Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Hansard source

The opposition wishes that Senator Xenophon's amendments were not necessary. We wish that because, as we have stated a number of times in this debate, we would much rather that the full suite of regulations were available. Were they available for us to review, we may find that the concerns that Senator Xenophon justifiably expresses are covered in those regulations. Unfortunately, they are not available. This legislation is very dependent upon different sets of regulations that it will work under. Although Senator Evans, when he was in the minister's chair, indicated that it is not unusual practice for regulations to come later and for the parliament to deal with matters in that order, this is such a significant bill with significant reliance upon the regulations that we do not think it is unreasonable to say there should be far greater certainty about them at the outset. Once in place, of course they can change—that is the nature of the beast—but, at the outset, we think there should be certainty to deal with the types of issues that Senator Xenophon's amendments to section 41 would provide for.

I have highlighted a few times in this debate that there was a very thorough Senate inquiry undertaken into this legislation. Whilst I do not agree with all the findings in the majority report, I give credit to not just the committee secretariat but also to Senator Cameron and government members in that they rightly highlighted a number of concerns. They presented extensive evidence that was brought out in the committee report. It highlights serious concerns about the application of the common practice test and how it would affect, in particular, individuals and organisations who have already taken steps to abate emissions or sequester carbon in some way.

I want to again highlight some of the evidence that the committee heard and the committee's recommendations, and then seek the minister's response. We heard from Carbon Farmers of Australia and the Carbon Farming and Trading Association who claimed:

... the ‘business as usual’ rule, which penalizes Landcare farmers and other progressive landholders who have taken up carbon farming techniques early and—

potentially—

rewards laggards who continue to degrade their soils.

The association described this treatment of progressive farmers as 'the ultimate perverse outcome'. They stated:

The impact of that is that there will be property not under contract for carbon farming. By that I mean that these progressive farmers will eventually sell out or pass the farm on and there is no guarantee that that regime will continue. We believe that people would not desecrate a carbon rich environment because of the obvious value of such a thing, but it is not guaranteed.

Similarly, when it comes to how the common practice test is applied to future practices, the New South Wales Farmers Association highlighted a number of concerns about its application. They provided particular concerns in their evidence, and those concerns are highlighted in the committee report. They said:

The way additionality is applied will be critical to uptake of the scheme in the farm sector.

The aim of the CFI should be to facilitate and [motivate] farmers to adopt climate friendly farming practices as quickly as possible. A threat to withdraw this funding should practices become common, or prove to be profitable in the absence of carbon credits, will be a red light to the majority of commercial farmers.

Such threats also raise doubt about the practicality of raising funding for projects with uncertain future cash flow.

While appreciating the difficulties posed by Kyoto rules applying to additionality, a central principle of the CFI should be that if a farmer increases or conserves carbon beyond a base line he will be paid for the service. In this regard, financial additionality or common practice considerations should neither exclude participation nor lead to later disqualification of an established project.

Obviously these are difficult issues. Senator Xenophon's amendments do not particularly deal with some of those broader concerns around the common practice test that I and Senator Nash highlighted before, but it does provide some greater level of certainty. The Senate committee in its recommendations urged the government to ensure there are no perverse incentives to cease existing abatement projects and to encourage first movers to undertake further abatement or sequestration activities under the carbon farming initiative. It recommended the government consider what more could be done to fast track development of methodologies and to develop and test the workability of carbon offset projects in key agricultural industries.

I am seeking, as we go through this committee stage, to get the government to put on the record how it is responding to these committee recommendations—not just the recommendations that the opposition may have made or the concerns that the opposition may have highlighted but the recommendations of the committee chaired by Senator Cameron in the majority govern­ment report. Even though it would look as though amendments such as Senator Xenophon's will fail, it is important that, at least on the record, we have some level of detail about how the government is going to provide greater certainty than this legislation in its current form will provide.