Ted O'Brien (Fairfax, Liberal Party, Shadow Minister for Climate Change and Energy) Share this | Link to this | Hansard source

The Safeguard Mechanism (Crediting) Amendment Bill 2022 forms part of the Albanese government's signature climate change policy reforms to the safeguard mechanism. The coalition is considering this specific bill within that broader context.

While there is bipartisanship in this parliament with respect to joining global efforts to reduce emissions to achieve carbon neutrality by mid-century, there is anything but a bipartisan agreement on how we go about reaching that goal. The 'how' matters, because how you seek to decarbonise the Australian economy and how you map a path to decarbonisation will determine the future in which our children and their children will live. If Australia ventures down the wrong path, as we are under this Labor government, our children and grandchildren will live in an Australia that is weaker and not stronger; poorer and not more prosperous; and an Australia that is more likely to be captured by the interests of foreign powers rather than being fiercely independent as a sovereign nation. What's more, Labor's plans to reduce emissions will fail, and will not make as a substantial contribution as we could be making as a nation to tackling global emissions. Once a successful, fit-for-purpose coalition framework, Labor is turning the safeguard mechanism on its head—reversing its intent and operation, and changing it from one that incentivises businesses to one that punishes businesses; from one that's voluntary to one that's mandatory; and from a scheme driven by technology to one that's driven by tax. Labor's safeguard mechanism is a Trojan horse for the carbon tax that Labor has longed for for many, many years.

I was referring before to the question of how we decarbonise the Australian economy. This carbon tax proposed by the Labor government and hidden within the safeguard mechanism accentuates a fundamental divide between the Liberal-National coalition and the Labor-Greens coalition. For the Liberal-National coalition, our approach has always been to strike a balance. We have always sought a balance. I underscore that word 'balance', because we have balanced both the reduction of emissions and the growth of the Australian economy. We met and exceeded our Kyoto targets and we reduced emissions by over 20 per cent on the 2005 levels. We put Australia well on track to beat our Paris treaty commitments, and we did so while, at the same time, improving the Australian economy. Our economy grew by up to 23 per cent over a nine-year period under the coalition government. There was record GDP, record jobs and record investment—investment, I might add, which included clean energy technologies. It was more investment than ever before.

We struck a balance. And how did we strike that balance? We did it by packing enterprise, by backing engineering and by working with industry, not against industry. We backed technology and we backed the search for solutions that were practical and which could be executed and implemented. On the other hand, Labor has failed to strike a balance because, instead, Labor backs big government, Labor backs big unions and Labor backs big taxes. Indeed, Labor's safeguard mechanism is illustrative of this, especially when it comes to Labor's backing of big taxes. It is the most punitive policy of its kind in the world. Starting 1 July of this year 215 Australian businesses will have to reduce their emissions by 4.9 per cent each year to 2030. This is the fastest rate of decline imposed by any government. It's even higher than the European Union, which is renowned for having set such a high bar in this regard. Under its emissions trading scheme their rate is 4.4 per cent. So, Labor is setting a decline rate that is even higher than the EU. As a reference point, I think it is worth noting that the EU's emissions trading scheme includes the electricity sector—outside of which emissions of large industrial businesses fell by one per cent between 2012 and 2018. Labor's scheme excludes the electricity sector, and it is putting the responsibility on large industrial businesses in Australia to reduce their emissions by 4.9 per cent—that's nearly 5 per cent—every single year through to 2030. This is unachievable. It won't happen. Why? The technology to do so simply does not exist and Labor knows this. And I know Labor knows this, because the same companies that've been coming through my office have been going through the minister's office, and they've been saying the exact same thing: the technology to reach these targets does not exist.

Scores of businesses caught under this new carbon tax, this new safeguard mechanism regime, will not be able to set the reduction anywhere near the rate set by the Labor Party. I genuinely believe that Labor is happy about this. Labor doesn't want business to meet this bar. Why? Because that allows its carbon tax to come into play. If businesses could meet the targets there wouldn't be a need for Labor's carbon tax. Once a business cannot reduce its emissions in line with that near five per cent target set by the government it will have to buy Australian carbon credit units—otherwise known as ACCUs. The government is pricing ACCUs, it is pricing carbon, at $75 a tonne. And for those who are wondering if $75 a tonne is a fair price or not, I remind them that it is over three times larger than the previous Labor government's attempt to introduce a carbon tax. They priced carbon at $23. The Albanese government now wishes to price carbon at $75. It's also a price that is higher than eight of Australia's top 10 two-way trading partners. The exceptions being the United Kingdom and New Zealand. Eighty per cent of Australia's two-way trade is with nations that are not covered by a national carbon price, or if they are their prices are substantially lower than the price Labor wishes to introduce.

Australia's international competitors in alumina, cement, copper, coal, gas, iron ore do not pay a carbon price, including those from the United States, Malaysia, Thailand, Qatar, Russia, India. So as much as Labor is clearly following the path of the EU, it's notable that the EU businesses receive billions of euros in support for the scheme annually in the form of free credits. Some have estimated that around 50 billion euros have been handed out since the ETS started.

Labor's $600 million support package doesn't even compare, but we know that Labor doesn't do detail very well. It never has. Labor is very happy to sell the dream. Labor will sell the dream, even if that dream turns into a nightmare. You might recall the soaring rhetoric of the Prime Minister when he spoke about leading Australia into a new era of climate change. The Treasurer boasts that he is redefining capitalism. The Minister for Climate Change and Energy believes he is enabling the biggest economic transformation Australia has seen, as big as the industrial revolution. This government are a humble lot, ushering in new eras, redefining capitalism and facilitating the next industrial revolution. Economics has been replaced by 'egonomics' with this lot, and it is reflected in the safeguard mechanism—the policy that they wish to impose on the Australian economy.

With all Labor's chest-beating on this policy and with the Prime Minister, the Treasurer and, in particular, the Minister for Climate Change and Energy screaming as loudly as they can and signalling their virtues, this safeguard mechanism is apparently their signature policy to enable all of this. This is their centrepiece policy. You would think that the government might have had Treasury, or at least the department, do some economic modelling on what its impact might be, but they didn't do that. Think about that. The government is talking about a new era, redefining capitalism and this being as big as the industrial revolution. It's introducing its centrepiece policy that will enable all of this and facilitate it, and they don't even get it modelled by Treasury or the department. They don't know the impact.

That impact, of course, is on the economy. It's on individual companies—Aussie companies—and it's on jobs. It's on everyday Australians and their livelihoods, and it's on regional communities. They didn't model the impact. But what we did learn, through the Senate inquiry into this bill, is that apparently a little bit of modelling was done. It wasn't disclosed by whom, but some modelling was done. So we, together with the Greens, asked the minister to produce that modelling. The government is refusing to disclose what little modelling was done—the only modelling that was done. Treasury didn't do it. The department didn't do it. I don't know who did it. The Australian people don't know. As for what it said, this government will not tell the Australian people, despite looking them in the eye and saying: 'This is going to be as big as the industrial revolution. We've done a bit of modelling but we—the government—will not show you.' That's the message from the Labor Party.

Let me assure members of this House that there is nothing safe about Labor's safeguard mechanism. It's bad for the economy and it's bad for the environment. If Labor introduces one of the world's most punitive carbon taxes, one of two things will happen. Either businesses will pass on the additional cost impost to their customers—consumers—or they'll close their doors. For those businesses that pass on the cost, it will become a hidden tax paid by everyday Australians. So let me put this in really clear terms. Due to Labor's policy, anyone running a car will pay more as the price of oil goes up. Due to this policy, anyone buying a new apartment, building a home or, even, refencing a property will pay more as the price of steel goes up. Anyone replacing the window frames at home or fixing the roof of their garden shed will pay more as the price of aluminium goes up. Anyone laying a concrete slab at home so they can park their car on it or laying bricks to create a garden bed will pay more because the price of cement will go up. Anyone buying a loaf of bread or maybe a packet of rice will pay more as the price of gas and, therefore, fertiliser goes up. And it goes on and on and on.

In the midst of a cost-of-living crisis, the Albanese Labor government is introducing the world's most punitive carbon tax that will be passed on and paid for by everyday Australians at a time when they can afford it the least. It should be noted that the Australians who will hurt the most due to this are the ones who can least afford it. At a time when some families are struggling like never before, the Labor Party, who will spruik values of social justice, are more than happy to pass legislation enabling a policy which is a hidden tax and which will drive up the prices of everyday goods for everyday Australians. It is a disgrace.

There will be those businesses, however, who just can't survive and can't pass on the cost to their consumers. They will shut their doors. I know that some businesses are genuinely looking at the possibility of shutting their doors. I know that because they've told me. They've told the minister too, by the way. I think we all know the human impact when a business closes. We're not just talking about profits for the business owner. We're talking about jobs. We're talking about livelihoods. We're talking about Australian families that can't put what they need on the table. Businesses are at risk of closing over this tax. The government knows about it; they've been told about it. If they can produce a skerrick of modelling that would provide any guarantee at all that that won't happen, please do. But they won't. They've been asked to. They know that businesses may close, that they're likely to close, that jobs will be lost and that lives will be hurt.

I've probably said enough about the economic consequences of Labor's reformed safeguard mechanism, but what probably hasn't received sufficient attention in this debate is the environmental consequences. When Australian businesses close their doors, especially manufacturers, it's operations in higher emitting nations that will typically fill the void. I had steelmakers and smelters telling me months ago that, due to the increase in energy prices under the Labor government, they might need to close and that their operations would likely move to India and China. Let's see what happens when you throw a carbon tax into the mix.

I have also subsequently spoken to companies and industry associations specifically about the safeguard mechanism that Labor is seeking to reform and the introduction of a carbon tax, and I can tell you that businesses are at risk of closing. When they do, it will be operations in high-emitting nations like China and India that will fill the void. According to a 2020 Climate Leadership Council analysis, Australian manufacturers are three to four times more emissions efficient than those in China and India. Let's think about that. Let's put that in the context of an example here. Labor introduces its safeguard mechanism and introduces its carbon tax. If an average manufacturer caught under the scheme emits one million tonnes of CO2 each year and has to close its doors, and if that gap in the market is filled by an operation in, let's say, India, then you are looking at four times those emissions. Instead of one million tonnes of emissions affecting the challenge of climate change, you now have four million. That's four times as bad. And yet, this government claims that this policy is in fact a policy that will help tackle the challenge of climate change. This this is greenwashing—Labor style: push it offshore, pretend it doesn't happen. It's someone else's problem, even though the net impact on the environment is worse. They know for a fact that is going to happen. Again, I've spoken to companies that have walked me through the same presentations the government has seen. That is what's going to happen.

Let me close where I started. There is no question about the need for action to tackle the challenge of climate change in Australia. There is no question about that whatsoever. There's also no question about the need for Australian industry to continue reducing its emissions. There's no debate about that whatsoever. But, on the question of how we should go about it as a nation, there is absolutely a debate. The climate change and energy debate in Australia has moved into a new phase, but that phase is all about how. Labor is answering the question of how in the wrong way, and it's setting Australia up to be weaker, to be poorer and to be more captive to interests of foreign powers and not our own. Carbon trading and ACCUs will continue to play an important role, but they should not be used by the Labor Party to facilitate a punitive taxation regime. That is not what it's all about. Government policy that decapitates the economy instead of decarbonising it should be rejected and so, too, should the outsourcing of emissions that leaves the world worse off, not better. With that, the coalition opposes this policy and therefore opposes this bill.

Gordon Reid (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

The member opposite just spoke about how we decarbonise. That's a rich statement coming from the Liberal Party that had no plans to reduce emissions, no plans for the transition to renewable energy and absolutely no plans for energy sovereignty. It's quite spectacular. All they really have is a series of empty words and poor slogans that aren't really catching on. The nonsense is so good coming from the opposition because the common sense is so limited. I was here in this chamber when the Climate Change Act 2022 passed through the parliament. It was a wonderful moment. It was a wonderful moment for the Central Coast. It was a wonderful moment for Australia, and it signalled to the world that Australia was back in the fight for climate change. It was a moment where we as a government finally took climate change seriously, which had not happened from those opposite for the past decade.

This is an opposition who continually turned their backs on the Australian people. Let's take manufacturing, Australian know-how and the NRF, and housing for the most vulnerable: Indigenous people, veterans, women and children fleeing domestic violence. And now? They're turning their back on climate reform that will benefit our people, climate reform that will benefit our economy and, more importantly, climate reform that will benefit our environment and our planet. The reforms before us here today are the first chance in over a decade—over 10 long years—to implement transformative climate change action that gets us to net zero. It has broad support—not just across the economy, not just across business groups, not just across industry groups—across the community. We have constituents calling, emailing, contacting us on social media, who are in support of this, who are in support of climate action, who are in support of the safeguard mechanism. The Liberal Party today, just now, have made themselves quite spectacularly irrelevant, despite calls from across industry for bipartisan support for this reform.

This Safeguard Mechanism (Crediting) Amendment Bill 2022 is ambitious, it's sensible and it's what's required. It's what's required for climate reform. It's what's required to protect our environment. It's what's required to sustain our environment and our climate for future generations. That's what we're talking about. Yes, we're talking about policy. We're the intricacies of climate change policy, but we're really looking at sustainability for future generations, and that's what the safeguard mechanism at it's core is all about. Australia has committed to reduce national emissions to 43 per cent by 2030 and to net zero by 2050—committed. Again, it's ambitious, but definitely required for sustainability. These targets are realistic. These targets are achievable. But it will take a deliberate and a sustained effort to meet them. All sectors have to play their part—not just industry, not just government but every person, every time.

Our government's Powering Australia plan commits to build on the existing safeguard mechanism to reduce industrial sector emissions. It provides a well-established legislated framework that places emission limits, called baselines, on large industrial facilities. Safeguard facilities are the country's largest emitters outside the electricity sector, contributing to around 28 per cent of the total emissions. These reforms back in the climate commitments that companies have already made and help meet our legislated national targets. As I said before, it's good for our people, good for the climate, good for the environment and, because they provide certainty, good for the economy, good for industry. The bill will enable tradeable credits to be issued to facilities below their baselines, and this provides an incentive for all covered facilities to reduce their emissions and access the lowest cost abatement.

A broad group of business leaders and groups support reforming the safeguard mechanisms to provide policy certainty for large industrial emitters. That's why it's absolutely baffling to me as to why the member just previously got up and in quite a spectacular fashion, as I said before, made the entire Liberal Party, the entire National Party—the coalition there—completely irrelevant. This is backed by industry, it's backed by people, t's backed by the community. It's baffling.

This bill will support and drive emissions reductions from facilities covered by the safeguard mechanism. These reforms will help Australian businesses to remain competitive as the world decarbonises and moves towards zero. The bill updates the objectives of the National Greenhouse and Energy Reporting Act 2007 to ensure that net aggregate safeguard baselines decline, increasing industry and investor confidence to take action. The bill allows for the creation of a new type of unit called Safeguard Mechanism Credits, and the bill deals with matters like the issue, transfer and ownership of these credits from facilities which beat their baselines. These credits will provide an incentive for all facilities to reduce their emissions if they have cost-effective opportunities, helping to deliver Australia's climate targets at the lowest cost. The bill also allows rules to be made about the interactions between the safeguard mechanism and the Emissions Reduction Fund, which will support the integrity of both the safeguard mechanism and those carbon credit units.

I think we need to focus on how the integrity of this scheme will be assured. The Australian government commissioned an independent review of the ACCUs—the carbon credit units—to ensure that those units and the carbon crediting framework have integrity and maintain a strong and credible reputation. That expert panel concluded that the credit scheme arrangements are sound. The panel found that there are appropriate checks and balances at the scheme, method and project levels to protect the integrity of the scheme and the credits created under it.

Industrial emitters will also have a strong incentive to reduce their emissions, but many in hard-to-abate sectors will also need options to use credits from those facilities beating their baselines or high-integrity carbon offsets. The panel made sensible recommendations to ensure that the scheme aligns with modern expectations of best practice. These include separating functions of integrity assurance, regulation and administration of those credit units; maximising transparency of scheme information; encouraging innovation in method development and project implementation; and supporting greater participation, including by First Nations communities—our Aboriginal and Torres Strait Islander brothers and sisters. The government has agreed, in principle, to the 16 recommendations of the review, and is working with stakeholders on that implementation.

Let's look at the key reasons for these reforms. Australia has now legislated its emissions reductions targets and the safeguard mechanism is about delivering on those targets. It was announced in December 2021 as part of our Powering Australia plan, and it was endorsed at the election by the Australian people. I think that's an important thing to note: the policies that we put forward at the election in May 2022 were endorsed by the Australian public, by the people of Robertson, by the members on this side of the House and across the country. These reforms are expected to save 205 million tonnes of emissions in the period to 2030. That's equivalent to taking two-thirds of Australia's cars off the road over the same period.

Reforms to the safeguard mechanism have been recommended consistently and supported by business—groups like the BCA, AiG and ACCI. Again, those opposite had grand plans for safeguard crediting when they announced their response to the King review in May 2020; in the May budget of 2021, in the accrediting consultation paper of August 2021 and in their long-term plan in October 2021. These are reforms they never delivered and reforms that they now oppose. After a decade of delay, a decade of denial and a decade of dysfunction, particularly in the climate space and in the environment space, all they have to offer are half-baked scare campaigns like we heard before—the fast and loose slogans that don't stick and which are all made up from the same talking points they seem to recycle for every election. Eighty per cent of facilities, representing around 86 per cent of covered emissions, are already covered by corporate net zero commitments, because business knows that reducing emissions is essential for their long-term competitiveness in a global net zero economy.

The safeguard mechanism covers around 215 large industrial facilities, accounting for around 28 per cent of Australia's emissions. Emissions from covered sectors are among the fastest growing across the economy and are projected to overtake emissions from the electricity sector without policy action. Reducing emissions from safeguard facilities is therefore a crucial part of meeting our climate goals and maintaining Australia's industry competitiveness in a decarbonising global economy.

In conclusion, I do think it is important that I reiterate the importance of the Safeguard Mechanism (Crediting) Amendment Bill 2022. It is the first chance in over 10 long years to finally get started on climate action that gets us toward net zero. It has broad support from multiple sectors across our population, multiple sectors across the community and multiple sectors across the economy, and that is why it is so important. Like I said before, the industry is calling for bipartisan support. So what I would say to the opposition is: get on board. We have a job to do to fix the climate, and this is the way we get there.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

A couple of Fridays ago the Labor government approved 116 coal seam gas wells in Queensland, Santos gas wells. The approval is active until 2077. Santos is a major long-term donor to the Labor Party—but I will come back to that. The Labor government say that they are taking action on climate change, but they have just approved a significant gas expansion until 2077. The Labor government say that they are putting forward legislation that will end a decade of inaction on addressing emissions; yet they have approved a significant gas expansion on prime agricultural land to run for 2077.

The Labor government say that they are going to end the climate wars. But what does that even mean if you are going ahead and approving 116 new gas projects to 2077—an expansion of a project that already has over 10,000 wells? The Labor government know that we need rapid emissions reductions, and that means at least no new coal and gas mines. They have been briefed by the best of the best on the science on all this repeatedly. They know and yet they have just approved 116 new coal seam gas wells for another 50 years. The government have seen the increase in bushfires and floods devastating our country, and they just approved 116 new gas wells for another 50 years. Forgive me for labouring that point, but this is absolutely crucial.

A recent study by the International Energy Agency has shown that the methane emissions from coal and gas projects have been underestimated. They are in fact 60 per cent higher than Australia has reported. Methane is far more potent a greenhouse gas than carbon dioxide. This means there is a high chance that the domestic emissions of even existing projects could wreck our chances of achieving even Labor's weak emissions reductions target, and yet the government have just gone ahead and approved more and have said that they intend to keep doing so. There are 117 new projects in the approvals pipeline.

Let's look at those donations from Santos to the Labor Party that I mentioned. Over the last 10 years, Labor has taken over $700,000 in donations from Santos. In return, it seems Labor approves their gas projects. And what were Santos's profits last year? They have doubled—$3.7 billion last year alone. In fact, Labor has taken over $6 million in donations from coal, oil and gas companies over the last decade. And it is not just donations; these corporations by access to senior Labor staffers. These cash-for-access meetings and business forums mean that often senior Labor people are hearing more about the interests of coal and gas corporations than they are hearing about the interests of everyday people.

Then there is the personnel swapping between coal and gas corporations and the Labor Party—the revolving door, as it is often called. Labor 's Queensland senator Anthony Chisholm worked for Santos between working as a strategist for the Labor Party and when he was elected to the Senate in 2016. Do you know what his role was? His role was providing advice on maintaining mainstream political support amid an ongoing campaign against the coal seam gas industry by environmental and landholder groups. That was his job description. And there are other examples from my home state in Queensland. Cameron Milner, a senior Labor strategist for a few years, was, while in his role in Labor, a lobbyist for coal and gas companies, including Adani. He is now a columnist for The Australian but that is a different story.

So with the donations, the cash-for-access meetings and the personnel swapping, perhaps none us should be surprised when we get presented with a bill by the government that will be more in the interests of the coal and gas corporations than in the interests of the rest of us, more beneficial for the ongoing profits of coal and gas corporations than in line with what we know, and what they know from the science, we need to do to tackle the growing climate crisis. Those who have approved of this bill include Origin, Rio Tinto, Shell, Woodside. The Prime Minister boasted about this. If it seriously affected the operations of these fossil fuel corporations, which is what any climate legislation worth the paper it is written on would have to do, would these corporations be lining up behind it? No.

Who has not approved of this bill? A report by research firm Climate Analytics concluded that, instead of reducing emissions as is urgently needed, this proposal would provide an avenue for fossil fuel companies to continue polluting at the expense of Australians and indeed the world facing worsening climate change impacts. The Climate Council are concerned that even existing coal and gas projects risk blowing the budget under these reforms. Greenpeace has also said that these reforms are way too weak and will not be effective in reducing emissions from our biggest climate polluters like Woodside, Chevron and Ampol. From the Australia Institute, '…there is a huge risk that by designing the Safeguard Mechanism to skyrocket demand for junk carbon credits, total emissions will actually increase.'

So the coal and gas corporations support Labor's legislation, but all credible policy institutes and green organisations say it is no good. It is no good because, in its current form, this bill will see emissions go up. Why? There are a lot of reasons but the main one is it will allow Labor to continue to open up coal and gas mines. It is not just me saying this. This was conceded by the Department of Climate Change, Energy, the Environment and Water in a recent Senate estimates hearing. There are 117 new coal and gas projects in the pipeline with their recent approval of 116 coal seam gas wells, their support for fracking in the Beetaloo Basin, their support for Scarborough PIP 11. With all of these, it is clear that Labor will continue to give practically unconditional support to future coal and gas projects. They have said it themselves. They plan to approve more and more coal and gas projects.

The domestic emissions from these alone will wreck our chances of reducing Australia's emissions, not to mention that they will lead to a massive increase in the emissions overseas and hold back other countries from making the transition to renewable energy by shifting potential investment away from renewables. We also, let me be clear, do not need new coal and gas in this country. If we regulated the industry and did not just allow corporations to export for maximum profits whatever they wanted to, we would have enough coal and gas supply to power us while we rapidly transition to new energy.

We also don't need those exports for national wealth. The overwhelming majority of the wealth generated by these coal and gas mines goes offshore to wealthy overseas investors. A small fraction comes back to us, the Australian people. Most of these corporations pay little to no tax and they actually employ only a tiny number of individuals. Instead, with real investment in industries like green hydrogen, green steel, solar, wind and batteries, we could have a booming export industry that provides jobs, wealth and sustainable development in this country. We could be the clean energy superpower of the world, so come on, people.

The safeguard mechanism is a Tony Abbott scheme, and Tony Abbott wanted nothing more than to safeguard coal and gas profits. Labor has made a few tweaks to a Tony Abbott scheme, changed its hat and shoes, and said, 'We have a solution to the climate crisis.' It is not. It is Tony Abbott's policy with a new hat and shoes. Labor is doing the same thing that Tony Abbott did—protecting the profits of coal and gas corporations. This safeguard bill from the government as it stands will lead to more coal and gas opening up and Australia's emissions going up.

It's riddled with more holes. I just wanted to highlight two of them, because a full list would bore and depress the listeners to this speech outside this chamber. The first big issue is this: it relies heavily on carbon offsetting instead of direct emissions reduction. Carbon offsets mean that corporations pay others to not produce emissions. There are a number of major issues with this, obviously. Firstly, a coal and gas corporation can increase their carbon emissions while paying a company to not produce emissions that may never have been produced anyway. This will result in a net increase in emissions. Moreover, there are growing concerns that claims of offsetting just don't stand up to scrutiny. Recently, 90 per cent of carbon credits issued by Verra, which is a major carbon offset company used by Shell, were found to not represent real emissions reductions. Secondly, the cost of paying for these offsets is so low that many corporations will simply factor it into their projections, pay the cost and expand their emissions. Parliamentary Library analysis last year showed that the cost to big mining and gas companies to offset their emissions each year to be in line with the safeguard mechanism would amount to only 0.1 per cent of their annual profits.

The second huge issue that's not spoken about enough is this: it still uses carbon intensity, not absolute carbon output, to set the threshold before the company has to start buying carbon credits. That just means that, instead of getting an overall cap on emissions a project can produce, the government will set a cap per unit. If a company expands production while changing operations to produce less carbon per unit of production, its overall emissions can go up while still receiving carbon credits from the government that it can sell on.

After all of that and the many more holes that have been found, it's clear that Labor's tweaks to the safeguard mechanism will make the problem worse. Labor says we shouldn't make the perfect the enemy of the good. The hollowness of this phrase increases in direct proportion to its mechanical repetition, because this is not good legislation, and the Greens are not demanding the perfect. In fact, the Greens are demanding the good in the face of genuinely bad legislation that will actually take us backwards. All we're saying is, for now, let's just not make the problem worse. Let's ensure we don't open any new coal and gas mines.

Josh Wilson (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I'll make a start on my contribution to the National Reconstruction Fund Corporation Bill 2022, which I support. It makes an important change to a mechanism that we need if we're to tackle climate change and if we're to reduce carbon emissions in Australia and if we're to be part of global efforts to reduce carbon emissions across the board so that we don't get dangerous global warming and all of the extreme climate impacts that follow, which we've seen here in Australia.

This measure picks up a significant shortcoming in the safeguard mechanism that the former government put in place but in a completely ineffective form. It was completely ineffective in a couple of different ways. Fundamentally, it didn't actually set an effective decarbonisation path, but it had another shortcoming, which was the inability for those who overachieve on their baseline emission reduction targets to be able to share the benefits of that overall performance with others covered by the mechanism who haven't met their baseline. That's a perfectly sensible and effective market mechanism in the task that we have before us. It goes precisely to what the shadow minister before asked over and over again in his 30-minute contribution: how? It's about the how. It's funny to have that question put by those opposite. To the extent that there was a question of how, from their point of view, it was: 'How do we do nothing?' or 'How have we done nothing?' or 'How do we pretend to so something while essentially doing nothing?' Those were the only forms of the question 'how' that they had any interest in. We're serious about achieving emissions reduction of 43 per cent by 2030, which will require 82 per cent renewable energy in the system by that stage. We're going to do it through our Powering Australia policy, and all of its elements set out the how. In about nine months worth of government, we've already begun to implement the measures that will get us there.

Debate interrupted.