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Wednesday, 12 August 2009
Page: 4650

Senator KROGER (10:24 AM) —I would firstly like to thank Minister Faulkner for his update to the Senate on the missing aeroplane in PNG. It is a tragic discovery, and it will be a devastating one for the families of those nine missing Australians. I just wish to extend our thoughts and prayers to those families whilst the crash site is being further explored and accessed.

Today I find myself in an unusual situation talking about a package of legislation—the Carbon Pollution Reduction Scheme Bill 2009 and cognate bills—which, if we believe those opposite, needs to be rushed through this chamber to save the planet yet at the same time will not make any difference to the negotiations in Copenhagen, where the whole world will be meeting to do just that. If you are confused by this, I am going to tell you, so am I. This confusion is one generated by the Labor Party. It was Prime Minister Rudd who admitted quietly behind closed doors that the upcoming climate change negotiations in Copenhagen will not have any groundbreaking result, whether there is an Australian ETS legislation in place or not. Yet the Minister for Climate Change and Water, Penny Wong, insists that we must have legislation up and running before the negotiations start in December. She insists that the global pact is destined to fall short if Australia does not show the world how committed it is to battling the outcomes of climate change, a very arrogant assertion. She insists that we, the opposition, have to wave this legislation through the Senate without discussing any possible amendments to this flawed scheme—amendments that could improve the outcome and protect many Australian jobs.

Interestingly, there is dissent in her own party, where not all the members support what is being proposed. Queensland Premier, Anna Bligh, is not the only Labor member who is worried about the implications of the proposed scheme and has publicly raised her concerns about the effect of the CPRS on Queensland’s coal sector. Treasurer Wayne Swan has also put on the record:

Any emissions trading scheme ... Australia has in place come December might be changed following the outcome of global climate change talks.

The Minister for the Environment, Heritage and the Arts, Peter Garrett, has been telling us all that sea levels would rise up to six metres by the end of this century, a claim no scientific establishment—not even the warming evangelists, may I suggest, from the IPCC—would support.

We then witnessed the government do a swift about-face when they dropped the solar credits scheme. Why? For no other reason than it was too successful, because there was a sharp increase in households applying for the rebate, which had already consumed the $271 million set aside in the budget to fund this very scheme. These households demonstrated they were clearly interested in investing in renewable energy and were prepared to make a difference where they could—in their homes. One has to question how interested the government is in renewable energies. Families, mums and dads, did their own cost-benefit analyses of solar systems on their roofs, and many decided it was something they wished to explore to reduce their carbon footprint. So much, may I say, for supporting and encouraging voluntary household action.

It brings to mind the contradictory quotes we have heard in relation to the global financial crisis. Last December the Prime Minister said it would be reckless and irresponsible for our economy and for our environment to delay the introduction of the CPRS. In that same month, Minister Wong said to journalists that this was not the view of the Australian government, that the delay would simply increase the cost. It is they who have moved the system back two years, not us. Why isn’t it possible to invest time in exploring alternative models, as the coalition has repeatedly suggested? Now the scheme is postponed by 12 months, with a start date of July 2011, a date that we here in the Liberal Party have supported all along. This is too critical to muck up. Our economy is contracting and, as we know from experience and history, it is at such times when carbon emissions contract due to lesser industrial activity, regardless of whether or not we have an ETS. An emissions trading scheme must take into account what is happening in other countries, or the scheme will be doomed from day one.

What Minister Wong should appreciate is that it will be far more damaging in the long run if she goes to Copenhagen carrying under her arm an ETS which is flawed. Australia will not be held up as the flagship, the country that all other countries should follow, if the costs of the scheme prove to be prohibitive. Rather we will become the example of what other countries should not do if we do not provide maximum protec-tion for our industries, our trade, our businesses and ultimately the people of Australia. And let us not for-get: even the head of the United Nations climate change agency publicly said that it will not matter if Australia does not have its emissions trading scheme finalised by December. It would only count that Aus-tralia has made a commitment to reduce emissions tar-gets ahead of the Copenhagen summit. The Liberal Party supports the Copenhagen process and supports the emission targets as projected by the Rudd Labor government. What we do not support, however, is the design of the scheme and the unnecessary rush to im-plement it.

Action on climate change is wanted by the Australian voter. We in the Liberal Party have heard that message loud and clear. We are not opposed to emissions trading in general, as the government continually suggests. We simply do not believe it is the only tool in the box to act on climate change. Carbon trading is not the only answer. We are a party that believes in individualism, not collectivism, and we know, accept and appreciate that individuals have different opinions. When it comes to climate change, we indeed have many viewpoints in this party, views which do not match the religious, zealot, black-and-white- approach of those on the other side of the chamber. A strength of the Liberal Party, which I am very proud of, is that we encourage individual expression. The dynamic of the Liberal Party is democracy working at its best here in Australia!

To the credit of the Minister for Small Business, Independent Contractors and the Service Economy, Craig Emerson, he has publicly stated that science is undecided on key aspects of the global warming debate. Climate change is an incredibly difficult and complicated topic. For most of us who do not hold a degree in science, it is challenging to assess the merits in this passionate debate on whether climate change is man-made or follows a natural pattern. Most of us do not have the time to get to the bottom of climate science. It is a complicated and time-consuming topic, one most people want to deal with but do not have the capacity or the resources to deal with in their daily lives. There are too many nightmare scenarios painted and too many deceptive solutions such as ‘save the Barrier Reef for $1 a day’. Whilst most of it is utmost rubbish, for most of us it is hard to tell what might be realistic and what might not be.

We need to take a step back from this overheated debate and talk honestly about what we realistically can achieve together. This is a position that more and more Australians agree with and it is shown by the shift in voters’ perceptions. I am talking about those who share everyday concerns for their families, who want to have a job to support their family, who want to give their children every opportunity in life, who want to provide for their education and health and who want to keep a roof over their heads. These people want to be responsible but they are also confused about what is the best course of action for future generations, for their children and their grandchildren.

You can see the shift in perception in the Newspoll results. According to this data, 45 per cent of voters want the Rudd government to delay finalising its CPRS until after the Copenhagen conference, compared with 41 per cent who believe that we should not wait to see what other nations are doing. To understand the true meaning of these figures, you have to compare them with last September’s poll. Back then, 61 per cent wanted Australia to act as soon as possible, compared with 33 per cent who wanted to delay. In other words, the more people are sitting back, the more information they receive, the more time they have to assess what is going on and what the implications of the CPRS are for them and their families, the more they want further discussion about this. The public is unsure about gen-eral support for an ETS. They want more time.

Interestingly, the Senate Select Committee on Cli-mate Policy came to a very similar conclusion. In their majority report the committee urged the Rudd Labor government to go back to the drawing board. Treasury should model the short-term costs of the scheme, the effect on jobs and in particular on regional Australia with and the comparative costs of a raft of vastly dif-ferent alternative ways of imposing a carbon price. I fully support this recommendation. Why, for example, does Australia need an ETS? Why should we not have a carbon tax or introduce a hybrid model such as a baseline and credit scheme? These questions have not been responded to by Minister Wong. Perhaps the an-swer is pretty simple: because an ETS is easier to sell to the consumer. It is easier to sell because it is too dif-ficult to understand the implications of this scheme. What will be the outcome? Higher prices for food, electricity and petrol.

Current estimates say that the CPRS will impose costs on electricity and other energy-intensive companies. This could easily lead to a 30 to 40 per cent increase in power bills and indirectly increase prices for most services and items purchased. Yet, from a political point of view, it is less troublesome to introduce an ETS than any other instrument—say, a carbon tax. As politicians, we all know that a new tax is very unpopular. It will not be just the big polluters who have to pay the price for the ETS; it will be the consumers, and they are beginning to understand that.

The unrealistic assumptions about the world’s action on climate change and the Rudd Labor government’s approach to this have demonstrated that they simply have not done their homework when designing the CPRS. There has been no suggestion of how many jobs this scheme will destroy, how it will affect different industries or regions, or even whether it is the most cost-effective option for Australia to reduce CO2 emissions. What will the cost be in the next 20 years in lost competitiveness and lost jobs? It hardly comes as a surprise that most businesses have absolutely no idea what will be in the pipeline for them once the CPRS legislation is introduced. The latest KPMG poll showed that more than three in 10 businesses say they have no knowledge of the key elements of the government’s scheme. They have expressed concerns about the direct cost of this scheme on their businesses, how they will be able to absorb those costs and the way in which the scheme will impact on their ability to retain their workforce.

The only interesting insight we have received from the Treasury modelling to date is one the Rudd Labor government surely would like to ignore. It suggests that we could have a differently designed ETS with higher emissions targets which would actually be cheaper for our economy, compared to the model the Rudd Labor government proposes. We have also seen this result mentioned in a report by the Centre for International Economics which was published in April this year. The report says:

The proposition that the CPRS generates abatement at lowest possible cost has not yet been demonstrated ...

For these reasons, the coalition, together with Senator Xenophon, commissioned independent research—independent research, I might add, that we had been asking for for some time. So we did it. The report from Frontier Economics states that we could easily have a cleaner, greener and smarter scheme. We have this modelling now, which the Rudd government has refused to ask its own Treasury to undertake. Very briefly, the difference, ultimately, is that five years after the introduction of this particular scheme, the average annual household power bills would only be $44 higher, compared with the $280 price hike the CPRS would cause. This is something that households want to discuss and debate. They do not want a wet blanket put over further discussion. They want time to consider possible alternatives to the government’s scheme. This report clearly shows that a different design could actually create—not lose but create—42,000 jobs in regional Australia, instead of destroying 26,000 as proposed under the Rudd government’s scheme. I recommend that everybody in this chamber carefully read this new Frontier Economics report. It provides a very strong contrast to what we have been considering.

We must make sure that Australia’s ETS legislation is designed well. It must offer no less protection for jobs, small business and industry than the Waxman-Markey bill, which is currently in front of the US Senate. We also must make sure that an Australian ETS does not simply result in futile carbon and production leakage. Our emissions-intensive trade-exposed industries should at least be on a level playing field with those in the United States. Let us not disadvantage our own industries here in Australia. Let us actually provide them with a level playing field so that they can continue their business as they have done it in the past. Australia needs to be better informed about the shape of the United States scheme, needs to know the outcome of Copenhagen and must allow some modifications to the design of the government’s scheme. The coalition do not seek to stall or block Rudd Labor government legislation lightly, but we owe it to those who elect us to this place to make sure that, with what is put in place, we get it right.