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Wednesday, 3 June 2009
Page: 5391

Mr TRUSS (Leader of the Nationals) (9:56 AM) —The Carbon Pollution Reduction Scheme Bill 2009 and related bills seek to impose on Australia the most radical economic change in memory. In the name of addressing climate change, Labor plan to implement their version of an emissions trading scheme, which they have named the Carbon Pollution Reduction Scheme. The scheme is like no other in the world and its impact on industry in Australia will be dramatic—costing hundreds of thousands of jobs—but its benefit to the global environment will be negligible and probably negative. Labor’s CPRS is friendless. It has been rightly criticised by industry for destroying their viability and international competitiveness and by environmental groups for not delivering real climate benefits. Both are correct, and that is why the Nationals oppose Labor’s scheme.

Australia produces just 1.4 per cent of the world’s CO2 emissions, and that share is going down. We are not even among the top line per capita emitters. We cannot repair the world’s climate by ourselves. Government spin implying that their CPRS will save the Barrier Reef, flood the Murray and stop bushfires is simply dishonest. Climate change issues are global issues and require a global response. Australia must be willing to play its part and, indeed, accept a leadership position. But our efforts, no matter how painful and devastating to Australian industry, will be puny if they are not part of genuine global action—from not just the developed countries but also the developing countries. The Prime Minister, when he is talking about Australia’s financial problems, excuses himself by blaming the rest of the world. But, when it comes to climate change, he asks us to believe that he can do it all himself. But he has never been able to explain why a 100 million tonne decrease in Australia’s emissions will counter a 10 billion tonne increase in China’s emissions.

In the middle of his recession the Prime Minister plans a major cost imposition on Australian people and our industry. He knows not how many jobs will go or where, because no modelling has been done. Perhaps the biggest reductions in emissions will come from factories that close. But Australia will not stop buying the products; we will import them from countries that do not have the extra cost of a CPRS and where environmental and emissions standards are less demanding. Global emissions will increase when Australian industry closes. There will be no benefit to the environment. Aluminium smelted in China will emit 60 per cent more greenhouse gas than aluminium smelted in Australia. Food production in Australia will emit less CO2 than food from Asia. Making cars in Australia will do less damage to the environment than making cars in Korea.

Senator Williams provided this excellent example. Australia produces 10 million tonnes of cement each year. Each tonne emits 0.8 tonnes of greenhouse gases. If Mr Rudd’s ETS taxes carbon at $30 per tonne, it will cost the Australian cement industry $240 million a year. This will put it out of business. Our 15 plants will close, with the loss of 1,870 jobs in regional Australia. We will then have to import all of our cement from China, which produces one billion tonnes of cement annually, each tonne emitting 1.1 tonnes of greenhouse gases. The result will be that the 10 million tonnes Australia uses will produce 11 million tonnes of greenhouse gases, or three million more than now.

Labor’s CPRS will export emissions with the jobs. The products we import will not be subject to the carbon taxes, but what we produce locally will. So job losses will cascade and the trade balance will obviously deteriorate. The coal industry have estimated that 66,480 jobs will go in their industry by 2030. Where are the Labor members for Flynn and Dawson and for electorates in the Hunter and the Illawarra when they should be defending local industry and workers?

The best that anyone can say about Labor’s proposed emissions scheme is that it should be passed so there is certainty. This is being mouthed by a few rapacious bankers, some barely affected sectoral figures and multinational companies who will simply move their investment overseas if Australia introduces a CPRS—and they want to make that decision early. We all like certainty in an uncertain world. Let us not confuse the claims of those who see some political or financial advantage from the passage of this bill with the grim reality of its effect upon the vast bulk of Australian people. As Seamus French, the chief executive of Anglo Coal Australia, said, ‘We do not want the certainty of a bullet.’

Surveys show that most Australians believe our country should have an ETS, even though less than 10 per cent of Australians say they know what an emissions trading scheme is. It says something about the stampede mentality that has developed around this issue that three-quarters of Australians are in favour of something they do not even understand. Put simply, an emissions trading scheme is designed to change consumer behaviour by increasing the cost of goods and services that are considered to be damaging to the climate. Such schemes therefore increase the cost of electricity, transport fuel, mining, waste disposal and industrial processes so that we will use them less.

Labor is not levelling with the people. A CPRS cannot be painless and still work. Indeed, it has to be very painful if it is going to change behaviour. For instance, I am not convinced that Australians will turn off their air conditioning on a sweltering day even if it costs twice as much to run. People may well go without other things, like entertainment or even food, but they will want to stay comfortable for the day. People do not stop driving their cars when the price of petrol goes up. So people should not think that the CPRS will only hurt others—big business, miners or workers in other towns. It will hurt everyone.

To win public support for the CPRS, the government offers compensation to the poor and the disadvantaged within the community and to some industries that are adversely affected. All workers will be expecting compensating pay rises, but the compensation package undermines the consumer incentives that the scheme was designed to implement. If householders do their bit to lower their emissions under Labor’s CPRS, they get no rewards. They just allow somebody else to emit more.

The CPRS also includes exemptions—free permits or concessional arrangements. In reality, of course, no-one is truly exempt, as we will all have costs passed on to us. But each of these concessions creates anomalies. The more sectors that are exempt, the heavier the burden that must be borne by others. Perhaps most serious of all is that, if Australia has a harsh CPRS and other countries do not, investment activity and industries will migrate with their jobs to non-participating nations. Other countries know that. Canada and New Zealand have delayed their schemes and the USA is proposing an ETS which is tied to mesh with global progress on climate change. The Nationals believe Australia should do the same.

After the failure of the world to agree on very modest reforms in the Doha talks, it is likely to take a long time to achieve genuine global emission reductions, especially in our sector of the world. If we rush blindly ahead with the world’s harshest ETS now and others do not, our economy will be in ruins and the climate will be not one degree cooler.

Labor’s CPRS is artificially contrived. How an industry is affected depends on how the government writes the rules, and the government is asking for this legislation to be passed before the regulations have even been written. A simple change of words can cost billions but may not have any environmental benefit. The CPRS does not reward measured improvements to the environment as much as it rewards or penalises compliance with the rules the government writes. As with the Kyoto accord, the winners are the lobbyists and lawyers—not the environment.

Why are emissions from sheep and cattle eventually to be counted but not those from kangaroos or humans? Why is carbon sequestered in trees credited, but not what is sequestered in pastures, sugarcane or the soil itself? A simple change in the rules—in the words—to count all sequestration would dramatically reduce the burden of Labor’s CPRS and make it fairer without creating artificial distortions in environmental investment.

Labor is offering concessions to some industries. But, if it changed the rules and offered the same concessions to other industries, the outcomes would be different—maybe even better. Coal, cement, power and others will be given some free permits, not because they have any special environmental merit but because the government has decided these industries should be allowed to survive a little longer. Labor is picking winners not to achieve the best and fairest environmental outcomes but to respond to powerful lobby groups, the noisiest unions and other mates. Less powerful industries or those who do not enjoy Labor’s patronage, like farmers, will just have to endure the costs of the CPRS or cease to exist.

Labor’s CPRS will in fact affect some of the most efficient of the nation’s transport sectors. I will use a couple of examples from the transport industry because it is my portfolio area. Rail, coastal shipping and aviation will face much higher carbon taxes, while less greenhouse-friendly transport measures will be tax free. Electric rail services passengers will be slugged with new taxes on the electricity they use, but those who drive their own car to work will not. Those who fly to North Queensland for their holiday will pay Labor’s new emissions tax, but if you go to Vanuatu, Fiji or the United States you will not—great news for our tourism industry!

If you need the Royal Flying Doctor Service to take you to hospital, you will pay the new tax, but if you go by ambulance it will be tax free. If you put a container on a diesel truck from Melbourne to Sydney, you will get an ETS exemption, at least for a year, but if you put it on a coastal ship you will not, even if the ship is on an international voyage. If you live in remote Australia and need to fly to the city, you will be taxed, but if you can drive to the shops it will be tax free. The CPRS that Labor has designed for Australian transport could actually see greenhouse emissions go up rather than down.

Labor are great taxers, and the more I read about this proposal the more it looks to me like a way to raise vast amounts of new tax revenue rather than to deliver real environmental benefits. Labor’s scheme is planned to collect $13 billion by year 2, growing to $20 billion by 2020, much of which will be churned into compensation payments at the government’s discretion, or, I suspect, used to pay off its debt. There will be a major new bureaucracy to support it. Governments should never be allowed to lose sight of the primary objective of emissions trading. It is not intended to be a new tax. It is supposed to deliver a better environment for us and for future generations.

I know there are many people, particularly in regional areas, who ask why we are bothering with an emissions trading scheme at all. Many even question whether global warming is real. I note that even the government now tends to use the words ‘climate change’ rather than ‘global warming’. The government refers to a Carbon Pollution Reduction Scheme, as though carbon is dirty and evil, rather than something that is also an important promoter of life. The Garnaut report acknowledges, right at the beginning, that there are reputable scientists who question the majority view that climate change is real and that the consequences are serious. I receive documents from qualified people almost every day arguing that their fellow scientists have got it wrong, that the planet is actually cooling, that CO2 emissions are good for us or that climate change is just a normal part of the weather cycle. I have to say I find it amazing that scientists cannot agree on seemingly obvious measurements like: is the temperature going up or is it going down; are the icecaps getting bigger or are they getting smaller; is it raining more or less?

While I know there are doubters, it is beyond dispute that the majority of scientists believe the world is warming and that the potential implications are horrendous. If the icecaps of the Himalayas melt, 40 per cent of the world’s population, in countries like China and India, will go thirsty. If the Arctic Circle’s icepack melts, not only will it affect polar bears but ocean levels will rise, drowning some countries entirely and flooding parts of most Australian cities. Surely, if we are able to do something to prevent such a catastrophe, we should, even if our action has some cost.

If you want a more expert judgement, Professor Garnaut summarised it in this way:

The outsider to climate science has no rational choice but to accept that, on a balance of probabilities, the mainstream science is right …

But, for those who still have doubts that we should be taking action to combat climate change, let me remind you that we all take out insurance policies, even though we hope we will never need them. In the words of Rupert Murdoch:

The planet deserves the benefit of the doubt.

The Liberal and National parties are committed to a comprehensive response to climate change issues in partnership with the world’s major emitters. In July 2007 the former, coalition government outlined a major agenda to address climate change. We were prepared to provide leadership and to do our part, but we were also determined to ensure that we did not prejudice the competitiveness of Australia’s trade-exposed emissions-intensive industries.

An emissions trading scheme, even if applied globally, is not a total or adequate response to climate change. Our plan was more comprehensive. In government we invested $3.5 billion in actions to address climate change. In 1998 we became the first country in the world to establish a separate climate change agency, the Australian Greenhouse Office. We were on track to meet existing Kyoto emissions reduction targets. We funded projects from the $500 million Low Emissions Technology Demonstration Fund and put another $500 million towards technology to support the management of emissions from coal. We provided $1 billion to support renewable energy projects and established the world’s first mandatory renewable energy target, which generated $3.5 billion in renewable energy investments. We committed to funding a national research institute for geothermal energy, the CETO wave energy project and the phase-out of incandescent light globes, and we developed the National Framework for Energy Efficiency, the hot rocks geothermal demonstration commercialisation project and the Moomba Carbon Storage project. We have been active and we have delivered significant progress.

The Nationals are a practical party, made up of practical men and women from regional Australia. We are concerned with what is happening in our communities, not with mindless symbolism. We believe that Australia must play its part in addressing climate change issues, but an emissions trading scheme is not an end in itself and can only ever be a part of a comprehensive response. We believe there are practical measures that should be taken now. The CPRS should be set aside and a redesigned ETS developed when it can complement an agreed global scheme. Such a scheme needs to deliver emissions reductions without destroying Australian jobs.

Australia should continue to act to implement practical CO2 emissions reduction measures such as soil carbon sequestration, revegetation of marginal land, biochar, clean coal technology, carbon capture, the use of algae et cetera; open a voluntary carbon market to encourage the immediate recognition and involvement of individuals and communities, agriculture and business in sequestration, with bankable offsets; support energy savings initiatives in households, industry and transport to reduce emissions; support more-energy-efficient vehicles and more widespread use of alternative fuels; and engage the commercial building sector in improving the energy efficiency of city buildings and residential housing. These measures have the potential to deliver greater reductions in emissions than Labor’s CPRS, without the massive economic cost and job losses.

The nations of the world are committed to meet in Copenhagen later this year to develop an appropriate global response to climate change. They deserve to be given a chance. The coalition has offered the government bipartisan support for an unconditional reduction of five per cent in emissions from 2000 levels by 2020 and a reduction of up to 25 per cent if there is a comprehensive global agreement.

All along, the government’s approach to policy since the election has been all about doing something rather than doing the right thing. The Nationals and the coalition are determined to do the right thing. Now, in a recession, is not the time to introduce an emissions trading scheme ahead of the rest of the world—but neither will it be the right time when we are struggling out of recession. The government should put aside this legislation until after Copenhagen. The Nationals cannot support an extreme ‘go it alone’ approach to emissions trading which will actually not deliver environmental benefits.