Jon Sullivan (Longman, Australian Labor Party) Share this | Hansard source

I am not actually referring to the Leader of the Opposition in this; I am referring to a policy which I would like to call Mr Abbott’s great big attack. But, if you would like me to do so, I will call this the Leader of the Opposition’s great big attack, which is supported by every member of his side, because they keep repeating it time after time. Cap and trade is not, as the Leader of the Opposition would assert, a tax of any magnitude, let alone a great big one. Let me quote from the Western Climate Initiative:

How is cap-and-trade different from a tax?

Cap-and-trade sets the limit for emissions and lets the market work out the costs of hitting that limit. A tax sets a price for emissions and lets the market work out how much of a reduction in emissions will happen. Both can work if designed and implemented properly, but the challenges are different. A tax provides price stability for those who will pay it, but the environmental benefit is not assured because emissions will not fall if people are willing to pay higher costs. Taxes at the rate needed to send the price signal needed to reduce carbon and spur reduction innovations are difficult to put in place and adjust over time. Cap-and-trade provides certainty of environmental performance but the costs are uncertain and will vary over time.

That is a reference, obviously, to the markets setting the price of permits, which will fluctuate. Finally, they say of cap and trade:

It may be easier to put in place but more challenging to implement.

The coalition’s con job on carbon pollution reduction must have set the lips of the Leader of the National Party and his national cohorts awash with the juice of their tongues. Can you imagine how much they must be looking forward to $2.5 billion of selective funding. The government, it seems, under the opposition’s policy will decide who gets it and who does not, just like the late unlamented Regional Partnerships program shown by the Auditor-General to have been used by the National Party as a slush fund. I imagine the member for Gippsland is particularly keen on this. The Managing Director of TRUenergy appeared on Business Sunday and had some interesting things to say. Firstly, he said that they would need the whole $2.5 billion on offer to replace the three units at Yallourn—that is, every cent the coalition plans to make available. It is a drop in the bucket of what is needed to modernise our generating plants. Secondly, he said that ultimately there will be a well-structured international emissions trading scheme, and he thinks Australia needs to be part of that scheme. So the managing director of Australia’s dirtiest generating plant believes there will be emissions trading but, ‘Let’s hold off so our industry can get some free money from the coalition first.’ When the Leader of the Opposition gets an idea, he certainly gets it wrong.

It has always been acknowledged that cap-and-trade schemes need to work side by side with what are known as complementary policies. These can include: removing market barriers to lower emissions; seeking reductions outside the cap, such as for households and farms; encouraging investment in low-carbon technologies; creating green jobs; lowering the cost of transitioning to a low-carbon economy and so on. These and more are part of the package of bills we are debating today. They are the entirety of the coalition’s so-called direct action plan. Environmentally this is virtually a ‘no action plan’, and mitigating against climate change is all about the environment. Departmental analysis of the coalition plan shows that there will be some modest savings, estimated to be about 40 million tonnes of greenhouse gases in the year 2020. But emissions will have continued to rise to a point of 13 per cent above 2000 levels. With a modest target of five per cent below 2000 levels, the ETS will have a more robust saving of 139 million tonnes of greenhouse gases. Importantly, emissions will be on a downward trajectory. The words ‘direct action’ may play well with the community but they are code in this case for ‘no action’ and households will pay dearly for that inaction.

There is of course serious concern amongst the business community about the coalition’s plan. I will take one quote from Nathan Fabian, chief executive of the Investor Group on Climate Change, which represents AMP Capital, Goldman Sachs, JBWere and others:

If you don’t send clear signals to business and investors, with a cap on emissions and a framework for pricing emissions, you do not get a lot of action.

People like to follow the money trail when trying to solve a problem. Let us follow the money trail on the government’s ETS. Firstly, in the government ETS, the polluters buy permits from the government. The government uses that money to compensate householders by passing that money on to them so that they can pay for the higher prices that may arise. The opposition’s direct action plan would take money from the budget, money that they would have received from taxpayers, and give it to polluters, with no money going back to householders. The difference between the two schemes is that emission reduction in the government scheme is paid for by industry; emission reduction in the coalition scheme is paid for by householders. (Time expired)

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