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Wednesday, 23 November 2011
Page: 9451

Climate Change and Energy Efficiency

(Question No. 1218)

Senator Boswell asked the Minister representing the Minister for Climate Change and Energy Efficiency, upon notice on, 19 September 2011:

In regard to the manufacturing sectors support for trade exposed industries:

(1) Does the department agree that approximately one million people are employed by Australia's manufacturing sector.

(2) How many of these manufacturing workers are employed in sectors that will receive assistance under the Government's Jobs and Competitiveness Program.

(3) Has the department an estimate of the number of manufacturing jobs shielded by its Jobs and Competitiveness Program; if not, why not.

Senator Wong: The Minister for Climate Change and Energy Efficiency has provided the following answer to the honourable senator's question:

(1) As of June 2010, the manufacturing industry employed approximately 950,000 people (ABS 8155.0: Australian Industry, 2009-10).

(2) Businesses across all manufacturing sectors will be eligible to apply for assistance under either the Jobs and Competitiveness Program (JCP) or the Clean Technology Program (CTP).

The JCP will provide assistance to manufacturers that generate over 80 per cent of the manufacturing sectors emissions. Further information on eligible activities is available at:

http://www.climatechange.gov.au/government/initiatives/jobs-competitiveness-program.aspx

The Government's CTP, amounting to $1.2 billion over the forward estimates, has been developed to provide support to manufacturing industries not eligible for assistance under the JCP. The CTP includes three components:

the $800 million Clean Technology Investment Program will provide grants to manufacturers to support investments in energy-efficient capital equipment and low-pollution technologies;

the Clean Technology Food and Foundries Investment Program will provide grants worth up to $150 million over six years to the food processing industry and up to $50 million over six years to the metal forging and foundry industries. The grants will assist the industries to invest in energy-efficient equipment and low-pollution technologies, processes and products; and

an additional $200 million over five years for grants to support business investment in research and development in the areas of renewable energy, low-pollution technology and energy efficiency.

(3) A comparison of the number of workers in industries shielded from a carbon price is not an appropriate measure of the effectiveness of a scheme in preventing carbon leakage and providing transitional assistance. The JCP targets assistance to industries that are particularly emissions-intensive and therefore most exposed to the impact of the carbon price. The targeted nature of the JCP means that it will provide assistance to manufacturers that generate over 80 per cent of manufacturing sector emissions.

The European Union Emissions Trading Scheme (EU ETS) is likely to provide far less assistance to the more emissions-intensive sectors under phase III of the EU ETS than proposed under the JCP. This is because under the EU ETS:

assistance allocations are to be based on the top 10 per cent most efficient installations rather than the average emissions intensity of the industry as per the JCP;

assistance is only guaranteed in respect of direct emissions, while under the JCP assistance is provided for the carbon cost exposure associated with direct emissions and electricity use; and

there is a cap on the proportion of free allocations that can be provided to industry which decreases over time - there is no such cap under the JCP.

In addition, the EU ETS has less tightly targeted assistance than the JCP. In the EU ETS, assistance is provided to a wider range of sectors, some of which are trade-exposed but not very emissions-intensive. Given that the total pool of permits available to industry is capped, increasing the number of sectors that are eligible for assistance potentially reduces the assistance provided to any given sector.