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Tuesday, 23 June 2009
Page: 4059


Senator SCULLION (5:39 PM) —Mr Acting Deputy President Ryan, I join my colleagues in congratulating you on your ascension to the chair. I trust I will be joining you to further celebrate that event later in the week.

I rise to speak on the Carbon Pollution Reduction Scheme Bill 2009 and cognate bills. The legislation before us today covers an issue that we as a government, as a nation and as a people have dealt with in the past. I suspect it is without precedent in its complexity, but I recall dealing with a similar issue 20 years ago. I was associated with fisheries at the time. I can remember us making some of the same fundamental mistakes then as we are making today. Suddenly there was an international crisis about what we were going to do with southern bluefin tuna. The world was noticing a decline in stocks. It was a fish stock that had been measured in a number of areas because it was popular. People noticed that it was harder to get, and the fact that prices were going up was an indicator. So we all had a very close look at that. In Australia, we decided that we would fix it with no worries at all by screwing industry and by screwing Australian fishermen into the ground and saying, ‘That’ll fix it’—until someone said, ‘We can do what we like here, but it is not going to make a zack of difference to the decline of the southern bluefin tuna, because the effects are taking place all over the world.’ The decline was felt in breeding and feeding grounds all around the world so, unless we took a global approach to that problem, we were not going to fix it.

Finding solutions to fisheries problems is not easy, but the Convention on the Conservation of Southern Bluefin Tuna, the CCSBT, is an international agreement that deals with that issue globally. We did not do anything domestically because we knew that, without ensuring that the activities in Australia were part of a fundamental international agreement, it would be a waste of time. I think the proposal before us today, promised to us prior to the election, is absolutely doomed to failure if it does not move in the same direction as the fisheries response did.

The scheme that was promised to us prior to the election said that we are going to have significant cuts in carbon emissions with absolutely no impact on exports, imports or the competitive nature of this country. It would have no negative impacts on jobs and it would basically not cost anyone anything. The government thought, ‘We’ll just quickly slip that into the election promises and hope for the best.’ That is the general thrust of it, but we know that what we are offered today is clearly going to cost tens of thousands of jobs. Anyone in business with the slightest idea about risk assessments of investment would have to agree that this is going to stop significant new investment in major projects in this country. It is definitely going to do very little, if anything, to contribute to the global quest to reduce our carbon footprint.

We have to ask what motivates the introduction of the bills. I have to say that those on the other side have form on this. We have had a whole stream of legislation which I suspect was motivated less by wanting to resolve the issue than it was by wanting to seem impressive. I am thinking of the disaster of Computers in Schools. I am thinking of the government’s guaranteeing of the banks, whereby they did not listen to people but just forged ahead, resulting in money in people’s accounts being frozen. I am thinking of their cash splash to impress everybody, their ‘no child in poverty’ campaign and their $900 payments. If they had listened to the rest of the world, they would recognise that there are much smarter and effective ways to spend our money that would have had much better results. Much like this proposal, those programs were based on the need to impress people for a political outcome rather than thinking about our national interest.

There has been much discussion—and I tend to agree—that this legislation appears to be motivated by a desire to go to an early election to escape the wrath of the Australian people on the fundamental stuff-ups in the management of our economy. I am not sure that is exactly the way the government is going to go, but there does seem to be an overwhelming and cynical body of opinion that that would be the only motive for going to an early election. I am sure that the Prime Minister would like to avoid the consequences of his policies. We all know that it does not seem so long ago that we had a magnificent economy. It seems like just a breath away. It is almost like lending your dog to your neighbour for the weekend. When you drop it off, it is a big, healthy, well-fed doberman—a fantastic animal, like our economy—but, when you go back at the end of the weekend or, in the case of our economy, only 18 months ago, it is a very sick chihuahua.

We have seen an effective change in the deficit of some $55 billion. We are now $350 billion in debt. Every Australian knows that and we are very sad about that. That is why I think that most people suspect that the motive behind this particular legislation is simply a political motive and that it is not a single iota about looking after the global environment. But Rudd has been consistent on this issue. He has consistently failed to reflect advice from just about anyone. It is very rare that you see a piece of legislation come into this place or the other place and, it does not matter what side you are on—whether you are a member of the Greens or the crossbenches or the coalition—we all reckon it is sick; we all think it could be vastly improved for a variety of different reasons. But, of course, we are going to stand in this place with this legislation, because the motive is not to fix the legislation and to provide the best legislative environment to look after the global environment. The government’s motive is to cynically try to sneak through to an early election for their own political gain.

The government have delayed the start date by some 12 months. You have to give credit where credit is due: someone has listened to a little bit of advice and they have said, ‘That would be a lot smarter.’ We do not think you can get it implemented. In fact, it was coalition policy. We said, ‘We don’t think you can get it done by now.’ And of course they could not, so they have changed that. It is not a bad idea, our policy. But a better idea would have been to listen completely and comprehensively to everyone else in the room—including the coalition, who were saying, ‘It’s a much better idea to delay finalising this legislation until early next year. It would give us time to fix the fatally-flawed legislation.’ Wouldn’t you expect, Mr Acting Deputy President, that it would be a good idea to perhaps have a bit of a peek to see what one of our largest trading partners, the United States of America, is going to do? Shouldn’t we see what Mr Obama is going to be doing before we lock ourselves in? Wouldn’t it be handy to toddle off to Copenhagen and see what the rest of the world is going to do?

It is interesting to note that the executive secretary of the Copenhagen conference, Mr Yvo de Boer, said that he does not expect countries to have any legislation. He is not expecting anybody to bring legislation to that particular party. He is expecting people to come along perhaps with a target, which we have supplied. So Australia is going to roll up to the party in fancy dress. We are the odd man out at this United Nations forum. Nobody else is expecting to come with legislation. We are in there with a dog suit—and we do not even know where the zip is. You cannot change this uniform. We are there with a dog suit on, we have brought our target and we are looking a little bit embarrassed. The most embarrassing thing—it is almost like fibreglassing the bloody thing on—is that we are not going to be able to go back and reflect on what we learn at Copenhagen. We are the only ones in the room. So I think one has to be very cynical about the motive that would put Australia in such a vulnerable position. It is an absolute outrage that, given the discussion about all of these matters, they are continuing to press on.

The meeting is to decide what the framework should be, how we should have compliance internationally and how it will all fit together so we can work together. Of course, you could argue that the five per cent target could have been different. We have made it very clear that we agree with that, so there is absolutely no argument supporting the consideration of this legislation at this time—or, in fact, at any other time. I think the political motivation is transparent, and I hope that the Australian people see it as such.

The Carbon Production Reduction Scheme and the ETS, which is a part of it, are clearly designed for a world where each country has put a price on carbon. Each country in the world puts a price on carbon, because without that we are doomed to failure. If this is the case and we do go to Copenhagen in our dog suit, and everybody else there tells us, ‘We’re going in early. We’re going in hard with a carbon price,’ perhaps we would not have a problem with that. Mr Acting Deputy President, I do not know if you have heard or read anything about China, India or Indonesia going in hard and early on a carbon price and with their own ETS—perhaps I have missed that—but without that this legislation is doomed to failure.

Forget about the idiocy of this; people need to understand that putting a multibillion-dollar tax on Australian business whilst it is extremely likely that our competitors will do absolutely nothing just beggars belief. The assumption that all our competitors are going to put a major tax on carbon is a flawed one. I am sure everyone will recognise that, and after Copenhagen we will certainly see that, but we will be locked in. We will have already locked it in. We will have voted for this or voted it out. We will be completely locked in. What if China, Indonesia and all those other large emitters decide that they are not going to do that? What will the consequences be? What will be the consequences of our competitors not playing the game? With respect, I do not think the government have a clue. I am not saying that to be disrespectful. I am simply saying that, when we see the questions that have been asked time and time again by all sides of this parliament, by the Greens and the crossbenchers, and the investigations that have been made, we see that no modelling has been done.

It is just as well that there has been some modelling done by business, and certainly there has been some modelling done by the Centre for International Economics. I think it is very interesting to read what they have to say, and it should be a concern to us all. If you look at the findings of the Centre for International Economics, there are a couple of issues that their report took issue with. For example, it states:

-    there is no analysis to show the tradeoffs between an ETS and other viable alternatives;

-    there is no analysis of the short term transitional costs;

that is, the 20- to 30-year transitional costs—

-    there is no analysis to test whether the framework outlined in the White Paper is in fact the lowest cost; and

-    there is no analysis of the risks involved in the short term . . .

The Treasury model has not, in fact, simulated the CPRS—which it proposed in its very own white paper. That has not been done. It goes on and on. These are significant errors that should not have been made. The key finding was that there has not been any analysis done, and one of the fundamentals is that we do not understand what is going to happen in this absolutely essential transitional period. It is going to be the most difficult period to get through. We really have to get through this to ensure that we do not lose competition, that we do not lose jobs and that we do not lose our business.

The report also notes the pretty damning finding regarding the cost effectiveness of the scheme over this critical 20- to 30-year transition period. It recommends that ‘critical analysis be done before finalising a scheme’—that is, before coming into this place to lock it in—and ‘that such analysis be undertaken by an independent and transparent organisation such as the Productivity Commission’. I will not go into the amendment that has been put in the other place and I am sure will be put here. But, no surprise—that is our policy. Our policy reflects a lot of good advice. We have had a lot of good advice around the place. That is why the fundamentals of our policy are based on evidence, good science and good economic advice. Unfortunately, as I have said, this very same report from the Centre for International Economics damns those on the other side for not even attempting to do the analysis.

So why would we legislate now? We have Obama’s draft legislation which assists the US electrical companies all the way through to 2030. We know that is the case. Our legislation provides a much smaller amount of assistance and it phases out in 2016. I am not sure how that is going to make us more competitive. Obama’s legislation is only in its draft form; it is yet to go through the Republicans. So it could get even harder for us to be competitive, and we are simply doing nothing about it. It is a complete mess.

Let us look at the free permits. A number of free permits will be appearing on the books. So you will go to buy a company and they will say, ‘It’s a nice Australian company. Have a look at this,’ and you will say, ‘Mate, what’s this here?’ and they will say, ‘It says free permits,’ and you will say, ‘Oh, that’s great; I’d like a few free permits hanging around the cupboard. Sounds like a good thing to have. What happens with these?’ and you be told, ‘The government will review them in five years.’ So you will ask, ‘What does that involve?’ and you be told, ‘You’ve got to go and get on your knee, you’ve got to be really friendly and you’ve got to hope that they are going to give out more free ones. We don’t really know anything more than that. Goodbye,’ and you will say, ‘Yeah, goodbye, mate; there’s no good buy there.’

There is another glaring anomaly in this. This is supposed to be something that is going to provide us with relief globally. Does LNG get a special mention? It is probably the only fuel today that is actually going to ameliorate some of the challenges that this legislation attempts to ameliorate. Do we say, ‘This is something that is helping today. We’ll give it an exemption. We’ll make sure that it can continue to be produced to ensure that it makes its contribution to the globe’? No siree; it ignores that completely. Everyone knows that they are the sorts of industries that we should not be penalising—not only because of their benefit to the world but also because of their benefit to the Australian economy, particularly in places like the Northern Territory and Darwin.

I do not know where the sale of permits is going to end up. We are selling all these permits. They are worth $13 billion. Can you imagine those on the other side saying, ‘We’re just going to hand them out. It’ll be fair. It’ll be equitable’? I do not think so. Of course, there is the temptation to make them conditional. There is a temptation to make them electoral promises and to politicise them. I am not sure that that is part of a system that we all should support.

There are a number of things in this legislation, but there is one thing that is notable by its absence. Everybody talks about practical measures that we can take—for example, capturing soil carbon. Part of the report that I referred to earlier says:

… it is important that any policy also incorporates the possibility of directly absorbing emissions from the atmosphere …

According to the scientist Freeman Dyson:

To stop the carbon in the atmosphere from increasing, we only need to grow the biomass in the soil by a hundredth of an inch per year.

I am not saying that this bloke with ‘scientist’ before his name is going to be the all-out solution, but wherever you go there are real, practical things that you can do to make a contribution. We do not see any of that in this legislation. We do not see an opportunity for communities. We do not see an opportunity for agriculture, for biosequestration or for more energy efficiencies—things which are in fact real, practical programs.

We have also suggested, as has been much discussed, the Chicago Climate Exchange. It will be a voluntary exchange. We on this side are not an organisation that just plucks figures out of the air. We said, ‘Five per cent; go for it.’ Why? Because we have done the sums and we think that if communities are involved we can actually achieve that. We think that is really important.

The pastoral industry in the Northern Territory—and, in fact, right across the north of Australia—will be significantly affected. Why? Simply because they do not have an opportunity to make a contribution. They will be penalised by this remote tax. If you live in remote parts of Australia, this is going to hurt you worse than ever, because it is going to have a significant impact on fuel and your cost of doing business—because there is no benefit in having an offset from soil sequestration.

We really need a better understanding. We should not go ahead and support this legislation unless we have a better understanding of the world direction at Copenhagen. We need to understand what the rest of the world is doing, if this is to mean anything to this country apart from a loss of jobs, a loss of business, a loss of credibility and a loss of competitive edge. That is what is going to happen unless we delay this legislation.

At the moment, the short- and medium-term modelling is quite astonishing. Those on the other side keep telling us, ‘By the way, guys, haven’t you noticed that it’s not us stuffing up the economy; it’s the global financial crisis.’ It is odd that we do not even have the global financial crisis included in the modelling. You would reckon that you would have to get that right. Tragically, this legislation goes nowhere near getting it right. It seeks a political outcome. It is not in the national interest. In fact, it is not in the globe’s interest.

Debate (on motion by Senator Wong) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.