Nola Marino (Forrest, Liberal Party) Share this | Hansard source

I rise to speak on the National Greenhouse and Energy Reporting Amendment Bill 2009, a bill which makes minor amendments to the coalition’s act of 2007. The administrative amendments allow corporations to appeal to the Administrative Appeals Tribunal if they disagree with Commonwealth determinations, through an audit framework which improves the administration and policy intentions of the act. The coalition does not oppose this legislation.

The original act was introduced to establish a national framework for reporting greenhouse gas emissions, various abatement actions as well as energy consumption and production by corporations. The aim was to minimise costs and red tape while providing criteria to calculate greenhouse gas emissions. When I consider corporations in my electorate of Forrest, the consultation and appeals processes are very important to companies such as Griffin Coal, a company that, for example, is currently experiencing major problems with determinations made by the Department of Climate Change and Water’s NGER scheme in relation to presumed emissions default determinations.

Currently, there is very limited capacity for any company to appeal any decision or determination made by the department—something Griffin has made several representations to me about. Griffin Coal owns and operates an open-cut, low-rank sub-bituminous black coal mine in the Collie Basin in my electorate, and is currently required to report under the NGER scheme and existing legislation. I note that Wesfarmers Premier Coal operates out of the same coal measures in the Collie Basin.

Noel Ashcroft from Griffin Coal wrote to the director of the National Inventory Section of the Emissions Reporting Branch:

I am writing to request Griffin be consulted during the determination review process that you are currently undertaking. In particular, we would like to discuss our disagreement with the current default emissions factor for fugitive emissions from Western Australian open cut mines prior to the finalisation of the new determination arrangements. Griffin is concerned that the department has set a default emissions factor for Western Australian fugitive emissions that is based on limited and possibly inappropriate information.

Mr Ashcroft enclosed a report to the director of the National Inventory Section of the department, commissioned from a leading energy and greenhouse reporting consultancy, which reviewed the default emission factors and the presumed basis on which they were established. The key findings of the report were that ‘The default emissions factor for WA open-cut mining was changed during the process of finalising the NGER determination and there was no opportunity for public comment on this change. The emissions factor that has been applied to WA is inconsistent with findings that indicate that Western Australian coal has a negligible emissions factor. There appears to have been an inconsistent approach undertaken in how to apply emission factors to different states.’

Potentially, one of the most relevant parts of the report in relation to the bill before the House was the statement that ‘There is little available information, nor is there clarity on the basis for the decision to change the emissions factor for WA open-cut mining.’ This is a practical example of the need for appropriate administrative appeals processes, specifically at the determination level in relation to existing and future departmental determinations, particularly as in Griffin’s case, when the department’s determination is based on an assumption not supported by independent sources of advice—advice such as that also provided by the Western Australian government Geological Survey and State Mining Engineer; advice that states quite simply that it is well known that Western Australian coal measures are of a different age and development from that on the east coast, and do not contain methane.

I understand also that this position was verified, supported and communicated in writing to the Department of Climate Change and Water by none other than the Western Australian Department of Mines and Petroleum—the state authority. To further support this in an operational sense, the new highwall miner currently operating at Collie—a machine with an extendable mining arm capable of working up to 300 metres into coal seams from an open-cut pit wall—has a continuous methane measuring capacity. I am told that in the two months the highwall miner has been in operation no methane has been detected in the Collie coal measures, a further reason for Griffin to have a mechanism to appeal NGER determinations.

I am also told that Griffin Coal is not the only company needing a process to appeal Commonwealth determinations. Mines in western New South Wales and parts of Queensland have also been allocated default factors beyond their actual levels and need a determination process to appeal such decisions. An appeals process may also prevent companies from having to conduct extremely costly drilling and tier 3 sampling and measurement processes to substantiate their actual emissions. This drilling and sampling process could cost individual companies tens of millions of dollars.

The need for an accurate default emissions factor in the first instance has major commercial implications for companies like Griffin that have to report under NGER. The default process needs to be simple and accurate, and not made based on assumptions of methane emissions from other states. Clearly, given the problems faced by Griffin, an appeals process at this particular level is a necessity. As Mr Ashcroft stated in his letter to the department:

The situation that exists with the current WA fugitive emission default factor has, if not corrected, the potential to materially and unjustly impact on Griffin’s business. We would like the default emission factor that we use to report to be based on credible information and assumptions.

My most recent information is that the department is ‘looking’ at the information provided by Griffin, but will not change anything until next year. Given the connection between the NGER emissions determinations and the government’s proposed flawed CPRS, accurate assessment and appeals processes are absolutely critical. For practical purposes, this also strongly supports the coalition’s calls to separate the Renewable Energy Target legislation from the CPRS. The need to get it right is paramount. I understand from a recent article in the Age newspaper on 10 August that just over half of the industries required to report their emissions to the government under this legislation have actually registered prior to the 31 August deadline. They do still have time. Of the over 700 businesses required to register, only 400 have currently done so.

The coalition cannot support the seriously flawed CPRS legislation, which will lead to job losses for Australian workers without materially cutting our 1.4 per cent of the world’s carbon emissions. We cannot afford to lose jobs and investments throughout regional Australia, particularly given the unprecedented government debt and deficit. The 40 per cent increase in power bills will affect every Australian and has the potential to render key regional industries uncompetitive and unviable. And we are yet to be told what the complete regulations will be under the CPRS and what and where the additional costs will be. Take today, for instance. A simple question on the additional cost on a litre of milk could not be answered by the Prime Minister.

The CPRS will bring about major structural change in our economy—potentially the most major structural change in our history. Framing Australia’s legislative response has to be right, and clearly the legislation is not right. We have repeatedly been told that it is a friendless scheme, and I have had visits to my electoral office from a range of green groups who strongly oppose the government’s CPRS. Business and industry do not support it. The expectation was that, with such significant structural change, the government would engage in comprehensive legislative, policy and regulatory consideration, consultation and amendment.

As I have said, without materially reducing our carbon emissions, this government is legislating to export jobs, investment and emissions through the design flaws. It is a design which will seriously damage the globally competitive position of many industries, severely disadvantaging our export and import competing industries. It is an incredibly complex design, which is a flaw in itself, creating one of the greatest churning of funds ever designed by a government in our history. This makes it almost impossible for industry to understand and evaluate specific impacts on their individual operations, let alone consider the management of the reporting and churn process.

There is genuine business concern that this complexity in itself will add ongoing major costs to business and industry. Some of the flaws in the scheme are quite fundamental. For instance, coal electricity generators in my electorate will add a $4 billion tax on the industry over five years. And coal fired power generators in my electorate, under the CPRS legislation, have been completely assumed away; they do not exist. They are not part of the government’s modelling at all. The legislation is based on the national energy market, which operates a gross pool system which allows costs to be passed through in the way that electricity is sold.

WA, of course, is an energy island. The market is primarily a bilateral contract system with long-term contracts of typically 15 years, with only a minor percentage of the market traded. Unless several years ago, when negotiating their contract, an electricity generator in the south-west made provision for carbon costs, the generator will now have to pay this cost under the proposed scheme. I note that 90 per cent of the transitionary assistance will go to four brown coal generators in Victoria and South Australia, with only $24 million going to the WA government Verve Energy plants and there being no assistance at all for the private sector.

A further structural flaw is the treatment of fugitive emissions, the cost of which is set from the greenhouse legislation using a set of default emission levels for each state. As I have said, south-west coal has been allocated the highest default factor when, as I explained earlier, Collie coal does not produce measurable methane. One company has been to Canberra four times and has met with more than 40 members of parliament and key departments. In spite of this, nothing has changed in the legislation. Seriously flawed legislation is not the answer to climate change.

I have a major alumina refinery in my electorate which operates in the global market, where prices are set by international supply and demand. In the words of the Aluminium Council, our major concern with the proposed CPRS and renewable energy target is the magnitude of the cost being imposed on Australian producers that is not being imposed on competing suppliers from other countries. The total cost impact of the current scheme design is approximately $4 billion over the first 10 years. This is tens of millions of dollars per site imposed only on Australian producers.

Concept Economics modelling shows that 23,500 direct jobs will be lost in Australia’s minerals industry by 2020 and up to 6,000 jobs will be cut in regional Western Australia. Put simply, the families and communities in my electorate will pay not only for the Labor government’s debt and deficit but also for this flawed legislation. And we have not seen the detailed analysis and modelling of the costs, how it will it affect each industry and regional community and whether this is the most effective option for Australia to reduce emissions. We need to know what the cost of action or lack of action by competing countries is, and industry and business need a globally competitive level playing field.

The proposed US emissions legislation will provide 100 per cent protection for US export and import competing industries until 2025. Coming from the dairy industry, I well understand how difficult it is to compete in global markets without a level playing field. The industry competes at this moment with heavily subsidised competitors that have a direct economic advantage. The result has been an erosion of our traditional dairy markets by those subsidised competitors. There have been losses in numbers of dairy farmers, jobs, small businesses, investment and Australian-owned processes. It has come at a huge cost, both socially and economically, to communities right around the country.

Any assumption that, by making the concessions first, the rest of the trading world will do the same, as the Rudd government is doing with the CPRS, is wrong. Farmers and exporters continue to carry the cost. Instead we are now seeing an increase in and a return to those subsidies by the US and the European Union. The agricultural, horticultural and viticultural industries will, under this scheme, now also have to compete with imported products from countries that have the advantage of no flow-on costs of production from an ETS.

The Australian Farm Institute and ABARE indicate there will be between 6 to 20 per cent cost increases to our 150,000 business growers, and under this scheme farmers will have no opportunity to participate in carbon capture and storage but will face declines in production and income. The forestry industry has also been excluded from additional fuel cost compensation, and I ask: what future will the Australian agriculture and forestry industries and manufacturers have under the flawed Rudd government CPRS? It should be no surprise to Australian farmers that Treasury modelling has not even considered the impacts on agriculture.

No-one in my electorate should underestimate the very direct impacts the flawed CPRS will have on every industry, business and individual, including the mining and resources sector; manufacturing; all forms of agriculture; forestry; tourism; every small, medium and large business; as well as every home and family. For Australia to implement a flawed, complex, bureaucratic emissions trading scheme which fails to make a measurable impact on reducing global emissions—at the same time as costing Australian jobs, industrial output and investment—will damage the economy and increase the cost of living for Australians. Businesses and individuals in Australia need to be globally competitive and environmentally effective in their emissions mitigation decisions, and businesses need certainty that they will actually still be in business after the introduction of the government’s flawed emissions trading scheme legislation. I support this bill.

Debate (on motion by Mr Brendan O’Connor) adjourned.

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