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Tuesday, 9 October 2012
Page: 11616

Ms SMYTH (La Trobe) (17:18): I am delighted to follow that contribution. My comments this afternoon will reflect on the various Liberal Party and National Party members who have endorsed previous versions of emissions trading schemes and carbon price mechanisms. I will look at the realities of what is happening around the globe and what is happening with our trading partners, not only those countries which are part of the EU, but also other international markets with which Australia might link up its emissions trading scheme in the future. Importantly, given the emphasis this afternoon of members opposite on the response of business to the carbon price, I will also focus on the realities of what is happening in business and businesses' responses to the carbon price and to the amendments that have been made in recent times to enable us to link our carbon pricing scheme to the EU ETS and to facilitate that connection in international markets.

Firstly, I should commend the member for Wannon for bringing an MPI on the topic of the carbon price in any form. While we know that around half of all Liberal MPs have spoken favourably on the record in support of putting a price on carbon in the past, there are not many who will come forward now and admit to that. I will certainly reflect on a few of those remarks later in my contribution today. The member for Wannon is one of a very few who these days, it seems, have not publicly commented on their support for a price on carbon or an ETS. We have had the Leader of the Opposition, the former Prime Minister John Howard and leaders coming thick and fast from the opposition to be on the record in support of an ETS. We have had most of the frontbench support an ETS at some point in their parliamentary careers or beforehand and quite a deal from the backbench.

The important thing to reflect on this afternoon in terms of the linkage of Australia's carbon price mechanisms with the ETS is that this government has consistently put the view that it supports the linking of our carbon pricing scheme with international markets. It has consistently said that because it is seeking to use a market mechanism, and ultimately a global market mechanism, to ensure that business has the most efficient and least costly way of reducing its carbon emissions. That has always been our endeavour; that has always been our view. For many members of the Liberal and National parties it has been a shared sentiment, although today it seems that many of those people have departed from that. We know that the benefits of linking our carbon pricing scheme to the largest ETS in the world—namely, the EU's ETS—are many. We know that the link would mean a wider range of abatement opportunities available to entities that are liable to pay a carbon price. Of course, we are not the only ones to know this, it is also the various industry representatives and other experts who have commented favourably on the linking of the schemes.

Martijn Wilder, of Baker & McKenzie, in his comments to the House of Representatives Standing Committee on Economics on 27 September, said:

… international linking creates a range of choices for you as a participant. You can dip into different markets and work out the cheapest place to buy abatement.

We also know that, by linking our emissions-trading scheme to the EU scheme, we stand to increase liquidity in carbon markets. Once again, it is not only the government's view that that is the case; it is the view of industry. TRUenergy's Executive Manager of Policy, Strategy and Sustainability, Claire Savage, said:

Linking with Europe will also provide access to a deeper and more liquid carbon market.

As a result of this government's efforts, we will seek to link Australia's emissions trading to the European Union's ETS from 1 July 2015. The EU's ETS is a scheme which operates across all 27 EU member states. It is the world's largest ETS, covering around 11,000 facilities.

The member for Wannon said, 'Why would you want to link something like this to the EU's ETS when they have done such a good job with their economy?' The world's largest ETS is operated in the EU. This scheme, as the government has long remarked and as many industry and other experts who appeared before the recent review of the economics committee into these arrangements have found, is supported by many industry participants and many experts in the field.

Let me mention a few other people who have spoken in favour of linking our ETS with that of the EU. The opposition would most certainly have you believe this afternoon that this is a unilateral decision of the government which is unsupported by business and unsupported by experts, so let me disabuse the opposition of that view. The Australian Financial Markets Association's submission to the House of Representatives Standing Committee on Economics stated:

Linking of the Clean Energy Scheme with sound international schemes has been consistently requested by AFMA as a mechanism to increase market depth, achieve least cost abatement and reduce overall risks for participants.

AFMA was not the only one to comment before the committee. The Chief Executive of the Energy Supply Association of Australia, Matthew Warren, said:

This is an important reform, and demonstrates that the Gillard government is willing to listen to genuine concerns of industry and act decisively to address them.

Andrew Grant, the Chief Executive of CO2 Australia, said it was 'very intelligent policy development'.

The Clean Energy Council's submission to the committee states:

International linking allows Australian businesses to access emissions reductions opportunities at least cost.

This afternoon, opposition members, in particular the member for Wannon, have raised the apparent concerns of business, of industry and of commentators in the market. I can go through page upon page of comments from those who have, in an informed way, reflected on the changes that the government has made to link our system to the EU's ETS as a first move to, hopefully, being able to link to other international emissions trading systems. They have referred to them very favourably indeed.

As the parliamentary secretary suggested earlier, the linking of our arrangements with the EU does strengthen the prospects of further international linkages. Indeed, it stands to promote and improve international cooperation on climate change.

Mr Seb Henbest, the Manager and Head of Clean Energy and Carbon Markets Research Australia, also made mention of this in recent evidence before the economics committee when he said:

… we see a link to the European trading scheme as potentially a very important first step towards establishing a broad coalition of capped markets around the world …

Indeed, on the point of linkage I should mention that John Howard wanted Australia to become what he called a 'carbon trading hub in the Asia-Pacific region'. How things have regressed on the opposition benches since the days when John Howard was proposing not only that an ETS be adopted by his side of politics, not only that this country be forward-looking in its approach to climate change, but that we use it to our advantage by becoming what he called a 'carbon trading hub in the Asia-Pacific region'. I think Mr Howard would reflect somewhat less than favourably on the approach that those opposite are now taking of using a market mechanism to respond to a significant global problem of climate change.

In the time that is left to me I would like to refer to some of the laudable projects that have been entered into by business in Australia following the introduction of a carbon price. We have heard for many months now that, in the opposition's view, the world would end following the implementation of a carbon price and that it would be the death of industry. Yet we find a significant number of industry participants responding and adapting to a carbon price, which is what all of us might have hoped. Mackay Sugar Limited, for instance, is investing over $120 million to reduce carbon emissions across its operations by 70 per cent for every unit of production. This includes the installation of a cogeneration plant at its Racecourse Mill to supply clean energy year round to the mill as well as supplying a third of the city's energy consumption, generating additional income for the company. One would have thought that those opposite would have applauded a measure like that, which would not have come about but for the implementation of our clean energy future package. This government is supporting Mackay's embrace of clean energy, with over $9 million in funding from the Clean Technology Food and Foundries Investment Program, which is funded through the clean energy future package. The reality of the carbon price for a business is that industry is responding and responding favourably. (Time expired)