Michael Johnson (Ryan, Liberal Party) Share this | Hansard source

I am pleased to speak in the House of Representatives as the member for Ryan and to speak on this important bill, because it also touches on issues of energy supply, energy security, environmental protection, our lifestyle and the way we will be able to enjoy a certain standard of living in the years and decades ahead. Fundamentally, the National Greenhouse and Energy Reporting Amendment Bill 2008 is a technical bill. I will just allude to that before I make some wider remarks.

The bill makes mandatory the separate disclosure of direct and indirect greenhouse gas emissions. It allows the minister to specify conditions, rating systems and the particular rating for the use of alternative methods which have been determined by the minister to measure greenhouse gas emissions. It allows for the publication of information relating to those methods of measurement, where the use of those methods satisfies the conditions. It amends the National Greenhouse and Energy Reporting Act to extend the obligations to comply with an external audit to members of a registered corporations group and amends the provisions relating to reporting requirements generally. The act was passed in September 2007, establishing a national mandatory corporate reporting system for the dissemination of information related to greenhouse gas emissions, energy consumption and production. The reporting obligations under the legislation are intended to lay the foundation for the proposed national emissions trading scheme, or ETS, due to be introduced by the Rudd government, as we understand, in 2010.

The coalition passed the National Greenhouse and Energy Reporting Act in 2007 when it was in government. This legislation aimed at establishing a single national framework for reporting greenhouse gas emissions, energy use and production. The coalition’s act had a focus that was to lay the foundation for its emissions trading system and aimed to reduce the red tape and duplication caused by the patchwork of state, territory and national programs. The Howard government wanted to try and minimise and reduce as much as possible all those additional bureaucratic and red-tape consequences that would flow from that overlap and duplication. The act also, for the first time, provided for the public disclosure of company-level greenhouse gas emissions and energy production and use.

On 14 July 2006, COAG agreed that a single streamlined greenhouse and energy reporting system that imposed the least cost and red-tape burden was a good thing and had to be worked on by its stakeholders. On 13 April 2007, COAG agreed to establish a mandatory national greenhouse gas emissions and energy reporting system, with the detailed design to be settled after the Prime Ministerial Task Group on Emissions Trading reported at the end of May 2007.

As I just alluded to in my opening remarks, this is not a controversial bill. It deals essentially with administrative and technical matters to do with reporting under the National Greenhouse and Energy Reporting Act 2007. Of interest and relevance is the minister’s second reading speech, where he says:

The bill will ensure the public and investors have access to information on both a corporation’s scope 1 (direct) and scope 2 (indirect) greenhouse gas emissions. This distinction has been added following public consultation. Corporations will benefit from a greater public understanding of how their emissions profile is composed, rather than from the publication of a single total. In some sectors, scope 2 (indirect emissions) can compose a significant share of a corporation’s total greenhouse gas emissions footprint.

There has been some criticism by the National Generators Forum of this proposal to include the reporting of indirect emissions from electricity, saying that it will only add to the red tape in the system without actually assisting emissions trading. In the same report, other business groups have warned that they will face significant compliance costs associated with their indirect emissions.

Of course, the people of Ryan, whom I represent, in the western suburbs of Brisbane, have a very great interest in how this government, the opposition and all members of parliament are going to develop this ETS, because they are fully aware that the proposed ETS promises to be one of the most significant reforms made to the Australian economy. Some 1,000 companies are expected to be affected, and these companies are producing more than 25,000 tonnes of carbon emissions, so it is quite significant. Therefore it has to be implemented properly. It must be implemented carefully. The ETS must be implemented effectively.

The government cannot afford to get this wrong. The government cannot afford to be reckless on this because, if they get it wrong, the Australian economy, the Australian people’s standards of living and certainly the standard of living in the western suburbs of Brisbane, in the Ryan electorate, will take a king hit. That is something that I certainly will not accept, and I will not endorse any policy that affects the economic standards in the western suburbs and in the Ryan electorate. Basically, if Australian companies, Australian industries, are no longer viable and no longer profitable, they are not going to be employing people. They are not going to generate the wealth and the prosperity that is so essential to where Australia ranks in the table of countries for its prosperity and lifestyle.

I want to refer the parliament to remarks made by Business Council of Australia President Greig Gailey, who is not some lightweight in our corporate community; he is a significant corporate figure. He has made his thoughts and, I think, the thoughts of the Business Council of Australia very clear—that is, that the ETS is essential and critical to tackling the greenhouse gas emissions that we have in our country but that, at the same time, we cannot do this with a view to damaging the economic architecture of our country. A country whose economy is in free-fall, a country that does not have economic stability or economic prosperity, is not going to be able to do much to reduce its own greenhouse gases and contribute to a wider global solution. We should not forget that climate change is a global challenge. No single country on its own will be able to make an impact; we all need to work together to try to come up with solutions. Certainly Australia, with some 1.8 per cent of global emissions will not of itself make an impact. But where we can make an impact is in our symbolic leadership and perhaps the brilliance of our engineers, scientists and policymakers to come up with a mechanism that can get the balance right between tackling greenhouse gases and maintaining an economic structure that delivers jobs and standards of living that really are the envy of the world.

Getting back to Mr Greig Gailey, because the people of Ryan probably have not had the opportunity to read the remarks of this very significant businessman and corporate leader—whose words are very much heavyweight words and words that members of the government and members of the parliament should be aware of—I want to let them know what Mr Greig Gailey said on 21 August 2008. He said:

The BCA fully supports adopting a comprehensive emissions trading scheme as the best way to reduce emissions, but getting the design detail right is critical.

Further, he went on to say:

We agree with the government that you must assist emissions-intensive, trade-exposed (EITE) businesses to avoid carbon leakage. The question is how to do that in a way which reduces global emissions without damaging the Australian economy.

Our research provides the first hard data on what will happen to real companies in Australia unless some modifications are made to the current proposals.

He is of course referring there to the government’s green paper on this issue. The green paper may perhaps be a first step in developing a workable and comprehensive ETS but, in its current form, it is full of flaws and full of holes. It is like a bucket with a hole in it—it is not going to contain water. So we have to improve it. Certainly, Greig Gailey asked the government to revisit this and look at it. Unless some modifications are made to the current proposals, it is not going to be something that is sustainable in the long term. It is no good coming up with a solution that is only going to be workable in the short term; we must come up with a mechanism and an architecture that will be long term and will actually make an impact in this country.

The BCA paper, which I am sure everybody would now be aware of, reflects some concerns. Fourteen major companies in the BCA membership were examined by a pretty successful and eminent consulting company, Port Jackson Partners. Their conclusion was that, if the current thinking in the government were to become reflected in policy, the impact on the businesses they examined, and most likely companies similar to them, would be profoundly detrimental—the bottom line being that further jobs would go. We have already seen in the Rudd-Swan budget that jobs have been cut. That is very regrettable, considering that, under the Howard government, 30-year lows in unemployment were achieved and, within a few months of being in government, the Rudd government has people exiting the door of companies throughout the length and breadth of this country. We do not want more people losing their jobs because of short-sightedness and political expediency on the part of the Rudd government.

I will touch on the points made by Port Jackson Partners in the BCA report. The BCA submitted 14 of its companies to Port Jackson Partners to explore the consequences for those companies and industries and to report back on how they would square up with the government’s current policy thinking. Anybody who read the weekend’s papers would have clearly seen that the report was quite devastating and significant. I know that the hardheads in the government—those with some intellectual and political capacity—will be fully aware that the article by Paul Kelly and the comments by Greig Gailey would not have gone unnoticed. There are some very fine minds in the government—not too many but a couple—and I am sure that they will be very aware of the views of Greig Gailey.

The companies explored some annual revenues ranging from $90 million to more than $3 billion and covering sectors from cement, manufacturing, petroleum refining, steelmaking, sugar milling, and zinc and nickel refining. So these are not insignificant industries in our economic structure. From what I understand, on average the ETS would reduce their pre-tax earnings by almost a quarter, with the worst affected in fact suffering a 136 per cent reduction. That is not something that is conducive to economic survival in the marketplace. These companies will basically go broke. And the ones that do not go broke will probably have to ship their industries overseas. I understand that the union movement is fully aware of this and is not too keen on it. We do not want Australian jobs going overseas simply because of a reckless policy initiative by the government.

Of the 14 companies, the report reveals that three will shut immediately and four will have to fundamentally review their operations just to remain viable, after losing between 32 per cent and 63 per cent of their pre-tax earnings. The rest will have to take immediate action to reduce their costs and many potential investments will not take place. The bottom line is that this country needs investment if we are going to provide jobs and if we are going to provide technology that will take this country forward in the years and decades ahead. I want to quote an important statement again from Mr Greig Gailey:

While these case studies have focused on 14 businesses there can be no doubt these outcomes would also apply more broadly across the relevant industry sectors.

That is quite an insight from one of the most significant businessmen in this country, someone who ought to be listened to by the government—and I am sure that he will be listened to. He and I certainly acknowledge that climate change is a very significant challenge for the world. Whilst there may be some debate about the causes of climate change, I am very much of the view that we have to do something about this. The question is: how do we go about addressing this issue? How do we go about getting the balance right between tackling the consequences of climate change and at the same time ensuring that we have a certain level of living standards that we all aspire to? I tell you what: one thing that can be said is that we will not be able to make any impact at all, in any policy area at all—let alone this profoundly important one—if everybody starts losing their job, companies start closing and industries get shipped overseas. That will not be to the advantage of any single Australian. I think the smart people around this place, and the smart people around the bureaucracy, are fully aware of that.

This is a global problem. I want to touch on that because, as I said before, Australia’s global emissions are less than two per cent, at 1.8 per cent. Without getting China on board, without getting Russia on board, without getting the US on board then very little, in a very substantial and meaningful sense, will be achieved. I think the big challenge for this government and the leading players in this government is to try to develop an alliance, a mechanism or a system in which we can get on board the big emitters of the world—the Americas, the Chinas, the Russias and the developing economies.

I want to have it on the record that I am very sympathetic to the place of developing economies. If a lot of the emissions are caused by modern industries in developed economies and are certainly not the fault of developing economies, then there is a place for the wealthy nations of the world to make a contribution to tackling the serious environmental problems in countries like China and in the countries of Africa. I am very sympathetic to that view. We have the technology and we have the smart people who can work together. We have brilliant people in this country and we want to be able to give them options and the mechanisms to support them in ensuring that their technology goes to practical use in those countries where it is most needed.

So for my part I certainly support the introduction and the implementation of an ETS. I know that the people of Ryan support that. There is no question about that. What we do want to say is that the government must get this right. The government must not be reckless in this. If they can get it right, they will earn more brownie points. If they get it wrong, they will earn the wrath of the Australian people, just as the Australian people and the people of Ryan have certainly rebuked the government, and the Treasurer in particular—I should not say ‘in particular’; I think the people of Ryan have rebuked the government collectively—for the way they introduced a policy that affected rebates for solar panels in the Ryan electorate. (Time expired)

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