Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Hansard source

I will debate you, Senator Cormann, anywhere. You are the one who refused to debate CPRS in this chamber. There is a question of judgment about the best policy framework and how best to spread the costs across the community. Senator Milne may or may not have heard me say that a decision to exempt one sector or another further from the carbon price, which is analogous to the RET price, imposes costs on other parts of the economy. We have taken that into account. We have had to balance the need, in our view, to assist particular industries, given their very high potential exposure under this policy, with the need to ensure that people pay their fair share.

I may not have previously indicated our assessment of the extended or wider assistance. Again, I emphasise that nobody gets away with 100 per cent exemption. There would be a 0.8 per cent increase in electricity prices between 2010 and 2020 as a result of that policy decision. Without any assistance or exemptions, we approximate that the impact of RET alone will be about three per cent between 2010 and 2020. We estimate that the impact of these decisions around industry exemption, made for the reasons I have outlined, will be around an additional 0.8 per cent. Yes, we have made that judgment, one that the coalition has supported, because we believe that we have to recognise the greater exposure to cost for some sectors than for others.

On the issue of the windfall gain test, because we are having a cognate debate, the fact is that the calculation of windfall gain is not an easy proposition. I know that implementation issues may not be front of mind in this discussion, but to calculate a windfall gain the government would be required to estimate what prices would otherwise have been for any particular entity and therefore to calculate what its actual financial position is as compared to not offering this assistance. A lot of hypothetical and detailed calculations would be required. We do not think it is sensible to get involved in an ongoing windfall gain discussion or process as the way to deal with this issue. Our view is that the way this is best dealt with is to ensure that assistance is less than 100 per cent. That comes back to the issue that you do not want to provide more assistance than is required. The way we have done that is to say that we will not exempt for the existing MRET and we will only exempt 90 per cent or 60 per cent, depending on the level of emissions intensity, for the remaining renewable energy target—that is, the expanded target. We think that is a more sensible way to deal with the prospect of windfall gain. So the government will not be supporting the Greens amendments.