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

I appreciate the opportunity to explain the government's policy, but at the outset can I completely repudiate the assertion that was just made by the shadow minister that I had made a false statement to the House. That is completely incorrect and I repudiate it entirely. It was completely unsubstantiated.

On 10 July the government announced a Clean Energy Future package. What we announced was accompanied by a very detailed set of materials outlining a host of the policy issues in detail including Treasury modelling and a number of other materials. At its core were a number of elements. One of them was a carbon pricing mechanism. The carbon price mechanism is an emissions trading scheme that commences with a three-year fixed price period, commencing from 1 July 2012, and from 1 July 2015 it is an internationally linked, fully flexible, emissions trading scheme—that is, it links with international carbon markets. I will return to that issue in time to address some of the comments made by the shadow minister.

There were other important elements of the announcement by the government on 10 July. Within that announcement was very strong support for renewable energy and a number of measures to improve energy efficiency in households and in businesses. A very significant element of the package relates to the land sector, carbon farming and the storage of carbon in the landscape. It is a very comprehensive policy package and I do not think anyone could seriously assert that a considerable amount of detail was not provided to the community. I make that point to repudiate the general statement that the shadow minister was endeavouring to make. The policy material is principally contained in the document Securing a clean energy future. Behind it sits a very comprehensive and credible set of Treasury modelling based upon the scenarios that would appropriately underpin a major policy initiative of this nature, representing, as it does, significant economic and environmental reform. All of that material is available to the community and has been published.

It is worth recalling for the moment that this is an emissions trading scheme and it has some features in common with the policy that Labor endeavoured to prosecute in the previous term of parliament. That previous proposal was at one point in time the subject of agreement with the coalition. It included important features such as the international linking of the emissions trading scheme with the international carbon markets. It is embarrassing, in fact, to hear the shadow minister repudiate so much that he stood for in the past from a policy standpoint, having completed a thesis on market mechanisms, including, I think, a set of policy propositions that he has completely walked away from. It is a pretty pathetic thing to see.

The entire policy position that the government announced is underpinned by the climate science. Of course, this is another matter of contention across both sides of politics. The shadow minister professes to accept and respect the climate science, but his party is led by someone who has had 100 different positions on the science and who sends the signal to those in the community who do not respect the science that he is with them. It is the same way that he walks both sides of the street on many different issues. In a formal forum he will say he accepts and respects the science, but when it is appropriate—particularly when he is on radio in Sydney with Alan Jones, his close colleague—he will send a very clear signal that he has no respect for the science, no respect for scientists and indeed no respect for economists, who support dealing with carbon pollution by a market mechanism.

It is always important to come back to the foundation of the science because the opposition has no credible policy to address what scientists are telling us. We always have to bear in mind that the empirical evidence is clear. Last year, 2010, was the warmest year on record, equal with some others. It was the 34th consecutive year with temperatures higher than the 20th century average. The warmest decade on record was 2001 to 2010, and each decade since the 1940s has been warmer than the last. This country, and many others, has a lot to lose from climate change and the warming that we are experiencing. The science is telling us that carbon pollution is contributing to the change that we are experiencing.

It is an international problem. The atmosphere is global; it is not confined to any national boundaries. Australia needs to participate in discussions with other countries about how we will address this problem, because, in particular, Australia is one of the top 20 polluters internationally and the highest polluter per person of all of the developed economies. No responsible government receiving this scientific advice and recognising these statistics has any alternative but to address this issue, in partnership with the international community, by reducing its levels of carbon pollution and driving investment in clean energy sources in its own economy in order to play a responsible part internationally in dealing with this issue.

It is incumbent on any government receiving this advice to act upon it. The government must take these steps to cut pollution, to contribute to international efforts to address climate change and to drive change in our own economy, but to do so at least cost to our economy, at least cost to businesses and at least cost to households. This is precisely what has driven the development of the policy that the government announced on 10 July. A carbon price mechanism, in partnership with the other elements that I described earlier, will drive cuts in pollution in our economy at least cost to the economy, to businesses and to households.

It is a simple proposition, to provide the incentive to cut pollution to the largest emitters of pollution in our economy. Those polluters can reduce their liability under the carbon price mechanism by reducing their pollution. They can do so in particular by improving energy efficiency and investing in lower emissions technologies. It will be particularly important in the years to come to improve the performance of our electricity generating sector with respect to the pollution that is attendant upon electricity generation. The advantage of a cap-and-trade emissions trading scheme is that the government can set emissions reduction targets. In fact, there is supposed to be bipartisan support for a set of emissions reduction targets in this parliament, in this House. The unconditional bipartisan emissions reduction targets that both sides have indicated their acceptance of is a five per cent reduction in pollution by 2020 from year 2000 levels. The carbon pollution mechanism that the government announced on 10 July will deliver at least that outcome, and that represents a reduction by the year 2020 of 160 million tonnes of carbon pollution. That is a very important commitment.

The government has also indicated its intention to establish the Climate Change Authority. It will be chaired by former Reserve Bank Governor and Treasury secretary Mr Bernie Fraser. The Climate Change Authority will have the responsibility of providing advice and recommendations to government on the pollution caps that will operate under the emissions trading scheme so that from 2015, when we commence emissions trading with international linking, pollution caps will be set by regulation by government. The emissions trading scheme will achieve at least the 160 million tonnes of pollution reduction by 2020, but the Climate Change Authority may recommend further emissions reduction targets by that time. Government has the discretion, of course, to act on those recommendations.

The other thing that is important in the development of an approach to tackle climate change and is represented in the policy that the government has announced is, as I mentioned, that we address change within the electricity-generating sector. One of the elements of that that is contained in the policy is the commitment by the government to seek to negotiate the closure of up to 2,000 megawatts of high-emissions, older, pollution-generating capacity in our system. The shadow minister falsely indicates that there has been no provision made for that negotiation in the material that was released; in fact, there is provision. A contingency has been made in the contingency reserve in the budget for that negotiation for the closure of up to 2,000 megawatts of high-emissions capacity. I do not think any responsible government is about to indicate what that quantum that has been provisioned may be. There will be a negotiation should some participants in the energy market wish to discuss that issue with the government, but we are not about to indicate to those players what the government may have provisioned. However, a provision has been made.

A number of other important elements of the policy have also been included. The government has indicated a commitment to establish a clean energy finance corporation and make an equity investment of $10 billion. That corporation could provide loans, loan guarantees or make equity investments in an effort to assist participants in the private sector and bring some technologies to the market.

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