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Monday, 17 September 2012
Page: 7026

Carbon Pricing

Senator CORMANN (Western Australia) (14:17): Mr President, my question is to the Minister representing the Minister for Climate Change and Energy Efficiency, Senator Ludwig. I refer the minister to the government's decision to link its carbon tax to the European emissions trading scheme after 2015. Has the government formally assessed the impact of that decision on the international competitiveness of Australian businesses? For example, how many European businesses with a direct carbon liability will have to actually purchase carbon permits to cover their whole liability under the European emissions trading scheme? And how many Australian businesses will be required to buy all their carbon permits from day one under Labor's scheme?

Senator LUDWIG ( Queensland Minister for Agriculture, Fisheries and Forestry and Minister Assisting on Queensland Floods Recovery ) ( 14:1 7 ): I thank Senator Cormann for his continued interest in the price of carbon. The EU—and I think this is worth reminding those opposite—was the first international carbon market in the world and is now one of the largest. It has operated for nearly a decade and, quite frankly, it has delivered on cost-effective emissions reductions and its trading with other credible trading systems, such as Australia, is in our national interest because it will help reduce emissions at the lowest cost. So it is the trading of those credits that will then drive lower cost outcomes. So it will benefit industry. It will be available for industry to pick up on. In fact, if you look at the EU as a block, it is one of our largest trading partners and accounts for over $90 billion in two-way trade. From 2015 that trade relationship will include carbon as well. Australia will have the same carbon price then as 30 other countries with a combined population of 530 million. The start of the linked emissions trading scheme is still over 2½ years away, and the assumptions in the Treasury modelling about linked carbon markets and international action have not changed. The Leader of the Opposition, though, would like you to believe that the carbon price will increase at an unimaginable rate but also drop to below the price floor and impact the budget. The Treasury was proved right on the $3.30 per week impact of the carbon price on electricity, and a large number of other reports which have made the front pages— (Time expired)

Senator CORMANN ( Western Australia ) ( 14:1 9 ): Mr President, I ask a supplementary question. Can the minister confirm that not a single European business with a direct carbon liability under their scheme will be required to actually purchase carbon permits covering their whole liability while, in contrast, hundreds of Australian businesses will be required to buy all their permits from day one of Labor's scheme? In fact, can the minister confirm that as far away as 2026 not a single European business, whether trade exposed or not, will be required to purchase permits covering their whole carbon liability?

Senator LUDWIG ( Queensland Minister for Agriculture, Fisheries and Forestry and Minister Assisting on Queensland Floods Recovery ) ( 14: 20 ): What I can do is speak on what Australia is doing. These linking arrangements do not change the overall access that Australian firms have to international units—that is, Australian liable entities remain able to meet up to 50 per cent of their liabilities through international units. The EU ETS, being the longest running emissions trading system, is highly credible. What you put at doubt is the EU emissions trading scheme. It has always been our policy to work towards linking with Europe and other developing emissions trading schemes globally, and any potential price difference with Kyoto units will also increase the competitiveness of our emissions intensive trade exposed industries. These industries could see effective assistance rates from 1 July 2015 go from 90.9 per cent to 97 per cent if Kyoto units can be sourced on the market for half of the cost of European allowances. (Time expired)

Senator CORMANN ( Western Australia ) ( 14: 21 ): Mr President, I ask a further supplementary question. Why does the Gillard government think it is fair to Australian businesses that they will be required to buy 100 per cent of their carbon permits for 15 years before their European competitors may be required to do so? Why has the Gillard government introduced not only the world's biggest carbon tax but also one that severely disadvantages Australian industries compared with their European competitors when the two schemes are linked in 2015?

Senator LUDWIG (QueenslandMinister for Agriculture, Fisheries and Forestry and Minister Assisting on Queensland Floods Recovery) (14:22): Let me reject some of the premises of the questions that have been put.

Opposition senators interjecting

Senator LUDWIG: Coming from those opposite, I doubt that very much! Nevertheless, if you look at the potential that is available the industries could in fact see the effective rate from 1 July go from 90.9 per cent to 97 per cent. It seems to me, Mr President, that those opposite are arguing that that is somehow a negative outcome for industries in Australia; it is a positive outcome. EU linking will effectively mean that we will be able to reduce the liability for those industries, in fact, to half the costs of European allowances. It is a positive move to link, and many industries that I am aware of have been arguing for EU linking for some time. It seems that those opposite not only oppose the carbon price but also want to punish business whilst continuing to oppose the carbon price— (Time expired)