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Monday, 7 November 2011
Page: 8403

Senator WONG (South AustraliaMinister for Finance and Deregulation) (19:56): That was a very long contribution by Senator Macdonald, including a very lengthy contribution about by how much the debate has been curtailed. I would make the point, Senator, that the opposition chose to bring on another matter for debate earlier today and took at least an hour out of the debate allocated to this committee stage. So that was a decision of theirs.

Senator Ian Macdonald: You set the rules.

Senator WONG: Senator, I listened to you in silence.

Senator Ian Macdonald: Well, be honest.

Senator WONG: I listened to you in silence, Senator. I would ask that you give me the same courtesy. There was also lengthy reiteration of past matters. I do not propose to respond to them. The only point I would make is that, first, the opposition has the same reduction target by 2020. So if the senator does not believe it is sensible for Australia to be reducing its emissions by five per cent by 2020, on 2000 levels, he should take that up with Tony Abbott. The differ­ence is that the policy that the senator supports will cost the taxpayers who elect him more than the government's policy. It will cost taxpayers more each year—$1,300 without assistance in a picking winners, doling out grants program that is bureaucrati­cally driven. I have placed on record a number of times in this debate why we on this side of the chamber believe it is important to price carbon, both in terms of moving the Australian economy to being a cleaner energy economy and also responding to the challenge of climate change, a position that is not remarkable; it is a position that Mr Turnbull shared, that Mr Howard shared and that the Conservatives in the United Kingdom share. I think Margaret Thatcher was one of the first world leaders to talk about climate change. So these are not radical positions.

I am asked some specific questions. Firstly, I would make a few points on sugarcane. I understand this was raised in some of the committee discussion—although maybe not. The agricultural sector is exclu­ded from coverage under the carbon pricing mechanism. Sugarcane farming will not be directly liable to purchase permits under this mechanism. In addition, the government has agreed to exclude fuel used in agriculture, fisheries and forestry. I am also advised that the sugarcane industry may be able to generate credits under the Carbon Farming Initiative which will be linked to the carbon pricing mechanism by, for example, reducing burning of the above-ground biomass of the sugarcane crop, reducing fertiliser use and sequestering carbon in soils. A number of inputs to farming, such as fertilising chemi­cals, are priced in international markets and therefore unlikely to rise significantly with a carbon price. The government is providing assistance to producers of fertilising chemi­cals through the Jobs and Competitiveness Program because they are not expected to be able to pass through their carbon costs. Manufacturers of urea, a key input to fertiliser production, will be eligible for assistance under the Jobs and Competitive­ness Program at the 66 per cent assistance level. Manufacturers will also be eligible for assistance under the $1.2 billion clean energy program. This includes $150 million dedicated to manufacturers in the food and beverage processing sector as part of the Clean Technology Food and Foundries Investment Program.

As I indicated to Senator Nash previously, Treasury modelling indicates that electricity prices may rise by about 10 per cent under a carbon price. However, I would note, as I previously indicated, that ABARES has estimated that electricity makes up about 0.9 per cent of total input costs for broadacre farming, even assuming full cost pass-through by electricity suppliers. This implies a very small impact on total production costs.

Senator Ian Macdonald: But not for sugar. In relation to sugar I asked you specifically.

Senator WONG: In relation to sugar, I make the point that in 2007 the Sugar Research and Development Corporation published a report looking into the impacts of climate change on the sugarcane industry. The report stated:

The predicted temperature rises and other climatic changes will have implications for:

key agricultural attributes such as plant available moisture and catchment/hydrology and thus stored water available for irrigation

plant growth rates … and shorter crop duration requirements

hazards to agricultural production, such as the predicted increased severity (but not necessarily frequency) of cyclones and floods

markets, as a changing global climate impacts on production worldwide.

I am referring to findings of the Sugar Research and Development Corporation. The report also stated—

Senator Ian Macdonald: Yes, but that is not addressing the question I asked you.

Senator WONG: I am making the point, Senator—you may not like the answer—that even the sugar industry itself has recognised the impact of climate change on it. Given that the sugarcane industry is—I will not deal with that; I am sure that the senator knows that.

I also make the point that some evidence was given by Mackay Sugar at the committee hearing on 5 August which pointed out that, whilst there was what was described by the business development manager as 'a short-term cost impost':

In the long run, the proposed carbon tax policy provides opportunities to Mackay Sugar. … in the longer term, a carbon price is likely to promote diversification projects for our business. As a large sugar manufacturer, Mackay Sugar generates considerable quantities of renewable energy using by-products of the annual cane crop. … under the proposed carbon tax Mackay Sugar will be largely exempt from direct greenhouse gas emission liabilities. Also, a carbon price will drive our business to improve overall energy efficiencies and reduce the use of supplementary coal fuel at our factories.

I think that has responded to senators on the sugarcane industry.

In relation to tourism, I make the point that, first, international aviation is not subject to a carbon price. I know from the number of questions that I have been asked in question time that the senator might not have recalled that. The domestic industry is subject to a carbon price. That has been factored into the cost-of-living impact of 0.7 per cent to which I referred earlier and which forms the basis of the Household Assistance Package. I also reference the effect on the tourism industry—for example, the Great Barrier Reef—of climate change, just to remind us that there are economic costs to climate change to which we need to have regard.

In relation to coal, I have answered a number of questions previously from the senator. We do not believe that it is appropriate to classify coalmining as emissions-intensive trade-exposed because most Australian coalmines do not release a great deal of pollution per tonne of coal produced and are expected to face relatively minor cost impacts in the carbon price. The policy issue is a small number of underground mines which are extremely gassy, which have high volumes of fugitive emissions. I have gone through—I think on Thursday—the assistance that the government is providing to this sector. I also make the point that, despite the sorts of scare campaigns that the senator has been part of, we continue to see increasing investment in the coal industry, including a takeover bid on the day that Mr Abbott suggested that this was the death of the coal industry.

I am also asked about CCS. The Clean Energy Finance Corporation is intended to deliver investment into renewable energies and low-pollution technologies such as co-generation. This is in addition to the government's existing support for clean coal technologies, which will continue to be delivered through our existing programs, which include the CCS Flagships Program and the Global Carbon Capture and Storage Institute.

In relation to defence, Senator, the government does fund defence. The 'enormous cost' that you are talking about would be, obviously, the electricity price increase, to which I have already referred. I note that the defence budget in 2011-12 was some $26 billion, so I suggest that we perhaps should keep in context the additional electricity costs.

I think that has dealt with most of the issues the senators raised.