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Monday, 22 June 2009
Page: 3935


Senator BACK (8:31 PM) —I rise also to contribute to the debate on the Carbon Pollution Reduction Scheme Bill 2009 and related bills this evening. I have been on the public record for 20 years saying that Australians have a responsibility to prudently manage our resources and minimise our impact on the environment. We inhabit the driest continent on earth and not yet have we come to terms with the challenges this presents. But the debate this evening before the chamber is not about global warming or the role that carbon may or may not be playing in this phenomenon; it is about the Rudd government’s proposed emissions trading legislation and the impact on Australia’s social and economic landscapes. This is a global issue and it requires a global approach. Australian industry and business, and indeed Australian workers, have no difficulty in shouldering an equitable share of responsibility in a global solution. We have a long and proud record of doing so. However, as we emit only 1.4 per cent of the world’s carbon, it is completely ridiculous for the Labor government to expect Australia to bankrupt itself in a misguided attempt to lead the world in reducing carbon emissions. World leaders do not expect it and know we cannot achieve it. Any attempt on Australia’s part will have an insignificant impact. This is simply an opportunistic attempt by Mr Rudd to elevate his profile on the world stage.

The global impact of World War I and Australia’s role in it has relevance to this debate. In 1918, at Le Hamel on the Somme, the iconic general John Monash broke ranks with his British counterparts and refused to send wave after wave of diggers at the enemy. Through meticulous planning and clinical execution, he marshalled limited resources in a most innovative and effective manner. In so doing, he changed the entrenched mindset of military leaders and changed the course of the war. This is Australia’s opportunity to take a leaf out of General Monash’s book and to develop innovative and effective strategies to deal with this current world carbon crisis.

Australia needs to focus on research and development if it genuinely wants to reduce global carbon emissions. Australia should be investing heavily in research and development in those areas where it can make a difference. Australia has a track record of success in this area, and it could donate the benefit of this research to developing countries or indeed sell the IT to wealthy countries. This would have an infinitely greater impact than attempting to reduce Australia’s 1.4 per cent of world carbon emissions.

What has the Labor government done to try to stimulate research and development in this area? Firstly, it has cut funding to the Low Emissions Technology Demonstration Fund. Why? Because it was an initiative of the Howard government. Initially, this program was to fund six projects, including carbon sequestration into an aquifer under Barrow Island. It involved a $60 million government grant and $780 million from the Chevon partners at Gorgon. The project was dumped. The second project involved oxygen production and oxy-firing to improve combustion of black coal. Again, that project was dumped. The third one was the drying and gasification of moist coal, which would have led to a 30 per cent reduction in the cost of producing electricity, a 30 per cent reduction in carbon production and a 50 per reduction in water consumption. Need I ask what happened to that project? It failed because of lack of financial support. Then there was a wonderful project involving new solar system technology, which would have yielded 1,500 times greater efficiency than existing solar cells with resultant carbon savings. But of course no funding was supplied. Under that program there would have been government expenditure of $500 million, with industry contributing more than $2 billion. What a lost opportunity in this climate of carbon issues.

In June 2010, the Desert Knowledge CRC based in Alice Springs will cease due to government funding being stopped. At the same time, of course, Land and Water Australia is to be terminated due to government funding being withdrawn. We know that funding to the Rural Industries Research and Development Corporation has been severely curtailed. All of these organisations have been engaged in world’s best practice research into matters associated with climate change, managing the impact of climate variability, weather forecasting and decision making as a result—matters that this evening have been addressed by our colleagues Senator Milne and Senator Cameron. All of those organisations would have had a direct, interesting and important effect on the capacity of farmers, pastoralists and Indigenous communities to deal with change, if indeed it is occurring. What has happened in all of these cases? Their funding has been reduced or they are to be discontinued. The world is facing a global shortage of foodstuffs and there has never been a more important time for research and development in this area. But what sin has each of these organisations carried out to incur this penalty? All I can assume is that they were focused on rural Australia, a region which regrettably is unknown and of little concern to the government.

I ask: what is the hurry? Consideration of this legislation before the world’s leaders meet in Copenhagen in December this year makes no sense. If passed, the scheme is not due to commence until July 2011, so why the hurry? Senator Evans told us today in question time that the delay is due to business uncertainty. Isn’t that the case! I can assure Senator Evans that one year will not resolve this uncertainty—in fact, 10 years will not resolve it—unless we get a unified approach from our regional neighbours and our trade competitors on carbon emissions trading to restore Australia’s certainty in business. If in Copenhagen Australia listens to and learns from what the United States and the other major players are planning, we may in fact amend our plans to conform to world’s best practice. There is nothing to be gained by passing this legislation at this time. It is simply a meaningless exercise in political expediency.

All that Australian companies are seeking in this emerging challenge of carbon trading is competitive neutrality. They do not seek advantage but they do demand that they enjoy a level playing field against international competition. What is the inevitable outcome of unfair competition from our overseas competitors? I will give you three examples. Firstly, the high-emitting export-exposed industries will move offshore to countries that do not have the same anticompetitive restrictions that we do. This, of course, will only add to global carbon emissions, as many of these countries will be less diligent, with the resultant leakage of thousands of Australian jobs offshore. Whatever my colleague suggests, our Premier is certainly talking about 15,000 jobs in our energy industries.

Secondly, we will see an acceleration of what we are already seeing—that is, multinationals winding back on investments in their Australian operations in favour of their overseas ventures while they watch to see the direction Australia takes. We are seeing it happen now, and unfortunately it is difficult to quantify what the effect of that is going to be because they are under no obligation to share their plans for expansion or reveal what future employment opportunities will be, either in Australia or elsewhere.

Thirdly, and most importantly, innovative technology will grind to a halt. In March this year Rio Tinto announced that its HIsmelt pig-iron plant at Kwinana, south of Perth, would be placed in care and maintenance. This is a Rio initiative to develop a low-carbon-emissions smelter using thermal coal from Collie which, when fully operational, will significantly reduce the amount of carbon emitted per ton of end product produced—surely the sort of thing we should be encouraging. Due to uncertainty over this government’s position in relation to our competitors and its inability to see the long-term gain, the whole project has been mothballed for at least 12 months.

My colleague Senator Cameron drew attention to Treasury modelling. I simply ask: why isn’t the Treasury modelling being supplied? We were told by Treasurer Swan in 2008 that Treasury economists had not modelled what the impact on Australia would be if our regional neighbours failed to embrace some form of emission reduction. We were merely asked to take on face value that Australia in some way would be disadvantaged compared to our European partners if we did not commence. Well, if we are not commencing till July 2011, we cannot be too concerned.

Are we really being asked to believe this? Does the Treasurer really think that most of our trading partners are in Europe? Surely he realises which region Australia operates in, where most of the competition is and where most of our trading partners exist. Either Treasury officials did not do this modelling—in which case I say they were grossly unprofessional and have provided advice to government on the basis of incomplete information—or they did do the modelling and it showed the likely disastrous impact on Australian jobs, business and industry. I am certainly disinclined to believe the former but have every reason to accept the latter. It is disingenuous of this government to ask the Senate to consider such important legislation without fully divulging all relevant information. Surely a decision by our regional neighbours not to participate in a carbon pollution reduction scheme will have a dramatic effect on our wellbeing and we should be in possession of all information necessary before voting.

Working, as I have, in the energy industry in the Middle East, India and Asia over the last decade leaves me with a deep sense of concern about whether these countries in our region will ever participate in emission reduction, in either the short term or the long term. Our capacity to influence their decision, I believe, is minimal. In fact, I can only draw on the words of our Prime Minister: it is ‘zip, zero and none’—mate. For example, the Chinese central government is aware that illegal power stations are being commissioned on a weekly basis in China. Its best estimate is that 20 per cent of the power stations in China are illegally built and operated. On that basis, what chance does the Chinese government have of influencing industry in that country on something like a carbon emissions trading scheme?

This brings me to the question of liquefied natural gas and of course the involvement of the North West Shelf of Western Australia. This is a unique source of energy, more emissions efficient than all other fossil fuels and able to contribute directly to global reduction of greenhouse gas emissions. CSIRO says that, for every ton of CO2 emitted in LNG production in Australia, at least four times that—four tonnes of CO2—in our customer countries are avoided when LNG is used to displace their coal-fired generation. The effect is even greater in China, where that figure of four tonnes becomes somewhere between 5½ and 9½ tonnes. This leads to some 180 million tonnes of global greenhouse gases being avoided annually. If the government is serious in its efforts to change the world carbon climate then let it remove the barriers to further investment, international competitiveness and uncertainty and encourage this vital but emerging industry to realise its potential.

And what is this potential? There are $200 billion of gas projects on the drawing boards on the North West Shelf at the moment; a capacity to triple our LNG production—at the moment we are only producing eight per cent of the world’s demand for LNG—leading to 50,000 jobs, 40,000 in construction and 10,000 in operations; and, importantly, greater than $10 billion of tax revenue per annum. These are important figures. If we really want to make a contribution to reducing world carbon then surely we need to get on board and be encouraging, in every way, this important LNG industry.

Let me turn to the impact of this legislation on agriculture. Only in the last few days in Denmark has the point been made that our capacity to be able to feed the world going forward is in danger. In the face of world shortages of foodstuffs, no other region of the world is even considering including emissions trading schemes for agriculture. If we proceed as we are then Australia and New Zealand will be the only countries threatened with a CPRS or similar. Three-quarters of all agricultural greenhouse gas emissions are contributed by the eructation of cattle and sheep in Australia. And 16 per cent of Australia’s greenhouse gases themselves are contributed by agriculture. The agricultural industry—


Senator Cormann —There’s a lot of greenhouse gas emissions in here!


Senator BACK —And a lot of eructation, Senator Cormann! The agricultural industry is rightly concerned and disappointed at the view expressed by some in this debate that in some way agriculture is an environmental vandal as a result of methane gas production by livestock. It goes without saying that it is an entirely natural phenomenon. It has been going on for several hundred thousand years, contributes to the natural carbon cycle, existing in healthy cycles, and it certainly is not amenable to change any time soon. There are 180 million cattle in India, and they are revered. If anyone in this chamber thinks the Indian population is likely to interfere in the digestive systems of their sacred cows to influence methane output then they certainly do not know India.

Australian agriculture is already being impacted adversely by the threat of this scheme. Uncertainty abounds in every sector on timing, impact on different sectors and the degree of relief, if any, under the emissions-intensive trade-exposed provisions. This uncertainty is already evident in the financing and refinancing of debt from the banks—and we need to remove the uncertainty. I can assure the Senate that a direct result of reduced livestock numbers, should this be successful—and we have heard from Senator Joyce this evening as to what that impact will be on the cattle industry—will certainly be less food produced, and inevitably, Senator Cormann, there will be less methane gas emitted from a hungry human population.

Let me share some sobering statistics in relation to the world’s population. It is predicted to increase by another three billion by 2050. More than half of this increase will be in our region, in Asia. There will be a dramatic increase in the demand for food, and we are capable of producing much of this. Most importantly, and disappointingly, Australian research and development as a percentage of GDP is half what it was 30 years ago.

I turn, in the final few moments, to the issue of savanna burning and the outstandingly successful West Arnhem Land Fire Abatement Project. It has been in place for most of this decade and has been achieving savings of more than 100,000 tonnes of greenhouse gases annually, due to the practice of early season, rather than late, dry season burning of the savanna in the north of the country. This figure is scientifically measured and has been independently audited. In return for that 100,000 tonnes per annum, ConocoPhillips pays to the Northern Territory government the sum of $1 million per annum, which in turn is passed back to the land managers. Besides the financial benefit there have been significant biodiversity, environmental and social benefits across Arnhem Land as a result of this brilliant project.

However, the national carbon offset discussion paper proposes that the projected emissions from savanna burnings be deducted from the national emissions target, effectively destroying its commercial and environmental benefit. This would not only dispossess Indigenous people but remove a decade of incentive to continue this program. By contrast, it is offset markets which have the potential to make significant contributions to reducing greenhouse gas emissions and add to the sustainable development in both Indigenous and pastoral communities across the north. I do hasten to say that the Department of Climate Change has now agreed to reconsider its position on this. One can only hope that common sense will prevail over a scheme that Australia should be celebrating and supporting and selling to the rest of the world rather than excising from this particular project.

I conclude by reiterating the observation that Australia contributes only 1.4 per cent of the world’s carbon emissions. Moving into my world as a veterinarian, if the rest of the world’s contribution to carbon were represented pictorially by an elephant then Australia, regrettably, would be a very small bee. To think that the bee in some way is capable of influencing the direction of the elephant in this debate is simply arrogance. If the legislation passes, these are the inevitable consequences: Australian jobs are lost, our economy suffers, our industries lose their competitiveness internationally and, lastly and regrettably, there is no effect on global carbon reduction. (Time expired)