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Monday, 20 June 2011
Page: 6556


Mr COMBET (CharltonMinister for Climate Change and Energy Efficiency) (17:28): Firstly, I accept none of the contentions made by the member for Indi. I make that clear at the outset. Generally, in policy responses to climate change, when one respects the science and therefore accepts the responsibility to reduce carbon pollution, we have to look at which public policy measure is the most desirable from the standpoint of economic efficiency. Some public policy measures that have the objective of reducing pollution may also have other public policy objectives such as, for example, supporting the development of the solar industry within our economy. However, when you are looking at the principal policy response to climate change and of the need to reduce our carbon pollution we need to go about doing it in the most cost-efficient manner. That is why the government has argued strongly for a market mechanism—whether it be through an emissions trading scheme or a carbon tax—as the way of putting a price signal in our economy to achieve the emissions reductions at the least cost.

The Productivity Commission considered these issues in general in the Australian economy and in the economies of our major trading partners in a recently published report. The Productivity Commission, unsurprisingly I think for those familiar with these issues, found that the least cost way of reducing pollution is through a market mechanism like an emissions trading scheme. That is why the government have been arguing on this basis. Also, over the last 10 months and beyond and in the previous term of parliament as well, we have rationalised a number of the climate change programs and initiatives—for example, one that went back to the Howard government period in the form of subsidies and support for solar panels on domestic rooftops. If the sole purpose of these sorts of programs is to abate carbon pollution, they are not necessarily the least cost means of achieving the outcome. The government, particularly over the last 10 months while I have been in the role as minister, have been looking at these programs, rationalising them where appropriate and focusing on the principal policy response that is necessary.

If the member for Indi is seriously concerned about these matters and the most efficient public policy response is through reducing pollution, I am sure that she would recognise and accept the fact that a market mechanism is the best way of reducing carbon pollution in the economy. The Productivity Commission report that I referred to in fact found that the effective cost of the abatement measures currently in place in our economy within our electricity system—whether they are state feed-in tariffs or other programs of support for various technologies or changes—is in the range of, I think, $44 to $98 per tonne of carbon abated. It also found that across the economy, had we done it through a market mechanism, we would have achieved the same levels of carbon pollution abatement for an approximate cost of $9 a tonne. These are material matters and it is extremely important when considering our policy response to climate change that we go down the path that is going to achieve the abatement at the least cost to our economy, and as I have said before that means the least cost to households and the least cost to businesses.

In my role as minister, I certainly have no concern about looking at alternative policy approaches from the standpoint of using the most effective approaches. Contrast that with the nonsense that forms the subsidies-for-polluters policy that the coalition are advancing as a response to climate change. It is going to cost tens of billions of dollars out to 2020 in direct government subsidies for polluters to achieve no net environmental gain. Ultimately, the subsidies-for-polluters program will be funded by taxpayers to the tune of $720 per household on average. No rational economic analysis could ever justify that approach. It is not a credible policy response to this issue, and unless and until the coalition and the member for Indi accept some basic economic principles in relation to this issue—that is, that a market mechanism is the best way of proceeding—they have no credibility in criticising anything. (Time expired)