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Tuesday, 1 November 2011
Page: 7823


Senator BOYCE (Queensland) (20:08): I would not want to comment on the content of Senator Crossin's speech, but I would at least like to congratulate her on the length of her speech and the fact that she appears to have made a real effort to contribute to this debate on the clean energy bills, unlike many of her colleagues from the Labor government and their close allies the Greens. We have had short speech after short speech from both the government and the Greens, who apparently could not even be bothered, despite Senator Crossin's comments around Ms Gillard's interest in this historic moment, to put together substantive contributions to this debate on what is alleged to be a great and historic change. I think it will be historic, but it will not be because we are on the right side of history. It will be remembered as another black Labor day.

In the political and public debate, many climate change issues are treated as black and white, for or against, when the truth is far less exciting and much greyer. The world and its climate are very complex, but I have faith that we can deal with most of the issues and maintain a liveable world. However, I think it is understandable that we will argue about the solutions to the very real threat of climate change and I would like to give you my take on that.

A clean environment has to be a natural cost of doing business. I remember the days when the environment protection authorities were formed in the states and many businesses complained that they could not stay in business with those restraints on their ability to emit into the air, yet they did. They changed, they innovated and they survived. What may seem to be costs now will in the future be seen as ways of turning a dollar. Solutions will be found by the integration of scientific and business ingenuity, although I hasten to add not under the current funding regimes that this government has for those sectors. It is private enterprise that will drive our solutions, or at least should drive our solutions, with government simply develop­ing supportive programs and getting out of the way. Government's role is to establish national policy settings that are clear, transparent, affordable and centred on a rigorous consultation with business and the host of brilliant minds that we do have available to us, although they are not much used right now.

The Gillard 'not in a government I lead' carbon tax does not pass any of the above tests. It is a huge shambolic bureaucratic monolith driven by a blind person in a green uniform who does not believe in sat nav but instead has absolute faith that they know where they are going. It is absolutely pointless to undertake environmental climate change initiatives that are not economically viable or do not regard economic viability as being crucial to their success. Although, why would we be surprised that this government has not quite got its act together on economic viability yet?

In a recent submission on the govern­ment's clean energy legislative package, the Business Council of Australia said:

The BCA is not contesting the bi-partisan emissions reduction target of -5% and the need for Australia to contribute its part to a binding international agreement.

There is no contest on those points, but the BCA also made a number of important observations that question the Gillard government's headlong rush to add environ­mental mismanagement to their long list of policy misadventures and policy mis-implementations. The BCA argues that the Gillard-Bob Brown clean energy future package, as it is currently designed, presents considerable risks to Australia's long-term future. For example, their clean energy future legislation is based on overly optimistic assumptions in the Treasury modelling that have already been called into question. Those assumptions, and the models on which they rest, have not been stress tested. In fact, as Senator Boswell so clearly pointed out to us earlier, no-one had even been allowed to see or analyse the models that were used. The Gillard government has no plan B. If this modelling is wrong, they have no backup plan at all. The BCA also points out that much of the operational detail of the proposed legislation will be contained in regulations that we have not seen. We do not have a clue about their workability in the real world. Given the government's current track record on practical solutions, I do not think we have any reason to be anything other than very, very worried about what this will mean for Australia and its future. In business, as in life, if you make a crucial decision on the basis of assumptions you must either be very confident about those assumptions—and we have proof that the government is not confident about these assumptions, or they would have released them—or you must have a backup plan if some or all of the assumptions are shown to be wrong. So what are the basic assumptions of the government's carbon tax plan? Firstly, that all other countries will implement pledges made at the Cancun United Nations Framework Convention on Climate Change, and that coordinated global action will emerge by 2016. At present there is no binding international agreement in sight.

I was musing earlier that it was interesting that Senator Wong and the then Prime Minister, Mr Rudd, spent so much time telling us how they needed a solution before they went to Copenhagen so that they could prove to the world that Australia was a leader in this field. We have Durban coming up at the end of November, and I do not see too much enthusiasm here for the govern­ment to be able to brag about its achieve­ments quite as loudly. Perhaps this is Ms Gillard being a bit concerned about what happened to Mr Rudd after the complete debacle of Copenhagen. Certainly, part of the reason that he ceased to be Prime Minister was the fact that Copenhagen, as a conference, achieved nothing, and Mr Rudd achieved nothing. Perhaps Ms Gillard is hoping to sneak out of the country to Durban, because we certainly will not have an international binding agreement, or even the outline of an international binding agreement, decided at the end of this month in South Africa, despite the fact that the Kyoto protocol is rapidly drawing to a close.

We should also recognise that the major developing economy pledges that form part of the Copenhagen agreement are subject to overriding economic growth and poverty reduction requirements. These pledges do not include an indication of when each country will reach its emissions peak. The pledges are actually best endeavours, not promises, and I suppose that is something this government should be well aware of. It is still unclear what legal instrument will be put in place and what binding actions major emitting nations as diverse as the USA, China, India, Russia and Brazil will take. The United States, Japan and, most recently, Canada have all either rejected or postponed their programs to price greenhouse gas emissions. Our Treasury modelling is predicated on all countries that have made pledges actually implementing these pledges and a global price on greenhouse gas emissions emerging. That will be interesting to watch, but once again we have nothing about what lies behind that Treasury modelling.

The first question that should be asked is: what is the likelihood of actual international consensus and activity eventuating? The Treasury modelling does not help us to assess the risks of different outcomes in the international negotiations. In fact, there has been no sensitivity analysis whatsoever. Similarly, Treasury has not modelled what may well be a more likely scenario; that is, fragmented and differentiated actions by only some advanced economies and some major emitters. The level and robustness of international commitments obviously has great importance for Australia, both from an environmental and from an economic perspective. Internationally, the levels of investment in low-carbon technology are substantially lower than the $500 billion required to keep temperature rises to less than two degrees Celsius. Let us make no mistake: it is the international environment in which Labor's big new carbon tax will operate, and it is that environment which will destroy Australian businesses, Australian jobs and, eventually, Australian households.

The Greens and their Labor finger puppets are so proud that Australia will be first and that it will lead the world to some sort of environmental nirvana. But let us look at what those nations are doing in the real world. Take China. Contrary to what the Prime Minister would have us believe, China is going through the fastest growth in emissions in history. Between 2005 and 2020 Chinese emissions will increase from about five billion tonnes of carbon dioxide equivalent per annum to over 12 billion tonnes per annum. This is approximately 100 times the reductions that would be achieved by the government's many bills. The Prime Minister has claimed that China is closing some of its coal fired power stations. For once, she has spoken the truth: they are closing some small ones and replacing them with some much bigger ones. Once again we have a version of the truth from this government.

Indian emissions are estimated to rise by 74 per cent by 2020. Similarly, India will not have a systemic carbon tax and, in fact, is completely and utterly uninterested in having one. Again Prime Minister Julia Gillard demonstrates her vague relationship with the truth when she claims that India was taking national action on pricing carbon by putting a clean energy tax on coal. The Indian coal tax is $1 per tonne, and it is just on coal. By comparison, even ignoring the government's clean energy bills, the state royalty on Queensland coking coal is already $20 per tonne. In the United States, a cap and trade system, their equivalent of a carbon tax, has been cremated and buried. The modelling upon which the Prime Minister relies includes the assumption that the United States will have a system that will be a full part of an international trading system by 2016. That is a completely false and unsustainable assumption. No member of the Labor government in Australia has been able to point to any evidence in the United States, from any legislator, which justifies that assumption. It is not even an assumption; it is another fabrication.

Europe does have an emissions trading scheme, but it is radically different from what is proposed here. The European system on a per capita basis is little more than $1 per person per annum across the economy. The Australian system will be approximately $400 per person per annum. Of course, I am sure the government can explain to us how we have the ability to pay 400 times what the very developed economies of Europe do.

Will this magnificent sacrifice being made in our names by the Gillard Labor government save the world? No, it will not. It will just mean that our emissions, our investment and our jobs will be sent offshore. Australian industry will have paid for platinum seats at a show that never happens—and there are no refunds. So there go business, jobs and growth. And what would happen to our budget and our debt if these untested, pie-in-the-sky assumptions proved to be bogus? Should the carbon permit price in the Australian scheme fall to $15 a tonne after the fixed-price period, the extra cost to the federal budget would be about $3 billion annually. A low permit price would turn a projected cumulative surplus of $9.6 billion into a cumulative deficit of $9 billion over the same period.

The Treasury modelling suggests 40 per cent of the cumulative abatement to 2020 will be through a reduction in the growth of electricity demand. The thing is, of course, that that relies on dramatic change in consumption both by households and by business. We already know that electricity usage is quite inelastic. There is very little opportunity for households to change and, given that they are allegedly going to be compensated by this government for those increases, why would they change their usage? As well, we have retail price regulation in some areas that means domestic users will not even be paying the real retail price for electricity.

I suspect that in fact the savings are going to be made by the number of manufacturers in Australia that will close and go on closing their doors. We had the very unattractive sight of the financial services minister, Mr Shorten, today suggesting that because he went to supermarkets he knew people were doing it tough out there. Apparently he has just worked that out. The coalition has been saying for three years that if you take the effects of the mining industry away you have an economy that has been failing over the past three years. Businesses—service busi­nesses and manufacturers—are closing their doors, builders are without houses to build. Yet this has all been masked by the attempts of this government to pretend that things are going well.

What should we be doing about this? The coalition has a direct action plan, which has been spelt out in the past by shadow minister Greg Hunt. If you look at the figures in it you will see it covers very successfully the need for change. What is more, our promises are real promises. A coalition government will support direct action on climate change to reduce Australia's carbon dioxide emissions by five per cent by 2020 while at the same time delivering real environmental benefits. This will be achieved without new or increased taxes on Australian industries or increased costs to Australian households and families. We are committed to incentives rather than penalties, to rewarding positive action rather than punishing Australian families, households and businesses in the way that this government will.

Our direct action plan outlines soil carbon sequestration, the electricity generation industry, forestry measures, waste coalmine gas, transport, green buildings, energy efficiency, landfill compost and recycling initiatives as areas that will genuinely save real money for this country and not leave us with this utter misrecognition of global reality. (Time expired)