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Thursday, 3 November 2011
Page: 8117


Senator BIRMINGHAM (South Australia) (11:22): Bad policy is always bad policy. That is why political parties who are true to their convictions should stand against bad policy from opposition and be willing to replace it with good policy in government. The Clean Energy Bill 2011 and related bills represent bad policy. That is why the Liberal and National parties are standing against them in opposition and, should the electorate endorse our position, it is why we would replace them with better policies in government. Above all else our approach to these issues demonstrates respect for the electorate. Labor ramming this carbon tax through the parliament demonstrates their complete and utter disregard for the electorate. Just because Julia Gillard's broken promise that there will be no carbon tax under a government she leads has been frequently referenced in this place and is widely understood throughout the Australian community does not mean it is any less relevant to this debate. In recent Australian political history the only comparable circumstance of a political leader making a crystal-clear, black-and-white promise to the Australian electorate only to do the exact opposite after forming government was Paul Keating's infamous l-a-w law tax cuts. Labor senators would be wise to remember how that act of electoral betrayal ended at the ballot box.

However, a broken promise is not in and of itself a satisfactory reason to oppose a policy or a package of bills. We should always consider legislation against the basic principle of whether it delivers on its stated objectives in the most effective, efficient and fair way possible. This legislation does not. The explanatory memorandum to the primary bill in this vast legislative package, the Clean Energy Bill, argues that Australia needs to reduce its emissions of greenhouse gases, or carbon pollution as the government tries to emotively describe such emissions. The coalition agree with this objective. We share the commitment for Australia to reduce emissions by five per cent from 2000 levels by 2020. We stand ready, if a real global agreement to do more can be reached, to do more as part of a coordinated and integrated global effort. The Prime Minister's second reading speech describes this legislation as, 'A plan to cut carbon pollution by at least 160 million tonnes a year in 2020.' However, there is an act of trickery here because all modelling demonstrates that this package does not reduce Australia's emissions. Even if all of the government's policies and all of their optimistic assumptions go exactly as planned, Australia's emissions will still rise from 578 million tonnes of CO2 equivalent gases in 2010 to 621 million tonnes of CO2 equivalent gases in 2020. These are not my numbers; that is the assessment of the government's own advisers at the Treasury.

This legislation fails the basic test of actually meeting its stated objective. It has been sold through a multimillion-dollar taxpayer funded campaign in which it has been presented as delivering Australia a clean energy future. This is simply misleading. Labor is trying to con the Australian electorate into believing this package delivers something that transparently it does not. However, many Australians have not been conned and they rightly ask this simple question: if the carbon tax does not reduce Australia's emissions, what is the point of it? It is a fair question indeed and one that Labor senators have failed to confront head-on during this debate. Labor only manages to claim that this package reduces emissions by outsourcing action and responsibility to the rest of the world, not by taking action in Australia. This does, however, come at a great cost to Australia. The same Treasury modelling shows that in 2010 prices Australian companies will spend $2.7 billion in 2020 and $57 billion by 2050 on purchasing overseas permits annually. Assuming inflation of 2.5 per cent annually, this results in actual spending by Australian businesses on overseas abatement permits of $3.5 billion in 2020 and a staggering $153 billion in 2050. Not only is this a massive outsourcing of action and responsibility, it also sees Australia placing multibillion dollar bets on global carbon markets that have already been found to be susceptible to fraud and manipulation, and, as the Canadian foreign minister described them just the other day, resemble a pyramid marketing scheme. This is spending that is additional to the cost of Labor's carbon tax or trading scheme in Australia, which domestically starts off raising and costing around $9 billion per annum.

It is remarkable that the Greens and others who call for the transformation of emissions within Australia accept and go along with this trickery and go along with the sleight of hand that sees this massive outsourcing of action. We constantly hear claims, from the Greens in particular, about Australia having amongst the highest emissions per capita in the world, not that this is actually a valid consideration as considering emissions against GDP or domestic consumption are more valid approaches. Nonetheless, the ongoing failure of the Greens to explain why it is acceptable to them, even with this carbon tax in place, for Australia to continue to have the highest emissions per capita in the world speaks volumes about the fact that the Greens approach to this legislation is more about politics than good policy. This legislation simply does not meet its stated objective of reducing emissions in Australia. That alone should warrant its defeat in this parliament. But matters of climate change are not just an Australian issue—quite the opposite. As I told the Senate in November 2009 during contributions on the previous CPRS debates:

Global action is essential, for unilateral action by Australia will not make any notable difference.

That statement is as true today as it was then. The science surrounding climate change makes it clear that addressing this issue requires all countries to act in an agreed way, especially those countries responsible for large volumes of emissions. Stabilisation of greenhouse gas concentrations in the atmosphere requires everyone in every country to do their bit. It cannot be achieved by some acting while others around the world continue on a trajectory of emissions growth.

In that 2009 debate I went on to state:

Global agreement is not easy and the pathway or processes towards it are messy, and we have seen that in recent weeks in the lead-up to Copenhagen.

If I thought the lead-up to Copenhagen was messy, it is hard to describe just how untidy, unsatisfactory and unseemly the outcomes of Copenhagen actually were. It was a debacle that has set global agreement back an indeterminable length of time. The Copenhagen conference collapsed. It produc­ed no agreement on a second commitment period for the Kyoto protocol, nor did it produce any agreement on a new treaty structure to limit global emissions. Instead it produced a flimsy three-page accord under which some countries have proceeded to pledge a range of non-binding, non-meas­urable and non-verifiable emissions targets or emissions intensity targets. The same group gathered in Cancun last year, but again failed to make any meaningful progress towards a binding pathway forward on global emissions. Next month they will gather in Durban, where nobody, including the Gillard government, seems to expect any further progress.

If the Labor Party and the Greens get their way we will see the perverse situation next year where, just as the first commitment period of the Kyoto protocol expires, leaving the future of global emissions mitigation decidedly unclear and with no legally binding global framework in place, Australia will embark on a carbon tax and emissions trading regime that imposes a legally binding framework on Australian businesses with greater scope and higher targets than anywhere else in the world. Labor justifies this apparent madness by claiming the world is acting, citing the pledges made under the Copenhagen accord and a scattering of carbon pricing schemes, all of which have much less scope and impact than is proposed by this legislative model.

Rather than taking Labor's word for it, it is worth checking what the rest of the world thinks about the extent of complementary global action on climate change. The World Bank's Carbon Finance Unit recently surveyed market participants regarding the likelihood of an international agreement being reached for the post-Kyoto protocol period that we enter next year. They found:

Survey respondents were not optimistic that a binding international agreement could be achieved in the short term.

Asked how confident these global carbon market participants were of there being a new legally binding multilateral framework, similar to the current Kyoto protocol, with legally binding commitments to reduce emissions, close to 90 per cent of respondents were pessimistic or slightly pessimistic of any such framework being reached before 2015. More than 65 per cent of global carbon market participants remained pessimistic about there being a legally binding replacement to Kyoto agreed before 2020.

The Copenhagen accord has seen a limited number of countries register a broad range of noncommittal targets and actions of varying forms, a veritable mixed bag of absolute reductions against business as usual trajectories versus changes to intensity limits, many with varying base years, some with quantified emissions reductions and others without. While there is little consistency and barely any comparability between the pledges made under the Copenhagen accord, the most important question should be: do they, or could they, achieve the aims of controlling or averting human induced climate change? The 2010 United Nations Environment Program's The emissions gap report estimates that developed and developing country pledges are 60 per cent of what is needed by 2020 to place the world onto a trajectory that will keep global temperature rises to less than two degrees Celsius in comparison to preindustrial levels.

The International Energy Agency concurs, stating that the two-degree goal will only be achievable with a dramatic scaling-up of effort from countries around the world in advance of their Copenhagen commitments. Even when the promises are voluntary, non-binding, non-measurable, non-reportable and non-verifiable, as is the case under the Copenhagen accord, the world is a long way off making commitments that justify the Gillard government's optimistic modelling of the impact of their carbon tax.

Despite the pessimism that surrounds the prospects for global agreement and unified global action, the coalition believes Australia should do its bit so as to maintain credibility for our bipartisan position in international negotiations to achieve an effective global agreement. That is why we remain committed to achieving the target of a five per cent reduction in emissions by 2020 against a 2000 baseline. However, there is no point applying policies that assume and pretend things are happening elsewhere when, quite frankly, it is the opposite. This carbon tax plan is based on a dream-world scenario, not a real-world scenario. In an ideal world, where the action among all major emitters is comparable, and the policies of those countries to restrain emissions enjoy a strong level of consistency and interoperability, there is a place for some type of carbon pricing.

Julia Gillard justifies her change of position on a change in circumstances. She is right to claim that leaders should change their position when circumstances change. However, it is equally right that a test be applied to ascertain whether the change in position is justified by and commensurate with the change in circumstances. In this position, it is most clearly not. Perhaps there would be a case if Julia Gillard had fronted the Australian public and said: 'Circumstances have changed. There have been dramatic positive developments from the major emitting countries.' Imagine if she had said that the United States had legislated a nationwide carbon pricing scheme or was even close to doing so, or that China had joined in and India had made firm commitments to reduce their carbon intensity over time. None of these things have happened. Instead, Julia Gillard's changed circumstances—

The DEPUTY PRESIDENT: Senator Birmingham, you need to refer to the Prime Minister by her correct title. I have allowed you not to use it on a couple of occasions but please refer to her as 'Prime Minister Gillard'.

Senator BIRMINGHAM: Instead, the Prime Minister, Julia Gillard, and her changed circumstances have nothing to do with the policy merits of climate change action and everything to do with the balance of power in the House of Representatives. In the real world, where we in the Liberal and National parties live, we believe policies should be based on reality. We believe it is foolish to base your policy on purchasing international carbon credits when a credible market for such international carbon credits does not exist. We believe it is foolish to spend billions on dubious overseas action when you can take direct action here in Australia. That is what our policy seeks to achieve, in contrast to the policy of those opposite.

This carbon tax does not just fail its primary test of reducing emissions and creating, as Labor and the Greens like to claim, a 'clean energy future' for Australia; it also fails the tests of efficiency and fairness. From Labor's own modelling, their own optimistic estimates, we know that this policy leaves millions of Australian households worse off—at least three million and many millions more if the modelling is at all out in its estimates. We know that the number of households left worse off will increase over time as compensation erodes over time. From Labor's own modelling—again, their own optimistic assumptions—we know that all Australians face dramatic price rises from the middle of next year: 10 per cent extra for their electricity, nine per cent extra for their gas, ultimately more for fuel and ultimately more for everything that everybody uses.

These costs are not faced just by households; they are not faced just by families, pensioners, retirees or singles, by young or old, rich or poor. They are equally faced by state governments, local govern­ments, charities, schools, hospitals—the list of people who face these economy-wide price rises is as big as your imagination. Then there are businesses. Most will pay, with little or no option available to offset those costs. Again, in the real world, we on this side recognise that electricity is already a huge input cost for many, many businesses. They already minimise use wherever possible. Under the carbon tax it will cost them more, but that does not mean they have greater opportunity to minimise their use of electricity; it just means they will have to pay more.

There is no compensation under this carbon tax package for Australia's biggest employer, the small-business sector. Small businesses, whatever their industry, whatever their service, whatever they provide, will again just have to pay. Yes, some businesses do receive some form of compensation, particularly those known as emissions-intensive trade-exposed industries, but they are not totally compensated, and the compensation they get erodes over time and is frequently limited to only certain parts of their business operations. So even those businesses that are identified as the businesses most vulnerable to this carbon tax regime face the real prospect of their work going offshore, their businesses going offshore and of course their carbon emissions going offshore.

This policy simply fails. It fails to reduce emissions in Australia, it fails to ensure global emissions are stabilised, let alone reduced, it fails to ensure Australian families are no worse off, it fails to protect Australian industry and jobs, it fails to ensure the budget does not plunge deeper into deficit—it fails on every test anyone can apply to it. What we will witness of course in the final days of this carbon tax debate are yet more acts of betrayal by the Labor Party, a party that is trying to implement a policy for political convenience not for policy good, a policy based on a lie at the last election. A policy that is bad policy today will be bad policy tomorrow and, until we see any form of global agreement, bad policy for the indefinite future. That is why we on this side oppose it now and will continue to oppose it until we can get the right policy for Australia's future.