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Wednesday, 3 June 2009
Page: 5505


Mr RANDALL (5:51 PM) —I am pleased to be on the record this evening in relation to the Carbon Pollution Reduction Scheme Bill 2009 and cognate bills. The coalition of course recognises the need to take steps towards reducing greenhouse gas emissions, but an effective and responsible approach is needed. The government has run up a bill of $315 billion, or one-third of a trillion dollars, in 18 months, and that is going to take generations to pay back. It has a plan that is likely to cost jobs, drive up inflation, inhibit business growth and investment and hit household budgets.

A global response is necessary, not the response of an overzealous Prime Minister. Cutting Australia’s emissions alone will not solve global warming. The big emitters such as China, the United States and India need to get on board. That is what Copenhagen is about. The global community will look at targets, actions and building an effective global market. But Prime Minister Rudd cannot wait until December because his vanity has got the better of him. An editorial in the Financial Review on 28 May this year hit the nail on the head. It says that the government:

… can afford to delay the passage of the legislation to get the detail right. It emphatically should not be holding the future of the economy hostage to the timetable of one of Prime Minister Rudd’s beloved international conferences.

Rushing the scheme to suit the Prime Minister’s political timetable would damage the Australian economy, cut jobs and result in businesses being exported to places where carbon emissions are free. So what is the result? The biggest polluters just keep polluting and there is little if any reduction in emissions, and developing countries will not have to comply because they are developing countries.

With Australia accounting for only 1.4 per cent of the world’s CO2 emissions and being one of only five countries to meet its Kyoto targets, it does not make sense to rush the CPRS without knowing the outcome of the Copenhagen summit and without the detail of President Obama’s plan. Canada has made the wise decision to defer its plans until the United States announces its measures. Canada’s action should serve as an example to Mr Rudd. It makes sense to wait for the world’s largest emitter to detail its plans. The US will have a much more powerful seat at the table in Copenhagen to influence the rest of the world, particularly the big-emitting and developing countries. A report in the Age newspaper on 24 November last year titled ‘Developing nations urged to slash carbon emissions’ spelt out that point. It said:

Executive Director of the International Energy Agency Nobuo Tanaka said “Developing countries will generate 97% of the growth in greenhouse emissions between now and 2030. After 2020 Brazil, Russia, India and China must participate. Without some of them it’s simply impossible to achieve the goals of limiting global warming by 2 degrees.”

Mr Tanaka confirmed that even if all the OECD economies reduced their emissions to zero it would not be enough.

I have said time and time again that the best thing you can do for a worker is give them a job. Under this flawed scheme an estimated 70,000 jobs will go. Many companies have already foreshadowed job cuts, including Rio Tinto, Xstrata, Bluescope, OneSteel, Ford and Envirogen. In Western Australia before the last election Mr Rudd promised that his emissions trading scheme would not disadvantage Australia’s export and import competing industries—yet another broken promise, costing export and import industries $12 billion in new taxes over five years and having a major impact on Western Australian operations.

Woodside’s CEO, Don Voelte, said last year that the CPRS would threaten up to $100 billion in new projects, and APPEA warned that the scheme could lead to a fall in growth in the LNG sector of up to 37 per cent. For every one tonne of emissions from LNG production in Australia, the reduction in coal production would save four tonnes in Japan, for example, and up to 9.5 tonnes in China. The Western Australian CCI has warned that the state’s international competitiveness should not be undermined.

In my electorate of Canning, Alcoa employs 900 people at Wagerup and more than 1,000 people at the Pinjarra refineries. These refineries see millions of dollars poured into the local economy. I recently had the pleasure of presenting certificates to those employees who have worked at the Wagerup refinery for more than 25 years. Alcoa’s current carbon footprint is less than half that of its Asian competitors. So we do it far better and far more efficiently. If the CPRS becomes unaffordable for the emissions intensive industries it may become cheaper to take operations offshore. That would cost Australian jobs and the Australian economy and do nothing to reduce global emissions. People in Canning cannot afford to lose the job opportunities that Alcoa offers. The company has already forecast job cuts at its Geelong and Portland facilities.

Alcoa needs to be sure that all emissions-intensive trade-exposed components receive at least 90 per cent credit assistance and that this remains until competitors adopt a comparable carbon price. Earlier this year Alcoa informed me that the cost of buying permits for refining is $25 million and the cost to Alcoa for all its operations with the introduction of the CPRS could be up to $95 million. That is a cost that Alcoa has to bear in full, making them less competitive with international companies that do not have to abide by an ETS. The cost cannot be passed on because the price is set by the London Metal Exchange.

Each year Alcoa exports $5 billion in products and 80 per cent of that stays in Australia. This is where there is a stark difference in the proposed American scheme. The draft US legislation includes provisions for 100 per cent protection of US export- and import-competing industries in any future emissions trading scheme until 2025, and protection will only be reduced when 70 per cent of the global industry have to abide by an ETS scheme. Doesn’t Australian industry deserve the same protection? If the Americans give their exporting industries that sort of protection, why aren’t we giving it to ours? Do we really want to export jobs and pollution because they do it less efficiently overseas? I can assure you I will be making sure the workers at Alcoa know what is before them if this scheme comes in and affects their jobs and their livelihoods.

Alcoa has already taken indirect action to address climate change. Globally its emissions are down 36 per cent on 1990 levels and the two refineries in Canning have cut emissions by 12 per cent per tonne over the same period. It has invested in energy efficient cogeneration, CO2 sequestration and carbon capture technology. There are two cogeneration plants at the Pinjarra refinery alone. This technology offers energy efficiency of 75 per cent, compared to only 30 per cent for conventional methods, and saves more than one million tonnes of CO2 emissions per year at Pinjarra, compared to coal-fired power. That is equivalent to taking 140,000 cars off the road.

Like Alcoa, BHP’s Worsley Alumina facility near Boddington has extensive revegetation programs to offset emissions. The mine’s capacity, rising from one million tonnes in 1984 to four million tonnes today, makes it BHP’s biggest carbon emitter in Australia. So the additional cost to them will be burdensome. Boddington Gold Mine, also to be in my electorate, is a $3 billion investment, which will make it the largest gold producer in Australia. It will support around 1,000 local jobs. When I visited the mine just a couple of months ago, BGM estimated that, depending on the price of carbon permits, the CPRS would cost anywhere between $15 million and $40 million a year, equating to up to $40 per ounce of gold, which certainly does a lot to their bottom line.

Finally, the coalition acknowledge the importance of taking a unified commitment to Copenhagen—an unconditional five per cent reduction on 2000 levels by 2020 and conditionally up to 25 per cent. But we do propose an earlier start to emissions abatement and the potential to build on the 2020 targets via voluntary action. Based on the Chicago Climate Exchange, our plan means Australians can take steps towards reducing emissions from 1 January 2010 with the knowledge that they will be credited for their work when the CPRS comes into full effect. It is an incentive that will encourage voluntary action. Considering the government has delayed the effective start date of this scheme until 2012, the adoption of these changes would give Australia a head start on meeting targets and would give Australia time to get its CPRS right—saving jobs and billions of dollars in investment  I reiterate: why would Australia put itself in the position of exporting jobs to developing countries which do not have to comply and exporting pollution to those countries which have industries that are far less efficient and are higher polluters than those in Australia? It just does not make sense.