Tony Windsor (New England, Independent) Share this | Hansard source

It is with pleasure that I rise to speak to the Australian Energy Market Amendment (Minor Amendments) Bill 2008. In doing so I congratulate both the current minister and the Ministerial Council on Energy on coming together to put in place a national system. Even though in the minister’s speech he said that there are only minor changes in the bill, these are significant for energy across the nation. But I also recognise the former minister, the member for Groom, who led that committee for something like six years, for the work that he too put in on this national scheme. I think this is very important. Obviously gas is going to be an important ingredient in our future. I am pleased to see the member for Parkes here as well because our electorates are next door to each other and there is currently natural gas being found in certain localities. Santos has an exploration licence, the first for that company in New South Wales, and they will be drilling some pilot holes in locations in our electorates. So there could be substantial resources of gas as well.

I was also involved some years ago with the formation of what was called the central ranges gas pipeline committee, which looked at how to get natural gas from Dubbo to Tamworth. That has been successfully achieved. It took quite some time, as most things do, and there were some difficulties in terms of competition policy. I think this legislation goes some way to addressing this. In some areas of the nation there is not massive competition between various pipeline authorities or private sector investors. That was a problem with both the state based IPART, the Independent Pricing and Regulatory Tribunal of New South Wales, and the National Competition Council in relation to what could be charged by the provider of the pipeline. But, having said that, that pipeline is in place now and it is proposed that another pipeline come out of Queensland. There are various exploration activities going on. Eastern Star Gas is pumping gas near Narrabri as we speak.

The importance of this legislation is that it creates in a sense a national law, and that is a good thing. I think it is very important for the future of this nation, particularly moving into the carbon trading era and global warming, that we establish some national guidelines. There is one thing that the current government has to come to grips with if it is serious about global warming and some of its policy initiatives: it has to stop sending mixed messages to the electorate in terms of what the agenda really is. I will give two examples, one more recent than the other.

The first example is the change of heart over the rebate for investment in solar energy panels. I listened intently to the Minister for the Environment, Heritage and the Arts in question time a couple of weeks ago when he said that the market was overheated, that it was going better than we thought it would and that therefore we had to means-test the provision of the rebate. I think that is an appalling message to send to the wider electorate. It says: ‘Look, we think it’s a good idea and we’d like to encourage you to do it, but don’t take us too seriously because Treasury runs the place and it is not as concerned about global warming as maybe the minister, the Prime Minister or others are.’ It is a mixed message to the community.

The other mixed message is one that I have been noting for quite some time. The previous government set up a sort of grandfathered arrangement in terms of renewable energy. It failed, in my view, particularly in terms of biofuels. We have this absurd statute—which is still there; the current government has not removed it—where in 2011, I think, if you are a biofuel producer in this nation, you will be taxed as though you were a fossil fuel producer. Is the message that ‘we are trying to encourage renewable energy’—is that the message we are trying to get out to the broader community? Alternatively, is the message that ‘if you produce a renewable energy source’—in this case, biodiesel or ethanol in certain blends—‘we will see you as a source of revenue’?

I have heard the absurd argument—and the former Treasurer used this argument a number of times—that to remove a fossil fuel tax from a biofuel would be seen as a subsidy to the renewable energy marketplace. What an extraordinary use of economic language to come out with that sort of nonsense. Are we trying to encourage renewable energy—wind, wave, solar and biofuels? I think the previous speaker spoke about the fact that there would have to be a whole range of contributors if we are to deal with the issues that we are told global warming represents. If we are concerned, we have to stop sending these mixed messages to the community. The government says—and the words sound nice—‘We’re serious. We want renewable energy. But if you do that then we will tax you, so we do not really want it.’

We saw a similar farce go on in terms of superannuation—‘it is a good idea—save for your retirement’. It was encouraged by all, and then it was utilised by various governments, of both persuasions, as three sources of taxation—as a source of revenue. The original intent was for people to save for retirement, which the punters could see quite clearly. I think this is a great idea. Let us have national legislation on a whole range of these issues, particularly with an emissions trading scheme around the corner, but let us have consistency of the message. Do not mix the messages.

I would like to reflect on this in relation to the emissions trading arrangements that are being contemplated by the government. There is a degree of confusion—and it is in some cases deliberate—between those who purport to represent renewable fuels. I am very pleased to see my colleague the member for Ryan enter the Main Committee. I know he is very interested in renewable fuels. Most people would know that the people of Ryan are extremely interested in renewable fuels—hopefully at lower prices. There has been a mixed message in the energy versus fuel debate. There have been food riots in various countries of the world. What role does Australia have to play? What can we do? Should we be using agricultural land for the production of biofuels, for instance? Is that moral? Overlaying that—and this is what I would like to talk about today—is the imminent carbon emissions trading scheme. We are not quite sure how that will work. We are not quite sure how that will allow or not allow for agriculture because of the purported emissions of agriculture. It is a conundrum that we really need to address.

I will use an example, and a few members have heard this example before. Walgett is in the electorate of the member for Parkes, but the Walgett wheat grower is a very good example of agricultural production in Australia. It is roughly 500 kilometres from a port. It produces prime hard wheat, which requires nitrogen. We are told that nitrous oxide is part of the problem in greenhouse gas emissions. High rates of nitrogen are required to get the protein for that food grain to enter the food chain and to get a global price premium. That is the marketplace today. If you overlay an emissions trading scheme, a number of things will happen. I think the parliament needs to look at the implications. The Walgett wheat grower under an emissions trading scheme will leave a carbon footprint. Due to climate change, the Walgett wheat grower in recent years has made a massive change in farming technology. The member for Parkes would be aware of the no-till techniques that are used now. I spoke to the Prime Minister about this a few weeks back. That represents an enormous adaptation to reduced rainfall. We are being told that there is going to be reduced rainfall in parts of Australia, and that could have an impact on our productive capacity.

There have been similar changes in some of the grazing technologies across Australia, where similar benefits can accrue. That change means for the Walgett wheat grower effectively 150 to 200 millimetres more rainfall. That has been proven by the Department of Primary Industries and the CSIRO. It is available moisture to the plant. The old techniques of cropping used at Walgett, when it was highly marginal, meant that cultivation would take place continually and moisture would be released into the atmosphere. You would then be waiting for rain, and you would cultivate and let a portion of it go. By having a protective mulch of the previous crop’s residue on the surface, you keep the moisture in the ground. That has a whole range of other microbial and moisture infiltration impacts. Also, it impacts on the capacity to naturally sequest carbon in our soils. In some of our soils—that is, not all of our soils and not all at the same rate—it could have a significant impact. The Walgett wheat grower’s carbon footprint is much reduced on 20 years ago; nonetheless, he is still using energy to produce his crop. He leaves a footprint when he takes his crop from the farm to the silo. We have just been through the wheat marketing debate. He leaves another footprint when the train picks up the wheat from the Walgett silo and takes it to the Newcastle port. Then he will leave another footprint when the wheat goes in a boat from the Newcastle port to, say, Egypt—where we will attempt to feed the starving millions. So there are a number of footprints.

I do not know how that process is going to be treated in an emissions trading scheme. I do not think we are fully aware of how commodities traded internationally are going to be treated—bearing in mind that part of the grain in that boat is carbon in the form of starch. So what does all that mean in terms of those issues? We have an oversupply in grain and we sell it overseas because we cannot consume it here. We exchange some of that money for another boatload of oil to bring back to Newcastle which is then put on a train or a truck to be taken back to the Walgett wheat grower so that he can go around in circles again and produce the trading arrangements to buy the energy, the oil.

Surely—and people have heard me on this topic a number of times—we have to send a consistent message about this and look at other options to the absurdity of doing that. We need to look at ways of converting grain into energy sources at source rather than creating all these carbon footprints, particularly when the grower will be landed with the cost of that footprint. The international trade component may have some special dealing with that, but the transport movements cannot. If we are going to have a carbon footprint or an emissions trading scheme, we have to include transport. It is ridiculous for us not to. It makes a nonsense of the message we are trying to send.

I would urge the government to look very closely at those issues. Now, some would say, ‘Yes, but we need to provide for the world.’ Australia produces 1¾ per cent of the world’s grain trade in a good year. So we are not the big player. We cannot feed the world. We are not the big player that people make us out to be. We are big in the wheat export market, but we are very small in terms of the total grain production in the world.

The other policy implication that relates directly to energy and to carbon, if we are going to have carbon credits et cetera in the system, is land use. Let us say the Walgett wheat grower changed his land use to growing species of pasture, for instance, where the cellulose in the perennial grasses—that is, they are not planted every year—is not cultivated at all and it emits lower rates of nitrogen, which we are told is part of the problem in terms of greenhouse gas emissions, and he harvests that material. This is what they are looking at doing in the United States with a plant called switchgrass. The grass is converted at very good rates from the cellulosic material into cellulosic ethanol. That immediately removes the food versus fuel argument, because it is not a food product that you are converting into an energy product, but you still have the land use issue. By doing that you remove all of the transport movements, the various carbon footprints that they would have in terms of emissions, but you also potentially have a massive impact on the capacity to sequester carbon into the soil and convert it into humus and organic matter. Switchgrass has a very deep root system. It has been shown that it was the natural grass of the American prairies.

How serious are people who are arguing in this food-fuel thing about returning to nature if they are going to keep imposing a fossil fuel tax on the production of a renewable fuel? I get back to that point that I made earlier that we have to get serious about the mixed messages that are here.

Another point that I have raised in the other place a couple of times is: what about the starving millions? What do we do to help them? One of the things we could do to help them is sell the technology or give the technology that the Walgett wheat grower has been developing over the last 20 years. When I say Walgett, he could be in a whole range of places: Western Australia, South Australia, on the Darling Downs, or the central tablelands of Queensland—but give that technology to those people in those dryland farming areas.

I have previously used the example of the country of Sudan, which is at war with itself. It has 100 million acres of land similar to that at Walgett. It has the capacity to produce six times the grain that Australia produces. There is no need to have this farcical transporting of food across the world when we can teach these people to produce their own food through modern technologies. If we are serious about global warming, and I think most of us are, we have to make sure that the message we send is consistent.

The other issue I raised with the Prime Minister recently was for more research to be done into the measurement and retention of soil carbon under different cropping and grazing technologies. There may well be a way of developing systems where natural sequestration of carbon is part of the emissions program. Benefits may or may not go back to farmers in terms of some of the pricing or stewardship arrangements, but there would be real recognition of the contribution that agriculture could make, not only to the energy debate, through biofuels, but through soil health and soil sequestration. I think there is a role for agriculture. Those who are involved in agriculture say: ‘Under the first blush of Kyoto, agriculture is not in the deal. So let’s hope it will always stay out.’ They are kidding themselves; it will be part of the deal at some stage. Rather than, in a sense, being taxed on the negatives, I think we have to do more homework on the potential positives and put agriculture in a pre-eminent position. (Time expired.)

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