David Gillespie (Lyne, National Party) Share this | Link to 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.

Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to this | Hansard source

They are going to be hours of speeches from those opposite on Hansard saying why it won't work, why we shouldn't do anything, why it's not being done well enough. In fact, the biggest danger we face as a country is the do-nothing attitude that those opposite have had for nearly a decade. This is not a time to be saying why it won't work, why it can't work or why it shouldn't work. It's a time to be saying, 'Let's make it work.' Let's come together and have a piece of legislation that can have a starting point here, can continue as we evolve as a country and, as our energy needs change, can evolve with us. I'm very proud to say that the Albanese government is not prepared to do nothing, not prepared to just sit back and shrug its shoulders and find all the excuses in the world for inaction. We want to see things change.

I think we need to go back to why this bill, the Safeguard Mechanism (Crediting) Amendment Bill 2022, is necessary. It's necessary because we've made a commitment to reduce national emissions to 43 per cent below 2005 levels by 2030 and to net zero by 2050. These things are realistic and achievable but it takes that deliberate effort and sustained effort to achieve them, and every sector has to play its part. This bill is about addressing one part of the jigsaw puzzle that goes into reducing our emissions, and, just as importantly, increasing our reliance on renewables.

The safeguard mechanism is providing for us a well-established framework—it's already legislated—that places emissions limits on large industrial facilities. We've been very clear that this policy is designed to get emissions down from every one of the big industries, new providers that might come in, the fossil fuels industry. It's not just about coal and gas; it's about things like aluminium. It's about the steelmakers. It's about fertilisers, and making sure they're playing a role in reducing emissions. It's about our airlines. It's not just about the old businesses; it's about the new ones too. It's about the facilities that have been there for a really long time, and it's about the ones that might come online. It isn't just a mechanism for one thing in particular.

Let's be really clear: if this bill doesn't pass, nothing changes. There'd be no constraints at all on emissions for anyone. I am staggered to think anyone in this parliament, having been through the election we had and seen the results delivered to this place, can be under any doubt that the vast majority of Australians want to see action on climate change. If this doesn't pass, nothing changes, and that would be a tragedy.

As to the effect of this, I want to address some of the questions that have come to me. I thank all the people who've really looked into this and tried to get their head around it. They've got together and come and met with me to talk about the things that they'd like to see it go further on. I completely understand their desire to do that, and I have listened to all of those. I've had emails, phone calls and face-to-face meetings, both here and back in my electorate, with people of the Blue Mountains and Hawkesbury. I really welcome those inputs and the desire to say, 'We can see that this is happening; we would like it to go just that bit further.'

I think it's important to remember that what we are talking about is a piece of legislation that, as it stands, is the equivalent of taking 205 million tonnes of carbon out of the air by 2030. That's the equivalent of two-thirds of the cars on Australian roads, so it's not a modest piece of legislation. It's a significant piece of legislation that changes an existing mechanism, and it has the support of business to do that. Business has been crying out for certainty, and not just for the last decade. The investment banks in the sector that I worked in prior to coming to parliament have been crying out for certainty since the early 2000s, saying, 'We just need a set of rules that will allow us to get going on this stuff and to really ramp up renewables.' Finally, as a government, we are bringing that certainty to this policy area.

There's one other part of the bill that I think is worth taking people through, and that is around the emitters and what they're going to be asked to do. Emitters will be given a baseline, and they will be asked to gradually reduce their emissions. We're starting with 4.9 per cent—I like to round it to five per cent—on their current level because want them to be active and incentivised to make changes to how they do it. One of the questions that has come up is about the integrity of the scheme. Emitters are allowed to use offsets where they can't reduce their levels, and questions have been raised about the integrity of that scheme. Let's talk about integrity and how that scheme is going to stand up to scrutiny, which is exactly what it should do.

We commissioned the independent review, the Chubb review, to ensure that the carbon-crediting framework has integrity so that we can maintain a strong and credible reputation, because we absolutely accept that that's required. The expert panel concluded that the scheme was sound, but they had a bunch of recommendations for ways that it could be made even more effective. There is going to be a very strong incentive for industrial emitters to reduce their emissions, but we recognise that many in those hard-to-abate areas are going to use credits.

We have accepted in principle the 16 recommendations that the panel made and we are working through them. They are to ensure that the scheme aligns with the most modern expectations of best practice. That means things like maximum transparency of the scheme information. It means tweaking it so that it encourages innovation in method development and project implementation. It also recognises that we can support greater participation, including by First Nation communities. We've agreed to the 16 recommendations of the Chubb review, and we're working with stakeholders on the implementation. I thank the people who have written to me with their concerns about the integrity of that scheme. We shared that concern. We've acted on it, and now we're working through it.

I've already said the safeguard mechanism is going to save around 205 million tonnes of emissions between now and 2030, and I've mentioned that it's been consistently supported by business groups like the BCA, the AiG and the Australian Chamber of Commerce and Industry, those organisations who are representing very large and some smaller groups. The contrast is the idea that we needed to go even further. As I said, I completely understand the desire for it to go further, but these are the 215 biggest emitters in the country that we're targeting. Unless we get emissions down, unless they bring down their emissions or start to bring down their emissions by that 4.9 per cent each year that we're going to require them to do, then we're going to struggle to achieve the targets we have set, and we have set ambitious targets.

I want to talk about the renewable energy targets that we have. We're talking about 82 per cent of our energy coming from renewable sources by 2030. There are not that many months to achieve our 2030 target. I don't know what we're down to, maybe 78 months, maybe 79 months, but it's rapidly disappearing now that we are in March. We're looking at achieving that 82 per cent reduction in less than 82 months now. That's a big job, and we know it is a massive task. What it means is that by 2030 will still be having around 18 per cent of fossil fuels, and so we know there needs to be a supply of those fossil fuels. To those whose argument is, 'This is all just too hard, it's not going to work,' we know that achieving the renewables and maintaining the supply of those fossil fuels is a balance that we have to achieve. We don't have a choice in achieving it if we want our economy to remain strong, and that is one of our primary concerns. We see renewables as an opportunity for jobs, particularly in regions and other areas that are reliant on fossil fuels. We know this can be a trigger for a whole lot of economic growth and diversification.

I was grateful that a couple of weeks ago that there were groups here in parliament talking to us about another concern they have on the safeguard reforms, and that is that the new industries that come on board might blow out the modelling. I want to be really clear about what has gone into that modelling. What we have said is that there is room in the estimates we have made to achieve the 205 million tonnes of abatement, but we have also factored in a buffer, an additional reserve of 17 million tonnes, which will absorb any of the modelled new changes. Obviously, it is also a scheme that will run for a long time and it needs to be reviewed. There will be reviews to measure how it goes. It is not a 'set and forget'. I appreciate that's been the pattern of the previous three governments, 'Set and forget, let's just do it, tick a box and say we have done it,' knowing that that is not way to do change well. You don't do it once and expect that it will work; you need to review it and keep monitoring it. That's what we will be doing, and that will be able to take into account any of the changes that occur. We will be monitoring and then adapting to those changes.

This is legislation that this parliament must support if as a nation we want to change the trajectory we have been on. I really urge people to look back at history, look at 2009. I remember the turning point on faith for people when a commitment to act on climate change was stymied by the joining together of two opposing parties, the coalition and the Greens. That led to Australia not getting a piece of legislation that would have been in place for nearly 14 years by now, and it would have made given us a totally different opportunity. That opportunity is lost, but the opportunity we have right now is there for the taking. It is profoundly disappointing but not surprising that the opposition will not be supporting this.

I urge the crossbenchers to think about the long-term opportunity this provides and the immediate opportunity it has to completely transform the way we see ourselves as a country striving for net zero. We're coming off more than a decade of this having been a frustration. Please, I urge the crossbenchers not to do that to the Australian people again. I urge you to think about the message we can send to the kids who come here and look down on this chamber, knowing that their future depends on the decisions that we make. A lot of us on this side are here not for our own generations but because we care about what's going to be left for our children and our grandchildren. This is the opportunity we have. We have a choice to end the uncertainty. We've made that choice; it's now up to the crossbench to decide where they want to be in Australia's history and, more importantly, the role they want to play in Australia's future. I understand that for many people it won't be a giant enough step—that's okay. A step is what takes you to the next one. It'll be profoundly disappointing if the vision that we have here is not able to be carried through, not just in this House but in the other place. To those on the crossbench: please think about this when you cast your vote.

Stephen Bates (Brisbane, Australian Greens) Share this | Link to this | Hansard source

The mining, transportation and burning of fossil fuels is the single biggest contributor to the climate crisis. If we want to avoid environmental and economic disaster by staying within 1.5 degrees of global heating, we must make real cuts to emissions and transition to 100 per cent renewable energy. One point five degrees—that number is not just a talking point. According to the world's scientists, it is a very real planetary boundary. If we breach it, our climate system is at risk of tipping over into spiralling chain reactions and we will no longer be able to control the climate breakdown. No area of our lives would be untouched by this—from our food supply, sending prices sky high; our hospital services being overrun; infrastructure damage, from sewage systems to flooding cities; and the loss of our precious natural landscape and wildlife. Climate damage is not some far-off, distant threat. We're already experiencing the shift, with 100-year bushfires and floods every few years. For us in the Brisbane electorate, the 2022 floods have left our community rebuilding for the last year now, with some local businesses only just being able to open their doors again, while others have been forced to close forever.

The government seems to just expect everyday people and volunteers to clean up the mess from natural disasters and to keep pushing, year in and year out, to survive. They rely on individuals, families and communities to bear the brunt of extreme and unpredictable weather. Meanwhile, they are funnelling billions in taxpayer dollars into the pockets of the fossil fuel industry and making the climate crisis worse. Community members are taking on personal responsibility to reduce their individual emissions, like using reusable bags and paper straws and making choices about the foods they consume. Meanwhile the government allows the biggest polluters in the country to pay little to no tax, destroy our natural environment and then send us the bill. This is the only evidence you need to see whose side the government is on.

Governments only ever tinker around the edges when it comes to kicking their addiction to fossil fuels. They politely ask fossil fuel companies to just reduce their emissions, but this has not worked and it will never work. Their business model and method of profit come at the expense of our climate. This industry cannot regulate itself, and it is the government's responsibility to phase out fossil fuels to ensure our economy and climate are sustainable. The bill before us allows fossil fuel giants to offset 100 per cent of their emissions. If you think 100 per cent seems very high, that's because it is. The Climate Council thinks so too, stating that:

This is highly problematic because unlimited use of offsets will simply encourage carbon accounting to cover up pollution-as-usual. The design of the Safeguard Mechanism should prioritise genuine emissions reduction, because tackling harmful climate change means Australia's emissions must shrink rapidly this decade.

This bill does not do that. It allows for the facilities regulated by the proposed safeguard mechanism to have access to unlimited offsets. So what incentive is there for these facilities to actually reduce their emissions? Analysis by the Parliamentary Library found that the cost of buying offsets to comply with the new safeguard mechanism proposals, to the fossil fuel industry—

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour, and, given your speech was interrupted, Member for Brisbane, you will be given leave to continue speaking when the debate is resumed.