Julie Owens (Parramatta, Australian Labor Party) Share this | Hansard source

I can see you guys are still living in the past. We in Labor are not the opposition. We make sure that families are looked after. We have made sure that if there is an increase in the CPI a compensation package will be in place, in full, for low-income families and to support the vast majority of families.

This new world of climate change with all its new acronyms—RETS, ETS, CPRS—is very hard economics. Its sophisticated and simplified explanations do not do it justice, but I am going to attempt today to explain the basics because I do know that there are still many people out there who are not familiar with the basics. For 200 years through the industrial age, manufacturers and electricity producers have spewed their waste into the atmosphere. We all know that. In fairness, for many years they probably did not know they were causing a problem, but they were. It has now reached a stage where the whole world will bear the costs of the damage done by the waste. If it is not borne by us, it will be borne by our children.

All the economic theories say that if those businesses had been required to pay for the cost of cleaning up their waste when they were producing it they would have found ways to reduce it, and cleaner forms of manufacture would have become more competitive and consumers would have looked around for cheaper options. You could say that, because they have not had to pay for the cost of waste removal, their prices have been lower than they should have been and we consumers have been paying less than we would have if waste removal was in the price.

The CPRS does two things, and that is why it is called a cap-and-trade scheme. First, it sets a cap on the amount of emissions that we as a nation can make. It does that for the biggest polluters—not for everybody, but for the biggest polluters. That cap reduces over time. It has to do that because we have to stop increasing our emissions and instead reduce them in order to have an impact on climate change. Without a cap and without reducing emissions, temperatures will continue to rise. That is why our plan will be effective and the opposition’s plan is pure nonsense.

The carbon price, as we call it, is actually the price of the permit. The polluters can use the permits themselves or they can sell them or buy more if they choose. The additional cost to production will encourage companies to reduce their emissions. If the price of permits is high because the demand is high, that will encourage even more businesses to find ways to reduce their emissions, to reduce their costs or to free up permits for sale at a high price.

Meanwhile, the government will use some of the money from the permits to compensate families and to ease the transition for industries that are exposed to international markets. But the real advantage of the price on carbon is that it encourages innovation to reduce emissions, which is necessary. It stimulates investment in alternative technologies. Government, through the kind of direct action suggested by the opposition, simply does not achieve that. Climate change is a problem that needs real action and only the government plans that action. (Time expired).

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