentially a major breakthrough in going to second generation biofuels. Second generation biofuels overcome the whole issue of displacement of food production land into fuel production, which has been a major problem for biofuels around the world. But Microbiogen had to leave the country.

What I am hearing from Senator Xenophon is just what I hear about so many technologies, whether solar, biofuel or whatever else. The main problem is we do not have an effective mechanism in Australia. I note the minister’s comments about how grants programs may be an effective way of doing this. They might, but they do not exist at the level at which we need them to exist. One of the points Professor Garnaut made in his review, when talking about emissions trading, was that you need to auction permits so that you get a substantial body of funds the government can use to proactively support grant programs and the like.

Senator Xenophon, I cannot support your amendment because I would like to do it differently, but I acknowledge that this is a major hole in Australia and it is why we are losing some of our best brains overseas. We have seen a massive brain drain out of the country in a whole range of new technologies. David Mills with Solar Heat and Power is a classic case—he went to California. Spark Solar say to me that all their technicians and engineers overseas are Australian. The University of New South Wales and the ANU produce fantastic solar experts who end up working for overseas companies. Zhengrong Shi is Australia’s solar billionaire. On and on it goes.

The current renewable energy target is not well enough targeted or high enough and, because of the faults I have mentioned before, will not support bringing on these new technologies. There is no gross national feed-in tariff. That is desperately needed to bring on these emerging technologies. In addition to a RET and a feed-in tariff you have to have a grants program not just about R&D but that actually takes you through to the commercialisation phases. We are going to have to introduce that. It is no good for the government to say they do not pick winners. They do. Carbon capture and storage is a winner that the government have proactively chosen. In my view it is a complete failure, a dud and nothing other than a pipe dream. Either way, the government have chosen it and given it massive financial support that all these other technologies already sequestering carbon in various ways have not been able to secure. I put on the record my support for addressing this hole in public policy, but I cannot support the amendment Senator Xenophon has put forward.

Question negatived.

5:35 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

On behalf of Senators Cash, Back, Eggleston, Adams and me, I move amendment (1) on sheet 6022:

(1)    Page 214 (after line 3), at the end of Part 8, add:

Division 5—Modified formula for activities using a different type of feedstock

173D  Requirements for the emissions-intensive trade-exposed assistance program

                 The emissions-intensive trade-exposed assistance program must provide that a modified formula apply for the issue of free Australian emission units in respect of a facility that engages in an activity that is within a minority group in an industry based on the type of feedstock it uses, in accordance with this Division.

173E  Interpretation

                 In this Division:

general EITE formula means the formula for working out the number of free Australian emissions units to be issued to an applicant in respect of an emissions-intensive trade-exposed activity carried on during a specified period.

173F  Application

        (1)    The applicant may apply to the Authority:

             (a)    for a facility existing before 1 January 2011, no later than 1 July 2011; or

             (b)    for a facility which comes into existence on or after 1 January 2011, within 6 months of the commencement of construction of the facility;

for the Authority to issue a certificate (a varied feedstock certificate) modifying the general EITE formula for:

             (c)    the facility specified in the certificate; and

             (d)    the emissions-intensive trade-exposed activity carried on at the facility.

        (2)    The application must be accompanied by:

             (a)    a statement of the definition of the activity in respect of which the application is made, including details of:

                   (i)    a description of the defined activity; and

                  (ii)    exclusions such as sub-activities or elements of production; and

                 (iii)    any other information requested by the Authority;

             (b)    a statement, evidence and details of the type of feedstock the applicant activity uses;

             (c)    a statement of the type of feedstock the rest of the entities carrying out the same activity as the applicant activity use;

             (d)    a statement evidencing that the applicant’s activity is within a minority group based on the type of feedstock it uses. For this purpose, the facility forms part of a minority if:

                   (i)    less than 20% of the total participants undertaking the same defined activity in Australia as the applicant are using an alternative feedstock to natural gas; or

                  (ii)    less than 50% of the total participants in Australia, but no more than 3 participants, undertaking the same defined activity as the applicant use an alternative feedstock to natural gas,

             (e)    international evidence on the weighted average emissions per unit of production, pricing and trade across all of the possible feedstock types used in relation to the applicant’s activity, including natural gas feedstock;

              (f)    in relation to paragraph (e), a statement from an independent expert specifying:

                   (i)    the scale and scope of international data available; and

                  (ii)    how representative the evidence in paragraph (e) is of world production for that activity; and

                 (iii)    the consistency of data with the activity definitions; and

                 (iv)    the existence of knowledge gaps in the evidence and information; and

                  (v)    the existence of other evidence and information which may be useful in determining the efficiency of Australian producers with that of international counterparts, including information relating to energy or electricity intensity;

             (g)    Australian evidence from an independent expert on the emissions per unit of production, pricing and trade of the applicant’s type of feedstock for its activity;

             (h)    a statement evidencing that a Department of Climate Change registered assurance provider has been engaged;

              (i)    an explanation of how the modification, if permitted, will impact upon the applicant;

              (j)    an explanation of how the modification, if permitted, will impact upon the general EITE formula;

             (k)    a statement of what the baseline level of direct emissions per unit for the production of the relevant product should be and the calculations from which it was derived; and

              (l)    a statement evidencing that the baseline level of direct emissions in paragraph (k) will meet the expected carbon cost exposure of that feedstock.

        (3)    The Authority must:

             (a)    prepare a draft varied feedstock certificate in respect of the applicant’s facility, which sets out a new baseline level of direct emissions per unit which reflects the weighted average emissions per unit across all of the possible feedstock types in relation to the applicant’s activity; and

             (b)    give a copy of the draft certificate to the applicant; and

             (c)    notify the applicant, in writing, of the reasons why it has prepared the draft certificate; and

             (d)    invite the applicant to comment about the draft certificate within 30 days after the date of the invitation.

        (4)    The invitation is not an undertaking or guarantee that the Authority will make a particular decision on the application.

        (5)    If, after considering any comments about the draft certificate received in accordance with subsection (3), the Authority is satisfied that it is appropriate to issue a varied feedstock certificate, the Authority must issue a certificate which sets out, in respect of the applicant’s facility, a new baseline level of direct emissions per unit.

        (6)    On issuing the varied feedstock certificate under subsection (5), the Authority must also notify each member of the minority to which the varied feedstock certificate relates that the new baseline level of direct emissions per unit of production applies to each member of minority.

Food production is becoming increasingly challenging around the world. There is a growing need to get a better yield from our existing natural resources. Fertilisers, including urea, are a prerequisite for getting those better outcomes. Currently Australia imports a very significant proportion of its fertiliser. However, there is an emerging fertiliser industry in Western Australia which commenced with a first project on the Burrup Peninsula in north-west Western Australia and which is now expanding to Collie in the south-west of WA. This emerging industry could quickly grow into a global export market for Australia. Our products out of Western Australia would be in high demand, particularly from countries including India and China, where large populations have to be fed off land with declining productivity. Around the world, including in Australia, both natural gas and coal are used as feedstock for producing urea, which is then used in the production of fertiliser. Of late, of course, a majority of new global fertiliser projects have used coal as their feedstock, as natural gas becomes used for LNG markets and ever more expensive.

The Burrup project utilised natural gas as its feedstock; the Collie project, however, is seeking to use coal as its feedstock. In the Collie project, the coal would be gasified with the hydrocarbons producing urea and the waste product being CO2. Gasification makes the product much less emissions intensive and the CO2 emissions would be captured and ready for storage in the nearby proposed Harvey region aquifer storage facility. Notably, this project is likely to be the largest clean coal capture and storage project ever in Western Australia’s history. Despite the improved environmental outcomes from such a process and the huge economic benefits of such an industry, the Rudd government has chosen to disadvantage the coal gasification urea industry through the CPRS and, of course, coal as a feedstock is massively disadvantaged when compared to natural gas as a feedstock in the Rudd CPRS.

This amendment seeks to ensure a level playing field for this emerging industry while ensuring responsible environmental and social outcomes, which will continue to assist in providing food for the world’s population. This first amendment very specifically aims to set allocative baselines. This amendment seeks to ensure that emissions intensive trade exposed assistance is consistent with the government’s statement that activities should not be differentiated by the quality and types of feedstock used. There are few entities within Australian industry, compared to the balance of the industry internationally, that use a different feedstock to natural gas. By doing so, international competitiveness is maintained as reflective of world practice and a consistent approach towards the prevention of carbon leakage ensues.

In particular the amendment will permit applications to modify the allocative baseline for emissions intensive trade exposed activities which meet certain criteria, namely that the feedstock is different to that of the balance of the group, to reflect the weighted average emissions per unit of production across all of the feedstock available for that type of activity rather than natural gas alone. I understand that this is one of the amendments which has been put forward by Ian Macfarlane to the government and it is one of the amendments which did not make it up. It is an amendment that is quite important for an industry that can emerge in Western Australia where a process can be environmentally superior to what is currently being used in other parts of the world but, because of the way the Carbon Pollution Reduction Scheme is currently structured, this particular industry will not get off the ground if this CPRS legislation were to become law. On behalf of the five Western Australian senators who are moving this amendment I commend it to the Senate.

5:39 pm

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

I would like to endorse the remarks of Senator Cormann my colleague from Western Australia. This is very much an example of an industry which is being probably unintentionally disadvantaged by the rules of the CPRS. This company, Perdaman, has secured the required equity for the project and has commenced efforts to raise up to $2 billion in bank debt for this urea plant to go ahead. When they spoke to me, as they did to the other Western Australian senators, the Perdaman company said that the additional impost of $50 million per annum for carbon permits will make the project non-bankable and therefore it will not go ahead.

This is a major project in the south-west of Western Australia producing urea largely for export, so it will increase Australia’s export income. It will create a lot of employment in the south-west and this is the kind of industry which we want to see promoted. In Western Australia, as has been said earlier, electricity supply is very largely based on gas and, as Senator Cormann has said, there is a clear need for additional transitional assistance for investments in low emission CCS projects, especially for those projects which qualify for the emission intensive trade exposed assistance. We believe that in the case of the Perdaman project the amendments which the company has suggested be put forward would enable this development to go ahead. I ask the minister to be of assistance to this company in permitting this development to occur by agreeing to the amendment. This is a project which involves jobs and generates export income. I question why these industries have apparently been overlooked in the development of the CPRS.

5:42 pm

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

The government is not supportive of this amendment nor was it one of the amendments negotiated and agreed with the opposition. The amendment as put forward in fact gives an incentive to pollute more. That is what is being sought—an incentive for companies to be able to use a more polluting process or in this case a more polluting feedstock but, for whatever reason, to receive free permits for that. It would seem not a very sensible policy proposition in the context of a scheme that is about trying to give the incentive to invest in cleaner energies and cleaner technologies. The amendment as it stands is not supported by the government.

5:43 pm

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

In response to the minister, I did say I thought this particular outcome was unintentional. Although the minister said it is a more polluting feedstock, the feedstock which is available in Collie is gas, the other one is coal and in this case this industry will create jobs and generate export income. I would have thought the minister would be prepared to consider those factors in her assessment of this and be agreeable to the amendment.

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

I frankly, Senator, would have thought you might consider how much climate change will mean to the Australian economy and consider supporting the scheme. We could trade that all night. We have put forward amendments and bills that we think are in the national interest that enable Australia for the first time to reduce our contribution to climate change while supporting jobs. I do not think it is sensible to say that what we should do is have within that scheme an incentive for people to pollute more. We differ on that. In terms of supporting jobs, I would just remind you that the government has put forward a very substantial amount of transitional assistance—including, for example, to the LNG industry—in order to support industries through this transition.

5:44 pm

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

The Australian Greens do not support this amendment. We do not support activities which pollute more, nor do we believe in paying polluters.

Question negatived.

5:45 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

I, and also on behalf of Senators Cash, Back, Eggleston and Adams, move amendment (2) on sheet 6022:

(2)    Page 214 (after line 3), at the end of Part 8, add:

Division 6—Issue of additional free Australian emissions units in respect of carbon capture and storage

173G  Object of Division

                 The object of this Division is to provide financial incentives for early investment in carbon capture and storage plant and equipment in relation to eligible assets. It does so by providing limited transitional assistance in respect of investment in carbon capture and storage plant and equipment in relation to eligible assets during the period up to and including the financial year 2024–25.

173H  Interpretation

                 In this Division:

carbon capture and compression means the capture, compression and, where necessary, conditioning of emissions, prior the transportation of emissions to a storage site capable of capturing and compressing emissions which are at least:

             (a)    99% pure carbon dioxide; and

             (b)    1.0 barg.

carbon capture and storage project means a project to construct and commission new carbon capture and compression equipment. For this purpose, it is immaterial whether the project has been completed.

carbon capture and storage ready assistance means assistance under this Division.

coal gasification means a manufacturing process that converts coal to a synthesis gas (syngas, which is mainly carbon monoxide and hydrogen), which can be further processed to produce chemicals, fertilizers, liquid fuels, hydrogen, and electricity; coal gasification is not combustion, but rather partial oxidation, meaning limited oxidant is added.

EITE emission units, in respect of a facility, means the number of free Australian emissions units issued to a person in respect of the facility under the provisions of the emissions-intensive trade-exposed assistance program, other than this Division.

173I  Issue of free Australian emissions units in respect of carbon capture and storage

        (1)    The emissions-intensive trade-exposed assistance program must provide for the issue of free Australian emissions units (CCSR units) in respect of a facility that:

             (a)    undertakes emissions-intensive trade-exposed activities; and

             (b)    uses coal gasification technology; and

             (c)    is controlled or operated by persons that have invested, or stand ready to invest, in carbon capture and storage ready plant and equipment.

        (2)    CCSR units must not be issued to a person under this Division unless the person:

             (a)    meets such requirements as are specified in the emissions-intensive trade-exposed assistance program; and

             (b)    has a Registry account.

        (3)    The requirements of this Division are in addition to the requirements of the other Divisions in this Part.

173J  Requirements for assistance

        (1)    The Authority may issue a person with a certificate of eligibility for carbon capture and storage ready assistance if:

             (a)    the person has applied for the issue of free Australian emissions units under the emissions-intensive trade-exposed assistance program; and

             (b)    subsections (2) to (6) apply in respect of that application.

        (2)    The facility (or facilities) to which the application relates uses (or use) coal gasification equipment.

        (3)    In relation to one or more facilities to which an application relates, as at 1 June 2011:

             (a)    carbon capture and compression plant and equipment is installed at the facility; or

             (b)    a carbon capture and storage project is in existence but has not been completed and the project is fully committed by the project proponent, having regard to the following matters:

                   (i)    the project proponent’s rights to land for the construction of the project;

                  (ii)    whether contracts for the supply and construction of the  project’s major plant or equipment (including contract provisions for project cancellations) were executed;

                 (iii)    the status of all planning and construction approvals and licences necessary for the commencement of construction of the project (including completed and approved environmental impact statements);

                 (iv)    the level of commitment to financing arrangements for the project;

                  (v)    whether project construction has commenced;

                 (vi)    whether a firm date had been set for project construction to commence.

        (4)    The applicant has not obtained or cannot reasonably obtain, on reasonable economic terms, an off take arrangement or storage option for the captured, compressed and conditioned carbon during the financial years up to and including 2024–25.

        (5)    The applicant must provide the Authority with a report:

             (a)    setting out the amount or volume of carbon which is reasonably likely to be captured by the carbon capture and compression plant and equipment in each year; and

             (b)    the date of installation of the carbon capture and compression plant and equipment at the facility; and

             (c)    the technical specifications of the carbon capture and compression plant and equipment at the facility; and

             (d)    whether the applicant considers that the carbon capture and compression equipment at the facility meets the requirements of this Division.

        (6)    A report complies with this subsection if:

             (a)    the report is prepared by a person who has appropriate engineering qualifications; and

             (b)    the report sets out the person’s estimate of the carbon capture and storage capability of the plant and equipment of the facility; and

             (c)    the person does not have an interest, pecuniary or otherwise, in the outcome of the application.

173K  Further information

        (1)    The Authority may, by written notice given to an applicant, require the applicant to give the Authority, within the period specified in the notice, further information in connection with the application.

        (2)    If the applicant breaches the requirement, the Authority may, by written notice given to the applicant:

             (a)    refuse to consider the application; or

             (b)    refuse to take any action, or any further action, in relation to the application.

173L Issue of certificate of eligibility for carbon capture and storage ready assistance

Scope

        (1)    This section applies to a facility if:

             (a)    an application for the issue of free Australian emissions units under the emissions-intensive trade-exposed assistance program has been made in respect of the facility; and

             (b)    subsections 173J(2) to (6) apply in respect of that application.

Issue of certificate

        (2)    After considering the application, the Authority may issue a certificate of eligibility for carbon capture and storage ready assistance in respect of the carbon capture and storage project.

        (3)    A certificate of eligibility for carbon capture and storage ready assistance must state that a specified number is the number of units available for issue as CCSR units in respect of the facility, for the purposes of the subsection 173M(3).

Timing

        (4)    The Authority must take all reasonable steps to ensure that a decision is made on the application:

             (a)    if the Authority requires the applicant to give further information under subsection 173K(1) in relation to the application—within 90 days after the applicant gave the Authority the information; or

             (b)    otherwise—within 90 days after the application was made.

Refusal

        (5)    If the Authority decides to refuse to issue a certificate of eligibility for carbon capture and storage ready assistance in respect of the facility, the Authority must give written notice of the decision to the applicant.

Publication of copy of certificate

        (6)    As soon as practicable after issuing a certificate of eligibility for carbon capture and storage ready assistance in respect of the facility, the Authority must publish a copy of the certificate on its website.

173M  Amount of free units to be issued

Scope

        (1)    This section applies to a facility if a certificate of eligibility for carbon capture and storage ready assistance is in force in respect of the facility.

Issue of free units

        (2)    On 1 September in each eligible financial year beginning from 1 July 2011 to 1 July 2024, the Authority must issue CCSR units in respect of the facility in accordance with this section.

        (3)    The number of CCSR units to be issued in respect of a facility in each eligible financial year must be the lesser of:

             (a)    the number of units available; and

             (b)    number of units capable of being allocated;

where:

number of units available is the number of Australia emissions units that represents the carbon dioxide equivalence of the greenhouse gases capable of being captured by the carbon capture and compression pant and equipment installed at the facility.

number of units capable of being allocated is the number of CCSR units which, if added to the EITE emissions units, would cause the total number of free Australian emission units issued to a person in respect of the facility to equal number of units which represents the percentage amount set out for that year in the following table:

Financial year

Percentage of free Australian emissions units against actual emissions in each financial year (including global recession buffer)

2011–12

94.5%

2012–13

93.2%

2013–14

92.1%

2014–15

90.8%

2015–16

89.7%

2016–17

84.3% (no global recession buffer applies in this financial year)

2017–18

83.2% (no global recession buffer applies in this financial year)

2018–19

82.1% (no global recession buffer applies in this financial year)

2019–20

81.1% (no global recession buffer applies in this financial year)

2020–21

80.0% (no global recession buffer applies in this financial year)

2022–23

78.7% (no global recession buffer applies in this financial year)

2023–24

77.4% (no global recession buffer applies in this financial year)

2024–25

76.1% (no global recession buffer applies in this financial year)

This amendment provides for a proposed mechanism which will deliver a consistent approach for providing transitional assistance and financial incentive for liable entities investing in carbon capture plant and equipment prior to the full commercialisation of carbon storage projects in Australia. It does this by confirming the government’s commitment to be a low-emission-energy economy and bringing forward the early development of industrial scale carbon capture and storage projects.

In particular, the amendment will confer the authority to issue a number of free Australian emissions units in respect of certain eligible emissions-intensive trade-exposed activities which employ coal gasification technology and invest in carbon capture and storage ready plant and equipment during the first 14 years of the scheme. The level of assistance will be determined by the amount of direct emissions which are capable of being captured by the installed equipment at the facility and the degree of carbon capture and compression readiness for such equipment. It will impose strict limits on the percentage of free Australian emissions units as a proportion of actual emissions which an applicant is issued with so as to avoid windfall gains; provide that the issue of free Australian emissions units available is pro rata-ed in respect of the degree of readiness of the carbon capture and compression equipment; provide for no double counting under other assistance mechanisms under the CPRS, including other policy commitments; and grant funding under, for example, the carbon capture and storage flagship program application.

Finally, the exemption scheme has been designed to encourage and incentivise forward-looking investment by liable entities to develop an effective global response to climate change. The design also moderates the level of assistance through the imposition of limits on the receipt of free Australian emissions units, which prevents entities receiving a windfall gain. Receipt of other forms of assistance under the CPRS would not preclude a liable entity from assistance under this scheme except to the extent that the percentage limit is reached. I commend the amendment to the Senate.

5:47 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I will speak very briefly, if I may, in support of Senator Cormann and my other colleagues. This is a producer that is receiving no support akin to that given to other coal producers on the eastern seaboard. It is important that the minister understand. I have represented this case very actively to our colleague Mr Macfarlane, who I understand has also raised this with the minister. This particular company produces 15 per cent of the electricity of southern Western Australia. While it is true to say that that is not in jeopardy immediately, it has missed out completely under the scheme, and the security of that supply of electricity in the shorter term is at risk. I ask: Minister, will you go back and reconsider the representations that have been put to you through our colleague in your negotiations? As I say again, this is a company and a product that has not received the protection given to others in the coal industry. Southern Western Australia’s electricity supply is of critical importance. It is not part of a national grid and, of course, the supply of coal—

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

We’re getting to that later.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I am sorry; I thought we were on it now.

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

You’re talking about electricity, aren’t you? We are still on CCS.

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

That is a man ahead of his time!

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Yes, the Western Australian electricity market is the next amendment.

5:49 pm

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

The government does not support this amendment. Essentially, what it is seeking is a double benefit. Under the scheme, if you engage in CCS, that reduces your liability because what is stored is netted out from your emissions. What this seeks is that you get free permits before you get CCS. It is a way of delivering assistance. Rather than amending the scheme in this way, we say the better way to do it is to provide grants, which the government is providing through the CCS flagship program and the Clean Energy Initiative.

5:50 pm

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

The Australian Greens do not support this amendment in any shape or form. Carbon capture and storage should be a cost of doing business to the people who are emitting carbon dioxide. In the absence of carbon capture and storage, there should be no new facilities that are generating carbon dioxide emissions. The government still has not put on the table the maps of the supposed carbon capture and storage sites that they say are viable, which we do not believe exist.

Question negatived.

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

by leave—I move government amendments (1) to (24) on sheet AL234 together:

(1)    Clause 175, page 215 (line 19), omit “4 financial years”, substitute “9 financial years”.

(2)    Clause 175, page 215 (lines 21 to 24), omit the dot-point beginning with “If a windfall gain declaration is in force”, substitute:

  • If a windfall gain declaration is in force in relation to a generation asset, the Minister may determine that the number of free units to be issued in respect of the generation asset for the financial years beginning on 1 July 2018, 1 July 2019 and 1 July 2020 is to be halved.

(3)    Clause 176, page 216 (after line 20), after paragraph (2)(e), insert:

              (f)    1 September in the eligible financial year beginning on 1 July 2016;

             (g)    1 September in the eligible financial year beginning on 1 July 2017;

             (h)    1 September in the eligible financial year beginning on 1 July 2018;

              (i)    1 September in the eligible financial year beginning on 1 July 2019;

              (j)    1 September in the eligible financial year beginning on 1 July 2020;

(4)    Clause 176, page 217 (before line 2), before paragraph (a) of the definition of generation assistance limit for that eligible financial year, insert:

           (aa)    if that eligible financial year begins on 1 July 2011—26,140,000; or

           (ab)    if that eligible financial year begins on 1 July 2012—26,140,000; or

(5)    Clause 176, page 217 (line 4), omit paragraph (b) of the definition of generation assistance limit for that eligible financial year, substitute:

             (b)    if that eligible financial year begins on 1 July 2014—26,140,000; or

             (c)    if that eligible financial year begins on 1 July 2015—26,140,000; or

             (d)    if that eligible financial year begins on 1 July 2016—19,600,000; or

             (e)    if that eligible financial year begins on 1 July 2017—19,600,000; or

              (f)    if that eligible financial year begins on 1 July 2018—19,600,000; or

             (g)    if that eligible financial year begins on 1 July 2019—19,600,000; or

             (h)    if that eligible financial year begins on 1 July 2020—19,600,000.

(6)    Heading to clause 183, page 228 (line 2), omit “No assistance for 2014-2015 or 2015-2016”, substitute “Reduced assistance for 2018-2019, 2019-2020 and 2020-2021”.

(7)    Clause 183, page 228 (lines 4 to 9), omit subclause (1), substitute:

        (1)    The Minister may, before 1 August 2018, by writing, determine that the number of free Australian emissions units that:

             (a)    have a vintage year of:

                   (i)    the eligible financial year beginning on 1 July 2018; or

                  (ii)    the eligible financial year beginning on 1 July 2019; or

                 (iii)    the eligible financial year beginning on 1 July 2020; and

             (b)    are to be issued in accordance with section 176 in respect of a specified generation asset;

is to be reduced by 50%.

(8)    Clause 184, page 228 (line 21), after “Minister has made”, insert “, or purportedly made,”.

(9)    Clause 184, page 229 (line 29) to page 230 (line 10), omit subclauses (2) to (4), substitute:

Revocation of determination

        (2)    The Minister must declare, in writing, that this Act has effect as if the determination made, or purportedly made, under subsection 183(1) is revoked.

        (3)    A declaration under subsection (2) is not a legislative instrument.

(10)  Page 230 (before line 11), before clause 185, insert:

184A  Revocation of Ministerial determination—issue of free Australian emissions units

Scope

        (1)    This section applies if:

             (a)    the Minister has made, or purportedly made, a determination under subsection 183(1) in relation to a generation asset; and

             (b)    as a result of the subsection 183(1) determination, a reduced number of free Australian emissions units have been issued to a person on a particular day in respect of the generation asset; and

             (c)    after the issue of those units, the Minister has made a declaration under subsection 184(2) in relation to the subsection 183(1) determination.

Issue of free Australian emissions units

        (2)    On the 10th business day after the day on which the subsection 184(2) declaration was made, the Authority must issue to the person, in respect of the generation asset, a number of free Australian emissions units that is equal to the reduced number mentioned in paragraph (1)(b).

        (3)    Free Australian emissions units issued in an eligible financial year in accordance with subsection (2) are to have a vintage year of the eligible financial year.

Registry account

        (4)    The Authority must not issue a free Australian emissions unit to the person in accordance with subsection (2) unless the person has a Registry account.

Other provisions

        (5)    Subsection (2) has effect subject to sections 185 and 188.

Note 1:  Section 185 deals with windfall gains.

Note 2:  Section 188 deals with power system reliability.

No double entitlement

        (6)    If free Australian emissions units have been, or are to be, issued to the person in accordance with subsection (2) of this section, subsection 176(2) has effect, in relation to the requirement to issue free Australian emissions units on the day mentioned in paragraph (1)(b) of this section in respect of the generation asset, as if:

             (a)    the subsection 184(2) declaration had never been made; and

             (b)    the relevant conditions set out in paragraph 184(1)(a), (b), (c) or (d) had never been satisfied; and

             (c)    in the case of a subsection 183(1) determination that was purportedly made—the determination had been validly made.

(11)  Clause 185, page 230 (line 14), omit “1 July 2013”, substitute “1 July 2017”.

(12)  Clause 185, page 230 (line 18), omit “30 September 2013”, substitute “30 September 2017”.

(13)  Clause 185, page 231 (line 5), omit “1 July 2014”, substitute “1 July 2018”.

(14)  Clause 185, page 231 (line 6), omit “1 July 2015;”, substitute “1 July 2019; or”.

(15)  Clause 185, page 231 (after line 6), after paragraph (4)(b), insert:

             (c)    the eligible financial year beginning on 1 July 2020;

(16)  Clause 186, page 231 (line 17), omit “1 April 2014”, substitute “1 April 2018”.

(17)  Clause 187, page 233 (after line 28), after subparagraph (3)(a)(iii), insert:

                 (iv)    the eligible financial year beginning on 1 July 2014;

                  (v)    the eligible financial year beginning on 1 July 2015;

                 (vi)    the eligible financial year beginning on 1 July 2016;

                (vii)    the eligible financial year beginning on 1 July 2017;

(18)  Clause 187, page 233 (line 32), omit “a vintage year of”, substitute “the following vintage years”.

(19)  Clause 187, page 234 (line 1), omit “1 July 2014”, substitute “1 July 2018”.

(20)  Clause 187, page 234 (line 2), omit “1 July 2015”, substitute “1 July 2019”.

(21)  Clause 187, page 234 (after line 2), after subparagraph (3)(b)(ii), insert:

                 (iii)    the eligible financial year beginning on 1 July 2020;

(22)  Clause 187, page 236 (line 27), omit “1 April 2013”, substitute “1 January 2017”.

(23)  Clause 187, page 236 (lines 28 and 29), omit “1 July 2013”, substitute “1 April 2017”.

(24)  Page 242 (after line 31), at the end of Part 9, add:

189C  Intermediary registered as a generator

                 If:

             (a)    a person (the first person) owns, controls or operates a generation complex; and

             (b)    under a law of the Commonwealth, a State or Territory relating to the regulation of energy markets, the first person is exempt from the requirement under that law to be registered as a generator in respect of the generation complex; and

             (c)    the first person is exempt because another person (the intermediary) is registered under that law as a generator in respect of the generation complex;

the intermediary is taken, for the purposes of this Division, to be a person who controls the generation complex.

These amendments extend the delivery of assistance to coal fired generators from five to 10 years and modify the windfall gains provisions. They give effect to the policy changes the government has agreed that will further enhance energy security in Australia and facilitate a smoother transition to lower carbon forms of energy. These changes follow the negotiations with the opposition and discussions on these issues.

We have also committed to a deferred payment arrangement and the future introduction of a low-emissions transition incentive to complement these amendments. The low-emissions transition incentive operates as an amendment to the power system reliability test, giving existing operators of coal fired generators the ability to replace their existing capacity with new generation with lower emissions intensity than current best-practice coal fired generation capacity in Australia while still receiving their Australian emissions units. The allocation formula for apportioning assistance between generation assets has not changed.

5:52 pm

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

I ask the minister what the cost of this handout to the big coal producers is and, secondly, because I think she may not answer that, I ask: is it zero cost?

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

The figure that the government has included in the government offer to the coalition, which is public, is an additional $3.055 billion. That was out to 2019-20, Senator. There is an additional year of assistance, given that it is a 10-year program, so it now runs to 2020-21. That is an additional $900 million.

5:53 pm

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

They are getting $4 billion dollars that they were not getting last week, but, under an arrangement with the coalition, they are getting it this week. It is an arrangement that the coalition is now not supporting, but the government nevertheless wants to give $4 billion, on top of $16 billion which was already there, to the coal producers. That is just crazy. It is a Rudd government excess and abuse of proper governance. It was done to seal a deal with the opposition. Although that deal does not exist anymore, this cuckoo-land process of the government is going ahead with it regardless. The Greens will not be supporting that.

5:54 pm

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

The government has made it clear in this place and elsewhere, particularly in relation to this package, that our focus has been to deliver a package which secures the reliability of Australia’s electricity supply. That is why this amendment was agreed to and that is why the government will maintain it. I have previously indicated the government’s position in relation to these amendments and I do not propose to traverse that again.

5:55 pm

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

It is utter nonsense to say we are having a carbon pollution reduction scheme to reduce our emissions when coal-fired power generators create half our emissions from the energy sector and we are going to sandbag them. We are going to keep them polluting because we want to have a reliable energy supply, but there are other forms of power generation—new technologies in particular—which are capable of generating energy. These technologies will be kept out of the market because of the decision to keep the coal-fired generators pumping.

We have covered this before, but it is worth repeating that the deal has increased the ‘money for nothing’ to the coal-fired generators. There is no economic justification for it. All the government says is that we have to have a reliable energy supply. If we have to have a reliable energy supply, it does not follow that it has to be coal-fired power, but now we have $7.3 billion on the table. The deal with the coalition has fallen over, but the government says, ‘We will leave this additional compensation, for which there is no justification, on the table anyway.’ How ridiculous is that?

It is appalling that the government has extended the period over which this compensation is paid from five years to 10. There was no need for that other than that it was a deal with the coalition. Now it stands even though the coalition does not want the deal anymore. Is it any wonder the coal-fired power stations are so excited? Those companies are so pleased—they want this deal locked in and the government is prepared to do it. The deal actually requires these companies to keep polluting in order to get their compensation. It actually prevents the exit of generators from the energy market where this would be likely to breach power system reliability standards and, of course, they will say that it does. They have all been threatening to turn off the lights if they do not get this compensation.

As well as that, they get even more than the $7.3 billion—a low emissions transition incentive. That is on top of the free permits they are getting. When they install this new low emissions replacement generation, they still get the remaining scheduled compensation payments. There is no way to see that other than as a windfall gain. Then there is the fact that the windfall gains test has been changed to apply to the last three of the 10 years assistance, rather than to the last two of what was previously five years assistance, and the test only applies to half of a generator’s allocation in this three-year period, not to the whole allocation.

That is an outrageous gift to the multinational corporations who are running coal-fired generators. The high level of assistance locks in coal-fired generation out to 2020 and is one of the most toxic parts of the government’s Carbon Pollution Reduction Scheme because it does not reduce carbon emissions. It locks them in out to 2034. The government’s own modelling shows these emissions do not fall until then. How outrageous is this? We should all be completely opposed to it.

The government still has not provided any figures on what that $7.3 billion becomes if the reduction turns into a 15 per cent reduction on 2000 or if it turns into a 25 per cent reduction. Just how much are we going to be forking out to companies to continue to pollute, when, for years, their share price has reflected the risk associated with a carbon price? These companies have known it was coming. This is rent seeking. This is a craven cave-in to coal-fired generators. There is no other way you could describe this. It is disgraceful public policy and a disgraceful transfer of wealth from the public purse. It ought to be opposed.

6:59 pm

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

The opposition supports the government’s amendment. Let us rebut some of the nonsense we just heard from the Australian Greens. To say that the money that will be paid by way of compensation is to keep these power stations polluting suggests that they are in business to pollute. They are actually in business to create energy and generate power. Australian’s actually do want reliable energy sources. Of course, if you pay them the money by way of compensation, you then expect them to give a guarantee that they will continue generating power for a particular period of time, otherwise they could just take the money, say ‘Thank you very much,’ and close up shop the next day—not a very good policy. Therefore, you have got to lock them in. To say that we are locking them into polluting is quite ridiculous. We are not locking them into polluting; we are locking them into continuing to generate power as we make the transition into an economy where there is less carbon pollution.

I also make this observation: much as my friend and colleague the Hon. Ian Macfarlane did a fantastic job in negotiating with the government in relation to this aspect, I have just got a funny feeling that part of the government’s decision on this was informed by the Morgan Stanley report, which we still have not seen. It has still not been released. I think the Australian people are entitled to know what that report says. We know that when it went to the Victorian government it caused great consternation, and rightly so. I have got a funny feeling that, whilst we negotiated well and hard to achieve an outcome, the government got mugged by the reality of the Morgan Stanley report, which indicated the consequences.

The Greens somehow want it—and this is always their approach on issues of this nature—to be all black or white with nothing in between. If you want to get out of coal generated electricity, you actually need a transition period. That is why you have got to ensure that the appropriate level of support is there to ensure that the power continues to be generated. To just say, ‘They are polluters and therefore we ought to flick the switch on them,’ is a great idea if you are ideologically driven but not such a great idea if you want the fridge to operate in your home or you still want the aluminium smelters, the food processors, or indeed the milking machines on the dairy farms to work. I am sure the Greens would volunteer to hand milk the cows all around the countryside, but I am not sure that would be a practical approach. I do ask for some sanity in this debate and some consideration of the fact that we do want a proper transition out of the carbon-dependent energy generating regime that we have in Australia to one that is less intensive. That is why I say to the government: well done on this amendment.

Much as we as the opposition would like to take credit for all of this amendment, I still have a slight suspicion that the government acceded to this amendment as a result of the Morgan Stanley report, which they have still not released, and I must say that is part and parcel of the coalition’s criticism of the government in relation to this. Last night, for example, we found out that their population figures were out by a mere 2 million people. We found that out after 12 months. They put down the figures for their projection out to 2050 and within 12 months they realised they only made a mistake of 2 million people—just a small little error along the way. One wonders what errors the Morgan Stanley report may have exposed, but undoubtedly we will not know until the cabinet papers are released after 30 years or so. Whatever the timetable, one of these days they might be released and some historian will get a great thrill from reading through the Senate Hansard of the last few days to see what people said about this Morgan Stanley report that the cabinet of the day was so anxious to hide from the Australian people. I have a funny feeling that the hunch I have expressed this evening as to what the Morgan Stanley report might indicate is right, but, just in case anybody is worried, take this tip: I will not be around in this place in 30 years time to find out.

6:05 pm

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

Quite a lot was said by both Senator Milne and Senator Abetz with which I do not agree, but I am at the point in this debate where I will just say on the record that I do not agree and the government does not accept a whole range of things. I am happy, as you know, to go through again why we do not agree. Senator Milne, for example, misconstrued again the low-emissions technology incentive, but I dealt with that last night or yesterday. Senator Abetz, as always, cannot help himself from using some hyperbole.

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

Just release the report, then I would not have to descend to hyperbole.

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

The government has made clear that we are not releasing the Morgan Stanley analysis because it is of the highest commercial sensitivity. I would invite you to go to the department’s website. The advice from the secretary on this issue is there and you can consider it. I would have thought a responsible opposition, as opposed to one that is simply trying to make political points, would not continue to make those assertions in the knowledge that—

Photo of Michaelia CashMichaelia Cash (WA, Liberal Party) Share this | | Hansard source

Mr Rudd is the one who said he wants a transparent government.

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

Senator Cash, is this rabid interjecting the brave new world of the Liberal Party? I do not want to get into this again, unless Senator Abetz really wants to use up more of the Senate’s time—we reached 40 hours of debate on this earlier today, including the second reading debate; I am not sure what we are up to now. After the senator’s questions about the Treasury figures, he might be interested to know I did get some advice on this. In relation to the net migration assumptions, I am advised that there was an increase in the second Intergenerational report. It was after the Treasury modelling—and I am just trying to recall if it was earlier this year; I think it was, but I can check that. The net migration that was assumed in the second Intergenerational report increased to 150,000 from 110,000. In the population projections in the third Intergenerational report there was a further increase in the assumption of net migration to 180,000. That was subsequent to the assumptions in the Treasury modelling, which was released in October last year; hence, the increase in population from 33 to 35 at 2050. Senator Abetz wants to make a big issue of this, but, again, I say this is obviously a question of when you hit that population figure. Finally, I also indicate that the advice I received from Treasury in response to this query is that the changes would not alter any of the conclusions in the report.

6:08 pm

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

Given that the minister does not want to release the Morgan Stanley report, and I accept that, would the government be willing to release the final figure, not the individual figures per power station? It would be very difficult to disaggregate and identify particular generators. We would like the final figure so that this debate can be better informed. There would be no commercial-in-confidence considerations there. There would be no embarrassment to a particular power generator. It would provide great support to this debate so that a more informed decision could be made by this chamber.

6:09 pm

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

I refer the senator to the advice I referred to earlier which is on the department’s website. It outlines the advice to government about the release of the report. I do not really think there is anything further I can add to that.

Question agreed to.

6:10 pm

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

by leave—The Greens do not intend to divide on this. We decided earlier in the day to divide on my amendment. I would like it noted in Hansard that it was only the Australian Greens who opposed this compensation amendment for coal fired generators.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

by leave—I, and also on behalf of Senators Cash, Back, Eggleston and Adams, move amendments (1) to (4) on sheet 6025 in relation to the western electricity market:

(1)    Page 216 (line 28), after “section 182”, insert “and 182A”.

(2)    Heading to clause 182, page 225 (line 1), at the end of the heading, add “in the National Energy Market”.

(3)    Clause 182, page 225 (line 4), after “asset”, insert “in the National Energy Market”.

(4)    Page 227 (after line 11), at the end of Division 3, add:

182A  Annual assistance factor in the Western Electricity Market

The annual assistance factor to be specified in a certificate of eligibility for coal-fired generation assistance in respect of a generation asset in the Western Electricity Market is the Authority’s reasonable estimate of the number worked out to 3 decimal places using the following formula:

Historical energy x (Emissions intensity – 0.7)

where:

emissions intensity has the meaning given by whichever of subsection (2), (3), (4) or (6) is applicable.

historical energy means:

             (a)    if the generation asset is a generation complex that entered service on or before 1 July 2004—the total number of gigawatt hours of electricity generated by the generation complex during the period beginning on 1 July 2004 and ending on 30 June 2007, as measured at all generator terminals of the generation complex; or

             (b)    if the generation asset is a generation complex that entered service after 1 July 2004—21.024 multiplied by the number of megawatts in the nameplate rating of the generation complex as at the day the generation complex entered service; or

             (c)    if the generation asset is a generation complex project—21.024 multiplied by the number of megawatts in the proposed nameplate rating of the proposed generation complex, worked out as at the start of 3 June 2007.

Emissions intensity

For the purposes of subsection (1), the emissions intensity of a generation complex that entered service on or before 1 July 2004 is the number worked out to 3 decimal places using the formula:

Carbon dioxide equivalence of emissions

Gigawatt hours of electricity generated

where:

carbon dioxide equivalence of emissions means the total number of kilotonnes of the carbon dioxide equivalence of the greenhouse gases emitted from the combustion of fuel in the generation complex for the purposes of the generation of electricity during the period beginning on 1 July 2004 and ending on 30 June 2007.

gigawatt hours of electricity generated means the total number of gigawatt hours of electricity generated by the generation complex during the period beginning on 1 July 2004 and ending on 30 June 2007, as measured at all generator terminals of the generation complex.

        (3)    However, the emissions intensity of a generation complex that entered service on or before 1 July 2004 is taken to be 0.7 if the number worked out to three decimal places using the formula in subsection (2) is less than 0.7.

        (4)    For the purposes of subsection (1), the emissions intensity of a generation asset not covered by subsection (2) is the number that, in the opinion of the Authority, should be treated as the emissions intensity of the generation asset, having regard to the following matters:

             (a)    any documents relating to the design of the generation asset;

             (b)    any contracts for the supply of fuel for combustion in the generation asset for the purposes of the generation of electricity;

             (c)    if the generation asset is a generation complex that has entered service—the number worked out to 3 decimal places using the formula set out in subsection (5);

             (d)    the report mentioned in paragraph 178(1)(f);

             (e)    such other matters (if any) as the Authority considers relevant.

        (5)    The formula mentioned in paragraph (4)(c) is:

Carbon dioxide eqivalence of emissions

Gigawatt hours of electricity generated

where:

carbon dioxide equivalence of emissions means the total number of kilotonnes of the carbon dioxide equivalence of the greenhouse gases emitted from the combustion of fuel in the generation complex for the purposes of the generation of electricity during the period when the generation complex was in service.

gigawatt hours of electricity generated means the number of gigawatt hours of electricity generated by the generation complex during the period when the generation complex was in service.

        (6)    However, the emissions intensity of a generation asset not covered by subsection (2) is taken to be 0.7 if the number worked out under subsection (4) is less than 0.7.

The background to these amendments is a result of the very eastern-states-centric approach in the Rudd government’s Carbon Pollution Reduction Scheme legislation. I place on record again that the five Western Australian senators moving these amendments have been consistent in our view that this legislation should not be finalised before Copenhagen; that we should be opposing it if it is put to a vote before Copenhagen. In the absence of an appropriately comprehensive global agreement, it will not help to reduce global greenhouse gas emissions and would put significant pressure on our economy for no environmental benefit.

Having said that, given the prospect that this legislation might get up, we were very concerned about some extreme unfairness for the state and the people of Western Australia enshrined in this legislation, because the Rudd Labor government has taken an eastern-state-centric approach in the design of this Carbon Pollution Reduction Scheme. Do not just take my word on that. When the Senate Select Committee on Fuel and Energy held a hearing in Perth in February 2008, the Carpenter Labor government pointed out to the committee that, in designing and modelling this scheme and in assessing the impact of this scheme, the Rudd government based its design on the national electricity market arrangements. Perhaps the Rudd Labor government, from its ivory towers in Canberra, thought that a national electricity market includes the great state of Western Australia. The reality is that it does not. Western Australia has its own electricity market: the western electricity market. Western Australia is an energy island and it has to be self-sufficient from an energy point of view. I happen to know that the Carpenter Labor government, through its Treasury officials, put a series of questions and issues to the Rudd Labor government without any effect. Treasury officials appeared twice before the fuel and energy committee and they made the point that all the issues raised in relation to this were ignored. If a state Labor government cannot get any feedback from the Rudd Labor government, what chance do the rest of us have?

Our overall concern is that electricity generators in Western Australia are being unfairly treated, that the financial viability of electricity generators in Western Australia is at risk and that, consequently, our energy security in Western Australia is at risk. The Rudd Labor government have been looking after energy suppliers in the eastern states of Australia, but they have completely ignored the specific circumstances in Western Australia. If this scheme were to go through, it would create serious issues for the viability of energy suppliers in Western Australia and, as such, the energy security for the people of Western Australia.

The first problem is that the assistance to WA generators under the Electricity Sector Adjustment Scheme in the CPRS legislation is absolutely negligible due to the brown coal bias of the much larger national electricity market. We have been advised by industry analysts that around 90 per cent of the assistance would go to brown coal generators in Victoria and South Australia and less than one per cent of the assistance would go to WA black coal generators. In the national electricity market brown coal generators are affected more, relative to black coal generators, as they have the highest relative emission intensities in that market. In the western electricity market, however, there are no brown coal generators. As such, black coal has the highest relative emission intensity.

Also, black coal generators in the western electricity market have struck long-term contracts over the past few years in order to compete with gas. This legislation does not recognise the WA scenario at all. The national electricity market is a spot market. There is a capacity effectively to pass on the carbon costs which are imposed under this legislation, which is a very different circumstance to that in Western Australia. In Western Australia there are long-term contracts in place, and the capacity to pass on those increased costs is limited.

I have already mentioned that the WA electricity market is an energy island. We will have to rely on black coal for our energy security for some time to come. Yes, there is obviously the intention to increase the use of gas—and, hopefully, through the increased use of renewables et cetera, we will be able to diversify further our energy mix; however, over the next five to 10 years we will continue to be gas constrained and will continue to have to rely on black coal. There is already, as a result of the legislation pending and in the context of what is likely to come down the road, less investment in more environmentally friendly black coal fired power stations. This is only going to get worse. In fact, in recent times some of the old, less environmentally friendly coal fired power technology has had to be brought back on stream. There is an expectation that that will have to continue into the future as a direct result of this legislation. So, rather than creating a more environmentally friendly outcome, the government is actually creating a more environmentally unfriendly outcome.

These amendments seek to address this inherent unfairness for electricity suppliers in Western Australia in the very eastern-state-centric, Rudd Labor government Carbon Pollution Reduction Scheme. We really do hope that the Senate will support these amendments. The circumstances in Western Australia are very different, based on the fact that we physically cannot be part of the national electricity market. We are concerned that when the government started putting together the design of this scheme they did not even understand that Western Australia was not part of the national electricity market. These are not my comments, Minister; they are the comments made by state Labor government officials before the Senate Select Committee on Fuel and Energy. They said to us that they were extremely concerned that the Rudd Labor government did not even seem to understand that Western Australia was not part of the national electricity market when they put together the design of this scheme. We have gone through a green paper, a white paper, exposure drafts and all sorts of other processes, but these issues still have not been addressed.

These amendments are critically important to making this scheme, if gets up—and we of course hope it does not—less unfair for the people of Western Australia and to ensuring our energy security in Western Australia moving forward, given that we are not part of the national electricity market.

6:19 pm

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

I endorse Senator Cormann’s remarks and call attention to the fact that Treasury have not recognised that Western Australia is an energy island and the Western Australian electricity market is very different to that in the eastern states, which, for some strange reason, is called the national electricity market. They may not have noticed that Western Australia exists—except that when it comes to the payment of royalties and taxes from the mining industry they are very well aware in Treasury that we exist.

It seems very strange that the national electricity market is really the eastern states electricity market and that rules have been made pertaining to the eastern states electricity market which are totally inappropriate to Western Australia. The Western Australian electricity market is very different to that in the eastern states in that WA depends for its electricity generation largely on gas from the North West Shelf being carried to the south-west of the state in the Dampier to Bunbury pipeline. This will continue to be the case even if renewable energies replace coal in Western Australia.

Griffin point out that there is a historic price competition in Western Australia between gas and black coal in the western electricity market and that WA’s long-term energy security will be compromised by the current CPRS settings. In other words, the energy security of the south-west of Western Australia, where most of the population live and where there is a lot of industry, will be compromised unless this legislation is amended. Griffin further point out that the so-called national, or eastern states, electricity market is based on a competitive spot market into which all generators supply electricity, whereas the western electricity market is based on bilateral contracts. In the selling model, the price of electricity is locked in for the length of contracts, and there is no capacity in the western electricity market to pass through to consumers the increasing price of carbon, which generators will bear over 15 years from the time the scheme is introduced.

By contrast, in the eastern states, in the so-called national electricity market model, based as it is on competitive spot prices, the additional cost of carbon over 15 years will be passed through via the market clearing price. That means that Western Australian generators will not be able to pass through the price of carbon to their customers and they will be progressively disadvantaged as the price of carbon rises. Western Australia, according to Griffin, asks that the western electricity market have a separate ESAS formula with an emission intensity cut-off limit at 0.75tCO2. This is not a request which I think can be ignored or denied. Western Australia does depend on gas. This is a very serious and very genuine anomaly which needs to be corrected, and Griffin has put up some proposed amendments which have now been put to the Senate by the Western Australian senators, and I would strongly urge the government to, in the interests of fairness and understanding of the fact that Western Australia is actually part of the Commonwealth of Australia, agree to these amendments so that there can be a rational and reasonable approach to electricity marketing in Western Australia. I suppose one might even wonder if, had we had more time, for example, and waited until after the Copenhagen conference, it might have been recognised that these anomalies occur. I do hope that the minister will correct this anomaly, and I would ask her if she would do so and commit the government to doing so.

6:24 pm

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

I was pausing because Senator Back tried previously to make a contribution, and I did not know if he wanted to make it on these amendments now.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

Thank you for the opportunity, but time is short.

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

The government is not supportive of these amendments. The government is aware of this proposition. In fact, the government modelled a pass-through for Western Australia and the effect of a carbon price on Western Australia for the white paper. If you look at the modelling results in the white paper, you will see that the level of cost pass-through modelled in WA is not very different from that modelled for South Australia. So I think that the proposition put by Senator Eggleston needs to be understood in that light. We are aware of the circumstances of Western Australia. What is being put forward by some of the senators over there is that essentially generators in Western Australia get special treatment.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

Fair recognition is a different circumstance.

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

It is special treatment. It is saying—

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

Fair recognition—

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

Hang on, Senator Cormann. If you could just desist from interjecting. Let me finish the sentence. If you want to get up and argue it, you can. It is special treatment. It is a different basis for allocating assistance.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

Special circumstance.

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

Senator, what is your problem? Why is it that you cannot be quiet while I am speaking?

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

It is a constructively intended interjection.

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

I do not interject like this.

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Order, Minister. I would ask those on my left to refrain from interjecting while the minister is answering the question.

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

It is special treatment. You may say that it is reasonable special treatment. If you would let me finish—

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

Senator Cormann interjecting

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

You are doing it again. It is just discourteous, Senator Cormann.

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Order, Senator Wong. Just continue and ignore the interjections.

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

If I could, but it seems that there is just an endless stream from Senator Cormann, who is one of the more rabid ones on that side. Have you finished, Senator? Would you like me to sit down so you can speak?

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Senator Wong, address the chair.

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

I am addressing you, Sir. I sat and did not interrupt Senator Cormann for his contribution. I ask that he extend some courtesy to me.

What is being sought by these amendments is special treatment. Senator Cormann and others may argue that that special treatment is justified—which is what I was trying to say. That is a question of policy judgment. We do not think it is reasonable to say that we should provide assistance on a different basis to one state from another, particularly where some of the modelling results are so similar. As I said, the level of cost pass-through modelled for Western Australia is not dissimilar to that modelled for South Australia. Let us understand what is being proposed. I am sure that the senators know that unless we increase the amount of compensation or assistance under the Electricity Sector Adjustment Scheme, what has actually been proposed is that a greater proportion goes to Western Australia, therefore a lesser proportion to Victoria, to Queensland and to New South Wales. I do not know if the opposition’s policy is in fact for a greater pie or whether they have got a position that says, ‘We want less to go to Queensland, New South Wales and Victoria.’ We have sought not to discriminate. What we have said is that we will target the assistance regardless of where these different coal fired power stations are in Australia. We will target assistance to the most emissions-intensive generators.

I have had the same proposition put to me by a number of states, saying, ‘This will assist’—for example, and I apologise to Senator Kroger—’Victoria, but it will it will not help us, because we use a lot of black coal.’ I have run the same policy argument. You cannot design a policy for assistance and transitional assistance, and it is very substantial transitional assistance, on the basis of trying to favour one state or another. It is much better to have a simple, clear policy proposition, and that is how the government is approaching it.

6:28 pm

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

This is not asking for one state to be favoured over another; it is asking for a recognition in differences, a genuine difference which exists in the way electricity is generated in Western Australia. This is a uniquely West Australian issue. We are not asking for anything unreasonable; we are asking for reasonable recognition of the fact that electricity is largely generated from gas in Western Australia, unlike the eastern states, which grandly call themselves the national electricity market model, and it is a perfectly rational and reasonable request that we are making. I think that we in Western Australia sometimes get a little bit tired of the fact that the Treasury and federal government departments do not recognise differences between our state—which is, after all, a third of this continent—and the eastern states.

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

I’m from Adelaide. Don’t call me ‘eastern states’.

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

We were very reluctant to join—

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Order! It being 6.30 pm, the sitting of the committee is suspended until 7.30 pm.

Sitting suspended from 6.30 pm to 7.30 pm

Photo of Michael ForshawMichael Forshaw (NSW, Australian Labor Party) Share this | | Hansard source

Order! The question is that amendments (1) to (4) on sheet 6025 moved by Senator Cormann and also on behalf of Senators Cash, Back, Eggleston and Adams be agreed to.

Question negatived.

7:31 pm

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

by leave—I move government amendments (25) to (28) on sheet BE242 together:

(25)  Clause 198, page 256 (line 3), before “A person”, insert “(1)”.

(26)  Clause 198, page 256 (after line 4), at the end of the clause add:

        (2)    A person is not entitled to make an application before 1 July 2010.

(27)  Clause 205, page 262 (line 4), before “A person”, insert “(1)”.

(28)  Clause 205, page 262 (after line 5), at the end of the clause, add:

        (2)    A person is not entitled to make an application before 1 July 2010.

These are technical amendments providing that reforestation applications may not be made until 1 July 2010. These are required due to the delays in the passage of the bill, and therefore regulations on this issue are unlikely to be made until mid-May 2010.

7:32 pm

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

The Greens do not support the reforestation amendments in relation to the bill and therefore these technical amendments associated with it.

Question agreed to.

7:33 pm

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

by leave—I move government amendments (3) to (5) and (29), (30) and (33) on sheet BE242 together:

(3)    Clause 5, page 10 (after line 18), after the definition of Crown land, insert:

Crown lands Minister:

             (a)    in relation to a State—means the Minister of the State who, under the regulations, is taken to be the Crown lands Minister of the State; or

             (b)    in relation to a Territory—means the Minister of the Territory who, under the regulations, is taken to be the Crown lands Minister of the Territory.

(4)    Clause 5, page 23 (lines 3 to 8), omit the definition of principal State Minister.

(5)    Clause 5, page 23 (lines 9 to 14), omit the definition of principal Territory Minister.

(29)  Clause 209, page 264 (lines 22 and 23), omit “principal State Minister of the State, or the principal Territory Minister of the Territory, as the case requires,”, substitute “Crown lands Minister of the State or Territory”.

(30)  Clause 212, page 269 (lines 4 and 5), omit “principal State Minister of the State, or the principal Territory Minister of the Territory, as the case requires,”, substitute “Crown lands Minister of the State or Territory”.

(33)  Clause 241B, page 326 (lines 9 to 11), omit “Minister of the State or Territory who, under the regulations, is taken to be the Crown lands Minister of the State or Territory”, substitute “Crown lands Minister of the State or Territory”.

These are, again, technical amendments to ensure that the bill refers consistently to Crown lands ministers for the purposes of the reforestation provisions. At present, some provisions refer to Crown lands ministers and some refer to principle ministers.

Question agreed to.

I move government amendment (35) on sheet BE242:

(35)  Clause 278, page 360 (lines 21 to 32), omit the clause, substitute:

277A  Publication of concise description of the characteristics of Australian emissions units

                 The Authority must:

             (a)    before 31 December 2010, publish on its website a statement setting out a concise description of the characteristics of Australian emissions units; and

             (b)    keep that statement up-to-date.

278  Publication of concise description of the characteristics of eligible international emissions units

Kyoto units

        (1)    The Authority must:

             (a)    within 30 days after the commencement of this section, publish on its website a statement setting out a concise description of the characteristics of each of the following types of eligible international emissions units:

                   (i)    certified emission reductions (other than a temporary certified emission reduction or a long-term certified emission reduction);

                  (ii)    emission reduction units;

                 (iii)    removal units; and

             (b)    keep that statement up-to-date.

        (2)    The Authority must:

             (a)    within 30 days after the commencement of regulations made for the purposes of paragraph (d) of the definition of eligible international emissions unit in section 5, publish on its website a statement setting out a concise description of the characteristics of units prescribed by those regulations; and

             (b)    keep that statement up-to-date.

Non-Kyoto units

        (3)    The Authority must:

             (a)    within 30 days after the commencement of regulations made for the purposes of paragraph (a) of the definition of non-Kyoto international emissions unit in section 5, publish on its website a statement setting out a concise description of the characteristics of units prescribed by those regulations; and

             (b)    keep that statement up-to-date.

        (4)    The Authority must:

             (a)    within 30 days after the commencement of regulations made for the purposes of paragraph (b) of the definition of non-Kyoto international emissions unit in section 5, publish on its website a statement setting out a concise description of the characteristics of units prescribed by those regulations; and

             (b)    keep that statement up-to-date.

This amendment clarifies the timing of the authority’s power to publish statements describing the characteristics of eligible emissions units. They set out when the authority is empowered to publish statements setting out the characteristics of AEUs—Australian emissions units—and eligible international emissions units. This will enable people selling those emissions units to rely on the authority statement in place of a product disclosure statement from the commencement of the legislation.

Question agreed to.

7:36 pm

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

by leave—I move Australian Greens amendments (59) and (60) on sheet 5786 together:

(59)  Clause 353, page 439 (lines 22 and 23), omit “before the end of 30 June 2014”, substitute “by the end of 2 years after the day on which this Act receives the Royal Assent”.

(60)  Clause 353, page 439 (lines 24 to 28), omit subclause (3), substitute:

        (3)    Each subsequent review must be completed within:

             (a)    2 years after the last day on which a copy of a statement setting out the Commonwealth Government’s response to the recommendations of the previous review was tabled in a House of the Parliament under paragraph 354(6)(b); or

             (b)    6 months of any significant changes or developments in a relevant international treaty or relevant scientific knowledge.

These amendments refer to the review period for the scheme as a whole. What we seek to do is substitute the government’s five-year review with a two-year review. Also, amendment (60) says that there can be a review within six months of any significant changes to or developments in a relevant international treaty or relevant scientific knowledge. In other words, what these amendments provide for is a review of the scheme every two years, not every five years. They also provide for a review after a period of six months if there has been a significant change to or the ratification or signing of a relevant international treaty or if relevant scientific knowledge comes to hand. This provides for the flexibility to enable the scheme to be changed to accommodate changing circumstances. A provision for a minister to change the scheme to take into account new scientific knowledge is part of the British legislation, and it makes eminent sense that ministers be enabled to change the scheme quickly if new information comes to hand of a scientific nature or in relation to a new treaty. That is basically the intent of the two amendments and the effect they would have if passed.

7:38 pm

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

The government is not supporting these amendments. They would require subsequent reviews to be carried out every two years or within six months of any significant changes or developments in relevant international scientific knowledge. We do oppose the amendments. We believe five-yearly reviews strikes a balance between the need for certainty and the need to regularly assess ways in which the CPRS can be improved. Having said that, I would flag that the government in, I think, the next set of amendments we will move has picked up some of these issues which will enable reviews post any new multilateral international agreement.

Question negatived.

7:40 pm

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

I would like it placed on the record that only the Australian Greens supported those amendments. The amendments were opposed by the coalition and the government.

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

by leave—I move government amendments (36) and (38) on sheet BE242 together:

(36)  Heading to clause 355, page 442 (line 3), at the end of the heading, add “matters specified by Minister”.

(37)  Page 442 (after line 22), after clause 355, insert:

355A  Special review of carbon pollution reduction scheme to be conducted by an expert advisory committee

Scope

        (1)    This section applies if:

             (a)    after the commencement of this section, a new multilateral international agreement is signed on behalf of Australia; and

             (b)    the agreement relates to climate change; and

             (c)    either:

                   (i)    the agreement imposes obligations on Australia to take action to reduce greenhouse gas emissions; or

                  (ii)    the agreement is specified in an instrument made by the Minister for the purposes of this subparagraph.

Special review of carbon pollution reduction scheme

        (2)    As soon as practicable after the agreement is so signed, an expert advisory committee is to conduct a review of the implications of the agreement for the carbon pollution reduction scheme.

Note:   Expert advisory committees are established under section 357.

Consultation

        (3)    In conducting a review, an expert advisory committee must make provision for public consultation.

Relevant matters

        (4)    In conducting a review, an expert advisory committee must have regard to:

             (a)    any policies of the Commonwealth Government notified to the expert advisory committee by the Minister; and

             (b)    such other matters as the expert advisory committee considers relevant.

(38)  Clause 356, page 442 (line 25), after “section 355”, insert “or 355A”.

Some parts of these amendments relate to the agreement with the opposition, but I would also note that one of the issues is not in the review because it is a ministerial direction. I would like to place on Hansard that it is the government’s commitment that we would direct the independent expert advisory committee to take into account the findings of working group 3 of the IPCC when considering appropriate caps and gateways in the first statutory review in 2014. In addition, this review that is proposed in amendments (36) to (38) enables a special review by the expert advisory committee after a new multilateral international agreement is signed on behalf of Australia and enables the expert advisory committee to conduct a review of the implications of that agreement for the CPRS. It requires that the expert advisory committee make provision for public consultation and have regard to relevant government policies and other matters it considers appropriate.

7:42 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

In relation to the review, do the projections that the minister has referred to include projections about future changes in the Australian dollar? If so, what do these projections show about the reliability of forward estimates and savings due to the Australian dollar’s appreciation against the US dollar in 2010?

7:43 pm

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

Senator, I am happy to talk to you about that, but are you speaking to the amendments? The amendments are about a special statutory review after an international agreement.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I think the best thing to do is to write to the minister. For the future, I take the point that it is peripheral in terms of the matters I have raised.

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

Senator Xenophon, you have been one of the people who have been very judicious in your use of your Senate time over the past whatever number of hours we are up to now, so I do not want to cut you off. I was just clarifying because I wondered if you were speaking to a different amendment. But if you have a question, I am happy to take it.

7:44 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Can I make it clear that I am speaking to the same amendments, but I take the minister’s point that the matters raised are matters best raised after the committee is established and, the amendments, as I understand it, allow for contextual factors. In terms of any international agreements, I see the thrust of the amendments and what the focus will be, and I do take the point that it is peripheral in the context of these particular amendments.

Question agreed to.

7:45 pm

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

I move Nationals amendment (2) on sheet 6023:

(2)    Page 451 (after line 23), at the end of Part 25, add:

Division 5—Auditor-General’s report

373A  Additional function and report of the Auditor-General

        (1)    The following is an additional function of the Auditor-General:

                 Assessing the adequacy, reliability and comprehensiveness of Australian Government statistical and analytical reporting on the economic and environmental costs and benefits of the CPRS, including but not limited to:

             (a)    direct outlays;

             (b)    indirect outlays (tax expenditures);

             (c)    agency reports (by agencies including, but not limited to, the Australian Taxation Office, the Australian Bureau of Agricultural and Resource Economics and the Australian Bureau of Statistics);

             (d)    the intergenerational report; and

             (e)    Council of Australian Governments reports.

        (2)    That within 4 years of Royal Assent, or by 2014, whichever is the earlier, the Auditor General present a report to each House of the Parliament assessing the matters specified in subsection (1).

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

The government opposes this amendment. The Auditor-General, I am advised, already has wide-ranging powers to enable a whole range of audits, including of the CPRS and of the operations of the regulatory authority. In addition, part 25 of the bill requires five-yearly reviews of the whole scheme. Subclause 353(1) requires an independent expert advisory committee to review the efficiency and effectiveness of the CPRS, including in such matters as the administrative costs incurred by liable entities in complying with the scheme. The government considers that there is a very robust framework for reviewing and auditing the scheme and its performance without the amendment proposed by Senator Nash.

7:46 pm

Photo of Fiona NashFiona Nash (NSW, National Party) Share this | | Hansard source

Obviously, the Nationals feel that this is an appropriate amendment to move. It certainly has some significant benefits, as we see it; therefore, we have moved the amendment accordingly.

Question negatived.

7:47 pm

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

I move government amendment (39) on sheet BE242:

(39)  Page 453 (after line 11), after clause 374A, insert:

374B  Authority’s power to require further information

Applications

        (1)    If:

             (a)    a person makes an application to the Authority under this Act; and

             (b)    the Authority exercises a power, under another provision of this Act, to require the applicant to give the Authority further information in connection with the application;

the Authority:

             (c)    must ensure that the further information is relevant to the matter to which the application relates; and

             (d)    must ensure that the power is exercised in a reasonable way.

Requests

        (2)    If:

             (a)    a person makes a request to the Authority under this Act; and

             (b)    the Authority exercises a power, under another provision of this Act, to require the person to give the Authority further information in connection with the request;

the Authority:

             (c)    must ensure that the further information is relevant to the matter to which the request relates; and

             (d)    must ensure that the power is exercised in a reasonable way.

This amendment arises out of concerns which I believe were raised by Senator Brandis about provisions in the bill which enable the authority to request further information in respect of applications. In order to ensure that this power is not abused, the bill is amended to require the authority to request only relevant information and to exercise its powers to seek information in a reasonable way.

Question agreed to.

Bill, as amended, agreed to.

Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 [No. 2]

Bill—by leave—taken as a whole.

The TEMPORARY CHAIRMAN We will now move to Australian Greens amendments (1) and (3) to (10) on sheet 5862.

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I am not sure that the running sheet on this bill has been circulated. Whilst Senator Milne is addressing us, if that sheet could be circulated I would be much obliged.

The Temporary Chairman:

Senator, I cannot advise whether it has or has not been circulated; however, I have one.

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

I have one.

The Temporary Chairman:

Order! I have one and the minister has one. The attendants will circulate the running sheet.

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

I have a running sheet dated 25 November.

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

I may not have one then.

The Temporary Chairman:

I have a running sheet in front of me dated 1 December 2009 at 10.26 am revised. I understand that it is now being circulated. I have an indication from Senator Nash that she has the sheet. Are we all ready to proceed?

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

The sheet that I am working from is 1 December 2009 at 10.26 am revised. I understand that has been withdrawn and that we have gone back to the sheet of 25 November. I do not have the earlier one because I threw it out in favour of the revised sheet. Either way, the first amendment on the sheet is the Australian Greens amendment. It is exactly the same so I shall proceed with the amendment, if everybody is happy with that.

The Temporary Chairman:

Order! Senator Milne, we need to clarify this because the sheet that I was provided with was dated 1 December. I now understand that has been withdrawn.

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

Chair, I am not quite sure what has happened in the chamber in terms of the running sheet. I now have one dated 1 December 2009 at 5.59 pm. Does Senator Abetz have the same one?

Photo of Eric AbetzEric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | | Hansard source

I think I do.

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

I think we are now all working off the same running sheet.

The Temporary Chairman:

I am sorry, Minister, we are not. The running sheet that I have just been provided with, which I understand was being circulated, is dated 25 November 2009 and it has ‘No. 2’ on it. There was an indication a moment ago that the previous sheet we were working off had been withdrawn. I am now advised that we will work through the sheet dated 25 November 2009 at 7.26 pm. I am not sure that there is any substantial difference between the two sheets but I think it is important that everybody has the same sheet in front of them, including me. The first set of amendments on sheet 5862 is Australian Greens amendments (1) and (3) to (10).

7:58 pm

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

by leave—I move Australian Greens amendments (1) and (3) to (10) on sheet 5862:

(1)    Clause 2, page 2 (after table item 7), insert:

7A.  Schedule 1, Part 2A

1 July 2012.

1 July 2012

(3)    Schedule 1, page 56 (after line 3), after item 183, insert:

183A  Subsection 24(1A)

Omit “This subsection is subject to subsection 25(3).”.

(4)    Schedule 1, page 56 (after line 3), after item 183, insert:

183B  After subsection 24(1A)

Insert:

(1AAA)   In addition to publishing the totals for the corporation’s group, the Authority must also publish on the website, in the case of a facility under the operational control of a member of the group and the individual operation of which meets a threshold mentioned in paragraph 13(1)(d) for a financial year:

             (a)    the greenhouse gas emissions that are scope 1 emissions; and

             (b)    the greenhouse gas emissions that are scope 2 emissions; and

             (c)    the energy consumption;

reported in relation to the facility under Part 3 or 3D.

(1AAB)    In addition to publishing the matters mentioned in subsection (1AAA), the Authority may also publish on the website:

             (a)    the methods mentioned in paragraph 19(6)(b) or 22E(2)(b) that were used to measure the values for the facility concerned; and

             (b)    the rating given to each of those methods under the determination under subsection 10(3).

(5)    Schedule 1, page 56 (after line 22), after item 184, insert:

184A  Subsection 24(1B)

Repeal the subsection, substitute:

Limitations

      (1B)    The Authority must not publish information mentioned in:

             (a)    subsection (1)—unless the corporation’s group meets a threshold mentioned in paragraph 13(1)(a) for the financial year covered by the report; or

             (b)    subsection (1AAA)—unless the facility meets a threshold mentioned in paragraph 13(1)(d) for the financial year covered by the report.

(6)    Schedule 1, page 56 (after line 22), after item 184, insert:

184B  Subsection 24(1C)

Repeal the subsection.

(7)    Schedule 1, page 56 (after line 22), after item 184, insert:

184C  Subsection 24(2)

Omit “This subsection is subject to subsection 25(3).”.

(8)    Schedule 1, page 56 (after line 22), after item 184, insert:

184D  Subsection 24(3)

Omit “This subsection is subject to subsection 25(3).”.

(9)    Schedule 1, items 186 and 187, page 56 (lines 26 to 30), omit the items, substitute:

186  Section 25

Repeal the section.

(10)  Schedule 1, page 73 (after line 15), after Part 2, insert:

Part 2A—Amendment relating to facility reporting threshold

National Greenhouse and Energy Reporting Act 2007

226A  Subparagraph 13(1)(d)(i)

Omit “25 kilotonnes”, substitute “10 kilotonnes”.

226B  Application

To avoid doubt, the amendment of subparagraph 13(1)(d)(i) of the National Greenhouse and Energy Reporting Act 2007 made by this Part applies in relation to a threshold for:

             (a)    the financial year beginning on 1 July 2012; or

             (b)    a later financial year.

I remind the Senate that these amendments refer to the National Greenhouse and Energy Reporting Act 2007. They basically say at what threshold a facility should report. The government’s bill has set 25 kilotonnes of carbon dioxide as the limit or the threshold beyond which a facility should report. The Australian Greens believe that we need a more stringent threshold, and so we have moved for a 10-kilotonne threshold. That is the significant change there.

The other aspect of this is publishing the information at the facility level. The government and the Greens have canvassed this on many occasions. The Greens believe that the reporting should be at the facility level and not the whole-of-company level so that the community can have a clear sense of what a facility is emitting. The information should be made public and readily available in a more transparent way. That is what these amendments go to.

8:00 pm

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

The effect of the Greens amendments, as I understand them, is to essentially require more people to report. They reduce the reporting threshold from 25,000 to 10,000 tonnes, require ACCRA to publish facility level data and remove the right of industry to object to release of data on a commercial confidentiality ground. That last one in particular is not a particularly sensible amendment. If things are commercial in confidence, to simply remove it as grounds seems somewhat odd. When assessing how a regulation operates you obviously need to balance the social or economic benefit against the regulatory cost.

What is being proposed by the Greens adds significantly to compliance costs and, the government would suggest, without a corresponding benefit. I am advised that data from the RIS, the regulation impact statement, for the National Greenhouse and Energy Reporting Act indicated that a reduction in the threshold as is proposed—I interpolate, from 25,000 to 10,000 tonnes—would potentially increase the number of liable entities up to threefold, whilst reducing carbon emissions by only 1.4 percentage points or less. That is a very significant increase in compliance requirements and, you would have to say, for a small increase in benefit in terms of carbon emissions. The government is also of the view that facility-level data may be commercially sensitive. We do not support the amendments proposed.

8:02 pm

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

Clearly we have a difference of opinion about the level of reporting. As to the information that is being published, there are a lot of corporations that hide behind commercial-in-confidence, as we all know. There will be certain corporations that would argue that publishing at the facility level provides commercial-in-confidence information. We would argue that the community has a right to know specifically about individual facilities. But I recognise that is a difference of opinion we have with the government and it is not going to be resolved.

8:03 pm

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

My advice is that the commercial-in-confidence proposition by a company is not simply a subjective proposition. That argument would have to be put to the regulator, who would have to accept it. So there is a mechanism there to guard against that particular proposition or excuse, for want of a better word, being misused. But to simply, by legislation, remove that as an argument at all is not in the public interest.

Question negatived.

8:04 pm

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

by leave—I note on the record that both the coalition and the government opposed those amendments.

Photo of Michael ForshawMichael Forshaw (NSW, Australian Labor Party) Share this | | Hansard source

Thank you, Senator Milne. We now move to your next amendment.

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

I move Australian Greens amendment (2) on sheet 5862:

(2)    Schedule 1, page 5 (after line 11), after item 5, insert:

5A  Section 9 (after paragraph (ma) of the definition of managed investment scheme)

Insert:

          (mb)    a scheme that relates to forestry operations of any kind;

This amendment relates to the exclusion of forestry operations from managed investment schemes. This has had a long gestation in this parliament. I do not intend to speak to it at length, except to say that the Australian Greens do not believe that the government ought to be proceeding with forestry operations as part of managed investment schemes. That has been a living disaster. Its oversight has been completely inadequate. We are now seeing the mess that has been created by providing a 100 per cent tax deduction up front for these forestry managed investment schemes. You only have to see the wash-up of the collapse of Great Southern and the other schemes to see how badly served we have been by this mechanism and how badly served rural Australia has been by this mechanism. So we are moving to exclude forestry operations from managed investment schemes. That is the effect of this amendment.

8:05 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I agree with this amendment. It has had a long gestation and this is an issue that has to be grappled with. I am not confident that it will get the numbers, but it is important to put on the record that this is an admirable amendment in the context of what needs to be done with MISs.

8:06 pm

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

The government is not supportive of this amendment. If there are issues in relation to MISs, managed investment schemes, they should be dealt with in that context. We do not think this is a sensible amendment in the context of this legislation. It could have a significant negative impact on the plantation forest industry.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | | Hansard source

The coalition agrees with the government.

Question negatived.

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

by leave—I would like to put on the record that the coalition—that is, the Liberal Party and the National Party—and the government just opposed the Australian Greens amendment and it was supported by Senator Xenophon.

8:07 pm

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

by leave—I move government amendments (1) to (7) on AL232 together:

(1)    Schedule 1, item 57, page 10 (lines 19 and 20), omit the item, substitute:

57  Paragraph 55(2)(d)

Omit “Greenhouse and Energy Data Officer”, substitute “Authority”.

57A  Subsection 55(3)

Omit “Greenhouse Energy and Data Officer”, substitute “Authority”.

(2)    Schedule 1, page 13 (after line 21), after item 77, insert:

77A  Paragraph 47(f)

Omit “signed”, substitute “made”.

(3)    Schedule 1, page 14 (after line 8), after item 82, insert:

82A  Section 158

Repeal the section.

82B  Paragraph 159(1)(b)

Omit “the Regulator”, substitute “an official of the Authority”.

82C  Subsection 159(2)

Omit “the Regulator” (first occurring), substitute “an official of the Authority”.

82D  Subsection 159(2)

Omit “the Regulator” (second occurring), substitute “the Authority”.

82E  Subsections 159(3) and (4)

Omit “the Regulator”, substitute “an official of the Authority”.

(4)    Schedule 1, item 83, page 14 (line 12), omit “and 132”, substitute “, 132 and 159”

(5)    Schedule 1, page 18 (after line 17), after item 93, insert:

93A  Transitional—documents signed by the Renewable Energy Regulator

(1)    Despite the repeal of section 158 of the Renewable Energy (Electricity) Act 2000 by this Part, that section continues to apply, in relation to a person who held the office of the Renewable Energy Regulator at any time before the commencement of this item, as if that repeal had not happened.

(2)    Despite the amendments of section 159 of the Renewable Energy (Electricity) Act 2000 made by this Part, that section continues to apply, in relation to documents or certificates signed by the Renewable Energy Regulator before the commencement of this item, as if those amendments had not been made.

(6)    Schedule 1, page 18 (after line 31), after item 94, insert:

94A  Transitional—employees of the Australian Climate Change Regulatory Authority

Transferring employees

(1)    For the purposes of this item, a person is a transferring employee if:

             (a)    the person was an APS employee in:

                   (i)    the Department; or

                  (ii)    the Office of the Renewable Energy Regulator;

                      immediately before the transition time; and

             (b)    the person is covered by a determination that:

                   (i)    is made under section 72 of the Public Service Act 1999; and

                  (ii)    causes the person, at the transition time, to become an APS employee in the Australian Climate Change Regulatory Authority.

(2)    If:

             (a)    a person is a transferring employee (other than an SES employee); and

             (b)    immediately before the transition time, the person’s employment in the Department or the Office of the Renewable Energy Regulator, as the case may be, was covered by a designated agreement;

then:

             (c)    the designated agreement (as in force immediately before the transition time) covers the Commonwealth and the transferring employee in relation to Authority work; and

             (d)    while the designated agreement covers the Commonwealth and the transferring employee in relation to Authority work, no other enterprise agreement, modern award or award-based transitional instrument covers the transferring employee in relation to Authority work; and

             (e)    the designated agreement has effect after the transition time, in relation to the transferring employee’s Authority work, as if it had been made with the Chair of the Australian Climate Change Regulatory Authority on behalf of the Commonwealth; and

              (f)    if the transferring employee becomes an SES employee after the transition time—paragraphs (c), (d) and (e) cease to apply in relation to the transferring employee; and

             (g)    if an enterprise agreement is made after the transition time by the Chair of the Australian Climate Change Regulatory Authority on behalf the Commonwealth—paragraphs (c), (d) and (e) cease to apply in relation to the transferring employee when the enterprise agreement commences.

(3)    If:

             (a)    a person is a transferring employee; and

             (b)    immediately before the transition time, the person’s employment in the Department or the Office of the Renewable Energy Regulator, as the case may be, was covered by an AWA or pre-reform AWA;

the AWA or pre-reform AWA, as the case requires, has effect after the transition time, in relation to the transferring employee’s Authority work, as if it had been made with the Chair of the Australian Climate Change Regulatory Authority on behalf of the Commonwealth.

(4)    If:

             (a)    a person is a transferring employee (other than an SES employee); and

             (b)    immediately before the transition time, the person’s employment in the Department or the Office of the Renewable Energy Regulator, as the case may be, was covered by an AWA or pre-reform AWA; and

             (c)    at a time (the cessation time) during the period:

                   (i)    beginning at the transition time; and

                  (ii)    ending immediately before the commencement of an enterprise agreement made after the transition time by the Chair of the Climate Change Regulatory Authority on behalf of the Commonwealth;

                      the AWA or pre-reform AWA ceases to cover the person’s employment; and

             (d)    a designated agreement covers the Commonwealth because of subitem (2); and

             (e)    the designated agreement was made before the transition time by the Secretary of the Department on behalf the Commonwealth;

then:

              (f)    the designated agreement (as in force immediately before the transition time) covers the Commonwealth and the transferring employee in relation to Authority work; and

             (g)    while the designated agreement covers the Commonwealth and the transferring employee in relation to Authority work, no other enterprise agreement, modern award or award-based transitional instrument covers the transferring employee in relation to Authority work; and

             (h)    the designated agreement has effect after the cessation time, in relation to the transferring employee’s Authority work, as if it had been made with the Chair of the Australian Climate Change Regulatory Authority on behalf of the Commonwealth; and

              (i)    if the transferring employee becomes an SES employee after the cessation time—paragraphs (f), (g) and (h) cease to apply in relation to the transferring employee; and

              (j)    if an enterprise agreement is made after the transition time by the Chair of the Australian Climate Change Regulatory Authority on behalf the Commonwealth—paragraphs (f), (g) and (h) cease to apply in relation to the transferring employee when the enterprise agreement commences.

New employees

(5)    For the purposes of this item, a person is a new employee if:

             (a)    the person is an APS employee (other than an SES employee) in the Australian Climate Change Regulatory Authority; and

             (b)    the person is not a transferring employee.

(6)    If:

             (a)    a designated agreement covers the Commonwealth because of subitem (2); and

             (b)    the designated agreement was made before the transition time by the Secretary of the Department on behalf the Commonwealth; and

             (c)    after the transition time, a person becomes a new employee;

then:

             (d)    the designated agreement (as in force immediately before the transition time) covers the Commonwealth and the new employee in relation to Authority work; and

             (e)    while the designated agreement covers the Commonwealth and the new employee in relation to Authority work, no other en