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

I think I owe Senator Xenophon at least an indication. Can I say at the outset that I think I gave an incorrect figure. The figure I gave was that the government’s calculations were that the cost of the previous amendment was $2.6 billion. I am advised that it is actually $3.5 billion over and above the cost of the amendment already agreed with the opposition.

As I understand it, the senator is seeking to do two things here. He is seeking to enable certain specified offset activities to receive emissions units. I want to come back to the principle, because rather than the sort of ‘every child gets a prize’ approach to this we have to come back to what the policy principle is. This plan is a means to meet our target, and part of what we are doing is setting up a new market. We have to ensure that the market has confidence in Australian emissions units and in the abatement that is represented by them—that is, in terms of offsets. The reason is not because we love markets but because that is how we generate investment.

What is being suggested here is that a range of activities—some of which count towards Australia’s targets and some of which do not under current accounting rules—should be rewarded under the scheme. As a policy proposition, the government does not agree with that. It is not a case of simply saying, ‘We love all these things and we’re just going to give them assistance through the scheme.’ A better policy approach to it is to say: ‘For those things that can be counted towards our target, we need to establish clear rules which enable those technologies to provide offsets or abatement. We need the methodologies there. We need to be able to measure it so that there can be investment through the carbon market or through private finance. For those things that don’t fall within the scheme and that are not counted towards Australia’s target, we should find other ways of supporting them. They might include either the voluntary market’—and we have had a long discussion about that—‘or they might include direct grants or other policy mechanisms such as the renewable energy target.’ The difficulty is that this proposal deals with some things which do and some things which do not count towards Australia’s international target. We have a target already but this would apply in the second commitment period.

The amendment appears to overlap with some of the incentives already provided through direct grant programs or under the renewable energy target. I do not know whether the senator is intending this amendment to work in conjunction with the government’s previous amendments. I am unclear as to how you ensure the integrity of these offsets. You will recall that we had a long discussion about the Domestic Offsets Integrity Committee which was charged with ensuring additionality and methodologies to preserve the integrity of the scheme. I am unclear as to whether this would work in conjunction with that or whether we just decide by legislative fiat that these technologies come in.

I want to emphasise again: it is not that the government is not supportive of these technologies. The question is: what is the best policy mechanism to deliver that support? That policy mechanism should not include either things that are not yet capable of being properly measured and counted such that you start to introduce uncertainty into the new market or things that do not count towards Australia’s targets. The reason is that, if we do those things, particularly the second, we in fact expose taxpayers to risk. If we have reductions in emissions in Australia that are not recognised by the international community then somehow the nation has to find the remainder of the reductions that it has committed to through other means, and the most obvious for that is in the budget. There is a very clear policy proposition here to which we hold. If the senator wants to push me or the government, as he regularly does, for additional assistance to these sectors, it is obviously open to him. However, I would respectfully suggest that these kinds of amendments are not the most sensible way to provide that support.