Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Hansard source

Firstly, I start with the issue of the integrity of some of the positions that have been taken in recent times by various actors in this debate, since the member for Flinders certainly brings them into question. In particular, let’s have a look at the positions that have been adopted by the Leader of the Opposition on the issue of climate change and responses to it over the last two years or so. The member for Warringah has in fact, on our count, had least eight different positions during that period on the issue of a carbon price. Firstly, he supported the former Prime Minister John Howard’s decision to take an emissions trading scheme to the 2007 election. Secondly, he supported, at various times, the passing of the Rudd government’s Carbon Pollution Reduction Scheme. Thirdly, he adopted a position to oppose an emissions trading scheme. Fourthly, he went on the record at one point, on 29 July 2009, and supported a carbon tax. Fifthly, the member for Warringah, the Leader of the Opposition, at one point, in order to usurp the leadership of the member for Wentworth, decided that this was all about politics and that climate change was absolute crap. Sixthly, he then decided that an emissions trading scheme was sensible policy and said so on 4 October 2009. His seventh position was to challenge the former Leader of the Opposition, the member for Wentworth, in November 2009, for the reasons that I described earlier—that is, to use the issue to usurp the member for Wentworth’s leadership of the Liberal Party. We are on the current position where the member for Warringah is again opposed to a carbon price and, in partnership with his shadow minister, the member for Flinders, is trying to beat up a scare campaign. All we have heard is the recitation of various attempts to scare people—a doubling in electricity prices, and the like—that is completely unprincipled.

There is a very important basis for climate change policy, and that is the climate science. We must never lose sight of it in the context of these debates. The fact of the matter is that climate scientists internationally are telling us that carbon pollution is contributing to climate change. Professor Will Steffen, who was advising the government’s multiparty committee considering a carbon price mechanism, has made a presentation, for example, to the committee on the basis of his broad review of the climate science—that there is 100 per cent certainty that temperatures are increasing and 95 per cent certainty that human activity, through the emission of carbon pollution, is contributing to that warming. In fact, 2010 was the warmest year on record, equal with 2005 and 1998, and the period 2001 to 2010 was the warmest decade on record. In fact, 2010 was the 34th consecutive year with average global temperatures above the 20th century average.

This country stands exposed to the impact of climate change, as we have heard on many occasions. There is a public policy responsibility on the part of any government to respond appropriately to the findings of the overwhelming majority of scientists. The 2010 Intergenerational report highlighted the fact that, without action to combat climate change, Australia’s GDP will fall by eight per cent by 2100. We all know from the economic analysis that has been conducted by many players, including Professor Garnaut—who is updating his review at the request of the government—that the cost of not dealing with this issue is going to be far greater than any immediate cost that we confront. There is a mammoth amount of evidence to support that contention. The member for Flinders valiantly puts this rather irrational but completely irresponsible position on behalf of the coalition and the Liberal Party but in circumstances where—and I certainly suggest no derogation of his integrity in relation to this—in his past, having worked at university, he had written a thesis on the importance of market mechanisms in response to climate change. This is the appropriate form of response that we need to consider.

The Australian economy is an emissions intensive economy. In fact, over 80 per cent of our electricity supply is generated through coal fired electricity sources, and any attempt to deal with climate change and reduce pollution in our economy has to attend to the reality of our energy generation sector. That is an issue that I will come back to shortly. In our country we are the highest per capita emitters of carbon pollution in the world. We emit about 27 tonnes of carbon pollution for each person in our country, whereas two-thirds of the world’s population emits less than seven tonnes per person. To deal with this issue requires a significant economic transformation. When one looks at such a requirement, such an obligation, such a public policy responsibility on the part of any government, one must go about it in a way that provides for the least cost to our economy and to our community. A carbon price that is based upon a market mechanism is unquestionably the cheapest and fairest way to cut carbon pollution and drive investment in clean energy. It is also important from the standpoint of providing certainty for investors in important sectors of the economy, including the energy generation sector, so that they know, with long-lived assets, what the rates of return are likely to be. They need the certainty in the energy sector in particular of a carbon price to unlock the investment that is going to be necessary in the long term.

During question time I referred to an important report that was released by the Australian Industry Group and, no matter what observations are made about how I presented it, the simple fact of the matter is that the report indicates very clearly that, with or without a carbon price, electricity prices are going to go up. They have gone up over the last few years by approximately 40 per cent. Projections are that they will go up significantly in coming years and it is fundamentally because of the fact that significant amounts of investment are going to be needed—they are needed now—in order to upgrade our electricity distribution network and ultimately to contribute to new generation capacity, particularly of a low-emissions nature. The estimates from the Australian energy market operator are that around $120 billion is going to be needed over the next 20 years to meet that investment demand. In long-lived assets there must be certainty for investors to invest and for bankers to provide finance. It is a universally held position in the energy sector, and a very widely held position across the Australian business community, that a carbon price will be needed to provide the certainty for that investment. The point that is made in the Australian Industry Group report, and that the government has been making for some time, is not as was misrepresented by the member for Flinders a short while ago—that electricity prices are going to go down; they are not—but that a carbon price will mitigate the extent of the electricity prices that will occur in the future because of these investment pressures in the energy sector.

The alternative policy position from the coalition is quite an absurd one. We have a Liberal Party that is divorced from markets. The Leader of the Opposition’s question during question time demonstrates that he does not understand how markets operate. The so-called direct action policy that the coalition has been advocating will be more costly. It is not a market mechanism and it will be more costly to taxpayers. It has to be funded directly off the budget and it will not be environmentally effective. It will not achieve the reductions in greenhouse gas emissions that are going to be necessary for Australia to make the economic transformation that is necessary in the longer term to ensure our long-term competitiveness and it will not make the emissions reductions that are necessary for Australia to play its responsible part in the international community to try to deal with this diabolically difficult problem of climate change. They do not have a credible policy on the other side of this House.

I would like to refer to some of the views that the member for Wentworth has indicated on a number of occasions about the various policy approaches, specifically in relation to market mechanisms. When you are talking about cost, as this MPI is endeavouring to do, it is critical that the least cost, most efficient method for pricing carbon in the economy is adopted. This is what the member for Wentworth had to say on 22 July last year about the coalition’s policy:

The Coalition’s policy is not the ideal from my point of view I grant you that—I’d like to see a market-based solution.

The Treasury in the incoming brief for the government said the following about the coalition’s policy:

Direct Action measures alone cannot do the job without imposing significant economic and budget costs.

We have done some analytical work on what the coalition’s policy may cost taxpayers in direct fiscal impact on the budget—and we are talking tens of billions of dollars—in an effort to try to reach the bipartisan targeted reduction of five per cent in greenhouse gas emissions by 2020. That is a completely irresponsible position. It is inefficient, it is high cost and it involves government picking winners to try and choose projects. Just imagine the National Party getting into that business. It is a completely irresponsible policy stance and one which completely undermines any credibility to an attempt to attack the government over the cost of carbon pricing.

On that front, the government has established a process which it is engaged in with representatives of the Greens and independent members of the House of Representatives. We have invited representatives from the coalition. The Leader of the Opposition has refused to participate in the process, but obviously it would be preferable if there were a bipartisan approach to the issue of carbon pricing, and we would continue to welcome it if that were achievable. However, we are in a process where we are discussing a carbon price mechanism that would have the capacity to pass both houses of this parliament so that we can start to make this economic transformation and reduce our greenhouse gas emissions—our carbon pollution.

As a government when we have prosecuted this case previously, including in discussions with the member for Groom, who is sitting opposite me—and I have high regard for the efforts that he made in discussing with the government on that occasion the Carbon Pollution Reduction Scheme—the evidence has been very clear: any Labor government is certainly going to do what it can to ensure that those who are most vulnerable, pensioners and low-income households in particular, are able to deal with any cost pressures that emanate from carbon pricing. The government has a very strong record in this regard. We have made a number of changes that are extremely important for the working people of this country. We have had three successive years of reduced tax burden on families. We have increased the childcare rebate. We have significantly increased the pension. We have introduced the education tax refund. We are delivering an increase of $4,000 in family tax benefit part A. We are extending the education tax refund to uniforms. We are exploring a whole pile of other options. We have introduced paid parental leave for parents. These are all extremely important ways of supporting Australian working families.

Our record, in relation to the Carbon Pollution Reduction Scheme arrangements, is that significant assistance measures were put in place to assist those who needed the most help. In the process of considering the design of a future carbon price mechanism, we are going to be motivated by the same values—and that is what it gets down to. There is a public policy response here to deal with climate change. The scientific evidence is very clear that we have that responsibility, and we will act upon it. We are endeavouring to prosecute the case through this parliament to achieve a market mechanism to price carbon in our economy, because it is the least cost, most efficient way of achieving reductions in carbon pollution in our economy. And, because of the values that a Labor government has, we will be providing all the support that we can to those who need it the most in the process of any change.

Finally, in relation to the electricity sector, it is vital that we price carbon to unlock the investment that is necessary in the future. The simple fact of the matter is that, until we are able to do that, investment will remain stalled in the energy sector and prices will rise due to that lack of investment. Under the coalition’s approach to this issue, all of that will take place and they will provide no assistance to households whatsoever. The contrast with the government’s approach is stark. The government has the appropriate policy response. We are working through and are committed to it, and I once again invite the coalition to wake up to the issues. (Time expired)

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