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Tuesday, 24 November 2009
Page: 8664


Senator FIERRAVANTI-WELLS (12:45 PM) —I rise to speak on the reintroduced CPRS package of bills. In a previous contribution, in speaking on the bills which were rejected by the Senate, I concentrated my comments on the particular impact of the legislation on the Illawarra. It is clear that the bills in their current form are deeply flawed. As Senator Humphries indicated earlier in the debate, very few of us in this place have a detailed understanding of climate issues. In the context of this debate, some have made it a point to broaden their understanding.

Instead, I have chosen to come at this from the simpler proposition that our constituents expect their governments to ensure that the air they breathe is clean, the water they drink is clean and the food they eat is clean and uncontaminated. It is probable that many of our constituents have not read the legislation. They are not familiar with the contents of the draft Copenhagen treaty, but they think we should do something about the environment. With the Kyoto treaty, we signed the treaty and met our emissions obligations, but did not ratify it. Rightly or wrongly, the Howard government was pilloried for not ratifying the treaty but was not recognised for meeting the obligations in any case.

All Australians want a cleaner environment. This is how I see the debate. I want to take us back to the early days of recycling. When it was first mooted, there was scepticism about how it would work. The appearance of coloured containers in the street was welcomed by some and frowned on by others. Some believed it would not work. Today, nobody bats an eyelid about recycling containers. Indeed, many of us are quite accustomed to making sure we sort out our garbage and do our bit. For me, one of the critical missing elements in the current bills is a framework to encourage households and individuals to be more environmentally conscious. As with recycling, our respective contributions to a better environment must start in our daily lives—in our homes and in our workplaces.

One of the focal issues of this debate has been the price of electricity. This is indeed an important issue and one that goes to the heart of our daily lives and the family budget. Electricity use and costs are not the only things that should be important components of the ETS framework; that framework ought to be about how we can all use energy better and more wisely. It ought to encourage us to do so. I recently extracted a pamphlet that came with my electricity account. It had 10 energy efficiency tips, including switching off home appliances; using energy efficient compact fluorescent lamps; remembering to turn off lights in unoccupied rooms; installing more efficient hot water systems and shower heads; taking shorter showers; using cold water in the laundry and hanging clothes out to dry on sunny days to give the dryer a break; buying energy efficient fridges and thinking twice about needing to have that beer fridge on all the time; using more energy efficient appliances; not overheating our homes and therefore saving energy; installing insulation; draught-proofing doors and windows; closing blinds and windows and pulling the curtains and doors closed in rooms that are not in use; and, of course, monitoring pool pump usage. I wonder how many of us do any of these things in our daily lives.

The average Australian wants to do his or her bit to contribute to a better environment and, to some extent, that is what I think is driving the debate rather than a detailed understanding of the science. For the average person, as I read the correspondence and in the discussions I have had, climate change has become a byword for greater environmental responsibility. Perhaps if more of us were more energy conscious in our own homes, it would greatly contribute to a better environment. If in our everyday lives we made the small efforts, then we would be making a constructive contribution to reducing CO2 emissions. As with recycling, we need to take the small steps so we can collectively make a broader contribution.

This is what I think the debate is about—doing our bit. Some may have been convinced that ‘doing our bit’ means embarking on a complex emissions trading scheme, as the Labor government has devised. Others have proffered the suggestion that a carbon tax would have been easier. Some just view this as a tax on just about everything. Others simply think the whole thing is the biggest con since the Y2K bug.

But what has troubled me about the current debate is the language and tone of the public utterances. On the one hand, there has been a fervent, almost evangelical, adherence to a view that the sky will fall in if the world does not act on climate change now. Advocates of this position have pilloried those who have dared oppose their view. They have dubbed them ‘climate change sceptics’ in tones reminiscent of the Inquisition and burning people at the stake. Some have stridently and appallingly equated them to Holocaust deniers. Yesterday’s front page article in the Australian, entitled ‘Hackers expose climate brawl’, and the release of emails only strengthen the views of those who have questioned the science. The apparent glee at the death of one such scientist by those holding opposing views is both sickening and appalling.

On the other hand, people have questioned the science. We have seen scientists, such as Professor Plimer, offering alternative viewpoints. In a talk to MPs earlier this year, Professor Plimer posed questions about the Romans. Given my heritage, I was interested to hear him say that grapes and olives grew around Berlin and that Roman garb gave an indication of the warmth of the weather in Roman times. Banal, you may say, but nevertheless it makes you wonder.

Some argue that we are seeing evidence of climate change whilst others say that this has been a feature of the world’s history. Some say that the world is getting warmer; others show that it is in fact getting cooler. Some question whether the change is man-made. Again there is certainly a divergence of views. Regrettably, the Prime Minister’s language in this debate has not assisted. In a speech to the Lowy Institute earlier this month, he used the opportunity to launch a scathing and vicious attack on those who have dared to question his stance on climate change. This is irresponsible and demonstrates yet again the obsessive, egocentric and cynical political agenda that is driving him in this debate. Instead of affording respect for different positions, the Prime Minister has chosen to characterise his forays into the public debate with venom and vitriol—hardly conducive to rational and balanced debating.

The Senate overwhelmingly rejected these bills three months ago, and the government has chosen to bring them back in their current form. The coalition should not support this legislation as it currently stands. Another major concern is that this Senate has been pushed into considering this legislation before Copenhagen. This has been part of Labor’s political agenda all along. There was absolutely no valid reason that we should be doing so; we would only be pandering to the Prime Minister’s vanity in wanting to strut the world stage and to say, ‘Look what we are doing here in Australia.’ Really, Prime Minister, who really cares?

Australia emits only 1.4 per cent of world emissions. Do we really think that what we do here in Australia will make a difference to the world’s outputs? Some argue that the answer to this is no but that we should start somewhere and, as this is a global issue, we should take a precautionary approach and give the planet the benefit of the doubt. But of course this is outweighed if we end up reducing emissions in Australia but, in so doing, act to the detriment of the Australian economy so that activities which are reduced in Australia result in increased emissions in some overseas location. Then there would be no net benefit to the environment. This is the nub of the issue for many in this debate: finding the right balance between the economy and the environment and doing so in sync with the rest of the world.

Some actually question the need for an emission trading scheme. Others say we should not be locking ourselves into a position until we know what the United States and other countries are doing and until we know the outcome of Copenhagen. Still others are pressing for action now. There is definitely a divergence of sentiment in the electorate. There is major concern in the electorate that the current package of bills does very little for the environment but will have a grave impact on jobs and on Australian families. It is clear from the commentary that it will have a major effect on small and medium businesses and, as a consequence, that it will affect the international competitiveness of Australian business. There is a real fear that the impost on business will have the adverse effect of businesses shifting their operations overseas to countries which have no corresponding ETS framework. This has been evident through the various committee considerations of the bills.

As a senator based in the Illawarra region of New South Wales, I am consistently reminded of the important role that export industries play in our economy. The Illawarra region is built around an industrial port which supports tens of thousands of jobs. The Illawarra Mercury has been prominent in focusing attention on this debate and on the deeply held concerns over prospective job losses in the region. In the Senate Standing Committee on Economics inquiry into these bills earlier this year, BlueScope Steel, the main employer in the Illawarra, identified that the scheme threatens to erode tens of millions of dollars from the company’s books within the first year and has the potential to threaten the viability of the 12,000 jobs that their operations support.

Many in the Illawarra have expressed concerns about the effect on their livelihoods, which are so reliant upon these crucial trade-exposed industries. A closure of the steelworks would mean the loss of 4,700 jobs at Port Kembla amid the loss of 12,000 jobs supported by steelmaking activities within the region. This is reflected in the Illawarra Mercury editorial of 2 April 2009, which stated:

The question now for the Federal Government is whether throwing 12,000 people in the Illawarra onto the unemployment scrap heap is worth the price of what is likely to be only a notional gain for the environment.

The problem is compounded by the fact that this scheme is being proposed amid a global financial crisis and rising unemployment where there are few employment opportunities for Illawarra workers to transition into. Accordingly, the coalition unveiled a plan to save thousands of Australian jobs and to limit increases in electricity prices for small business through common-sense suggestions for changes to Labor’s flawed and rushed emissions trading scheme. The coalition put forward a package of suggested changes that have formed the basis of good-faith negotiations with the Rudd Labor government. The package demonstrated that Labor’s CPRS can be made cheaper and smarter whilst at the same time protecting vital jobs in our economy.

The coalition’s approach has been to ensure that key export industries, including coalmining, food processing, natural gas and aluminium, will be better protected and thus make sure thousands of Australian jobs are saved from the threat that comes from Labor’s flawed scheme. The coalition wanted to protect farmers from the scheme by exempting agriculture altogether. By allowing agricultural offsets, which include carbon sequestration in soils and vegetation, there is the opportunity for financial and land management benefits in the rural sector. By including voluntary measures, the environment will also benefit from individuals, businesses and community groups developing their own initiatives to reduce greenhouse gas emissions.

The coalition has continued to advocate an intensity based cap-and-trade approach to the electricity sector, as this more than halves the initial increase in electricity prices, reducing the economic costs of achieving emissions cuts. If the Labor government refuses to consider the intensity based approach, it must clearly explain why. The coalition has pushed for an alternative strategy for cushioning the initial impact of higher electricity prices on small businesses.

I would now like to focus on the key changes suggested by the coalition to Labor’s flawed CPRS. Firstly, in relation to trade-exposed industries, the coalition has suggested that the CPRS be amended to provide a single level of assistance for emissions-intensive trade-exposed—EITE—industries, that the thresholds for assistance be lowered and that they retain their international competitiveness. The coalition has advocated including primary food processing in the EITE scheme and allowing industries that include a series of sequential or parallel production processes to have these assessed as a single activity in determining assistance.

Agriculture has been an important issue for the coalition. We have advocated permanently excluding agricultural emissions from the CPRS. We have also sought the government’s agreement to the introduction of an agricultural offset scheme in line with similar offset schemes to be introduced in comparable economies, such as the United States and the European Union. For example, I recently completed a major study-leave report on the Australian wool industry—an industry worth about $2.6 billion per annum—and I saw the impact that Labor’s flawed scheme would have on this industry alone. There are many agricultural industries that would be affected. Another area of concern for the coalition has been coalmine emissions, which is particularly of interest for the Illawarra. The coalition has advocated for the exclusion of coalmine fugitive emissions from the CPRS and for the relevant minister to be provided with authority to use regulation to control fugitive emissions.

Lower electricity prices have also been of great concern for the coalition, and we have continued to advocate an intensity-based cap-and-trade model for generators to deliver the same emissions cuts as the CPRS but with a much smaller increase in electricity prices. This would greatly reduce the burden on small and medium businesses, which receive no compensation for higher power bills under Labor’s proposals. Under the CPRS, retail electricity prices will rise by close to 20 per cent in the first two years. Under an intensity approach, retail electricity prices would rise by less than five per cent in the first two years. Our concern is to cushion electricity price increases for households, small businesses and business in general.

Compensation for electricity generators is another area where the coalition has proposed changes. Coal fired generators need to be better compensated for loss of value they experience from the CPRS, to ensure security of electricity supply and enable them to transition to lower emission energy sources. Energy efficiency and voluntary action are important factors for the coalition. We have suggested a national ‘white certificate’ energy efficiency scheme so households and businesses earn credits for efficiency measures and contribute to reducing national emissions. If households do their bit—or more than their bit—they should be recognised for it. This goes back to the comments I made earlier about all of us, at the grassroots, making our contribution toward a cleaner environment. Likewise, the coalition supports creation of a voluntary offset market in advance of the introduction of the CPRS and amending the CPRS to ensure voluntary abatement leads to a lower national level of emissions.

The coalition’s intention has been to negotiate the above matters with the government in good faith to deliver environmental benefits with less severe economic costs. The current bills and the manner and timing in which they are being introduced will export jobs overseas. The fears and apprehensions felt by the people of the Illawarra and other constituents around New South Wales are justified, as they know full well that they stand at the forefront and will face the full brunt of this job-destroying scheme. Unless Labor is prepared to fix the flaws in its proposed emissions trading scheme, to save jobs, reduce costs and act in the interests of all Australians, then the bills in their current form should be rejected.