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Monday, 26 November 2012
Page: 9756


Senator SINGH (Tasmania) (17:45): I rise to speak to this package of legislation that collectively provides for the linking of Australia's carbon emissions-trading system to the European Union. Carbon pricing is one of the most significant changes to the Australian economy and will have an important and enduring effect on the way businesses calculate the environmental cost of their activities. It is amongst the most significant changes we have ever seen in environmental regulation in this country and is part—arguably the most effective and central part—of dealing with one of the most significant challenges the world faces.

For a long time it has been clear that the response to dangerous climate change needs to be coordinated, comprehensive and international. Much of the criticism of Australia's action on climate change has either been misinformed or has completely missed the point. Some critics have asserted that Australia would be going it alone, ignoring both the existing international frameworks for climate action such as Kyoto and Kyoto 2, in which we have recently announced Australia's involvement, and the huge amount of domestic and regional action in other parts of the world.

From 2013, 850 million people will live in a place where emitters pay for their pollution. Some of this action includes seeking targeted efficiencies or taxes of particular emissions-intensive sectors such as coal taxes or penalties on inefficient housing or transport, but emissions trading is the preferred method of carbon reduction across most of the world because it is the easiest for business, the most efficient and effective policy lever and the cheapest way to identify and undertake emissions reduction.

The European Union Emissions Trading System was the first international carbon market and has been in place since as early as 2005. Emissions trading schemes have been legislated in New Zealand, India and the Republic of Korea and are operating or being developed in 11 US states, China and South Africa. Action in Indonesia, Thailand and Vietnam signals the beginnings of a future Asia-Pacific carbon market. So the assertion that Australia is ahead of the pack is completely misguided if not disingenuous.

But, of course, it is important not only that this action is taking place but also that the international community takes part. Each of these individual mitigation activities must form part of a broader, integrated effort to reduce global emissions. Some critics have attempted to use the lack of total global consensus around defined reductions policies to argue that Australia should stall its efforts to respond to climate change. What they misunderstand is, firstly, the considerable shared vision achieved in a series of international forums through the United Nations Framework Convention on Climate Change; and secondly, the enormous foundational power and the flexibility of a domestic emissions-trading system to be integrated into current or future regional and global systems.

To prevaricate and invent excuses for not taking action on the basis that this action is not from first blush a fully developed global solution is to put the cart well before the horse. It is to ignore the significant preparation that needs to be done not just by government but also by businesses and community to understand and adapt to the inevitable development of an international emissions-trading system inclusive of our trading partners and competitors. If we are going to be able to adapt to a carbon constrained global trading environment, we need to foster innovation in this country and we need to embed the carbon costs of doing business into the thinking of our entrepreneurs and job-creators. And we need to do that now. We need to deepen our capacity to produce high-quality, low-emissions goods and services that we can sell to the world, especially in the century of opportunity created by our nearest neighbours—the Asian century.

What the Gillard Labor government has consistently pursued since prior to 2007 is a flexible emissions-trading scheme for Australia that is capable of being integrated into the international system. At the same time as promoting domestic innovation and emissions reduction, it would enable Australian businesses to contribute to emissions reduction efforts across the world simply by acting in a rational way, locating the cheapest forms of abatement across the system and including those costs in their core business and they should do. The Gillard Labor government has now been vindicated in its pursuit of this emissions-trading policy. The carbon price commenced on 1 July 2012 and, despite the very worst predictions of economic catastrophe propagated by advocates not of conservatism but of regression—that towns would be wiped off the map and investors would flee from Australia—what we have actually seen is the carbon price quietly, efficiently and cheaply doing what it is meant to do.

It is encouraging businesses to innovate and rewarding those businesses that operate with a good social and environmental conscience. To the extent that households have been affected, they have been compensated; indeed, the changes made complementary to the introduction of carbon pricing have reduced the tax burden on many Australians, particularly those on low incomes. And the revenues that we have dedicated to investment in the technologies and the opportunities that will create a better future for Australia—renewable energy projects, smart grid technologies, and energy efficiency initiatives—are also receiving the support they need.

But most importantly on this particular legislative package, the Gillard Labor government has been vindicated in creating a robust scheme that also acts as the foundation for an international system. From 1 July 2015 our emissions-trading scheme will link with a carbon market that comprises over three-quarters of the world's carbon trading, creating the first intercontinental carbon market.

At the end of the transitional fixed price arrangement on 1 July 2015, Australia will move into a variable-pricing mechanism that operates in the largest emissions market in the world. This one-way, interim link with the EU emissions-trading system will enable Australian businesses to access the fullest range of mitigation opportunities and to achieve the most accurate abatement price of any market. That emissions unit price will be set dynamically on the basis of a cap-and-trade system that, like Australia's, reflects a high degree of integrity and a genuine and serious emissions reduction effort. It will be a price that requires businesses to change their behaviour and to reduce their emissions profile at the same time as they can fairly compete for the lowest priced abatement options.

From August this year, Australian businesses which are liable entities under the carbon price have been able to buy European carbon permits for future compliance with the Australian emissions trading scheme dating from 1 July 2015. Australian businesses will be able to use international emissions units for up to 50 per cent of their carbon liability, with up to 12.5 per cent to include the use of Kyoto units such as those generated under the UN's Clean Development Mechanism, the CDM. This new market will be the clearest example yet of a comprehensive and international response to climate change, not only setting standards and providing ideas about the best way to organise action of climate change but actually undertaking it.

Indeed, the Australia and EU link is an example of the aspiration of many of those who believe that climate change is real and does require urgent action now, not just by us but by the broader international community. It will help to shape the expectations for states to participate in any global emissions-trading system. Indeed, in the words of the World Wildlife Fund:

Linking with countries and regions, such as Europe, where equally strong provisions are in place will help to ensure these environmental integrity provisions become the global standard.

That is a very good and important quote indeed.

It is certainly not true that Australia is acting alone, when so many other countries are taking steps to address their own emissions' profile. This is something being addressed by so many countries because, like us, they realise that we have to act on climate change and that we have to act on the fact that we have global warming as a result of human activity. Australia is not, at least in that sense, ahead of the global community at all, but Australia is leading the world by helping to shape a carbon market that will, for the first time, stretch the length of the globe and provide a template for global action.

There is a reason that Australia has always been a supporter of multilateral and international institutions, whether it is in security, trade or environmental protection. As a middle power with a seat at the table, we have the opportunity to lead by example and to influence the emergence of a new, rules-based order capable of avoiding the most dangerous consequences of climate change. Indeed, as a middle power in our own region we have an opportunity to lead and to set that example. I know that a number of countries look up to Australia, and the action and the leadership that we are taking on this issue of climate change is just one good example.

Opponents of domestic climate action and opponents of this linking agreement with the European Union profoundly underestimate the capacity of Australia to generate change, forgetting that we presided over the adoption of the Universal Declaration of Human Rights; we formed the Cairns Group to advocate for agricultural exporters; APE, of course, was born of our efforts—most notably by former foreign minister, Gareth Evans; and we have just been elected to the UN Security Council in the first round of voting. And it is our initiative and our support for carbon pricing that will, again, precipitate an information cascade that will prompt global action.

The linking of Australia's emission-trading scheme with the European Union's is an important step towards what the world needs to do together to prevent serious climate change. And it has been made possible by a government and by a party that has had the courage to advance a positive, forward-looking agenda despite the tremendous and overwhelming amount of fear mongering from those who place politics above policy.

I have no doubt that there will come a time in the not-so-distant future where accounting for pollution will be a matter of course in every business and community across the world. There will come a time in the not-so-distant future when we will look back on these debates with incredulity at the time, the energy and the courage it has taken to put such a system in place, and with amazement at the naivety and the recklessness of the climate sceptics. This legislation is a large, large step towards that time, and it is a large step towards a better, cleaner, healthier planet. I support the legislation.