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Wednesday, 23 February 2011
Page: 1173

Mr MURPHY (2:59 PM) —Following on from the Prime Minister’s paralysing and excellent response to the Leader of the Opposition’s question—

Opposition members interjecting—

The SPEAKER —The member for Reid will resume his seat. I remind the House that they are eating into their time for question time.

Honourable members interjecting—

The SPEAKER —The Speaker through another misspeak having eaten up the time again, the member for Reid has the call and he will come directly to his question.

Mr MURPHY —I am now prompted to ask the Minister for Climate Change and Energy Efficiency: will the minister outline to the House the need for a carbon price, including any recent research on this issue?

Mr COMBET (Minister for Climate Change and Energy Efficiency) —I thank the member for Reid for his question. Of course to tackle climate change we need to cut carbon pollution. As our economy grows—

Opposition members interjecting—

The SPEAKER —Order! The minister will resume his seat. The House will come to order. The Minister for Climate Change and Energy Efficiency has the call. He will be heard in silence.

Mr COMBET —To tackle climate change, the simple fact of the matter is that we need to cut carbon pollution in our economy. As our economy grows we have to ensure that pollution does not grow with it. The fact of the matter is that a carbon price through a market mechanism is the most cost-effective way of cutting pollution in our economy. A carbon price will cut pollution, it will drive investment in clean energy and it will provide business certainty for investment, especially in the energy sector.

This week the Australian Industry Group released an important report about energy prices. The report echoes the government’s view that a carbon price is needed in our economy. The AIG report is in fact clear that energy prices have already risen significantly and that they are set to rise further with or without a carbon price; but, importantly, the report emphasises that a carbon price could, in fact, help reduce the impact of future electricity price rises. The report makes clear that electricity price rises are occurring because of the tens of billions of dollars of investment that are necessary in our electricity distribution infrastructure. In fact, on that point the Australian Energy Market Operator has estimated that we will need up to $120 billion of investment over the next 20 years in our electricity network.

The AIG report makes clear that without the certainty delivered by a carbon price we are going to see higher electricity prices due to poor investments being made. To answer some of the interjections from the other side, I will quote from the report. It says in the section attributed to the CEO of the Australian Industry Group:

… while much concern has focussed on carbon pricing, energy prices are going up significantly with or without it. Some of those cost drivers could be reduced by a well-designed carbon price. This could eliminate the policy uncertainty that is damaging investment in new electricity generation …

Ms Vamvakinou interjecting

The SPEAKER —Order! The member for Calwell is now warned.

Mr COMBET —The message which echoes the position that the government has been articulating for some period of time is that not only is a carbon price needed to resolve the uncertainty for investors in the energy sector but it will, in fact, mitigate price pressures in the electricity market for some time to come. This is something that it would be useful for the opposition to understand. We have before us a Liberal Party that does not understand markets and a Liberal Party leader who does not understand the allocative efficiency of markets.

Honourable members interjecting—

The SPEAKER —Those on my left will come to order.

Mr COMBET —You do not need modelling to tell you that markets allocate resources efficiently and that a market mechanism is going to be the most effective way of pricing carbon in our economy. It is a message you should take on and understand.

Mr Hunt —I seek leave to table the report to which the minister was referring.

Leave not granted.

The SPEAKER —The member for Flinders will resume his seat. Is the member approaching me to ask a question?

Mr Hunt —Yes.

The SPEAKER —The member for Boothby was unlucky yesterday. The member for Flinders should have learned from that.

Mr Hockey interjecting

The SPEAKER —The member for North Sydney did not lose the vote because of that one vote. The member for Flinders with a question.