Jenny Ware (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on this bill, the Safeguard Mechanism (Crediting) Amendment Bill 2022, which purports to revise the safeguard mechanism applying to Australia's largest emitters to achieve net zero carbon emissions by 2050. The safeguard mechanism has been designed to accommodate the unique circumstances of the electricity-generation, transport and waste sectors. I was present in the House today when the member for Blair called those on my side a disgrace, on a number of occasions, for our purported failure to support action on climate change and on this legislation. I would just say this on that point: having spent most of my professional career before entering this place as a planning and environmental lawyer, I am particularly interested in this proposed legislation. The coalition does support action on climate change. I support action on climate change. In my first speech in this place, I said:

… climate change … is one of the leading contemporary issues facing our country and our world. It is important, though, to remember that when we are talking about climate change it is not just about the climate. It is about the environment. It is about the local environment—the parks, the waterways, the green spaces and biodiversity.

My approach to this is through traditional conservative and Liberal pathways, using the markets to incentivise businesses to innovate to address both our climate change and the environmental issues facing our nation. As we transition to new technologies and a new economy, we must maintain affordable and reliable energy to Australian households and businesses, and, in that vein, those on my side of the House did not necessarily support the climate change legislation because of the specific 43 per cent mandate. It was not properly explained by the Labor government then as to how they would get there, and this legislation today also demonstrates some intellectual laziness in its approach. I'll talk about that as I go through this legislation. Furthermore, I attended COP27 last year at the invitation of the Coalition for Conservation to understand how other countries throughout the world are moving towards net zero; how industries, farmers, governments and the private sector are moving towards net zero; and how a government can facilitate those industries and businesses to do that in Australia. For the member for Blair to assert that none of us on this side are interested in climate change is completely disingenuous.

The current position in relation to the safeguard mechanism environment in which we find ourselves is that it commenced operation on 1 July 2016—that's right, under a Liberal government, under a coalition government. To date, it has operated as a greenhouse gas emissions reporting mechanism for around 212 of Australia's largest industrial facilities—that is, facilities that emit more than 100,000 tonnes of carbon dioxide equivalent in one year. The scheme at the moment applies only to covered emissions, which are defined as scope 1, or direct emissions, including fugitive emissions and emissions from fuel combustion, waste disposal and industrial processes such as cement and steelmaking. Some scope 1 emissions are not covered by the current safeguard mechanism legislation. These include, for example, legacy emissions from the operation of a landfill facility, emissions which occur in the Greater Sunrise unit area or joint petroleum development area, emissions from the operation of a grid connected electricity generator in a year covered by the sectoral baseline and emission not currently covered under the National Greenhouse and Energy Reporting (Measurement) Determination of 2008. By implication the definition excludes scope 2 and scope 3 emissions which are indirect emissions such as emissions from the use of sold products and services. Therefore, at present, if a facility's scope 1 emissions exceed its baseline, the facility can apply for a new baseline or surrender carbon offsets, which for these purposes I will call ACCUs, to offset emissions or apply for a multi-year monitoring period or for an overall exemption.

An increasing number of facilities—and as at the time of giving this speech we are now at nearly 19 per cent—are now covered by a multi-year monitoring period. This allows a facility to reduce average net emissions over a two- to three-year period. In practice, however, the mechanism applies to facilities mainly in the electricity generation, mining, oil and gas, manufacturing, transport, construction and waste sectors. The mechanism does not apply to smaller enterprises that fall below the reporting threshold currently in the NGER Act. There are also four categories of statutory exclusion from the mechanism 1. The bill purports to amend relevant other legislation to alter the safeguard mechanism so that covered facilities must reduce their scope 1 or direct emissions into the future. This bill at the moment provides that key elements of this scheme will be implemented via amendments to existing legislative instruments made by the minister. This is important as it's talking about changes being made simply through regulation rather than coming back to the House for legislation and consideration, and that will mean that it will bypass the other place in terms of its scrutiny.

While I and many on this side of the House support changes to support our industries, our organisations, our people and our country to move towards net zero, there are concerns with this specific legislation, expressed not only by the coalition but also by key industry stakeholders. Indeed, one part of the member for Blair's speech that I did agree with was that even the Greens party are not supportive of this legislation, albeit for very different reasons. Particularly, I have no idea what impact this will have on businesses and industries in my electorate of Hughes. That is because the Labor government has not identified the cost of this legislation to businesses, to our economy and to our people. While I support a debate being held on the question of how we balance the need to reduce emissions to reach a cleaner future, we must balance this against how Australia also remains strong, prosperous and independent.

In government, the coalition, through its introduction of the initial safeguards mechanism legislation, achieved its targets and the economy grew. It grew up to 23 per cent in the nine years the coalition was in office. For example, we met and exceeded Australia's Kyoto targets. We signed Australia on to achieving net zero by 2050. We reduced our emissions by over 20 per cent on our 2005 base level, putting Australia well on track to beat our Paris treaty commitments. After almost a decade of emissions reduction being balanced with economic growth, Labor is now rushing to impose this bill, which could lead to drastic cuts on Australian businesses.

The safeguard mechanism has been working well for years as a system to cap emissions while allowing our economy to grow. Now Labor proposes to change the purpose of the scheme to one that stops emissions by encouraging businesses and backing technology to a scheme that penalises businesses and instead backs greater taxes. The coalition in government supported a trading system that rewarded businesses that voluntarily reduced their emissions. Again, this was very well supported by businesses, so I'm still perplexed as to why the member for Blair said that we did not engage with the business community. The coalition's plan for the safeguard mechanism was to create incentives and support businesses that made the transition to net zero. This is what governments should be about—facilitating an environment where businesses and individuals can move towards net zero.

Despite the strongest economic headwinds in decades, and having already whacked businesses with higher energy prices, businesses will also now be hit with what is in fact a carbon tax, if this legislation is successful. By pricing carbon dioxide at $75, Australia will have a price that is three-times higher than the one set by the previous Labor government, and it's set to rise to $100 by 2030. This could lead to Australian businesses becoming very uncompetitive. Many of our trading partners do not have a carbon tax at that level. Many of our trading partners and international competitors for key industries—this includes cement, copper, coal, gas and iron ore—do not have any national carbon pricing scheme in place at all. This can only then cause our businesses, our exporters, to struggle to compete in these markets. This not only means less export revenue; it means less investment and fewer jobs for Australians.

The government in Australia has already hit Australian households with higher costs of living, and this legislation shows that it is determined to hit them again. The carbon tax could well lead to higher building material costs, higher fuel costs and higher transportation costs that will hit our supply chains, including the food we source from regional Australia. The coalition understand Australians want action on climate change. We support action on climate change. But we in this house, as we vote on this legislation, and Australians in general deserve to know what costs we are all facing under Labor plans. Again, this is another part of this bill that has remained silent.

It should come as no surprise, but in Labor's rush it has provided no evidence of the impacts of its policy to introduce a carbon tax by reforming the safeguard mechanism. A major reform, like the proposed changes to the safeguard mechanism, means that Australians deserve to know the impacts. So why then is the Labor government keeping the Australian people in the dark? For example, Labor failed to get Treasury to model the impact of this policy before pushing it on Australian industry. On the economic impact of this policy, Labor has again been silent. Australians are not being told how this reform will affect them. The government has claimed that industry supports this policy, but the same government claimed industry supported its industrial relations reforms because they attended its jobs summit.

What we do know is that many of the industries covered by the safeguard mechanism have strong concerns about many aspects of Labor's policy. Key parts of Australian industry such as producers of cement, steel and aluminium are large employers, but these businesses are in hard-to-abate sectors. These are the industries that have been ignored by Labor. Just this week, for example, the CEO of the freight company Aurizon highlighted the perverse incentives in Labor's policy. It has the potential to increase rail freight costs to the point where road transportation becomes cheaper, even though it has a higher emissions intensity. Again, this shows that Labor has not done its homework on this legislation. It shows it has not properly assessed these issues, particularly the potential financial impacts on Australians.

Senate estimates recently confirmed that the government has not undertaken any assessment of the impacts of the policy. Labor did not model the economic impacts of its policy on investment, jobs and growth, and Australians will be the ones left to pay. There is no modelling, for example, of the expanding credit market the government wants to use. There is no assessment of demand for carbon credits or their price. What we do know, though, is if the demand for carbon credits exceeds supply, Australian businesses will be slugged with a $275 penalty per tonne of carbon dioxide.

Therefore, to conclude, the coalition is supportive of moving to net zero. The coalition is not supportive of a lazy bill where the work has not been done to advise Australians on the financial impacts. Thank you.

See this speech in context