Senate debates

Monday, 26 November 2012


Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012, Clean Energy (Charges — Excise) Amendment Bill 2012, Clean Energy (Charges — Customs) Amendment Bill 2012, Excise Tariff Amendment (Per-tonne Carbon Price Equivalent) Bill 2012, Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment (Per-tonne Carbon Price Equivalent) Bill 2012, Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment (Per-tonne Carbon Price Equivalent) Bill 2012, Clean Energy (Unit Issue Charge — Auctions) Amendment Bill 2012; Second Reading

5:45 pm

Photo of Lisa SinghLisa Singh (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to speak to this package of legislation that collectively provides for the linking of Australia's carbon emissions-trading system to the European Union. Carbon pricing is one of the most significant changes to the Australian economy and will have an important and enduring effect on the way businesses calculate the environmental cost of their activities. It is amongst the most significant changes we have ever seen in environmental regulation in this country and is part—arguably the most effective and central part—of dealing with one of the most significant challenges the world faces.

For a long time it has been clear that the response to dangerous climate change needs to be coordinated, comprehensive and international. Much of the criticism of Australia's action on climate change has either been misinformed or has completely missed the point. Some critics have asserted that Australia would be going it alone, ignoring both the existing international frameworks for climate action such as Kyoto and Kyoto 2, in which we have recently announced Australia's involvement, and the huge amount of domestic and regional action in other parts of the world.

From 2013, 850 million people will live in a place where emitters pay for their pollution. Some of this action includes seeking targeted efficiencies or taxes of particular emissions-intensive sectors such as coal taxes or penalties on inefficient housing or transport, but emissions trading is the preferred method of carbon reduction across most of the world because it is the easiest for business, the most efficient and effective policy lever and the cheapest way to identify and undertake emissions reduction.

The European Union Emissions Trading System was the first international carbon market and has been in place since as early as 2005. Emissions trading schemes have been legislated in New Zealand, India and the Republic of Korea and are operating or being developed in 11 US states, China and South Africa. Action in Indonesia, Thailand and Vietnam signals the beginnings of a future Asia-Pacific carbon market. So the assertion that Australia is ahead of the pack is completely misguided if not disingenuous.

But, of course, it is important not only that this action is taking place but also that the international community takes part. Each of these individual mitigation activities must form part of a broader, integrated effort to reduce global emissions. Some critics have attempted to use the lack of total global consensus around defined reductions policies to argue that Australia should stall its efforts to respond to climate change. What they misunderstand is, firstly, the considerable shared vision achieved in a series of international forums through the United Nations Framework Convention on Climate Change; and secondly, the enormous foundational power and the flexibility of a domestic emissions-trading system to be integrated into current or future regional and global systems.

To prevaricate and invent excuses for not taking action on the basis that this action is not from first blush a fully developed global solution is to put the cart well before the horse. It is to ignore the significant preparation that needs to be done not just by government but also by businesses and community to understand and adapt to the inevitable development of an international emissions-trading system inclusive of our trading partners and competitors. If we are going to be able to adapt to a carbon constrained global trading environment, we need to foster innovation in this country and we need to embed the carbon costs of doing business into the thinking of our entrepreneurs and job-creators. And we need to do that now. We need to deepen our capacity to produce high-quality, low-emissions goods and services that we can sell to the world, especially in the century of opportunity created by our nearest neighbours—the Asian century.

What the Gillard Labor government has consistently pursued since prior to 2007 is a flexible emissions-trading scheme for Australia that is capable of being integrated into the international system. At the same time as promoting domestic innovation and emissions reduction, it would enable Australian businesses to contribute to emissions reduction efforts across the world simply by acting in a rational way, locating the cheapest forms of abatement across the system and including those costs in their core business and they should do. The Gillard Labor government has now been vindicated in its pursuit of this emissions-trading policy. The carbon price commenced on 1 July 2012 and, despite the very worst predictions of economic catastrophe propagated by advocates not of conservatism but of regression—that towns would be wiped off the map and investors would flee from Australia—what we have actually seen is the carbon price quietly, efficiently and cheaply doing what it is meant to do.

It is encouraging businesses to innovate and rewarding those businesses that operate with a good social and environmental conscience. To the extent that households have been affected, they have been compensated; indeed, the changes made complementary to the introduction of carbon pricing have reduced the tax burden on many Australians, particularly those on low incomes. And the revenues that we have dedicated to investment in the technologies and the opportunities that will create a better future for Australia—renewable energy projects, smart grid technologies, and energy efficiency initiatives—are also receiving the support they need.

But most importantly on this particular legislative package, the Gillard Labor government has been vindicated in creating a robust scheme that also acts as the foundation for an international system. From 1 July 2015 our emissions-trading scheme will link with a carbon market that comprises over three-quarters of the world's carbon trading, creating the first intercontinental carbon market.

At the end of the transitional fixed price arrangement on 1 July 2015, Australia will move into a variable-pricing mechanism that operates in the largest emissions market in the world. This one-way, interim link with the EU emissions-trading system will enable Australian businesses to access the fullest range of mitigation opportunities and to achieve the most accurate abatement price of any market. That emissions unit price will be set dynamically on the basis of a cap-and-trade system that, like Australia's, reflects a high degree of integrity and a genuine and serious emissions reduction effort. It will be a price that requires businesses to change their behaviour and to reduce their emissions profile at the same time as they can fairly compete for the lowest priced abatement options.

From August this year, Australian businesses which are liable entities under the carbon price have been able to buy European carbon permits for future compliance with the Australian emissions trading scheme dating from 1 July 2015. Australian businesses will be able to use international emissions units for up to 50 per cent of their carbon liability, with up to 12.5 per cent to include the use of Kyoto units such as those generated under the UN's Clean Development Mechanism, the CDM. This new market will be the clearest example yet of a comprehensive and international response to climate change, not only setting standards and providing ideas about the best way to organise action of climate change but actually undertaking it.

Indeed, the Australia and EU link is an example of the aspiration of many of those who believe that climate change is real and does require urgent action now, not just by us but by the broader international community. It will help to shape the expectations for states to participate in any global emissions-trading system. Indeed, in the words of the World Wildlife Fund:

Linking with countries and regions, such as Europe, where equally strong provisions are in place will help to ensure these environmental integrity provisions become the global standard.

That is a very good and important quote indeed.

It is certainly not true that Australia is acting alone, when so many other countries are taking steps to address their own emissions' profile. This is something being addressed by so many countries because, like us, they realise that we have to act on climate change and that we have to act on the fact that we have global warming as a result of human activity. Australia is not, at least in that sense, ahead of the global community at all, but Australia is leading the world by helping to shape a carbon market that will, for the first time, stretch the length of the globe and provide a template for global action.

There is a reason that Australia has always been a supporter of multilateral and international institutions, whether it is in security, trade or environmental protection. As a middle power with a seat at the table, we have the opportunity to lead by example and to influence the emergence of a new, rules-based order capable of avoiding the most dangerous consequences of climate change. Indeed, as a middle power in our own region we have an opportunity to lead and to set that example. I know that a number of countries look up to Australia, and the action and the leadership that we are taking on this issue of climate change is just one good example.

Opponents of domestic climate action and opponents of this linking agreement with the European Union profoundly underestimate the capacity of Australia to generate change, forgetting that we presided over the adoption of the Universal Declaration of Human Rights; we formed the Cairns Group to advocate for agricultural exporters; APE, of course, was born of our efforts—most notably by former foreign minister, Gareth Evans; and we have just been elected to the UN Security Council in the first round of voting. And it is our initiative and our support for carbon pricing that will, again, precipitate an information cascade that will prompt global action.

The linking of Australia's emission-trading scheme with the European Union's is an important step towards what the world needs to do together to prevent serious climate change. And it has been made possible by a government and by a party that has had the courage to advance a positive, forward-looking agenda despite the tremendous and overwhelming amount of fear mongering from those who place politics above policy.

I have no doubt that there will come a time in the not-so-distant future where accounting for pollution will be a matter of course in every business and community across the world. There will come a time in the not-so-distant future when we will look back on these debates with incredulity at the time, the energy and the courage it has taken to put such a system in place, and with amazement at the naivety and the recklessness of the climate sceptics. This legislation is a large, large step towards that time, and it is a large step towards a better, cleaner, healthier planet. I support the legislation.

5:59 pm

Photo of Alan EgglestonAlan Eggleston (WA, Liberal Party) Share this | | Hansard source

The purpose of the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 is to provide for a link between the Australian carbon pricing mechanism and the European Union's emissions-trading scheme and facilitate convergence between the two carbon prices by withdrawing the planned 2015 carbon credit floor price of $15 and restricting use of Kyoto units. This is really, I must say, just another chapter in the ongoing fairytale of the Gillard ALP government saga on carbon pricing in Australia. According to UBS Investment Research in a report published in November 2011 in the Sydney Morning Herald, the European Union carbon-trading scheme has so far cost no less than $287 billion for almost zero impact when it comes to reducing carbon pollution. They are rather incredible figures, I think. The Friends of the Earth have said that the European Union emissions-trading scheme is a failure on environmental grounds—again, pretty severe criticism from one of the rolled gold environmental groups in the world.

So what benefit is there for Australia in being linked to the European emissions-trading scheme if it is not reducing carbon emissions, which is supposed to be the objective of an emissions-trading scheme and this whole exercise of taxing carbon? The whole idea of a carbon tax was to reduce carbon emissions. While it is plain that this is not happening in the world's biggest emissions-trading scheme—that is, the European Union emissions-trading scheme—nevertheless the Australian government has set a carbon price which in time will add to the price of almost everything in this country. The Australian carbon tax was scheduled to transition to an emissions-trading scheme in 2015, but with this legislation the transition to an emissions-trading scheme has seemingly been brought forward—no doubt, I have to say, at the instigation of the government's coalition partners, the Greens, who can read the writing on the wall, I am sure, and know that this compliant ALP government is unlikely to last very much longer.

My concern about emissions-trading schemes is that, while the concept sounds wonderful and progressive, in reality, instead of reducing carbon levels, emissions in one country are simply traded off against, say, a rainforest in Indonesia or the Amazon or some other carbon sink, and all of this is done with no net reduction in carbon emissions in the home country. For example, an aluminium plant in Australia could trade off its emissions by purchasing a rainforest in Indonesia and, having done that, the aluminium plant in Australia would have no obligation whatsoever to reduce its emissions, because it has traded them off for the rainforest in Indonesia. Frankly, I think that is very deceptive, and I think that the poor old Australian public are being led up the garden path into imagining that emissions-trading schemes are going to do wonderful things to carbon levels when in fact they are going to do nothing at all because, if you trade off your pollution for some other carbon sink in some other country, you do not have to reduce the pollution at home or carbon emissions at home; you just buy credits for having purchased a carbon sink elsewhere. It is a very dishonest concept, and I think the Australian people need to be made aware of that. All that happens is that money changes hands from the owner of the polluting industry to the owner of the rainforest or whatever, with no reduction in the level of pollution caused by the purchaser in their own country. In other words, as I have said, the whole emissions-trading concept is totally fraudulent, as it does not result in any reduction of carbon emissions. The European Union emissions-trading scheme is an example of just that: for all the money that has been spent on it, there has been no reduction in carbon emissions. Just remember that the money that has been spent is $287 billion in Europe, and all for no reduction in carbon emissions.

Of course, the same outcome could and should be expected from any Australian emissions-trading scheme. Furthermore, as has been said in this chamber many times, the Treasury modelling actually shows that the net outcome of the carbon tax and, in the longer term, the proposed emissions-trading scheme will be an increase, not a decrease, in carbon emissions in Australia. That Treasury modelling has been documented in this chamber many times. So what are we doing? Getting into this simply to increase, in the end, carbon emissions in Australia—which is a long way from reducing them, which is the story that is being promulgated to justify us joining the European emissions-trading scheme.

Then, of course, there are other problems associated with the international governance and the veracity of emissions-trading schemes. Firstly, there is the core matter of how the putative value of traded carbon credits will be confirmed. These credits will be worth millions of dollars, and as yet no international body has been set up with the role of, firstly, verifying the existing value of the traded commodity and, secondly, registering transactions as they occur. Verifying the traded commodity is a very important thing to do. One might ask, in the absence of any verification system, how many times, for example, will the same Indonesian rainforest be traded for emissions reduction? Without an international body supervising these transactions, the fact is that the same Indonesian rainforest could be traded very many times.

These are very serious questions when one understands that it is proposed that hundreds of millions of dollars will be exchanged in carbon trading. We are not talking about $1 million or $2 million. We are talking about hundreds of millions of dollars, and those sums will grow larger, year by year, as these schemes go on, if they do. So I think we in the Senate can be justified in asking: if there is no body to set up to verify the veracity of these carbon sinks that we are trading for, why on earth is Australia prematurely jumping into some sort of arrangement, with the biggest carbon trading scheme in the world, which, as I have said, is actually a total failure? There has been $587 billion spent on it for no reduction in carbon pollution in Europe.

One has to wonder why the time frame been brought forward. The original plan was to proceed to an emissions-trading scheme in 2015, but now for some reason there is what seems to be this rather indecent haste to link the Australian carbon tax to the European trading scheme. As I have said, I can see the fingerprints of the Greens all over this proposal, driven, as I am sure many of you might suspect, by their fear of the likely consequences of an election victory by the coalition in the forthcoming election. What I suspect the Greens want to do, along with the ALP, is get this in place before the election while they still have a combined majority in the Senate. The ALP and the Greens do have a majority, and they are very worried that if, after the election, the coalition is in office, none of this will occur. Although they, I think, quite sincerely believe in the value of these emissions-trading schemes and in carbon pollution itself as being dangerous, in the view of many of the people on this side of the House these things are just a fantasy.

Regrettably, the numbers in the Senate are such that this legislation will probably pass, and Australia will continue with this frolic down the pathway in fairyland for a little bit longer until the coalition become the government. Then we will have the responsibility of seeking to dismantle these arrangements. I know that there are those in the present government who understand the adverse impacts of an emissions-trading scheme on our economy and Australian industry in general and who do not need to be told that following this pathway will hurt Australian business and the Australian economy, will cost jobs and, according to Treasury's own modelling, will actually see an increase in carbon emissions. I just hope that people in this chamber might think about what I have said and perhaps consider not proceeding with this legislation. But, of course, the hard realities of politics are such that that is unlikely to occur. I have to say that this is a very sad day for Australia, because I think that today this very adverse legislation is going to be passed.

6:11 pm

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

I want to start my contribution to the debate on the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related bills by reading from some articles by a news organisation called Point Carbon over the last few days. The first one I will start with is: 'Greece sells 500k second phase EUAs for 6.76 euros each'. The article states:


you know, that great example of good financial management—

sold 500,000 European Union carbon permits … at 6.76 euros a tonne each, according to Athens Stock Exchange

The next one talks about Italy proposing to replace the European emissions-trading scheme, which we are tying ourselves up with, by a carbon tax. So, whilst Australia is going to an ETS, the Italians are talking about going to a carbon tax. Another article states:

European carbon prices rose for a second day, gaining as much as 2.8 percent after the UK pumped 6.5 million allowances into the market in the biggest permit auction to date.

There is a purpose in raising these articles, Madam Acting Deputy President, which I will come to. But, before I do, can I just again read from the same source this article about New Zealand:

Spot permits in New Zealand’s carbon emissions market rose 8.1 percent week-on-week to close Thursday at NZ

wait for it—

$2.92, pulled up by vanishing supply although traders said buying interest was also lacklustre.

So it is $2.92 per tonne for our friends across the ditch in New Zealand.

'Chinese firms face 1.5-bln loss on re-jigged CO2 deals', says a consultant, is the next headline. I am sorry I am wasting the Senate's time going through these, but they just make such magnificent reading. These are headlines in the last few days.

Here is another one: 'EU carbon allowances for delivery next month were largely unchanged Thursday after the EU sold about 4.5 million permits at $6.64 euros, in line with market expectations'.

The next headline is: 'Germany on Friday sold 3 million carbon allowances from the third phase of the EU Emissions Trading Scheme at 6.75 euros each, the auction host German bourse EEX said'. And so it goes on: 'EUAs hit 5-day high on firmer energy'. Then this statement:

European carbon prices rose to a five-day high above 7 euros on Friday amid firmer energy prices and as speculators covered short positions …

I only raise these issues to show that the Labor Party wants us to align ourselves with the European market, which is so volatile. Let me do a quick calculation. Those euros I just mentioned equate to A$9 or A$10. The New Zealand price of $2.11 equates to about A$1.50. That is what the Labor Party wants to associate our carbon pricing scheme with.

Today we are debating a bill that will remove the legislated carbon tax floor price of $15. Hang on a second! Didn't we just pass a piece of legislation a matter of weeks or months ago that actually put in that $15 floor price? Why did that $15 floor price go in? Clearly, because someone was looking at the European and New Zealand floor prices, which are down around A$5, A$6, A$7, A$8, A$9, A$10 or, if you look at the New Zealand price, around A$2. So the government, in all its wisdom on this carbon tax, decided that we would have a floor price of $15. I could not quite understand that. The government's funding of this whole carbon tax debacle is based on the fact that carbon will sell in Australia for $23 a tonne. Forget about the $15 floor price, forget about the European schemes at around $8, $9 and $10 a tonne or the New Zealand scheme at $2 a tonne—the government's figures on what it is going to get from the carbon tax are based on $23 a tonne. But it does not stop there. By next year the $23 a tonne is to go up to $29 a tonne and, by 2020, it is to go up to $39 a tonne and, by 2050, to about $350 per tonne.

If the government's figures are based on those amounts, why did they put in this floor price of $15 a tonne? I could not understand it then. Why do you need a floor price of $15 a tonne when all your figures, all your tax receipts, all the money you are giving away, all the loans that you are borrowing from overseas lenders and that you will have to repay are calculated on the basis of $23 per tonne, increasing to $29, $39 and $350 a tonne?

Why did we need the floor price? I could not understand that. But here we are today, as I understand this legislation, removing the $15 floor price and equating it directly to the European prices which, as I said at the beginning of my contribution, are so volatile. They range from A$7 to A$10.

How are the government ever going to make their books balance? Nobody believes that they ever will. They are still running on the pretence that they will make the books balance, based on $23 a tonne and here we are associating it with the European scheme that will, as at today's prices, get them back about $10 a tonne.

I only raise these things to show how totally incompetent the Australian Labor Party are when it comes to running anything. Who would trust them at all with anything to do with the carbon tax? Quite clearly, the Australian public knew that. They did not want anything to do with the carbon tax and that is why Ms Gillard dishonestly promised the Australian public, on the eve of the last election, that there was no way there would ever be a carbon tax under her rule. She dishonestly and deliberately misled the Australian people. I repeat that: she in fact dishonestly and deliberately misled the Australian people by saying that the Australian Labor Party would never introduce a carbon tax. So why would you, I or indeed any other Australian believe Ms Gillard and her government on anything at all they say about the carbon tax and indeed, by extension, on anything at all?

As I travel around my home state of Queensland I get the distinct impression that Queenslanders—and I am sure this applies across Australia—have simply stopped listening. It is very much, I might say, the same feeling that we had in Queensland before the state election. I have worked on polling booths for 40 years, handing out how-to-vote cards. The last Queensland election was notable in that more voters than ever before, and a considerable majority, refused to take anyone's how-to-vote card. Why? Because they had made up their minds on what they were going to do. They did not need a how-to-vote card. They did not need election promises. They did not need Ms Bligh crying on TV about something. They did not need all those false accusations about Campbell Newman and his family. It did not make one iota of difference: people in Queensland had made up their minds six months before that all they wanted was the end of a dishonest, disreputable, incompetent Labor government.

My impression as I serve my state of Queensland is that the same is occurring federally. People simply do not bother talking about anything Ms Gillard says anymore. They know that she deliberately and dishonestly lied to the Australian public before the last election and they now have no interest in anything she says. She can say all she likes about not being involved, back at Slater & Gordon, in the slush fund. It does not really matter because nobody listens to her. Nobody gives any credence to what she says. I might add in passing that if I as a lawyer had conducted my practice as a solicitor the way Ms Gillard is alleged to have conducted her practice then I would have been disbarred. That does not seem to apply in the case of Slater & Gordon and people who are partners in that firm. But that is by the way; what we are talking about here is that, within four months of the commencement of the carbon tax scheme, we are onto our eighth major change to this legislation.

Madam Acting Deputy President Stephens, if you want to have a good laugh, don't watch the cartoons or 7.30 or Q&A, just go to what was said about the need for having a legislated carbon price. On 13 September last year Ms Gillard said that we have to have a price cap and a price floor in the first three years 'to provide certainty'. In November last year she said 'we have set a floor and cap so there can be stability in pricing'. In July 2011 she said there was 'a price ceiling and a price floor which we have announced' and that 'this is essential for certainty'. Mr Combet said: 'We have legislated for a floor price, that is quite well known. It is essential.' On 13 September last year he said, 'We've put in a floor price and a price cap to provide some confidence over the first few years about potential variability.' He also told ABC Radio National, the great mouthpiece of the ALP, on 12 July this year that the federal government had negotiated a price floor as part of the multiparty climate change committee. That multiparty committee, mind you, was the Labor Party and the Greens, that is how multi that was—but, again, that is beside the point. Mr Combet went on to say, 'We have a legislated three-year fixed-price period.' That was in July this year. We are now in November, five months later, and we are doing away with that floor price and associating ourselves with those bastions of good economic management, the socialist governments of Greece, Italy, Spain and now France. I acknowledge that in some of those countries the socialists were tossed out in their elections but they were the ones that caused the economic chaos. So Australia is associating itself with those bastions of good economic management, the European Union. I guess it would be a competition as to which are the most incompetent financial managers, Mr Swan and the Australian government or the former socialist governments of Europe who have put the European economy in such a mess.

I would hope that I have this wrong and that someone from the coalition or the Greens—

Photo of Jacinta CollinsJacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | | Hansard source

The coalition?

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

will get up and say: 'No, all those prices that Senator Macdonald quoted from the carbon market in the last few days are wrong. Senator Macdonald has read those incorrectly. We don't have to worry about $15 or $23 or $29 a tonne, which we've got to have to balance our books. Those prices he read out of $8, $9, $10, $11 are all wrong.' I am just waiting for someone from the Labor Party to get up and say, 'Senator Macdonald got that wrong about the New Zealanders.' As one of the Labor Party members said in a very significant interview a few weeks ago: 'The Australian government has adopted a similar carbon tax proposal as the New Zealand parliament—exactly the same.' Yeah, yeah! Only the Australian price is $23 a tonne, the New Zealand price is $2.11 per tonne. Yeah, the same price! What a joke. This would be a laughing matter if it were not so serious for the Australian economy.

Quite frankly, I say with some regret that I think Labor Party politicians are in permanent denial mode. I know most of them are not game to go out and face their constituents at the moment. I know most of the Queensland Labor MPs in the lower house—the few that there are—avoid public meetings like the plague. Why? Because every one of their constituents is suffering as their costs of living skyrocket. Why? Because of the carbon tax. You can have all sorts of other excuses and explanations, but can I just say to the Labor Party senators here: don't bother wasting your voice even trying to explain it. People in Queensland know that they have been done over, that their costs of living have risen because of the price of carbon. They also know that the carbon tax and the mining tax are causing real uncertainty. I challenge any Queensland Labor senator to go and spend a few days in Gladstone, talk to people there and you will find in that magnificently active and aggressive industrial city of Gladstone that people are worried. They are worried about their jobs. They are worried about their futures. They are worried about their mortgages.

Debate interrupted.

Sitting suspended from 18:30 to 19:30

7:30 pm

Photo of Ron BoswellRon Boswell (Queensland, National Party) Share this | | Hansard source

I speak tonight on the green policies currently hurting the pockets of Australian power users, the carbon tax and the renewable energy target. The energy white paper recently released by the government has made several recommendations to alleviate rising power bills. If the government were serious about easing energy prices, and pressures on families and businesses, they would do better to address the cost impact of the carbon tax and the RET.

The carbon tax is placing an $8 billion a year burden on Australia and must be abolished. Not far behind it is the $5 billion a year RET, which Labor's Chief Whip, Joel Fitzgibbon, has rightly questioned. The RET is lowering electricity demand and pushing up electricity costs. These costs will only go higher as the percentage of our power sources from renewables goes from 10 per cent now to the 20 per cent target in 2020. The RET is foisting expensive and unreliable power on us and driving out the cheap, dependable and abundant energy sources we have relied on for decades.

But if Fitzgibbon is truly concerned about the rising electricity costs, he should also criticise the carbon tax, which is the major contributor to the higher power bills. Every day we are seeing power companies shutting down units and slashing jobs. This is due to current low electricity demand and falling demand forecast resulting from the RET and now the carbon price, which is creating an oversupply in the market. The low price this creates, as electricity regulator AEMC Chairman, John Pierce, demonstrates, is temporary and must give way to a renewed price surge. As prices go up due to the RET, more and more manufacturers are being put under pressure or going out of business, which is further driving down the demand for electricity.

The fall in demand has depressed wholesale electricity prices, but because the increase in supply has been from intermittent renewable sources, the energy retailers have had to contract for more of their supplies and they can only do this at a premium. Ironically, the forced replacement of fossil fuel-driven electricity by renewables has therefore increased costs to the consumer. This is a major point that John Pierce, the Gillard-appointed Chairman of the Australian Energy Markets Commission, made last month about the distortion created by the RET.

Every industry in Australia faces higher electricity bills due to the RET and the carbon price. The target of 45 terawatt hours being sourced from renewables annually from 2020 to 2030 will require businesses to surrender an increasing number of renewable energy certificates through electricity retailers each year at considerable cost to their bottom line. In its submission to the Senate Committee on Electricity Prices, Ergon Energy estimated that the carbon price would add approximately $164 million to its electricity costs in 2012-13 alone.

The current and estimated future price hikes caused by the RET and the carbon price are sizeable. One industrial user in the state—an abattoir—told me it recently got a bill for $244,000 for electricity. Of that, $32,500 came from the RET and $45,000 came from the carbon price. This is a 50 per cent increase from this user's costs last year due to the combined influence of the RET and the carbon price.

The average cost of electricity for Queensland industrial users whose total annual consumption amounts to between 20,000 and 100,000 megawatt hours is $112.87 per megawatt hour. Of that, $21 per megawatt hour comes from the carbon price and $14.33 per megawatt hour comes from RET compliance. That means for an industrial site that consumes 50,000 megawatt hours a year with an average $5.6 million electricity bill, an average of $717,000 is due to the RET and approximately $1 million is due to the carbon price. How can anyone compete against overseas imports when saddled with this?

For smaller middle-of-the-range Queensland users who use between 1,000 and 5,000 megawatt hours per annum, the average electricity cost is $147.90 with $21 per megawatt hour coming from the carbon price and $14.62 per megawatt hour coming from renewables. These users have annual energy bills ranging from $148,000 to $740,000. Of that, the RET puts up prices between $14,620 and $73,100, while the carbon price puts up prices between $21,000 and $105,000.

Future estimates of the price impact of the RET and the carbon price on industrial users paint the same grim picture. A cost projection prepared for one industrial user in the Queensland electricity market which has an annual energy consumption of 46,304 megawatt hours, shows that in 2013 it will pay $124.85 per megawatt hour of electricity. Of that, $10.69 per megawatt hour will be due to the RET and $21.72 per megawatt hour will be due to the carbon tax. That means of its $5.78 million electricity bill next year, $495,000 will be attributable to the RET and approximately $1 million will be attributable to the carbon price.

This is in line with modelling done for the Queensland Competition Authority, which shows that complying with the LRET scheme in 2012-13 will cost $4.10 per megawatt hour, while complying with the SRES will cost $6.38 per megawatt hour, bringing the total estimated cost of the RET to $10.48 per megawatt hour.

These costs have seen industry groups like the Australian Chamber of Commerce and Industry, the Business Council of Australia, the Minerals Council of Australia and the Coal Association speak out against the RET and call for its abolition.

The National Farmers Federation has singled out the RET for driving up energy prices for our agricultural sector. The NFF has criticised the target for increasing costs for farmers, particularly irrigation, dairy and grain farmers and abattoirs, who are unable to pass the costs of renewables on to their customers. It supports the removal of the RET on the grounds it will continue to push up power prices with no corresponding environmental benefit.

The RET's price impact on households has been substantial. Much of it is due to the poorly designed Small-scale Renewable Energy Scheme, SRES, which will cost us $3 billion for 2012 and 2013 alone. The recently released consumer price index figures show a 15.3 per cent increase in household electricity prices in the September quarter alone, the biggest quarterly increase since records began in December 1980. ACIL Tasman modelling done for EnergyAustralia estimates that, if the fixed large-scale RET remained unchanged, the cost to the average householder will rise from around $22 a year currently to $123 a year by 2027.

According to the modelling done for the Climate Change Authority for its recently released RET discussion paper, taking away the RET would save the average Australian householder $65 a year, while abolishing the carbon price would save the average household $185 a year. This matches estimates from IPART and the Queensland Competition Authority and the New South Wales and Queensland respective energy regulators, who have said that the RET and the carbon price together will add approximately $270 a year to typical household bills in each state. This, IPART notes, is because Australians are subsidising more renewable energy than is currently being produced. This is due to the solar credit multiplier, which gives householders back a multiple number of STCs per kilowatt hour of small-scale energy they produce. This has pushed phantom small-scale technology certificates onto the market, creating a huge oversupply. Because the SRES is uncapped, businesses are being forced to buy these phantom STCs and pass on the cost to their customers. In effect, we are paying for more energy than is actually generated by these renewable technologies.

The federal government has admitted that the solar credits scheme has driven up electricity prices for businesses and householders and it has decided to phase out the multiplier six months earlier, on 1 January next year. That is a good start, but the government should also heed IPART's call for the complete scrapping of the SRES, or at least a limit to the number of STCs businesses must buy each year. The Queensland Competition Authority has also cited concerns about the costs of solar. The Queensland Competition Authority's most recent modelling shows that by 2015-16, almost 15 per cent of the total average household power price will be used to fund solar feed-in tariffs—that is, $240 a year for each household to pay for the rooftop PV systems. These costs are made all the more staggering by the fact that solar makes up less than one per cent of Australia's electricity production. In fact of the 10 per cent total renewables that are on the market at the moment, seven per cent comes from relatively reliable hydro sources, while three per cent comes from intermittent, unreliable wind and solar power sources.

Other countries with higher intermittent renewable percentage shares have experienced much higher household electricity prices. By comparison, the household price in Australia in 2011 was US14c per kilowatt hour; Ireland, with 17 per cent wind and solar, was 22c per kilowatt hour; Portugal, with 20 per cent wind and solar, was 28c per kilowatt hour; Denmark, with 29 per cent wind and solar, was 28c per kilowatt hour; Spain, with 18 per cent wind and solar, was 30c per kilowatt hour; Germany, which has a 35 per cent renewable target for 2020 and with 11 per cent wind and solar, was 32c per kilowatt hour.

Electricity prices in these countries and the rest of the world are expected to rise by 15 per cent on average over the next decade, according to Maria van der Hoeven, the Executive Director of the International Energy Agency. She said this week that one of the key reasons for this increase was renewable energy subsidies. At the same time, she said renewables had received $88 billion in subsidies in 2011, 24 per cent more than the previous year. Renewables are driving up electricity prices more and more, and the world is pouring more and more into them. It is madness we should not follow.

In Australia, the RET is already likely to exceed its 20 per cent original goal and for this reason alone even its most passionate supporters ought to call for its reduction. Reining in the blow-out would, according to ACIL Tasman, reduce the measure's burden from $53.3 billion to $28 billion. But this is not enough. I recommend that the parliament examine the views of the Labor Party think tank the Grattan Institute, the Productivity Commission and a number of industry groups which have demonstrated a very strong case for the RET's removal. Modelling done for the Climate Change Authority shows that removing the RET altogether would save $7.8 billion in resource costs more than if the current target were retained. Unfortunately, the Climate Change Authority did not even consider in its discussion paper the cost benefits of removing the RET.

In short, renewables and the carbon price are driving up electricity prices for consumers. The current renewables target will cost $53.3 billion by 2030. Energy retailers are cutting jobs in response to the pressures created by the RET and the carbon price and, going by hard research conducted in Spain and Germany, green jobs created in our renewables sectors will fall far short of making up for these losses.

In fact, the total number of full-time green jobs in the Australian renewable energy industry has decreased from over 10,000 in 2008 to around 8,000 at present.

We can talk all day about reducing the RET figure to a 'real 20 per cent'. It would certainly help, but at the end of the day one man's subsidy is another man's penalty and we will still be saddled with a policy that lowers electricity demand, drives up prices and pushes out cheap, reliable energy for intermittent, unreliable power that is still dependent on back-up generation from coal and other power sources. Renewable energy is an expensive and ineffective way of reducing carbon emissions. The Productivity Commission estimates abatement costs to be $473 to $1,043 per carbon tonne for solar technologies and $60 per carbon tonne for wind. The Electric Power Research Institute estimates that wind-powered electricity costs $150 to $214 per megawatt hour and medium-sized solar PV systems cost $400 to $473 per megawatt hour—with smaller domestic PV systems costing even more—compared to coal-fired electricity, which costs just $78 to $91 per megawatt hour.

In the 1970s, Australia became a manufacturing country and gained an aluminium industry and other heavy industries because of the low-cost energy available in abundance in this country. We are losing these industries now because of the RET and now the carbon tax. While we cannot and should not abolish the subsidies given to those like the sugar industry and other industries that have invested in renewables—on the bipartisan support that we have offered—they should be grandfathered. Every day the RET is left unchecked the more electricity we source from expensive and inefficient renewables, and the more the cost goes up and the heavier the burden gets on industry and households. It is time Australia played to its strengths. We have got so much low-cost and reliable power in abundance here that we should be taking advantage of it. Australia is in an expensive energy hole right now because of the RET and the carbon tax, and it is time we stopped digging.

7:46 pm

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

I thank my colleagues for accommodating my need to speak a little earlier in relation to the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012. I indicate that I will not be supporting the bill for a number of reasons. I believe it is bad policy and I believe that what the government is doing is building on an already shaky foundation in terms of the existing piece of legislation, which has failed in its architecture, its design and its very foundations. Adding on to it is really going to cause additional problems.

I want to put on the record that I believe that anthropogenic climate change is a real issue and a factor that must be dealt with—or, to quote Rupert Murdoch of all people, that you need to give the planet the benefit of the doubt. It is important to take sensible measures to manage the inherent risks, the potentially very grave risks, of climate change, but this scheme passed by the government really does not do that and I think the amendments will just make a bad situation much worse.

I want to quote extensively from an opinion piece by Danny Price, the Managing Director of Frontier Economics, and I disclose that Danny Price's Frontier Economics undertook an analysis—for both me and the Hon. Malcolm Turnbull when he was opposition leader—for an alternative pricing scheme, an alternative emissions trading scheme, that would have actually been greener, cheaper and simpler, one that was based on an intensity base model, one that was subject to the rigours of modelling by the same modellers as Treasury actually used. I know that because I coughed up in part for that modelling. It was not cheap but it was worth it because it showed that there was an alternative way to deal with this issue.

Back in Senate estimates in October 2011, I asked questions of Treasury in respect of analysis by Bloomberg New Energy Finance which predicted back then a $16 a tonne carbon price in 2015. I asked Treasury officials whether this would create a $4 billion revenue shortfall in the budget. I think it is fair to say that Dr Martin Parkinson, the Treasury secretary, basically said that if the world price was lower than the government's predicted $29 a tonne price there was a 'potential fiscal downside' for the Commonwealth budget. Dr Parkinson, in fairness to him, also said:

… There has always been that in the same way that, if permit prices were higher, there was always a sense that you might find there would be more revenue, but you would need to think about returning that to households or what you were going to do in terms of compensation.

This scheme is deeply flawed in terms of what is being proposed and I want to quote extensively from an article, an opinion piece by Danny Price in the Australian on 5 September 2012. To put this in perspective, I first got to know Danny Price during the Olsen Liberal government's privatisation of South Australia's electricity assets in the late 1990s and he was critical of what was put up by the state Liberal government back then, saying that it was a very badly structured privatisation deal leaving aside the issue of a broken promise and a breach of mandate. What Danny Price said back then—and he was working for a different economic consultancy—was to warn of severe power price rises and of real issues in terms of competition in the marketplace and how consumers would be hurt. Everything he predicted was right, despite the fact that the then Liberal government did everything they could to pillory him. With some melancholy bemusement I note that this government has been highly critical of Mr Price now in terms of his predictions, but I get the feeling that Mr Price will be vindicated by history. In fact, these changes in a sense vindicate his concerns about the scheme. This is what Mr Price said, and I could not have put it better myself:

WHILE last week's backflip—

that is, back in late August of 2012—

by the government on the removal of the carbon pricing floor was broadly welcomed by those facing the prospect of paying the world's highest carbon price, this most recent change in policy direction lays the foundations for more problems down the line.

I could not agree more. Mr Price makes this point about the minister:

Greg Combet justified the move by saying that it was important to link the Australian carbon pricing scheme to the European scheme and other emerging trading mechanisms. But the fact is this kind of trading was already allowed under the existing arrangements.

Mr Price asks this question:

So why remove the floor price? One sensible reason—

he postulates—

could be to reduce the costs of cutting emissions for Australian businesses and consumers. But the problem with admitting this is that it would imply lower government revenues and further undermine the government's promised budget surplus.

He goes on to say:

The government's spin on the backflip was to deny carbon prices would be lower despite knowing full well that informed stakeholders believe the opposite. When Combet was asked whether he thought the Treasury modelling showing a $29 a tonne carbon price in 2015 was overegged, he rejected the claim, stating that he had full confidence in Treasury's predictions.

I have great respect for our Treasury, but when you have analysts from around the world for Bloomberg Energy who are involved with setting, making and staking their livelihoods on what the carbon price will be in 2015-16 and beyond, I think we need to listen to those analysts at Bloomberg and to other independent analysts as well. Mr Price asks:

… if the carbon price really is going to be $29 a tonne, why do you need to remove the price floor? Indeed, leaving the floor price in place would give investors in low-emissions technologies greater confidence to make long-term investments—the very argument the government made for imposing the floor. None of the government's position on this matter makes sense and reminds me of something that economist John Kenneth Galbraith once said: "It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled seas of thought."

I have been a great fan of John Kenneth Galbraith and I think those words have a lot of weight in the context of this debate. Mr Price says:

If the government had thought this through it would realise that its removal of the carbon floor price lays the foundations for further policy backflips.

Reductions of carbon emissions will come largely from investment in new technology, mainly from investment in new electricity generation technology.

He goes on to say that this backflip will give a windfall to the dirtiest generators of all—the brown coal generators. That is the great irony here. That is what Mr Price was warning about when he was doing his modelling when he was preparing a report for both Malcolm Turnbull and me in relation to an alternative scheme for emissions trading. He went on to say:

A carbon price lower than $23 a tonne will mean Australian coal generators will remain viable for many years and gas generation will remain out of the money, renewables even more so. This will mean little to no investment in clean technology will occur in Australia because of low European prices.

He says that we will not see the transformation that has been touted in respect of the government's scheme and goes on to make the point that Frontier Economics 'warned the government back in October 2009 of this inherent fiscal price risk in its scheme design and it ignored our warning.'

He 'expects this budget black hole will be about $5 billion a year or about $25 billion across five years'. The beauty of the Frontier scheme was that the compensation would adjust, would vary, according to the carbon price. There was that flexibility and variability in it, which this scheme does not have. What is the perverse outcome of this scheme? Mr Price says that the 'one group that will see only upside from the abolition of the price floor is the private brown coal generators in Victoria and South Australia'—the dirtiest emitters. Mr Price further says:

The government handed them billions of dollars of cash compensation and permits in the high fixed-price period, based on the Treasury modelling of carbon prices across many years, not just the fixed price period, that now look unrealistically high. Ironically, this makes the dirty brown coal generators more valuable than if the government had never priced carbon and compensated for it.

It also makes the dirty brown coal generators relatively more valuable than the cleaner, government-owned black coal power generators in NSW and Queensland that have not been compensated.

The waste from these handouts to brown coal generators eclipses the waste of the pink batts scheme and the school halls program.

Those are harsh words, but I can understand his frustration in relation to this. Mr Price's comments in relation to brown coal generators were subject to some comments by the Leader of the Australian Greens, Senator Milne, who quite rightly expressed her concern about this sort of compensation, this windfall, being given to brown coal generators. To my mind, supporting this legislation will just perpetuate a bad scheme. The architecture of this scheme is built on very shaky foundations. What the government is asking us to do is effectively add another couple of floors to a scheme that is already showing signs of cracking and already showing signs of real decay in its building structure. That is why I cannot support this legislation.

7:56 pm

Photo of Bridget McKenzieBridget McKenzie (Victoria, National Party) Share this | | Hansard source

I rise to speak to the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related bills. I cannot agree more with Senator Xenophon that it is bad policy—something of an epidemic with this current government. These seven bills seek to make further significant changes to the government's carbon tax. Primarily, the bill package removes the legislative floor price—something that was assertively backed by the current government on numerous occasions, like a punter throwing good money after bad on Ethiopia, who ran 63 lengths behind the winner at this year's Melbourne Cup; that is good advice, Senator Xenophon, not to gamble—from the carbon tax and ties that carbon tax to the European emissions trading scheme. Indeed, Hansard records Senator Wong espousing the value of a floor price in this very chamber on 28 February 2012. The senator said:

It is the case that our policy does include a price floor which acts as a safety valve for investors in low-emissions technology by establishing a minimum price for the first few years of a flexible price period.

It would seem the senator should have gone with months rather than years. In addition, the bills will more than double the carbon unit auction limit to $40 million in 2015-16, make changes around natural gas liabilities and the measurements of potential greenhouse emissions and alter the arrangements, applying an equivalent carbon price for liquid fuels and synthetic greenhouse gases.

The suite of bills before us is yet another example of this government making policy changes on the run. We saw it with asylum seekers, Fuelwatch, the home insulation scheme and cash for clunkers, and 2.1 million Australians, the majority in regional Australia, are now seeing it with the Murray-Darling Basin Plan, as amendments are rushed through chambers and communities struggling with uncertainty, wanting a healthy basin going forward, are having to deal with the government flipping and flopping on how to make it happen. Quite clearly, this government cannot be trusted to deliver major policies.

People and communities need certainty in planning. Organisations and businesses need certainty. The Gillard government has made eight major changes to the carbon tax since its inception, creating serious uncertainty for businesses, industry and households and begging the question: does this government have any idea what it is doing?

It is one thing to recognise that you make mistakes—we all make mistakes outside of this place; when we are in positions of power we make mistakes—leadership is about recognising that mistakes are made, adjusting and moving on; it is another thing entirely to pursue a policy development agenda which involves a five-step process like the government's. Step 1: brainwave, which could be kick-started by a poll, a conversation or the needs of its coalition partners, the Greens. Step 2: a press release. You have to get out fast on the front foot; you have to get your brainwave into the media. It is only then, with step 3, that this government starts to think: 'How are we actually going to implement this brainwave? How are we actually going to make this happen on the ground? What's it going to look like in real life outside of the imaginings of a minister or department head?' You would think step 4 would be government saying: 'We will go out and consult. We might consult with industry, community. How do you think this should happen?' Unfortunately, time and time again this government fails to consult. We see it with the NBN, with the siting of mobile phone towers, with the Murray-Darling Basin—we see time and time again that this government fails to consult community and fails to consult industry. Its mining tax? It consulted with a handful of industry players and it got a really interesting policy response that favoured the guys in the room—surprise.

Step 5: you might want to evaluate your policy or have a mechanism for evaluation; understand the implications, the unintended consequences. Conservatives like to think about hypothesising the unintended consequences of pieces of legislation before us. We do not presuppose that we know how this is going to play out in the vagaries of real life. You would think they might do a bit of cost-benefit analysis. Again, I think of the NBN as an example of a policy development process that is not about the fundamental steps in getting it right. The kicker of the five-step plan is where is the money, and time and time again this government, with its policy implementation, does not think through the financial implications of what it does.

The introduction of the legislation to scrap the floor price just 80 days after the carbon tax was introduced confirms the scheme is in complete chaos. Removing the floor price and linking the carbon tax to Europe's scheme puts our economy in someone else's hands. And while we all recognise the Gillard government's economic track record is abysmal, let us face it: Europe's economic judgement is also being widely questioned at this time. I do not think it is quite the change of government regional Australia is calling for.

By changing the carbon unit auction limit from 15 million to 40 million, the government potentially creates an extra $725 million worth of revenue from forward permits. Do you believe this change is environmentally motivated? Or is it more likely an attempt to prop up the budget and deliver the promised surplus? The Energy Supply Association has stated that forward selling permits will lead to higher electricity prices. As a Nationals senator, I understand that this will hit regional Australia the hardest. People living in regional Victoria typically spend 30 per cent more on electricity than those in Melbourne, so it is far from welcome news for those thousands of families and businesses already struggling with power price hikes.

Allow me to quickly put on the record a couple of examples of carbon tax costs in my home state of Victoria. Victoria Police have confirmed that they have had to budget $3 million extra to cover the cost of the carbon tax next year. That money should be going into police resources to help keep our communities safe. Victorian health services and hospitals will have to pay $143 million in carbon tax by 2020, amounting to $13 million or $1,044 per hospital bed in the first year alone. In my patron seat of Bendigo, Bendigo Health, which provide exemplary care to central Victorians, will need to find an extra $600,000 this financial year just to cover the tax.

And as we head into the warmer months, we have now discovered that swimming centres are yet another casualty of the carbon tax, which has driven up the costs of pool heating, running pool pumps, floodlighting and hot showers. Local pools have reported dramatic increases in their day-to-day running costs, a recent power bill in the Peter Krenz Leisure Centre at Eaglehawk has gone up by more than $2,000. Obviously, these costs have to be passed on, so the young mum with three kids going off to swimming lessons will see an increase in access prices to her local swimming pool because local businesses cannot continue to absorb the ongoing costs of the carbon tax.

The Lakes Entrance Fishermen's Co-op sure did not escape. Despite fishermen being price-takers, they are facing a $24,000 increase in their power bills. The Prime Minister's assertion that the Lakes Entrance Fishermen's Co-operative is in a position to pass through costs because the government put more money in the hands of consumers shows how out of touch Labor are with small business. The fact that you hand out compensation and think that will make it okay shows that this government do not understand how business works.

A Goulburn Valley based fruit-packing business has had a $10,500 carbon tax whack out of a $70,000 bill. This business is in a section of our community in regional Victoria, the Goulburn Valley, that is hardest hit under the Murray-Darling Basin Plan with our horticultural plantings. Shops have closed in the regional centre of Shepparton—a regional base that centres on fruit picking. Cool stores are significantly affected by the carbon tax. That $10,500 was just one month's worth of carbon tax, and the managing director of the 400-employee strong business says he will need to consider cutting staff as it cannot put up the price of supplying apples and pears to supermarkets because the supermarkets will not pay it. The grower, the processor and the producer are bearing the cost. It just does not make sense how this is all going to flow out so that it is not the producer and the businessman who have to absorb and bear the brunt of this Labor government's poorly thought out policy decision.

The western Victorian dairy farmer who contacted me to say he had received a $360 carbon tax bill for one month of electricity supply is worried about how much that will increase when the bills roll in at irrigation time. The dairy industry estimates that the average Victorian dairy-farming family will be hit between $5,000 and $7,000 a year. They cannot pass that on because the supermarkets will not pay it.

Primary producers were dealt a losing hand in the first carbon tax iteration. For example, $150 million was earmarked for the nation's food industry under the Food and Foundries Investment Program designed to support them in maintaining their competitiveness in a carbon constrained economy. In Victoria we have a $25.4 billion food industry. It exports to over 100 countries worldwide and directly employs over 130,000 people. When you look at the size of our industry alone and then think about the other states, you can see the compensation available works out to an absolute pittance—just a handful of dollars, in real terms, per worker. Farmers also get a dud deal with these latest carbon tax amendments. Australian farmers have been excluded from selling carbon credits to Europe via the Carbon Farming Initiative until 2018. The one-way deal negotiated by the Gillard government essentially allows Europe a monopoly until this time because, while Australia is locked out of Europe, Europe can sell its credits to Australia.

For months and months, the hardworking people of the Latrobe Valley in the south-east of my home state were trapped in a state of uncertainty as the government attempted to negotiate the Contracts for Closure. The government failed. Again, failure seems to be the hallmark of this Labor government when it comes to seeking to adequately address the needs of regional Australia. The Minister for Resources and Energy, Martin Ferguson, announced in September that the government had not been able to reach an agreement on the flawed plan to use taxpayers' money to shut down the Latrobe Valley power generators; but there is no cause for celebration because jobs have already been lost as a direct result of this policy. The backflip was a small reprieve for local power industry workers and their families, who are very proud of the work they do, but the region still needs critical government assistance to deal with the impact of the carbon tax. For every one job in the Latrobe Valley's electricity sector another four jobs are supported in the local retail and services sector. This community is undoubtedly more exposed than most.

The crisis of confidence throughout the Latrobe Valley community has had a direct impact on industries that support the power sector, along with construction, agriculture and retailing. I take this opportunity to state that the Gillard government must not use the scrapping of the Contract for Closure program as an excuse not to assist industries and communities that have been harmed by the carbon tax like the Goulburn Valley and the Latrobe Valley. It is regrettable that we appear no closer to seeing guidelines for the Regional Structural Adjustment Assistance program. Every time a National Party senator stands up in this place and asks a question about the Regional Structural Adjustment Assistance program, the paragraph in the documentation that has been sitting on everyone's desks for a long time is trotted out. The impacts are happening now; the fallout is happening now in our communities. We would like some more detail around that.

The only way to fix the carbon tax is not to amend it eight times with things that are going to make it worse—it is to scrap it. I refer again to dear old Ethiopia who struggled home in the Melbourne Cup this year. As they say—if the horse is dead, just get off it. The coalition opposes these bills.

8:11 pm

Photo of Fiona NashFiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | | Hansard source

I also rise to make some comments on this package of bills before us, the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related bills. Following on from what my very good colleague Senator McKenzie said, there is absolutely no doubt that this government is completely hopeless. The chaos that we again see in front of us is nothing short of breathtaking—although I suspect we should probably expect this kind of policy mess from this government because the hits just keep on coming.

The main purpose of the bill is to remove the legislative floor price from the carbon tax and link the Australian carbon tax with the European ETS. We have seen the government affirm its commitment to the floor price as a crucial piece of the carbon tax legislation on no fewer than 11 occasions. This is yet another backflip from the government. It is no wonder that the Australian people cannot trust a word this government says because it consistently says one thing and does another, time and time again. If the government cannot be said to be consistent in some things, at least it is consistent in being completely unable to come up with a decent policy platform, work it through and do what it says it is going to do. It is quite extraordinary. With the mess that we are seeing in front of us—the ad hoc changes on the run; I know my good colleague Senator Bushby understands very well what a mess this is from the government—it is no wonder that people across this nation have absolutely no confidence in this government. The coalition opposes the bill for a very good reason. It is an absolute mess.

I want to focus tonight on one of the parts of this mess—the Carbon Farming Initiative. I want to return to the issue of Henbury Station. Last year, the government co-funded the $13 million purchase of Henbury Station in the Northern Territory with RM Williams Agricultural Holdings. The government put in $9.1 million of taxpayer dollars. There is no bucket of money under Parliament House; this is $9.1 million taxpayer dollars. According to the government, the plan was to turn the 500,000 hectare property into a nature reserve, effectively removing thousands of cattle from the food chain. At the time I raised a series of questions with the government and I certainly still do have a lot of concerns about the impact of that purchase on future food security. Interestingly, there was very little detail as to how the agreement had actually come to take place. There certainly seemed to be an ad hoc nature to the deal itself.

The government at the time said:

The Carbon Farming Initiative will unlock new economic opportunities, just like this one at Henbury, for farmers and other landholders who take action to reduce greenhouse gases.

That was according to Mr Dreyfus, the Parliamentary Secretary for Climate Change and Energy Efficiency, who went on to say it was a key part of the Gillard government's policy for landholders across regional Australia. At the time, however, there was a backflip. Mr Dreyfus went on to say the owners of the station have decided that they want to increase natural biodiversity on that station and engage in some very large-scale restoration of degraded landscape. It was contradictory from the very beginning of the Henbury project all the way through.

There were no assurances at the time about what checks and balances were in place to ensure accountability for the taxpayers' $9 million contribution. There was no evidence why the figure of $9 million was determined to be appropriate. There was no advice given from the government about how much of the revenue from carbon trading would be invested back into the project and how much would go into the company's profits. The list of questions went on and on, and it became very clear that this was just a bucket of money that the government, in their ad hoc way, had decided to toss at this particular project so they could talk about doing projects for the environment and how it was the largest property ever purchased for the National Reserve System, with no accountability and no process at all. It was quite extraordinary.

The company plans were stated at the time. They planned to sequester up to 1.5 million tonnes of carbon dioxide emissions per year for the next 10 to 15 years. The aim, according to the government, was to establish a model for generating biodiverse carbon credits to fund ongoing conservation management to generate new sustainable income streams. However, get to 2012 and the mess of Henbury becomes more and more obvious as we have gone through the year. In April, the minister, Senator Ludwig, was defending the Henbury Station purchase, talking about needing to develop all the opportunities for jobs that we can. But hang on a second; when we started this out, it was for environmental purposes, for sequestration. Then, earlier this year, the minister was talking about developing all opportunities that we can for jobs in the pastoral industry. It was quite extraordinary. In July, Landcare NT said:

RMWAH Spokesperson Rebecca Pearse stated at a recent Carbon Farming Initiative workshop in Alice Springs that there are still many unknowns with the project, including how much carbon is currently in the trees and shrubs, how it will grow, and what price the company will get for non-Kyoto compliant carbon credits in the voluntary carbon market.

If approved, the methodology could be used by other rangeland managers looking to increase woody plant biomass—

and on and on it goes. They hoped to see Henbury as a case study. They then went on to say:

There is no doubting that a case study is needed.

Even in July this year, nearly a year after Henbury gained that massive injection from the government, we still did not have a methodology approved, they still did not know what they were going to do, they still did not know what the process was going to be, the government having tipped in $9 million of taxpayers' money. It is an absolute mess. The ad hoc nature of this government development of policy is absolutely breathtaking.

In July, we saw Qantas announce an agreement to purchase more than a million tonnes of carbon. Here we had Qantas diving into this deal, saying, 'We're going to take more than a million tonnes of carbon.' A couple of weeks later the spokesperson said the methodology was not even approved and there were still many unknowns, and yet we had Qantas buying into this. Whether or not Qantas just wanted to make themselves look environmentally good I have no idea, but it is extraordinary that a company would dive into something like that with the unknowns and the fact that there was no methodology approved.

When we got to October this year it became very clear that the chief executive, David Pearse, and the head of environmental business, Rebecca Pearse, whom I referred to earlier, were no longer working in their roles at Henbury Station. So they have gone. We are trying to get a handle on what happened there. Where have they gone? They set it up and, according to some, were the drivers behind the whole project. I could be wrong on that, but that is what I hear from some. So why did they go? What on earth happened there? It is quite extraordinary. Apparently, it was said that they were no longer working in their roles while an internal review of the company's operations was carried out. They had not even done anything yet. They still did not have a methodology, it was still unknown how the whole process was going to work and they were having an internal review a year later with what seems to be precious little, if any, progression down the track toward what on earth they were going to do to put to 'advantage' the $9 million of taxpayers' money that they have thrown into Henbury Station. It is absolutely extraordinary.

Then, in October, we had RM Williams Agricultural Holdings saying it was going to completely restructure its carbon conservation project model at the 5,000-square-kilometre Henbury Station in Central Australia. I have every reason to believe that that is indeed a correct statement. So what are they restructuring? We did not even have a plan in the first place. There was not anything there to restructure. They still had problems, they still did not know what they were going to do and there was still no methodology approved, so what on earth were they completely restructuring? It is gobsmacking that we have this situation a year later. This purchase is an absolute mess.

There is no strategic direction and there is no explanation to the parliament about what on earth is going on. According to this article—and as colleagues in this place know, we do not always take media at face value—the chief operating officer, Roy Richards, said at the time that the board felt leadership 'needed refreshing'. What needed refreshing? They were not actually doing anything!

The questions that need to be asked by the Australian people about this project are endless—absolutely endless. We have seen as recently as 11 November, again on the ABC, some commentary around the fact that there has been internal mismanagement. There was reporting that the man behind the project, David Pearse, who I referred to earlier, was dismissed as managing director a few weeks ago. It is just an absolute dog's breakfast.

More than a year after the government contributed $9 million of taxpayers' money, and without what seems to be any kind of due process, there is still no methodology. That is extraordinary. Talk about mismanagement from this Labor government and this ad hoc approach they have to government; there was no proper process in any way, shape or form to justify why $9 million of hardworking taxpayers' money should be put to this project. We have seen a year of mismanagement and a year of one mess after another when it comes to Henbury. Apparently we are now seeing a complete restructure—what on earth is going on?

It is about time that this government were accountable for the decision that they made to put in that $9 million—thank you very much; I am sure they appreciated the $9 million injection. But where are the benchmarks? Where is the accountability? Where are the requirements for delivery against those taxpayer dollars? Again, it is extraordinary. Mr Acting Deputy President Ludlam, I know I have used that word a lot in my contribution to night, but I tell you that it is nothing short of extraordinary.

With regard to the Carbon Farming Initiative under the clean energy legislation, Australian farmers have been excluded from selling carbon credits to Europe until 2018. But the deal that the government has negotiated allows Europe to have a monopoly selling carbon credits to us—to Australia—from 2015! So we are locked out of the European market until 2018 and they can get in here in 2015—who did this deal? Can anybody negotiate anything on that side of the chamber? It is just—

Photo of Helen KrogerHelen Kroger (Victoria, Liberal Party) Share this | | Hansard source


Photo of Fiona NashFiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | | Hansard source

I will take that interjection, thank you, Senator Kroger! No. They cannot. It is absolutely gobsmacking—absolutely gobsmacking!

I would ask the minister, and perhaps there is a fantastic answer to this—perhaps there is a brilliant answer which explains everything with great clarity—about the proper due process that was in place before the $9 million was contributed to Henbury. Perhaps there is a fantastic explanation of the absolute mess that seems to have been the management of this process for over a year now. Perhaps there is a fantastic explanation for the fact that it seems the government has not required any accountability from the organisation itself. Where are we? We still do not even have a methodology. We still do not have anything that is going to show how there is going to be any benefit to the taxpayer for the investment of the $9 million.

I did note somewhere in all of this that the property was going to go back to running cattle as part of their future processes. What on earth is going on? They took the cattle off and they were going to do X, Y and Z, and that never happened. Now they are talking about putting the cattle back on. But, 'We have taken the $9 million, thank you very much!' That was a very helpful contribution to the $13 million purchase. Where is the accountability? There is no accountability.

It is about time that this government came clean with the explanation about why this has been such a flawed process, came clean with an explanation of why this has got to the situation that it has and came clean with exactly how there is going to be the sequestration on this property. There is reporting of the fact that these arid soils will not actually do what they want them to do in terms of carbon sequestration in the soil.

So this is yet another dog from this government. I cannot believe that they could just fling a $9 million-bucket of taxpayers' money to purchase a property and not require any accountability—no benchmarks. Nothing. Along the way, no milestones and no nothing; just a bucket of money that they are happy to throw out into the ether in the cause of 'better environment'. It is just ridiculous.

Governments are supposed to be accountable. They are supposed to do a good job. They are supposed to practically and properly assess policy and make sure that the Australian people have value for the taxpayer dollar that the government is using. We have seen this government in an absolute mess. They have managed to turn a $70 billion-surplus into a $120 billion-black hole—the list is endless. But this is one of those things that have just slipped under the radar. Sure, it is not a huge thing; it is not one of the top issues for people living in Sydney, Adelaide, Melbourne and the capital cities. And perhaps they are not aware of this even across some of the regions. But it is yet another example of this government's absolute mismanagement; they simply cannot run the country, and it is about time they were accountable for the decisions that they make.

I challenge the minister to come forward and give the parliament a clear and concise explanation of exactly how that $9 million has been accounted for and what the process has been, because to date it is as clear as mud and it is becoming increasingly obvious that this government simply cannot run the country.

8:29 pm

Photo of Helen KrogerHelen Kroger (Victoria, Liberal Party) Share this | | Hansard source

I too rise to speak on the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and the six related bills.

Before I proceed, I would like to associate my remarks with Senator Nash's remarks. I am sure that there was no pun intended when Senator Nash referred to the fact that the government actually needs to come clean on the clean energy amendment bills! I thought it was quite inspired of her to draw that parallel!

What we have here is the most recent incarnation of the carbon tax. That is the carbon tax, of course, that we all know we were never supposed to have if we believed the words of the Prime Minister, Julia Gillard. This is the tax that, as we know, is costing Australians $9 billion a year. Frankly, the carbon tax has perhaps undergone more reincarnations than Lady Gaga—for those of us that may observe the various manifestations that she has taken over the years—and we all know that this carbon tax is barely a year old. Many of us will recall the last two sitting weeks of 2011, when the swag of carbon tax related bills were rammed and guillotined through this place. We had less than a week to debate that huge package of bills. Such was the importance and the essential necessity of these bills being passed at that time.

Here we are, barely a year later, and we have yet another amendment in the form of the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and the six related bills. There have now been some eight major changes to this act since it passed this place in November last year, and each modification to the carbon tax, as we know, is a reinvention. It is yet another example of Labor's deception. Every time we come back here to look at and deal with another amendment, it is yet another example of policy on the run and another chip away at the government's credibility. I see Senator Polley smiling, because she knows this is true. It is so hard to defend. She knows it is true.

But most concerning of all is that each modification and each reinvention provides further uncertainty for Australians, and that is the tragedy of what we face here today—uncertainty that, I have to say, I hear about daily in my electorate office from those that come through the door and express the concerns about the many issues that they face. We all recall that the first variation of the carbon tax came before it was even introduced. This alteration used taxpayers' money—the money of hardworking Australians—to bail out major companies like Alcoa and Energy Brix. On the very eve of the carbon tax being introduced—the very night before it was introduced—we saw significant changes.

Next up was the minimisation of the clean tech investment grant funds arrangement for small business. The money that could and should have been directed to local Australian SMEs was diverted towards big business. Unfortunately, this is typical of this government's attitude towards small business. Small business owners have grown accustomed to getting a bad deal from this government. We know that, at the end of the day, it is small businesses that have really paid a very big price under the manifestations of Labor governments—the former Rudd Labor government and now the Gillard Labor government.

Then the Clean Energy Regulator added business name after business name to its big polluter hit list, which I understand is now some 319 businesses strong—319 businesses across the whole of Australia. But I have to say that I would not have thought that education could be a pollutant. The list includes La Trobe University, but I could not see how that is possible. It includes a number of local councils across Australia, but providing municipal services does not seem so unclean to me, I have to say. It even selects Albury City Council as a top polluter, yet across the Victorian border we see that Wodonga does not make the list. This just does not add up. The hypocrisy of it just does not add up.

The carbon tax seeks to decrease emissions and promote what I have to say is an Orwellian phrase, 'clean energy'. In reality, its amended regulations have increased real emissions from landfill and pipelines by roughly a million tonnes. I am sure that every senator here has received representations from councils about the real effect that this is having on them and the real effect in the rollover that it is having on ratepayers in their areas. The Contract for Closure program was supposed to shut down power stations but has been abandoned. For the same level of emission reductions to be achieved, the carbon tax will have to significantly increase.

Then we come to this package of bills, which seeks to link Australia's carbon tax to the European carbon-pricing system and ditch the floor price that the government legislated in its original carbon tax bills. These are major structural changes to the original bills which this government sought within three months of the carbon tax's operation. What does that say about the homework that this government has undertaken in putting together these bills?

I will address the floor price issue first because, unfortunately, here we see yet another example of this government saying one thing and promising one thing but, as we know, doing another. Not only did Prime Minister Gillard promise, 'There will be no carbon tax under a government I lead,' but, after she broke that promise and introduced a carbon tax, she said there would be 'a price cap and a price floor to apply for the first three years'. The Prime Minister said, 'This will limit market volatility and reduce risk for businesses as they gain experience in having the market set the carbon price.' In fact, the government affirmed its commitment to the floor price on no fewer than 11 occasions. Even up until the week before the floor price commitment was scrapped, the government's climate change minister, Greg Combet, was out spruiking the importance of the floor price to the operation of the carbon tax. Now businesses, both large and small, are rightly asking: what happened to the importance of creating stability and certainty? The sad truth, we know, is that the government is all talk.

Prime Minister Gillard does not care about creating a stable environment. If she did, we would not be seeing this process but a stable environment, which businesses demand and need to operate successfully. The tax has done nothing more than create many, many headaches for businesses. I refer to one such business, one of many examples, called Techniques Incorporated, which is in my patron seat of Chisholm. This is a family-owned business. It was started in 1983 and it develops and manufactures quality dry powder food products—everything from cake mix to drinking chocolate. This business has been in the family for three generations, so this family has invested a lot in the effectiveness of this business. Everything that the family has is reliant on the productivity of this business.

But this business is feeling the pain of the carbon tax, no thanks to the local member and Speaker of the House, Anna Burke, who voted for it. Managing director Matthew Martin says that many of his suppliers—in particular, those who supply packaging and the like—have had to put up their prices as a result of the carbon tax. But much of that increase in pricing he has had to absorb, because he cannot pass on to his consumers the increased costs that the carbon tax has meant. I have to say that I fear it is only going to get worse, however, as this business has an electricity contract expiring towards the end of this year. One can only imagine the hike in electricity prices and the increased consequences of that. As many Australian businesses and families are now painfully coming to realise, the carbon tax has essentially become an electricity tax.

The major impact of the carbon tax is, as we know, on electricity prices at the moment. The industry predicts that this will rise by over 20 per cent in the 18 months from the introduction of the carbon tax. The government keeps trying to downplay this impact, but it is not working—not when people see firsthand the impact of the carbon tax when they are in receipt of their electricity bills. People around Australia are hurting, including another family in Deakin, one of my patron seats, the Juric family. Olivia and Tom Juric are in their 30s and have three daughters aged four and under. Last month they invited us into their home to share their concerns about the rising cost of living, compounded by the carbon tax. To the Leader of the Opposition, Tony Abbott, Mrs Juric expressed her concerns, concerns that she shares with all Australians—namely, the increasing cost of living and the increasing cost of necessities like electricity.

The Juric family do what they can to decrease their electricity usage, but they have a six-month old child and cannot take measures like turning off the heat. This family have been seriously let down by their local member and they want action on it so that they can have a chance of holding things together, managing to balance their budget and keeping their heads above water. Let me quote Mrs Juric, who so articulately summed up the way that she feels at the moment, and it certainly reflects what a lot of Australians are saying:

We explained to Tony Abbott that, as a single-income family with three children, it is not easy. And we don't expect it to be, but we do want to get ahead a bit. Tony Abbott assured us that a coalition government would repeal the carbon tax to make it easier for working families, just like us, to be able to get ahead and not be so worried about whether we can afford the bills.

This is what I tell the many constituents who contact my office worried about how they will be able to hold things together. A coalition government will repeal the carbon tax and return the stability and certainty that is so critical to the strength of our economy.

Our policy on this side of the chamber stands in stark contrast—

Senator Carol Brown interjecting

Senator Brown, I will take that interjection.

Senator Carol Brown interjecting

It actually helps to listen to your constituents. I would suggest that, if the member for Deakin, Mike Symon, did that, he might learn a thing or two about his constituents.

Senator Carol Brown interjecting

Photo of Ursula StephensUrsula Stephens (NSW, Australian Labor Party) Share this | | Hansard source

Order, Senator Brown, please!

Photo of Helen KrogerHelen Kroger (Victoria, Liberal Party) Share this | | Hansard source

As I was saying, our policy on this side of the chamber stands in stark contrast to the government, who today seek to not only backflip on the floor price but put the Australian economy in the hands of Europe. The idea of linking the Australian scheme to the European carbon trading scheme is almost akin to proposing that the Australian dollar join the Eurozone. It makes no sense to leave the future of Australian businesses in the hands of bureaucrats in Brussels, particularly at a time when there have been so many economic challenges faced on that side of the globe Europe.

Even Prime Minister Gillard has previously pointed out the issues and concerns in relation to the European scheme which she now seeks to link us to, saying:

We, of course, have learned lessons from overseas, where people have had emissions trading schemes for a long time, and having learned those lessons we will design this scheme so that it is not able to be used by shysters to make a dollar.

Clearly, Prime Minister Gillard has not learned anything. The government has gutted the Australian economy and is continuing to aim to destroy business confidence in this country. As my colleagues from the Nationals—and Senator Williams is here, listening avidly, tonight—have effectively continued to argue in debate, international emissions trading is a terrible deal for Australian farmers.

In terms of the Carbon Farming Initiative, Europe has been handed a monopoly in selling carbon credits to Australia from 2015, yet Australia is banned until 2018. This government has negotiated a monopoly that benefits other countries and that hangs our farmers out to dry. It is the final straw in what is already an intolerable situation.

The coalition cannot support this bill. It is a slap in the face for Australians. The public have already had to deal with the Prime Minister breaking her promise on the introduction of a carbon tax and then had to watch the various manifestations of the government as it continues to make amendments and changes to this toxic tax.

It has done nothing but create fear and uncertainty, whether it be for businesses or families alike. We know that, despite the carbon tax, Australia's emissions will continue to increase from 578 million tonnes in 2010 to 621 million tonnes in 2020.

The coalition calls on the government today to finally do the right thing by this country and scrap the carbon tax. It is pushing up electricity prices, notwithstanding the hysteria that we hear from the opposite side of the chamber, to levels that families like the Juric family will continue to struggle to afford. It is making life almost impossible for Australian manufacturers to do business at a time when they are already struggling to remain competitive, due to the high Australian dollar, and to keep their heads above water. The carbon tax, which this government keeps changing, is just downright confusing for so many and it also threatens jobs.

Australians did not vote for this carbon tax. In fact, they voted against it at the last election. The only political party that supported the carbon tax at the last election sit on those crossbenches over there.

The first order of business for a coalition government would be to repeal this crippling tax and to restore some certainty to the Australian economy. We are committed to achieving a five per cent reduction in emissions but without an economy-wide tax that costs more than $9 billion a year. I join my colleagues on this side of the chamber in condemning this piece of legislation.

8:47 pm

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

I rise to contribute to this debate on the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and six related bills that we should never, ever have had in this chamber. I am glad that you are in the chair, Madam Acting Deputy President Stephens, because of your consistent interest in the steel industry, with your many questions in this chamber.

Senator Carol Brown interjecting

Madam Acting Deputy President, there might be a problem with the microphones, but there is an echo in the background, unless it is Senator Carol Brown still going on for some reason. I am not too sure, but you might keep an eye on that, Madam Acting Deputy President.

Senator Carol Brown interjecting

It is an echo, I am sure! I would like to add something. If we raise the soil carbon by three per cent over 450 million hectares of agricultural land in this country, that would equate to 150 tonnes of CO2 per hectare. If we did that, that would actually neutralise Australia's CO2 emissions not by five per cent or 10 per cent but for more than 100 years. So we need to work with our farmers to ensure that we protect our soils, our greatest asset, because that soil has to grow our food. It is a health issue: if you do not have good, healthy soil, then you do not grow healthy food and you do not have healthy people. That is what it comes down to.

But let us look at this legislation before us. So often we heard from people such as Senator Wong and members of the government in the other place say: 'We must have a price on carbon to bring certainty to our nation.' Certainty? Here we are changing the laws on this carbon tax emissions-trading scheme on a regular basis. How uncertain is the government about this whole plan? We will come back to the start of this matter.

There are 150 members of the House of Representatives. At the last election, on 21 August 2010,146 of the 150 members of parliament elected in the other place went to the election saying that they would not introduce a carbon tax. A Greens member was elected, the member for Melbourne, Mr Adam Bandt, sadly, because of Liberal preferences to the Greens instead of to the Labor Party. I hope that changes at the next election; it certainly worked well at the Victorian election last time. There are two members of parliament up my way: the member for New England, Mr Tony Windsor; and Mr Robert Oakeshott, the member for Lyne. Mr Windsor said that one of the conditions to him putting his support behind Ms Julia Gillard to go into The Lodge was that she form a multiparty climate change committee. And that she did. The next thing you know is that we have the tax—

Government senators interjecting

Madam Acting Deputy President, those members on the other side are being very rude, aren't they? Hopefully, they will improve their behaviour as the night goes on. I will not be too ambitious. But I see that Senator Bishop is now there to keep them in order, which is a good thing.

Getting back to this legislation, I must correct something my colleague Senator Kroger said. Senator Kroger said that our emissions are going to go up to 621 million tonnes by 2020. Senator Kroger, figures out last week show that that figure has been underestimated. It is going to go up 16 million tonnes more than that. It is going to go up to 637 million tonnes by 2020. You underestimated how much our emissions are going to go up.

Photo of Helen KrogerHelen Kroger (Victoria, Liberal Party) Share this | | Hansard source

I am being generous to the government.

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

I can see that you are being generous to the government, Senator Kroger. We are going to go from 578 million tonnes in 2010 to 637 million tonnes in 2020, with a $9 billion carbon tax that is going to go up and up and up.

The reason the Greens have supported the removal of the floor price is that they are hoping it is going to escalate enormously and that that will save the planet. No, it will not. We know the Greens want to shut down every coalmine in Australia.

Photo of Lee RhiannonLee Rhiannon (NSW, Australian Greens) Share this | | Hansard source

That's not true.

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

It has been your policy to shut down the coalmines and go to all renewable energy. It is amazing. I will repeat those figures: this year China will burn 3.1 billion tonnes of coal, 434 million tonnes more than last year. They will increase their consumption of coal more in one year than Australia produces in total. We produce 421 million tonnes of coal for export and domestic use. China will increase their consumption of coal by more than the total that this nation produces. That is a fact. And there will be no reduction in CO2 emissions around the world. In fact, figures show that China will go from 10.3 billion tonnes this year to a massive 17.9 billion—not million, billion—tonnes by 2020. They are going to go up by 7.6 billion tonnes. We are going to go up by 59 million tonnes, from 578 million to 637 million tonnes, and somehow we are going to reduce the CO2 in the atmosphere. That simply will not work.

In three years time, if this government is still in place, we will go to an emissions trading scheme. Let me explain what an emissions trading scheme is. It is a scheme where wealthy people sell fresh air to wealthy people and poor people pay for it. I will repeat that: an emissions trading scheme is where wealthy people sell fresh air to wealthy people and the battlers pay for it. That is all it is, and somehow it is going to reduce our CO2 levels. No, it is not.

It is quite amazing that those on the other side have tampered with this legislation from day one, have been all over the shop, never had a mandate to bring it in. What gives four out of 150 members of the House of Representatives a mandate? They did not have a mandate. Those four—the Greens member, Mr Wilkie, Mr Windsor and Mr Oakeshott—were just complicit in this government betraying the Australian people. But people will be able to square the ledger on that come the next election in those seats, as I always say. The seats do not belong to the politicians, they belong to the people. You betray the people and they will square it up for you at the next election.

When this scheme came out I remember the Prime Minister saying she was going to wear out her shoe leather travelling here, there and everywhere. I remember writing to the Prime Minister the day after she said she would visit every Australian family who wanted to know more about the carbon tax. She was going to wear out as many pairs of shoes as it needed to get the message across that the carbon tax was just what the country needed. So I wrote to her inviting her to New England, the heartland of the turncoat Independent, Mr Tony Windsor. And—surprise, surprise—I never even received a reply from the Prime Minister, even though she was going to talk to every family who wanted to know about the carbon tax. It turns out the Prime Minister did venture out for a few days but scurried back into her office very quickly when she got a taste of what the Australian people actually thought of this.

The tax is designed to increase electricity prices. I have just been part of the Senate Select Committee on Electricity Prices. We have seen electricity price rises. People have turned off the second fridge. People have turned down the thermostat on the hot water system from 75 degrees to 60 degrees. People are already saving because of the cost of the infrastructure, the poles and the wires, needed to accommodate the huge demand on a hot day, for example, when air conditioners are going flat out. However, most of the time the demand is not at that extreme level. But, as I said, electricity prices have already gone up. We saw the 19 per cent increase on 1 July in New South Wales, half of it from infrastructure after 16 years of neglect by the Australian Labor Party government in New South Wales. That is the government we are hearing so much about now that had a huge interest in grazing properties that just happened to have coal underneath them. What sort of cattle did they run? 'Ones that eat grass.' Were they beef cattle? 'I'm not sure.' Were they dairy cattle? 'I'm not sure.' Were they on agistment? 'I'm not sure.' Did you talk to an agronomist? 'A what?' Now we have seen it all!

In 16 years of neglect from that mob, we have seen infrastructure falling apart and hence the extra cost brought in by IPART, the independent pricing authority in New South Wales. So why is this floor price being removed? Is this about the certainty that was promised to the Australian people? 'We must have a price on carbon for certainty,' they were told. But, hang on—when we finally get it through both houses, where they had no mandate to do that, we are now going to change it. Why are we changing it? Well, we know why the Greens are supporting it: because they want to see the price go up and up and up. It is as simple as that.

The fact is we cannot fool the Australian people. They know why their cost of living is going up. I will quote from some of the emails my office has received. One is from Nicola of Tamworth, who says: 'My husband and I are both against the carbon tax. If I had known Tony Windsor was going to side with Labor and the Greens I would never have voted for him. I have heard many other people in our electorate say the same thing. As far as the carbon tax goes, I think the government is rushing into it. The government is very hypocritical. They want a carbon tax but they reap the benefits of taxes from coalmining.' What a good point. The government say, 'Let's stop burning coal, burning fossil fuels,' but they take the taxes from the coalmines.

Another email is from Denise who says: 'I am in the Lyne electorate and continually feel disappointed with the representation of Rob Oakeshott as our elected federal MP. Regardless of his views, I cannot understand why he gives support to a leader that literally lied to the Australian people re the carbon tax. Now is not the time for another tax.' I could not agree more, Denise.

Why didn't the Prime Minister visit Nicola and Denise and their families? Why didn't their local members, Tony Windsor and Rob Oakeshott, listen to their concerns? I did a poll through the seats of New England and Lyne on the carbon tax. In New England I found 89 per cent of the returned ballot papers were against the carbon tax; in Lyne it was 87 per cent. Yet at election time people are told: 'Vote 1 Tony Windsor, the people's representative'. What, when 89 per cent of some 6,000 returned forms in the poll say they didn't want it? That is not being the people's representative.

The Hunter region has been hit with job losses. I know that Labor would like to forget the Kurri Kurri aluminium smelter which closed and cost over 350 jobs. The company conceded that their problems stemmed from the high dollar, low metal prices, increasing energy costs and the carbon tax. There was no sign of the local federal member there, Mr Fitzgibbon. They have to ask his boss why she was putting 350 of his constituents out of work.

I want to refer to the transport industry, our truckies. Under this crazy plan, on 1 July 2014 we are going to impose almost another 7c a litre diesel tax on our truckies—about $515 million. This government in its desperate state of finances because of its reckless spending and waste, has already added around $500 million a year road-user charges or diesel tax to our truckies. Now it is going to add another $500 million—that will be $1 billion a year that our truckies will have to pay as an extra diesel tax under this government. The Transport Workers Union's Mr Sheldon described it—and I know that my colleague Senator Cormann was in the inquiry—as a 'death tax'. How many people on that side are in here because of the Transport Workers Union? Mr Sheldon said it was a 'death tax' that would 'sweat' the trucks and 'sweat' the drivers, meaning working the drivers harder and causing neglect of safety and the upkeep of their rig. That is what the Transport Workers Union think of the carbon tax. Why aren't you removing that?

Truckies have already endorsed Euro 4 motors, a new design in motors that is basically pollutant free and very clean. There is one problem with them: they use about 10 per cent more fuel. The amount of fuel burnt in the motors has a direct effect on how much carbon dioxide is emitted. They actually burn 10 per cent more fuel so they are putting out CO2but when it comes to sulfur, lead and carbon monoxide, they are extremely clean. And with unburnt diesel you do not see the black smoke coming out of the stacks when you are pulling up the hills these days, just a little heat glow. So they have done their bit and, because they use 10 per cent more fuel, they are actually paying, in effect, more fuel tax. They are paying their bit to clean up the environment and so this government is going to slam another half a billion dollar diesel tax on our truckies. It was not long ago that we looked at legislation for 'safe rates' to help our truckies, yet between the carbon tax and the extra road-user charge, this government will cost our truckies, by 1 July 2014, an extra $1 billion a year tax.

On my travels in the Hunter Valley I was speaking to Martin Transport—yellow Kenworths, B-doubles, double-decker cattle and four-decker sheep—well-known carriers who do a great job. It is going to cost that business $1 million extra fuel tax a year. One million dollars to a stock transport company doing their thing, to shift stock around our country to the abattoirs, around the farms, wherever they are taking them—just a lazy $1 million! What are they going to do with that cost? They are going to pass it on to—who? They are going to pass it on to the farmers, the cow cockies, the graziers or the abattoirs. The abattoirs are already finding it hard to compete with their competitors in America with our high Australian dollar brought about by high interest rates in this country brought about by ridiculous stimulus spending at a time when the Reserve Bank was raising interest rates, another stupid move. So they have got to compete and there are extra costs compared with their competitors. Whether it be abattoirs exporting cattle to South Korea, Japan or wherever, they have to compete against American beef producers and processors who do not face these costs. This is what we are doing and that is why this whole carbon tax plan is so ridiculous.

In summary, I would just like to say that there was never ever a mandate to introduce this tax. A hundred and forty-six of the 150 members of the House of Representatives went to the last election saying that they would not bring in a carbon tax. Four out of 150 is no mandate. I suppose one is a Green so that gives them a mandate, and then of course you have got the others, Tony Windsor and Rob Oakeshott, going along with them, listening to advice of that great economist who is not even a scientist, Ross Garnaut. What a great thing to have. Here is someone on a scientific issue as a key adviser to government, who is an economist not even a scientist, on a climate change policy. That is an irony in itself.

I would just like to reaffirm what opposition leader Tony Abbott has said. The next election will be a referendum on the carbon tax and, if the coalition is elected to government, as I hope we are, then that carbon tax is going. It is a $1 trillion tax. That is a lot of noughts—$1 million is a lot of money, and $1,000 million, $1 billion, is a lot of money. But $1,000 billion is a huge amount of money. It is a $1 trillion tax on our economy in today's money, by the year 2050, while the rest of the world are doing very, very little.

You are not going to change the CO2 levels. Ours are going up. We do not have a tent over our nation, but just a tax so that you can compensate people for the price of electricity going up—we will put the price up and then we will compensate you for it! But you have not compensated business. When will people in this place on that side of the chamber learn that it is the business sector that drives our nation's wealth, and the more you strangle that business sector the more you strangle the living standards and prosperity of our nation? That is exactly what this carbon tax is doing and, as for the removal of the floor price, the whole scheme is ridiculous and the sooner it goes the better.

9:06 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

The Labor Party are in complete chaos over the carbon tax that was imposed on them by the Greens as the price for government. The reason we are debating these bills tonight is because the Labor Party are in panic mode. The Labor Party are in panic mode about the impact of the carbon tax. It only came into effect about five months ago but here we are: in the last five months we have had significant changes to a tax which was supposed to provide certainty.

Once the carbon tax was legislated it was going to provide certainty to business.

The Labor Party have finally cottoned on that the carbon tax is deeply unpopular across Australia. People across Australia understand that this is a tax which will push up their cost of living because it will push up their cost of electricity and it will push up their cost of gas. This tax will push up the cost of doing business in Australia, which will make us less competitive internationally at a time when, quite frankly, we should be focused on making ourselves more competitive internationally. It is a tax which is doing nothing for the environment. Far be it from being a tax which would lead to reduced global greenhouse gas emissions, it arguably will actually lead to increases in global emissions.

This carbon tax is an absolutely incredible broken promise by the Prime Minister. The Prime Minister made the most emphatic promise five days before the last election. Staring down the barrel of a camera she told the Australian people in the shadow of a difficult election for her: 'There will be no carbon tax under a government I lead'—a promise which was supported and endorsed by every single one of the Labor senators sitting on the other side of the chamber. It is a broken promise. It is bad policy for Australia. We will scrap it. As Senator Williams has just said, the next election will be a referendum on the carbon tax. If we do get the confidence of the Australian people, we will scrap this bad carbon tax when we are in government.

This Labor-Greens carbon tax is, as I have mentioned, the world's biggest, most expensive carbon tax. It is bad for families, bad for business, bad for jobs, bad for international competitiveness and bad for our economy. In fact, it is even bad for the federal budget, because the government has spent so much on trying to deal with the political implications of introducing a carbon tax. Even the federal budget is worse off as a result of spending more than the revenue it will raise. Of course, it is even bad for the environment.

According to the government's own modelling, the cost of electricity is expected to go up, the cost of living is expected to go up, the cost of doing business is expected to go up and investment in key sectors of our economy is expected to be lower than it would be without the carbon tax. Our economy is expected to grow less strongly than it otherwise would and not just by a little bit but by $1 trillion in today's dollars between now and 2050. People might say that 2050 is a long time away. Yes, it is 38 years away. But when you judge the merits or otherwise of economic policy proposals you have to look at the long-term implications. What direction is a particular policy taking Australia into? Over the next 38 years, according to the government's own modelling, the carbon tax and the emissions-trading scheme which is to follow will take Australia in the wrong direction because it is making us less competitive internationally because it will actually result in slower and lower economic growth to the tune of $1 trillion in today's dollars between now and 2050. To put that in perspective, that $1 trillion represents the whole GDP for the whole of Australia for a whole year. I have said it before and I will say again that effectively what the Labor Party and the Greens expect people across Australia to do between now and 2050 is to work a whole year for nothing to pay for the impact of the carbon price on our economy. They expect people to work a whole year for nothing in order to pay for this mad tax.

Critically, this carbon tax is imposing a cost on business in Australia which is not faced by businesses in other parts of the world which businesses in Australia are competing with. Every time a higher-emitting business in another part of the world is taking market share away from a more environmentally efficient, lower-emitting business in Australia not only does the economic activity and the jobs go overseas but the emissions go overseas too. On many occasions and across many industries when you have higher-emitting businesses in other parts of the world—where for the same amount of economic output the emissions intensity is going to be higher—then what you are actually doing is increasing global emissions as a result of the way this Labor-Greens government has structured this carbon tax here in Australia.

Labor and the Greens do not like it when we refer to their carbon tax as the world's biggest, highest and most expensive carbon tax, but it is. Let me just run through some facts and figures. The Australian carbon price is manifestly the world's highest on a per tonne of CO2 basis. It is more than 2½ times higher than the current EU ETS price. The Australian price starts at $23 and the European Union, which has the world's largest emissions-trading scheme at present, has a price of about A$8.60 right now. The Australian price is going to go up to $20.15 and then $25.40 a tonne in the next two years and then up to $29 a tonne, whereas the European Union price is forecast to go up to $11.20 and $13.60 per tonne respectively. That is according to forecasts published by analysts at Reuters reported back in October 2012.

The tax take per capita here in Australia will be the world's highest whether compared with EU experience to date or looking at forward projections. The transition period for Australian industry to adjust will be the world's shortest. The EU emissions-trading scheme transition is more than 20 years. Hundreds of Australian firms are now due to pay the full carbon liability from year 1. Not a single European firm will have to buy all of its permits until 2027. The level of assistance to trade exposed industry in Australia is far weaker than that in the EU scheme. The safeguards for jobs in manufacturing are far inferior in the Australian scheme compared to those applicable in the European ETS.

The cost burden on Australian exporting and import-competing industries will be the world's harshest. That is here in Australia and it will be much higher than that applying in the EU ETS. And tax take does, of course, matter because a firm in Australia with an emissions profile of one million tonnes of CO2 per annum will pay $72.5 million from 2014-15, while its identical European equivalent will pay just $9.4 million. The Australian carbon tax will be much higher than the EU price for the next three years—we know that—and I have just gone through the figures there. But the tax take from the Australian scheme is and will be the world's highest.

Over the next three years, 22 million Australians are in fact paying five times as much carbon tax as 500 million Europeans over the same period. How can that be a level playing field? How can that be seen to be fair? Based on revenue estimates contained in the government's own fiscal tables contained in the Clean Energy Future package of July 2011—which I am referencing—and even after deducting the value of industry assistance, the Australian scheme is expected to raise nearly $49 billion in tax revenue over its first 6½ years. This compares with $4.9 billion in tax revenues generated by the European ETS since its commencement in 2005. In other words, the Australian scheme will raise 10 times as much revenue as the European ETS in its first 6½ years and this is despite the fact that the European population is 23 times larger than Australia's population and European GDP is 14 times larger than Australia's.

A couple of weeks ago, the Minister for Climate Change and Energy Efficiency, Mr Combet, thought he should go out and boast about the fact that 'America’s east coast emissions trading drives 10 per cent pollution cut by 2018 and clean energy investment'. He runs through a report which supposedly has indicated that annual CO2 emissions for the three-year period 2009-2012 across 10 states on the north-east coast of the US were 23 per cent lower than for the preceding three-year period. Incidentally, there is actually no information in that report as to a causal link. There has been somewhat lower economic activity across large parts of the US than would otherwise have been expected. Arguably, when you have less economic activity than you thought you would have then your emissions are going to be less than you thought they would be.

But leaving that point to one side, there is a fact about the carbon price for that particular scheme, the Regional Greenhouse Gas Initiative, as it is called, being an emissions trading scheme operating in 10 states in the north-east of the United States which the minister pointed to as a great success. Guess what the carbon price is in that scheme? It is less than $2 a tonne; $1.90 a tonne is the carbon price in that particular scheme. It does not even apply to manufacturers and other industrial plants. A whole bunch of people are actually excluded from that scheme. If Minister Combet thinks it is such a fantastic scheme and that that scheme is evidence that in other parts of the world they are doing things that we are doing here in Australia, why not adopt that scheme with the $1.90 per tonne carbon price if he thinks it is so fantastic while excluding all of manufacturing and all of the industries that are currently captured in the Australian scheme? Because Minister Combet does not mind making Australian manufacturers less competitive than the competitors we have got across the US, Europe, China, Russia, Mexico or Brazil. He does not mind and he does not worry about putting more lead into Australian manufacturers' saddlebags, but then he comes out with dishonest spin like this.

Here we are now in this situation where clearly things are not looking good and so the government comes up with this plan: 'Oh well, given that the carbon price is not likely to be $29 a tonne by 1 July 2015, when we plan to go to the emissions trading phase of the scheme, we'd better get rid of the floor price because the floor price is going to be very embarrassing for us. When we have a floor price of $15 a tonne at a time when we expect that the carbon price would be $29 a tonne and the actual price across Europe is probably going to be below $10 a tonne, it's going to be very embarrassing for us. But not only that as we're going to link our scheme to the European scheme holus-bolus and that's going to get rid of any sorts of competitiveness considerations.' That is the government's argument—but it doesn't because the European scheme was fundamentally different from the scheme that has been put forward here in Australia. For starters, in the European scheme the transition period for industry adjustment was very different. Permits will be sold in the Australian scheme from the first year while the auctioning of permits will not commence in the European ETS until probably 2015, the 11th year of the scheme. There are approximately 11,000 European firms with a direct carbon liability under the EU ETS and approximately 400 to 500 Australian firms that will have a direct liability. Tens of thousands more will face higher electricity and fuel costs. How many of those 11,000 European firms, whether trade exposed or not, will be required to purchase permits covering all of their liability in 2013? The answer is none, not a single one.

Of course, there are a lot of other inconsistencies. The European scheme provides assistance in the form of free permits to at least 151 trade exposed sectors. The Australian scheme provides such assistance to around 45 activities; 90 per cent of Australian minerals exports by value will receive no shielding; 60 per cent of Australian manufacturing exports will receive no shielding. In Europe the wine industry is considered trade exposed while the Australian sector is not. Why? In Europe sugar producers are considered trade exposed while in Australia they are not. Why? Why is the European gold industry trade exposed but the Australian sector is not? In Europe why are the jobs in these and 120 other European industry sectors worthy of protection from the carbon price but the jobs in the Australian sectors are not? Why do European manufacturers of watches, ships, pleasure crafts, sporting goods, brooms, brushes, chemicals and fertilisers who are trade exposed get free permits but manufacturers of these goods in Australia do not? Why are European manufacturers of work wear, outer wear and underwear deserving of free permits under the European scheme while their competitors in Australia are not under the Labor-Greens carbon tax? Job safeguards in the Australian scheme are manifestly far inferior to those in the European ETS. The EU scheme will provide assistance to manufacturing firms employing 14.6 million Europeans. That is around 42 per cent of EU manufacturing jobs. The Australian scheme will provide shielding for firms that employ, wait for this: 93,500 Australians. That is less than nine per cent of Australia's manufacturing workforce of just over one million.

The cost burden for average firms in Australia will be the harshest in the world. The small number of EU industrial firms that do not receive trade exposed treatment will face a far lower cost burden than their Australian counterparts. Non-trade-exposed industrial firms in the EU will receive 80 per cent of permits free in 2013 and 30 per cent of permits free in 2020 and will only buy all their permits in 2027. In contrast, non-trade-exposed industrial firms in Australia will buy permits covering 100 per cent of their liability from the first day of the scheme.

There are many, many other problems, not least of which is that the European scheme actually expressly excludes, for example, methane gases from coal production. So we have the Australian government linking the Australian carbon price to the European scheme and saying, 'Oh, well, that makes sure that we're all working on the same level playing field.' But it is not true because, under the linking arrangement that this bill is trying to legislate, we will have the perverse situation where Australian coal producers will be paying the European carbon price equivalent at the time that the linking happens while European coal producers will not because the European emissions trading scheme does not even cover methane, the greenhouse gas known as a 'fugitive emission' that is emitted during the mining of coal. So, if the government's Treasury modelling is correct and the carbon price is indeed $29 per tonne in 2015-16, Australian coal producers will be paying more than $1 billion annually in carbon costs whereas European coal producers will not pay a single euro for their emissions. On the contrary, most of the high-cost European coal producers will be receiving public subsidies. This is a complete joke, yet this is what the government has signed us up to.

Here are a few other bits and pieces. Last week, Barclays described the European CO2 scheme as a 'regulatory omnishambles'. That is what the Gillard government is signing Australia up to: a regulatory omnishambles. The Senate should also know that the recent assessment by the carbon market advisory firm RepuTex is that recent policy decisions taken in Brussels to prop up the European carbon price will increase the cost of the carbon price to Australian companies by $3.7 billion. Of course, the European bureaucrats in Brussels can change their scheme and impose additional costs on Australian businesses overnight without consulting us, and we think it is a good idea. We do not think it is a good idea. This carbon tax is a shambles. It is bad for Australia, bad for Australian families, bad for Australian small businesses and bad for the Australian economy. It makes us less competitive internationally while pushing up the cost of living and, at the same time, does absolutely nothing to help reduce global emissions. It should be scrapped.

9:26 pm

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party, Minister for Agriculture, Fisheries and Forestry) Share this | | Hansard source

I thank the members who have contributed to the debate in the Senate, particularly members of the Senate Economics Legislation Committee, chaired by Senator Bishop, who delivered the report on the bill at the end of October. It is not something that you generally thank committees for in a summing-up speech, but I think that they made a significant contribution and added to the debate.

More broadly, and not unexpectedly, we have heard from the opposition nothing but a series of false and misleading claims as part of their ongoing scare campaign. One would have thought that by now they would be running out of puff in their scare campaign but, no, they continue to harp on with their scare campaign. One of the key claims we have heard repeated here tonight is that the world is not acting, which we have heard before. It is a broken record and one would think that they would play a new tune. Countries in our region are not acting and Australia is going it alone is the refrain that they use, along with the one that we are the only emissions trading scheme in the world.

How far from the truth can that possibly be? The reality is that, by next year, around 1.1 billion people will be living in a jurisdiction with a carbon price. Since we introduced the carbon price last year, more and more countries around the world are saying that they too are moving to put a price on carbon, just like Australia. It is reinforced that South Africa, China, Korea, Japan will, and the list goes on. The eighth biggest economy in the world, which is California, has already held its first auction and, by 2015, the scheme will be the third largest in the world, covering 85 per cent of emissions—an extraordinary achievement. This is on top of the carbon price schemes already operating or being developed in nine US states and four Canadian provinces, covering nearly 90 million people. Next year, our biggest trading partner, China, will launch its regional emissions trading scheme. It will cover over 200 million people and over 2,000 Chinese businesses. All of these developments come after the European Union and New Zealand introduced emissions trading schemes, not last year or the year before but in 2005 and 2008 respectively.

We are acting with the world. We are not ahead of it; we are not behind it; we are doing our fair share to reduce emissions. That is an important statement to dwell on for a moment. It is action that we are taking in the best possible way—that is, introducing a price on carbon with a fixed period followed by an emissions-trading scheme because the markets will operate most effectively to reduce our carbon emissions.

I am taking some time with this summing up speech to debunk some of the misleading and false assertions by the opposition, because they think if they say it over and over again it must be true. Well the more they say it the further from the truth it is becoming. It is no longer credible for the opposition to say that we should not act. The world is acting and the community, by and large, expect us to act and we are acting. We are acting with the world and already you can look at our record. Two weeks ago the IMF reported on our economy and commended our well-designed carbon price. Last Monday, the International Energy Agency delivered an in-depth review of Australia's energy and climate policy, welcoming the carbon price and Clean Energy Future plan.

I want to deal with the coalition claim that the EU will set the price and that this is an abrogation of sovereignty to the EU. The coalition do not seem be rationally debating arguments; they seem very close to arguments that only people on the outer fringe of these debates—extremists—would come up with. Quite frankly, it is surprising that they would hold it. Linking to international carbon markets, including the EU, allows market forces to set the carbon price. Trade in carbon is no different to trade in any other commodity we will import or export. We cannot set the global price for coal or oil. These prices are set on the international market. Similarly, global carbon prices are set by the international market and the legislative and economic decisions from all countries that trade in carbon will influence those prices. The important thing is that the linking arrangement now allows us to be part of that broader global carbon market, which will only grow larger into the future.

Again, the coalition are fundamentally at odds with the views of the business community about these amendments. Again, the opposition put themselves on the fringe, away from what would be, I would have thought, their natural constituents. Far be it from me to say it, but it might be a view where they feel quite comfortable to be on the fringe and that far away from their business community links. If that is the case, then business understand the imperative of setting a price on carbon, driving for a low carbon future, ensuring that we have a clean energy future and participating in markets dealing with carbon. Business understand these changes will deliver benefits for Australian industry and for the environment. They respond to calls from peak business and industry groups not to have a floor price when we move to an ETS and to provide access to the largest carbon market in the world.

That is why business groups and companies like the Energy Supply Association, TruEnergy and Virgin came out in support of this announcement. The coalition claim that these changes are bad for the Carbon Farming Initiative. When key carbon farming participants like CO2 Group and Greenfleet strongly support these changes, it is extraordinary that those opposite put themselves on the fringe again. Be that as it may, I guess when you are wedded to a negative argument you cannot find room to move.

This is another one of those myths that those opposite peddle. This is the emissions-trading scheme design the Howard government proposed and now they reject it for politics over policy. Again, if you look at the history of this, it was in 2001 that we started talking about this. It was under the Howard government that ABARES did work in this area, very important work, about how to develop an ETS and design a system. With an agreement to link a fully flexible emissions-trading scheme from 2015, this is in fact the very same policy the coalition took to the election in 2007. I suspect some in the opposition would have many statements of support for an emissions-trading scheme, and yet what we find now is a complete policy backflip. Bold-faced? Be that as it may, clearly the community recognise that it is a policy backflip from those opposite.

In conclusion, if you look at the really short issue—that is, Australia's carbon price is part of a global action to tackle climate change—it is a very simple proposition. We are participating in and playing our bit in the global action to tackle climate change. This bill represents an important step towards establishing a common carbon price internationally. This will ensure Australia's industry is competitive as the world reduces emissions. By contrast, the Leader of the Opposition would do nothing to tackle climate change, thereby increasing the cost to business by barring links to international carbon markets and exposing Australia to trade retaliation from countries reducing their emissions. The fact is that the carbon price has been in place nearly five months and contrary to all the bogus claims by the Leader of the Opposition, unemployment is low, inflation is low, the economy is outperforming every other developed economy and investment is at record levels. Bit by bit the claims the coalition made in their hollow scare campaign are shown up for what they are.

I cannot understand why they are not embarrassed but maybe they have more gall than I. By this time I would be trying to slip out the back door on this issue but those opposite remain steadfast. Can I say I take my hat off to someone who in the face of that remains so steadfast.

This government is going to do its fair share to protect against the dangerous impacts of climate change. This bill is part of that action. It is economically and socially responsible. It will ensure that emissions are reduced at the lowest cost and that our economy can transition to a clean energy future. Can I again thank all of those who participated in this debate and commend the bill to the Senate.

Photo of John HoggJohn Hogg (President) Share this | | Hansard source

The question is that these bills be now read a second time.