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Wednesday, 6 July 2011
Page: 4107

Senator CORMANN (Western Australia) (09:40): This bill is the government's attempt to introduce direct action policy. They do it badly but they are trying. The coalition agrees with the bipartisan commit­ment to reduce greenhouse gas emissions and has committed to the bipartisan five per cent reduction on 2000 emissions by 2020. This bill, at its essence, is about voluntary financial incentives for farmers to improve land as a means of reducing Australia's emissions. It tries to do this by creating incentives for farmers and landholders to undertake voluntary land-sector abatement projects. The government will provide saleable Australian carbon credit units in return for eligible carbon offset projects to achieve carbon abatement and improved soil resilience. Carbon farming would have additional environmental benefits such as reducing salinity and erosion, protecting bio­diversity, regenerating landscapes, improv­ing water quality and improving agricultural soil productivity. Incentives for carbon farming are earned through abatement of greenhouse gases by capturing and destroy­ing methane emissions from landfill or livestock manure or by removing carbon from the atmosphere and storing it in soil or trees—for example, by growing forests.

So far, so good. In principle the coalition agrees with what the government is trying to achieve with this but there are some flaws in it. We would like to see the detail in the regulations before we finalise our consideration of this legislation. I also note the comments that Senator Xenophon has just made that the government shut down a very successful scheme that was previously in place—the Greenhouse Friendly scheme put in place by the Howard government. Shutting that scheme down took Australia backward rather than taking us forward in addressing our challenge of helping to reduce global greenhouse gas emissions.

But there are some things that we can do to make this legislation better. If the government supports the sensible amend­ments that we will be putting forward in the committee stages there is no doubt that this could be a very good way of making a sensible contribution to helping reduce global greenhouse gas emissions, moving forward.

But this comes in a broader policy context. This comes in the policy context of the government wanting to impose a carbon tax on Australia. This comes on top of the government wanting to impose a carbon tax when none of our major overseas trade competitors that are relevant in this context will impose either a carbon tax or an emissions trading scheme.

The carbon tax that the government is proposing to impose as of 1 July 2012 will push up the cost of everything. It will make Australia less competitive internationally so it will cost jobs. And it will do all of that without helping to reduce global greenhouse gas emissions. Why? Because it will make overseas emitters more competitive than equivalent Australian businesses, including those in Australia that are operating at world's best practice in terms of environ­mental standards. This will mean that overseas emitters will take market share from Australian businesses, which will mean that we will shift emissions overseas and we will shift jobs overseas. That will mean that a carbon tax, in the absence of an appro­priately comprehensive global agreement to price emissions, will reduce emissions in Australia in a way that increases emissions, arguably by more, in other parts of the world. This is a fundamental flaw in what the government is putting forward. Yesterday I asked the Minister for Finance and Deregulation, Senator Wong, a series of questions in question time about why carbon emissions from coal were worse than carbon emissions from petrol. If people have no choice but to use their car, why should electricity not be exempt from the carbon tax as well as petrol? Families who have to access electricity from coal fired power stations will equally not have any choice, no chance to avoid doing so.

Verve Energy in Western Australia gave evidence to the carbon tax inquiry that, irrespective of a carbon tax, they will have to continue to use coal as part of their energy mix to the same if not to a growing extent in order to ensure energy security in that state. This means that, given they are currently responsible for 8½ million tonnes of emissions, given that they are currently the 11th biggest emitter, they will have to pay between $160 million and $200 million worth of carbon tax, which will be passed on either to consumers by way of higher electricity prices or to taxpayers because, as a state owned enterprise, the electricity generator is, in that context, very likely to make a loss.

Because Minister Wong was unable to answer the questions, she went for a distraction. She made a statement in this chamber that somehow I had made a statement in September 2007. She said yesterday in question time:

I am interested that Senator Cormann has asked me about taxing petrol, because I was surprised to find his comments in the chamber, in September 2007, where he said of Mr Howard's emissions trading scheme: 'This will be the most comprehensive ETS, in the world, broader in coverage than any scheme currently operating anywhere; a world-leading scheme to cover 70 to 75 per cent of total emissions. By including large emitters alone, the scheme would cover 55 per cent of total emissions; however'—and this is the best bit, Mr President—'by including transport and other fuels the coverage of the scheme is significantly increased.' So Senator Cormann used to back an ETS which covered petrol.

I never made any such comments in this chamber or anywhere else. The minister misled the chamber. I suspect that she did not deliberately mislead the chamber. I suspect the minister's misleading of the chamber was due to some sloppy staff work. I suspect it was due to some incompetent hollowmen in her office giving her bad advice. If this is the quality of the advice she is getting in order to structure a political attack on the opposition, I really worry about the quality of the advice she is getting on the important matters of the nation. If this is the quality of the advice she is getting to run a cheap political attack in the context of not being able to answer a very important question, then no wonder we are looking at $107 billion of net government debt and no wonder we are looking at record levels of deficit year after year under this Labor administration. Clearly, this is a government that is not getting very good advice indeed. If the minister had any decency, she would come into this chamber and apologise.

Clearly, one of her advisers did have a look at my first speech in this chamber and she did, out of context, quote one particular sentence. The sentence she quoted did relate to the proposition of an emissions trading scheme:

The government's recent announcement of a national emissions trading scheme, including offsets for trade exposed industries, is a positive and sensible approach to addressing global warming.

I encourage all members opposite, and indeed people across Australia, to read my whole first speech because, if I may say so myself, it was a very good speech. In order to make sure that members opposite have a good understanding of what I actually said at the time, I am going to read them the whole quote. It is very important to have a very good understanding of what was said at the time. Let us remember that this was in August 2007 when the coalition did support an emissions trading scheme. In August 2007, all of us assumed that the United States would have an emissions trading scheme by 2010, that Japan would have an emissions trading scheme by 2010, that China would have an emissions trading scheme by 2015 and that India eventually would have an emissions trading scheme.

We know that Penny Wong, the then Minister for Climate Change and Water, and the then Prime Minister, Kevin Rudd, went to Copenhagen in December 2009. Copenhagen was a massive failure and everything changed. When the facts change, good governments reassess the facts and are prepared to go for a policy rethink. This is actually what the government did at the time. The then Deputy Prime Minister, Julia Gillard and the—sadly, still—Treasurer, Wayne Swan, went to the then Prime Minister, Kevin Rudd, and said: 'We should kill this ETS. This ETS is bad news, given what happened in Copenhagen.' That was very sensible advice. No doubt that is why the by-then Prime Minister, Julia Gillard, in the lead-up to the last election, said, 'There will be no carbon tax under the government I lead.' She realised in 2010 that what all of us thought in 2007 may happen was not happening, that there was no foreseeable prospect or likelihood of any emissions trading scheme or any carbon tax in countries like the United States, Japan, China or Russia—many of the trade competitors of Australia. I will read the whole quote because I think it is important that senators opposite are aware of what I said back in August 2007. I know that Senator Ludwig is very interested to hear what I said:

Climate change is a challenge we are facing as a global community. If we take a sensible and considered approach to meeting that challenge, Australia can play a pivotal role in facilitating the production of clean energy for the world ... we are blessed with immense reserves of clean energy in the form of gas and uranium. No other place in the developed world has such reserves. Moreover, the growing bulk of this energy is being exported directly or indirectly in the form of processed resources to China, the epicentre of the world's growing energy challenge.

I am still reading—it is a very good speech. It goes on:

Our greatest possible contribution to addressing climate change is to export more energy. Each unit of clean energy exported from Australia reduces the consumption of less clean energy in China and elsewhere and, therefore, reduces greenhouse gas emissions.

That is exactly what a carbon tax in Australia—a price on carbon in Australia—in the absence of an appropriately comprehensive global agreement to price emissions will make harder to achieve. It will make it harder for Australia to maximise our exports of clean energy because it will make it harder for us to increase production of LNG and uranium. If we were serious about reducing global greenhouse gas emissions rather than just patting ourselves on the back for a reduction in domestic emissions here in Australia which will increase emissions in other parts of the world, we would be exporting more LNG to China—where, if LNG displaced coal, it could save five to nine tonnes of emissions for every tonne of emissions produced in Australia—and exporting uranium to India, which is something that this government is not prepared to do.

The speech is really good. It continues:

The Kyoto protocol failed to recognise the unique role that resource and technology intensive countries like Australia play in providing clean energy to the world. That is never more relevant than in a state like Western Australia.

That is an important point. I know that Labor senators get really irate when I say that if we are truly focused on one thing that is to reduce global greenhouse gas emissions—

Senator Ludwig interjecting

Senator CORMANN: Here I am going to say something that is going to shock you, Senator Ludwig: if our focus was really on the reduction of global greenhouse gas emissions, it might be in the world's best interest for Australia to increase its emissions if, by our doing so, we could help to reduce emissions by a greater amount in other parts of the world. That is the point this government does not seem to understand. This government is focused on the concept that Australia is somehow an island, that somehow the sky around Australia has a boundary around it. This government thinks that, instead of the rabbit-proof fence, we have a carbon-emissions-proof fence around our sky, as if carbon emissions in other parts of the world will not make it to Australia and vice versa. There is no 'carbon-proof fence' around Australia, but who knows—one day this government may think that it would be a good policy. The way they are going, they might as well try to set up a carbon-proof fence. It would only be as ridiculous a proposition as their carbon tax proposal, which is before us at the moment.

Further on in my first speech I said:

The government’s recent announcement of a national emissions trading scheme, including offsets for trade exposed industries, is a positive and sensible approach to addressing global warming. Going forward we need to remain vigilant against pursuing one-policy-fits-all measures that fail to recognise our unique capacity, particularly in Western Australia, to use more energy and reduce global greenhouse gas emissions at the same time.

That is a fundamental point which, because it is inconvenient, this government completely fails to understand. If you look at the government's green paper back in the post Garnaut review days, there was a little sentence that recognised this point. However, it was removed in the white paper. Why did this happen? I asked officials from the climate change department. It was removed because in the absence of an appropriately comprehensive global agreement on pricing emissions this policy principle was too difficult to 'operationalise' as part of a price on carbon in Australia.

I was quite an active participant throughout 2009 in the policy debate on the proposed emissions trading scheme. We had a robust debate across Australia and across both sides of politics—and we had one also within our own party—about what the best way would be for Australia to help reduce global greenhouse gas emissions. The coalition, along with the Greens, Senator Xenophon and Senator Fielding, voted against the government's Carbon Pollution Reduction Scheme, first in August 2009 and then in November-December 2009. Because Senator Wong is so interested in what I have had to say about imposing a price on carbon, I will share my thoughts with her and help her advisers to find the right quote by pointing them in the right direction. In the great West Australiannewspaper on 6 October 2009 I said:

I do not think we should negotiate amendments with a view to pass the ETS legislation before Copenhagen … This flawed legislation—

the CPRS legislation—

will push up the cost of everything, put pressure on our economy and not reduce global emissions. We should wait until we know what the rest of the world is prepared to do before finalising Australia's position on the ETS.

A few days later, the same paper, the great West Australian, read:

WA Senator Mathias Cormann said waiting until after the Copenhagen conference before finalising an Australian ETS was common sense.

"Unless other relevant countries come on board with similar trading schemes, we would make overseas polluters more competitive, export emissions and jobs and any reduction in local emissions would be more than offset with increased emissions overseas," He said. "That is not an effective way for Australia to help reduce global emissions."

To finalise the trifecta of quotes, I go to the Weekend Australian, which is another very good paper. In it there was an article by Lenore Taylor, who is very supportive of emissions trading and putting a price on carbon. It read:

… West Australian senator Mathias Cormann said what he meant last week. "After Copenhagen, the coalition parties should decide on the best policy on emissions, which may or may not include an ETS."

That, of course, is the point. After Copenhagen—after we realised that there was no likely prospect of an emissions trading scheme, carbon taxes or explicit prices on carbon in a whole range of countries that Australia competes with—it was very clear that imposing an ETS or a carbon tax in Australia was not in our national interest because neither would help to reduce global emissions. That was the conclusion that the Labor government reached before the election, only to change its mind under pressure from the Greens after the election. The Greens voted against the emissions trading scheme because they thought it was not tough enough; it will be interesting to see what sort of carbon tax or emissions trading scheme they will be supporting as of Sunday. We will be looking very carefully at what the Greens are proposing to do.

One of the other unfortunate untruths that is being told in this argument is what the minister said again on Q&A on Monday—that is, that somehow the coalition is saying that nobody else is doing anything. The coalition is, of course, not saying that Australia is not doing anything either; Australia is doing a fair bit and could do more. But the point is this: if we are going to do more and if we are going to ask people to make sacrifices, that 'doing more' has to actually make a positive difference. A carbon tax and an emissions trading scheme in the absence of an appropriately comprehensive global agreement will not make a positive difference; arguably, it will make things worse. It will result in increased global emissions, not less, even though you might be able to pat yourself on the back about having reduced emissions domestically.

The point is: Australia is an emissions-intensive export-oriented economy. Access to cheap coal is one of the reasons why we have a very significant international competitive advantage. If we undermine our strengths in a way that will not help to reduce global greenhouse gas emissions, well, we are just being completely economically irresponsible. The way a US Republican congressman described it a few days ago, it would be 'unilateral economic disarmament', and that is not something that Australia should do. We should not be going for unilateral economic disarmament. Countries around the world understand this. Countries around the world are adopting direct action policies—whether it is the US, whether it is China—and of course what the minister does not say when she says 'other countries are doing their bit' is that other countries that we compete with are going for direct action and not for a toxic carbon tax which will make them less competitive.