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

I move:

That this bill be now read a second time.

An incident having occurred in the gallery—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The gallery shall come to order!

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

The Clean Energy (Consequential Amendments) Bill 2011 contains consequential and transitional provisions relating to the clean energy package of legislation.

These amendments along with the associated bills the government is introducing today will give effect to our plan to move our economy to a clean energy future.

The science of climate change is clear. Peer-reviewed science is clearly telling us that climate change is occurring, that human activity is contributing through carbon pollution, and that we need to respond by cutting pollution and driving investment into clean energy.

Scientists are also clear that Australia faces huge economic costs from climate change across a range of sectors including energy supply, water, agriculture, and infrastructure.

No responsible government can ignore these facts or this advice.

Therefore the question is not should we cut our pollution, but what is the best way to cut our pollution at least cost and to ensure continuing economic growth.

Mainstream economists are clear in their verdict. A carbon price is the cheapest and most effective way to cut pollution and to drive investment in clean energy.

It allows us to fulfil our obligation to future generations, to do all we can to leave them a better place—that is, to act on our responsibility to achieve intergenerational equity.

Put simply, we should never lose sight of our responsibility as parliamentarians to leave our nation in a better place than we inherited it for future generations.

We have been debating these issues for decades. The time for inaction has long passed—it is now time for this parliament to show leadership and to take action on climate change.

It is time to make an economic reform to end the years of uncertainty around carbon pricing policies.

The business community needs certainty so that it can respond to innovative and new clean energy and renewable energy opportunities. Investors need to make long-term investment decisions.

Investors know a carbon price is coming but need clarity about the rules they need to apply for investing in assets with lives of 30, 40 or 50 years. And until this reform is made, and this legislation passed, these investments will be stalled.

This legislation provides the transparency and detail that industry needs.

And the package the government is introducing today provides a holistic approach by encompassing renewable energy, energy efficiency and land measures.

It is a package that recognises the need for action now, that recognises that delay will just cost us more.

It is a package that will maintain strong economic growth and provide new opportunities for industry. In fact, by 2020, while our carbon pollution will have reduced, national employment is projected to increase by 1.6 million jobs.

A broad-based, market-driven mechanism like a carbon price is the cheapest and most effective way to cut our pollution.

Carbon pricing sends a clear market signal to investors and consumers about the pollution content of goods and services. A carbon price will drive structural change in key sectors of the economy. At the same time industries will continue to grow.

The measures in this bill bring together in a coherent way the existing programs under the National Greenhouse and Energy Reporting Act, the Office of the Renewable Energy Regulator, and the soon to commence Carbon Farming Initiative, under the responsibility of a single clean energy regulator. The bill provides consistent reporting arrangements, equitable taxation treatment, and greater security for investors and businesses.

National Greenhouse and Energy Reporting

The National Greenhouse and Energy Reporting System (or NGERS) is the national framework for the reporting of information on greenhouse gas emissions, energy consumption and energy production. It was put in place by this parliament in 2007 when those opposite still believed in taking action on climate change and had a commitment to heed scientific and economic advice. In fact, the act was specifically intended to underpin an emissions trading scheme to start no later than 2012. Consistent with the government’s commitment to the streamlining of reporting of greenhouse and energy data, the National Greenhouse and Energy Reporting Act 2007 will be the starting framework for monitoring, reporting and assurance under the carbon pricing mechanism.

This system provides a sound structure for monitoring, auditing and compliance. A rigorous compliance framework is essential to underpin the carbon pricing mechanism.

A number of changes are proposed to strengthen the act and align it with the requirements of the carbon pricing mechanism. Under the amendments, a single report will satisfy both an entity’s reporting requirements under the mechanism, as well as the current reporting requirements under the act.

Coverage of synthetic greenhouse gases

As part of the carbon pricing package, synthetic greenhouse gases will be subject to an equivalent carbon price using legislation. Amendments are made to the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, and associated legislation, to give effect to that commitment, using the existing import and manufacturing levies in place. The levies will be adjusted annually to reflect the prevailing carbon price. This parliament first brought synthetic greenhouse gases under the ozone protection regime in 2003 on the basis of implementing our obligations to the United Nations Framework Convention on Climate Change.

The provisions ensure that the destruction of waste synthetic greenhouse gases which are imported into Australia is not affected. This is important because Australia has the only approved destruction facilities in our region and deals with the destruction of gases on behalf of a number of our Pacific neighbours.

Establishment of the Clean Energy Regulator and Climate Change Authority

The bill contains a number of consequential amendments relating to the establishment of the Clean Energy Regulator and the Climate Change Authority.

As well as administering the carbon pricing mechanism, the new regulator will take over administration of greenhouse and energy reporting, the renewable energy target and the Carbon Farming Initiative. This necessitates a number of legislative amendments to replace three existing statutory office holders—the Office of the Renewable Energy Regulator, the Carbon Credits Administrator under the Carbon Farming Initiative, and the Greenhouse and Energy Data Officer—and it transfers their functions to the new Clean Energy Regulator.

Measures to prevent market manipulation and misconduct

The amendments to the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 will provide a strong regulatory regime to reduce the risk of market manipulation and misconduct relating to emissions units.

Australian emissions units and eligible international emissions units are to be financial products for the purposes of chapter 7 of the Corporations Act 2001 and division 2, part 2 of the Australian Securities and Investments Commission Act 2001. The bill amends these acts accordingly.

Responding to industry feedback on the exposure draft legislation, there are also measures to provide greater security of title for holders in good faith of Australian carbon credit units, carbon units and eligible international emissions units.

Taxation amendments

Schedule 2 of the bill amends various taxation laws to clarify the income tax and goods and services tax treatment of emissions units, and to provide a refundable tax offset for certain depreciating assets used in conservation tillage farming practices.

The main consideration in designing the tax treatment of units is that the tax treatment should not compromise the main objectives of the scheme. This means that tax should not influence decisions between purchasing, trading and surrendering units or alternatively reducing emissions. The preferred tax treatment will help implement the scheme and reduce compliance and administration costs for taxpayers and the Australian government.

For income tax, the amendments establish a rolling balance treatment of registered emissions units which is similar to that for trading stock. The result of the treatment is that the cost of a unit is deductible, with the effect of the deduction generally being deferred through the rolling balance until the sale or surrender of the unit.

The proceeds of selling a unit are assessable income with any difference in the value of units held at the beginning of an income year and at the end of that year being reflected in taxable income. Any increase in value is included in assessable income and any decrease in value allowed as a deduction.

The bill also amends the goods and services tax law to make a supply of an eligible emissions unit GST free. The amendments will promote certainty about the application of the normal GST rules to scheme transactions and reduce compliance costs for businesses. While the agreement of the states and territories to this approach has been sought, not all jurisdictions have yet responded. For this reason the commencement of the GST-free treatment for eligible emissions units will be contingent on an announcement being made through a notice in the Gazette that the agreement of all states and territories has been obtained.

The conservation tillage offset, also provided for in the bill, will provide primary producers with a refundable tax offset for 15 per cent of the cost of a depreciating asset that is an eligible no-till seeder (as defined in the bill). To claim the offset, a primary producer will need to hold a research participation certificate to demonstrate that they have completed a survey about their farming practices.

Conclusion

The consequential amendments contained in this bill are important for the efficient and effective operation of the carbon pricing mechanism. They seek, where possible, to streamline institutional and regulatory arrangements and minimise administrative costs within the scheme.

The government’s objective in its Clean Energy Future plan is to implement the cheapest and most effective way of moving our economy to a clean energy future—of providing our children and their children the future they deserve.

This package of legislation has been designed to secure our environmental and economic security at least cost. There is no credible alternative.

We need to act now in order to mitigate and reduce the risk posed by climate change for the future of our economy, our environment and our society. I therefore commend the bill to the House.

Debate adjourned.