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Wednesday, 28 October 2009
Page: 11197


Mr TRUSS (Leader of the Nationals) (11:06 AM) —Today we are again debating the government’s proposed Carbon Pollution Reduction Scheme, in the Carbon Pollution Reduction Scheme Bill 2009 [No. 2]. It is the same legislation that the Nationals, the Liberals, the Greens and most Independents rejected just a few months ago. The only friends of this legislation are Labor. None of them are ever prepared to go outside and defend its implications and its contents. Yes, they come in here, as the previous speaker did, to talk about the impact of climate change on the weather. But no-one will explain how Labor’s CPRS will actually fix the problem. No-one is out there defending the clear deficiencies in this legislation. No-one is explaining how Labor’s CPRS will actually reduce CO2 emissions or how Labor’s CPRS will actually make a positive difference to the environment.

I know that there are many government members who know that this is bad legislation, but they are too afraid of their party bosses to speak out and tell the truth. These are the same bills that use regional Australia for target practice. They destroy jobs and investment and do nothing to benefit the environment. Indeed, this legislation as it stands, with Australia acting alone on a CPRS, will increase global emissions. This legislation will actually increase global emissions, not reduce them, as industry deserts Australia and goes to other parts of the world which do not impose these new taxes and new costs.

In contempt of the parliament, Labor have reintroduced these bills even though they know that they contain drafting errors. They have not even fixed the drafting errors, yet they bring them back into this House, treating the members of this parliament like fools by expecting them to vote for things that they know are technically deficient. I wonder how government members can explain to their constituents why they are voting for legislation which they know contains drafting errors. They will not even fix those. The reality is that this legislation is not about the environment at all. It is simply a political stunt.

This bill will establish a massive new bureaucracy with draconian powers, powers that the tax office does not even possess. Executives will require a lawyer by their side virtually every time they make a decision. It reverses the onus of proof in relation to a whole range of issues, should someone offend the sensitivities of this bill. There will be thousands of pages of new regulations. We have not seen them yet, but we are being asked to trust the government when it says that these regulations will be drafted in a sensitive and appropriate way. But they are being designed by people in the environment department, people who have no understanding of industry, people who do not know how mining and agriculture and commerce and transport actually work. There are some ministers—like the minister at the table perhaps, the member for Rankin—who could make a constructive contribution to drafting the regulations, but departments like his or the minister for industry’s are not included in this process. It is being done by the environmentalists, and everyone therefore has concerns about the practicalities of the result.

Ninety per cent of Australians admit that they do not understand Labor’s CPRS, yet no-one from Labor is trying to explain how the CPRS will actually work and what its real benefits will be. Frankly, I think the other 10 per cent of Australians are lying. This bill is so complicated, so massive, so self-contradictory and so full of new concepts and regulations that it is impossible for anybody to have an accurate understanding of its implications.

Prime Minister Rudd does not need this legislation to go to Copenhagen. No other country is going to the UN climate conference with a legislated CPRS—no other country. All the UN is asking is for countries to come with targets, and Australia agreed to those targets many months ago. The Prime Minister has everything in his kitbag that he needs now. He does not need to have legislation which no-one else in the world will have and which no-one else in the world is interested in. It is completely ridiculous to suggest, when our Prime Minister turns up in Copenhagen with this legislation in his pocket, that the US, the Europeans, the Africans and the Chinese will all say: ‘Wow! That’s what we’ve got to have. Let us all sign up to your legislation.’ The reality is they will be completely disinterested in it and it will make no impact.

Everyone also knows that, when and if there is an international agreement, this scheme will be irrelevant. The world is not going to adopt a scheme that looks anything like Labor’s CPRS. Even if we have an emissions trading scheme, even if we have commitments to reduce CO2 emissions, they are not going to come through a scheme like Labor’s CPRS. So Australia will be out there by itself with a scheme no-one else is interested in, thereby ensuring that this scheme will never achieve any of its objectives.

The government have been very keen to isolate industries which have any opposition to their proposal. I was asked to speak about 12 months ago at a Food and Grocery Council dinner, because the Prime Minister had decided not to go. Maybe it had something to do with the fact that the Food and Grocery Council were drawing attention to the fact that the CPRS Bill would have a significant effect on Australia’s food prices, the cost of processing food in this country and our capacity to feed our nation in generations ahead. A few weeks later, the mining industry also had the Prime Minister suddenly withdraw his agreement to speak at an event and so the Deputy Prime Minister came along. At one stage in her speech, she asked her Labor colleagues who were present at that gathering to stand up to show their support for mining, and only two did.

So that is where the Labor government is coming from with its CPRS. It has no understanding of agriculture or the food processing sector. Labor is proposing the only emissions trading scheme in the world which will include the mining sector. This is the only scheme anywhere in the world that includes and imposes heavy costs on mining. The European scheme exempts them. The proposed US legislation exempts them. But Labor is proposing to impose billions of dollars in taxation on this sector.

Is it any wonder that coalmining companies see this as the end of 10,000 or more Australian jobs? At least 16 mines are likely to close, but there will also be ramifications in other sectors. The Australian mining sector, the proud leader of our economic growth, will suffer seriously from the cost implications, and as a result the Chinese, the Japanese and others will buy their coal from Indonesia, their iron ore from Brazil or from any other country in the world that does not impose these taxes. In fact, they can get it from the United States and it will not impose these taxes. Even the Europeans, who are often put up as the world leaders in their concern about CO2 emissions, do not impose these sorts of taxes on their mining sector. Only Australian Labor’s CPRS will impose these costs.

There are many fundamental difficulties with designing an ETS. Labor’s proposals make that obvious. An ETS cannot be painless, as the federal government likes to pretend when it is talking to pensioners, consumers and low-income Australians. If it is going to work, it has to be painful—in fact, very painful, so painful that people stop doing the things that they want to do that are assessed as damaging the environment and do without. Will they turn off their air conditioners on a hot day so they can reduce their CO2 emissions? Frankly, I do not think Australian people are likely to do that. They may go without food or without a visit to their relatives, but they are going to want to keep cool on a hot day or keep warm on a cold day.

If, in fact, the government does as it says it is going to do—as part of its CPRS package provide compensation to people who have to meet the higher costs of electricity, food and the other things they buy in this country—that is another reason why they would not switch off their air conditioners. They will be subsidised to run them. Other people whose wages are dependent on CPI rises will have their higher costs flow through into their wage structure and, therefore, also will lose the incentive to change their behaviour. So the reality is that the scheme will not of itself deliver reductions in CO2 emissions.

Emissions trading schemes always include exemptions, free permits and concessional arrangements. This scheme includes them as well. In reality, of course, no-one is truly exempt, because the increased costs flow through to them and will inevitably be passed on to consumers. However, each concession creates anomalies. You have birthday cakes all over the place. You have some industries that are in and other industries that are out. The more sectors you exempt, the harsher you have to treat those that are being taxed if you are going to raise the revenue that the government obviously has in mind resulting from this scheme.

Last Thursday Don Argus, one of Australia’s leading businessmen, had some things to say about the emissions trading scheme, which I think are very important. Friday’s Australian reported his speech in this way:

Now, when a banker of legend who is the titular head of Australia’s global resources house starts telling you, unequivocally, that unfettered markets will not always work, then it might be wise to listen.

…            …            …

Argus acknowledged the admirable intent of the scheme: to use market pricing to effect a reduction of our carbon footprint.

But he insists that all the emissions trading schemes, as currently designed, will fail. The idea that the markets will fix a real price for carbon and consumers will manage their demand accordingly was “great in theory”, Argus said. “But there are some very smart guys who will make a buck and I am sure they will not be worrying about CO2 emissions.”

The problem is that the price of carbon is inevitably going to vary across international constituencies and that will create arbitrage which will, in turn, fuel a new, hyperactive market for carbon permits and a whole new set of derivatives.

Traders, says Argus, have quite different objectives to governments and global warming bureaucrats. “A trading mentality will not get CO2 out of the atmosphere,” Argus said. He warned that not enough had been done to appreciate or anticipate the “unintended consequences” of a market-based solution.

“We haven’t learned the lessons of the financial system,” he said.

Here is the Labor government, which has been vocal in its criticism of world financial markets, now advocating the establishment of a giant new trading scheme. The reality is that an emissions trading scheme will deliver rich traders but a poorer environment. Simply shuffling paper, selling bits of paper time and time again, will not reduce CO2 emissions. A trading house on the top floor of a capital city building is so remote from the person being asked to switch off their light bulb 1,000 kilometres away that the impact will simply be nonexistent.

This is a scheme that is backed by the bankers and the traders, but the environmentalists, industry and Australian workers will be the losers. Labor talks a lot about green jobs. I can tell you where the green jobs are going to be. They are going to be in the houses of emissions traders, in the houses of the bankers and of course in Work for the Dole schemes.

Initiatives like MRETs, compulsory inclusion of ethanol in fuel, incentives for energy efficient buildings, alternative energies and sequestration will actually deliver real results. A trading scheme will not. These days many markets are global and with an increasing proportion of production exported to other parts of the world. If the purpose of an ETS is to change consumer behaviour, why not impose the tax on the consumers rather than the producers?

Many of these other options have never been properly debated or considered by this parliament or by the government. They are simply dismissed out of hand. Anyone who raises an alternative suggestion is not met with a rational argument as to why that is inappropriate, they are just accused of being dinosaurs or climate change sceptics. You are not a climate change denier if you advocate a different system of reducing CO2 emissions than the one being proposed by the government. You are not a climate change denier if you want to address these environmental issues in a different way. The way this debate has been treated by the government is insulting to the Australian people and insulting to those who want to address these issues with goodwill.

This scheme is full of anomalies and none of those anomalies have been corrected in this legislation. Why do you tax some of the energy efficient transport sectors more intensely than those that are less energy efficient? Why should electric passenger rail services be slugged with new taxes on electricity but those who drive their car to work will not be taxed, at least in the initial years? If you fly to North Queensland for your holiday, you will pay an emissions tax but, if you go to Vanuatu, Fiji, Dubai or the United States, you will not. If you need the Royal Flying Doctor Service to take you to hospital, you will incur a new tax but, if you go by ambulance, you will not.

It is simply inevitable that Australia’s do-it-yourself CPRS will be flawed—probably fatally flawed like its European predecessors. Like the Kyoto accord, it is artificially contrived and therefore ripe for manipulation and will produce few, if any, real environmental benefits. Labor’s obsession with signing Kyoto should provide lessons for the CPRS debate. Kyoto has not saved a single polar bear, or the Great Barrier Reef, and it has not filled the Murray, as Labor claimed it would before the last election. But it has now meant that Australia cannot undertake a whole range of carbon mitigation measures and sequestration that nonsignatories to Kyoto can.

A US farmer can get credit for sequestering carbon but an Australian farmer cannot. The Chinese can generate electricity from gases in a disused coalmine but in Australia you cannot, yet an Australian industry can buy those credits from China and use them in Australia. What sort of a scheme is this? It is a load of nonsense and it is an example of how environmental objectives were used as an excuse to effectively transfer industry from countries like Australia to developing countries like China and India and Korea. But it also ensures that the very things that we could be doing today to reduce CO2 emissions in fact are unaccredited under the Kyoto process. Labor needs to explain why it is that Australians are not able to undertake carbon sequestration activities which are known to work and which almost every other country in the world can do, but which are not going to be allowed for Australians. This is a really odd policy if it is designed, as the government claims, to actually do something about the environment. What sort of an environmental treaty is it that actually prevents Australia from undertaking CO2 reduction projects which nonsignatories can undertake, yet we can buy the credits from them? This is simply a nonsense and it is one of many examples of how Labor has not thought through the impacts of its emissions trading scheme.

We should not accept an ETS that is just a guise to raise vast new tax revenues rather than deliver environmental benefits. There is a $50 billion-plus bonanza of tax revenue in this scheme for the government. That is why they are interested in it—a bankrupt government with big spending projects in mind and its eye on the $50 billion of revenue. This is about taxation. It is not about the environment, and Labor has been dishonest in the way in which it has portrayed the scheme to the Australian public.

The Nationals have had a consistent view that the government has been more concerned about creating new money-shuffling bureaucracies and a gigantic new drain on taxpayers’ wallets than actually helping with the environment. We have consistently regarded Labor’s scheme as particularly harsh on regional Australia. Indeed, regional Australia will cop it in the neck. Regional Australia is where our energy is produced and our exports created. We are the people who will lose the jobs. We are the people who can create emissions credits, who can do the work, but we are being denied the opportunity under Labor’s scheme.

It is hard to believe that the successful passage of this bill will make any difference to global emissions. The government’s resource minister admitted as much when he said that China was building so many new coal fired power stations that the impact of Australian efforts will be almost nonexistent. So this scheme is of no value. There are proposed amendments that may well improve the scheme and we will be prepared to support those that are of value. But this is the bill that we were asked to vote on three months ago. It has not changed. We voted against it then and we will be voting against it now. (Time expired)