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Wednesday, 12 August 2009
Page: 4671

Senator COONAN (12:01 PM) —I rise to make a contribution to the debate on the Carbon Pollution Reduction Scheme Bill 2009 and related bills. The complex issues presented in these bills have been comprehensively ventilated. I do not intend to go over the same arguments in exhaustive detail. However, as has been well and truly telegraphed, the coalition will not be voting for the Rudd government’s Carbon Pollution Reduction Scheme in its current form, on the basis that it is both structurally flawed and ultimately ineffectual to transition Australia to a low-carbon economy. I hasten to say that the issue here is not whether the coalition should support a framework to deal with climate change. After all, an emission reduction scheme is coalition policy, which was in fact taken to the election in 2007. So at some point in the future the parliament would have been confronted with a carbon reduction package regardless of whichever party formed government.

Yes, there are differences of opinion in the coalition about what the design should look like, when it should be implemented and how this matter should be handled. But the overwhelming majority of us do understand that science does not always provide definitive answers. This is manifestly so in the case of whether carbon emissions are responsible for climate change. Rather, science tells us about probabilities and, on the science, probabilities favour the view that climate change should not be ignored and requires a carefully calibrated and targeted global response.

A global problem requires united global action and it is illogical to lock in a flawed scheme when we, as an emitter of just 1.4 per cent of global emissions, have limited capacity to contribute to or influence a meaningful outcome apart from the rest of the world. Dealing with the problem requires decisions today that will be right for tomorrow. It requires diligent and honest efforts to get the balance right and to get the right scheme for Australia at the right time. The legislation in front of us does none of this. It is devoid of the regulatory detail that outlines how the scheme will reduce emissions, despite Mr Rudd pronouncing this as ‘the greatest moral challenge of our time’.

While the proposed legislation has been on the table for some months, Minister Wong and Mr Rudd have apparently been unable to produce the regulations for the scheme, so it is impossible to know how this scheme will even work without the formulas, methodology and detail you would expect to see when being asked to vote about a scheme with the far-ranging consequences that these bills portend for Australia. Without these regulations, we have countless unanswered questions about the make-up of the scheme and how it will be implemented. For instance, we have no idea how the treatment of emissions-intensive trade-exposed industries will be determined and laid out.

Senator Wong presented some of the regulations in June, but the majority of them are nowhere to be seen. In fact, it seems they are yet to be decided. As the minister admitted on ABC radio recently, aspects of the emissions trading scheme are still being negotiated with industry—and that is just a couple of days out from the impending Senate vote.

Absent that detail as presented, the Carbon Pollution Reduction Scheme is fundamentally objectionable in terms of the permit system, the churn or recycling of billions of dollars of taxpayer money through the system at the government’s discretion and the impact on Australian jobs, particularly in regional Australia. The sale of permits will see the Rudd government simply collect huge revenue from driving up the cost of energy. The CPRS is the equivalent of hiking the GST from its current rate of 10 per cent to 12½ per cent. This new tax to be foisted on Australia will generate $13 billion in year two, growing rapidly to $20 billion a year by 2020 or thereabouts. No new energy or resource project will succeed without parent companies begging for a quota of free permits from the government in order to be competitive. The 30 to 40 per cent increase in household and workplace electricity bills will result in tens of thousands of businesses facing indirect ongoing costs which many, in the short term, will be able to do absolutely nothing about. It is a tax on industry and on growth.

On top of this, the government plans to recycle the moneys collected by compensating low-income earners for the major increase in electricity costs. A huge bureaucracy will be administered to churn millions of dollars back through the economy, with the government picking winners as to who is to be compensated or not. This is not a very attractive proposition.

The truth of the matter is that, with higher electricity and transportation costs driving up the cost of employment, goods and services, emissions will merely be transported overseas to cheaper locations, making no net difference to the global emissions output. This all comes at a time when no-one, certainly not the coalition or the Rudd government, knows what the global consensus will be at the end of this year in Copenhagen, when world leaders will meet to discuss a united way forward. As many speakers have noted, we heard the UN chief scientist, Yvo de Boer, just last week admitting that Australia does not need an emissions trading scheme before the meeting in Copenhagen and that what matters is countries coming to the table with targets. Very well. The coalition has already offered full support for the targets that Mr Rudd has proposed to take to Copenhagen, but you certainly do not hear much about that.

The United States’ form of the emissions trading scheme, contained in the Waxman-Markey bill, has been approved by the House of Representatives but is yet to pass the Senate. Clearly, the United States, responsible for over 20 per cent of global carbon emissions, will provide a benchmark for developed world economies as to how they reduce and treat emissions. Why would Australia, responsible for around 1.4 per cent of global emissions, lock in place a scheme risking our jobs and our economy before knowing how the US is going to do it?

Whilst we cannot know what the United States or other developed nations will have as a final position on carbon emissions, we do know the disastrous impact the Carbon Pollution Reduction Scheme, as it stands and as we are being asked to judge it today, will have on Australian jobs. Now is not the time to be introducing legislation that will undoubtedly kill Australian jobs, such as is contemplated in this bill. Fighting off the effects of the global financial crisis, governments across the globe have desperately implemented stimulus packages to support jobs, yet we have seen that, even in Australia, where the downturn has been less sharp than expected, unemployment is still forecast to trend upwards.

In case there is any doubt, there have been clear and unequivocal warnings from industry as to the likely impact of the Carbon Pollution Reduction Scheme on existing and future jobs. A $4 billion investment to extend an aluminium smelter in the Hunter Valley will be shelved, a move that will see 15,000 construction jobs and 3,000 permanent jobs gone. These are not just make-work jobs, like those that we have seen in the stimulus packages that have been introduced by the Rudd government; these are real jobs. Rio Tinto has warned that the CPRS will cost jobs now, as has the Minerals Council, which warned that over 66,000 jobs will go. Xstrata has said that up to 10,000 jobs across Australia will go. BlueScope Steel and OneSteel have said that 12,000 jobs will be under threat. Ford Australia believes the ETS will drive Australian jobs overseas. That should be of some concern to Senator Carr, sitting here in the chamber.

Even industries working towards a cleaner environment will be punished under a poorly thought out and sloppy scheme, showing just how poorly planned the design of the Carbon Pollution Reduction Scheme really is. Clean energy projects such as ZeroGen and Envirogen predict that up to a thousand jobs could go, should future investment be cancelled. Visy, the recycling company that employs thousands of people in regional areas, has warned that this legislation will disadvantage its business because—can I say rhetorically—guess what? Recycling is not recognised under the Carbon Pollution Reduction Scheme. Visy’s own renewable steam energy is not counted under the CPRS emission offsets. It really beggars belief.

Research prepared for the state and territory governments showed that 126,000 full-time jobs will be lost or put at risk throughout Australia under the government’s rushed and bungled scheme. There will be 45,000 jobs lost in my home state of New South Wales alone, which brings me to the concerns for regional Australia. The CPRS would largely ignore the adverse impact on regional and rural Australia. We used to be concerned about having two Australias—a disadvantaged regional Australia and other people living in very different circumstances in metropolitan areas. Research commissioned by the New South Wales government found that regional areas such as Gippsland, Geelong, central west Queensland, the Hunter Valley—which I have already mentioned—central Western Australia, the Kimberley and Whyalla would shrink by over 20 per cent under the Carbon Pollution Reduction Scheme. An average dairy farm would face new and annual indirect costs to the tune of $9,000 with absolutely no way to offset the cost. The beef and sugar industries would be hit. The grains industry, a low emitter anyway, would face annual indirect costs of up to half a billion dollars. Under the CPRS, agriculture would be ignored by the Rudd government, even as a source of abatement—of which there are many. In comparison, the US legislation explicitly excludes agriculture from the cap. It also explicitly includes the industry in the opportunities to develop carbon offsets and to use this as a revenue stream for farmers.

You can go on and on about the problems with the scheme. Obviously the coalition believes the Rudd government have gone the wrong way in the way they have designed the scheme. The Rudd government’s Carbon Pollution Reduction Scheme does nothing for the environment and everything, it would seem, to destroy jobs. But, when we boil it all down and look at how the debate has moved on over the past few days, what is most disappointing about the government’s approach to their CPRS is the high-handed and arrogant way in which they have refused to consider any alternatives or to even sit down with the coalition to discuss how to make the scheme more efficient and workable.

Just last month the coalition released nine principles that we believe must underpin and inform a considered approach to dealing with any carbon scheme. Without canvassing all of them, at the heart of the opposition’s principles is a united position to protect Australian jobs and industry. Critically, we contend that there must be no less protection for jobs, small business and industry from an Australian scheme than from the one that is finally agreed to in the United States Waxman-Markey bill. In addition, we agree that an Australian scheme should not encourage carbon and production leakage, exporting emissions and jobs. Emissions-intensive trade-exposed industries need to compete on a level playing field with the United States and other advanced economies. As well, agricultural emissions should be excluded and agricultural offsets from biosequestration should be included in the scheme. The Rudd government has complained that these principles are not amendments. How petty is that, when it would be perfectly sensible to discuss these concerns as a precursor to developing complex technical amendments?

There needs to be a discussion to thrash out basic positions to go forward, but this Labor government is not genuinely interested in going forward; it is hell-bent on forcing this flawed scheme to a vote. We have watched the Rudd government in action for almost two years now, and we know that this is a government that is all about seizing a political advantage and not, sadly, about safeguarding the broader national interest. You need only look at its treatment of the renewable energy targets. The coalition supports the renewable energy targets, but the government has chosen to play cynical politics by incorporating them into the Carbon Pollution Reduction Scheme Bill 2009 in a vain attempt to wedge the opposition into passing this deficient legislation. This political opportunism was evident on Monday, when Frontier Economics published the economic modelling on the Rudd government’s Carbon Pollution Reduction Scheme. Mr Combet, the Minister Assisting the Minister for Climate Change, voiced his shrill opposition even as it was being released, and, rather than considering the many findings and recommendations that the research offered, Senator Wong was out calling the document a ‘mongrel’ by lunchtime.

The Frontier Economics report shows that the Rudd government’s CPRS will unnecessarily drive up electricity prices, destroy jobs and expand the size of government in Australia. Under the Frontier approach, output, real wages, employment and investment would all be higher in a cleaner, greener, smarter scheme. There may be arguments about the detail, but, should the Rudd government sit down and talk to the coalition and crossbench senators, Australia could work toward an emissions trading scheme that would potentially be twice as green at a much lower cost to Australians and the broader economy. In fact, the economic costs of the scheme could be reduced by $49 billion over the next 20 years, from $121 billion to $72 billion.

The Frontier approach offers far more bang for one’s buck, and I believe the government should be condemned for failing to even give it the time of day and for continuing to maintain this rhetoric about wanting to see specific amendments. The coalition’s principles and the Frontier Economics findings do warrant discussion and action. To propose that an Australian emissions trading scheme should offer no less protection for jobs, small business and industry than its American counterpart is a totally legitimate proposition when the Rudd government itself has repeatedly said that there is no Australian solution and that there must be a global solution.

As it stands, the Rudd government must understand that the CPRS is currently friendless legislation. So far as I understand it, the Greens are not happy with it; the independent senators, Senator Fielding and Senator Xenophon, are not happy with it; the National Party is not happy with it; the Liberals are not happy with it; Australian business has grave reservations; and the Australian public, I believe, is confused about the impact that this flawed scheme will have on the economy and on their livelihoods. But instead of listening to concerns and heeding the warnings from the numerous groups and individuals who have spoken out against the scheme and its design, the Labor Party arrogantly parades on.

The Rudd government took the advice of the opposition and pushed the emissions trading scheme start date back to 2011. Mr Rudd and Senator Wong should be utilising this valuable extra time to ensure that Australia is in line with global action, to work with the opposition and to ensure that Australia has a quality and workable scheme. That is certainly the motivation and the intention of the coalition in not voting for the scheme the way it stands and the way we are being asked to look at it in the Senate today.

The Rudd Carbon Pollution Reduction Scheme as it stands is not balanced. It offers virtually no benefit to the environment. Indeed, it is a futile piece of legislation because it is not going to have the benefits contended for it. It threatens productivity, Australian competitiveness and Australian jobs. It is our responsibility as a coalition not to vote in favour of such a flawed set of bills.