Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

by leave—I move Australian Greens amendments (37), (38), (40) to (44), (47), (48), (50), (55) and (56) on sheet 5786 together:

(37)  Clause 165, page 205 (line 16), at the end of paragraph (2)(c), add “, only to the extent necessary to offset the loss of competitiveness created by the absence of carbon pricing policies in the economies of foreign competitors of the activity”.

(38)  Clause 165, page 205 (after line 30), at the end of the clause, add:

        (3)    To avoid doubt, transitional assistance under this Part must not compensate for the loss of profits or reduced asset values resulting from the existence of the scheme embodied in this Act and the associated provisions.

(40)  Clause 166, page 206 (lines 1 to 16), omit the clause, substitute:

166  Simplified outline

                 The following is a simplified outline of this Part:

• The regulations may formulate a program, to be known as the emissions-intensive trade-exposed assistance program, for the auction of Australian emissions units in respect of activities that:

(a)

under the program, are taken to be emissions-intensive trade-exposed activities; and

(b)

are, or are to be, carried on in Australia during a financial year specified in the program.

• The regulations may provide for assistance under the program in the form of compensatory payments to an emissions-intensive trade-exposed activity, for each unit of production, by way of a credit against the activity’s emissions obligations equivalent to the expected increase in world product prices that would eventuate if foreign competitors had carbon pricing policies similar to those of Australia.
• The emissions-intensive trade-exposed assistance program may impose reporting or record-keeping requirements on a registered holder under the program of auctioned Australian emissions units.

(41)  Clause 167, page 207 (line 6), omit “issue of free”, substitute “auction of”.

(42)  Clause 167, page 207 (after line 10), after subclause (1), insert:

     (1A)    All Australian emissions units issued for the purposes of the emissions-intensive trade-exposed activities program must be auctioned.

(43)  Clause 167, page 207 (after line 10), after subclause (1), insert:

      (1B)    The regulations may provide for assistance under the program, in the form of compensatory payments to an emissions-intensive trade-exposed activity, for each unit of production, by way of a credit against the activity’s emissions obligations equivalent to the expected increase in world product prices that would eventuate if foreign competitors had carbon pricing policies similar to those of Australia.

      (1C)    The Minister must consult the Productivity Commission before making a recommendation to the Governor-General about regulations to be made for the purposes of subsection (1B).

(44)  Clause 167, page 207 (line 12), omit “free”, substitute “auctioned”.

(47)  Clause 169, page 208 (line 6), omit “free”, substitute “auctioned”.

(48)  Clause 170, page 208 (line 15), omit “free”, substitute “auctioned”.

(50)  Clause 173B, page 213 (lines 14 to 20), omit subclause (2), substitute:

No compensatory payments for 2 eligible financial years

        (2)    No compensatory payments in accordance with the emissions-intensive trade-exposed assistance program are to be made to the corporation for:

             (a)    the first eligible financial year that begins after that time; or

             (b)    the eligible financial year that next follows the eligible financial year mentioned in paragraph (a).

(55)  Clause 273, page 357 (line 2) to page 358 (line 2), omit subclauses (1), (2) and (3).

(56)  Clause 274, page 358 (line 13) to page 359 (line 7), omit the clause, substitute:

274  Quarterly reports about issue of free Australian emissions units under Part 11

                 As soon as practicable after the end of each quarter, the Authority must publish on its website the total number of free Australian emissions units with a particular vintage year issued during the quarter in accordance with Part 11 (destruction of synthetic greenhouse gases).

These amendments go to the issue of the compensation that is being proposed in the scheme to the energy-intensive trade-exposed sector. The amendments we are moving are entirely consistent with Professor Garnaut’s assessment of what is and what should be appropriate. I will make a few comments in relation to this.

As Professor Garnaut said in his review, this is ‘a dreadful problem’. He talks about the potential distortion that arises:

… if an Australian emissions trading scheme is introduced in the absence of, and until such time that there is, an international arrangement that results in similar carbon constraints or carbon pricing among major trade competitors.

He goes on to say that we should compensate the energy-intensive trade-exposed sector for the extent of their trade exposure. He says, particularly, that:

There is no basis for compensation arising from the loss of profits or asset values as a result of this new policy.

That policy is the CPRS. He continues:

The rationale for payments to trade exposed, emissions-intensive industries is different and sound.

That is different from there being no case for the coal fired stations. He goes on to say that that compensation:

… is to avoid the economic and environmental costs of having firms in these industries contracting more than, and failing to expand as much as, they would in a world in which all countries were applying carbon constraints involving similar costs to ours.

His point is that there is an argument for compensation for trade exposure but trade exposure only, and that is precisely the Greens’ position.

I have heard the minister say a couple of times in the media that the Greens do not support any compensation to any industry, and that is not correct. These amendments have been on the record now for several months—a couple of months, at least. We have said that we support the Garnaut position: no compensation to coal fired generators and compensation to the energy-intensive trade exposed to the extent of their trade exposure. We do not support compensation for loss of profits, and we do not support them for loss of asset value. They have known the impact of a carbon price in terms of their profits and their asset value over time, and that has been factored into their share price and all of the decisions they have made. This is pure rent seeking, windfall profit behaviour from them. It is, frankly, despicable.

I look at, in particular, Woodside and Don Voelte’s role in this. If ever there were going to be an industry sector to profit from peak oil, it would be gas. To see him out there rent seeking in the most disgraceful manner is quite interesting. But, then, I do recall that just before the last federal election in 2007 there were not very many companies coming out supporting the Rudd government’s proposals in relation to Work Choices—and then out came Woodside. Out they came, days before the federal election, in Western Australia where the votes were needed. It was orchestrated fabulously. I could not help but smile, recognising, of course, that the former National Secretary of the Labor Party, Gary Gray, worked for Woodside for many years leading up to his preselection for Labor in the seat of Brand. Out comes Don Voelte saying that his company could work with a Labor government. Labor is elected. Gary Gray is appointed Parliamentary Secretary for Western and Northern Australia, where, happily, Woodside works. Now we have the Labor Party in a tight corner again, and along comes Don Voelte. They get their incredible compensation for absolutely no justification in terms of the position that Woodside put for the compensation that they ended up with. Now Don Voelte is out again saying, ‘Support the legislation.’ Well he would, because he knows that it is utterly and completely unjustified and a total try-on, and any real assessment of this will show it in the future, and he might as well lock in what he can get now as long as he can get it. That is basically, in a nutshell, the kind of behaviour you get.

It was identified in the Garnaut review that, unless you have a principled position—a set of principles against which you judge how much you provide for trade exposure—you get completely political decisions being made. They are completely compromised decisions; they do not reflect any real situation in the market at all. They are just about how many lobbyists you employ, how much you have in political influence and how much publicity you can get, and then you end up with a figure. That is exactly what Professor Garnaut warned about, and he said it is just a diabolical situation. He has said over and over again that you will end up with a political compromise that does not reflect the real situation. I recall that in the estimates process I did put this to the government, and it was admitted that all the arguments about leakage, all the arguments about loss of profit et cetera were yet to be proven and there was in fact no evidence for them. There is evidence for trade exposure—of course there is—and that should be looked at.

This proposition is that the compensation for energy-intensive trade-exposed industries should be for their trade exposure; that the minister should set in the regulations a definition of the principles against which you would measure that trade exposure; that the minister would take that advice from the Productivity Commission, which, before the regulations were set, would have done the work on that; and that the compensation be paid in cash after you have auctioned all the permits, which is something the Greens put as a proposition.

I will not take up any more time of the Senate. I would like to indicate here that this is a similar amendment to the next one. But I have moved this set together, and I recommend them to the committee. What we have seen is a disgraceful display of rent seeking and massive amounts of money spent on lobbyists in the last few months. Instead of these companies spending money on actually reducing their emissions, we have had a huge amount of money spent in sending lobbyists to Canberra. It seems that the squeaky wheel has well and truly been oiled in terms of the proposition for compensation for the energy-intensive trade-exposed industries, and it is yet another example of the flawed nature of this particular scheme. I commend these amendments to the committee. It is the economic position that is justified. It is an economic position which is based on a set of principles and not on who can exercise the most political influence. It is what Professor Garnaut recommended, and the Greens agree.