Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

When speaking last night on this Energy Efficiency Opportunities (Repeal) Bill 2014 I was remarking on how the repeal of this bill marks the end of one of the most significant acts of environmental policy of the Howard government.

The three credible Howard government policies on the environment in this particular bill aimed at curbing climate change were shifting the economy to a low-carbon future, a commitment to an emissions trading scheme and a renewable energy target—all three things that the Labor government, when we came into power in 2007, sought to build on. So the end of this act marks yet another retreat by this government not only from the Labor government's agenda on decarbonising the economy but even the Howard government's limited efforts in this area.

It is the repeal of a scheme that an independent review commissioned by the government found was saving companies over $800 million a year in energy costs. It did have a small compliance burden; we do not resile from that fact. But that should be contrasted with energy savings of over $800 million a year. I would submit that that is a very small cost for a very significant payoff.

The stated reasoning for repealing this bill is that large electricity customers, that people in Australia, are responsive to rising power prices—that consumers are responsive to price signals and are reducing their electricity consumption accordingly. That is a reasonable statement; electricity is an elastic good. The unfortunate thing is that it demonstrates the hypocrisy of the government because that contradicts flatly what their so-called Minister for the Environment has been stating for the last four years, that one of the reasons they have opposed the carbon price—a fixed price emissions trading scheme transitioning to a flexible price emissions trading scheme—is that 'electricity is a inelastic good', that you cannot increase the price of electricity and expect demand for electricity to fall. This is a concept that is blatant nonsense and yet again was one of the final nails in the coffin of the economic credibility of the government and, in particular, the Minister for the Environment.

This bill is part of a broader agenda of removing any attempts to decarbonise the economy. This bill is part of any attempts to shift Australia's energy structure away from carbon-intensive energy production. The constant attacks on a renewable energy target that we are witnessing now is another part; appointing a self-confessed climate sceptic to review the renewable energy target was a ridiculous and cynical move, a move that jeopardises an industry that employs 24,000 Australians, has $9 billion in sunk investment and another $9 billion of investment in the offing out to 2020. This is a scheme that on independent reports is suppressing energy prices rather than increasing energy prices. So this is another part of their attacks on decarbonising the economy.

Another one is their abolition of the Australian Renewable Energy Agency—ARENA—a body that they voiced support for prior to the election but—surprise, surprise!—have now decided to axe in their latest budget. This is an agency devoted to plugging the commercialisation gap in developing new technologies; it is an agency that those opposite are all too happy to go to unveiling of grants and plaques for but are then happy to kill, destroying $1.3 billion of additional investment in clean energy technology.

It would be remiss of me not to point out that the Parliamentary Secretary for Industry only last month attended the unveiling of a project funded by ARENA that was developing solar thermal technology at the Wallsend Swimming Centre. That is a great project, and the parliamentary secretary was very enthusiastic about it—as he should be. But that was funded by ARENA money that they have now cut from the budget for future projects—a tragic event.

Another attack on any efforts to decarbonise the economy is the stated goal of abolishing the Clean Energy Finance Corporation, a finance corporation that is doing great work. With $600 million worth of investment—half of which is energy efficiency initiatives with companies that are covered by the bill we are debating now—they have managed to leverage that up to $2.4 billion of investment in clean energy technologies. This investment will cut 3.9 million tonnes of carbon dioxide per annum from the environment at an abatement cost of only $2.40—a very low abatement cost—while returning to the taxpayers a return on average of seven per cent, well above the Commonwealth long-term bond rate, which was the stated financing goal.

These are all parts of the last government's efforts to decarbonise the economy, to shift the economy at a relatively low cost into a low-carbon economy where we can compete with the rest of the world, which are all being ripped away by a government intent on returning to the fossil fuel era while the rest of the world moves in a completely different trajectory. For example, overnight, President Obama announced very striking limits on emissions from coal fired power stations. The New York Times stated that it is the single largest climate change initiative of the United States government ever. A 30 per cent cut in fossil fuel emissions from coal fired power stations was his second choice. His preferred choice was an emissions trading scheme but he was unable to get it through Congress because of the climate change sceptics in the Congress, principally in the Tea Party—we see plenty of people who would line up with the Tea Party sitting opposite me today—so he has had to resort to direct regulation. But that will drive a 30 per cent reduction in carbon emissions from the energy generation sector, which is the most significant emitter of carbon dioxide in the US economy.

The rest of the world is taking action. Over one billion people now live in countries or regions governed by a carbon price. By the end of 2016 that will be three billion people. Unfortunately, the Australian government is intent on going in another direction of condemning us to being a rustbelt economy while the rest of the world embraces these clean energy opportunities. It is all built on a falsehood that the carbon price is not working, that an emissions trading scheme is not providing appropriate incentives to decarbonise the economy in conjunction with things like the Energy Efficiency Opportunities Act. The facts are already starting to show this is patently false. For example, since the carbon price began in July 2012, emissions in the electricity sector are down over 7.6 per cent or the equivalent of 14.8 million tonnes of carbon dioxide. This is the equivalent of taking three million to four million cars off the road.

A frequent response by those opposite is, 'Well, emissions in the economy as a whole are broadly flat. They have only fallen slightly by 0.1 per cent.' That is true but all the growth has been in sectors not covered by the carbon price. So their simplistic mischievous response is actually undermining their argument and supporting the argument of those people who support of market based mechanism to combat climate change complemented by policies such as energy efficiency opportunities.

It contrasts directly with their patently ridiculous Direct Action Scheme, a scheme of command and control, a scheme that they could not find a single reputable economist to support. A recent survey of 35 economists found 33 of the 35 economists opposed the scheme. The only two economists that they could find that supported the scheme were one who supported it because he did not accept that science of climate change so he thought direct action would do least harm in combating climate change and one who supported his own unique scheme and saw direct action as a way of getting there. They could not find a single reputable economist to support their dog of a scheme.

They are still walking away from their scheme despite paying lip service to it. For example, the Minister for the Environment stated only one week before the budget that the forward estimates commitment to the Emissions Reduction Fund—the centrepiece of direct action—would be $2.55 billion. Yet when the budget was released two weeks ago, we only saw $1.1 billion allocated in the budget to be spent over the forward estimates. Yet again, not only is direct action a fig leaf but it is a fig leaf that they do not match with any significant amount of dollars.

The Energy Efficiency Opportunities Act was a good act. It was an act implemented by the Howard government. It was an act supported by Labor. It was act that was delivering over $800 million a year in energy costs. It was an act complementing other strong policies to decarbonise our economy: the Renewable Energy Target, the Emissions Trading Scheme, the Clean Energy Finance Corporation and the Australian Renewable Energy Agency. All of these are being undermined by a government intent on being economic and environmental vandals.

Unfortunately, it will be the Australian population that will pay the price, not just people of voting age now. I have a daughter who is one-year-old and I want her to grow up in an economy that is decarbonised, not because it means that we have got a chance of saving the Great Barrier Reef—a reef that delivers $9 billion in tourism revenue each year—or saving agriculture in the Murray-Darling Basin—a basin that is at risk of losing 97 per cent of its production if climate change is left unchecked—but because I want her to grow up in an economy where we can take advantage of the opportunities of living in a low-carbon economy, of developing the technologies that in the future can spark a new industrial revolution and that can be strong manufacturing sectors for our Australian sector—and we need them after the death of the automotive industry under the current government's negligence.

It is very important that we continue attacking a high-carbon carbon economy by supporting energy efficiency, by supporting a market mechanism to combat climate change and by placing a hard cap on pollution. Unfortunately, this repeal bill is a step backwards not only from the Labor government's agenda but from the Howard government's limited agenda on climate change. It represents another step in the Liberal government, the coalition, becoming the Tea Party of Australia where they reject the science and they reject the reputable economists all to appease people like Alan Jones and other cranks who have a very poor impact on Australian society and public policy discourse. So the Labor Party will reluctantly wave this bill through but we would like to place on record our deep opposition to the repeal because yet again it demonstrates the hypocrisy and economic illiteracy of the coalition government.

Melissa Parke (Fremantle, Australian Labor Party, Shadow Assistant Minister for Health) Share this | Link to this | Hansard source

There is some considerable irony in having to argue against the Abbott government's repeal of one of the very few halfway-meaningful initiatives of the Howard government in the area of energy efficiency.

This is a program that has saved the organisations to which it applies—essentially large power users—more than $300 million dollars by encouraging the adoption of energy saving measures. In so doing, it has of course reduced the emissions that would otherwise have resulted. The Energy Efficiency Opportunities Program was an early step towards requiring large energy users to identify and assess energy-efficiency opportunities, and to report outcomes of those assessments to government and the wider public.

It was a step in the direction of a lower carbon economy, and its removal shows just how total and absolute the Abbott government's abandonment of responsible policy in this area will be. It is a scorched-earth approach to policy—and I use that term advisedly, because it is an approach that is blind, passive, and utterly sanguine in the face of the deadly serious heating and drying of our continent.

The Climate Council released a report yesterday that shows Australia has just experienced its hottest two-year period on record—again highlighting the need for our concerted participation in global action. Council member Professor Will Steffen, commented as follows:

We have just had an abnormally warm autumn off the back of another very hot 'angry summer'. … The past two-year period has delivered the hottest average temperature we have ever recorded in Australia. … Climate change is here. It's happening and Australians are already feeling its impact.

This sits in a kind of absurdly bizarro-world contrast to the results of the GLOBE Climate Legislation Study of 66 nations released in February that found Australia to be the only country taking retrograde legislative action in the area of climate policy.

After the incredibly important progress and structural reforms of the previous six years—reforms that were initially a matter of bipartisan policy, and only later became a bitter contest—Australia is now jettisoning everything we have won, everything we have achieved.

The Abbott government is turning away from an emissions trading scheme just as the hard work of getting us to this point is virtually complete. This government is undermining the creation of large-scale renewable energy production just at the point when Australia is becoming a serious player in one of the most critical and valuable 21st century industries. And it is all so unnecessary.

In the name of sticking to slogans, the coalition could still have taken the responsible path, presiding over the removal—or 'abolition', if it wanted to use that term—of the carbon tax as we made the transition to the emissions trading scheme that the Minister for the Environment himself has previously endorsed. In the name of cooperation the Labor opposition would have happily supported this outcome. Instead we are seeing everything that has been achieved torn away—including the policy gains in this area, however minor, that were established by the Howard government.

The repeal of the Energy Efficiencies Opportunities Program and governing legislation takes away a mechanism that addressed a market failure in relation to the availability and use of energy efficiency data. Putting awareness or ignorance or even wilful blindness of climate change aside, it is strange that the supposedly small 'L' liberals and free-marketeers opposite are so averse to ensuring that markets operate as they should. Indeed, this applies to the whole area of climate change policy—and it really must be emphasised time and again that the failure of the global and national economies to price carbon emissions, when such emissions have a clear and serious cost, is probably the greatest market failure of all time.

Of course many things change when you change the national government, but the black-and-white flip from Labor to the coalition in relation to climate change and low-carbon energy policy is perhaps the sharpest change of all. Labor's commitment to reducing carbon emissions; to participating in concerted global action on climate change; to increasing renewable energy and energy efficiency; and to transforming the Australian economy for our future social, environmental and economic needs is in the process of being reduced to nothing. It goes to the question of what kind of country Australia wants to be. Are we an innovative nation? A country that stands among the leading nations in exploring the way forward in the face of a growing global population and growing energy needs that are balanced against a finite store of hydrocarbons whose CO2 emissions are trapping heat at a rate that will bring widespread devastation to life as we know it.

Sadly, in a year when Australia holds unparalleled multilateral leadership positions on the UN Security Council and as Chair of the G20, the GLOBE Climate Legislation Study marks us out as a singular climate change reprobate. As the shadow minister for climate change has noted, China and the US signed a statement in February this year recognising the 'overwhelming scientific consensus on climate change' and the 'urgent need for action'. They believe this year's G20 meeting needs to address the issue of coordinated global action on climate change.

On the basis of our nation's record between 2007 and 2013, no country would be better placed to have the chairing role for such a critical discussion. Alas, since September last year we have gained a government and a Prime Minister whose real position is denial and whose policies are destructive of progress. So now on this issue that is critical for the entire planet, and in relation to a danger which we stand to be affected by more than many other nations, our place as chair of the G20 is a puzzling embarrassment and a liability. And this is at a time when, as my colleague the member for Charlton has just noted, the United States has announced significant and groundbreaking new measures to sharply reduce carbon emissions from existing new power plants, including a 30 per cent national target by 2030.

The Energy Efficiency Opportunities Program newsletter from late last year is heartening and sad at the same time. Heartening because of the progress it reports and sad because the very next communication from the EEO was to announce its own demise. The November newsletter included the following observations on the value of the guided pursuit of energy efficiency:

Savvy corporations can save three times as much power as their less energy-conscious competitors.

… … …

The most dramatic energy savings were reported by corporations that regularly collect and analyse their data, include energy policies in their operational guides, and have strong support from senior management.

The newsletter also noted:

The IEA [International Energy Agency] estimates that for 11 member countries, (including Australia), investment in energy efficiency since 2005 resulted in cumulative avoided energy consumption of 570 million tonnes of oil-equivalent over the five years to 2010.

This is the kind of achievement that we need to build upon and take further as part of a comprehensive suite of policies and programs designed to deliver a smarter and more sustainable energy profile, and to give Australia a low-carbon and sustainable climate future. On that basis the repeal of the EEO is yet another backward step by a government whose neglect when it comes to climate change will likely mark its greatest failure.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry) Share this | Link to this | Hansard source

I will start by presenting a correction to the explanatory memorandum for the Energy Efficiency Opportunities (Repeal) Bill 2014. The correction has been provided to rectify two minor transcription errors. These transcription errors occurred during the development of the supporting regulation impact statement when a departmental officer inputted an incorrect figure from the business cost calculator. These errors are minor and have no effect on the overall cost of the Energy Efficiency Opportunities Program to Australian businesses. Repealing this legislation will save businesses $17.7 million per annum.

The Energy Efficiency Opportunities (Repeal) Bill 2014 terminates the Energy Efficiency Opportunities Program through the repeal of the Energy Efficiency Opportunities Act 2006. The bill has a retrospective commencement date of 29 June 2014, in line with the Mid-Year Economic and Fiscal Outlook, which announced the removal of the funding for the program from 30 June 2014. Repealing the Energy Efficiency Opportunities Act 2006 will save Australian businesses over $17.7 million per year in compliance costs. This is a demonstration of the Australian government's commitment to cut red tape and minimise the regulatory burden on Australian businesses.

Since the introduction of the Energy Efficiency Opportunities Program in 2006 the program has played an important role in improving energy management capabilities across industry, which has strengthened their resilience to rising energy prices. Many of the key elements of the EEO program are now standard business practice for industry, making the program unnecessary.

A good government identifies when there is an issue. A good government engages with industry and stakeholders to put forward a program, legislation or regulation to improve the load. A good government monitors the impact of that legislation. A good government continues the stakeholder engagement and identifies when a piece of legislation or regulation has served its purpose.

On 29 March 2006 I summed up this bill for the government. We accepted amendments that came back from the Senate and which were brought to the House because of the then Howard government's and, in this portfolio, Minister Ian Macfarlane's engagement with industry and their understanding of the impacts on industry and what industry wanted to develop from this, such as the reporting requirements. But the commitment was there and they supported the act. What we are seeing today is a mature government responding to the outcomes of industry where the objective has been achieved.

Those opposite have spoken of the $323 million—a figure taken from the explanatory memorandum to the bill—that is saved every year as a result of the Energy Efficiency Opportunities Program. On this point I will agree with those opposite. The scheme has been a success. When it was introduced in 2006 companies did not think about their energy use. They did not even really know how to make energy savings. We as a government achieved the outcome that we had initially set about to achieve. Now, eight years later, large energy users are acting on their own accord to reduce energy costs and therefore business costs. In fact, if you ask any business, you will probably find out that reducing their energy costs is very, very high on their agenda—and not because the government put it there. Companies are taking comprehensive steps to embed key energy efficiency practices at the very core of their operations. Under such conditions, it is industry and not government that can make the best energy management decisions.

Businesses today will still make $323 million in savings on their electricity bills because of energy efficient activities. But they will make these savings because it makes good commercial sense, not because a government tells them to. As I said earlier, on top of this, businesses will have around $17 million of annual savings as a result of this repeal. That is $17 million that can be funnelled into energy efficiency practices rather than being consumed and wasted in unnecessary red tape compliance.

Back in 2006 the then Howard government saw a market failure, an information gap, that was stopping companies from taking action to reduce their energy use, and the government introduced what even the member for Brand acknowledged yesterday to be a light-touch, low-cost, fit-for-purpose, successful scheme. But, as I said earlier, being part of a good government, adhering to the practices of good governance, is recognising when the government's job is actually done. In fact, Manufacturing Australia has commended the action taken by this government to repeal the Energy Efficiency Opportunities Act by saying: 'Rather than asking what should government do to help manufacturers, often we should be asking what should our state and federal governments stop doing in order to help Australian manufacturers.' This government is being mature and accepting that a program that was introduced to address a market failure has seen its day and it is no longer needed.

In the contributions by members opposite, statements have been made questioning this government's support for renewable and energy efficiency schemes. I want to make our position clear and give a couple of examples to the House. The coalition government is investing $1 billion in ARENA funds in nearly 200 renewable energy projects. The member for Charlton criticised me for turning up to open a project at the Wallsend pool. It was a rather unique arrangement with solar energy to heat the pool and create electricity. I think it is a good investment. That is why the government is making sure that that billion dollars is wisely spent, invested and monitored and is delivering the outcomes it was intended to deliver.

There are $288 million to support the development of low-emissions coal and carbon capture and storage technology. There are $2.5 billion to establish the Emissions Reduction Fund. That is a lot of money. It is a lot of Australian taxpayers' money. As we have all found out, the government does not have any money; we have debt but it is not even our debt—it is taxpayers' debt. So it is taxpayers' money and taxpayers' debt and taxpayers demand that they get a solid return on their investment without any waste or indeed forfeiture. The investment I have spoken about shows the government's resolve to assist businesses lower their energy costs, to restore competitiveness and to reduce Australia's emissions.

The young boys and girls from Metford school in my electorate who are up there in the gallery today understand the importance of using energy wisely. I am sure each and every one of those children will commit to turning the lights off in their bedrooms and bathrooms at home for their mums and dads to reduce their contributions to the greenhouse gas footprint. I know it is a lesson I have not been able to teach my children but I am hoping the boys and girls from Metford school are able to adhere to that.

Overall, when it comes to the Energy Efficiency Opportunities Program, this government is getting out of the way so that business can do what business does best—make decisions that make commercial sense. The government will continue to support industry capability by providing information on energy efficiency best practices through the Energy Efficiency Exchange website. The government will continue to collaborate with industry to improve Australia's energy productivity through the energy white paper, the Council of Australian Government energy council and the Emissions Reduction Fund that will support industry to take direct action on emissions and to improve energy productivity.

The repealing of the Energy Efficiency Opportunities Act 2006 shows that the Australian government understands the cost associated with the mandatory compliance reporting programs and is continuing to deliver on its commitment to cut unnecessary red tape.

Question agreed to.

Bill read a second time.