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Tuesday, 11 October 2011
Page: 11433


Mr COMBET (CharltonMinister for Climate Change and Energy Efficiency) (17:00): I thank the more than 120 members for their contributions to the second reading debate on the Clean Energy Future legislative package. I particularly thank those who have made a constructive and supportive contribution. I would also like to thank the members of the Joint Select Committee on Australia's Clean Energy Future Legislation, in particular the chair, the member for Chisholm, and the secretariat, for all their hard work examining the legislation and for preparing such a comprehensive report. It is important to record that the majority report fully supports the passage of these bills.

The 19 bills comprising the clean energy legislation and the Steel Transformation Plan Bill represent one of the most important environmental and economic reforms in this nation's history. The science demonstrates that atmospheric and oceanic warming is occurring, that the climate is changing and that greenhouse gas emissions must be reduced to mitigate the environmental, economic and social risks that we face. Climate change is a threat that must be tackled internationally, but in which individual countries, including our own, must play their part.

The government's clean energy legislation addresses the science. It will reduce emissions and drive investment in clean energy. It will also ensure that Australia does play its part internationally. The centrepiece of the legislative package involves the introduction of a carbon price to our economy through the implementation of an emissions trading scheme. The largest emitters of greenhouse gases will be required to purchase a permit, called a carbon unit, for each tonne of carbon pollution they emit that is covered by the scheme, thus creating a powerful incentive to cut their pollution. This is a long overdue reform that will reduce the emissions intensity of our economy over time. It will drive innovation, productivity and competitiveness and it will create jobs. Investment in clean energy and low-emissions technologies has been stalled awaiting this reform. It is critical therefore that the parliament pass the clean energy legislation to provide certainty to business so that this investment can be unleashed.

I will address some of the specific arguments raised in the debate in order to correct the record and then briefly foreshadow some amendments that the government will move. Firstly, to address issues that have been raised concerning the Treasury modelling, I note that on the 21 September, last month, the Treasury released updated modelling confirming the Australian economy will continue to grow and grow strongly while emissions are reduced. The additional results in particular demonstrate that there will be no further impact on electricity prices in 2012-13 from the introduction of a carbon price compared to the original modelling.

An argument has also been put that Australia would be acting ahead of the rest of the world in pricing carbon. This argument conveniently ignores the action that is occurring around the world. It also disregards our own national interest in reducing carbon pollution and improving the competitiveness of our economy. One cannot ignore the fact that Australia is the highest per capita emitter amongst developing economies and that our future prosperity will be enhanced by making this reform. Delaying cutting carbon pollution will increase climate change risks, lock in more emissions-intensive investments and defer new investments in clean technology, industries and jobs.

The fact is that 90 countries, representing over 80 per cent of global emissions and over 90 per cent of the global economy, have now made pledges to undertake mitigation action. The European Union, for example, has for six years had an emissions trading scheme covering 30 economies. Australia's top five trading partners—China, Japan, the US, the Republic of Korea and India—have implemented or are piloting carbon trading or taxation schemes at national, state or city level. China, which is our major trading partner, plans to pilot by 2013 emissions trading in several major provinces and cities with a combined population of around 150 million and a combined GDP significantly larger than our own.

A number of members have also spoken to the specific impacts of the legislation on households, industries and jobs. The government is committed to supporting Australian households, Australian industry and Australian jobs as we reduce our emissions. The Treasury modelling shows that the Australian economy will continue to grow strongly at the same time as we cut pollution to reduce the risks of dangerous climate change. Real national income will continue to grow under a carbon price. Average incomes per person, in fact, will increase by around $9,000 from today's level to 2020 and by more than $30,000 to 2050. National employment will increase by 1.6 million jobs by 2020 with or without carbon pricing. All state economies will continue to grow strongly.

The government is proactively assisting heavily affected industries and regions to transition into the scheme, including through its jobs and competitiveness program, the steel transformation plan, the coal sector jobs package and programs to support clean technology. In fact, many emissions-intensive industries that are trade exposed will receive an average of 94.5 per cent of their carbon units for free in the first year of the scheme. This means that their carbon liability generally equates to less than one per cent of their revenue. There is therefore very significant support for jobs and competitiveness at the same time as a continuing incentive to cut pollution.

Some members have also falsely claimed that assistance to households will not be sufficient or long lasting or permanent. Let me be clear on behalf of the government in relation to this point. The household assistance payments and tax cuts will be ongoing and permanent. The clean energy payments will be indexed to keep pace with the cost of living. A second round of tax cuts in 2015-16 will provide assistance to cover the projected impact of the carbon price out to the end of the decade.

To meet the modest price impact of a 0.7 per cent increase in the CPI, nine out of 10 households will receive some combination of tax cuts and increased payments. Almost six million households will receive assistance that covers their expected average price impact and, importantly for a Labor government, over four million low-income households will receive assistance that is at least 20 per cent more than their expected average price impact. That is extremely important to pensioners and low-income earners in our society. The changes to the personal income tax system, which include a trebling of the tax-free threshold, will deliver genuine and enduring tax reform in addition to assistance for a carbon price.

The second reading debate has also included consideration of the $300 million Steel Transformation Plan, which will provide certainty to the steel industry so that it can invest and innovate to transform into a more efficient and competitive industry in a low-carbon economy. The plan will also promote positive environmental outcomes. Eligible corporations will need to provide an annual report to the government specifying the activities, including workforce skills development, that have been undertaken and are planned to be undertaken to reduce emissions and improve the environment. The Steel Transformation Plan will be additional to assistance provided under the Jobs and Competitiveness Program.

Some members have also commented on the cost of the package. The Productivity Commission's report earlier this year which analysed the comparative costs of climate change action across a range of countries found that all emissions reduction policies impose some costs, with implicit costs per tonne of emissions ranging from below $10 to above $400. The Productivity Commission are very clear in their analysis. An explicit price on carbon such as through an emissions trading scheme is the most cost-effective way for nations to reduce their emissions, and the fact is that the government's carbon price mechanism is the most cost-effective way that Australia can reduce its emissions by at least five per cent over year 2000 levels.

Some members have pointed to alleged discrepancies between the size of revenue collected by the carbon pricing mechanism and other countries' schemes. These comparisons that have been made are not valid as they simply do not compare like with like. A direct comparison of the equivalent market size of the EU scheme and the government's mechanism over the same time period of 2013 to 2015 shows clearly that the EU scheme is more than five times the size of the Australian carbon pricing mechanism.

A number of opposition members have also made absurd claims concerning the purchasing of emissions reductions on overseas carbon markets. The clean energy legislation does provide for linking with other international carbon markets and it does so to achieve the lowest cost emissions reductions in our economy. Let us be clear: a tonne of emissions validly reduced overseas has the same environmental benefit as a tonne reduced in our own economy. The atmosphere does not have national boundaries. Through international linking of carbon markets Australian businesses can source the lowest cost emissions reductions and we can also establish a common carbon price between our economy and that of our trading partners over time, thereby ensuring that carbon pricing does not disadvantage our industries. Opposition to international linking is economically reckless. It would more than double the cost of emissions reductions in our own economy and it represents an appeal to economic xenophobia.

On the issues raised concerning fraud and other types of crime, there are comprehensive oversight and strong compliance provisions in the legislation. Emissions units will be classed as financial products under the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. ASIC will be able to investigate and prosecute market misconduct and the ACCC will have the power to address anticompetitive behaviour. Emissions units will also be regulated by AUSTRAC under the anti-money-laundering legislation. Where the Clean Energy Regulator is given powers they are wholly appropriate and consistent with powers given to similar regulators.

In light of the joint committee's report and ongoing consultation on the government's plan, I will be moving some amendments on behalf of the government. In particular, the government has responded to the views of landfill operators, including local councils, by allowing landfill operators to surrender 100 per cent of their liabilities by using Australian carbon credit units created under the Carbon Farming Initiative during the fixed-charge years. This will allow many operators to acquire or generate inexpensive carbon credit units to meet liabilities, and I believe this will be welcomed.

Other amendments include further clarification of liabilities in relation to natural gas and drafting clarifications in relation to the residency requirements for household assistance. A number of companies in the consultation process have also expressed interest in having liquid petroleum gas included in the carbon pricing mechanism. The government is open to considering this in a similar manner to the way in which large liquid fuel users may opt into the scheme and we will consult on options for achieving it. No amendments however are proposed in relation to this at this time.

In conclusion, I would like to thank everyone who has worked with me and my colleagues in the development of this policy and the formulation of this legislation, including the Prime Minister, my parliamentary and cabinet colleagues, my staff and departmental officers. It has involved a tremendous amount of work and I have been very fortunate to be supported by many talented and committed people.

Australia does need to tackle climate change and as a parliament we have a responsibility to respect the scientific evidence and advice and to respond with an environmentally effective, economically efficient and socially equitable policy. The clean energy legislative package discharges this responsibility and will achieve these outcomes. I commend the bills to the House and I do urge members to put aside partisan politics and to vote in the best interest of our country and of future generations. Question put:

That the bills, not including the Steel Transformation Plan Bill 2011, be now read a second time.

The House divided. [17:18]

The Speaker (Mr Harry Jenkins)

Question agreed to.

Bills read a second time.

The SPEAKER: Order! Pursuant to the resolution agreed to by the House on 13 September 2011, I will now put the question on the Steel Transformation Plan Bill 2011. The question now is that the Steel Transformation Plan Bill 2011 be now read a second time. The House divided. [17:32]

The Speaker (Mr Harry Jenkins)

Question agreed to.

Bill read a second time. Messages from the Governor-General recommending appropriation for the Clean Energy Bill 2011, Clean Energy (Consequential Amendments) Bill 2011, Clean Energy (Household Assistance Amendments) Bill 2011 and Steel Transformation Plan Bill 2011 announced.