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Tuesday, 2 June 2009
Page: 5291


Mr TURNBULL (Leader of the Opposition) (9:42 PM) —The Carbon Pollution Reduction Scheme Bill 2009 and its accompanying bills represent the centrepiece of the government’s efforts, so it claims, to reduce carbon dioxide emissions in Australia. The legislation is distinguished by the fact that it has almost no supporters. The business community have almost unanimously complained about its job-destroying provisions; the environmentalists, on the other hand, have complained that it does not go far enough and is not effective in reducing emissions. It is a poorly conceived scheme, poorly put together in haste, with inadequate analysis and consideration.

The fundamental problem that the designer of any emission reduction scheme faces in any country is that this is a unique environmental problem. If we accept, as a matter of prudence, taking the precautionary principle that we should seek to reduce the world’s carbon dioxide emissions so as to slow the impact of global warming and undertake to do that—and that was certainly the policy of the previous government, as it is of this government and, indeed, almost every government in the world, to the best of my knowledge—then we have to recognise that, because of the global nature of this problem, if we reduce emissions in this country but in doing so cause emissions to increase somewhere else, there is no environmental benefit.

This is a very important distinction. We can in Australia say, ‘We choose as a society to have higher environmental standards than other countries,’ if that is our choice. And we can say to a business, ‘We will impose on you the cost of not polluting a river or a stream or a harbour and that will be an additional cost to you, but, nonetheless, there will be a benefit to our environment and an overall benefit to our community.’ But if we say to a business in Australia, ‘We are imposing on you a cost per tonne of CO2 emitted,’ and if the consequence of the imposition of that cost is that that business becomes uneconomic in this country because the businesses with which it competes in other nations are not bearing such a cost then the only consequence is that less CO2 is emitted from Australia and more CO2 is emitted from other countries. There are any number of examples of this right across the industrial spectrum in Australia, but probably the best, the most glaring, example is that of the coal industry. That is our largest export, and the industry is not being treated as other emissions-intensive trade-exposed industries are under this scheme for appropriate compensation or appropriate allocation of free permits. It is being treated very differently. Every major coal producer has said that the consequence of this treatment will be the destruction of thousands of jobs and billions of dollars worth of projects. They have been absolutely unanimous about that. This will devastate our single largest export industry.

We can ask the question: is that a price worth paying to save the planet? The answer is that it is not, because the only consequence of Xstrata or any other large coalminer in Australia being unable to mine coal profitably in this country is that they or other companies will mine more coal in other nations. In other words, we will mine less coal in Australia and there will be more coal mined in Indonesia or Colombia or South Africa—fewer jobs, less income, less tax revenue, less prosperity in Australia; more jobs, more income, more prosperity and the same, if not more, emissions in another country.

That issue of carbon leakage is the problem at the absolute core of this challenge of reducing global carbon dioxide emissions. It is a global problem. A tonne of CO2 has the same impact on the climate whether it is emitted in Sydney or Shanghai or Stockholm or San Francisco. Therein lies the problem.

All of our major trade-exposed emissions-intensive industries are unhappy with the proposals being presented by the government. Whether it is coal, as I have just discussed; whether it is steel; whether it is aluminium; whether it is cement—the list goes on; all of them point to the fact that they are already operating in a relatively high-cost environment in Australia. We are a country that pays higher wages, we have higher costs than most countries with which they compete and we are now proposing to impose an additional cost, for no environmental benefit but with considerable economic harm.

So the bottom line is this. A global carbon cost can work equitably and effectively. If the whole world paid the same cost on carbon then it would not matter what the cost was; all the boats would rise or fall on the same tide. We know that that is not going to be the case. We know that our economy is particularly trade exposed. We are, more than most countries, certainly more than any other developed country, particularly dependent on emissions-intensive export industries. We have that particular vulnerability. Yet the government is determined to pass its legislation before we know what the world will agree to at the Copenhagen summit in December and, most remarkably, before we know what the shape of the United States climate change legislation will be.

This is a very rapidly developing scene in climate change. I had the honour in the previous government of being the Minister for the Environment and Water Resources and represented Australia at climate change conferences, and I have to say that, going back less than two years, I would not have thought that the debate globally would have moved as quickly as it has. I would not have imagined that we could be in a position where emissions trading scheme legislation will be likely to be on the floor of the United States House of Representatives and voted on within a few months, and may well be law by the end of the year. That legislation—which of course addresses the central problem of emissions-intensive trade-exposed industries, as every piece of emissions trading legislation has to, wherever it is enacted—will inevitably be the global benchmark. Common sense dictates that Australia’s scheme should not be finalised until we know the shape of the US legislation, until we see what that US legislation is and until we see what has been decided at Copenhagen.

As the House knows, we are proposing that the consideration of this matter be deferred until after the Copenhagen summit in December, after the conclusion of the legislative process of the United States legislation—currently titled the Waxman-Markey bill; it no doubt will acquire other sponsors during the process—and, of course, after the Productivity Commission has conducted a thorough analysis. I will come to that in a moment and the shadow minister for the emissions trading scheme and infrastructure, Andrew Robb, will speak further about that when he addresses the House.

The US legislation, even in its draft form at the moment—and it is still going through the committee stages of the House of Representatives—is already markedly different from the government’s legislation in the way it treats emissions-intensive trade-exposed industries. I might say, before I go on to speak in more detail about Waxman-Markey, that here in my hand is a copy of the principal Carbon Pollution Reduction Scheme Bill. It is a lengthy document of 428 pages. The key issue, as we all know, is emissions-intensive trade-exposed industries. It is important to note that they are the subject of and are covered by about eight pages in this whole document—just eight pages, which are simply enabling legislation to permit the government to enact regulations. So the key issues about which industries will be protected, how much protection they will get, how it will be allocated, the decay rates and how the protection will reduce over time—all of that—are to be dealt with administratively by the government in regulations. None of the regulations have been published. We have had reports of them. The government has spoken about them. They are in the process, we know, of continuous and constant renegotiation by the government and yet they are the guts of the scheme. The guts of the scheme is in the regulations. That is the essence of it; that is the hard problem. The rest of it is just a framework, just really the bones. What price democracy if the parliament itself is not being asked to vote on that?

But we have been told. The government has described what it is going to do—although it keeps on changing its plan—so we have some idea of at least what it says it is intending to do, and already we see dramatic differences between the government’s proposal, on the one hand, and what the Americans are contemplating, on the other. Let me give you one example. The big issue is that if you give a trade-exposed industry protection—aluminium, cement or coal; take your pick—firstly, how much protection should you give it? Our view, when we were in government and Peter Shergold chaired the emissions trading task group, was that, in principle, businesses that fell into that category should be given complete protection until such time as the countries with which they competed had a comparable scheme. That is a commonsense, straightforward approach. While the American scheme is subject to the legislative process and will no doubt change, at this stage the position appears to be that, once an industry is given free allocations of permits—in effect, protection—because it is an emissions-intensive trade-exposed industry, that protection will continue until 2025 and thereafter will only start to decay once the US President determines that less than 70 per cent of the global output of the relevant sector—say, aluminium—is produced in countries that have a comparable scheme. So, in other words, until the bulk of the rest of the world catches up American industries will have that continuing protection. That has no counterpart in the foreshadowed regulations proposed by the Rudd government.

So we are faced already just at this stage with the undeniable fact that the President of the United States, Barack Obama, is disposed to give more protection to American workers than Kevin Rudd is proposing to give to Australian workers. The United States government—and its congress—is more committed to protecting American jobs as it designs its scheme than the Rudd government is concerned about protecting Australian jobs. That is just the tip of the iceberg. I see the Parliamentary Secretary for Climate Change sitting opposite me at the table. He knows that very well, he knows the force of these points and that is why he is, even as I speak, in intense discussions with some of these industries as the government desperately scrabbles to try to change the as yet unpublished regulations.

This is too important a transition to do in a rush; it is far too important. There are thousands of jobs, perhaps hundreds of thousands of jobs, to be affected here. This is a global effort and anything we do in Australia is futile unless it is matched by global action. We know that. Having said that, I know we recognise that it is not defensible for Australia to say, ‘We’ll be the last one to move.’ Obviously, we want to move as part of a global movement. But, plainly, the country that will have the most influence in this exercise is the largest economy, the largest industrial country and the largest polluter in terms of its CO2 emissions—although perhaps now falling a bit behind China; nonetheless, it and China are the two largest emitters—the United States of America. That is the benchmark. Common sense says we should not finalise this legislation until we have seen what the Americans do.

Now what have the government been saying to business? Let us think about what the government have said to business. They have said two things. Firstly, they have said, through the parliamentary secretary last week, ‘Sign up now or what you’ll get next year will be worse.’ The parliamentary secretary was reverting to his old trade union approach, a bit of bullying. That was greeted with a raspberry from the business community. The other thing that the government are saying, the other part of their pitch, is said somewhat under their breath: ‘Oh, don’t worry. We’ll change all the regulations next year anyway.’ So what price certainty, because the thing that we have been told is that we must approve this scheme now to give business certainty. But how can there be any certainty if the essence, the essentials, of the scheme is in the regulations and the regulations, which have not been published, are in a state of constant amendment and negotiation and in any event will be amended next year after the Americans have legislated and the Copenhagen conference has concluded?

What then is the rush? Where is the rush? There was an argument for legislating this year because the Prime Minister had a self-imposed starting date for the scheme of 2010. It was going to start on 1 July next year, so common sense said it had to be legislated this year. The Prime Minister has now said it will not start until 2011 and when it starts it will not actually be a trading scheme at all because the permits will have a fixed price. It will be a carbon tax for the first year and the trading will not actually begin until 2012. There is now absolutely no reason at all to legislate for this this year.

What about Copenhagen? Does the Prime Minister need to go to Copenhagen with a legislated scheme? The answer is plainly he does not. The only thing the parties at the Copenhagen conference will want to hear from Australia is what sort of target Australia will support. The Prime Minister has laid out some targets. We have given him our bipartisan support for those targets to go to Copenhagen. That is all he needs.

The Danish Minister for the Environment was here in Australia recently and spent some time with several of my colleagues, and she was quite explicit in saying that her government did not expect, nor were they particularly interested in, the details of any scheme we had in Australia. They simply wanted to know what targets we would support. That was the essence of it. That was what they wanted to hear.

There are many other flaws in this legislation. There is insufficient time and the hour is late, so I will not go through them all, but I will just touch on a key omission. In the fight against climate change, it is important always to remember the value of what we have often called in the past ‘least regrets’ or ‘no regrets’ policies. Ideally, if we can reduce or offset emissions by policies that have collateral benefits, we should plainly do so. That is common sense. Our greatest comparative advantage is our real estate—770 million hectares of it. Our massive landmass is our greatest advantage. We have the ability in Australia to offset hundreds of millions of tonnes of CO2 emissions through improving the soil carbon across Australia, improving the productivity of our soils and improving the productivity of our agriculture, yet that form of carbon sequestration, of carbon offset, is not to be recognised in this scheme. It is recognised in the United States. Those credits generated by farmers through more sustainable tillage and other agricultural practices are traded every day on the Chicago Climate Exchange.

That is why we have proposed the establishment of a voluntary carbon market that can take advantage of credits of that kind and others, such as biochar, from the beginning of next year. We have so many opportunities, through avenues which we have called ‘green carbon’ or ‘biocarbon’, that are being ignored by the government for no reason at all. The Minister for Agriculture, Fisheries and Forestry thinks he is a great fellow because he is proposing to spend $1.4 million on researching biochar. He can do that, but the reality is that biochar, which is a form of charcoal, once created from forest waste or crop waste and returned to the soil, sequesters carbon. There is no doubt about that. From the point of view of recognising it in an emissions trading scheme or a carbon trading scheme, there is absolutely no question about the science or the fact that that charcoal, once restored to the soil, does result in carbon being stored—just as much as if it is taken from a coal fired power station and pumped under the ground. Yet, despite that, the government declines to recognise it.

This is a poor scheme. It threatens jobs. It already has the potential of being dramatically out of step with the largest developed nation and the nation which will have the most influential benchmark, the global benchmark. I will mention just one other area, because I know it is of great interest to several of my colleagues. One of the curious omissions from the Rudd government’s so-called Carbon Pollution Reduction Scheme is recognising the value, as a carbon credit, of generating energy from coalmine methane—from taking methane out of gassy coal mines. That has been ignored, yet here it is recognised and deemed to be a renewable energy source under Waxman-Markey in the United States.


Mr Hunt —And Germany.


Mr TURNBULL —The member for Flinders says, ‘And Germany,’ and there is no doubt that he is correct. Why would we want to be out of step with those countries? What possible argument is there for doing that? That is the problem with rushing into this scheme and trying to reinvent a carbon trading scheme without regard to developments overseas. There is a better way to go about this, and that is to defer consideration of the bill until the Copenhagen summit is concluded, we have seen the American legislation and the Productivity Commission has reported and done the analysis that has not been done by the government. I move:

That all words after “That” be omitted with a view to substituting the following words: “the House defer consideration of the bill until the following have occurred:

(1)   the Copenhagen Climate Change Summit at the end of this year has concluded;

(2)   the Barack Obama administration in the United States has clarified its intentions in this area;

(3)   the Government has referred its Carbon Pollution Reduction Scheme (CPRS) to the Productivity Commission so that it may conduct a six-month review to:

(a)   assess the national, regional and industry sectoral impact of the CPRS in light of the global financial crisis;

(b)   assess the economic impact of the CPRS in light of other countries either not imposing a price on carbon comparable to that proposed for Australia or imposing such a price after different assumed periods of delay; and

(c)   conceptually and empirically examine the relative costs and benefits (including emissions reductions) of the key alternative scheme designs against the CPRS; and

(4)   the Productivity Commission’s reports on these topics have been publicly released”.


The DEPUTY SPEAKER (Ms AE Burke)—Is the amendment seconded?


Mr Robb —I second the amendment.


Mr TURNBULL —I heard the member opposite make a point about climate scepticism. Let me say this in conclusion: the basic flaw in the government’s approach to this issue is that they treat it as a political issue, not as a scientific and economic issue. The objective of an emissions trading scheme is not to prove that Kevin Rudd is greener than me, greener than John Howard or greener than anybody else; the objective is to effectively reduce emissions at the lowest cost—that is the objective. We must recognise that the key to that is design. It is not a question of being for or against an emissions trading scheme. There are few people nowadays that do not agree that a price on carbon is inevitable in the world in the years ahead. How we put that price on carbon is the critical question.

The parliamentary secretary can chuckle away. But he would not be chuckling if his government’s inept management of this issue, if it were to be fulfilled, resulted in the loss of thousands of jobs—by members of the unions that he used to be proud to represent. This scheme, if implemented in accordance with its terms, will be a job destroyer. The parliamentary secretary recognises that—that is why he is scrabbling to change it. We have the time to get it right. We have the means to get the expert advice, the objective advice that has been denied us, from the Productivity Commission. We have a responsibility to protect the jobs of Australians and not to sacrifice Australian jobs for no environmental gain.