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Wednesday, 3 June 2009
Page: 5431

Mr MORRISON (12:44 PM) —The religious phase of this debate on the Carbon Pollution Reduction Scheme Bill 2009 and related bills is over, yet listening to those across the chamber that have spoken before me throughout this day you would think it was still going on. This is not a debate about religion; it is not a debate about belief; it is now a debate about action—the action we need to take—and not about whether we need to take it. Labor do not actually want that debate. Labor do not want a debate on what they are proposing to do. They want to have a debate about these broader philosophical questions.

Labor wish to arrogantly assert to this parliament, to our fellow Australians and indeed to the world that there is only one solution to addressing our shared commitment to reducing carbon emissions. I stress ‘our shared commitment’ because, in a rare gesture in the history of this parliament, we have a bipartisan position on the carbon reduction targets that have been put forward and offered by the coalition for the government to take to the conference in Copenhagen. But, no, the government have made it quite clear that they believe there is only one solution—the solution of Reverend Rudd—and this position is the one that must be followed or we will go down the path of eternal damnation. This is the language that suits the arguments being put forward by the government, because it does not suit them to have a debate about the specifics of the action that they are putting before this parliament—I should say ‘not putting before this parliament’, because the devil in the detail sits in the regulations. What we are seeing in this bill is a request from the government for a blank cheque—a blank cheque to put this system in place—and ‘just trust us’ on the details that will determine the future of Australian jobs.

There are a suite of tools we need to embrace to reduce emissions. I believe an emissions trading scheme, in one form or another, is one of those tools. Placing a price on carbon, as the Leader of the Opposition has said, is inevitable. However, when and how we do this as a nation is the question. The timing is critically important. Just like in surfing, if you move too early on that wave it will crush you; if you move too late you will miss a genuine opportunity. So this is a debate about the specifics of action, not the question of action, and it is a debate about the sense of judgment on timing.

We must be realistic about the future we embrace and the facts that we are faced with as a nation. Any action will not do in addressing this challenge. It must be the right action. We cannot allow Australians to pay the price with their jobs and their livelihoods for an ineffective and indulgent scheme driven by guilt rather than reason. Australia needs an ETS that suits our circumstances and addresses our needs, a scheme that will cut, not export, emissions and a scheme that will protect, not export, Australian jobs.

The facts are these: we produce 1.4 per cent of the world’s carbon emissions. Our competitive advantage as a nation over more than a century has been built upon our natural resources advantages and our relatively cheap cost of energy as a result. We simply cannot throw that away on some sort of whim or as some form of gesture. The future of carbon trading also will be determined elsewhere. As a small emitting nation these schemes and the future of these schemes will be determined principally out of the scheme to be determined in the United States and in other places. So there is no need for our scheme to be finalised before the Copenhagen conference, which is just six months away. We have committed to the targets which enable the government to go and participate constructively in the debate in the position of leadership that the coalition has afforded them by taking a bipartisan position on this, but there is no need for the details of our scheme to be in place before that conference. There is a delusional view on the part of the government and particularly the Prime Minister about his own level of significance and influence on these matters rather than anything based on any genuine need that is in Australia’s interests. It is not in Australia’s interests for our trading scheme to be finalised before Copenhagen. The government’s scheme is not intended for introduction, as we just heard from the previous speaker, until 2011, and for actual trading in 2012. There is no rush; there is no need. There is no need for this bill to be pushed through this parliament at this time other than for the vain and political motives of a Prime Minister who has simply lost control of his own ego.

These are the things we need to know in order to consider this scheme. We need to know the final design of the US scheme. We need to know the cost of going it alone, and that is the substance of the coalition’s amendments which were put forward by the Leader of the Opposition last night. This is information we need to know to make good decisions in the interests of all Australians. We need to know what the impact of this scheme will be on our growth as a nation for the next five years, 10 years, 20 years. Why? Because if you look at the budget papers you see that the government have forecast an economic miracle—12 years of miracle growth to pay off their absolutely unbelievable yet true level of debt. The government need to provide the information which answers this question: if we introduce this and we go it alone, what is the impact going to be on those economic growth forecasts and how much longer will Australians have to pay off Labor’s debt—how many years, how many generations—as a result of the introduction of this scheme in the way that it is currently designed?

We have some major problems with this legislation. We have a problem with its failure to afford appropriate protections to Australian jobs and export-intensive industries, as have been provided in the US under their scheme—far more generous arrangements. We have a problem with an overly complex scheme that will incur significant compliance costs which will trap business in an ETS compliance bog where they are forced to count every gram of carbon, which is not required under all schemes—there are alternatives. The scheme, as it has been designed, will undermine corporate balance sheets—as outlined by the member for Goldstein. It will introduce in this nation—this of all nations!—the idea of sovereign risk of investments. Who would have thought that, in a country like ours, which has, arguably, the most stable democracy of any in the world, this government could actually come up with a way of introducing a higher level of sovereign risk for major resource investments in this country? No wonder those who are responsible for resources and energy in the government are so sceptical of this scheme. This scheme also fails to provide additional complementary measures to reduce carbon emissions. Renewable energy initiatives—and the Leader of the Opposition has highlighted the issue of green carbon and green depreciation issues such as biofuels and algae as areas of offsets—provide important opportunities, but they are not addressed by this scheme.

In my electorate there are two big issues: the issue of oil refineries—with Caltex who are based in Kurnell—and also the issue of the aviation industry. In my electorate, I have a very high proportion of people who are employed in the aviation and related industries, but particularly in Qantas. My electorate has the highest proportion of Qantas employees of any electorate in the country. Caltex employ 541 employees at the refinery at Kurnell and more than 200 contractors—and often many more than that—who regularly go out and service the site. In their submission to the Senate Select Committee on Climate Policy, Caltex argue that the competitiveness of emissions-intensive trade-exposed industries must be maintained. They say:

Caltex’s two refineries will emit in total about 2.5 million tonnes of carbon dioxide equivalent … annually when the CPRS is in operation. At the CPRS-5 price scenario—

A price of carbon to achieve a five per cent reduction in carbon emissions—

this will result in a permit cost of about $25 million pa in the early years of the scheme, increasing to about $35 million pa (in $2005) by 2020. At the CPRS capped price, the permit costs would be $40 million pa and $60 million pa respectively.

…            …            …

These permit costs will not be recoverable because the prices of petroleum products from Caltex’s refineries are based on import parity and none of the overseas refineries that are our direct competitors … seem likely to adopt equivalent carbon costs for the foreseeable future.

…            …            …

In order to fully maintain international competitiveness, Caltex proposes that activities such as oil refining where prices are completely aligned with import parity should receive a free allocation of permits equal to 100% of Scope 1 and Scope 2 emissions, until such time as all significant import competitors face equivalent carbon costs.

These competitors would include Singapore, India, Korea, Japan and China. And, as we heard from the Leader of the Opposition last night, this is exactly the level of opportunity and protection which is being considered in the US scheme—that, until the rest of the world catches up, the US government is not going to risk US jobs.

In the area of aviation, the Qantas submission to the Senate Select Committee on Fuel and Energy said that the government’s ETS did not recognise aviation as emissions-intensive trade-exposed industry or strongly affected industry and ‘would have airlines pay for 100 per cent of their carbon permit obligations immediately’. Qantas further stated in their submission:

Unlike many other emissions intensive industries, aviation will not be given transitional assistance.

It is the view of Qantas that the impact of the CPRS on domestic aviation ‘will be extensive, as the ability to offset the introduction of a carbon cost is limited’. Qantas said:

The introduction of an emissions trading scheme would effectively increase the cost base of airlines, just as the rising cost of fuel has, with associated negative implications for regional communities and the tourism industry.

This legislation is just not done—it is not ready; it is undercooked. It is not ready to go, and it should not be supported. The government should heed the advice of the opposition. Common sense should prevail. They should put jobs first and they should ensure a scheme such as this reduces emissions and does not just export them, as is the plan.