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Wednesday, 28 October 2009
Page: 11318


Mr SWAN (Treasurer) (7:39 PM) —I rise tonight to support the Carbon Pollution Reduction Scheme Bill 2009 [No. 2] and related bills because they are critical to building the low-pollution economy Australia needs for our future. Tonight I have a pretty simple message: the time for dithering, the time for delay and the time for denial is over. The previous member was talking about these bills being rushed. I would hate to see him if he were really rushed. They have been at least 12 years in the making. There has been two years of intense work from the government and that follows a commitment that both parties took to the last election for action on an emissions trading scheme—and they talk about ‘the rush’. The fact is that there is an urgency about these bills but the government has dealt with them in a methodical way. We have presented a green paper; we have presented a white paper; we have presented legislation; and, there has been extensive scrutiny. We have been through one of the most comprehensive legislative processes in our history—and so it should be, given just how important this legislation is. Climate change is real and, of course, the economic and environmental consequences for Australia are real. We need to act now.

Australia is one of the hottest and driest nations on the planet. It is highly exposed to the impacts of climate change. If we are to protect our nation’s interests we must not delay any longer. To begin with, the business community in Australia is absolutely desperate for investment certainty. Our business leaders need certainty so that they can continue to invest with confidence. They do understand the need for a low-pollution economy and they know that this type of transformation requires long-term planning and strategic business investment decisions right now. This is a view that has been expressed by many business leaders. In a speech on 15 October, Heather Ridout from the Australian Industry Group said:

… many of our members are telling us that they are holding off making investments until there is a greater degree of clarity around domestic climate change legislation.

That is just commonsense. Then there is the following quote from Fiona Reynolds, the CEO of the Australian Institute of Superannuation Trustees. She said that the passage of legislation:

… will provide a clear signal and measure of certainty around which long term institutional investors like superfunds can begin to base investment planning and decision.

Industry is crying out for certainty. Just this afternoon the Minister for Resources and Energy and I attended a roundtable in the north-west of Queensland on renewable energy. We talked with investors, not just from this country but from around the world, about what can be done and what we can achieve, not just through our CPRS but also through our RET, if we just manage to get this legislative framework right and provide the degree of certainty that capital requires so that we can move forward with certainty. But that is not there and of course those opposite continue to deny the need for certainty. Business certainty is absolutely important in this debate.

At the end of the day what it means to the average Australian is jobs. Business investment is all about jobs and, most particularly here, the jobs of the future. There are very strong employment and growth reasons for acting now. The scheme is designed to help support the jobs of today, while creating the low-pollution jobs for the future.

Treasury modelling shows that Australia can achieve strong trend economic growth while making deep cuts in emissions through the CPRS. From an employment perspective all major employment sectors grow over the years through to 2020, substantially increasing employment from today’s levels. National employment is projected to increase by 1.7 million jobs from 2008 to 2020 and by 4.7 million jobs by 2050 while carbon pollution emissions allocation levels are projected to fall at least 60 per cent from 2000 levels by 2050. Average income is projected to increase by $4,300 per person over the 12 years from 2008 to 2020 with strong trend growth in GDP and GNP.

Treasury modelling also projects that by 2050 output in the renewable energy sector will be 30 times larger than it is today. This means jobs. Treasury modelling also shows that economies that act early face lower long-term costs—around 15 per cent lower—than when everybody acts together. So the case in terms of jobs is strong, but the case is also strong in terms of environmental impact.

On top of the economic advantages there is the environmental imperative. The Garnaut review found that current emissions trends would have severe and costly impacts on agriculture, infrastructure and iconic environmental assets in tourism destinations such as the Great Barrier Reef. Without action on climate change the Garnaut review showed that by 2030 the value of agricultural production in the Murray-Darling Basin will shrink by 12 per cent—and by 49 per cent by 2050. Likewise, the intensity and severity of bushfires are expected to increase so that, in the regularity of them, they will decimate our landscape and threaten lives and property.

We do understand that there needs to be an adjustment as we introduce the CPRS. The CPRS will reduce emissions, helping avoid those environmental impacts. Importantly, the scheme we have put forward does so in a way that protects low-income Australians. This support, I believe, undermines the scare campaign the opposition are trying to run on price increases. The government is committed to providing assistance to households to adjust to the introduction of the CPRS in three key ways. Upfront support will be provided to low- and middle-income households from 2011-12, through a package of direct cash assistance and tax offsets. All households will receive support to take practical action to reduce their energy use and save on electricity bills. Motorists will be protected from higher fuel costs by the application of cent-for-cent reductions in fuel tax for the first three years.

The compensation will fully meet the additional costs of pensioners, seniors, carers, people with disability and low-income households, and will help meet the costs of middle-income households. Around 90 per cent of low-income households, or 2.8 million households, will receive assistance equal to 120 per cent or more of the expected overall increase in their cost of living due to scheme. For middle-income families receiving family tax benefit part A the government will provide assistance to meet at least half of the expected overall increase in their cost of living from the scheme. The assistance package has also been welcomed by ACOSS. ACOSS said:

… ACOSS welcomes the Government’s commitment to provide cash compensation for low income households through the tax and payments systems to cover the expected energy price increases.

That brings me to small business, because here again the opposition are trying to run a scare campaign on the effects of the CPRS. Small businesses and self-employed people—like builders, plumbers or accountants—will not have to buy permits under the CPRS because they will not generate enough emissions to be liable parties under the scheme. These business people may face higher costs for some of their inputs—in particular, higher energy costs—but for most small businesses the impact of these price increases is expected to be modest, with the precise impact dependent on their energy intensity. The government will provide assistance here as well.

The fuel tax credit means that petrol prices will not rise due to the CPRS for the first three years of the scheme, and small business will be one of the key beneficiaries of the Climate Change Action Fund, which will provide $2.75 billion in assistance. The Climate Change Action Fund will assist small businesses, communities and regions to adjust to the CPRS. The government will also support larger businesses who would be most affected by the introduction of the scheme. The government is providing almost $4 billion to the most emissions-intensive electricity generators through the Electricity Sector Adjustment Scheme. This assistance is designed to assist coal-fired electricity generators with the introduction of the carbon price, and support investment in the Australian electricity sector.

Our generous assistance for emissions-intensive trade-exposed businesses will help guard against carbon leakage and provide some transitional assistance that will help support jobs. Energy-intensive trade-exposed industries will receive an initial free allocation of approximately 27 per cent of all permits. Free permits will initially be provided at a 90 per cent rate for highly emissions-intensive activities, and at a 60 per cent rate for activities that are moderately emissions intensive.

In addition, the global recession buffer will be applied for the first five years. Industries eligible for 60 per cent assistance get an extra 10 per cent, taking their rate to 66 per cent in 2011. Industries eligible for 90 per cent assistance will get an extra five per cent, taking their rate to 94.5 per cent in 2011. The CPRS white paper also explains that because the majority of coal mines are not emissions intensive it would be inappropriate to provide the whole industry with energy-intensive trade-exposed assistance. The government will instead provide $750 million over five years to assist the most gassy coal mines. This will provide associated benefits for the communities that rely on these coal mines for employment and economic activity. The delay in the start of the CPRS by one year and the $10 fixed price first year will provide the coal industry with significantly more time to prepare for the introduction of a carbon price.

Another scare campaign that the opposition like to run relates to farmers. The government has not made a decision on the inclusion of the agriculture sector in the CPRS. We have commenced a comprehensive consultative work program with 25 leading agricultural industry bodies and technological examination to look at possible future government policies in this area. Accordingly, the impact of the CPRS on farm incomes is expected to be small relative to annual variability in farm incomes and offset by productivity gains in the industry. The government is providing a number of measures to assist farmers. Agricultural producers will receive the cent-for-cent reduction in fuel excise for the first three years of the scheme, and agricultural producers may also qualify for funding under the $2.7 billion Climate Change Action Fund.

The final scare campaign that the opposition use is that Australia should not be acting ahead of the rest of the world. The reality is that something like 27 EU countries, the US, Japan, Canada, New Zealand and Korea have, or are developing, cap and trade schemes. Our critics, many of whom sit opposite, also say that we should wait until after Copenhagen. This is the same sit-and-wait attitude and approach they advocated during this global recession. It was the same sit-and-wait attitude that they put forward when they opposed tooth and nail our economic stimulus which has been absolutely essential to keeping this country out of the global recession.

The reality is that those opposite have never faced up to a hard decision. They can never absolutely face up to the decisions that go to the core of our economic prosperity. Whether it is taking the tough decisions in the middle of the global recession or facing up to the challenge of global climate change, they simply are not up to it. They have demonstrated it in this House time and time again, particularly during this debate. At their very core, they are simply climate change sceptics. They cannot bring themselves to join the modern world and face up to the challenges that each and every one of us has the responsibility to face up to as a representative of the Australian people so that we can pass on to our children an economy which is more prosperous and an environment which is more sustainable. That is something they simply do not understand because they are not up to understanding the challenges of modern government.

At the 2007 election, both major political parties put forward the establishment of an emissions trading scheme—both of them. Both of them put forward that proposal. The fact is that the commitment they made during that campaign has now been conveniently forgotten. It is absolutely clear that Australians want action on climate change and this government believes it is critical to take that action and to take it now. It is clear that business leaders want the certainty that will allow them to invest with confidence so that this economy and society can transition to a low-carbon future. They want action; they need it now. How rare a thing it is for a Labor government in this House to have the support of the business community, and the wider community. Those parties opposite that from time to time pretend they are somehow representative of the other side of politics or the business community once again are completely out of step with what is good for the economy in the long term and what is good for society.

The opposition has said that they are going to come to the table and negotiate in good faith. I am told that, so far, that is coming along. We welcome a detailed examination of their proposals. We look forward to negotiating with them in good faith, but I do have to say that the sort of commentary I have heard on the floor of this House during this debate would indicate to me that there are many members, including members of the front bench, that remain deeply sceptical about taking any action or about having an meaningful negotiation. Nevertheless, we on this side of the House will not be deterred from doing what is right for the country. And what is right for the country is the passage of this legislation through the House of Representatives and through the Senate. I commend the bills to the House.