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Wednesday, 12 February 2014
Page: 177

Senator XENOPHON (South Australia) (10:29): I can indicate that I have reservations about supporting this bill at this stage. I cannot support this bill, but I come to that position from a different place than some of my colleagues on the other side of the chamber. My view is this: I do believe that climate change is real and that we need to—as Rupert Murdoch once famously said—give the planet the benefit of the doubt. I think that the science is incredibly strong and that there are issues that need to be dealt with. We need to play our part and be regional leaders in relation to this.

I also believe that it was fundamentally wrong for former Prime Minister Gillard to say, just prior to the 2010 election, that there would be no carbon tax. I think that, if anything, the former government had a reverse mandate not to introduce a carbon tax given the promise that was made. I believe it would—

Senator Whish-Wilson: It was not.

Senator XENOPHON: Senator Whish-Wilson said it was not. I do not believe that the former Prime Minister lied, but I think that the electorate was misled.

What we are debating here is the role of the Climate Change Authority. We know that the role of the authority is to monitor Australia's emissions mitigation processes, including reviewing the functions of the Renewable Energy Target, the Carbon Farming Initiative, and the National Greenhouse and Energy Reporting Scheme. It also advises the government on the carbon pricing mechanism and it reports on Australia's progress in emitting the national emissions reduction target.

I note that the government's rationale is that the repeal of the carbon tax makes many of the authority's functions redundant. I think that there is a flaw in the government's rationale in respect to this, for a number of reasons. Firstly, the coalition says that it has a bipartisan commitment to the same level of reduction as the former Labor government of a five per cent reduction of greenhouse gases by 2020 on 2000 levels. I may have got my dates wrong in terms of 2000, but I think that basically it is clear that there is a bipartisan commitment in respect to that. There is another debate whether that five per cent is adequate or not. I suggest that it is not, but at least it is a start to reversing an increase in emissions. That is a good thing.

Because the government is proposing a Direct Action Plan—I will get to that shortly—and other mechanisms in respect to dealing with greenhouse gases, I think that the role of the authority is not redundant in terms of having an independent, robust look at whether targets are being met and whether it is the most efficient way regarding how these matters are dealt with. What needs to be done is this: we need to have an independent mechanism. I am concerned that what the government is proposing to put in place is not independent at all.

I do not think that the functions of the authority are redundant in the absence of an alternative robust mechanism to look at them. I note that the government is proposing that some of the functions will be shifted to the Department of the Environment. I think there needs to be an independent oversight of emissions reduction. The authority's remaining functions should not be handed over simply to the department. There needs to be that level of independence. I do not know whether what the government is proposing to do is necessarily the best approach, given that they too are making a commitment to spend billions of dollars of taxpayers' funds in terms of reducing emissions.

I think it is fair to say that the way the carbon reduction policy was dealt with by the previous government was less than satisfactory. I note the comments of Danny Price from Frontier Economics. I disclose that he is a person who has given me advice over many years. When the Liberals were in power in South Australia, he advised me about the privatisation of the electricity assets back then—another case of a reverse mandate by the Olsen Liberal government. The advice that Mr Price gave about the disastrous way that the electricity assets were privatised and the impact on consumers was met with a lot of derision from the Liberal side of politics and, I think, a lot of unnecessary abuse directed against him and me at the time. But he was right; his predictions of price rises were pretty much spot-on. That privatisation simply shifted public debt to private households, in terms of higher electricity prices.

Back in 2009, together with then opposition leader Malcolm Turnbull, we both commissioned Frontier Economics—Mr Price in particular and Matt Harris from his office—to look at an alternative emissions trading scheme. The scheme that was the subject of debate in this place and the subject of debate in the coalition party room was one of an intensity-based scheme, where you actually could have less revenue churn and a better outcome in terms of emissions reductions. That is because you would not have the enormous revenue churn or price effects that you would have with what was being proposed by the government, even in its first and second forms.

The point that Danny Price made in an opinion piece in TheAustralian in September 2012 was that the former government was backflipping, there was a lot of waste in that scheme and there were different pricings being given all the time. He said that, with those backflips in terms of removing the price floor, private brown-coal generators in Victoria and South Australia would end up getting a massive windfall of funds in terms of compensation. I think he has been proved right in respect of that.

I note that Mr Price is now the chairman of the government's reference group on its direct action policy. I have great confidence in him. I believe that he is robustly independent. He has said that we still need to have a Renewable Energy Target and a renewable energy scheme. I think it is good that the government is getting sensible, measured advice from someone with his expertise in respect of this.

They are the sorts of concerns I have. I think that the current carbon-pricing mechanism is deeply flawed. It has given coal generators—particularly brown-coal generators—windfall gains, which seems to me to be perverse. It has not been good for investment in terms of the uncertainty. Tying it to the European scheme, as was proposed by the former government, is not a good thing in that that price is subject to political manipulation, to regulatory failures, and to fraud and corruption in terms of the European scheme. We have seen that previously. I think we can do better. Whether Direct Action is the way to do that is something that needs to be subject to intense scrutiny, but I think it is important at this stage—unless the government has an alternative independent mechanism to determine the extent of greenhouse emissions reductions—that we ought not to throw the baby out with the bathwater by repealing the Climate Change Authority.

I will keep an open mind on this if the government comes up with other mechanisms to independently assess greenhouse gas reductions; you need to get independent advice. I agree with the former Reserve Bank governor, Bernie Fraser, now the authority's chairman, who said, 'On a subject as complex as climate change, I would have thought every government—whatever its complexion—would want to get good independent advice.' I think that is a pretty wise thing to say.

There is a lot of talk about the Renewable Energy Target. I make no apology for the fact that I am very concerned about the price effects of wind energy in my home state. I think we have more wind turbines than the rest of the country combined. It is something that the former Wran government pushed very hard in South Australia. There are issues about the impact on nearby individuals. Leaving aside issues of low-frequency noise and easy-to-measure decibel counts, people are being kept awake and their health is suffering. Also, I think it is legitimate to look at the way that renewable energy certificates are issued for wind energy compared to other forms of renewable energy. In other countries—for instance, in the UK—my understanding is that wind energy does not get the same loading of renewable energy certificates as other forms of renewable energy, because it is not as reliable, it is intermittent and, as we know, particularly on hot days, when the demand for power is greatest, it has to be switched off.

A couple of weeks ago following some terrible fires in the Barossa Valley in South Australia, I met with a number of local residents who were concerned that, but for the aerial firefighters, they would have lost their homes. The Henschke winery is one of the great wineries not only in this country but also in the world, with their Hill of Grace wine. I have never tried it—I am sure some of my colleagues have—but it is a rare commodity that is up there with Grange. Stephen and Prue Henschke spoke out about this situation. These winemakers are concerned about climate change; they are passionate about the environment and about looking after the land. If it were not for those aerial firefighters, their property, including their historic 140-year-old vineyard, would not have survived. There is a real concern that fighting fires around wind turbines, which are up to 165 metres high, will not be practical.

I would urge the government to look very closely at strengthening baseload renewables, including solar thermal, which is much more reliable than wind, depending where it is. Geothermal has a lot of potential, along with tidal power. If we tweak the scheme to have the same end objectives but also to give that funding, the impetus for baseload renewables—more reliable renewables than wind—will be an unambiguously good thing. You are not going to get rid of coal fired power stations if you have unreliable forms of renewable energy. I think that is part of the debate.

What is being proposed by the government is somewhat premature. The government needs to come up with a plan B for a robust independent mechanism to measure greenhouse emissions. The government's reasoning, in saying that we do not need this authority because there is no longer a carbon tax, is flawed. If the carbon tax is abolished—I have said I support it, with various caveats, and we will discuss that later—you still need to measure greenhouse emissions, given the government's commitment to reduce them. Not to do so, not to have that robust independent mechanism, would be a grave mistake. I do not think most Australians would think that would be a good thing. Most people are still concerned about climate change, as they should be. The government has made a mistake to prematurely seek the abolition of this authority in the absence of a robust, alternative independent mechanism to measure greenhouse gas reductions.