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Wednesday, 28 October 2009
Page: 11183

Mr IAN MACFARLANE (10:01 AM) —I rise today to speak on the government’s Carbon Pollution Reduction Scheme (Charges-Customs) Bill 2009 and the associated amendments. Can I state from the outset that the coalition is absolutely committed to reducing greenhouse gas emissions by the target of five per cent and—in the event of international agreements—by 15 or even 25 per cent. It remains a fact, in this House, that the coalition has done more to achieve that, in its time in government, than this government. In fact, this government has yet to achieve any measure that has reduced carbon pollution or carbon dioxide emissions in the last two years. It is a fact that there has been a lot of talk on that side but not much action.

The fact of the matter is—as was highlighted the Australian newspaper about three or four weeks ago—it is the Howard government that put in place the practical measures and the first step towards an ETS. It put in place the practical measures to reduce greenhouse gas emissions—to lower the intensity, for instance, of emissions generating a kilowatt hour or a megawatt hour of electricity. So we are supportive of the target. We have the record of achieving gains in lowering emissions.

We set out in this process to negotiate, in good faith, the amendments to the Carbon Pollution Reduction Scheme. We have indicated all along that we will conduct those negotiations with the goal of achieving a bill that will not destroy the jobs and the industries that exist in Australia today. We should be absolutely clear, though, that the reason we are doing this is not—as the member for Moreton wants to attest—to delay the passage of this bill. It is to fix the multitude of flaws that are in this bill; the multitude of flaws that will cost Australians their jobs and will cost future Australians their jobs and will cost Australia our future competitiveness.

We need to ensure that we fix this bill. We need to ensure that this is not, instead of being a blueprint to reduce greenhouse gas emissions, in fact a blueprint to destroy jobs in Australia. I am interested to read the speakers list, Mr Deputy Speaker, and am interested to see that the member for Flynn, the member for Dawson, the member for Throsby and the member for Hunter are not on this speakers list.

Ms Bird —I am here!

Mr IAN MACFARLANE —The member for Cunningham is here. In fact, the member for Cunningham, the member for Newcastle and the member for Capricornia are the only ones who are going to speak on this bill from that side and explain to the coalminers in their electorates why they are going to lose their jobs. As I say, there is a list here that is absent of some people who represent electorates where there is coal, industry LNG and power stations—where people will lose their jobs.

That is why the coalition is saying that we should delay this bill until we know what the rest of the world is doing. We are currently flying completely blind. I was at a briefing yesterday where representatives of DFAT made it very clear that there is absolutely no expectation—none whatsoever—that any country in the ASEAN pact will introduce a carbon price in the foreseeable future. One of our biggest trading partners and trading competitors will not have a carbon price. Tell me how, in the absence of that—and without knowing what the Americans will do, without knowing what the Japanese will do, without knowing what the Canadians will do, without knowing what the Europeans will do—we can put in place legislation to ensure that our workers and our industries are not placed at a disadvantage as a result of this legislation.

It is crucially important that we protect our economic assets, both the people who are employed, who are an enormous economic asset, and also the industries that they work in. We also need to ensure that we protect one of the hearts and souls of our economy, and that is small business. Small business has been left unassisted, uncompensated, under this current legislation. Small business will face, for instance, a huge spike in the electricity price in the first two years of this scheme, probably of around 20 per cent. That is why we are moving these amendments. These are not insignificant issues. They are major issues that go to the heart of Australia’s future competitiveness, our future economic security, our future standard of living. They deserve the time and the detail and the understanding and the knowledge of what our trade competitors will do if we are to ensure that they are addressed properly and that our economy, our way of life and our lifestyle are preserved. Everyone wants to reduce emissions. Every Australian that I talk to says we need to reduce our emissions. We need to clean up our waterways even more. We need to ensure our air is clean. But we need to do it in a way that is effective. Doing it in isolation from the rest of the world, doing it without a global agreement, is simply wasting our jobs and our energy.

We in the coalition set about to ensure that we had a close understanding of what the issues were in this process. I have a background in farming. I have a background where I understand climate. I have a background where I have worked for industry and the resources sector as a minister in the Howard cabinet for six years. But the member for Goldstein and I went back to all of those industries and carefully worked through their concerns in a methodical and sensible way to ensure we produce a practical result as we try to amend this legislation to ensure that jobs are not lost in Australia as a result of the undue haste of running to this false deadline the Prime Minister has put in place of the Copenhagen conference. What we found from those discussions was that this CPRS legislation lacked any analysis of the immediate costs to many of the industries that were going to be affected, that there was some broadbrush economic modelling put in place that did not really go to the heart of individual industries. We have worked through that in a methodical way, as I said, and we have come out and articulated nine principles around which our amendments have been built.

The coalition at every step of the way have been clear and consistent. Our amendments are practical. They are reasonable. But, most importantly, they will save jobs. There is no point in losing a coalminer in the Hunter Valley simply to see a coalminer employed in Colombia. We need to understand that many of our industries, in fact nearly all our industries, are at world’s best practice now. There is no point in slugging the coal industry with a $1 billion tax every year if there is not the technology to lower those emissions in the first place. We need to ensure that whatever we do here in Australia has a global effect, that it in fact lowers emissions. So we also set out to try and guess—because it is an educated guess—where the Waxman-Markey bill will settle now it is in the US Senate. Where will that come out? Where will the Europeans decide to target their industries? France has already announced that it is going to introduce a carbon tax, and there is a good reason behind that. I know that those opposite do not want it explained too clearly, but it is because France made the sensible decision some time ago to introduce nuclear—that baseload, zero emission electricity producer—to ensure that they are able to lower their emissions in a way which of course Australia cannot. As we go forward we are seeing these variations, so we set out nine principles and the amendments to go with them.

The first on that list of principles is, of course, the exclusion of agriculture. It is simply not feasible to include agriculture in this scheme. Not only can you not measure the emissions coming from agriculture but you cannot stop them. There is no technology to stop a ruminant animal, a cow or a sheep, from burping out methane. No other country is including agriculture in their scheme. The Canadians are not. The Americans are not. The Europeans are not. Our major trade competitors have said this is too hard, and yet the CPRS includes it. We want to ensure farmers, the custodians of the earth, the custodians of the soil, are able to participate in offsets, and so we have said there needs to be an offset scheme, particularly in the area of soil carbon and opportunities that are being proven up as we speak covering biochar. We need to ensure also as we go forward that this is a process where that carbon is locked away in an internationally recognised scheme.

Another area that we are very concerned about, and one which I am more than familiar with, is the coal fired electricity generation sector. The changes that are being put in place will cost that industry billions, if not tens of billions of dollars. We have said quite clearly that the assistance measures being offered by the government are insufficient to ensure that sector even keeps generating. Lose one turbine, one generator, in one power station in Victoria and that state will be plunged into blackouts—no ifs, no buts, no maybes. The industry is running above its safety margin in terms of its reserve power. It is generating its heart and soul out, but at the same time under this scheme it will be forced to skimp on its maintenance and place at risk its generating capacity. We need to ensure that that energy security issue does not become real, that we are in fact ensuring the electricity sector is able to maintain its generating capacity. That is why we have proposed increasing the number of permits from 130 million over five years to 390 million over 15. We are perplexed as to why the government is hiding the Morgan Stanley report. We know that report, at least in a draft form, exists. We know it must contain the numbers that back up the other reports that have been released, numbers which say the industry should be compensated by in the vicinity of $10 billion. As we go through this negotiation we will be asking why we have not seen that report and what the numbers actually say.

More important than electricity generation—although it is hard to believe—is the management of electricity price increases. Everyone accepts that under any emissions trading scheme there needs to be a market signal, a signal to industry, through the electricity price, through the coal price or through the fuel price, which then pulls technology through into that business. But increasing the price of electricity to small business by 20 per cent in the first two years of this scheme is simply going to destroy the viability of thousands of small businesses. There are two million small businesses in Australia. They are the largest private sector employer in our economy. Yet here we have a process which is driving the electricity price up so quickly, by the admission of the government, in a way which will give small business a shock. Small business will not be able to contend with a 20 per cent increase in costs. Who will be affected? The local milk bar will be, running refrigerators with electricity bills for thousands of dollars suddenly rising by another thousand dollars or more. Where are they going to pull that margin from? The reality is that electricity  prices can be managed and those increases can be done in such a way that we convey the market signal but, at the same time, do it in a more adjusted and lower trajectory. The end point will be the same. That is why we have put up our hybrid model, our carbon intensity model. The government’s plan, quite unashamedly, is to force a large price rise onto small business, and small business simply will not be able to contend with that.

Moving through the other areas of concern and towards the issues in particular of the trade-exposed industries, we need firstly to deal with food processing. Australia has the cleanest food in the world. It is internationally renowned and also obviously favoured by our own consumers. Our consumers want to have food made here. That is why we have said that, because of its close association with agriculture and because of its high level of trade exposure, food processing, including the meat and dairy industries, needs to be protected, to be compensated, to be assisted in this transition, to ensure that food processing industries are still here in 10 years time, to ensure that first-class, safe food, which we rely on and our overseas customers rely on, is maintained.

A key area which we are addressing and which the amendments really cut to is trade exposure. Australia is a naturally export-oriented country. We have a small population who have, by tradition, exported the majority of our goods. We have simply not enough people to consume them. No other major economy which we trade with has this same scenario. In the United States about half the number of industries are trade exposed, as a percentage of their economy, compared to what we have in Australia. For example, the US have about 14 per cent; in Australia it is closer to 30 per cent. We are talking about industries like Leave not granted; we are talking about the smelters which export our raw materials; we are talking about the aluminium smelters; we are talking about industries which, again, employ thousands and thousands of Australians in regional Australia. We need to ensure that they are assisted through this transition. We are not saying they will not pay a carbon price—quite the contrary. We are not saying that initially they will not be disadvantaged against the rest of the world, because they will be. No-one else will have a carbon trading scheme when we do. We are saying that they need to be put in a position where they will be long-term competitive.

I will never understand why we are slugging the LNG industry when it is one industry which will lower global emissions probably more than any other. For every tonne of LNG sold overseas, for every tonne of carbon dioxide it produces, there will be a saving of four to nine tonnes from generating electricity from the traditional source, which is coal. So we should be assisting that industry. We need to ensure that the coal industry itself is protected. As I mentioned earlier, where are the people from Flynn and Dawson, from Throsby and Hunter protecting coalminers’ jobs, which are going to be slugged so heavily under the proposal from the government? The coalition will work to protect those coalminers’ jobs and ensure that they have a job into the future. We will also empower business and community groups to participate in voluntary measures and directly contribute to the reduction of greenhouse gas emissions through measures such as energy efficiency.

The coalition is absolutely committed to lowering greenhouse gas emissions. We have the track record in lowering greenhouse gas emissions. We believe there should be an emissions trading scheme but it should protect Australian jobs, in step with the rest of the world, and it should understand the economic impacts on individual industries. We need to go to Copenhagen with a commitment but we do not need to go with legislation which is going to cost jobs here. We will continue to work to ensure that Australia is in line with the world economies like the US and the EU and that we are not disadvantaging our industries against major trading partners like ASEAN countries, China and India. We have to understand that we need to do it with the full knowledge of what is going on in the world. That is why it is so crazy to be doing this before Copenhagen. That is why it is so crazy for Australia to be putting its jobs at risk through this absolute mad rush by the Prime Minister to pass this legislation. Our amendments are designed to protect jobs. Our amendments are designed to protect industries. Our amendments are designed to protect Australia’s future.