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Thursday, 28 October 1993
Page: 2823

Senator PANIZZA (9.31 p.m.) —I will not hold the Senate very long. I must clear up any misapprehension that I may have caused when I queried the fixed schedule reduction scheme. I stated quite clearly in my speech on the second reading that I believe that whatever we sell on the fixed reduction scheme, we stick to it. Who is to say whether Professor Garnaut and the government, in formulating this legislation, have hit on exactly the right sort of schedule? But I am prepared to accept the schedule that is contained in the legislation.

  The reduction scheme should remain fixed because, as I said this morning, if we leave a back door open, something will happen. If the door is there, if an escape route is there, someone will find an excuse to use it. We have had five schemes in the past where that escape door has been left open and something has happened. Let us not do it again.

  I would like to look briefly at the situation that Senator Woodley told us about. He is more or less advocating that the higher the price the more we can let on to the market, and the lower the price the less we can let on to the market. I am afraid that that is not going to work, for reasons that Senator Tambling and others have already canvassed.

  I have been quickly trying to show in equation form how the scheme would work. I used a comparison with the pressure-volume equation in hydraulics where the higher the pressure through the aperture the greater the volume delivered, and as the pressure comes down the volume delivered is less. Senator Woodley left world demand out of the equation. That will interfere with it.

  The other element of that equation is temperature. I relate temperature to world demand. If we do not take into account all those other considerations, including world demand, it will not work. It is a good attempt to please everyone—the buyers, the sellers and the brokers in the middle—but it will not work. Let us back the Garnaut system and have a fixed schedule and stick to it. Otherwise, as Senator West said, we will be back here next year debating some more.