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Wednesday, 17 June 2009
Page: 6412

Mr COMBET (Minister for Defence Personnel, Materiel and Science and Minister Assisting the Minister for Climate Change) (10:54 AM) —I thank the member for his questions. I think the issue of funding for research into cellulosic ethanol might be a matter under the Environment, Heritage and the Arts portfolio administered by my colleague. So I undertake to investigate that further for the member and to respond to his question further.

As to the second issue, the member for New England would be aware that the government, in contemplating a 12-month delay in the commencement date of the Carbon Pollution Reduction Scheme, from 1 July 2010 to 1 July 2011, at the same time determined to continue the commencement of the reforestation initiatives under the Carbon Pollution Reduction Scheme from 1 July 2010 to encourage investment in reforestation so that investors in that area, landholders who are engaged in that activity, would have an immediate incentive to begin that investment. The government are very mindful of the arguments that have been put forward as to the potential impacts on land use. We are unconcerned, at this point in time, following the consultation with various parties about it. But, as I think I indicated during the summing-up at the second reading stage on the amendments concerning this in the House of Representatives, the government will keep a close eye on this matter because, naturally, we have an ongoing concern to ensure optimal use of the land that is available for agriculture. So we will watch that issue very closely. It is, however, an extremely important initiative in the context of the CPRS, because the sequestration of carbon through reforestation can be an important contribution to reducing our emissions and it is an area recognised internationally for the generation of permits that can be effectively traded in linked emissions trading schemes, so we are keen to get that underway. As to your former question, I undertake to revert to that.

I might use the remaining time to take further some of the remarks that I was about to make about emissions-intensive trade-exposed industries. Where I had left off is that there has been very extensive consultation with many industries throughout the economy in the development of the Carbon Pollution Reduction Scheme over the impact of the CPRS on these sectors. There have been a number of reports that have been posited suggesting negative employment impacts.

Mr Robb —Nothing’s been done.

Mr COMBET —Each of those reports, of course, has been considered by the government and there are a number of problems with them. I know that the member for Goldstein has adverted to these reports on a number of occasions, so I wish to address it. The government, the Department of Climate Change and the Treasury have had a look at a number of these reports. The difficulty with them is that they all rely upon a reference case, charting towards the year 2020 in particular where the medium-term target is aimed for emissions reductions. The assumptions underpinning the reference case generally are not transparent and have been difficult for us to attain. They do not advert to direct job losses. They refer to reductions against some non-transparent business-as-usual case against a number of other assumptions concerning the impact of the Carbon Pollution Reduction Scheme. We are not satisfied, therefore, that they are reliable evidence of employment impacts of the Carbon Pollution Reduction Scheme that would deter us from the findings of the most comprehensive Treasury modelling that has ever been undertaken, which indicated growth in output in all major sectors of the economy.

In the specific policy context, therefore, of the emissions-intensive trade-exposed industries, we have been very concerned to work closely with those industries to develop the levels of assistance that would be provided over at least five years to those areas, such as aluminium smelting, cement manufacturing or, indeed, a host of others. Those levels of assistance are structured at two tiers, one of which is now a 66 per cent level of free permit emissions and the other at 94.5 per cent free permit emissions.