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Wednesday, 12 August 2009
Page: 4654


Senator COLBECK (10:32 AM) —I rise to make my contribution to the debate on the Carbon Pollution Reduction Scheme Bill 2009 and related bills. I note at the outset that the effects of this legislation comprise yet another broken promise on the part of the Rudd government. Kevin Rudd said before the election:

As part of its comprehensive approach to climate change, Labor has already indicated that it will develop mechanisms to ensure that Australian operations of emissions-intensive trade-exposed firms are not disadvantaged before an effective global regime is in place. This will be pursued as a key component of emissions trading, alongside the expanded MRET.

You ought to tell that to Australia’s farming community, because there is absolutely no question that this scheme is completely and utterly diabolical for the rural sector in Australia. There is no question that elements of the agricultural sector are emissions intensive and absolutely no doubt that they are trade exposed. Australia exports 60 per cent of what it grows—clearly trade exposed—and yet the Rudd government, through this scheme, leaves the agricultural sector exposed to the impacts of higher costs. And it makes no apology. When we questioned departmental officials during the inquiry held by the Senate Select Committee on Climate Policy, the response was: ‘That’s the effect the scheme is supposed to have.’

Tell Australia’s dairy farmers, who this year had a 32 per cent reduction in milk price in January and a similar price reduction just this month, whose milk price has dropped by almost 50 per cent in total, to well below the cost of production, that they can afford another $8,000 to $10,000 cost imposed on them per year from the emissions trading scheme. Tell them that they can afford that.

I am pleased that the National Farmers Federation have at last said that they do not want agriculture to be included, because that is what should happen. The government should take up the suggestion by the opposition that agriculture be left out of the emissions trading scheme. The government specifically indicate in the white paper that, if agriculture does not come in after the time for consideration has passed, if the 2013 decision excludes agriculture, mitigation measures would still be applied in agriculture, which would result in a cost of emissions similar to those under the scheme. So the government’s current policy is that, if they do not bring the agricultural sector in, they are going to impose a similar cost anyway on a sector that exports 60 per cent of its product.

They promised before the election, a solemn promise from the Prime Minister—no wonder people do not believe that they can believe anything Kevin Rudd says anymore—that the emissions-intensive and trade-exposed sectors would be protected. The agricultural sector exports 60 per cent of its product, yet the government are not prepared to do anything for the agricultural sector. The $8,000 to $10,000 I spoke of is to apply from the beginning of the scheme, because it is a pass-back cost from the impost on processing.

We have a highly competitive international commodity in dried milk powder. It is as intensive to manufacture dried milk powder as it is to make cement, but the cement industry is being protected because of the threshold level and the way it is set. This demonstrates a clear design flaw in the scheme. Kevin Rudd will not keep the promise he made to the Australian people, particularly the Australian agricultural sector, when the scheme was being designed.

It is a similar situation with the beef industry. There is $60 million a year passed back to beef farmers from the processing sector of the beef industry. Again, this is a major export industry. We have enormous markets in South Korea and Japan. We had up to 50 per cent of the Japanese meat market at one stage—that is, 50 per cent of the beef consumed in Japan came from Australia. Yet the Rudd government are prepared to disadvantage this sector, not keep their election promise, with a flawed scheme design. Not only that—they will impose a whole range of other costs on the industry. They have just taken away the 40 per cent rebate on AQIS charges. That is a $42 million cost to the agricultural sector and a $32 million cost to the beef industry. When you add in the renewable energy target, a potential further $15 million cost to the beef industry, that is over $100 million a year that the government are going to impose on the beef industry. Over $100 million a year will be imposed on one of our major rural export sectors. Kevin Rudd promised that ‘operations of emissions-intensive trade-exposed firms will not be disadvantaged’. Some promise!

We have seen so many holes in the modelling conducted through this process. We were told that there would be no impact on employment. The modelling showed that there would be no reduction in employment as a result of the emissions trading scheme. That is what we were told by Treasury officials at the inquiry. We were told that would be the long-term effect. The only problem with that is that that is an assumption of the model. It is not an outcome of the model; it is an input to the model. The assumption is that there will be no impact on employment over time. The assumption is that new industries will take up where others have been disadvantaged.

There will be some new jobs created as a part of this process. No-one is denying that. But the government have absolutely no idea where they will be. They will not recognise any of the modelling that shows what the negative regional impacts might be. They dismiss it. They try to downplay it. They attempt to discredit it although it has been done by creditable organisations, some of it for the New South Wales government. They do not want it released. They do not want the Australian people to know the truth. They try to hide the facts.

I have spoken of the beef sector and I have spoken of the dairy sector. It was great to see representatives from the Australian Food and Grocery Council last night talking about the impact on the food-processing sector. Again, this is another element of the agricultural sector that will be negatively impacted. Kevin Rudd promised that they would not be. Kate Carnell said last night on The 7.30 Report that the Australian food and grocery manufacturing industry employs 250,000 Australians. It means that products manufactured in Australia on the supermarket shelves will go up by about five per cent, but imported products from companies that do not have a carbon charge will not go up at all, so it will cost jobs. It will cost Australians who want to buy ‘Australian made’ even more.

Madam Acting Deputy President Brown, you as a Tasmanian will remember, as I as a Tasmanian remember, when the tractors came to Canberra in 2005. It was a huge event. It focused attention on Australian grown, produced and manufactured agricultural products. It placed a huge focus on them. There is enormous concern in my home state about the importation of food, particularly from China. I can tell you that this policy will promote that—it will promote more vegetables being imported from China. There are enormous concerns expressed by the agricultural sector, particularly the vegetable-growing sector. Eighty per cent of the processed vegetables in Australia are grown and processed on the north-west coast of Tasmania, so there is where some jobs are going to be lost.

I have spoken to the management of one of those firms and their impost for permits is horrific. And we all know who pays when costs go up in the processing sector: the farmer pays. If they are going to compete with the imported product in the marketplace there will be no capacity to pass the cost through to the consumer. It will come off the farmer’s bottom line. I have already said that the cost will be $8,000 to $10,000 per dairy farmer.

It is about $7 or $8 per head for a beast to be slaughtered. Now there are job losses and imported foods threatening our food supply and food security. If we lose the processing plants that exist on the north-west coast of Tasmania it is going to be awfully hard to re-establish them. Eighty per cent of Australia’s processed vegetables come out of the north-west coast of Tasmania. The very proud farmers who are looking to protect their industry are being threatened by this broken promise from the Prime Minister. That is only a domestic market but it is exposed to trade from the international community.

We have been told throughout this process that it is urgent to pass this legislation, that we have to get it passed and that business needs certainty. What they do not need is a gun to their head. The government are putting a gun to the head of agriculture. They are saying: ‘We will consider whether we bring you in. If we do not bring you in, you are going to pay the costs anyway.’ What choice do those in agriculture have? No wonder at last they are saying, ‘We do not want to be in.’ We ought to be looking at what is happening around the world and giving consideration to what is happening in other countries—for example, countries such as the United States where they allow them credits but do not count the emissions.

I was in Europe recently on a study tour. The officials from the department in the United Kingdom were absolutely gobsmacked when I told them what this government were considering doing in agriculture. Their eyes were like saucers: ‘You are doing what—considering whether you bring them in or not? We understand that, but imposing a cost whether you do or don’t is absolutely absurd.’ The government are working cooperatively in the UK with the National Farmers Union, who I also met. They are talking about a six per cent reduction in emissions from agriculture. That is an agreed target between the two but based on voluntary measures such as leaving land fallow, things of that nature. There are no such discussions in Australia. The blinkered approach from Penny Wong is: ‘This is my script. I’m going to follow it. It’s too bad what anybody says. This is the line that I’ll follow.’ No wonder Greg Combet has been brought in to clean up the mess.

But there is no urgency to pass this legislation. There is time to consider the factors that need to be considered as part of this. There is no question about that. The government have already made the delay. I feel sorry for the government senators on the Senate inquiry. Witness after witness asked them whether or not there was an urgency to pass this legislation. Some senators even suggested that the global financial crisis was not a reason to delay this legislation. Can you imagine their faces when, on the Monday after the committee completed its hearings, the government used the very reason the senators had been saying was not an excuse as the reason to delay the commencement of the scheme for 12 months? That very delay gives us the opportunity to say what the opposition have been saying all along: wait until we know what the international community is doing. Wait until we understand how the Waxman-Markey bill works out. Wait until we know what the final design of the European scheme is. They have a scheme there but it is effectively a pilot at the moment.

The government told us, and we had witnesses telling us, that there had been no carbon leakage in Europe. Of course there has been no carbon leakage, because emissions-intensive trade-exposed industries are not impacted yet. The government sent witnesses to the inquiry to say that there has been no carbon leakage, and that is the reason all the information we were being given as part of our process should not be taken notice of. For all of the witnesses that came in—the mining industry, the agriculture sector, the energy generators and the aluminium industry—the government said: ‘Do not take any notice of their evidence. You do not need to. There has been no impact in Europe.’ Of course there has not, because there has been no impact on the emissions-intensive trade-exposed industries yet. That process does not start until 2012 and they are still negotiating their mechanisms. They have not finalised it yet. This government want to rush out, disadvantage our industries, screw over our agriculture sector and disadvantage investment in the energy generation industry. The energy sector actually told us that.

ERM Power are gas generators. They are winners under the emissions trading scheme that the government proposes. Trevor St Baker from ERM Power told us that the imposition of the government on the asset values in the power industry was actually having an impact on his capacity to raise investment funds in his business. So the message that this government are sending around the world is, ‘Be careful about investing in the energy sector in Australia, not just the coal sector and not just the emissions-intensive ones but even those that are winners.’ ‘The remaining international lenders are even more sensitive to change country risk and particular sector risks,’ is what Trevor St Baker told us in his evidence to the inquiry. The government claim they have this just about right. Clearly they have not because even the winners cannot get investment funds under the scheme they are proposing. It is absolutely absurd.

The government tell us again that this is urgent and we need to get it passed before Copenhagen and that we need to send a clear message. Interestingly, as previous speakers from the coalition have already said, Mr Yvo De Boer from the United Nations climate change body said, ‘What people care about in the international negotiations is the commitment that a government makes on a certain target.’ That is what they care about. On my study tour I spoke to the EU, the French government, the UK government and the OECD, and that is the message that I got—what people care about are the targets. I said to them that we support the government’s targets. We support five, 15 and 25 per cent depending on what Copenhagen does. They understood that it was sensible for Australia to wait and see what, particularly, the US does and what the EU does. They are the ones that are going to influence what happens internationally more than anybody else. They are the big players in this process. They understood that that was a sensible policy. They also understood that things will change at Copenhagen. Some of the accounting rules might change.

I spoke yesterday in this place about carbon stored in solid timber products. That could be one thing that changes. It would be a significant positive for the forestry industry. A number of other things will change at Copenhagen. Simon Crean has even admitted that, if we pass this legislation now, we will probably have to amend it after Copenhagen. So why not get it right? Why not do it properly the first time? What is the rush? The government have already delayed the commencement of this scheme. They do not need to delay it any further. They can wait until after Copenhagen, as we have been saying all along and as we recommended in our committee report. When we looked at the scheme, we travelled across the country and talked to witnesses on all sides of the equation. I got a similar response when I spoke to different jurisdictions in Europe. They were worried about the targets. They appreciated the fact that we had bipartisan support for the targets, but what they were really worried about was that we stuck to those. They were not worried about whether or not we had legislation.

One other thing that concerns me is the churn through the scheme that will occur. Caltex told us that $17 billion will pass through Treasury coffers between the commencement of the scheme and 2025 and that there will be no reduction in emissions from fuel. There will be $17 billion passing through Treasury; the government will take off their little bit for managing it. But it will not do anything. If it is so urgent, don’t we want a scheme that will actually do something, that will reduce carbon emissions? That is what the government say—they are going to save the world. That is what this process will do for us. Yet in fuel there will be enormous churn. Prices for petrol will actually go down for the first three years. The government are overcompensating. Then they will start to rise again. But they will not achieve anything. There will be $17 billion going through the system for no effect. There is no question that this scheme is all about politics. The Prime Minister set a political target. He has had to back down from that target for logistical reasons. He has used the global financial crisis as an excuse. He should be prepared to do this properly. He should give this parliament and the country the proper time to consider the things that need to be considered as part of this process. (Time expired)