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

I thank the member for his question. This is where the coalition tries to have it every way, of course. On the one hand it is doom and gloom and terrible. I think the Leader of the Opposition today was forecasting the price to go up, and so on, but on the other hand, when it is politically suitable for them, they try to point to the price falling and therefore holes in budgets and all the rest.

We have confidence in the Treasury modelling, and that is reflected in the budget. I was reminded today in question time in relation to this issue, when the member for Flinders was googling the European Union allowance prices, that in fact in July 2008 the European unit price was, I think, A$56 a tonne just prior to the global financial crisis. It is an emissions trading scheme, it is a market price that is set. Of course, the carbon price mechanism that we have implemented will migrate to a floating price, a market price, from 1 July 2015, and the market will set the price. The Treasury has modelled that, in one of the most comprehensive modelling exercises undertaken for a public policy change, at $29 a tonne in 2015-16. We have confidence in the modelling. If the member for Flinders is a derivatives expert on carbon markets, that is great. However, to be suggesting at this point in time that, in three years, we will still have low prices in Europe is a pretty big call, for a number of reasons. One of them is that we would all share the hope that the current debt crisis that is being experienced throughout the European zone is resolved as expeditiously as possible. That debt crisis has affected many markets, including the carbon market in the EU. I know, through consultations that I have with the EU in relation to this issue, that there is a great degree of concern about that and the need to resolve the debt crisis and restore confidence and stability to markets in Europe, including in relation to the trading of European Union allowances.

The government has already announced that we are in consultation with the European Union about the potential for ultimately linking the two schemes, which would be an important policy initiative—it is the largest carbon market in the world. The European Union scheme goes into a third phase in the not-too-distant future. There is a lot of discussion in Europe about the application of that phase and whether there would be contemplation of measures to support the price in the EU ETS as part of those changes. That is a matter for the European Union to deal with. The point that I am endeavouring to make is that 1 July 2015 is some period away, and we certainly anticipate that carbon prices and international markets will recover. By the time that we migrate to a floating price, from 1 July 2015, I think the Treasury modelling is going to prove to be as sound as the confidence we have in it.

Proposed expenditure agreed to.

Treasury Portfolio

Proposed expenditure, $4,441,842,000.

See this speech in context