Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Taking effective, strong action on global warming is a challenge of my generation, and it is certainly why I am here in the Senate today and why the majority of my party room do what they do. Taking action on global warming and the gases that lead to global warming is not going to happen through a silver bullet solution; it requires a policy approach that uses multiple and complementary measures—sticks and carrots. Policies based on incentives. As an economist I understand economics is more about incentives than anything else—understanding how they work and how people and markets respond to them to get results.

Senator Nash interjecting—

I will make sure I talk through Senator Nash's speech next, Acting Deputy President Gallacher.

The way I describe action on climate change to a lot of people I meet who maybe do not necessarily understand the complexities of things such as the clean energy package is that it is an insurance policy. If you think about insurance for a second you do not have to have proof to be prudent. Even if you face up to the climate sceptics—and I recognise there are a number of them on the other side of the chamber—then what we talk about here is risk management, managing what clearly is a risk. It is clear that most scientists and experts not just in this country but around the world recognise it as being a clear and fast-approaching risk. In fact, it is already in our economy and our society today. This is the basis on which insurance markets work.

In fact, speaking of insurance, it has actually been the insurance companies themselves who have led the charge on action on tackling climate change. As early as the 1980s they were the ones who chaired the first round tables on action on climate change, because they priced the risks of things such as extreme weather events and rising sea levels and they are well aware of the costs of climate change. So if we just focus on our jobs in government as managing risk then it becomes a lot clearer and the importance of what we do in this place to tackle what is the issue of my generation becomes more apparent.

We hear a lot of arguments and debate in this chamber about the cost of living—that somehow a small and questionable impost on your electricity bill is going to have a significant impact on your life. I agree that this debate should be about the cost of living, but it should also be about the cost of living with climate change and the impacts of climate change. We know from a number of international and Australian climate change authorities that the potential cost of climate change from things such as floods, rising sea levels, damage to ecosystem services and direct damage from extreme weather events—economic damage that is tangible and that we can measure—will rise into the trillions. It is certainly already in the billions. Whether you ascribe current extreme weather events to climate change or whether you believe the experts when they say to expect them to be more frequent in the future, either way these types of events are going to cost our economy significantly—not to mention our beautiful environment and our communities—so we need to take action and we need to show leadership.

On this note I would like to pay a special tribute to Senator Milne for all her hard work over many, many years in helping put together the clean energy package, but especially the work Senator Milne and the Greens party room did prior to my entry into the Senate on getting the Clean Energy Finance Corporation and the Climate Commission up and running in Australia. The Clean Energy Finance Corporation is just one of many measures set up by successive governments in this country to tackle climate change including: the carbon price, fixed and floating; the renewable energy target; and grant funding from agencies such as ARENA are other measures. They are all sophisticated approaches and they are designed to provide incentives to attract investment and influence prices.

Why was the Clean Energy Finance Corporation specifically necessary in this package of measures? Like all these measures it seeks to make commercial investments to counter market failures and impediments to financing. I have heard climate change or global warming described as the biggest market failure of our time. Why is it a market failure? We define that in pretty simple terms: it is because the activities, the costs of producing the pollution, the dirty energy from the polluters, does not reflect the external cost that climate change impinges on our economy and on our environment. We therefore have to take measures to price that externality into those production activities.

I would say this for Senator Cormann's benefit, because he is in the chamber at the moment. I have heard him say in this chamber that a fixed price on carbon or a floating price on carbon is not a market based instrument.