Senate debates

Wednesday, 26 March 2014


Environment and Communications References Committee; Report

6:19 pm

Photo of Lin ThorpLin Thorp (Tasmania, Australian Labor Party) Share this | | Hansard source

Pursuant to order, I present the report of the Environment and Communications References Committee on the Direct Action Plan, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

I am grateful for the opportunity to speak today as the chair of the Environment and Communications Committee on the inquiry and report into the government's Direct Action Plan. This is an important report because it addresses what may be the single greatest environmental issue facing the planet today—climate change.

Climate change is an issue that will test the mettle of the human race and our ability to work together to find solutions to reduce carbon emissions and ensure we pass on a healthy planet to our children, our grandchildren and all the generations that will follow. While there is enormous value in individual and group efforts to effect change in local areas, the heavy burden of responsibility for solving this problem must lie with governments. There is absolutely no doubt that governments across the globe must act—and we must act now.

Over the past months the Environment and Communications References Committee has heard from experts across the country about the government's proposed climate policy, direct action. We did not hear just from environmentalists, but also from academics, investors, scientists, doctors, farmers, economists, think tanks, business groups, and climatologists. And almost to a person, they told us the same thing: direct action is expensive, inefficient, and, more than likely completely unable to address climate change in any meaningful way. In fact, not one witness was willing to support direct action as a credible stand-alone means of addressing the climate change crisis that may soon be on our doorstep.

Many told us that direct action is little more than a government gift to polluters and that it will do little, if anything, to reduce Australia's emissions. Others pointed out that direct action throws away the well-established legal and ethical principle of 'polluter pays' in favour of setting up a taxpayer funded slush fund for big emitters. This approach is particularly bizarre when you learn that environment minister Greg Hunt wrote an award-winning graduate thesis entitled A Tax to make the polluter pay, which championed this very cause. Pollution is a waste output of business just like any other. Just as we would not expect someone else to pay to dispose of the skip bins of rubbish that a construction company might generate, it is quite unfair to require the taxpayer pick up the tab for big business and their carbon outputs.

The committee also heard that Direct Action is riddled with design issues. Establishing baselines will be difficult and administratively onerous, not to mention the fact that it will be virtually impossible to determine if a project would happen anyway, potentially opening up the scheme to be gamed by companies who could charge the taxpayer for emission reduction projects they were going to undertake anyway. Perversely, companies that have acted early to invest in emissions reductions may be penalised because they will be starting from a lower baseline.

Also, many witnesses pointed out that soil carbon sequestration, which is the major abatement strategy in Direct Action, is highly inefficient. In a hearing in Canberra, the CSIRO confirmed that it is likely to take a land mass two-thirds the size of Australia to achieve the sort of abatement the government says it will get from soil carbon. Other witnesses pointed to the extremely short time horizons as a threat to business confidence and investor certainty. For these and many other reasons the report recommends that the centrepiece of Direct Action, the emissions reduction fund, is fundamentally flawed and, thus, should not proceed. Another overriding message we got from submissions to the inquiry was that Direct Action will be an expensive and unnecessary burden on the taxpayer.

To meet our commitment of reducing Australia's carbon output by five per cent by 2020, the government has allocated $1.55 billion over three years, but independent work done by SKM MMA and Monash University shows this falls $4 billion short, even using the most generous modelling parameters. The government has been very clear that there will be no more money in the bucket, so it is virtually a foregone conclusion that the government will fail, probably spectacularly, to meet our emissions reduction target. This is not surprising when you consider evidence from the Climate Institute that, if other countries were to follow the Abbott government's policy lead, the world would be on track for a catastrophic rise of up to 6.5 degrees Celsius by the end of the century. For Australia, this would mean a five-fold increase in droughts in southern Australia, the virtual destruction of the Great Barrier Reef, forced abandonment of many coastal communities, and a 90 per cent reduction in agricultural production from the Murray-Darling region. In fact, the government has virtually admitted failure already by removing the national cap on carbon emissions, because Mr Hunt and Mr Abbott both know that, if no goal is set, it cannot possibly fail to meet it. This is an outrageous omission and one which the committee strongly recommends be rectified immediately.

On the subject of targets, the committee was also convinced by the weight of evidence toward greater reductions, and supports the adoption of the targets recommended by the Climate Change Authority, namely that Australia's 2020 emissions target be set at 15 per cent below 2000 levels in addition to the four per cent carryover from the first commitment period of the Kyoto protocol. So it is clear that Direct Action is undeniably the wrong way to go about effecting meaningful carbon emission reduction.

What did the experts recommend as the most effective solution? What has been most notable about the inquiry is the consistency of evidence we have heard from witnesses in this regard. Again and again the committee heard that the single most effective and efficient means of achieving carbon abatement is to put a price on carbon. Carbon pricing provides a positive incentive for businesses and consumers to change their behaviour and embrace low-carbon alternatives. It provides a boost to renewable industries and encourages investment in low-carbon technologies. It also encourages business to invest in areas that will ultimately make them more efficient and profitable as energy costs grow in the future.

Of course, it is not just the witnesses and submitters to the inquiry who understand the importance of pricing carbon. There are currently more than 30 countries across the world and many subnational jurisdictions that already have a price on carbon. These schemes cover the enormous number of 880 million people. In fact, while countries across the globe are embracing market based mechanisms to address this global challenge, Australia stands alone as the only country in the process of dismantling carbon pricing. Not only that; the Abbott government is also systematically trying to abolish each and every tool Australia has to protect ourselves from the potentially devastating impacts of climate change. This irresponsible action is not supported by today's report. Instead, it unreservedly recommends that Labor's clean energy package remain and that Australia move to a fully-flexible carbon price under an emissions trading scheme on 1 July this year.

The report notes that Labor's package 'presented a comprehensive set of policy instruments to reduce Australia's carbon emissions, invest in renewable energy and provide assistance for businesses and households to transition to a clean energy economy'. It also recognises the 'significant time and effort' that was spent on 'ensuring that Australia adopted an effective and credible way to address climate change in the long-term'. The committee concurred with many witnesses that the institutions that sit under the clean energy package should be maintained. This includes the Climate Change Authority, which is a crucial means for the government to obtain independent and transparent advice on climate policy. The committee was also convinced by the arguments of witnesses that the profit-making Clean Energy Finance Corporation needs to stay. This organisation has clearly succeeded in its goals of encouraging private sector investment in the renewables sector and reducing carbon emissions while still returning a healthy multimillion-dollar profit to the Australian taxpayer.

Likewise, we need to retain funding for ARENA, and the Renewable Energy Target must be maintained in its current format. If the government persists in its perverse determination to adopt an expensive, inefficient policy solution at the expense of the considered, effective and forward-thinking policy framework that we already had, it risks relegating Australia to become an environmental and economic backwater, unable to compete in the low-carbon global economy of the future. It also threatens not only our international credibility but our ability to take a leadership role in the global climate change response. This is an alternate future that we simply cannot risk and I urge the government to consider the findings of this inquiry very seriously.

Photo of Cory BernardiCory Bernardi (SA, Liberal Party) Share this | | Hansard source

Before I call you, Senator Ruston, I understand that informal arrangements have been made for you and Senator Milne to speak for five minutes to enable other committee reports to be tabled.

6:30 pm

Photo of Anne RustonAnne Ruston (SA, Liberal Party) Share this | | Hansard source

I rise to speak on the Environment and Communications References Committee report into the Direct Action Plan. While we utterly reject the recommendations of the Labor Party and the Greens in this report, one of the things that has been most disappointing is that this inquiry was supposed to be into the Direct Action package. A precursor to the Direct Action package was the very loud and clear policy platform on which the coalition went to the last election, and that was that we were intending to abolish the carbon tax.

They may well have a majority report, but the greatest endorsement that any of us in this place can get is to have the majority support of the Australian people, and that is what we received in September last year at the election. The coalition was told very clearly by the electorate, as were the opposition and the Greens, that the electorate wanted the carbon tax abolished. Notwithstanding that, I think one of the most important issues that we need to put on the table right here and now is that this debate has actually been about climate change. It has not been about Direct Action; it has not been about the abolition of the carbon tax. It seems to have become a debate about climate change.

The fact of the matter is that the government differs from the opposition and the Greens in the way that it believes that climate change can best be tackled. Our view is that, instead of imposing a $7.6 billion economy-wide tax that hinders business and does nothing for the environment, there is an alternative way in which we can achieve the outcomes that all of us in this place seek to achieve—that is, to have a cleaner energy future, to have a low-carbon future and to make sure we deal with the obvious impacts which we all talk about and that could potentially occur because of climate change.

Turning specifically to the Senate inquiry, there were many, many submitters who represented hundreds of thousands of businesses and employees. I noted that in the majority report there was some suggestion that no-one supported Direct Action as a credible means to deal with climate change. I would beg to differ. I think there were a number of people who supported Direct Action and I also think it is very premature for us to be making comments about what Direct Action can achieve, how much it is going to cost and what it can deliver, because nobody has actually given it a chance. I think we need to put on the table that this is not a debate about climate change; it is a debate about how we are intending to address the issues and the consequences of climate change.

I put on the record some comments from the submitters who gave evidence during the Senate hearings. The Australian Industry Group said that they, 'Do not support any decision on additional targets at this time.' The Association of Mining and Exploration Companies provided evidence saying:

The burden borne by Australian industry under the previous Governments Clean Energy package placed Australian mining and exploration industries at a significant disadvantage to our competitors. For the exploration and mining industry it was a financial penalty without any meaningful opportunities to contribute to Australia's response to climate change.

The National Farmers Federation said:

The NFF does not support the carbon tax due to the significant flow-on impacts to agriculture.

I have to put on the record some comments of Professor Ross Garnaut when he was responding to Senator Williams, who asked him about the implications of increasing the carbon tax to cover diesel fuel and the fact that diesel fuel would add an extra $515 million to the costs of road users. He asked Professor Garnaut if he supported that policy, and Professor Garnaut responded that he did. The truckies of Australia will be delighted to hear that!

In conclusion, we were very disappointed that the debate really did not focus on the potential positives and benefits that could be achieved by the direct action policy. I think that, if we had actually focused a lot more on trying to work our way through the potential benefits instead of focusing on the fact that we were having a debate about climate change, who believed in climate change and who was a climate denier, we may well have ended up with a report that we all possibly could have agreed with.

I would like to thank the secretariat for the huge amount of work that they put into this; it was a big hearing and a big inquiry. They had to do a lot of travel. I would also like to thank them for their outstanding work and their diligence during this inquiry. I would also like to say that the deputy chair of the committee, Senator Williams, endorses my comments in thanking them.

6:35 pm

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

I rise tonight to respond to the tabling of the committee report on direct action. Suffice to say, this report absolutely exposes direct action as simply a slogan. There is no substance to this policy, and that was revealed throughout the inquiry. In response to Senator Ruston's remarks about the so-called positive benefits not being discussed, the reason for that was that nobody through all the inquiries could put any facts on the table whatsoever about direct action. The fact of the matter is that the inquiry demonstrated that it is narrow, will not create any lasting transformation across the economy and is unfinanceable because the grants are so small, contracts are limited to five years, prices on offer are so low that they fall far short of being investment-grade and finance institutions and banks will not waste their time on direct action.

It is an optional—in other words, it is a voluntary scheme—so there is no incentive for polluters to participate. Therefore, it is very difficult to see who on earth is going to be part of this so-called emissions reduction fund. It is costly because it is going to require a huge bureaucracy to administer it, and the taxpayers are going to have to pay. In other words, so much for the slogan 'great big new tax'. In fact, communities are now going to be taxed to pay the polluters through this emission reduction fund, and there is going to be no absolute ability to determine whether there are any emission reductions additional to what companies would have done anyway. So additionality is a real issue. The assessment of the baselines is a real issue. No detail was provided and the department could not answer any of the questions. Remarkably, there is no detail about Direct Action whatsoever.

In fact, not a single economist who came before the committee supported Direct Action, because they rightly said that it is expensive and it is charging the taxpayer to pay the polluters for no guaranteed outcomes in achieving even five per cent, let alone the 40 per cent to 60 per cent emissions reduction trajectory that is going to be required by 2030. As well as statements of support from the Business Council of Australia, the Chamber of Commerce and Industry and so on, and their disgraceful efforts as a cheer squad for a policy which has no substance, we had Professor Garnaut and Ken Henry commenting in the media recently. We also had Bernie Fraser appear before the committee. All of them said that Direct Action demonstrates no real commitment to addressing the climate, no consistency with what the science requires for emissions reductions and, what is more, that the direct action policy had no substance. In fact, it will fall short of its five per cent emission reduction task and will cost a great deal of money. Billions of dollars will be required, on top of the existing $1.55 billion that is allocated.

As Direct Action unravels we are simply going to see a repeat of the failed Howard government program. It did not achieve emissions reductions and had to be abandoned because, essentially, it was a gift to companies that hung out to get the money to do what they otherwise intended to do. We need serious emissions reduction in Australia. The advantage of the emissions trading scheme that we currently have is that it can be scaled up to achieve that trajectory of 40 per cent to 60 per cent emissions reduction by 2030. That is the scale of the task. We are living in a climate emergency. You have to put in place a mechanism that will deliver.

It is recommended that the Climate Change Authority stay, and so it should, to do the assessment of the renewable energy target, not the shonky assessment that is currently underway. We need to maintain the Clean Energy Finance Corporation. That is an absolutely critical part of rolling out utility scale renewables in the time frame.

I thank the committee secretariat for the work they did and my colleagues on the committee. I thank Senator Lin Thorp, chair of the committee. I thank everybody involved, including all those who made submissions. The overwhelming majority of submissions were opposed to Direct Action. You could hardly find one there supporting it, to the point where some senators from the coalition side kept asking, 'Why is everyone so negative?' It is because there is no substance to the policy. I seek leave to continue my remarks later.

Leave granted; debate adjourned.