Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Hansard source

We are asked this afternoon to take note of answers given by the Minister representing the Minister for Climate Change and Energy Efficiency. I find this highly ironic, given that those opposite refuse to take note of the advice of 90 per cent of credible economists in this country when it comes to this very important issue, that those opposite refuse to take note of the advice of the overwhelming majority of climate scientists in this country when it comes to the issue of climate change and that they refuse to take note of the 37-odd inquiries conducted in the parliament and by governments on this important issue, one of those being an inquiry conducted under the auspices of the Howard government by Professor Shergold under the impetus of the former Prime Minister John Howard. Indeed, those opposite refuse to take note of the advice of former Prime Minister John Howard, who, in the lead-up to the 2007 election, advocated a market based mechanism.

Well, we do take note of that advice and we understand that as an economy, as a society, we need to take action to reduce climate change and the human induced impacts of carbon emissions from a baseline scenario in our economy. Indeed, we take note of the advice of those experts that the best way to do that for our economy, for our circumstances and for our energy mix is through a market based mechanism because that is the cheapest option for our economy, the cheapest option for households and the cheapest option for businesses. It allows them to make their own decisions about the manner in which they reduce their individual carbon footprint. It comprehends quite well the unique energy mix that we have in this country and the way that we generate electricity, most notably through cheap coal. It recognises that over time there will be a cost put on carbon emissions and that other fuel sources, most notably gas, will act as transitional fuels until we get to a scenario where we are generating more of our electricity through renewable sources.

Those opposite seek to take issue with and take note of the minister's answers in respect of the assumptions that have been made by Treasury in determining and putting together the modelling associated with the carbon price. I do not know how many times we need to explain this in this place and in other places: those assumptions are sound and those assumptions result in robust modelling. That has been the advice and the recommendation of other economists who have looked at the modelling.

Those two assumptions are simple. The first is that the 90-odd countries which have made international pledges through those commitments made at Cancun and Copenhagen to reduce their carbon emissions within their economies compared to a baseline scenario by 2020 will achieve them. They will be achieved. That is not an unreasonable assumption for anyone to make. Indeed, the United States have indicated that they will reduce their carbon emissions by 17 per cent below 2005 levels by 2020. How they do that is up to them. It is up to them as a nation of people to make a decision in their congress about how they achieve that, but we here have taken the approach, based on the advice of experts, considering our energy mix, that a market based mechanism is the appropriate way for our economy to deal with this issue because it is the least-cost option. It is the one that bears the least on Australian businesses and Australian households.

The second assumption that has been made—another reasonable assumption—is that there will be an international carbon market in 2016, by the time our economy moves from a fixed price mechanism to a floating based mechanism. This is a market that is already in operation. Indeed, companies in the United States, in China, in India and in the European Union can, if they choose to, buy permits and buy these mechanisms on an international market. They are free to trade in these permits as we speak.

These are not unreasonable assumptions to make. They are sound, they are robust and they have been credited by independent economic experts. That is why our system will work and why it is the best mechanism. (Time expired)