Senator WONG (Minister for Climate Change and Water) (5:07 PM) —The government does not support this amendment. What the Western Australian senators who will vote against this scheme and who have campaigned against this scheme are doing is, by legislative fiat, seeking to pick one industry out of a policy and simply say, ‘We are going to give you a different rate even if, due to your emissions intensity, you do not qualify for that rate.’ That is what they are doing.

Here we have a policy framework that gives assistance on the basis of the amount of carbon costs you face—how emissions intensive you are compared to your revenue. We have a coherent policy position, a principle that says we will assist companies on the basis of considering how much in carbon costs they will face and their capacity to pay. That is probably the best way of simply describing it. What they are saying is, ‘We want you to forget about the policy and just put an amendment in that says that, no matter how small the carbon cost and no matter how high the revenue, a particular industry is going to be favoured because we’—this particular group of senators—’want to make a political point.’ This would increase the cost of assistance for the LNG industry by about $2.6 billion out to 2019-20. So, Senator Cormann, next time you come in here, having a go about debt and deficit, I will ask you to remind us where you were going to fund this amendment of $2.6 billion over the decade from.

We on this side of the chamber are big supporters of LNG, as has been demonstrated by the progress under this government of many activities in the LNG sector, the most important and most recent of which is the turning of the first sod today—I think—by my colleague Mr Ferguson to mark the start of the construction of the Gorgon project. Obviously the activity definition for LNG has not yet been finalised but, in relation to the question from Senator Cash, we will finalise that definition in accordance with the policy, because when you are conducting a whole-of-economy reform you do not pick bits of industries and change your policy just because you want to advantage one or other of your electorates.

Senator Eggleston interjecting—

Senator WONG —I beg your pardon. I would ask you to withdraw that.

The TEMPORARY CHAIRMAN (Senator McGauran)—Yes, I heard that from the chair, Senator Eggleston. I ask you to withdraw.

Senator WONG —You should stand and withdraw.

Senator Eggleston —If it is unparliamentary, I will withdraw, but I do think it is insincere of the government to be objecting—

The TEMPORARY CHAIRMAN —An unqualified withdrawal, Senator Eggleston.

Senator Eggleston —I do withdraw.

Senator WONG —We are big supporters of LNG, but what this amendment does is say, ‘By legislative fiat, we will override all policy.’ That is no way to conduct sensible economic reform. Does that mean that if the Tasmanians get together and decide that a particular industry for Tasmania—

Senator Cash —It’s the states’ house!

Senator WONG —I will take that interjection: ‘It’s the states’ house.’ Goodness me! So this is how we will try and conduct economic policy and economic reform—not on the basis of the national interest but on what a particular senator might consider is in their state’s interest! The government expects that—

Honourable senators interjecting—

The CHAIRMAN —Order! Give the minister a chance, please.

Senator WONG —We are expecting that LNG projects will qualify for 60 per cent assistance of the industry average emissions intensity under the standard assistance policy. As I discussed with Mr Macfarlane, your negotiator, there is a policy issue with LNG, which is the wide dispersion in emissions intensities. In other words, some fields are much gassier than others. That is the policy issue here. It is not, for example, like a particular industrial process where you are going to get variations in the emissions intensity of the activity but it will not be an enormously wide variation. There is that issue with LNG, so the agreement that the government made with the opposition through Mr Macfarlane—who I think is a former energy and resources minister, so I do not think you—

Senator Cormann interjecting—

Senator WONG —Exactly, and we negotiated the agreement with the opposition that we would enable a supplementary allocation of free permits to ensure all projects received an effective rate of assistance of at least 50 per cent in relation to their production. What this does is ensure that the most emissions intensive—that is, those projects with the highest level of reservoir gas—will be assisted whilst ensuring there are strong incentives for companies to seek opportunities to reduce emissions, such as through the implementation of abatement technologies or developing fewer emissions-intensive gas fields. But for the government’s windfall gains test, the risk of this proposition would be that you would actually be assisting companies for more than their liability. That is not a sensible policy approach. That is not a policy approach supportive of industry. It is a policy approach that reeks of politics rather than sensible policy.

I make the point that we have provided additional assistance to LNG consistent with our policy framework because we believed it was appropriate given the importance of this sector to Australia’s economy and to our exports and because it is true that, in a world where there is a carbon price, this is a cleaner fuel than coal. In fact, it will do better in a world where there is a carbon price. If you were a supporter of LNG, you would support a global carbon price, because that would actually make LNG more comparatively competitive than it is now. But, of course, those opposite want it out but they do not want to include a carbon price.

I make the point—and it is interesting, because I do not often reference him, but Don Voelte has had a lot to say in this debate, and I think even those opposite might have used his words and criticism of me on more than one occasion—that the senators opposite in this place are in fact asking for more than Woodside have publicly declared they can accept. Mr Voelte has urged the parliament to pass the amended CPRS legislation. But I suspect that is not advice that those opposite would take, because they are no longer listening to sensible advice from the business community. They are no longer listening, for example, to the Business Council of Australia, to Origin Energy or to the Australian Industry Group. They are not listening to them anymore. They are listening to some extreme views inside their own party. That is where this debate has now gone.