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Tuesday, 11 October 2011
Page: 11455


Mr COMBET (CharltonMinister for Climate Change and Energy Efficiency) (18:18): I refer to the amendment that has been moved by the member for O'Connor. It was referred to briefly a moment ago by the shadow minister, the member for Wide Bay. I indicated in question time today that the government was giving some consideration to this proposal moved by the member for O'Connor. The government is in fact not inclined to agree to that amendment.

It is very important to go back to some of the basics of the policy in considering this issue: a broad based carbon price will reduce our greenhouse gas emissions at the lowest overall cost to the economy. The bills overall seek to apply an effective carbon price to off-road energy use outside of agriculture, fisheries and forestry to provide an effective price signal relative to the carbon content of the fuel used. Off-road fuel usage is a separate matter from the carbon-pricing mechanism. The way the off-road fuel use is dealt with—whether it is an off-road energy need that is met by electricity from the grid, from diesel, from onsite generation, from biofuels, from renewable energy generation, from LPG or from natural gas—means the relative carbon intensity of fuels is taken into account in the formulation of the bills.

The different arrangements for natural gas, LPG and liquid fuels combine to ensure that the impact of carbon pricing—or an effective carbon price—flows through to end users in a manner that is competitively neutral for both energy suppliers and the industries which use that fuel. Of course, the flowthrough of that has been an important factor in modelling household assistance, for example. Obviously, the effective price is not retained by all businesses. It is passed through and, ultimately, that leads to the CPI effect that has been modelled and the way in which the household assistance has been designed.

All of these arrangements have been fully taken into account in the design of the household assistance package. They are a key part of establishing a carbon price in the Australian economy and rewarding low-pollution choices of large and small businesses. The point at which the carbon price applies has been designed to achieve broad coverage while minimising administrative costs. The use of the fuel taxation system to apply an effective carbon price to fuels will achieve broad coverage of fuel emissions while minimising compliance costs to business because it uses the existing fuel taxation arrangements. Fuel-using businesses will still claim fuel tax credits using existing administrative systems and will not be subject to additional regulation, compliance burdens under the carbon-pricing mechanism or the need to engage in carbon markets. So businesses in those circumstances will not have to be concerned with any of those matters. The government also recognises the issues for small, off-grid electricity generation—and this is one of the matters that I think the member for O'Connor has expressed concern about—so support is provided for off-grid generation through multiplier arrangements under the renewable energy target, in particular, and the $40 million investment in the Remote Indigenous Energy Program, which I know is also a matter of interest and concern to the member for O'Connor. If that amendment were to be passed, there would not be competitive neutrality between different fuel users, and more-emissions-intensive liquid fuels would be advantaged relative to grid electricity, renewables, natural gas and LPG. In addition, up to 200 liable entities under the carbon price mechanism whose emissions mainly relate to non-liquid fuels or other sources of emissions may also have no effective carbon price for their liquid fuel emissions, should the amendment be passed. Clearly, that would not be consistent with the intent of the legislation. It could also result in assistance being provided to industry or households for costs which they did not face.

I can develop some of these arguments a bit further in the course of the evening's debate, but those are the broad reasons why the government does not support the amendments moved by the member for O'Connor.