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Tuesday, 11 August 2009
Page: 4541


Senator BARNETT (8:47 PM) —I stand tonight to place on record my opposition to the Carbon Pollution Reduction Scheme Bill 2009 and related bills and to make a few brief comments about the reasons why.

Senator Xenophon has just noted that this is one of the most impacting pieces of legislation ever to come before the Australian parliament. The legislation is effectively a tax on good and services and it is to reflect the damage done from CO2 emissions and its effect on our environment. But the ETS and the legislation before us is poorly framed and it is too important to rush. The government is rushing this legislation for political purposes, and, I believe, inappropriate reasons are at the heart of the government’s objectives in regard to these bills. We must get this legislation right; it is too important not to. The timing is critical. Here we are, in August, debating this legislation and the government wants it passed and rushed through, yet the largest economy in the world, the United States, still has not passed its similar ETS legislation, and nor have we had the Copenhagen climate conference, which is scheduled for later this year. Why would we be leading the world in such a way with the fear that we might get it wrong? We must get it right.

I quote from the executive summary of the Frontier Economics report that was released just yesterday:

In terms of the breadth and magnitude of economic effects, the CPRS is arguably the most significant policy change in Australia’s history. As such there is a substantial onus on the Government to demonstrate that whatever policy is introduced it is the best that can be developed.

We know, not only from the Frontier Economics report but also from numerous other commentators and experts in the field, that the government has not got it right. Let me say at the outset that I am not an expert, I do not have the background or expertise in science, but I have read the various papers and reports about these matters and I base my views on those and on my own experiences as a Tasmanian senator. I also note that the opposition supports a properly framed and carefully put together emissions trading scheme and other measures to ensure that the consequences and damage to our environment of the CO2 emissions is taken into account. I will come to those shortly.

It should be noted that it was actually the Howard government that first introduced the emissions trading scheme—in fact, under the former minister, Malcolm Turnbull. Mr Turnbull should be commended for his foresight and vision, as he has been demonstrating in more recent times regarding this matter. In terms of renewable energy of course, we remember the initiative and the leadership of Dr David Kemp, the former minister for the environment, who together with the Howard cabinet, put together the mandatory renewable energy target, which was some 9,500 gigawatt hours by 2010, which essentially was an initiative to encourage renewable energy. It really kick-started the various renewable energy initiatives all around Australia.

As a Tasmanian senator, I know only too well the importance of hydropower and wind power and other senators know the importance of renewable energy more generally, whether it be solar or whatever. So why isn’t the government willing to sit down to negotiate, to consult and to discuss with the opposition and indeed others their contributions to get it right? Clearly, the government has not got it right and I think it demonstrates hubris and arrogance on the part of the government that it is willing to insist that this be an express effort that must be rushed through. It wants to ram this legislation through the Senate and through the parliament when it should really do the right thing: withdraw the legislation and work with the opposition and with experts in the field to ensure that we get it right and that the timing is correct so that the contributions of the Copenhagen climate change conference can be taken into account.

I also note that the government has floated the idea of a double dissolution, with threats as to the possibility of that. I am not afraid of that. I say to the government over this issue to bring it on, because we know that the government’s legislation will increase power costs for the average Australian family and for small businesses and large businesses alike. This will be a jobs destroyer for Australia. In fact, this will be less green and will provide fewer benefits as to the environment than other models that have been drafted and put forward. So the government has got to pull back and get this legislation right.

There are three parts to addressing the concerns. Obviously, there is the emissions trading scheme, the renewable energy measure—a 20 per cent measure by 2020—needs to come into place and there are energy efficiency measures. They are three key broad initiatives that need to be undertaken by any government and any community to ensure that we get this right. The Minister for Climate Change and Water, Senator Penny Wong, said the Frontier Economics report was a mongrel of a report. That is a shocking overreaction from a minister.


Senator Ronaldson —She hadn’t even read it.


Senator BARNETT —I accept that, Senator Ronaldson. We know that her reaction was inappropriate. What sort of behaviour was that? Does she demonstrate any shred of credibility in her role as the relevant minister? That was a shocking overreaction, and I call her to account and to think again without being so abusive and without being on her political high horse in behaving in such a way. We know from the report that was tabled yesterday and that is now in the public arena that the ETS will add a cost to as many goods and services as possible to reflect the damage that greenhouse gases are doing to the environment. The report that Frontier Economics put out noted that the Rudd government’s ETS will unnecessarily drive up electricity prices, destroy jobs and expand the size of government. The report shows that the scheme can actually be made twice as green at a much lower cost to consumers and the broader economy with a net improvement of 68,000 in regional jobs. That is a fantastic outcome. In short, it is greener, cheaper and smarter.

So what else does it say? It treats the electricity generating sector in a less punitive manner, whereby household power bills need rise by only about five per cent in the near term, rather than by the immediate 25 per cent that the Carbon Pollution Reduction Scheme, put forward by the Rudd Labor government, would trigger. We know that households in Tasmania have recently, as of 1 July, been copped with a 15 per cent increase in power bills. This is exactly what they do not want at this time. Five years into the scheme average annual household power bills would only be $45 higher, rather $280 higher under the government’s CPRS. That needs to be taken into account. Rather than the loss of 26,000 regional jobs revealed by modelling of the CPRS, the changes proposed by Frontier Economics would lead to a net gain of 42,000 in regional Australian employment and overall the cost to the Australian economy over the next 20 years in net present value terms would be reduced by $49 billion, or about a third. That would certainly be a good outcome; that is for sure. As I have said, the power costs issue is very important in Tasmania. This is a very sensitive issue right now. Households are copping it in the neck as a result of Labor’s management—or mismanagement—of the economy in the state of Tasmania.

I have mentioned Mr Turnbull. I also want to commend Andrew Robb, our relevant shadow minister on this matter. He is quoted as saying that the lower electricity prices would also greatly reduce the indirect costs of the government’s ETS, which would be faced by hundreds of thousands of small and mid-sized businesses. We know how important that is for Tasmania, as we are a small business state with over 35,000 small businesses and with nearly 50 per cent of the private sector workforce being in the small business sector. We know that these businesses are copping it in the neck at the moment and are on struggle street. This is exactly the wrong time and this is the wrong type of policy being put forward by the Rudd Labor government, and it is going to hurt them. We do not want that to happen.

In terms of agriculture, I turn to a point that I know Senator Heffernan and Senator Cormann and others in this place who are concerned for rural and regional Australia and the agricultural community in general are very concerned about. It is that agriculture needs to be taken into account. For example, Mr Robb said in a contribution that under the CPRS a typical dairy farm would face an extra cost of $8,000 to $10,000 per year. That is a huge cost on a dairy farmer and his or her family. Under the proposals of Frontier Economics, this would be reduced by 90 per cent. The coalition policy supports a doubling of the compensation proposed for electricity generators from $4 billion to $8 billion to $10 billion in order to provide greater fairness and investment certainty for firms in this industry.

At this point I just want to say there are a number of major employer groups in Tasmania that are very important in my community. Rio Tinto, for example, is one of those. Under the CPRS in the first decade there would be an additional cost of $80 million, a permit decay of $60 million and, as a result of the renewable energy target, a $70 million cost. So $210 million would come off the aluminium smelter’s bottom line. It is very hard for an industry like that, like Rio Tinto, to pass that on to their customers. In fact, it is nigh on impossible. So what are they going to do? They will have to cut back in other areas, whether it be employment, social investment, capital investment or other operating expenditure.

But with any renewable energy target, which certainly I strongly support, a true 90 per cent exemption would enable the resource sector to sustain employment and wealth generation and the government to facilitate growth and development in that sector. In Tasmania, that is critical. The renewable energy sector is vitally important. Nearly 100 per cent of our energy comes from hydro, comes from wind. We are very proud of that in Tasmania and we want to ensure that it prospers and grows. I recently met with Alex Beckett of Hydro Tasmania and had an excellent briefing with him, and I appreciate that very much. What we do know is that under the government’s proposal, industries such as Rio Tinto, TEMCO and Nyrstar—which are export-oriented industries—will go offshore. They will set up and operate in China or India, and the consequences will be very serious.

I draw to the Senate’s attention A socioeconomic analysis of selected MEG industries’ contribution to the Tasmanian economy, a report written by Dr Bruce Felmingham, a well-regarded economist. If five of those Major Employers Group industries disappeared the economic impacts would be very serious indeed. The report says:

  • The withdrawal of the MEG 5 would reduce the output of Tasmanian industry by $3.638 billion annually.
  • Their withdrawal will reduce Tasmania’s GSP by $1.802 billion or 12% of its real income.
  • Withdrawal would lead to a fall in the annual wage income of $479.58 million.
  • The job loss amounts to 7,035 fte positions.

The cost to social wellbeing is astronomical. So there are consequences of this type of legislation, and we need to take those into account. The opposition’s policy, or at least the Frontier Economics report, has put forward some very sensible contributions and I hope those are taken into account. We need to support business, large and small, and investor confidence—and that needs to come back and fast.

In terms of renewable energy, yes, Tasmania does have it. Indeed, Hydro Tasmania are the largest generator of renewable energy in Australia. Hydro own and operate throughout Tasmania 29 hydro power stations worth $4.8 billion. They have a number of renewable energy projects through their wind development, the Roaring 40s. It is a joint venture company between Hydro Tasmania and China Light and Power. Tomorrow I will meet with Matthew Groom of Roaring 40s for a briefing with respect to some of their concerns and to provide encouragement to proceed with their renewable energy target of 20 per cent by 2020. It is something that I support, and I know others do too. But we need to decouple that legislation from the package of legislation before us so that they can get on and invest, develop and prosper, whether it be through hydro upgrades and development or wind farms. In Musselroe Bay, in north-east Tasmania, in the electorate of Bass, what is the local member doing to support that development? I have not heard much, and the community has not heard much. We need a proactive representation on the part of the federal member for Bass and all members of parliament to support these types of development. They have developments at Woolnorth and Cathedral Rocks, with wind farms totalling 206 megawatts through the Roaring 40s. They have a lot of good things happening, and we need to make that 20 per cent target by 2020 and achieve that as soon as possible.

I have mentioned that the Mandatory Renewable Energy Target started under the Howard government, and that was an incentive for Hydro to invest in the way that it has. Since 2002 Hydro Tasmania has spent approximately $180 million on those various initiatives. With respect to new wind energy projects stemming from Hydro Tasmania’s 50 per cent owned Roaring 40s, that includes over 500 megawatts already in operation and under development and a total construction pipeline of 1,000 to 1,500 megawatts potentially worth over $1.5 billion. We have the Waterloo Wind Farm in South Australia and 140 megawatts from the Musselroe Bay wind farm in Tasmania. These are the opportunities. These are the things that can happen if we get this legislation right, if we frame it correctly, if we take into account the importance of agriculture and give them a fair go. One of the nine principles that were released a few weeks ago by the opposition leader referred to agriculture. He said the fifth principle was:

As in the Waxman Markey legislation—

in the USA—

agricultural emissions should be excluded from the scheme and agricultural offsets … biosequestration or green carbon) should be included.

Let us give them a fair crack of the whip and give them a fair go. Rudd has got it wrong on this count. I also note that amongst those principles the scheme design must ensure that general increases in electricity prices are no greater than comparable countries to minimise the impact on all trade exposed industries. That is exactly the point. You have to take into account those major employer groups that we rely on for fair power prices so that they can have a go and employ the people that they have and continue to grow, prosper and make a job of it. This is why we have to get all of these things right. I commend Greg Hunt for the work he has been doing in promoting the renewable energy target and promoting coalition policy. He said in a speech on 30 July, ‘A vision for a solar continent’, to the Appropriate Technology Retailers Association of Australia:

We want to do the right thing by renewable energy. But to link the RET with the ETS was a new low in political game-playing.

He is absolutely right. It should be decoupled and the government should come to the party and fix it pretty much straightaway.

It seems the Frontier Economics proposal is greener, cheaper and smarter. But, look, let’s put it all on the table. Let’s talk, discuss and see if we can work it out together. I call on the government to release their Treasury modelling. It has not been released with respect to the CPRS. That is a disgrace. They did this in the May budget when they forecast a 4.5 per cent GDP growth and everybody asked, ‘How is that possible?’ Independent experts said, ‘How is that possible?’ Nobody could work it out. They did not have the guts to release their Treasury modelling. They have to get it right for the sake of Australia and for the sake of Australian families.