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Monday, 7 November 2011
Page: 8289


Senator THISTLETHWAITE (New South Wales) (12:02): I find it highly amusing that Senator Cormann and those opposite are seeking to ask questions of the government regarding the operation of the various assistance packages which form part of the government's clean energy package and the set of bills being debated in committee this morning, because of course we all know that Senator Cormann and those opposite are completely opposed, in the whole, to those assistance packages. They are opposed to the Jobs and Competitiveness Program. They are opposed to the Steel Transformation Plan. They are opposed to the assistance that the government is proposing for the coal sector. They are opposed to our community support package, which will provide assistance for community based organisations to over time reduce their emissions intensity and improve their energy efficiency. And of course, importantly, they are opposed to the assistance package for households and the increases to pensions, which are an important part of the government's program. They are opposed to the payments to families. They are opposed to the additional payments that will be available for job seekers and students.

All of these assistance measures are very important parts of the government's clean energy package because they provide the basis on which our economy will transform itself and move from an industrial based economy based on heavy carbon pollution to a clean energy future based on a transition to renewable fuels, and they make the transition much easier, particularly for households and those on low to middle incomes. That is the aim of the scheme: to target the assistance; to target the use of half of that revenue to where it is required the most—that is, to low- and middle- income earners. The assistance is not a one-off proposal. The increases to pensions and to family payments will grow in line with the increases in the carbon price. So I find it highly amusing that Senator Cormann and opposition senators are seeking to gain points by asking a series of questions associated with the assistance, particularly the assistance that is there for business.

That is symbolic of the fact that Senator Cormann and those opposite do not under­stand the way the scheme will work and the fact that it is a market based mechanism. Those in the Liberal Party say they are all for the efficiency of markets and government getting out of the way when it comes to the running of our economy, but they are opposed to this market based mechanism. They are opposed to an emissions trading scheme, which of course our scheme will move to after the first three years. Senator Cormann has raised the issue of those who are doing the right thing, companies that are reducing their emissions, and the assistance that will be available to them; but he fails to comprehend the fact that through an emissions trading scheme there is a natural advantage for those companies who do the right thing and over time reduce their emissions. The advantage becomes the fact that they are able to generate permits, buy credits and sell those credits both domestically and in the international market as well as reduce the costs associated with their emissions. That is the whole basis of the scheme. That is the way the scheme will work. Under Labor's plan, a market based mechanism, companies have the opportunity to make their own decisions about the way that they reduce their emissions and therefore reduce their costs. We are not going to force outcomes on them; we are seeking to allow them to do what companies do best—to make their own decisions about how they reduce their emissions intensity and therefore their costs. That is what will occur under our scheme over time. It is opposed by those opposite, because they do not understand the fundamental nature of the way that this scheme works. It is very difficult for them to grasp the nature of this scheme and how it will work.

That became evident when they developed their direct action policy. Through their policy they are saying that they are opposed to the sale of permits, particularly in an international context. Senator Cormann has raised issues in the committee stage today about the opportunities for high polluters to make a transition into the clean energy future and to reduce their costs. One of the ways that they will have the opportunity to do that is to install new technology, make changes to their production methods, and, to offset some of that cost, generate permits and be able to sell those permits on the international market. Under the opposition's plan, that opportunity will not be there for many of these companies. That will mean that their costs will be pushed up.

That was borne out in the evidence given to Senator Cormann's committee, the Scrutiny of New Taxes Committee, when they conducted an inquiry into the carbon pricing mechanism. I particularly draw the committee's attention to the fact that, whilst that committee was taking evidence, they heard from a number of big players in the domestic electricity sector—most notably, Loy Yang Power, one of the biggest producers and generators of electricity on the eastern seaboard. When they were giving their evidence to the committee, they were asked what it would mean for them, a big producer of electricity and a big emitter, if they were not able to purchase abatement permits on the international market. Their answer was very succinct and very simple. Their answer was that their costs would be pushed up; that their costs would be greater than they otherwise would if they had the opportunity to purchase permits on the international market.

That is quite symbolic of the fact that those opposite do not understand the way this market based mechanism will work. Companies will be able to make their own decisions about how they reduce their emissions and over time reduce their costs. Indeed, wider than that, across the whole economy, households, businesses, small businesses, larger companies and farmers will make their own decisions about how they reduce their emissions over time. So it is nonsensical and quite amusing that those opposite seek to come into this debate at this point in time and criticise the government about the way the scheme will work.

The opposition's direct action scheme is anything but a market based mechanism. It is a scheme that will be based upon the premise of subsidising the biggest polluters in our country—providing government assistance to those who are the biggest polluters—and for the rest of the economy, those who do not receive assistance, there is no incentive for the reduction of emissions over time. So those who are doing the right thing will be penalised under the opposition's scheme if they are not able to access that assistance.

Some of the premise on which the opposition's scheme is based is highly dubious. The claim that 85 million tonnes of abatement will be achieve through soil carbon is something that many experts in this field say is a dubious claim—most notably, the Farmers Federation. The Farmers Federation have said that they do not believe that that level of abatement will be able to be achieved under the opposition's scheme.

Of course, there is also the issue of ongoing uncertainty, particularly in the National Electricity Market, associated with the opposition's scheme. If the coalition roll back the carbon pricing mechanism, the fact that we would not have a domestic carbon price and would not be contributing in terms of an international carbon market would add to the uncertainty that would be ongoing in one of the most important industries and sectors in our economy.

But it is not for me to make these claims; these claims have been made by serious players in this industry and by their associations. The Energy Supply Association of Australia have said that Mr Abbott's warning not to purchase permits will put pressure on electricity prices and consumers. Again, that is a fact that came through in the evidence of Loy Yang Power. It will push up costs, because those opposite are opposing the notion of trading permits. The National Generators Forum have said that Mr Abbott's approach would increase the risk for electricity generation contracts, which would fuel higher prices. A number of banking organisations that work in the industry have said the same thing. So what we would see if the coalition's plan were implemented would be ongoing uncertainty and increases in prices—not only on the wholesale market but also for consumers ongoing—and we would not achieve the levels of abatement that we need to achieve as an economy and as a society to ensure that we are rolling back our emissions intensity over time compared to baseline objectives.

So, once again, I find it highly amusing that Senator Cormann and others are seeking to criticise the government's package when it comes to a move to a clean energy future and important assistance that will ensure that companies, small businesses, households and consumers can make that transition to a clean energy future—because they are funda­mental to that transition. Once again it demonstrates that those opposite fail to understand and grasp the notion of a market based mechanism. They are seeking to reward those that are the highest polluters in our economy whilst providing no incentive other than for those they are seeking to subsidise through their Direct Action Plan, which of course will not provide the impetus for an economy-wide approach to reducing emissions and trading both domestically and in an international market. It is unfortunate that they seek to waste the committee's time with these issues. I hope that we get some more sensible debate in the remainder of the time allocated to these issues.