David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to say some cautionary words about the Safeguard Mechanism (Crediting) Amendment Bill. I fear that this will lead to further de-industrialisation of the Australian industrial base and lead to a further reduction in the amount of productive agricultural land being taken up so that people can get Australian carbon credit units at the lowest possible cost. You will find that industrial giants will buy up agricultural land because it's the cheapest way to generate Australian carbon credit units, let alone the new safeguard mechanism credits.

The coalition government commenced the safeguard mechanism as part of the Emissions Reduction Fund under the Direct Action Plan. Entities with 100,000 tonnes of scope 1 emissions would be liable to pay a fee if they breached their allowance. This includes companies like our airlines Virgin and Qantas; fertiliser plants; smelters for nickel and other metals, like aluminium; ammonia production; LNG plants; and coalmines. It is going to affect all the industries that deliver our energy and minerals. It will be a major risk and cost to them, such that many of them will become unviable and will shut. They'll keep the Australian name and the Australian business, but they'll just import goods that they would have otherwise made in Australia and then make their money from retailing it. The countries that these industrial processes will be shifted to won't have the environmental standards that we have. We have seen so much of our manufacturing move offshore to other countries in Asia—with China being the biggest—that don't have as strict environmental standards as Australia has.

The intent of the amending provisions of this bill is an emissions reduction program on steroids. Reducing your footprint by 4.9 per cent—basically five per cent—per year, every year, is a huge industrial process because the physical entity has no other way to make the product that they're producing. As recently as 2021, there were 212 facilities that produced 137 million tonnes of CO2, which is only 28 per cent of total emissions. This bill, which will amend a cluster of existing legislation—the National Greenhouse and Energy Reporting Act 2007, the Australia National Registry of Emission Units et cetera—will affect all these large entities.

For instance, airlines only operate because of jet engines. I don't know how existing jet engines are going to improve their efficiency by five per cent every year, year on year. It means that we'll all have higher airline fees. The Tomago aluminium smelter, across the river which forms the border of my electorate, sells its aluminium based on the price that aluminium goes for at the London Metal Exchange. They can't just add their costs on top of the cost of production. If they don't meet the market price, they don't get the sale, and they are going to be under huge pressure.

We need fertilisers being made in this country. We are an island on the bottom of the earth, and we need to have sovereign manufacturing capability in so many things. The modern industrial world has been made on ammonia, on chloride, on liquid natural gas, on steel and other minerals being smelted and on concrete being made. In Australia, we have entities that for decades have done this. We industrialised after World War II so that we wouldn't be caught as we were in World War II, when we were dependent on Britain for a lot of our manufactured goods. That's why we built our power stations, so that we could make things and make ourselves independent. It is why we search for oil and gas and why we built power stations in the Hunter, up in South-East Queensland, in the Latrobe Valley in Victoria and around the place, because we wanted to make stuff.

The good members on the other side are all for making manufacturing, but you're not going to have any manufacturing growing or even existing if your business is sent to the wall financially. The essential entity that runs through all manufacturing is the cost, availability and reliability of energy. Industrial processes don't run, like an office, from nine to five. They run 24 hours a day. All those things that I've mentioned are businesses that have to operate 24 hours a day, and their cost of electricity is going up because our electricity system is becoming more and more reliant on low energy density that's randomly available, producing direct current that needs to go into an alternating current system, and that integration of random variable renewable energy sources is incredibly expensive. The generation of the electricity at the solar panel or at the wind farm, at that very spot in time, is cheap, and it would want to be cheap, because it's only available 20 or 30 per cent of the time at best. This bill will mean that all those businesses will be under huge pressure, and the knock-on effect will affect agriculture, because our fertilisers will cost more. They will have to come in from overseas. A lot of our manufactured goods, the bulky things, will have to come in from overseas, and that is the natural result of putting up the cost for these huge businesses.

In agriculture, a lot of farms that are highly productive whilst they're worked are family owned or small businesses which will find that they are offered incredible prices by industrial entities who are buying land to generate Australian carbon credit units or the new safeguard mechanism credits, which are defined in this bill. There are all sorts of ways that we can offset emissions. There's an obsession with growing native forestry, but it will not be efficient if you shut down a productive farm to let it go to native forestry and trees.

Admittedly there are plenty of good farming entities which on the face of it go through a difficult period—a drought or a flood—and it gets all too hard. They're privately owned, and I can't begrudge a farmer who has no next generation that wants to take up the business or no-one locally that's prepared to pay what these big industrial entities will pay for agricultural land. Good luck to them if they sell, but we're getting dairy farms that are being shut down, good beef production—even sugar cane has a lot of land that could be put into generating safeguard mechanism credits and Australian carbon credit units.

We are also getting assaulted in agriculture with credits for biodiversity, which are limiting the viability of the farm in the long term if too much of their productive land is being put into biodiversity. Some of the people in my area who generated carbon credit units by soil organic carbon farming found out in the floods a lot of the organic carbon leached out of their soils, and now they owe money to the crediting mechanism. So it's a double-edged sword. Generating locked-up farms that were productive will not help anyone; it will mean we won't be making as much food and fibre, if that is indeed the case, and lots of people are saying the same thing: it's going to be inevitable, because to reach this 4.9 per cent reduction each year there will have to be lots of safeguard mechanism credits generated and plenty of existing Australian carbon credit units that will be used up.

The primary legislation will need legislative instruments or secondary legislation, which will be determined by the minister. So it's starting at 4.9 per cent, but the current government, who are obsessed with thinking they're going to change the planet by doing all these things, could easily ratchet it up in subsequent legislative instruments. The methane pledge is also facing agriculture, which in other countries has led to blanket ordinances instructing people to reduce the size of bovine herds by up to 30 per cent. Even one state in Australia are already auditing herd size so they can document it, which is a pre-runner of producing an edict saying you have to reduce the size of your herd.

Already in the last year one billion litres less milk has been produced in Australia. Prices being paid for milk are going up. This is a retreat away from an industry that used to have 15 or 16 billion litres of milk a year and is now down into single digits, and I'm afraid we will end up importing even simple milk and dairy products from across the Tasman or from other countries in Europe or North America, when all these people with productive farms, running huge herds of either beef or cattle for meat or for dairy, are faced with the unenviable decision to sell off to someone bidding a whole lot more than other agricultural concerns.

The idea of carbon credit units is a bit like buying indulgences, which were part of what caused the Reformation. People could commit any number of sins, and you went off to the bishop or the Pope and you bought what were called indulgences so you got off scot-free. This carbon trading mechanism is exactly the same logic. You can have a factory spewing out things that are bad for the atmosphere either here or anywhere in the country, and you'll be hit with a bill. In the bill the maximum fine might be actually $41 million a year. That will come straight out of profit, so that's why I say a lot of these big industrial players will be forced to look at taking back agricultural land, all to get their carbon credit units or safeguard mechanism credits—their indulgences, modern-day indulgences.

Seriously, we are dreaming if we think what we are achieving is far more than our portion of what we generate for the world. We're a country of 25½ million people but we produce food for 120 million people. We produce raw energy that feeds and runs the industry of Japan, Korea and other countries in Asia—Malaysia, Indonesia. Even Ukraine has kept its lights on with our raw energy. But these sorts of businesses that have lifted people out of poverty by allowing their countries to industrialise, like we have done for Japan—our first export of coal to Japan was in 1864, and we have been supplying about 70 per cent of their electricity-generating coal for decades. But this bill will have ramifications for our neighbours and allies who rely on our energy as well as our food if we've got one side of the legislature trying to grow agriculture and production and manufacturing, and the other side shutting it down.

We've all got to be on the same page and realise the consequences of this bill. It will have consequences. Good members on the other side may not think it, but, sure as eggs, so to speak, it will happen, and it will be counterproductive to the wellbeing of this nation. Sorry to disappoint you, but I don't think this is a good bill. Go back to the beginning and work out a better way.

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