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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

David Smith (Bean, Australian Labor Party) Share this | Link to this | Hansard source

I also rise today to speak in favour of the Safeguard Mechanism (Crediting) Amendment Bill 2022. I would like to take the opportunity to commend the Minister for Climate Change and Energy and the Prime Minister for their hard work on this legislation. I particularly commend the extraordinary work of their departments.

The latest Intergovernmental Panel on Climate Change report, released this week, confirms what we already know: there is a rapidly closing window for transformative climate action both here and around the world. This latest IPCC report shows global warming has increased at an unprecedented rate over the past decade, resulting in more frequent and severe droughts and cyclones. By the 2030s, every region in the world is expected to face increasing risks from climate change. We know that Australians will experience increasing and increasingly devastating climate events, just as we've seen in recent years. After a decade of denial and delay, Australia finally has a government that is committed to taking serious action on climate change. These reforms to the safeguard mechanism are the first opportunity in over a decade for action to bring down emissions from Australia's largest emitters. This is an opportunity we can't afford to miss.

I recall spending hours talking to voters on prepolls across Bean and meeting climate action communities during last year's election and, of course, meeting the same Canberrans and Norfolk Islanders during the whole duration of the last term. These are issues they care about. A consistent issue raised with me was the need for responsible and effective action on climate change and emissions reductions. Public servants that I spoke with often raised with me how ineffective the current safeguard mechanism was and how reforms to that mechanism could make a significant difference in a very quick way over the next five to 10 years.

The safeguard mechanism is one of three existing components of the Emissions Reduction Fund, or ERF. The ERF has been one of the central policy tools supporting the achievement of the Australian government's emission reduction targets in accordance with its nationally determined contribution under the Kyoto Protocol and, more recently, the Paris Agreement. It's key to meeting the reduction targets that we have set for 2030. The safeguard mechanism was intended to ensure that the emission reductions purchased through the ERF were not displaced by significant increases in emissions elsewhere in the economy.

However, the safeguard mechanism has been allowed to operate in a manner such that the emissions of covered facilities have increased in accordance with business as usual. It has essentially operated as an additional reporting mechanism rather than requiring covered facilities to reduce operational emissions—a perverse outcome. More specifically, the emissions of covered facilities have increased by seven per cent since the commencement of the safeguard mechanism in 2016. Emissions are projected to increase further by 2030 unless we achieve change. An enhanced safeguard mechanism is a crucial building block for Australia's transition to net zero. As announced with our Powering Australia plan, it will require Australia's largest industrial facilities to reduce their emissions gradually and predictably, in line with our national targets, but to do so with certainty.

I do not wish to re-dredge history, but history matters. In 2009, the crossbenchers and the opposition at the time blocked then Prime Minister Kevin Rudd's Carbon Pollution Reduction Scheme. The Australian people were then forced into a decade of climate change inaction because it was decided by a few that it wasn't good enough for them and so the whole country would have to go without. As someone who worked for more than a decade in science and engineering advocacy, I know the extent of the opportunity that was missed.

Last year the Albanese Labor party went to the Australian people with a proposal and said, 'We can get 43 per cent emissions reductions by 2030—an achievable and meaningful reduction that will encourage innovations in industry and won't cripple business.' On 22 May the Australian people emphatically said yes to that proposal. We have here today a bill that will ensure this country meets its emissions reduction targets and its international obligations. We have before this House legislation that makes it possible for climate action to happen.

The Albanese government was elected because we listened and created a policy that reduces our country's emissions without needing to cripple industry. By lowering the cost of reducing emissions, crediting and trading will help the safeguard mechanism meet Australia's climate targets in a cost-effective way and enable increased ambition over time. Kerry Schott, the Chair of the Energy Security Board from 2018 to 2021 and the nation's top climate adviser to successive Commonwealth governments, has described this policy as a really important policy measure to reduce emissions and has said that delaying the implementation of this legislation by even a year would mean the emissions reduction targets of the facilities with the heaviest pollution will become even more difficult to reach.

These reforms are critical to contribute about 30 per cent of the cuts needed to deliver on Australia's legally binding target to reduce our greenhouse gas footprint by 43 per cent by 2030. At the end of the day Australia will be locked into 43 per cent by 2030. This is the floor. This is the minimum. We could actually achieve a higher reduction. This country will not achieve anything if it's not passed because there are some people who, as the previous speaker said, think this legislation doesn't go far enough or who think it goes too far.

To those opposite, who've long championed the need for every market to run efficiently, this legislation targets inefficiencies in our emissions markets. This bill addresses one element of the reforms—crediting. It aims to support and encourage industry to unlock emissions reductions where they are most efficient. Under this bill some businesses that have low-cost abatement opportunities ready to go could reduce their emissions faster than required by the safeguard mechanism. To incentivise such action, the bill enables these businesses to be issued tradeable safeguard mechanism credits. Other businesses with more limited abatement options could buy these credits to help them meet their required emissions reductions.

I'd like to remind the House about what some of the country's industry leaders and businesses are saying about this legislation. The Australian Chamber of Commerce and Industry say:

With the new climate change legislation committing Australia to reduce national emissions by 43% below 2005 levels by 2030 and achieve net zero by 2050, changes to the design of the Safeguard Mechanism are essential.

The Australian Aluminium Council says:

The focus of policy design for Safeguard Mechanism should be on establishing a framework to maintain industry, jobs and competitiveness while also decarbonising, through the period to 2030 and beyond to achieve net zero by 2050. The success of this policy will not be measured in 2030 alone, but in the transformation of Australia's industry in the biggest clean industrial and economic revolution this country has seen.

Rio Tinto, another group of radicals, say:

Rio Tinto supports the use of a reformed Safeguard Mechanism as part of a suite of policy measures to incentivise genuine industrial abatement.

Finally, the Energy Efficiency Council says: 'The Energy Efficiency Council strongly supports the government's proposal to enhance the safeguard mechanism by declining facility baselines. Overall the EEC believes that reforms to the safeguard mechanism should make a substantial contribution to Australia's emissions reduction targets and jumpstart the transition to achieving a net zero economy no later than 2050.'

It's clear that there is genuine support and demand for these reforms. This certainly doesn't sound like the Armageddon that those opposite, in different parts of the chamber, seem to think it is for different reasons. It sounds like industry has been waiting for an adult government to prepare achievable, mature policy that encourages innovation and drives efficiency.

Australian businesses and their investors know the world is changing and that they need the right signals in place to not just stay competitive, but to innovate and thrive. Many businesses that operate facilities covered by the safeguard mechanism have made long-term climate commitments that match or surpass Australia's climate targets. They demonstrate great levels of business frustration with the former government's lack of strong and coherent climate action policy.

We cannot be surprised that it's once again up to a transparent, climate conscious and responsible Labor government to legislate policy that isn't a smokescreen, but endeavours to deliver on this country's climate obligations. In September 2022 this parliament enacted the Albanese government's Climate Change Act 2022 which set out a national emissions reduction target of 43 per cent of 2005 levels by 2030 and net zero by 2050. It was the beginning of this government's plan to ensure that Australia meets its target of being a net zero country by 2050. The Safeguard Mechanism (Crediting) Amendment Bill 2022 complements this government's responsible and effective approach to reducing emissions. Reforms to the safeguard mechanism will provide strong investment signals and provide a balanced scheme that is effective, equitable, efficient and simple.

To those constituents that came to me, during the election and during the term of the last parliament, concerned about the integrity of Australian carbon credit units: your concerns were heard. The Australian government commissioned the independent review of ACCUs to ensure that they and the carbon crediting framework have integrity and maintain a strong and credible reputation. The expert panel concluded that the ACCU scheme arrangements are sound. Further to this, industrial emitters will have a strong incentive to reduce their emissions, but many in hard-to-abate sectors will need options to use credits from those facilities beating their baselines or high-integrity carbon offsets.

A broad coalition of business leaders and groups support reforming the safeguard mechanism to provide policy certainty for large industrial emitters. Most importantly, the Australian people made it clear that they want a policy that delivers on climate change, delivers on industry innovation and doesn't hurt business. They made this view clear and delivered the Albanese Labor government a mandate to get this done.

This legislation complements the Albanese government's approach to deliver tangible change in emission reductions, to ensure that this country will reach its goal of 43 per cent reductions by 2030 and be a net zero country by 2050. I thank the minister and the Prime Minister again for their hard work along with the hard work of those public servants that have brought this bill to this parliament. I commend this bill to the House.

Darren Chester (Gippsland, National Party) Share this | Link to this | Hansard source

I take pleasure in joining the debate in relation to the safeguard mechanism. A bit like you, Deputy Speaker Georganas, I feel like we may have been on this ride once or twice before in the last 10 years. I appeal to those opposite and to the media covering this issue to recognise we need a balanced debate on this issue. We need a balanced debate and a balanced approach to ensuring we achieve our energy security and affordability needs and delivering the environmental outcomes that Australians expect.

I'll touch on environmental issues first. I believe the environmental debate we're having in Australia today has become too simplistic and obsessed with emissions and the climate debate, at the expense of the far more complex conversations we should be having about natural resource management and the complex conversations that regional Australians are having every day as they deal with failures to manage the natural environment appropriately. I accept that climate change is a global challenge and we must play our part as a responsible nation, but the other environmental challenges, the real environmental challenges we face every day, demand local action. What I'm talking about is more practical environmental action in this nation. I often refer to this as a policy which reflects the need for more boots and less suits—that's more boots on the ground doing practical environmental work and less suits in the cities making excuses for why things can't be done.

When I make those comments, I immediately think of the invasion of pest animals and plants right throughout our nation, which is particularly prominent in regional areas and particularly prominent on areas of public land being neglected by state governments. My state of Victoria is certainly no exception. What I'm seeing as I travel throughout Gippsland is farmers, landholders and people living in towns who are deeply concerned about the impact of feral animals—feral deer, feral pigs—in their communities. These issues demand greater attention in this place in partnership with the land owners, the state governments. We only need to think about issues such as foot-and-mouth disease and the risk it poses to the agriculture sector if it were to get loose in this country. The vector animal that would spread that disease through this country would be feral pigs, and feral pigs are now showing up in northern Victoria in my electorate of Gippsland.

So the environmental conversation we need to have, as much as it should recognise these global issues of emissions and climate change, has to also take into consideration the practical environmental management needed on the ground in local communities, focusing on pest animals and weed control, the need to improve biodiversity and tackle erosion and riparian vegetation—things like hazard reduction in our forests, where the fuel load has grown enormously even since the 2019-20 bushfires, and critical asset protection around our towns and catchments and other important infrastructure in regional areas.

It also has to include a serious conversation about a world-class and sustainable native timber industry in regions like Victoria, where the industry is under direct threat right now by Premier Daniel Andrews's obsession with closing down all timber harvesting in the native hardwood sector by 2030.

I would argue the true environmentalists in this nation don't reside in Canberra or Sydney or Brisbane or Melbourne. They live in our regional communities. They're the people who are out there every day getting their hands dirty. They're joining Landcare, they're joining Coast Care, they're doing feral animal control, they're planting trees. They're taking action locally to improve our environment, which after all is one of the key considerations of the bill before the House today. Unfortunately, in my state of Victoria the state government has absolutely gutted the workforce on the ground in public land management. We look at Parks Victoria or the department supposedly responsible for practical land management. The workforce on the ground has been absolutely gutted by a government which continues to invest in suits but not enough boots.

So I fear that the bill before us today doesn't get the balance right. The coalition's policy to achieve net zero emissions by 2050 is a responsible and balanced reduction plan that protects our economy. In government, as much as those opposite would like to claim otherwise, we had a record of achieving our international targets, in partnership with industry and other levels of government. We've always said that the approach to this challenge is through technology, not taxes. The coalition in government supported the carbon trading system that rewarded businesses that voluntarily reduced their emissions. In government we committed $22 billion to bring down the cost of lowering emissions, leveraging up to $132 billion in private sector investment and supporting 160,000 jobs. We would argue on this side of the House that we can grow the economy while taking effective action on climate change and undertaking practical environmental measures.

That is not what this government is proposing. They want us to use a carbon trading system to force businesses to buy carbon credits. That is effectively a tax. The bill intends to have 215 businesses that are impacted by the safeguard mechanism reduce their emissions over ten years. That includes 66 coalmines, 36 gas facilities, 26 iron ore mines and 49 manufacturing facilities, nine of which are in my electorate of Gippsland, which includes the coal fields of the Latrobe Valley.

What concerns me greatly—and I think any reasonable member of this place would share my concerns—is that we have a range of cost-of-living pressures right now that are severely impacting people on low and fixed incomes. My concern is that this policy is only going to do more to hurt Australians and drive up the cost of living in our everyday households. I fear that emitters who can't achieve the reduction proposed by this government will purchase their credits at inflated cost. In fact this legislation proposes a $75 carbon tax, three times the Rudd-Gillard carbon tax. Effectively, that will be passed on. When you think of who will pay this price in the end, it will be the people from the communities that every one of us in this place, the 151 electorates, represent. It will be the people in those communities who will pay the price when it's passed on to consumers. Businesses will pass the additional costs straights on to consumers through higher electricity prices, higher food prices and higher prices for building materials. We will see increases in things like the price of steel and concrete, which obviously are critical inputs into the construction of homes. We've just seen significant increases in housing prices right across Australia, particularly in regional Australia, where the cost of dwellings is rising in the order of 30 per cent across many regional communities. That's why people on this side of the House, in the coalition, fear this as a hidden tax. We fear that this is going to drive up cost-of-living pressures on households when they can least afford it.

We believe there are better ways to do our share in reducing global emissions. I recently visited Fortescue Metals in the Pilbara and saw firsthand how that particular company is using technology to drive down its emissions through alternative fuels like hydrogen, or the largest solar farm I've seen. They're investing in renewable energy sources and on track to reach decarbonisation themselves by 2030. This is one of the world's largest producers of iron ore, and it's a clear example of how our policy—the previous government's policy—in relation to technology not taxes was working in the community.

I want to reflect for a moment a little closer to home in my own electorate of Gippsland, and particularly the regional Latrobe Valley, which stands to be the most adversely affected region in Victoria if we get this wrong, and I fear we are already getting this wrong. For more than a hundred years the people of Latrobe Valley have supplied a reliable and affordable secure form of energy to all Victorians and much of south-east Australia. Victorians have depended on that reliable base-load energy from Latrobe Valley, from the brown coal-fired power stations. That community should be enormously proud of the achievements it has delivered and the wealth it has created and helped to create right across Victoria. The member for McEwen would know this very well: my region still bears the scars of the job losses associated with the decision to privatise the SEC more than 30 years ago. The member for McEwen will remember it as well as I do.

He'll have to forgive us and those opposite will have to forgive me if I'm a little sceptical about promises being made on just transition plans. What we have seen already in the Latrobe Valley with the precipitous closure of the Hazelwood power station, the planned closure of Yallourn W power station in 2028 and the announcement only last year that Loy Yang A will shut in 2035—prematurely shut in 2035—is that those plans will leave a gaping hole in energy supply. Yet we are being asked to trust the renewable energy zealots, like the minister for climate change. Minister Bowen will say there's large-scale solar and onshore and offshore wind supported by advances in battery technology that will help to create jobs and keep the lights on at an affordable price. But I fear it's a bit like the captain of the aircraft saying: 'Don't worry. We're going to take off and we'll add the wings to the plane when we get up in the air.'

Don't get me wrong, I believe there's a transformation underway towards more renewables and less fossil fuel-powered energy sources across Australia, and I freely admit I was at the forefront of the National Party design to support a net zero emissions target by 2050. But I reinforce my opening comments that this must be done in a balanced way. It must be done in a way which respects our communities, particularly in places like Latrobe Valley, and still delivers a reliable and affordable system for all Australians. Given our national contribution to global greenhouse gas emissions is 1.3 per cent, we need to recognise that there is no Australian solution to these environmental challenges in isolation. We need to be in a position of economic strength to make our contribution to dealing with these challenges. Keep in mind, if we shut down every one of the coal-fired power stations in Latrobe Valley, total global emissions would go down by 0.11 per cent.

The decision by AGL to bring forward the closure of Loy Yang A will impact, obviously, local jobs and the economy by undermining the reliability of Victoria's power supply. ExxonMobil Australia acknowledged today that they will not be in a position to stabilise the grid if coal-fired power plants break down unexpectedly, like they did last winter. David Berman, ExxonMobil Australia's Commercial Director, said:

The Gippsland Basin Joint Venture will no longer have the capacity to step in as it has in the past to provide whole of market solutions when planned or unplanned maintenance events occur, or when additional gas is required to support the electricity market.

This is my concern, that we are rushing headlong into a weather-dependent form of energy supply without the security to back it up in a major manufacturing state like Victoria. International experiences leave me unconvinced that the planned renewables will offer the same reliable and affordability that Victorians have become used to expecting from Latrobe Valley generators. For example, projects like offshore wind off the Gippsland coast have great potential, but the turbines haven't been built, approval hasn't even been granted and the transmission lines through private property to connect them to the grid remain extremely contentious in my community. Given those challenges, I would be surprised if there were any wind turbines operating in Bass Strait by the end of this decade and contributing to the national grid. You won't be surprised to hear me say as a local MP my first priority is the social and economic prosperity of my community, and that is centred around long-term and sustainable job opportunities.

Our region has a rich and proud history of powering the wealth of Victoria through the delivery of affordable, reliable base-load energy, and my community has a very proud history of practical environmental management as well. They just want to see a balanced approach, and our power industry workers and their families should be proud of their contribution to the nation and should be respected as we make this transition.

Last year the Australian Energy Market Operator released the 2022Integrated system plan for the National Electricity Market. I freely admit I know a lot of people probably haven't read it. I don't blame you. It was a soulless document, written by engineers and economists, with hardly any reference to the people who will be directly impacted by the changes in the electricity generation system. Moving to a system which is 100 per cent weather dependent before transmission lines are even built to link from large-scale renewable projects to the grid is a recipe for higher prices and unreliability for businesses and for blackouts and brownouts for family homes and industry in regional communities.

Finally, I want to make this simple point. People need to be at the heart of these decisions. The AEMO report was disturbingly light on any references to the likely social and economic impacts in directly affected communities like Gippsland and the Latrobe Valley. People need to be at the heart of these decisions—the people who currently work to generate the electricity, who are expected to install the new renewable capacity and the transmission lines, who need reliable and affordable energy at home and in their workplaces and who want to live in an environmentally sustainable system for their children.

If we put aside all our concerns about the capacity to meet our future energy needs from renewable sources alone by 2035, the issues facing Latrobe Valley demand a coordinated, strategic response from all levels of government. I believe there should be a high-level and bipartisan task force appointed to immediately deal with the long-term issues and provide long-term funding to help my community make the transition. As a local MP, my focus is on the region and on ensuring that Gippsland and Latrobe Valley families are not forgotten, when it's our families who have been working to power Victoria's wealth for the past 100 years.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

When we talk about the Safeguard Mechanism (Crediting) Amendment Bill 2022, we need to start with the first question. Why is it needed? Why do we need to have these bills? Because it's about our future and our kids' futures. It's about the No. 1 thing that we all should do as people in this place—to sit here and look at how we're going to make this nation better for the next generations.

We've gone through 10 years of climate wars that did not need to happen. They only happened because of the ideologues on the other side—not all of them, granted—that pushed against everything. We had the time when former prime minister Abbott claimed that there was a carbon tax, and we had every single one of those false statements put out about the words of then prime minister Gillard, even to the point where Peta Credlin admitted on TV that it was a lie. But they still keep holding to it. That's a real shame because, as I said, I know some of the people over there genuinely come to this place because they want to do better for our nation and our nation's future, and the most important thing we can do for our nation's future is to make sure that our kids and grandkids and the generations to come have an environment that's clean and safe and where we can actually have production of food and fibre and the things that we need to go forward.

I think it's fundamental that we should stand back and say, 'What are we doing now that is going to benefit our kids' futures?' because this goes to the crux of what this is all about. It's about doing things cleaner, greener and in such a way that we don't have as much impact on our environment. That's why we committed to reduce national emissions to 43 per cent below our 2005 levels by 2030 and to move to net zero emissions by 2050. This is about what's achievable and it's about what's realistic, but it's also about making us work to really have a deliberate and sustained effort to meet those targets, and every one of us has to play their part.

This is the way that we drive things forward. Let's move aside the absolutists who would have us do nothing at all or go all the way to where you can't actually do it. You've got to be practical. You've got to be sensible. One thing I agreed with the pessimistic member for Gippsland on was that we've got to bring people along. People need to be able to make change, see how it benefits them and see how it works. With every sector playing its part, we will be better off overall in terms of our environment and our kids' futures.

Our government's Powering Australia plan commits to build on the safeguard mechanism to reduce industrial sector emissions—something we know needs to be done. But it's about making sure that what we're doing is taking this country forward. For 10 years we've just wallowed in the pit of an inability to deliver positive steps for communities and for the nation as a whole. We want to take that technology, invest in what we can build and take that to the world. If we think back to the time of the former Howard government, PV cells were made and developed here—technology that goes around the world. But, because we had a government at that time that did not support the idea of renewable energy, that all went offshore. All that manufacturing, all those jobs, all that technology, went offshore, and we ended up buying it back. It's silly. We develop these things. We have the talent and the ability to do these things. But, unless we've got a government like our government that's actually on the side of people who develop technologies and who want to make a cleaner, greener environment, we're going to get nowhere. That's what we had for 10 years—constant fighting and bickering over what needs to be done.

Safeguard facilities are the country's largest emitters outside the electricity sector, contributing around 28 per cent of our total emissions. These reforms back in the climate commitments that companies have already made. These are steps that they're already taking. People are actually wanting do this. It's across industry wherever you go. People do want to have a better environment. They want to have a better future. By working with businesses and working with people, we can help meet our legislated national targets. The bill enables tradeable credits to be issued to facilities below their baselines. This provides an incentive for all covered facilities to reduce their emissions and access the lowest-cost abatement. We've had a broad coalition of business leaders and groups supporting the safeguard mechanism. This is because it will provide policy certainty for large industrial emitters.

What does the bill do? The safeguard mechanism will support and drive emission reductions from facilities covered by the safeguard mechanism. These reforms will help Australian businesses to remain competitive as the world decarbonises. We shouldn't be waiting. There is this theory on the other side: 'Let's not do anything. Let's just wait until others have done it. Then we'll start moving.' It's just wrong. You can't be international leaders if you're at the back of the pack. That's why we've got to be at the front of the pack. We've got to take the ability we've got through our science, through our manufacturing processes and through the skilled workforce that we have and will have for the future and utilise that best. Once we do that, the reforms will help Australian businesses to remain competitive and go forward as we continue through this 21st century.

The bill updates the objectives of the National Greenhouse and Energy Reporting Act 2007 to ensure net aggregate safeguard baselines decline—increasing industry and investor confidence to take action. That's the one thing that industry tells you—that over the past few years there's been nothing but instability in where we're going with our climate future, where we're going with pollution, because of all the chops and changes and the issues we've had during these climate wars.

This bill allows for the creation of a new unit type, a safeguard mechanism credit. The bill deals with matters like the issuance, transfer and ownership of the credits from facilities which beat their baselines. 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 interactions between the safeguard mechanism and the Emissions Reduction Fund. This will support the integrity of both the safeguard mechanism and Australian carbon credit units. The detailed design of the safeguard mechanism, such as how baselines are set, will be in subordinate legislation referred to as the safeguard rules. The draft safeguard rules were released for consultation on 10 January this year.

The key reasons for these reforms are quite simple: we now have legislated emissions reduction targets, and the safeguard mechanism is a central policy to delivering our targets—announced in December 2021 as part of our Powering Australia plan and endorsed at the last election by the Australian people. This is the key: we took this to the election and we've received a mandate to do this, because the overwhelming majority of Australians want action on climate and they want action for our kids' future, whether it's through emissions reduction to remove the pollution from our air or whether it's about cleaning up waterways so that we've got cleaner water to run through our nation. That's why we've got to look even at things such as cleaning up the waterways so that our native fish can thrive. We need to do that through carp eradication programs, for example, as a way to do something positive to bring a better future for our kids.

These safeguard reforms are expected to save around 205 million tonnes of emissions in the period to 2030, which is the equivalent of taking some two-thirds of Australian cars off the road in the same period. Reforms to the safeguard mechanism have been consistently recommended and supported by businesses and business groups, including the BCA, AIG and ACCI. They're people that normally are probably not on our side of the fence; I guess that would be the thing we'd say. But they're businesses, and businesses know where the future's heading and why they need to be part of that. That's why they support these mechanisms: to be able to actually get a pathway forward and deliver better outcomes, something that we need to stop the climate wars that we've had for the last 10 years.

We know those opposite had grand plans for the safeguarding credit they announced back in May 2020 with their King review response in the May budget of 2020-21. In their crediting consultation paper in August that year and their long-term plan in October 2021, they put forward these reforms, which they never delivered and now oppose. I think that's been the key thing that we've learnt from this: we now have an opposition not only opposing the government's views but opposing their own views, a rather bizarre set of circumstances.

This is why we've got to bring these things forward and move this Safeguard Mechanism (Crediting) Amendment Bill through to get things done, because, after the decade of delay, denial and absolute dysfunction, all we have to hear is a half-baked scare campaign. We heard that through the previous speakers: 'I fear, I fear, I fear.' It is not about any positive plan or any way to actually address the issue that Australians want. It goes back to the standard 101 of the conservatives, and that's to run a fear and smear campaign, with no basis other than that they're planning to oppose everything.

When we look at what's happening, we see that 80 per cent of our facilities, representing 86 per cent of covered emissions, are already covered by the corporate net-zero commitments, because businesses know reducing emissions is essential to their long-term competitiveness in a global net-zero economy. We see that around the world with manufacturers who package stuff, send it overseas and then require the packaging to come back, to make sure that we re-use, recycle and cut our emissions globally.

When we're looking at around 215 large industrial facilities, accounting for around 28 per cent of Australia's emissions, the importance of this is to make sure there's integrity involved. We commissioned an independent review, the Chubb review, to ensure that carbon-crediting frameworks have integrity and maintain a strong and credible reputation. The expert panel concluded the arrangements are sound. The panel found there are appropriate checks and balances in the scheme, the methods and the projected level to protect the integrity of the scheme and the credits created underneath it. The panel made sensible recommendations to ensure the scheme aligns with modern expectations of best practice, including separating the functions of integrity assurance, regulation and administration; maximising the transparency of the scheme information; encouraging innovation in the method development and project implementation; and supporting greater participation, including by First Nations communities.

The government has agreed in principle to the 16 recommendations of the review and is working with its stakeholders on its implementation. We need to know that emissions from covered sectors are among the fastest-growing across the economy, and are projected to overtake emissions from the electricity sector if we don't take policy action. Reducing emissions from safeguard facilities is therefore a crucial part of meeting our climate goals and maintaining Australia's industry and competitiveness in a decarbonising global economy.

We released our proposed reforms on 10 January this year and imposed comparable requirements to the commitments and actions of other countries at sectoral and whole-of-economy levels. Our reforms would see Australia's largest industrial emitters take a proportionate contribution to meeting our target by reducing facility baselines by 4.9 per cent each year between 2024 and 2030. This means that, on average, safeguard facilities reduce their emissions to the same rate as the rest of Australia's economy in 2030.

The important message to start with and lead with is that this is a sensible approach. You can't take the absolutist views of the Greens, who want to do everything but can deliver nothing, or of the opposition, who, after 10 years of infighting and plans all over the place, left us in a worse position than what we started with. We need to continue on a sensible, safe and intelligent path to meet our emissions targets, but to do that with business and with communities. The only way we do this is by ending the scare campaigns, ending the internal fighting across the chamber and starting to focus on the nation, not ourselves.

I absolutely support this bill, and look forward to it having a speedy passage through this place.

Keith Wolahan (Menzies, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Safeguard Mechanism (Crediting) Amendment Bill 2022. Last year, my wife told me, 'You need to speak with Leo.' Leo is my son, and he's 10. She said, 'He wants to talk to you about climate change.' I said, 'Okay; why does he want to talk to me about climate change?' She said, 'He saw that documentary on Netflix.' I said, 'What documentary on Netflix?' She said, 'It was David Attenborough:ALife on Our Planet.' I know many other members of this place often cite that documentary because it came out of a time when most of Melbourne was locked down, so most of Melbourne watched it. For those of you who haven't seen it, it is quite a moving documentary. It charts his life as a person as well as the issue of climate change, and he makes a point at the end. There will be criticism about the form of advocacy and whether things are properly fact-checked, but as a piece of art it was very effective and it was moving. It goes back to when he was a young boy; he's sitting in what is an old Welsh mine and he's looking at the different gaps in the soil and talking about how the earth has changed. It then breaks through different pictures of him travelling around the world as he ages but there's a clock ticking down at the same time, and it's got this loud clicking motion, and it is the percentage of wild areas on earth. As he gets near the end, there's a crescendo of how much of the wild areas of earth have gone in his lifetime—it's quite moving—and he draws the link between that and the challenge of climate change. You would have to have a very thick skin not to be moved by the way that was put.

That's often used as a reason to support a particular bill or a particular proposal—that any actions taken in this place are somehow going to affect the visuals you saw in that documentary. It's dishonest to view it in that way because the things we do here must not only be important for the environment but be important for the issue globally and also in a responsible way for our economy. So let me quickly outline what it is we're dealing with because a lot of people outside of this chamber who might be listening or viewing may not know the details of this proposal.

In 2005, we were, as a country, emitting 621 megatonnes per year. The policy put to the election by the colleagues opposite was to reduce that by 43 per cent by 2030, which would take you, in 2030, to 354 megatonnes a year. The proposal that we have before the parliament now has a focus on 215 facilities which have been picked as the largest carbon emitters. They include mines, gas manufacturers, airlines and concrete facilities. Altogether they account for 28 per cent of emissions. This proposal sets limits on those, and that will have impacts on many different areas. But it's important to note that a lot of those sectors have made great strides in reducing their emissions to date. In particular, electricity, waste and agriculture have cut between 10 and 20 per cent of their emissions over the terms of the last government, but many others haven't. Transport and industry processors have not been able to obtain the same cuts. So the proposal is to give each facility a cap on their emissions and then to reduce that by a percentage each year. I think it's 4.9 per cent per year. If it's below cap, the facility can then sell to another facility, and they can also offset those with carbon credits, including by land restoration and other projects.

It's important to note that the coalition, when in government, achieved a lot of this without the burden which is going to be imposed on facilities and which will have an impact on inflation. It will probably have very little impact on the environment and almost no impact on the visuals that were shown in that documentary that my son watched. In government, the coalition had significant achievements in nine years of office. The government met and exceeded Australia's Kyoto targets and signed on to achieve net zero by 2050. The government reduced emissions by over 20 per cent on the 2005 base level, putting Australia well on track to beat Paris treaty commitments. It was a decade of balancing emissions without significant reductions in economic growth. In fact, the economy grew.

Labor is now rushing to impose this bill, which would lead to drastic cuts for Australian businesses. Labor is taking a scheme that did exist, but they are changing the scheme from one whose purpose is to stop emissions by encouraging businesses and to encourage them to back technology to a scheme whose purpose is to penalise businesses through taxes. The coalition, when in government, supported a carbon trading system that rewarded businesses that voluntarily reduced their emissions. Our plan for the safeguard mechanism was to create incentives and support businesses that made the transition to net zero. If the proposed bill is successful, businesses will be hit with what is, in effect, a carbon tax. By pricing carbon dioxide at $75, Australia will have a price that is three times higher than the one set by the previous government, and this will rise to $100 by 2030. This will make Australian businesses extremely uncompetitive, to the point that they will be driven offshore. You will have affected the economy in a serious way and you will have done nothing for climate change because those businesses will then be going overseas.

Many of our trading partners and international competitors for key industries, including aluminium, cement, copper, coal, gas and iron ore, do not have any national carbon pricing scheme and certainly not one on this level. Our exporters will struggle to compete in these markets. That means not only lost export revenue but less investment and fewer jobs. The economic activity will relocate overseas in markets with no climate policies and high rates of emission—in many cases more than double the emissions of Australian companies. So this will lead to higher building material costs, higher fuel costs and higher transportation costs at the very time when the last thing this country, the economy, families and small business need is higher costs. It's the very last thing we need at this time.

It should come as no surprise that Labor have rushed this proposal through. There's no evidence of the impacts of the policy to introduce a carbon tax. Instead, Labor promised a $275 cut to household electricity bills, and I know that side get very sensitive—

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

The debate is now interrupted in accordance with standing order 43. The debate may be resumed at a later hour. Given that you were interrupted, Member for Menzies, you will be given leave to continue when the debate is resumed.