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Wednesday, 10 February 2010
Page: 943

Mr SULLIVAN (10:42 AM) —As the member for Herbert heads for the doors, I hope to have these words ringing in his ears: before he comes back into this place and continues the great big lie, he should read the paper with his Wheaties. This morning’s Age carried an analysis by Bloomberg New Energy Finance—

Mr Billson —Mr Deputy Speaker, I rise on a point of order. It comes as no surprise, but I would invite you to ask the member for Longman to withdraw the remark about the member for Herbert.

The DEPUTY SPEAKER (Hon. Peter Slipper)—The honourable member for Longman has used a word that is unparliamentary. I would ask the honourable member to facilitate the business of the House by withdrawing that term.

Mr SULLIVAN —Absolutely, Mr Deputy Speaker. Rather than have you explain it at length, I will remove the word ‘lie’ and replace it with the word ‘untruth’. Bloomberg New Energy Finance said the Abbott policy would cost twice as much as the government’s policy. The article said of the Bloomberg analysis:

It said the Coalition’s claim that the government scheme would cost $40.6 billion was based on a “strange logic” that confused its market value with its cost to taxpayers. The opposition needed “to come up with something better and get the numbers right”, it said.

It said Mr Abbott’s proposal—allowing businesses and farmers to apply to have the government pay for their greenhouse gas emissions cuts from a fund eventually worth $1 billion a year—failed on three fronts: it was not the cheapest way to cut emissions, could not accurately limit national emissions and was a short-term option only.

As I said, the member who spoke previously should read the papers, because the holes in the policy that he is proposing today are becoming more and more apparent.

Obviously I rise to speak in support of the Carbon Pollution Reduction Scheme Bill 2010 and cognate bills this morning. On Monday, 16 November I spoke in support of these bills, or their predecessors, also. First of all I want to reiterate two points that I made at that time. On that occasion I said:

I am one of those many Australians who are convinced by the weight of scientific evidence and by the opinion brought forward that this planet and its oceans are warming.

I have not changed my view, but today, as then, I acknowledge and respect that others hold an opposing view equally strongly. The other point I want to repeat is this. I also said:

What happens if we take action and discover in 50 years time that we did not need to take action? We have rejigged the economy of the world, and that has happened previously. But what happens if we do not act and we find out in 50 years time we should have? That is when the legacy of this parliament will be most felt by the people that we most care about: our children and our children’s children, and even their children.

Again, I have not changed my view on this. It is true that certain admissions have been made of late concerning some less than wholly proper recent practices by some elements of the IPCC. Those admissions do not in my view call into question the totality of 30 years of scientific work by thousands of scientists—work that leads inexorably to a conclusion that our planet is warming, that the warming is due in no small measure to human activity and that time to take effective action is rapidly running out.

Despite the strength of my conviction on this matter, I do not arrogantly dismiss those who hold an opposing view. To them I simply say: what if you are wrong? What if you are wrong but your view prevails? What if you are wrong, your view prevails and our planet passes the point of recovery? What do you say then to those you have confined to extinction? You cannot simply say ‘oops’ or ‘sorry’. To me it is infinitely preferable to have transitioned our economy to what is known as a low carbon economy and to discover later that it was not necessary. The stance being adopted by the opposition fills me with fear—fear for the future of my children and the families that they will ultimately raise.

Isn’t it ironic when we consider that both the ALP and the coalition went into the 2007 election campaign promising to introduce what were very similar cap-and-trade emissions trading schemes? Let us consider this. Had the Howard government been returned in 2007 Australia would already have in place a cap-and-trade emissions trading scheme. Had John Howard not lost his seat of Bennelong and stayed on as opposition leader, we would have in place a cap-and-trade emissions trading scheme. In either of those situations, honourable national leaders, Kevin Rudd and John Howard, would have brought into these parliamentary chambers actions backing their word to the Australian people.

Unfortunately, the current opposition leader, who professed just last Sunday to have ‘respected, admired and liked very much’ John Howard, appears to share none of the finer features of his idol’s character. Late last year we watched in amazement as this opposition leader took his party to the brink of destruction, to achieve what? Did he take that fantastic risk simply out of his own ambition to be leader or did he risk his party’s very existence because, contrary to his assertions of respect, admiration and liking, he truly believed John Howard—and, I might add, a cabinet of which he was a senior member—to have been wrong in this matter.

It has been illuminating to observe the victorious posturing of the opposition leader and his entourage since President Obama admitted that he may have to isolate his cap-and-trade emissions trading scheme from other climate change measures. The President of course is simply being pragmatic given the realities of the changed circumstances in the US Senate as a consequence of the election of Republican Scott Brown to fill the Massachusetts Senate vacancy left after the death of Senator Ted Kennedy. While those opposite crow over events in the US they should reflect that were the American congressional voting culture replicated in our Senate chamber down the hall this legislation would pass in a heartbeat. There are certainly more than two coalition senators who supported this legislation by crossing the floor last November and who ache to support this legislation. But, unlike the opposition leader and his cronies, it would appear that they baulk at taking their party to the brink.

What the opposition seem to not understand—and certainly do not talk about—is that President Obama has in this matter some backup that the Australian government does not have. Members may not have heard of the Western Climate Initiative. I suggest they make themselves familiar with it. The Western Climate Initiative is a joint program of seven US states and four Canadian provinces who are currently developing a cap-and-trade emissions trading scheme and complementary policies to combat climate change. A further six US states, two Canadian provinces and six Mexican states hold observer status with this group. If just those current observers join the group the resultant ETS will cover around 50 per cent of the landmass of North America. This group has a goal of 15 per cent reduction on 2005 levels by 2020.

In Australia of course we have no such state based scheme on which to rely. We have no margin for relaxation so far as our federal legislation is concerned. Members opposite need to acknowledge that, whilst there is to be a delay in the implementation of a national scheme in America, this is not an argument that says there will be no ETS in America. The reality is of course that President Obama has a backstop.

There has been plenty of opinion bandied about, both in the media and by those opposite, concerning the Copenhagen Conference of Parties, the COP15. The media and the opposition use the word ‘failure’. Only a fool would claim that Copenhagen was not a disappointment, but ‘failure’ is too strong a word. It is easier for those opposite to scoff and deride the attempts made by the 190 nations involved to tackle a complex and important issue than it is to act responsibly and in the national interest and in the interest of the planet.

Toward the end of last year it became obvious that achieving a comprehensive accord was unlikely, but there were three major outcomes from Copenhagen that should fill us with some joy. For the first time there is a global accord that temperature increases should be kept within  two degrees Centigrade. For the first time, developed and developing countries have agreed to share the abatement burden, and a global monitoring system is to be developed to ensure those who commit actually do what they say they are going to do. Copenhagen is not the end; the issue of climate change has not disappeared and all responsible people know that it must be addressed as a matter of urgency. Yes, the outcome of the Copenhagen conference was disappointing, but it was a first crucial step.

People ask why we should have a cap-and-trade system. A cap-and-trade system is a proven and successful mechanism and is the best means of reducing greenhouse gas emissions at the same time as providing incentives for industry to develop new technology and to embrace renewable sources. A cap-and-trade system sets out clear and enforceable emissions limits and it allows the market to find the best way to achieve those limits. Cap-and-trade programs turn pollution reductions into marketable assets.

There are three elements to a cap-and-trade program. The first of those is a mandatory emissions cap limiting the total tonnes of pollutants that can be emitted and reduced each year in order to meet targets. The permits issued equal the cap, which can be bought or sold according to the needs of the emitter, and there is accurate measuring and reporting supported by enforcement. These are the elements of the government’s CPRS.

At the end of last year the Parliamentary Library produced a document for the information of members. It was put online on 17 September and it appears under the heading ‘Emissions trading—has it worked?’ In that document they investigated two schemes. The first scheme was the cap-and-trade acid rain schemes in the United States of America. The second scheme was the cap-and-trade carbon dioxide or greenhouse gas scheme from Europe. The American example is the longer lasting. In the years 1995 to 2008 using a cap-and-trade system for sulphur dioxide, sulphur dioxide emissions in the US dropped by 64 per cent annually. That means that the level of emissions in 2008 was 64 per cent less than the emissions in 1995. For the nitrogen oxides the figure was 51 per cent. They did that despite the fact they were measuring emissions from nearly twice as many units that were emitting. With sulphur dioxide, it was a cap-and-trade system and with the nitrous oxides it was a cap system only, with no trading allowed. The second system looked at the European cap-and-trade system for emissions trading. The document made, I thought, a fairly interesting comment, which was to note that economic growth, as measured by the growth rate of European domestic product, did not cease during June 2008. The report went on to state:

The European economy did not go backwards. The point that European GHG—

that is, greenhouse gas—

emissions fell while the region’s economy grew (albeit modestly) is a strong indication that the link between economic growth and GHG emissions is being modified.

 There is no hit to the economy from a carbon trading scheme. A further interesting point that has come out of this report is that to delay is dangerous. The report makes that point by indicating the introduction of both the trading scheme for acid rain in America and the trading scheme for carbon dioxide in Europe. In the first couple of years, emissions rose before they started to fall. We should take from that an understanding that the point at which we introduce a carbon trading scheme is not the point at which emissions will start to fall but a point a few years before that. The second point the report made was in relation to the price of carbon. It said:

Generally emissions rise, or stay at a comparatively high level, when prices are low. Emissions appear to reduce after the price of emissions permits rise to higher levels.

The interesting point there is that the coalition is seeking to reduce emissions with no price on it. That brings me to what I like to call Mr Abbott’s great big attack—

The DEPUTY SPEAKER (Hon. Peter Slipper)—Order! The honourable member for Longman ought to refer to the Leader of the Opposition by his title and not by his actual name.

Mr SULLIVAN —I am not actually referring to the Leader of the Opposition in this; I am referring to a policy which I would like to call Mr Abbott’s great big attack. But, if you would like me to do so, I will call this the Leader of the Opposition’s great big attack, which is supported by every member of his side, because they keep repeating it time after time. Cap and trade is not, as the Leader of the Opposition would assert, a tax of any magnitude, let alone a great big one. Let me quote from the Western Climate Initiative:

How is cap-and-trade different from a tax?

Cap-and-trade sets the limit for emissions and lets the market work out the costs of hitting that limit. A tax sets a price for emissions and lets the market work out how much of a reduction in emissions will happen. Both can work if designed and implemented properly, but the challenges are different. A tax provides price stability for those who will pay it, but the environmental benefit is not assured because emissions will not fall if people are willing to pay higher costs. Taxes at the rate needed to send the price signal needed to reduce carbon and spur reduction innovations are difficult to put in place and adjust over time. Cap-and-trade provides certainty of environmental performance but the costs are uncertain and will vary over time.

That is a reference, obviously, to the markets setting the price of permits, which will fluctuate. Finally, they say of cap and trade:

It may be easier to put in place but more challenging to implement.

The coalition’s con job on carbon pollution reduction must have set the lips of the Leader of the National Party and his national cohorts awash with the juice of their tongues. Can you imagine how much they must be looking forward to $2.5 billion of selective funding. The government, it seems, under the opposition’s policy will decide who gets it and who does not, just like the late unlamented Regional Partnerships program shown by the Auditor-General to have been used by the National Party as a slush fund. I imagine the member for Gippsland is particularly keen on this. The Managing Director of TRUenergy appeared on Business Sunday and had some interesting things to say. Firstly, he said that they would need the whole $2.5 billion on offer to replace the three units at Yallourn—that is, every cent the coalition plans to make available. It is a drop in the bucket of what is needed to modernise our generating plants. Secondly, he said that ultimately there will be a well-structured international emissions trading scheme, and he thinks Australia needs to be part of that scheme. So the managing director of Australia’s dirtiest generating plant believes there will be emissions trading but, ‘Let’s hold off so our industry can get some free money from the coalition first.’ When the Leader of the Opposition gets an idea, he certainly gets it wrong.

It has always been acknowledged that cap-and-trade schemes need to work side by side with what are known as complementary policies. These can include: removing market barriers to lower emissions; seeking reductions outside the cap, such as for households and farms; encouraging investment in low-carbon technologies; creating green jobs; lowering the cost of transitioning to a low-carbon economy and so on. These and more are part of the package of bills we are debating today. They are the entirety of the coalition’s so-called direct action plan. Environmentally this is virtually a ‘no action plan’, and mitigating against climate change is all about the environment. Departmental analysis of the coalition plan shows that there will be some modest savings, estimated to be about 40 million tonnes of greenhouse gases in the year 2020. But emissions will have continued to rise to a point of 13 per cent above 2000 levels. With a modest target of five per cent below 2000 levels, the ETS will have a more robust saving of 139 million tonnes of greenhouse gases. Importantly, emissions will be on a downward trajectory. The words ‘direct action’ may play well with the community but they are code in this case for ‘no action’ and households will pay dearly for that inaction.

There is of course serious concern amongst the business community about the coalition’s plan. I will take one quote from Nathan Fabian, chief executive of the Investor Group on Climate Change, which represents AMP Capital, Goldman Sachs, JBWere and others:

If you don’t send clear signals to business and investors, with a cap on emissions and a framework for pricing emissions, you do not get a lot of action.

People like to follow the money trail when trying to solve a problem. Let us follow the money trail on the government’s ETS. Firstly, in the government ETS, the polluters buy permits from the government. The government uses that money to compensate householders by passing that money on to them so that they can pay for the higher prices that may arise. The opposition’s direct action plan would take money from the budget, money that they would have received from taxpayers, and give it to polluters, with no money going back to householders. The difference between the two schemes is that emission reduction in the government scheme is paid for by industry; emission reduction in the coalition scheme is paid for by householders. (Time expired)