Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

Because we are very intent on ensuring that this is a well-regulated, well-functioning market. We want to roll this out competently and carefully, and that is what we intend to do.

I have some information on the bushfire issue, and then I also have some responses to a previous question. I am advised that, in the case of bushfire reducing carbon stored in a Carbon Farming Initiative project, the project proponent will not be penalised. They will be allowed to re-establish the carbon over time. When the carbon is restored to its previous level, the project proponent can then begin to earn additional credits.

In relation to your question about where people will be able to sell credits—these are Kyoto compliant, obviously—the legislation that we hope will pass this place will create a market. I accept that there are still developments in markets in the international context in terms of some of the issues that have been raised, but the legislation before the parliament creates a domestic market.

I would also say to the senator that there are already some commercial companies engaging in this. There was an announcement in 2010, after the announcement of the CFI, of an agreement between Carbon Conscious Ltd and Perenia Pty Ltd which involved Carbon Conscious planting around 50,000 to 70,000 mallee eucalypt trees in marginal Western Australian farming land and delivering AAUs to Perenia in line with tree growth under the CFI. They agreed a price.

Senator Heffernan interjecting—

Because this indicates how the market moves. This came on top of a deal which was announced by Carbon Conscious in 2009 with Origin Energy and BP Singapore, worth up to $169 million and $2.5 million respectively, designed for the CPRS.

Senator Heffernan interjecting —

I quite like Senator Heffernan, but he has had a few goes, so I am going to have a go back. The thing that seems to be escaping you, Senator, is that this is the creation of a market and that markets will respond to the pricing signal. It seems extraordinary that it is the Labor Party and the Greens who are understanding the effect of a price signal on the behaviour of private sector companies and individuals. People will respond to the price signal. That is why it is important to get that signal into the economy, so that you can get the investment in the right places.