Monday, 22 August 2011
Carbon Credits (Carbon Farming Initiative) Bill 2011, Carbon Credits (Consequential Amendments) Bill 2011, Australian National Registry of Emissions Units Bill 2011; In Committee
The committee is considering the Carbon Credits (Carbon Farming Initiative) Bill 2011, as amended, and amendments (4) and (1) to (3) on sheet 7129 revised moved by Senator Xenophon, also on behalf of Senator Birmingham. The question is that the amendments be agreed to.
I would like to hear from the government in relation to this but my understanding is that there have been extensive discussions between the government and the key stakeholders. There was a concern that early adopters for landfill management would be penalised. I am very grateful for the work of Senator Milne in bringing the parties together to reach a sensible compromise so that there will be certainty for early adopters. I have not had an opportunity to speak to my colleague Senator Birmingham, with whom I moved this amendment. If the government could indicate, firstly, that progress has been made and, secondly, that it is satisfactory to the two key stakeholders, LMS and EDL, that could be quite satisfactory. In the meantime, I am obligated to discuss this with my colleague Senator Birmingham.
We are picking up from the debate on Friday in relation to this amendment for the landfill gas sector. I have done one better than to speak with Senator Xenophon. I have had the fortune this morning of speaking with Evelyn Ek from his office, who from time to time provides great guidance to many of us in this place on serious issues. Let us remind ourselves that this is an amendment which Senator Xenophon and the coalition have pursued to ensure the landfill gas sector is protected from any perverse or adverse outcomes under this legislation. It is a big issue. We are talking about more than 4,500 million tonnes of CO2 equivalent gases that were recovered or destroyed in 2009 from waste in landfills. Many of those projects could be at risk or at threat of discontinuance should we get this legislation wrong or should the government get the implementation of this legislation wrong. We want to make sure that that outcome is avoided.
I join with Senator Xenophon in thanking Senator Milne for her initial support of the issues raised and ensuring that industry was able to engage in some discussions with the government. It is equally my understanding, having spoken to some of the industry players as well as Ms Ek, that the industry has had further discussions with government, that there is an agreed pathway forward for how the methodology and the time line will be developed and the base lines that will be considered as part of that process.
We want as many guarantees and as much information on the record as the minister is able to provide as to what the guarantees provided to industry are. I posed some questions to the minister on Thursday about how he thought he could achieve the timing that Senator Milne had alluded to and that he had alluded to in the debate on Thursday. If he could for the benefit of the chamber and the record provide us with the detail of the time line for discussions with industry and finalisation of the methodology, the approach that is going to be applied to the base line in this regard and the government's understanding of what this will mean for the existing projects, that would certainly assist us in hopefully proceeding with this debate, dealing with this amendment and, most importantly, providing certainty for early adopters and early movers who have invested significantly and done so much to reduce the amount of greenhouse gas that comes off landfill gas facilities.
People have been very busy working on this issue over the ensuing period since we last met on Thursday. I think that all within the chamber see this as an important matter that does need to be resolved.
From the government's perspective, we have released a revised draft methodology to the landfill technical working group that includes standardised baselines for GGAS and greenhouse-friendly landfill projects. Landfill companies have indicated that they support the proposed approach. That is what I indicated on Thursday—that is, going back and working through the draft methodologies and then going to the independent assessor, which, to all intents and purposes, we now refer to as DOIC, for those who are interested in acronyms. The government will continue to work with the industry to implement the methodology following its assessment by the DOIC.
Let us be clear that what we now have is a draft methodology for the capture and combustion of methane in landfill gas, and the companies have indicated they support the proposed approach, which is to take the draft methodology, move it into assessment by the DOIC and, then, following that assessment, the independent assessor will make the decision in relation to it to establish those issues, including the baseline. So it effectively means that the integrity of the system is maintained and the legislation continues to provide a framework that has integrity that continues to deliver for all areas, including this one, which we have now proposed a way forward with.
I thank the minister for the information and his response. Certainly, the landfill gas sector have said to me, and I am sure they have said it to Senator Xenophon as well, that they are eager to ensure that the integrity and equity of the system is maintained, as well. But they also want to make sure that there is as much certainty for them as possible.
I pose two areas of questioning, first in relation to the draft methodology that is being finalised and will be presented to the DOIC. Is there an understanding of how that will approach the baseline figures and, if so, how is it going to approach those? Are you able to inform the chamber of that? If you are not able to inform the chamber perhaps you could tell us why you are unable to do so. Secondly—this is a matter I raised on Thursday—in regard to timing I understand that there is an expectation that the finalisation of the independent assessment should all be done within the space of about a month. I think you, Minister, alluded to that on Thursday. Is that your understanding? Perhaps to educate me, if not anybody else, could you inform the Senate how it is possible that that timeline is going to be met in such a short period of time. Is the DOIC already operational, notwithstanding the fact that it appears to have its rules and mandate laid out within this legislation? Is there a process already underway to ensure that those timelines to provide certainty can in fact be met?
Dealing with the timeline, we do expect it to be dealt with in the one month. Why? Because the government has established an interim process—that is, the DOIC—that is in place. One of the issues you raised last Thursday was that you imagined—hypothetically—that it would take a lot longer. What I did not have an opportunity to tell you at the time was that there is in fact a DOIC in place. So, all of the work that you, hypothetically, envisaged had to be done is done. There is an interim DOIC in place and the draft methodology has been prepared and is ready for the interim DOIC to assess in a very short space of time. So all of that work is in train and can be done in a matter of a very short space of time—less than a month, I am advised, and probably sooner, depending of course on people's work commitments. But it is expected within that period and that is why we were confident in making that original assessment.
The draft methodology includes a standardised baseline of 30 per cent of projects transitioning from GGAS and zero for projects transitioning from greenhouse-friendly. In addition to that the draft methodology contains the baselines for both GGAS and for greenhouse-friendly projects as well. This means it is now likely to go to the interim DOIC within the month. Therefore, depending on how long the interim DOIC takes, we do not expect it to take particularly long. We are confident that the landfill sector can have confidence in the process.
I appreciate the minister's explanation and response to those two questions. I have one just one subsequent question that flows from the minister outlining the establishment of the interim DOIC and the manner in which the interim DOIC will work. When this legislation is enacted and the permanent DOIC is established, as against the interim DOIC, will that permanent body equally have to review all of the determinations of methodologies that the interim body has ticked off? If so, what guarantees are there for industries which think they have certainty once it has been ticked off by an interim body that the permanent body may not undo that? Is it expected that the memberships of the two will be consistent, or what guarantees are there? Obviously the minister is turning to a page of the bill which may well address that very question. Could the minister make sure for the benefit of completeness on the record and certainty for this industry sector, given the government's commitments, that this is dealt with as quickly as possibly—certainly in less than a month, which is important to the industry—so that the industry does not see serious negative financial consequences? What certainty or guarantee is there for them as this issue progresses beyond the interim stage and into the permanent stage?
Yes, you have correctly identified the bill in my hand. At 131, 'Transitional—pre-commencement application for endorsement of proposal' the bill contemplated that there would be an interim DOIC in place and how we would then deal with transitional arrangements. Effectively that section means that a person applies to the interim offsets integrity committee for the endorsement of a proposal or a methodology determination and the committee either endorses the proposal or refuses to endorse the proposal—avoid doubt. Then 132 deals with pre-commencement endorsement of proposal and indicates how each is to be effectively dealt with. Then, as you are aware, the methodologies are disallowable instruments. So once they are set in train, the short answer is that they are flipped over into the new DOIC as methodologies that will be picked up—that is the easiest way to explain it. That allows all of that work to commence prior to the establishment of the permanent DOIC and to be utilised and continue in operation.
Minister, thank you for humouring me and ensuring that all of that detail is clearly on the record. I want to indicate that, following discussions with Senator Xenophon, it is our intention to withdraw this amendment. Having spoken to the industry sectors involved and having got the information on the record from the minister this morning, we are of the belief that the government is intending to do the right thing by this industry. I want to make it clear once again that the last thing we want to see is a perverse outcome where projects that were early movers in the abatement of greenhouse gas emissions are somehow penalised, where projects that were early movers are facing a situation of financial disadvantage or where projects that were early movers in fact close down and we have the perverse situation that a bill designed to encourage further abatement and new abatement activities has the consequence of causing early abatement activities to cease to operate.
The industry is taking the government at their word that this process will avoid that outcome and will provide appropriate certainty for the sector. I hope that is the case. We are placing that trust in the government rather than the chamber seeking to exercise its will. We are placing that trust in the process of this legislation. We hope that that trust is not ultimately proven to be misplaced. Once again, we emphasise that this was an issue highlighted by the Senate inquiry. It is a shame that it has taken until this last moment of the legislative debate to solidify a pathway forward on it to ensure that there is some level of certainty for the sector. Hopefully, this is the end of the uncertainty and that they are able to proceed within the month knowing exactly where they stand. Hopefully, that will ensure that the projects, especially the many regional projects in the landfill gas sector, are able to continue and to be supported by this scheme, just as they were previously under a greenhouse-friendly arrangement or the New South Wales government's GGAS scheme.
I again place on the record my thanks to Senator Xenophon for his work with the coalition on this matter, to industry for making sure that we all had this matter brought to our attention and to the Greens and the government for trying to come up with an appropriate resolution. We hope that this resolution sticks and works for the benefit of industry. We will certainly be watching very closely from here.
I seek leave to withdraw the amendments.
by leave—I move amendments (3) and (4), standing in my name on sheet 7118, together:
(3) Clause 56, page 81 (line 19), after "Act", insert "and subject to subsection (1A)".
(4) Clause 56, page 81 (after line 21), after subclause (1), insert:
(1A) Notwithstanding subsection (1), if a project:
(a) was established as, or as part of, a managed investment scheme; or
(b) is determined by the Minister, on the advice of the Domestic Offsets Integrity Committee, to have an adverse impact on:
(i) the availability of water; or
(ii) land and resource access for agricultural production;
the project is deemed to be an excluded offsets project.
(1B) A determination under paragraph (1A)(b) is a disallowable instrument for the purposes of the Legislative Instruments Act 2003.
(1C) In this section:
managed investment scheme has the same meaning as in section 9 of the Corporations Act 2001.
I remind my colleagues that the position with this is that the government was to provide details of the risk management principles and guidelines. I am grateful to the government for providing those. This is AS/NZS ISO 31000:2009 Risk management—Principles and guidelines. My question to the government is that, on the face of looking at these risk management guidelines, I do not understand how it will work in the context of this amendment, which relates to the negative list, and setting out criteria for a project that will have an adverse impact on the availability of water or on agricultural production. How does the government envisage that these guidelines, which, with annexures, run into some 23 pages, will work? For instance, on page 17, item 5.4.2, which is headed 'Risk identification', states:
The organization should identify sources of risk, areas of impacts, events (including changes in circumstances) and their causes and their potential consequences.
I have a genuine question. What on earth does that mean in the context of how the government proposes these risk management guidelines will operate?
I think we are in fact all in screaming agreement. What you are proposing concerns doing it project by project, which would create unnecessary work and would, I think, also slow the process down and create a logjam. We are proposing types of projects. The reason we use that is so that you can characterise them all within a group and in doing so allow those types to be proceeded with in the process of maintaining the integrity of the process—that is, the ability for methodologies to come forward and be independently assessed and then put in place.
The real difference between us here is between projects and types of projects. The reason we use the ISO code is that it allows DOIC to have a way for everyone to understand that the way they do their assessment is in accordance with accepted practice—that is, ISO guidelines. This means that there is integrity in the system and that integrity is underpinned by the independence of the DOIC, as well. All of this means that projects that come forward will be assessed with methodologies under the type they fit within. So there is a broad ability for people interested in particular types of projects to know that they have got certainty. Using as an example the one we have just been talking about—the draft methodology for the capture and combustion of methane in landfill gas—the draft methodology is broader than an individual project. It is the type that fits within it, the type being the capture and combustion of methane in landfill gas. That is the breadth of it. It then provides the draft methodologies we would use and the issues that we have been talking about, including how it would apply. But it is not an individual project. It is not one company saying, 'Here is one landfill. This is the project we want.' This means that all of those firms that deal with the combustion of methane in landfill gas have certainty that once that methodology is independently assessed and approved by DOIC any similar project coming forward will fit within that framework. Therefore they have certainty. They also then have the ability to utilise the scheme and they do not have to come up, as individual projects, and go through the whole issue again, which would cause both unnecessary cost and delays.
Perhaps we could look at it in another way, and I appreciate the spirit in which the minister answered the question. I think the issue is this—and this is a question I posed on 16 August in this place—how will it be assessed whether a project reduces the production of a particular type of food or grain in a particular area? How does the government take these matters into account? The government is saying that they agree that these are important matters, but that this is not the way to do it. The government is saying, 'Don't assess this on an individual basis.' But I ask for an assurance about how the methodology would work in individual cases. In other words, it seems to me that the risk management process would be irrelevant. I am still not sure how it would apply and that is why I will still maintain this amendment.
I am not sure what the coalition's point of view is in respect of this amendment. But I would have thought that if there is a clear statement of principle in the legislation that if there were to be an adverse impact on the use of water and on fruit production that would place it clearly in the negative list. I do not want to prolong this debate unnecessarily. If the government could explain what assurances they can give in the context of these risk management guidelines about how the methodologies would be individually assessed and what level of transparency and scrutiny there will be, then I guess we can get on and vote on this particular amendment. I am concerned that we are not giving the priority that is required to water security and food production.
Perhaps you will forgive me for using an example. One type of weed in one paddock might be a threat to food production. One project is to eliminate that weed in that paddock. It may or may not be a threat to food production. It may be specifically a threat to that farm's food production, but when you look broadly at all the arable land, if that weed is only in that one paddock, it is not a threat because it is one weed in one paddock. If you aggregate that you can say: 'This weed in many paddocks across all the arable land might be a material risk. Therefore we need to address it.' I am trying to describe that what you are talking about, as I understand it, is individuals, whereas I am talking about types—a type of weed aggregated across. In other words, that is the only way you can assess whether or not it has an impact. That is a poor way of trying to make it concrete.
The challenge always is that—forgive this analogy—if you look within the weeds, you will not see the bigger picture. The bigger picture is the aggregation across this area. That is why we use types. A type of weed may not be a material risk to food production, but the aggregation of that—in other words, a significant number—then may be. I am trying to use a different way of explaining it to you to give you some confidence that this is the way forward, not the way that you have sought to put in your amendment. I am trying to show why we have chosen the path that we have chosen, why we have confidence in the way the negative list will work and why you cannot use individual circumstances. Each of them on their own may not actually amount to a material risk, whereas if you aggregate it and look at the type it may in fact do that. I will pause there and see if we can progress it.
I think it boils down to this: there are different paths to achieve this. I think the path that I have suggested in this amendment is a clearer, unambiguous path. I appreciate what the government is saying. I feel more comfortable with the amendment. My concern is that the way the process will operate may be subject to a number of ambiguities and uncertainties where we will end up with certain projects being approved where there is an overall adverse impact on water security and food production. I understand it is a question of approach and which path will be more effective. I think there ought to be a legislative approach. I am not certain what the opposition's view is in relation to this. That may determine whether we have a division in relation to this or not. If this amendment fails, as appears likely, I am sure that there will be ongoing scrutiny of the methodology and of how the risk management principles are used. Again, it is a question of different paths presumably to reach the same objective. I believe the objective could be reached more easily with an unambiguous approach such as the one set out in this amendment.
In the earlier debate on this amendment before we postponed it, I indicated that the opposition is sympathetic to the issues that Senator Xenophon is attempting to address with this amendment and that we are inclined to support this amendment. That position has not changed in the days that have followed or as a result of the advice that the minister has given. I understand the point the minister is attempting to make in terms of the differentiation between kinds or types of projects and broad criteria and the potential of this amendment to capture and require analysis of specific projects. However, the types of projects that are likely to flow from this bill are of course going to have very specific effects and impacts in very different areas as they are applied right across the country, especially when it comes to water availability or agricultural production. We spent quite a period of time debating another amendment that had been championed by the opposition in relation to providing some security over land access for agricultural production. We think that in this regard it is important that we do not allow a system where loopholes in broader regulations can be exploited by specific projects. Whether they are exploited deliberately or otherwise, the potential is there for these specific projects to potentially have an adverse impact on water or agricultural production even under the type of regulations that the government is proposing under the existing section. Indeed, we have seen it in those draft regulations and in the earlier debates on the amendment about land access for agricultural production. I expressed quite strongly and passionately at that stage the concern that the government appeared to be treating land access for agricultural production as a side issue. The government appeared to not take into account the amendment that has now been made to insert new subclause 56(2)(e) to provide for consideration of land access for agricultural production. The government appeared to have no intention to revise the regulations relating to the negative list to reflect any guidelines in that regard.
I understand that there are challenges in preparing guidelines for that such as: what is your prime agricultural land and how do you go about defining it? These are issues the minister has to tackle in a number of different areas. But in this regard we think there is value in Senator Xenophon's amendments, which provide the potential for some case-by-case scrutiny and provide the potential for projects that may sneak through the types of project regulations to be addressed under a specific project-by-project regulatory approach.
To that end, we are supportive of these amendments. They may not be perfect. The challenge with any legislation is whether or not we can make it perfect. However, as is so often the case—and will probably be the case with this bill—I am sure that, whether this amendment passes or otherwise, the bill will be back before us in a year or two so we can tidy up things that have problems in the way they operate. If this clause were to have such problems then I am sure it will be addressed equally. It is possible that by not passing this clause, we will find in a couple of years that we are back, perhaps inserting something like this to provide greater discretion and greater powers to the minister to disallow certain projects or put them on the negative list.
I think it is important for the government to take this matter seriously. As I said, I understand the arguments the minister has made. But we think, as Senator Xenophon has outlined, that there is a continuing risk at the end of this process that if the bill passes in its current form we may see projects proceed that have an adverse impact on water availability, or we may see projects proceed that have an adverse impact on agricultural production. They may be one-off projects, but those one-offs add up to create a problem. It is that type of adverse impact and inadvertent consequence of a bill like this that we want to make sure is avoided. That is why we are inclined to support and will be supporting these amendments.
We urge the government, if these amendments fail, to once again take a good look at the regulations it is proposing, to once again take a good look at that draft and, particularly, to once again revise that draft with regard to the new clause, 56(2)(e), which was inserted the other day; it does at least provide for some consideration of any adverse impact in regard to land access for agricultural production. I urge the government to take a look at that again and be particularly mindful of what the stakeholders have to say during consultation on this. I am accepting the likely political reality that this amendment will fail, but I hope the government at least takes into consideration the principles that this amendment is seeking to pursue. If it will not do that, then I urge the government to make the regulations for the negative list as tough and as stringent as possible. That is what is absolutely important—to make sure that the credibility of this system and the credibility of the assurances the government has given to farmers and to all those stakeholders in the industry stack up and are seen through. With that, I again thank Senator Xenophon for proposing these amendments and once again indicate the opposition's intention to support them.
As Senator Birmingham said, the opposition support amendment (3) and (4), proposed by Senator Xenophon. I will come back and say a couple of words about the amendments, but before I do that I want to raise a couple of issues that came up in this debate last Wednesday, I think it was.
I must say, Senator Ludwig is an important person! I have just been out to the rally at the front of Parliament House, and his name is being mentioned quite a lot out there. I might also say, though, that his name is not being mentioned very favourably. A lot of the people out there are the sorts of people who are now in desperate straits because of the government's bungling of the live cattle exports issue. I suspect that some of these people have spent their last pennies to come down and make their views known here in Canberra.
It is very sobering, and quite moving and emotional, to see all these people, some of whom have driven trucks 2½ to 3,000 kilometres. One of the speakers was just saying to the crowd that he gets about two kilometres to the litre of fuel in one of his big trucks. You can imagine what it has cost him to come 2½ thousand kilometres—money he does not have. He is from the north west. The whole of the north of Australia—rural Northern Australia—are struggling because of the live cattle ban. They are in absolutely desperate straits. We are going to see the bankruptcies come in the not-too-distant future. These people are making a last-ditch effort to try and make their government listen on things like live cattle exports and, more importantly, on things like the carbon tax. Out there, there are a lot of trucks, a lot of truckies. If Senator Sterle were in the chamber he would agree with me on this. There are people who understand that their livelihoods are about to be destroyed by the carbon tax brought in by this government whose leader promised us just a year ago that there would be no carbon tax under a government she led. And here we are a year later with these people.
It is quite emotional to be out there. They are making a last-ditch effort to come down and try and make people in this building, this government, understand just how they are hurting and how the decisions of this government have impacted so badly on ordinary Australians. I would hope, Minister, that you would have the courage and perhaps the time to go out and speak with these people, because the more you interacted with them the more you would understand the hurt that you have caused by a stupid decision, a poorly thought-through decision made on the balance of what you thought was a political opinion from GetUp! and the left-wing parties around the world. Your original decision was correct, Minister, but why you changed we in this parliament know: because you were done over by the left of your party and the Greens and the GetUp! group and some of the unions.
But I have distracted myself from the debate before the chamber. On Wednesday, Minister, I was making a plea again on behalf of some northern agricultural people. I was asking you about the banana industry, which your carbon tax will have a very heavy impact upon because they use a lot of electricity in their coldrooms and ripening rooms and they use a lot of fuel in bringing bananas, a bulky product, from Tully down to Sydney and Melbourne. I was saying that they are really getting it in the neck. I asked you, you might recall, whether this Carbon Farming Initiative that we are debating would perhaps give them something back. You assured me, yes, it will be good for them.
Coincidentally, a couple of banana growers, in fact a couple of horticulture growers, from my state of Queensland—and your state of Queensland too, of course—have been in touch with me and they say that this Carbon Farming Initiative is not going to help the horticultural industry one iota. They rightly point out that if you have a banana farm of 100 hectares, to take 20 per cent of that farm and put on trees for under the Carbon Farming Initiative will mean that that is 20 per cent fewer bananas they can grow and so their income would fall by far more than they might ever achieve from this Carbon Farming Initiative bill and the good things that are supposed to come from it. I am a bit naive. I said: 'But if you are growing banana trees, isn't that like growing trees? Won't that help, won't that qualify?' I am told no, that banana trees are business as usual and if you are growing things in a business as usual style you will not be able to take advantage of anything this bill might make available to you. So the information you gave me on Wednesday is quite wrong, unless some of the facts that I have mentioned are not correct, in which case I am sure you would take the opportunity of the debate today to tell me that the banana industry can in fact get some positive outcome from this Carbon Farming Initiative.
Also on Wednesday I asked you about whether all of those graziers, those cattle owners up in the north of Australia, many of them Indigenous people, I might say, Indigenous enterprises, might be able to get some advantage from this Carbon Farming Initiative. That is problematic as well. I am told by some of the people I was speaking to earlier today that a lot of them could reduce some of their costs in their cattle farming operations if they were able to plant some sorghum, some silage crops, and feed their cattle. But as you know, Minister, thanks to your Labor Party colleagues in the Queensland state government, you cannot chop a tree down. I know you, Madam Acting Deputy President, have been up that way and have seen trees everywhere across the north of Australia. They are not allowed to chop one of them down. So the opportunity of reducing their costs to try and make their industries a bit more viable is taken away from them.
I have just mentioned a couple of things, but if you walk outside there are about 5,000 people outside trying to make your government understand the hurt that is being imposed upon the people of rural and regional and remote Australia. I do hope you are able to spend some time with those people today, Minister. I thought you were fairly courageous in going to Mount Isa to address angry farmers not long after you made those silly decisions. I am told from people who were there that, whilst you at least had the courage and courtesy to go there, you did not answer any questions. People kept wanting to ask you things, wanting to get answers from you at those meetings, but they got absolutely nothing. I understand the mayor of Carpentaria Shire, Fred Pascoe—a very competent and able mayor; a very quietly sounding sort of fellow who never gets excited—was asking the minister a lot of questions which, again, he gave the politician's answer to. The minister never answered the question. But Mr Pascoe kept coming back to you and saying, 'That was all very well, Minister, but could you please answer the question.' I understand that everyone went away disappointed.
This is happening right around Australia. In front of Parliament House today there are some timber workers from Tasmania. The timber industry used to be one of Australia's greatest industries. If any of you have been to Tasmania, you will know that there are millions and millions of old growth forest trees in that state. Thanks to the Greens, there is no industry in that state anymore. There is no way in the world you could interfere with the sustainability of the Tasmanian forests. Hundreds and hundreds of workers are now without a job. Those sort of people are out the front protesting. These are hardworking, decent, genuine Australians. They are not after a government handout—all they want is the right to work in what has been, for as long as Australia has been going, a very sustainable industry, the timber industry, particularly in Tasmania. There are some Tasmanian senators here. As Senator Milne would know, some of these forests have been logged for over 150 years. But they are the forests that the Greens go and put a placard in, saying, 'Save these virgin native forests.' Those forests were cut down 120 years ago and have regrown. That is why this industry is so sustainable.
This is relevant to the debate before the chamber because in certain instances land in Tasmania could be used for the Carbon Farming Initiative. I raise the matter in the context of the hurt around Australia that is demonstrated out the front of this building as I speak. That hurt will get worse when the Gillard Labor government brings in the carbon tax. I can talk about the carbon tax, because the Carbon Farming Initiative bill is one of a suite of bills that we will be dealing with in this chamber this year concerning the carbon tax that will be imposed upon Australians—that tax that just a year ago the Labor leader, Julia Gillard, promised hand on heart would not be introduced under a government she led. While some people might say perhaps she made a mistake, perhaps she did not mean to say that, we have on record the Treasurer, the deputy leader of the Labor Party, who said I think on no less than a dozen locations that Tony Abbott was being hysterical when he kept saying to people before the last election that Labor and Greens in alliance after the next election would bring in a carbon tax. Wayne Swan said Tony Abbott was off his brain—how dare he suggest that; they were not going to bring in a carbon tax. Wayne Swan said Tony Abbott was being hysterical. We have the leader and the deputy leader of the Labor Party both just a year ago, before the election, promising Australia there would be no carbon tax under this government and here we are, a year later, debating one of a suite of bills which will introduce a carbon tax.
Senators might also recall that before the last election Ms Gillard told the Australian public that she would not be doing anything on climate change until there was consensus. Do you remember that? A year ago there was consensus—99 per cent of the candidates standing for election a year ago promised that there would be no carbon tax. What more consensus can you get than that—99 per cent of all candidates promised there would be no carbon tax. Yet here we are, just a year later, dealing with this bill which is part of a suite of bills to introduce this toxic tax that is going to destroy even more Australians and which those many thousands of people out the front of this Parliament House at this very moment are expressing their concern about.
Unfortunately I have cut myself short of time to actually address the amendment. As Senator Birmingham says, we will support it. (Time expired)
The question before the chair is that amendments (3) and (4) on sheet 7118 moved by Senator Xenophon be agreed to. A division having been called, I remind honourable senators that divisions cannot take place before 12.30 pm on Mondays. The debate is adjourned accordingly.
by leave—I move amendments (8) and (9) together:
(8) Clause 76, page 101 (line 11), omit "5 years", substitute "3 years".
(9) Clause 76, page 101 (line 24), omit "5 years", substitute "3 years".
These amendments reduce the offsets reporting period maximum from five years to three years. Currently there is a period of 12 months to three years. There is a concern that a five-year period is too long. I can indicate that I will not be seeking to divide on these amendments but I would like an explanation from the government about the upper limit of five years and whether it acknowledges concerns about having such a long period. I think three years would constrain the offsets reporting period to what some would consider a more reasonable period, rather than five years.
What it would do, as you have correctly identified, is shorten the maximum reporting period. But a five-year maximum reporting period provides flexibility. For example, it avoids reporting costs at the beginning or end of a project when forest growth rates are slow. So what you would be doing is having three years creating churn. Five years provides that flexibility. The scheme integrity continues to be maintained because credits are only issued after abatement has been achieved, therefore the scheme continues with integrity. Five years is the appropriate period. It gives certainty, it gives flexibility within that period and it ensures that credits are only issued after abatement has been achieved. What it does not do, given what yours does, is create a greater churn in that period. In other words, what you do is you add to administrative cost.
Temporary Chairman Cameron, I am not sure I have had the pleasure of noticing you in the chair before. It will be a great temptation to many people in this place to test the will of the chair, I suspect, whilst you are there. But I will not be one of those. I congratulate you on your ascendancy to this very significant office.
I am sure that it will at times be both and that you will exercise the office with the aplomb to which we are so accustomed. In regard to this amendment moved by Senator Xenophon to the reporting requirements within this bill, the opposition are not inclined to support this particular amendment. I think we probably share some of the concerns that the minister has just outlined. In regard to the eligible offset projects that we are talking about, a period of reporting for them of between 12 months and five years is probably an appropriate time line. Whilst five years has the potential to be a long period of time, equally, in regard to the establishment of and the progress of these sorts of projects, it is not necessarily an inordinate period of time. It is going to be a matter of balance. Different projects will have different time lines which it will be most appropriate for them to meet, but obviously where it is possible and sensible for projects to meet a five-year time line then that is probably wise. The well-established projects may need fairly minimal work to make their reports. It is going to be argued in either direction whether they should report more often or less often, but well-established projects probably need less oversight and checking once they are well established and their credentials have been acknowledged. So we think that shortening, in a sense, the mandatory reporting period to less than three years would not aid the efficient running and efficient management of this scheme and as a result we would join with the government in thinking that the five-year time line is appropriate to maintain.
It would be remiss of me if I do not mention that I welcome you to the chair, Acting Temporary Chairman Cameron. I am confident that, whilst you are in the position that you are in, this place will not degenerate into a rabble. As to this matter, I think it is a genuine concern. Let us see how this goes in terms of the five-year period. I accept what the government and the opposition have said. I think we need to monitor this in terms of the length of the reporting period. Of course, we will have a vote on it now. I understand it is lost but I can understand the reasons given by both the government and the opposition.
I move amendment (10R) on sheet 7122 revised, which is standing in my name:
(10R) Clause 112, page 146 (after line 8), after subclause (14), insert:
(14A) Within 28 days of giving a notice under subsection (14), the Domestic Offsets Integrity Committee must publish on its website the reasons for the endorsement of the proposal or the refusal to endorse the proposal, as the case may be.
Under this amendment the Domestic Offsets Integrity Committee must publish on its website the reasons for its endorsement of the proposal or its refusal to endorse the proposal. Currently the bill provides that the minister must 'as soon as is practical' cause a decision to be posted on the department's website. This amendment inserts a 28-day requirement and also says that reasons for a proposed methodology being refused must also be published. It is effectively a transparency provision, and I am grateful for the discussions that I have had with the government and the opposition in relation to this. I think it would improve the legislation to have that benchmark of transparency and accountability in the legislation.
Obviously, we are in great agreement. Unlike other occasions when the minister has said we are in agreement on a principle or on a subject of debate, on this occasion I think we are also in agreement on the direction that the debate should actually take and the final vote that should be applied. The opposition thanks Senator Xenophon for moving this amendment. We concur with the arguments that he has put in regard to providing further transparency to the process and the assessment and recognition of offset entities and, in particular, to the work of the Domestic Offsets Integrity Committee. We hope that this amendment will provide not just further transparency but also the further benefits of confidence, being that of those who participate in this scheme, and certainty as to the way that the DOIC works and undertakes its considerations.
The Greens support this amendment and agree that adding the transparency and the time frame and the reasons are all good things for the community in terms of the decisions that are made. I thank Senator Xenophon for the work he has done on this and we support it.
Question agreed to.
by leave—I move amendments (11R), (11A) and (11B) on sheet 7124:
(11R) Clause 255, page 271 (after line 16), after paragraph (c), insert:(ca) to monitor scientific research relevant to the issue of permanence and to advise the Minister about best evidence in relation to permanence;
(11A) Clause 255, page 271 (line 7), before "The", insert "(1)".
(11B) Clause 255, page 271 (after line 18), at the end of the clause, add:(2) If the Domestic Offsets Integrity Committee gives advice to the Minister under paragraph (1)(ca) about best evidence in relation to permanence, the Minister must, within 28 days after receiving the advice, cause a copy of the advice to be published on the Department's website.
These amendments relate to the issue of permanence. This is something that was looked at closely by the Senate Environment and Communications Legislation Committee and there is a discussion about this in some detail at pages 34 to 36 of the committee's report. There is a concern that a number of submitters argue that the requirement to maintain carbon stores for 100 years was too long and would discourage some potential proponents from participating in the scheme. Michael Kiely, the Chairman of the CFTA, stated, as reported on page 35 of the Senate committee report:
No farmer would be silly enough to agree to 100 years for soil carbon or 100 years for anything. A finance lender would want to know seriously the impact on the value of the property of agreeing to such a thing. We did some research into the 100 years thing and discovered it was a policy decision, not a scientific measure … We believe that 100 year is a perverse outcome. The result is said to be necessary so buyers can be confident they are getting value—that is, genuine abatements—so they get nothing. There is nothing available for them. We have found examples where the IPCC and the Verified Carbon Standard have allowed other periods of time recently—20, 25, 30-odd years. We believe we could work within that sort of time frame.
Recommendation 3 of the entire committee at clause 2.49 of the committee report at page 6 states:
The committee recommends the government continue to monitor scientific research relevant to the issue of permanence and adjust permanence obligations in the CFI to reflect international consensus on this matter.
This amendment adds to the Domestic Offsets Integrity Committee a function that it monitor all scientific research relevant to the issue of permanence and advise the minister of best evidence in relation to permanence. This was a recommendation of the Senate committee and I think it is important that DOIC as the responsible agency continue to look to update, amend and improve the scheme into the future. This amendment also provides that the advice by the committee be published on the website of the department within 28 days.
There is an issue here about the continued monitoring of permanence, given the quite serious reservations expressed in its current form. It does not seek to change the permanence provision, but it does seek to ensure that there is ongoing or continuous scrutiny of the permanence provision, looking at the best available scientific evidence.
As Senator Xenophon has rightly highlighted, this issue was considered in some depth by the Senate committee inquiry into this legislation, an inquiry which you Mr Temporary Chairman Cameron chaired. So you would well recall the bipartisan recommendation that the government continue to monitor scientific research relevant to the issue of permanence and adjust permanence obligations in the CFI to reflect international consensus on this matter.
The bill does put in place a basic permanence obligation regarding the maintenance of carbon stores where credits have been issued. That is an important feature of the bill. There needs to be some certainty in this regard. However, as Senator Xenophon has highlighted, a number of submitters were critical of the 100-year permanence obligations and the impact that would have on the scheme. Senator Xenophon highlighted the evidence of one of the submitters to the inquiry. There were others. Ausveg in their submission made a very strong appeal on what the impact of this 100 year requirement may be. They indicated in the extract from their submission that appears in the Senate inquiry report:
… it would take a very brave farmer to agree to 100 year permanent arrangements in which they (and their children and grandchildren) will be held accountable for "natural disturbances such as drought that may cause carbon to be released from the soil".
Equally, placing all risk and costs as the growers' responsibility for "bushfire … drought, or actions by neighbours, or third-parties" belies the Government's own commitments to meeting its Kyoto obligations.
Given these serious challenges and immense uncertainty of carbon markets, it is quite unrealistic to expect vegetable and potato growers to sign 100 years commitments (with the threat of civil and criminal prosecution), undertake major investments, and change generational farming practices without any firm guarantees on the price they will be paid.
Those types of concerns are the concerns which are likely to manifest themselves and potentially make this legislation ineffectual in terms of its uptake. It is not just the farming or agricultural groups who have highlighted their concerns about this. It is not just the industry bodies; the committee also highlighted the evidence of the Climate Institute. The committee report stated that the Climate Institute agreed that the 100-year permanence provision was:
… likely to be perceived by many landholders as a substantial, even insurmountable barrier to participation in the scheme.
For these reasons, the opposition will be supporting Senator Xenophon's amendments, which put in place obligations on the Domestic Offsets Integrity Committee to monitor scientific research relevant to the issue of permanence and to advise the minister about best evidence in relation to permanence. We think that is an appropriate course of action which will hopefully provide some continual evaluation of this issue.
Importantly, as he so often does, Senator Xenophon has provided a transparency provision in this regard as well, a provision which requires that advice provided to the minister by the Domestic Offsets Integrity Committee on this matter of permanence must be published on the department's website so that it can be scrutinised, assessed and debated. I would expect there to be a feedback loop—that, once such scientific assessment and evaluation undertaken by the DOIC is published on the website, scientists and other experts will scrutinise the findings of the DOIC and provide further feedback to it, informing the DOIC's further deliberations on this issue. For these reasons, the opposition will be supporting Senator Xenophon's amendments and we hope that other parties within the chamber will do likewise.
The government does not support the amendments moved by Senator Xenophon. Members of the Domestic Offsets Integrity Committee have expertise with offset projects. The functions of the DOIC are described in proposed part 26, paragraph 255, 'Functions of the Domestic Offsets Integrity Committee':
The Domestic Offsets Integrity Committee has the following functions:
(a) the functions that are conferred on it by this Act and the regulations;
(b) to advise the Minister about matters that:
(i) relate to offsets projects; and
(ii) are referred to the Committee by the Minister;
That is the role and function of the Domestic Offsets Integrity Committee. Senator Xenophon's amendments effectively confer on the committee the function of monitoring scientific research relevant to the issue of permanence. Nothing prevents, on my reading of the bill, the minister referring these matters to the committee. But their work is primarily about offset projects. They are there to look at the methodologies and then give independent assessments of those.
Permanence is about the length of time that carbon dioxide remains in the atmosphere and its radiative forcing effect. Separate from the Domestic Offsets Integrity Committee, the government will continue to keep the permanence issue under review in light of developments in the Intergovernmental Panel on Climate Change. I know that you have an interest in the issue of permanence, but we should not use the Domestic Offsets Integrity Committee as the vehicle to maintain that interest. It is inappropriate to use it in that way. That is why we do not support the amendments.
Permanence has been set at 100 years. We have set it at 100 years because carbon dioxide cycles between the atmosphere, oceans and land biosphere and its removal from the atmosphere involves a range of processes with different timescales. The Intergovernmental Panel on Climate Change notes that around 50 per cent of the increase in CO2 will be removed from the atmosphere within 30 years. A further 30 per cent will be removed within a few centuries. The remaining 20 per cent may take longer. In this context, 100 years has become the internationally accepted time frame for ensuring that sequestration is equivalent to, and can be used to offset, emissions. Under the CFI, sequestration projects can be terminated after 100 years without having to pay back carbon credits because it is then considered that permanence has been achieved.
Even without these amendments, the government will continue to monitor international developments on the issue and adjust permanence obligations in the CFI to reflect international scientific and policy consensus. It is not for the Domestic Offsets Integrity Committee to give advice to the minister about the best evidence in relation to permanence. Government will continue to monitor this issue and to look at international developments, but it is not a function that you should confer on the Domestic Offsets Integrity Committee.
Just as an aside, it should also be noted that the CFI permit obligations allow significant flexibility. Landholders would be able to cancel their sequestration projects at any time by relinquishing the number of credits issued for the project. That will of course mean that projects will have a much higher value if they represent a permanent abatement. The integrity of the scheme is maintained by having permanence because there is no genuine abatement if carbon stores are subsequently released back into the atmosphere. You need permanence. All of those who want to make an effort in reducing our carbon, all of those who want to make an effort in ensuring that there can be carbon sequestration and all of those who want to make an effort to move towards a clean energy future require permanence. Landholders will be able of course to terminate sequestration projects at any time provided they hand back the same number of credits. If they do want to terminate, the flexibility is there.
I will not be supporting these amendments, either, for many of the reasons that the minister has just outlined. For the Greens it is essential that the permanence obligations stand very clearly as they are in current legislation. I remind the coalition and Senator Xenophon of one of the big concerns people have with the whole Carbon Farming Initiative. It has been outlined by Senator Joyce in his run around the country, saying that the whole of the Murray-Darling Basin will be covered in trees if you turn around twice and so on and so forth. We need to not only guarantee permanence but also give people very clear signals so that we do not end up with the simultaneous crises that we have leading to perverse outcomes. The simultaneous crises we have are a climate crisis, a water crisis, a food security crisis and an energy crisis. If you do not look at all of those in a holistic way, you will get perverse outcomes. If you suddenly decide that you are going to go with carbon sink forests everywhere without any concern about water or about food production, you will end up with a complete mess in rural and regional Australia. It is what essentially happened with the managed investment schemes, and we absolutely do not want to see that happen again.
Equally, we do not want to see food production pushed out of the way by energy crops. We do not want to see a massive investment from managed investment schemes mark II with the planting of carbon sink forests in areas which should be maintained for food production. Equally, we do not want people going into a gambling framework where they basically say they will put trees in, they will get the carbon credits for 25 years and then at the end of that the next generation can cut the lot down, rip it up, do what they like and go back to a different regime. By putting in 100 years, we are acknowledging that the task here is to put in the carbon and maintain it for 100 years. Every farmer will sit there and say, 'Right, I am going to look at this piece of my property and determine that.' That means there will be parts of people's properties that they cannot use for anything other than, for example, putting in a biodiverse planting. It will improve their property; it will improve the biodiversity on their property. It will not take anything else out of production. It is a good thing to do and it will store carbon, and it is being planted as a biodiverse planting because it is meant to be there for 100 years. That is what you would do if you were planting something to last 100 years—you would build resilience, get local seed and local species, and actually have that part of your property like that for 100 years. But it is not going to be a substantial part of your property if you can make more from doing other agricultural pursuits on that land.
Similarly with soil carbon, one of the issues—it is an issue that Australia is engaged with daily in the talks in Durban, and has been over the last several years in negotiations—is drought. Every time we have a major drought in Australia we lose massive amounts of carbon to the atmosphere. Australia is saying we are not going to sign up to the forest management provisions of the treaty because we run the risk in a major drought of having to pay a massive amount on loss on our target because of the carbon we lose to the atmosphere. So Australia has been arguing that we want force majeure provisions so that in the event of extreme events that are beyond what would be classified as normal Australia would not have that immediately taken off the target. There are a whole lot of complexities in the UN negotiations around permanence. One thing we have succeeded in doing here is sticking with the spirit of the international agreement and understanding on permanence, but this is also a very clear signal to rural and regional Australia that permanence means permanence and if you make these decisions they last for 100 years. That will lead to more balanced land use in rural and regional Australia.
We have also put in this bill the need to consult natural resource management plans and the natural resource management groups in any particular catchment to make sure we do not get perverse outcomes where too much of the catchment is turned over to one carbon farming alternative or another. We are trying to give rural and regional Australia the opportunity to take up the benefits of creating permits by putting carbon in the landscape on a permanent basis or restoring carbon in the landscape if they have a degraded bit of forest on their land that they want to restore or a piece of forest that they can bring up to its full carbon carrying capacity with assistance in various ways. We are providing people with the opportunity to do good things and giving them an incentive to do so, a payment to do so. But we are making sure that we do not end up with the perverse outcomes we see when we incentivise something in a way that does not take into account all the other issues like water, food production and energy. We are dealing with all these crises at once.
I wholeheartedly support the notion of permanence being 100 years. I recognise there is an ongoing discussion in international negotiations. I am also cognisant of what the minister is saying, that that advice coming back through the international negotiations will obviously be taken into account by the government, is being taken into account every time there is one of these international meetings and will continue to be taken into account—but the DOIC is not the place to do it. Having said that, I think this is the most sensible way to proceed because it will give people a reality check. As the minister said, if they proceed on the basis that it is 100 years and then determine that there is more money to be made or there is a separate issue of ownership or for whatever reason they decide to get rid of the carbon that they have stored in this way, they will have to give up the permits. The reality is that that will be the consequence. It does not prevent them using that part of their property in the future in a different way but there will be a financial penalty incurred just as there is a financial benefit gained because you have done this in the first place. So that is going to be a commercial decision for people on the land, but I am confident that under this provision what we are going to get at last is a whole lot of biodiverse plantings on properties in places where it is appropriate to have them, where there will be decisions to avoid land clearance, where there will be decisions to restore degraded systems and improve biodiversity at the same time.
I actually think this carbon farming initiative bill in the way that it has now been developed is an extremely good thing for rural and regional Australia and I think farmers are pretty desperate to have it out there because it is the first time that marrying concepts of stewardship with the financial outcome is going to be able to happen on the ground. I think that has been one of the really positive things we have achieved through this negotiation.
I am pleased to hear Senator Milne and the Greens party wanting to do something for rural and regional Australia. If you go and ask some of the 5,000-odd people out the front of the building now, most of whom are from rural and regional Australia, they will tell you that the Greens political party is the worst thing that has ever happened to rural and regional Australia. I might suggest to Senator Milne that if she is interested in helping rural and regional Australia not only should she do what she can in relation to this carbon farming initiative, but if she wandered outside and spoke with people from rural and regional Australia and found out what really concerns them that would show some real commitment to rural and regional Australia. If you go out there and ask those people, the things that really concern them are the carbon tax that is being imposed upon us by the Greens-Labor alliance. People out the front, people from rural and regional Australia, people from my town in country Australia, people right across the north of Australia, know that the carbon tax will be bad for them. It is a toxic tax. It is going to increase their cost of living but particularly for those in rural and regional Australia because of the greater reliance we have on transport and fuel and the greater impact that the carbon tax will have on those of us who live in rural and regional Australia.
So I am pleased to hear Senator Milne at least mouthing the words about support for rural and regional Australia. I just wish she would go outside and hear the real problems of rural and regional Australia and adjust her party's approach accordingly. Give up this government that has been so devastatingly bad for all in rural and regional Australia, in fact all Australians. Slip down and ask BlueScope Steel workers. None of them have much confidence in this government, which is being propped up by the Greens political party.
Getting on to the amendment before the chamber, which is as I understand it for the independent domestic offset integrity committee to monitor scientific research relevant to the issue of permits and to advise the minister about best evidence in relation to permits, Senator Birmingham on behalf of the coalition has indicated that the coalition would be supporting Senator Xenophon's amendment. I just raise the issue, though, that I hope this independent domestic integrity committee is independent. I hope that it will monitor all scientific research. This is a concern I have with this amendment. You would be aware, Mr Temporary Chairman, that we set up an independent climate change commission to oversight so-called climate change and appointed Professor Flannery to lead that group, appointed him to a position in which he gets $180,000 a year for two or three days a week work—much more than you, Mr Temporary Chairman, as a member of this Senate gets every year. I know that you and most people in this chamber work seven days a week and many of them work anything from 12 to 15 or 20 hours a day seven days a week. They do not get the sort of pay that Professor Flannery is getting to run this so-called independent Climate Commission on behalf of the government.
This is my point in relation to this amendment. The government appointed to that independent commission only those people who had a scientific view or had a view of science that the government supported. So in this amendment this domestic offset integrity committee is being asked to monitor scientific research. I just hope that if the amendment is passed and the integrity committee is looking at and monitoring scientific research that it monitors all research and not just, as in the case of the Climate Commission, research which the government agrees with. In Professor Flannery's case and in the case of the Greens-Labor alliance, all of those scientists who do not agree with Professor Flannery's view on climate change are just ignored. I am not saying they should be believed. I have often said in this chamber before, with thousands of scientists believing one way and thousands of scientists believing another way, that I am not a scientist and I do not form an opinion when it comes to the cause of climate change. We all accept that the climate is changing. But the scientists cannot agree and so I put myself in the category that simply says if a scientist cannot agree what chance have I got?
In Australia we do not have the totalitarian, fascist governments of the middle of the last century when you had to believe what Hitler or Mussolini thought or you were put to the sword. There was only one view and that was Hitler's or Mussolini's and if you disagreed with that it was off with your head. We are a democracy and we are not like that, yet in this case the Labor-Greens alliance government is saying there is only one view of climate science and if you do not agree with it not only will you be ignored but also they will make sure that you never get any research funding. That is to the extent where a lot of respected scientists in Australia are now not game to raise the alternative view because they know that they—and their associates and colleagues who might be seen to support that view—will simply not be funded for research which keeps scientists in operation. That is the sort of thing that happened under the fascist governments and the communist governments of the last century: you have got to believe what the government believes or you are finished. Let us hope that, with this amendment, the independent Domestic Offsets Integrity Committee looks at all scientific research, not just research that the government wants it to look at to come up with a view that the government has already preordained.
In relation to the climate change commission, we know that Professor Flannery and all his colleagues on that were only appointed because they shared the government's view. They refused to look at any other scientific work on the issue because that did not accord with what the government wanted Australians to believe. As for Professor Flannery, we know he is the one that has been warning us about tidal increases but then we find—and I did so with absolute amazement—that, contrary to what he is telling everybody else about tides rising, he goes and buys a property or two right on the edge of the Hawkesbury River, so clearly he cannot believe that the tides are going to rise by as much as he has been predicting around the place. Perhaps we will hear more about that at estimates and perhaps the government will come clean in their supposedly open and accountable paradigm about Professor Flannery's conflict-of-interest statements. I understand from last estimates that he put one in but no-one has been able to see it. That is another secret of this very secretive government. We are told that he has indicated his interests that might be in conflict with his duties. But while the government knows that, nobody else in this chamber does. We are not being taken into the confidence of Professor Flannery or of the government. It is another secretive deal by this government that has really become renowned for its lack of accountability and lack of openness. So, whilst as Senator Birmingham has indicated, we support this amendment, I do hope if the amendment is passed that the Domestic Offsets Integrity Committee will be a committee of integrity—unlike, I suggest, the climate change commission, which seems to me to lack integrity because you are only appointed because of your view on things—and that, if it is going to monitor scientific research relevant to the issue of permanence, it will actually monitor all scientific research and not just the research that the government wants it to look at.
I want to address some of the contributions made so far to the debate on this amendment. I thank Senator Macdonald for a valuable contribution that has highlighted not just the importance of this amendment but some of the broader issues around the continual scrutiny and analysis of science in this debate. Senator Milne, in outlining hers and the Green's opposition to this amendment, was emphatic that we must keep the 100-year benchmark. Nothing about this amendment, in and of itself, seeks to step away from 100 years. Nothing suggests that 100 years, as the time line for permanence under the carbon farming scheme, will not be the ongoing figure. All it does is say that, if relevant international scientific research suggests that a different approach to permanence is warranted, that research should be brought to the attention of the minister and should be published on the department's website. It is a pretty straightforward amendment in that regard. It is not, in fact, an amendment—even were the Domestic Offsets Integrity Committee to find that there is overwhelming scientific research that would warrant a change in the definition—that does not mandate that change. All it does is say that the DOIC must advise the minister of that finding and they must publish the evidence. That is where it starts and ends. Then we can have a debate about how the minister may respond to that change in evidence. So I think to portray this amendment as an amendment that in some way seeks to undermine the 100-year benchmark as it currently exists is not accurate. It is purely an amendment that seeks to ensure there is genuine ongoing analysis of the science.
Senator Milne said that permanence needs to be permanence, and the minister emphasised the international discussions that continue with regard to permanence. We have semantic debates about words in this place sometimes. Obviously, in this case we all accept that the word 'permanence' is being used with a definitional period and would, in any other debate, be a description of duration rather than permanence. When you say something is for 100 years, that is 100 years duration not 100 years of permanence, because in all the usual approaches permanence means permanent, not 50 years, 100 years or a trillion years. But I understand that this is a case of accepting international language in that regard.
What does disturb me, though, about the minister's contribution is that he emphasised it is not the role or function of the Domestic Offsets Integrity Committee to undertake this work. That is right to a point, Minister, but it is a bit of a circular argument because the functions of the Domestic Offsets Integrity Committee are laid out by clause 255 of the bill, and the amendment we are debating seeks to change and add to those functions. If we pass this amendment and it goes into law then indeed it will be the function of the Domestic Offsets Integrity Committee to look at and monitor scientific research relevant to the issue of permanence. So the argument is: who should be responsible for looking at that? Who should be the responsible party to provide some advice to the government about up-to-date scientific information on permanence as it relates to the operation of the carbon farming scheme?
Whilst in the way the government envisioned this scheme operating it may not have been the DOIC's core role to look at this, the DOIC does appear to be the best fit as to who should most logically look at and provide ongoing advice to government about these matters of permanence. Rather than accepting a 'trust us' attitude—and we have had, as I have emphasised at other times in this debate, serious concerns time and time again when this government has said, 'Trust us; she'll be right, mate,' in its approach to things—the opposition believes, and is keen to support Senator Xenophon in this regard, that it makes a lot of sense to mandate some ongoing analysis of the science in regard to permanence and to ensure that somebody with particular responsibility for how the scheme will work has an ongoing brief to look at international developments with regard to permanence. That makes perfect sense.
We think the Domestic Offsets Integrity Committee are the obvious parties to do so when it comes to this legislation. We do not want just to leave it up in the air—that is, the minister of the day will be advised by the department of the day about the matter. We do not want to leave it on a 'trust us' platform that, should those international standards evolve, change or be informed by better science, the minister will respond to that in an unprompted way. We want to make sure the prompting process is in place, and these amendments of Senator Xenophon provide very specifically for the prompt to be given that the scientific consensus or research has shifted and there is a better understanding of how permanence may be treated. This relatively simple amendment provides for a very clear process by which the Domestic Offsets Integrity Committee will monitor the science around permanence and tell the minister what they have seen, what they know, what they understand it to be. They are the people, after all, who ultimately are looking at the methodologies for the operation of the scheme and any issues that come up in relation to programs that operate under this scheme. They are the people who are tasked and equipped to provide good oversight. With regard to the practical—where you bring the science together with the practical operation of the scheme—they are the people who are going to have to make those decisions and mould it together, so they are equally well placed to advise on this matter.
The minister rightly said that in the clause as it is written there is probably nothing to prevent the committee providing information to the minister if they think it relevant in relation to this issue of permanence and scientific research on it. I agree with the minister—there probably is nothing to prevent them doing that. Certainly subclause 255(d) provides for them to have a function:
to do anything incidental to or conducive to the performance of the above functions.
And those above functions themselves are relatively broad about providing advice to either the secretary or the minister in relation to offset projects. If in the course of providing advice about a project matters of permanence come up, it is obvious that it would not just be prohibited but probably be a responsibility of the committee to provide some advice to the minister in relation to those matters of permanence and the scientific advice that surrounds them. So the potential and the likelihood are already there that, at some points in time, the DOIC will be looking at matters of permanence. Given at some points in time they will be looking at those matters of permanence, we think it is quite appropriate that in fact all of the time in an ongoing manner they should have an obligation to ensure they are up to date with the science and across it and, where there are changes in that science, inform the minister of them and, where there are relevant changes in that science, having informed the minister of them inform other stakeholders and the public of them so that we get that feedback loop that I talked about previously that ensures we are continually apprised of developments in this regard.
I struggle with the government's arguments against this. I am not sure why the government is so emphatically against it. I understand the arguments that Senator Milne has made, but once again I think she is attempting to read more into these amendments than they will actually achieve. She is attempting to believe that these amendments will somehow undermine the standards that have been set from day one. There is nothing in these amendments that will undermine those standards. There is nothing in these amendments that will see anything change in the 100-year time line any time soon. There is nothing in these amendments that will provide increased powers or scope for the minister or the government of the day to arbitrarily change that. These amendments are about the provision of advice and the publication of that advice. That seems to us to be perfectly sensible and rational, and to be perfectly entitled to our support.
I want to emphasise that this does not seek to change the 100-year provision, but it does seek that there be ongoing monitoring. So if there is further evidence that it needs to be modified in any way for certain types of use, perhaps then it can be looked at. It is just a requirement for there to be monitoring of the scientific research relevant to the issue of permanence. I think the government are saying, 'We'll do that, but not through this committee.' But if this committee is entrusted with dealing with the issue of carbon farming to provide objective evidence, to look at the scientific evidence and to look at the administration of the scheme, I would have thought it appropriate for this committee, the Domestic Offsets Integrity Committee, to look at this issue. It does not actually seek to change the 100 years, but it does seek for the committee to advise itself or to give advice to the government and for that advice to be published. I think that is the right thing to do for such a piece of legislation. Therefore, I will be persisting with these amendments and I am grateful to the opposition for their support.
I move amendment (12) on sheet 7118:
(12) Clause 306, page 303 (after line 6), after subclause (1), insert:
(1A) Any review under subsection (1) must be conducted by the Commonwealth Scientific and Industrial Research Organisation in conjunction with the Productivity Commission.
(1B) The Minister must ensure that the Commonwealth Scientific and Industrial Research Organisation and the Productivity Commission are provided with sufficient additional resources to conduct any such review.
This amendment relates to the CSIRO and the Productivity Commission conducting reviews. Under the current deal, there is a review of the act, the regulations and other instruments every three years. It is important to ensure that this initiative continues to improve. However, it is crucial that this review be independent and, as such, this amendment requires that every three-year review be conducted by the CSIRO, which has already done research into carbon farming, in conjunction with the Productivity Commission.
I believe it is important that the review include consideration of how the carbon credit market operates and how Australian farmers and industry are participating in the trade of carbon credits, and that is why I believe the Productivity Commission should be involved in any review. I note that the Productivity Commission has recently conducted a review on carbon pricing mechanisms. I think that was a very useful exercise. I think the Productivity Commission did a very thorough job of adding to the public debate and our knowledge of this area. Furthermore, this amendment requires that both agencies be provided with the adequate additional resources to enable them to conduct such reviews. I urge my colleagues to support this amendment.
We have already stated in the House that the government will seek the advice of the CSIRO, as it is a valuable organisation and we value their advice, when reviewing the adequacy of the risk of reverse buffer adequacy. But let us be clear: the government's plan for the Clean Energy Future includes the establishment of a climate change authority which will review the CFI. The government will continue to, and always have, value the advice of the CSIRO and the Productivity Commission in relation to climate change policies. They will have an opportunity when the CFI is reviewed. But the government do not agree with putting it in the legislation in the way outlined by Senator Xenophon. It calls for the CSIRO to undertake the review in conjunction with the Productivity Commission, so there is no choice about that. They would both have to undertake the review. It does not say how they would do that. It does not say what the terms of reference would be. It does not say what they would be looking at, such as the terms of reference and, of course, it does not give them any underpinning to undertake it.
It is a much better course for the government to follow its plan—that is, for the Clean Energy Future—which includes the establishment of the Climate Change Authority, independent of government, which will review the efficacy of the CFI. In 1B you have also included:
The Minister must ensure that the Commonwealth Scientific and Industrial Research Organisation and the Productivity Commission are provided with sufficient additional resources to conduct any such review.
But it does not say how that would be done. These would be budget decisions. They may not amount to much in financial outlay; nonetheless, I can see you are trying to set up a scheme which provides a type of review which, the government says, creates too much specificity and does not allow an appropriate review to be done at the appropriate time. In that way, even if your amendment were successful, the Climate Change Authority would still undertake a review of the CFI. In doing that, you would also be creating additional work that the CSIRO and the Productivity Commission would need to do and you could end up, effectively, with a double-up. For all those reasons, we do not support the amendment.
The opposition does support Senator Xenophon's amendment. We think it is important that there be appropriate organisations tasked with undertaking this review. I have listened to the minister carefully, and he has said that Senator Xenophon's amendment does not provide for what the terms of reference are or how the review would be undertaken. Of course we need to understand that Senator Xenophon's amendment to mandate that the review be undertaken jointly by the CSIRO and the Productivity Commission does not stand in isolation; it is an amendment to the existing clause 306 of the bill. The government themselves are proposing that this review occur and that it be a review into the operation of the act and the regulations and other instruments made under the act. They have already set out to some extent the broad framework of what the review would be expected to do. They have set out that there will be public consultation, they have set out that there will be a report and they have, thankfully, set out that that report will be made public and tabled in the parliament. They have set out the time lines for the review, which is the subject of subsequent amendments, and of course they have set out that there will be further reviews. So they have set out almost everything in relation to this review process except who is to undertake it.
If I am correct in what I think I heard the minister say, he indicated that the Climate Change Authority will be tasked with undertaking this review and that that was the intention of the government. The minister is nodding, so I take it that I did hear him correctly. I appreciate the minister telling us who the government intends to undertake this review; of course that is not stipulated in the bill. But of greater concern is that the Climate Change Authority does not at present exist. The structure of it is not at present known; exactly what its powers, remit, skills et cetera will be are not currently clear. The CSIRO, from a scientific standpoint, and the Productivity Commission, from a regulatory and economic standpoint, have proven track records. They have known skills and a clear ability in working together to undertake a review of a scheme such as this one. That will require a mix of scientific understanding and an appreciation of best practice and lowest cost regulation, which the Productivity Commission of course has.
The minister was critical that the amendment does not specify how the two are to undertake it together. I would have thought that they are grown-up organisations and that, just as at present, it is open for the minister of the day to stipulate someone to undertake the review. Under the current framework of the bill, the minister of the day could ask Mickey Mouse to undertake the review and that would comply with the bill. He has indicated that it will be the as yet unestablished Climate Change Authority that will undertake the review. Were the Climate Change Authority to have been in operation for a period of time, or were it in fact to be in operation full stop, we might be comforted by that information. But I am not comforted by the information when I do not know fully how that authority is going to work. Its establishment is probably to be the subject of future debate by this place, unless it is to be established purely under the executive powers of government.
We know CSIRO and the Productivity Commission have independence; we know they have integrity; we know they have capability; we know they have experience; we know they have the skills; we know that we can have confidence in the work that they produce. They are the sensible bodies to look at something as complex as this scheme and to provide sound advice on how it will operate in the future and on how this parliament may wish to consider improving it in the future to get the type of outcomes to which we all aspire.
With all of that, the opposition is strongly supportive of Senator Xenophon's amendment here, and we would hope that the government might reconsider or, if not, that the Greens might see some benefit in these proven expert bodies being tasked to undertake this very important function and review.
The Australian Greens will not be supporting the amendment proposed to require the CSIRO and the Productivity Commission to conduct a review of the carbon farming legislation. As has been devised in the whole clean energy package, the Climate Change Authority is to be appointed not only to set the targets, if you like—the budget of greenhouse gas emissions that need to be reduced each year through to an 80 per cent target at 2050—but also to conduct a review of these specific pieces of legislation that are part of the package. The Productivity Commission is already going to be significantly expanded and it will have a much larger workload put on it because its job will be specifically to review the level of compensation provisions that have been made to the emissions-intensive trade-exposed industries. It will have a major role in doing all that, and it will need expanded resources to do so. At the same time, the CSIRO is working with a number of farmers and farming organisations right now on soil carbon issues and is trying to work through the development of an appropriate methodology that may be applied in the future to enable the permits to be granted and so on. The CSIRO is very firmly engaged in this space at an operational level and at a consultative level with the farming community.
The Climate Change Authority will oversee all of these particular pieces of legislation in a big-picture way and will need to consult with, as the minister has just suggested, both the Productivity Commission and the CSIRO and no doubt a number of other institutions who are doing various aspects of work. In a structural way you have an oversight authority who will oversee all of it and then drill down how they actually conduct each of the assessments of those pieces of component legislation. This was thought through very carefully, because you cannot have an organisation which is part and parcel of working out the assessments and the methodologies reviewing itself in that context as to the effectiveness of the legislation. But certainly all the work that it has done will feed into that assessment that will be done by the Climate Change Authority.
The question becomes, do we think that the Climate Change Authority is going to have sufficient rigour to do this job? That is entirely dependent on, in the end, who is appointed to the Climate Change Authority and that is a matter that everybody with an interest in climate change in Australia will take a keen interest in as this develops over time. I appreciate the difficulty here because at the time these amendments were developed the whole clean energy package had not been announced, the whole procedure of how everything would fit together and who would oversee what and how they would be involved had not been announced, and so, in the absence of having any authority with the rigour to oversee this, I can understand why you would choose CSIRO and the Productivity Commission. But now the government has announced the clean energy package and there is a very clear role for the Climate Change Authority to look at all the legislation and make sure it is delivering on the objective of reducing emissions in the context of the emissions reduction target that will be based on the 80 per cent reduction by 2050. That is why the Greens are not supporting this amendment—there is a different structure in place now but it does not exclude either the Productivity Commission or the CSIRO, who will feed into that review process of the Carbon Farming Initiative.
There is a following amendment in relation to time frame for review, and Senator Xenophon has said within 12 months of legislation being passed or 2014. Within 12 months of the legislation being passed, assuming that it is going to be passed in the second half of this year, means that we would be doing the first review next year and that is just not feasible given that it will hardly have got started by that time. In the government's timetable, 2014 is the timeline proposed for the first review, by which time you would have some results on the ground to review. I want to foreshadow that the Greens will not be supporting the amendment on the timeframe for that reason. Again I say that at the time the amendments were developed the other package had not been announced and there was no way of knowing that. I make clear where the Greens will be standing on that and also indicate that the Greens will not be proceeding with the last amendment on the sheet as it currently stands.
I am worried by this statement of the government, supported by the Greens, that the Climate Change Authority is the body to undertake this review. This really is a case of putting the cart before the horse. We have the amazing situation where the government is proposing that a review of a bill that it hopes to have passed by the Senate today will be undertaken by an authority that is not yet in existence.
Senator Xenophon interjecting—
Senator Xenophon says it is not satisfactory at all. This is an authority that is going to be brought into existence as part of the government's planned carbon tax package. It is on the record that the opposition will be opposing the carbon tax package, and in opposing the carbon tax package we will be opposing the establishment of this Climate Change Authority. Understandably we think it is unsatisfactory to agree to a proposal that a review will be undertaken of the operation of this bill, or act if it is passed, and of the operation of the carbon farming scheme by an authority that we will fight and hope to stop being established. That would of course leave meaningless the minister's promise that it will be the Climate Change Authority, because we hope that it will not be there. We hope it will not be there because it is part of some $400 million worth of administration that the government is proposing to create under the carbon tax regime. This is one of the great and amazing things about the government's carbon tax package. Such is the money-go-round that is the carbon tax package, it is going to establish a climate change authority and a raft of other regulatory bodies that just over the life of the forward estimates will churn through $400 million of taxpayers' money in administrative costs for the carbon tax. Anybody who pauses to think about that should be gobsmacked and horrified. This comes on top of the forward estimates costs for the continuing operation of the existing Department of Climate Change and Energy Efficiency and so on. All up, we are talking about more than half a billion dollars in regulatory and administrative oversight for these schemes over the forward estimates—$400 million alone specifically identified within the carbon tax package that the government has released.
All Australians could find better ways to spend that sort of money. The opposition certainly believes that it could find better ways to spend that sort of taxpayer money. Taxpayers could find better ways to spend that sort of money rather than having to part with it in a tax in the first place. So it is anathema to us that we would be asked to agree that this review be undertaken by a new regulatory body, a new statutory authority, that is going to be part of, frankly, squandering some $400 million of taxpayers' money on a bigger bureaucracy. That is where the carbon tax is leading us to—this great giant new bureaucracy that churns money around. It takes in around $9 billion a year in new tax revenue for the government, spits some of it back out to households and to industry and churns up $400 million of it over the forward estimates in new public servants, new authorities, new regulators and new carbon cops out there on the beats—all of these bodies put in place just churning the money around as only this government is capable of doing.
Despite putting in place the new $9 billion a year tax, the government will still manage to lose money on it. They will still manage to run a deficit on it, as only they can do. Once they have churned all that money around through their giant new bureaucratic arrangements and they have spit it out to those they think most worthy, not only will they leave millions of Australian households worse off and thousands of Australian businesses of all sizes struggling and thousands of Australian jobs in jeopardy and send billions of dollars overseas for the purchase of carbon permits but also eventually they will increase the size of the deficit to fund all of this activity. That is the madness of the scheme they are proposing. It is the madness of the scheme that will be debated in this place during the second half of the year.
We think that it makes no sense at all to agree that the review of the Carbon Farming Initiative should be undertaken by a yet-to-be-established, yet-to-be-proven, yet-to-be-tasked, yet-to-be-staffed regulatory body—an authority which is yet to be given the time to establish their expertise and which is part of this carbon tax money-go-round and part of this great big new $400 million expenditure in bureaucracy by this government. It is particularly ridiculous to do so when the skills are already there in existing agencies to do the job properly. The skills are there in CSIRO to provide a rigorous and thorough examination of the scientific issues in the carbon farming legislation, the matters of permanence we have just debated, the impact on the water tables and water flows, the impact on biodiversity that we have debated already and the environmental and scientific impact. Quite clearly, CSIRO already has the skills and expertise to undertake the review we are talking about in best practice regulation, in lowest cost regulation, in ensuring that this scheme does not have perverse or adverse consequences to overall abatement targets and measures and in ensuring that, should the carbon tax have gotten through, it operates in a sensible way with the carbon tax regime. We think that obviously the policy skills and the independence of the Productivity Commission is equally the right place and has those skills already in place to be able to deliver on this.
Why on earth you would propose sending it off for review by an untested, unknown, unestablished authority is beyond me. This is a very sensible amendment of Senator Xenophon's. It will ensure that the most able people to provide the most independent of advice and review are the ones who do so and give advice back to the government. That is why we support this. It is very disappointing to hear not just that the government will not be supporting it but equally that the Greens will not be supporting it. I would have thought that they would want to see the type of rigour and robust approach that we know CSIRO and the Productivity Commission can achieve. I would have hoped that they would have seen the wisdom in this. Frankly, I believe that at one stage in another parliament they would have, but they now are in a situation where most of the detail on these things is probably worked out behind closed doors with the government. Most of the agreement on 'We'll let you have this amendment but we don't want to see any of the other amendments go through' is done behind closed doors with the government rather than, as perhaps they once did, going through and seeing sensible amendments for what they are and then supporting sensible amendments, particularly sensible amendments like this one that only go to improving the long-term integrity, credibility and operation of this carbon farming scheme. It is an amendment that should be supported and it is a disappointment to see that it does not appear to have the numbers in chamber to enjoy support.
I will briefly refer to the contribution that Senator Milne made a few moments ago. I listened to her arguments in relation to my subsequent amendment—I note that we are not dealing with it now—and see that her argument has some considerable merit, so I will not be proceeding with amendment (13) on sheet 7118. I foreshadow that in relation to the first review, as I think there is a legitimate point there. I take that on board and I accept it. Therefore, I will not be proceeding with that amendment.
On this particular amendment, though, it is critical that it is supported for a number of reasons. If you look at the bill at page 303—the very final page of this bill—and at clause 306, 'Reviews of operation of this Act etc', you see it states:
(1) The Minister must cause to be conducted reviews of the operation of:
(a) this Act; and
(b) the regulations; and
(c) other instruments under this Act.
He must make provision for public consultation. He must cause a report to be prepared of a review under subsection (1). A report of the review must be tabled in parliament. It needs to be tabled before the end of 31 December 2014. But it does not say who will do that review. As I understand it, the government is foreshadowing that it will be the Climate Change Authority. That authority has not been established. It does not provide for terms of reference of that review, not even broad parameters for that. That concerns me. The Productivity Commission has already done tremendous work looking at the whole issue of appropriate mechanisms for the pricing of carbon. I would have thought that this would segue, if you like, into the work they have already done. They clearly have the capacity to do so.
In relation to Senator Milne's point about the CSIRO—that it has already provided advice and it may not be appropriate for it to look at this—I think it is valuable that Senator Milne raised that point. But the CSIRO has looked at this issue. I think it is in a perfect position to be part of the review. You could have perhaps a Chinese walls mechanism so that there isn't any potential conflict, but clearly the expertise of the CSIRO would be valuable.
The very thrust of this amendment is that there ought to be an independent process to review the operations of this act. The Climate Change Authority is part of the executive arm of government. You do not have independence. I believe you will not have the robustness of purpose to the review process that is required. Therefore I think it is important that you have an independent body to do this. This mechanism is the best way forward. The current legislation is deficient in that it provides a mechanism for a review but it does not provide the basis for such a review, the broad terms of reference or the independence of such a review. That is why I am very grateful to the coalition for its support for this.
The carbon farming initiative is a huge change that has been proposed. I want it to work effectively and to work well. But I think we ought to seek independent advice when reviewing this legislation. The Climate Change Authority is not the appropriate body. What has been proposed in this amendment is far superior for dealing with the very important issue of a review.
The question is that amendment (12) on sheet 7118, moved by Senator Xenophon, be agreed to. It being not yet 12:30, the division will be postponed to a later hour.
Bills—by leave—taken together and as a whole.
Whilst we move to 12:30 shortly, it might be worthwhile dealing with two government amendments. They are technical amendments to the Australian National Registry of Emissions Units Bill 2011. I seek leave to move the two amendments together.
I move government amendments (1) and (2) on sheet BR232 together:
(1) Clause 66, page 56 (lines 20 and 21), omit “Australian carbon credit”, substitute “non Kyoto international emissions”.
(2) Clause 82, page 63 (table item 2), after “section”, insert “36 or”.
Clause 66, is a technical correction to make it plain that it is non-Kyoto international emissions rather than the Australian carbon credit. It has been picked up as a technical correction; it may be a drafting issue. Clause 82 is the reviewable decision. Rather than a technical correction, there was an oversight with reviewable decisions in that one of the clauses which is reviewable was omitted. We are now putting it back in to ensure that both those provisions are reviewable under the legislation. With those short words, I am sure no-one will object—though I may be surprised—to the government making sure the legislation is both technically correct and properly reviewable.
I thank the minister for his explanation of these amendments as technical amendments or matters of correction. Of course we all wish to see that the technical aspects are correct in the final legislation and that where small errors may have occurred in the drafting process they are rectified and picked up before we reach the final point of passing the bill and then having to deal with insignificant amendments at a later time. The opposition appreciates the minister bringing those to our attention. We will not stand in the way of the government making what he assures us are technical amendments.
Question agreed to.
Bills, as amended, agreed to.
The question is that Senator Xenophon's amendments (11R), (11A) and (11B) on sheet 7124 be agreed to.
The committee divided. [12:43]
(The Chairman—Senator Parry)
There is one further division that has been postponed. The question now is that amendment (12) on sheet 7118 moved by Senator Xenophon be agreed to.
The committee divided [12:48]
(The Chairman—Senator Parry)
The question now is that the bill, as amended, be agreed to.
The committee divided. [12.52]
(The Chairman—Senator Parry)
Question agreed to.
Bills, as amended, agreed to.
Carbon Credits (Carbon Farming Initiative) Bill 2011 and Australian National Registry of Emissions Units Bill 2011 reported with amendments; Carbon Credits (Consequential Amendments) Bill 2011 reported without amendments. Report adopted.