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Tuesday, 11 August 2009
Page: 4428


Senator CASH (1:17 PM) —I also rise to speak on the Carbon Pollution Reduction Scheme Bill 2009 and the series of cognate bills that are before the Senate. No matter how shrill those opposite are—and we have had a lot of shrieking from the other side claiming that Rudd Labor has a strategy to tackle climate change—the only strategy that Labor has is a political strategy that falls apart when subjected to closer examination by the Australian people. This has now been further confirmed with the release of the independent economic research commissioned by none other than those people who are actually serious about making policy in this country—the coalition and Senator Xenophon. This demonstrates that the Rudd government’s emissions trading scheme ‘will unnecessarily drive up electricity prices, destroy jobs and expand the size of government in Australia’. What we have had to date from the Labor government is policy on the run. It has taken the easy, the cheap and the popular decision, but not the right decision. For goodness sake, it is those of us on this side of the chamber who have had to go and commission Frontier Economics to undertake the modelling that those on that side of the chamber refused to undertake because they knew what the results of that modelling would be. The results have proved yet again that their scheme is diabolically flawed. Those opposite have told the people of Australia that regardless of its consequences, regardless of the fact that there will be no positive benefit to the environment—in fact it has been proven that carbon leakage will be the end result—Australia must have the Rudd ETS, no matter how flawed.

These bills represent just another one of the many stepping stones that Mr Rudd is using to gain himself celebrity status on the world stage. These bills are nothing more than political convenience aimed at portraying Mr Rudd in a positive light at the expense of the Australian people. I will never agree with, and I will never be a party to, taking action at the expense of the Australian people. That is what Labor is asking us to do with this legislation—take action at the expense of the Australian people. Labor’s scheme puts at risk thousands of Australian jobs but, worse still, may have the perverse outcome that, if this scheme is implemented in Australia, it will actually lead to an increase in global CO2 emissions. That is completely contrary to the promise made by Mr Rudd prior to the 2007 election that, if elected, his party would introduce a scheme which would ‘produce deep cuts in CO2 emissions but would not disadvantage Australia’s export and import competing industries’. What a joke! The evidence now clearly proves that this government’s scheme fails to reduce carbon pollution at the lowest economic cost, fails to put in place long-term incentives for investment in clean energy and low emissions technology and, worse still, fails to contribute to a global solution to climate change.

One of the major flaws of Labor’s scheme is the stubborn rush by this government to introduce an ETS before the rest of the world. As is perfectly apparent to all serious policymakers, and we could hardly accuse Mr Rudd of being one of them, there is no unilateral solution to climate change; there is only a global solution. As a serious policymaker, I would have thought it was significant that our ally and trading partner the United States, in its draft emissions trading legislation includes very specific provisions providing 100 per cent protection to US export and import competing industries in any emissions trading scheme until 2025. But, further than that, the draft bill also provides that these industries will only see a reduction in their protection when more than 70 per cent of global output for that sector is produced or manufactured in countries that have a scheme equivalent to that operating in the United States. As I am sure senators in this chamber will appreciate, the provisions in the US draft legislation may mean that the rest of the world will never see a reduction in protection in relation to some US export and import competing industries. Unlike Mr Rudd and those on the other side, President Obama cares about his country’s competitiveness, cares about the fact that Americans need jobs and is not about to subject his country to risk through flawed emissions trading legislation. In contrast, the Labor Party is prepared to impose higher taxes and charges on Australian industry without restraint, which will result in Australians losing their jobs.

The United States is but one country, albeit an extremely significant one. We also need to understand what other countries are doing to reduce their emissions. In December this year Copenhagen will host an extremely important multilateral forum to discuss emissions trading, emissions targets and what can be done globally to reduce CO2 emissions. Until the Copenhagen conference has a chance to negotiate the many complicated issues that will arise from setting carbon abatement targets, it is sheer folly for Australia to prematurely legislate—that is, to do so before we find out what our international trading partners and competitors are doing.

With Australia’s emissions at just 1.4 per cent of global carbon emissions and declining, is it honestly likely that we are going to lead the debate in Copenhagen especially with a scheme that may or may not be compatible with what is negotiated in December? I think not. In fact, the Institute of Public Affairs gave said the following in its submission to the inquiry by the Senate Standing Committee on Economics into the exposure draft of the legislation to implement the CPRS:

With only one per cent of world GDP, we are neither prominent among world nations nor particularly influential within world councils … Accordingly, it is pure hubris for Australia to attempt to take the lead in abatement activity.

We have no way of knowing what the international community will be doing, whether or not they are going to decide to move in the same direction as Australia. But, if the international community miraculously does, you can be sure that it will be after considered discussion, not because we in Australia arrived at our position first. Unlike Mr Rudd, other world leaders see the issue of climate change as a serious global challenge and not just as an opportunity to promote themselves on the world stage. Our international trading competitors must be rubbing their hands with glee at Mr Rudd’s insistence on strutting the world stage rather than protecting Australian jobs.

Evidence that this legislation is being run to a political timetable, as opposed to one that exhibits good public policy, is reflected in Mr Rudd’s arbitrary decision to delay the start date by 12 months. I can only wonder how the Minister for Climate Change and Water, Senator Wong, the ETS vigilante, felt as she tirelessly trumpeted the government line that there would be a commencement date of 2010 but was then ambushed by the Prime Minister. That the minister can stand in this place and not laugh when she argues for the revised start date shows that consistency of argument will never ever get in the way of selling Mr Rudd’s message of the day. Minister Wong’s claims that this legislation must be passed to provide momentum to the crucial UN negotiations in Copenhagen in December are absurd. What momentum? The only momentum that Minister Wong is looking to achieve is the momentum for the Rudd spin machine to go into further overdrive.

The current Labor line is that this unseemly rush to put the legislation to a vote is all about giving business certainty. Well, let us look at comments made by the Chief Executive Officer of Anglo Coal, who said, ‘We don’t want the certainty of a bullet.’ And what about the economic cost to business of Labor’s scheme? In asking the Senate to pass this legislation before the international community has collaborated, the Rudd government has decided to impose a massive taxation burden on Australian industry. This legislation will seriously damage the competitive position of many of our industries and will see Australian jobs, investment and CO2 emissions exported to countries where no price is being imposed on carbon. Goodbye, Australia, and hello, China! Let me spell out the problem for business. The Labor government is imposing on Australian businesses a significant new tax, either directly or indirectly, that their competitors will not be paying. How is that good public policy? Those on the other side of the chamber seem to have forgotten that employers, business and industry create jobs and that governments do not create jobs. What governments can do, though, is create an environment which is conducive to creating jobs or, alternatively, as with the legislation before us, an environment that will inevitably result in job losses.

Let us have a look at what has been stated on the record in relation to job losses. The Minerals Council of Australia have stated that the CPRS legislation in its current form will cost over 66,000 Australian jobs in the minerals industry over the next 20 years. In my home state of Western Australia, an Access Economics report has been reported to confirm that the Labor ETS would cost 13,000 jobs in WA alone and more than 126,000 jobs nationally. Remarkably, the Access Economics report was commissioned by the state premiers, who all bar one are Labor.


Senator Cormann —Bar a good one!


Senator CASH —Bar a good one in Western Australia—thank you, Senator Cormann! It would seem that even Mr Rudd’s most senior Labor colleagues are worried about the impact of the ETS on jobs in their home states. Otherwise they would not have commissioned the modelling that was undertaken in this report. I will stand up for Western Australia, even if those opposite will sell it out to a spin-driven political timetable. I will not stand by and vote for a scheme that will destroy jobs in Western Australia and negatively impact on my state’s economy.

As a senator for Western Australia, I would now like to highlight a further flawed area of this legislation insofar as it relates to the Western Australian electricity market. The WA energy market, in which gas power is dominant, has not been distinguished from the eastern states energy market in the determination of ESAS assistance, insofar as the Treasury modelling uses the same competitive spot market assumptions for electricity sales for all states. This fails to distinguish the unique circumstances in Western Australia. The WA energy market has fixed priced contracts which do not allow the sector to pass on the increasing price of carbon, which generators will bear. This is not the case for the eastern states, where the price of electricity is based on a competitive spot market, allowing the additional cost of carbon to be passed on to consumers through the market clearing price. There have been several sensible suggestions put forward by Griffin Energy to deal with the unique circumstances that apply in Western Australia.

While I am aware that the energy sector is in talks with the government, it is patently wrong and commercially ludicrous for Western Australians that the federal Labor government should demand that the Senate vote on this legislation before the vital issues that have been raised by Griffin Energy are resolved. But in Western Australia we have not only problems with the federal government not recognising the unique circumstances that apply to the WA energy market but also concerns, as raised by Griffin Energy and by the Western Australian Department of Mines and Petroleum in a letter dated 15 June 2009 to Dr Martin Parkinson, Secretary of the Department of Climate Change. There is concern that the open-cut coal industry at Collie in Western Australia is being wrongly treated because of an apparent error in the National Greenhouse and Energy Reporting (Measurements) Determination 2008. As Mr Noel Ashcroft of Griffin Energy stated in a letter to me:

We find that in October 2008 we were allocated a default coal mine methane fugitive emissions factor in the greenhouse gas statutes (Determination) which bears no relation to the reality of the situation, that is, that WA Collie coal does not have methane, as is the case with Queensland. Nor have we any idea how it got there as there was no consultation.

In the past we were assumed to have the same default fugitive emissions factor as Victoria and South Australia but without reference to us this was changed last year to the equivalent of Qld and NSW at the last determination. It is well known that Qld and NSW have significant methane.

As this factor is to be used as the penalty emissions factor for CPRS it will cost us—

Griffin Energy—

well over $1.25 million per annum and rising as the mining increases to accommodate new projects.

As previously set out in a letter from The Griffin Group to the Department of Climate Change dated 11 May 2009, Collie coal does not have methane, a fact borne out by its absence from the WA mining and safety legislation and supported by the Geological Survey and the state Mining Engineer. Nonetheless Canberra is effectively saying we have to do very expensive research/drilling to verify that we have a low methane situation. It seems that they have adopted a position of “guilty until you prove yourself innocent” in a regime where the cost of proving what is well known is exorbitant!!

What other errors are being made in relation to Western Australia in the formulation of the CPRS and the associated bills? As a senator for Western Australia I reiterate that it is patently wrong and commercially ludicrous for Western Australians that the federal government should demand a vote on this legislation before such vital issues are resolved. Prior to the 2007 federal election the Prime Minister, as then Opposition Leader, said:

In taking the lead before an effective international agreement is in place, it is also vitally important that a domestic scheme does not undermine Australia’s competitiveness and provides mechanisms to ensure that Australian operations of energy-intensive, trade-exposed firms are not disadvantaged.

Well, it would seem that Mr Rudd was a little loose with the truth. When held up to scrutiny the Rudd Labor CPRS fails on all counts: it will cost Australians their jobs, it will kill investment in Australia and it will do very little, if anything, to reduce CO2 emissions. The only action that a government should take to reduce carbon emissions is responsible action. Action taken at the expense or to the detriment of the Australian people should not be supported. The government’s current CPRS, if agreed to in its present form, will result in action being taken at the expense of the people of Australia. But worse than that its implementation in its present form is likely to achieve the perverse outcome of Australia contributing to an increase in global emissions. As a proud Western Australian I will not be selling my state out to indulge Mr Rudd’s appetite for celebrity status on the world stage. This legislation must not be supported.