Bridget Archer (Bass, Liberal Party) Share this | Hansard source

Back in August last year, during the second sitting week of the brand new parliament, I supported the government's Climate Change Bill for a number of reasons, including the fact that we must reasonably do what we can as a country to cut emissions while taking advantage of the economic opportunities that exist for our country. When supporting that legislation, I also made it known that while I agreed with the goal of supporting more ambitious emissions reduction targets my views on how we might get there may differ.

Having reviewed this legislation very closely and methodically over the past few months, and consulted with relevant stakeholders, I have come to the conclusion that, although I won't be voting against it, I can't yet support it in this form as there are a number of concerns that have not been adequately addressed. I think my record in this place is a clear demonstration that I consider legislation that comes before me thoughtfully and that I always try to act in the best interests of my community. But I am concerned that the Safeguard Mechanism (Crediting) Amendment Bill 2022, in its current form, leaves too many questions unanswered, and I'm uncertain about where it's going to land, so I don't see any alternative but to reserve judgement at this stage.

The safeguard mechanism, a coalition scheme originally introduced in 2016, is intended to be strengthened through this legislation to ensure that our biggest polluters are reducing emissions in line with our legislated targets. However, I don't believe that the original safeguard mechanism has achieved the goal it set out to, with emissions by our 215 biggest carbon polluters growing by seven per cent. The existing safeguard mechanism is not adequate or consistent enough to support the now legislated 43 per cent target. In this case, something is broken and we should seek to fix it. But I'm disappointed that the government has not sought to strengthen the legislation before presenting it to members of this House. I frankly believe the House is being used as a rubber stamp rather than the government seeking to undertake genuine efforts to negotiate before this bill gets to the Senate. We all know there remains quite a lot of uncertainty about what the Senate might do, and I was hopeful that by the time we got to this point we may have brought all sides together—but we're not there yet.

At first glance, the mechanisms proposed under this legislation provide a sensible pathway forward towards decarbonisation. At its very core it is consistent with Liberal values by avoiding heavy-handed government intervention in favour of a market based mechanism. That approach is also one that has the broad support of businesses across Australia from the manufacturing, resources and heavy industry sectors. Many companies in these industries have already set bigger emissions reductions targets than government. Industry has been leading the way for years, and this legislation provides another tool towards supporting their goals. Many of our major industries are already far ahead in meeting their own carbon goals and will be wanting to make further investments to meet these goals.

I want to recognise the significant support the safeguard mechanism has had from a broad range of industries. In January the Business Council of Australia came out in support of the legislation, stating that the safeguard mechanism is a crucial tool in Australia's ability to accelerate the decarbonisation of the economy while remaining internationally competitive and the government is right to ensure that it works as effectively and simply as possible. The Australian Chamber of Commerce and Industry has also welcomed the proposed changes to the safeguard mechanism to drive down carbon emissions while providing business with much needed certainty. 'The safeguard mechanism will play an important role in assisting Australia to reach its 2030 emissions reduction target and net zero by 2050,' ACCI Chief of Policy and Advocacy David Alexander has said. 'The 215 largest facilities covered by the safeguard mechanism should be doing their fair share of the emissions reduction task.'

The Australian Industry Group have also thrown their support behind the legislation as a step forward. AIG CEO Innes Willox has said that 'The crediting bill is essential policy infrastructure and it's strongly in everyone's interests to pass it.' Furthermore, the key lobby group for gas, the Australian Petroleum Production and Exploration Association, are supportive of the legislation, as are the Minerals Council of Australia, with CEO Tania Constable stating that 'the parliament must maintain Australia's competitiveness and lower emissions. These are vital for driving investment, economic growth, and increasing prosperity.'

Over the past few months I have had many conversations with industry about what these changes might mean for them. In my electorate in northern Tasmania, Rio Tinto's Bell Bay aluminium smelter is one of the 215 companies that will be affected by this legislation, and one of five in Tasmania. The smelter is part of the Bell Bay industrial precinct just outside Georgetown, which produces 59 percent of Tasmania's manufacturing exports. As the former mayor of the town and now the federal representative, I understand how important the smelter is to the economy, providing hundreds of jobs and more than a thousand indirectly.

Looking ahead, understanding that a cleaner, greener future is inevitable, Rio Tinto signed an memorandum of understanding with the Tasmania government last year. Rio Tinto agreed to prepare a business case for the production of hydrogen on site with the aim of replacing existing supplies of natural gas. It is the opportunities for a greener future that have prolonged the future of this smelter. In regard to the safeguard mechanism, Rio Tinto is supportive, albeit with some caveats, which I will go into shortly. They have publicly stated their support for the reform, stating the government's climate ambitions align with their own commitment to net zero emissions by 2050.

I do note that while there is broad general support for these changes, it's not unanimous. I've had direct conversations with industry groups who have expressed concern over the financial impacts some aspects of the mechanism will have, particularly in regard to the decline rate. The ability for some businesses to deliver 4.9 per cent reduction, particularly in the first year, will be quite challenging and will create an additional financial burden. I know that these industries, including Rio Tinto in my backyard and Cement Australia, who have a significant facility based in the member for Lyons' electorate, have raised issues with the government. I am signalling here today that their concerns must be addressed through the relevant regulation. I note that an additional $600 million will be available to support investments in decarbonisation. I do think, though, that the decline rate is challenging, though manageable.

However, I strongly believe that in order to achieve the ultimate goal of reducing emissions and to strengthen the intended outcomes, the onus is on the government to bring the industries with them for the best outcome for the environment and economy. I also have some of my own concerns, particularly around allowing any big carbon emitters who exceed their baselines to maintain compliance by purchasing any combination of Australian carbon credit units or the new safeguard mechanism credits. The unlimited use of offsets is not sustainable, and offsets should only be used as a last resort. Big carbon emitters must be incentivised to prioritise genuine efforts to decarbonise, and I share the concerns of others in the House who have raised this issue. I agree with the member for Wentworth, who has said, 'We cannot offset our way out of the climate crisis.'

Then there are concerns I have regarding the seeming overuse of or overreliance on Australian carbon credit units, which have a legitimacy issue in the eyes of the public. Though I note that this legislation proposes a new type of credit, safeguard mechanism credits, to operate alongside ACCUs, this appears flawed, as it will allow facilities exceeding their baselines to maintain compliance by purchasing any combination of SMCs and ACCUs, potentially leading to a situation that encourages a reliance on ACCUs, which remain cheaper, and pushes out the need or incentive for facilities to purchase SMCs.

I applaud the efforts by the member for Wentworth and other crossbenchers to be constructive in their efforts to strengthen this bill, and I'm utterly exasperated by the lack of engagement from my own side to come to the table and engage in a constructive conversation about how the safeguard mechanism could be improved. It is an approach that is going nowhere. From the debate that I've heard across this chamber, the opposition to the legislation seems to fall in two categories: it goes either too far or not far enough. My fear is that this inertia will also lead us nowhere.

With such a divide, where does this end up? Our communities, and certainly my community, have an expectation that we as parliamentarians should collaborate and improve what is put in front of us. We should not just support or oppose it for political purposes; instead we should seek to adjust the legislation to get the best outcomes for our communities and the country. All parties should be engaging in good faith, which has not occurred on this critical piece of legislation.

I also hold concerns about where this legislation will land with the Senate and the danger of unwillingness by some to progress the safeguard mechanism. This will lead nowhere. As David Cross from Blueprint said to me, 'Any resulting uncertainty over future policy settings will disincentivise business investment in decarbonisation and over time lead to a deterioration in the competitiveness of Australia's trade exposed emitters as more and more countries and multinational firms begin to factor in carbon emissions in their purchase decisions'.

Fundamentally, this bill doesn't deal with many of the issues that are raised in the public debate on the safeguard mechanism. These issues will be dealt with by regulation. This bill deals with the implementation of safeguard mechanism credits, but it is a vehicle to discuss the whole package. Again, whilst I will not oppose the bill, I am concerned that the government is looking to pat itself on the back and claim victory for passing the legislation through the House before making significant amendments or agreements to pass it in the Senate. I can't support that on this important matter.

I'm well aware that neither my support nor my opposition makes a difference to the passing of the bill in the lower house. However, while I hope that my reservations are clear, I am also not seeking to stand in the way of these important changes, as clear action is needed. I want to see it succeed. We need it to. I am hopeful that, at the very least, my comments made here today will encourage greater debate and collaboration from all parties in the Senate, with subsequent amendments that may result in a better outcome for business, for the climate and for our future. I will be watching with interest the inevitable amendments that will make their way back to this House, and I'll consider my position very carefully at that time.

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