Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Evans. Can the minister advise the Senate why it is important for Australia to introduce the most economically efficient way to tackle climate change and how is the government planning to achieve this? Also, how has this approach been received—

Honourable Senators:

Honourable senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Order! Keep going, Senator Moore.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

How is this approach being received and are there any alternatives?

Honourable Senators:

Honourable senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Order! If the interjections from both sides continue, I don’t feel we are going to get too far down the question list today, which will be unfortunate.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank Senator Moore for her question. Both sides of politics have committed to making a significant reduction in the carbon emissions of the Australian economy, but of course there are sharp differences in how we go about achieving those reductions. The first option is to introduce an explicit carbon price and allow individual businesses and households to choose the best way to cut emissions. The second option is for the government to choose how to reduce emissions through subsidies and more red tape—what those opposite call direct action. The most economically efficient way of tackling climate change is through the establishment of a carbon price via a market mechanism. This is the view of the mainstream businesses, most economists and the premier economic institutions, both here and overseas. It is a unanimous position.

I am asked about the alternatives. In its latest economic survey of Australia, the OECD said that the costs of regulatory approaches to reduce emissions can ‘be more than twice as high as the cost of market based approaches’. Why would we want to pay twice as much to achieve at best the same outcome? We should not just rely on the OECD’s views regarding the opposition’s policy of direct action, because on 22 July this year the member for Wentworth also told ABC News—

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

Senator Bernardi interjecting—

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Sterle interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Order! Senator Bernardi and Senator Sterle, if you want to have a private conversation you can go outside.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

As I was saying, the member for Wentworth told ABC News earlier this year:

The Coalition’s policy is not the ideal from my point of view I grant you that—I’d like to see a market-based solution.

Of course he is right. The coalition stand outside mainstream economic and business thought on these issues. The coalition’s so-called direct action policy fails to guarantee the transformation of our economy that we need. The overwhelming consensus of Australian business and economists is that a carbon price is the most economically efficient way to tackle climate change and that is why we are committed to it. (Time expired)

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can you please inform the Senate of the economic justification for the introduction of a carbon price and the economic risk of failing to deal with this issue?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

The government believes that the most efficient and cost-effective way to achieve reductions in carbon pollution is through a price on carbon. The economic and environmental case is clear. A carbon price will create an incentive to reduce pollution, drive investment in renewable and low-emission technologies, create certainty for business investment and ensure our economy remains internationally competitive in the longer term. A carbon price will therefore create jobs, strengthen the economy and build a sustainable environment. Importantly, a carbon price will provide businesses with investment certainty—a very important thing. Business needs to know the form of a carbon price; otherwise, it must build more risk into its investment calculations. A lack of a carbon price leads to investment in Australia being more expensive than it needs to be, leading to less investment and fewer jobs. This is very important economic reform. (Time expired)

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister outline to the Senate why it is in Australia’s national interest to take action on climate change?

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Many other countries are taking action to reduce carbon pollution and it is in Australia’s interest to do the same. We recently made public a paper on the extensive action that is being taken by countries around the world. Many states of the United States are moving ahead with their emissions trading schemes. The EU has been pricing carbon in Europe for over five years. China and India are also taking action. It is very clear that countries around the world accept the economic reasons for taking action on climate change.

Our recently announced Productivity Commission study will provide more information about what the effective price is that already exists in our major trading partners. It is in our long-term economic interest to reduce the emissions intensity of our economy. In a carbon constrained future, clean energy technology will be in greater and greater demand. Innovation and investment in clean energy will ensure our long-term competitiveness. A carbon price will be a fundamental transformation of the way we produce. It is important that we get this economic reform. (Time expired)