Anne Urquhart (Tasmania, Australian Labor Party) Share this | Hansard source

I rise to speak on the debate on Clean Energy Legislation (Carbon Tax Repeal) Bill 2013 and related bills. With my colleagues on this side, I will not be supporting these bills.

This suite of bills sets Australia up to fail on our climate change obligations, to fail our children and our grandchildren and to fail millions of people facing displacement from the effects of climate change. These repeal bills seek to set Australia up to do less to combat climate change. These bills seek to leave the burden and heavy lifting of decarbonising our economy to future generations.

There is a strong foundation of scientific fact underpinning the need to reduce global emissions to reduce the risk of global warming above two degrees. It is so certain, in fact, that doubt has crept in. With 95 per cent certainty that greenhouse gas emissions from humans are the cause of global warming, some cast doubt and ask, 'What about the five per cent?' If you were 95 per cent certain that something bad, something nasty, was going to happen to you or your family, would you sit by and ask, 'What about the five per cent?'—or would you find out what was causing the problem and get about fixing it? It is not too late to fix the problem of climate change, but time is running out—and fast.

Late last year I participated in the Senate Environment and Communications Legislation Committee inquiry into these repeal bills. The new coalition government referred these repeal bills to the committee to examine the costs of pricing carbon for households and businesses, while the opposition referred these bills on the basis of examining how they fitted with Australia's long-term climate change obligations. Put simply, we started from and continue to see this problem through very different lenses.

On one side the new coalition government see climate change in terms of purely the here and now. The arguments from those opposite revolve around immediate costs for business but fail to mention the Jobs and Competitiveness Program that was embraced by so many businesses that saw an opportunity to invest in energy-efficient technology, in renewables or in low-emissions technology to give their business a competitive edge. Their arguments are that the immediate costs for households are too high, but they fail to recognise that the carbon price was offset through tax cuts and increases to welfare payments to nine out of 10 households.

On our side we see the problem in terms of the medium to long term. The need to have in place a price mechanism for emissions reduction beyond 2020, with targets for reductions at 2030 and 2050, is just as important as a 2020 target. It is not just about the here and now. It is about the kind of Australia and world we want to leave to future generations. Just last week the Climate Change Authority reiterated its calls for an increase in the emissions reduction target to 2020, recognising that emissions reductions made now are less costly in the longer term.

Labor's approach to reducing emissions is to repeal the carbon tax and keep in place the already legislated emissions trading scheme, which puts a legal cap on carbon pollution. This lets business work out the cheapest and most effective way to operate within that cap. Cap and trade is overwhelmingly endorsed by economists as the most cost-effective and efficient emissions-reduction method. The OECD recently confirmed that higher levels of emissions reductions can be achieved at much lower cost through a carbon market mechanism. Carbon pricing is cheaper and more efficient than direct subsidies without a pricing signal.

The first 18 months of the carbon price has seen emissions from electricity fall, with coal power generation down and renewable energy generation up. The carbon price is not the sole reason for these changes, nor has it been insignificant. As such, the carbon price has been effective in increasing the competitiveness of renewable energy generation. Meanwhile, Australia's economy grew at trend in 2012-13, while additional government assistance to households has more than offset any price rises caused by the carbon price.

The binding caps will ensure Australia meets its international emissions reduction targets under the second commitment period of the Kyoto protocol—2013 to 2020—and under the United Nations Framework Convention on Climate Change. These are the targets pledged by 99 countries, covering eighty per cent of global emissions and including all of the major emitters, to reduce or limit emissions by 2020.

A flexible price would bring the Australian carbon price into line with the carbon price prevailing under the European Union Emissions Trading System, which is currently expected to be around $6 per tonne of emissions. Moving to flexible-price emissions trading would ensure Australia meets its international emissions reduction commitments while also reducing compliance and transaction costs for businesses, increasing flexibility and improving risk management. Importantly, embedding a carbon price in our economy sets Australia up on a long-term trajectory for emissions reduction. Slow decreases in the cap on pollution over a long period of time give businesses and households certainty and limit the risk of a carbon shock in future years, a carbon shock that will hit households and business far harder than a responsibly introduced carbon price. Direct action subsidies with a finite duration do no such thing, and the new coalition government is fully aware of this.

These bills have left many across the world wondering: is the new Australian government serious about reducing emissions? After all, it was just a few years ago that the new Prime Minister famously dismissed climate change science as 'absolute crap' to a small crowd in rural Victoria. Based on the coalition government's policies, Australia's rating on the Climate Change Performance Index has dropped to 57th out of 61 countries. Embarrassingly, at last year's Warsaw Climate Change Conference, Australia received four of the five 'Fossil of the Day' awards. These awards recognised the coalition government's backward proposal to wind back the carbon price mechanism and abandon support for research and clean energy.

It is clear that this current Senate will not pass this suite of bills as they stand. What of the next Senate? Interestingly, in Tasmania, the Liberal opposition election spokesperson, Vanessa Goodwin, is questioning the Palmer United Party's stance on abolishing the price on carbon. I quote: 'Mr Palmer has refused to pay his $8 million carbon tax bill, including penalties, and now he is aiming to win the balance of power in the Senate so that his senators will vote to backdate the abolition of the tax so Mr Palmer doesn't have to pay it.' Will those opposite cede to Mr Palmer's demands? What is the cost to the Australian budget if those opposite abolish the carbon price and refund all payments made over the past two years? Clearly, they will rely on the Palmer United Party senators to pass this legislation.

This legislation, which has been discussed for months, sets Australia up to fail. In its latest report on climate change policies, the OECD has highlighted that those serious about tackling climate change are implementing a price on carbon. For Australia to have a carbon-pricing mechanism in place and then remove it means we are turning our back on the world.

China, long held up by the coalition as not acting, is implementing seven carbon-pricing trials, and in one its carbon price has surged higher than Europe's. Guangdong province, China's largest, with a population of more than 100 million, introduced a cap on greenhouse gas emissions and issued carbon permits to big polluters from 10 December last year. Emissions trading schemes were also introduced last year in Beijing, Shanghai and Shenzhen provinces. As we participate in this debate to remove Australia's carbon-pricing mechanism, China is getting on with implementing carbon-pricing policies to see its economy through the carbon restraints destined to occur across coming decades. Yes, China's starting price is lower than Australia's, but there were amendments on the table in the House of Representatives to reduce our price and the new coalition government did not even allow them to be debated. As our new coalition government seeks to send Australia backwards, China recognises the impacts of pollution upon its economy and upon its society and is putting in place the long-term policies to deal with it.

The President of the United States of America has outlined his desire for a national market based solution to climate change. He acknowledged that it would not pass the current Congress and has moved anyway to introduce stronger regulations. It is interesting to note the similarities between the Republican Tea Party and the climate deniers in the new coalition government. It is also interesting to see the opportunism of some of those in the coalition in using President Obama's remarks—that emissions trading will not pass Congress and that America will increase its efforts through regulation—to justify their claim that emissions trading is not being implemented across the world. In Australia we already have a carbon-pricing mechanism in place, so the coin is flipped the other way.

In his submission to the Senate inquiry, Dr Frank Jotzo, a leading climate change academic at the Australian National University, highlighted the clear benefits to the Australian economy of using a carbon-pricing mechanism to tackle climate change. The submission said:

The carbon pricing mechanism currently in place is an economically sound basis for climate change mitigation policy in Australia. Repealing Australia’s Clean Energy Legislation and related bills is undesirable if a lasting policy framework for greenhouse gas emissions reductions is to be established, and if emissions reductions are to be achieved cost effectively. If emissions reductions are to be achieved without carbon pricing, then regulatory and subsidy approaches will need to play a larger role. These are generally more costly and less effective in creating incentives for long-term investment in low-carbon options by Australia’s businesses. Repeal will exacerbate policy uncertainty, with adverse effects on investment.

Dr Jotzo was not alone in supporting the current clean energy legislation. The clear majority of submissions to the inquiry opposed the repeal bills. Mr Nathan Fabian, the chief executive officer of the Investor Group on Climate Change, in evidence to the inquiry, said that the world is acting to reduce carbon. Mr Fabian said:

Nations are implementing emissions reductions policies that make sense for their circumstances.

…   …   …

It is our view that an emissions trading scheme with a cap makes sense for Australia's circumstances. That is because it is in the interest of Australian companies to be able to contribute to emissions reductions at least cost while reducing their own emissions from domestic plant and equipment over time, and in a time frame that makes sense to them.

It is simply not good enough for the new Australian government to throw out this well-thought-out policy, a policy that is designed to lower uncertainty for businesses and households and that seeks to meet our international emissions reduction obligations at the least cost to jobs and our economy.

The coalition government's repeal bills and Direct Action policy undermine investment certainty in renewable energy and energy efficiency measures. If there is bipartisan recognition that climate change is a serious concern, we must limit Australia's emissions. We need a long-term framework to provide some certainty to investors, business, the community and other nations.

The coalition claims its Direct Action Plan will reduce emissions by five per cent from 2000 levels by 2020. But this legislation before us does not specify a five per cent reduction. The target is purely that—just a target. It is not binding. The government has insisted there will be no further expenditure across the four-year budget. Everything is unknown until the government's review processes are finalised sometime this year.

On top of that, the government has announced a review of the renewable energy target—to be conducted by an individual who does not even believe that human induced climate change is an issue. Despite claims to the contrary, the renewable energy target, currently set at 20 per cent of generation by 2020, actually acts to lower energy prices. This is because the variable cost of wind power is virtually zero and increased use of wind generation reduces the nation's reliance on expensive gas generation. Despite this basic economics, there are fears in the community that the coalition will abolish or reduce the renewable energy target. If they do, this will increase energy prices and reduce our nation's capacity to generate renewable energy.

The delays, the poor legislation and the RET review are clear impediments to long-term investment in the Australian renewable energy sector. The Investor Group on Climate Change suggests that, because of the relative policy certainty in countries like Ireland, the UK and USA, it is easier and more secure to invest in those countries than it is to invest in Australia. Investors like long-term certainty. They like reasonable returns combined with the lowest possible level of risk.

It is not just big institutional investors that are being hit by the investment uncertainty created by the coalition government's delays and poor policy. The 2,000 investors in the Hepburn Community Wind Co-operative in Victoria have had their projected returns slashed. The families who invested in the cooperative made their investment decisions in the years 2008 and 2009, a time when there was bipartisan support for a carbon-pricing mechanism. Their earnings are expected to fall from 4.1c per share in 2012-13 to 1.1c per share without a carbon price. So much for the Prime Minister's declaration that we are 'open for business'. The new coalition government are, in fact, 'eyes wide shut' in their approach to providing certainty to business.

The new coalition government have sought to frame this debate as being about the utility bills paid by households and businesses. In seeking to repeal the carbon price, their main purpose seems to be to achieve a miraculous reduction in utility bills and overall costs on households and businesses. Never mind that the rise in electricity costs has overwhelmingly been the fault of infrastructure upgrades to our distribution networks and never mind that there are different prices and usages in every state—the Prime Minister has been unambiguous in stating the reductions Australians can expect if these repeal bills pass. He said:

Thanks to this bill, household electricity bills will be $200 lower next financial year without the carbon tax. Household gas bills will be $70 lower next financial year without the carbon tax.

There is evidence to suggest the coalition government has overestimated the impact of removing the carbon price on household expenses. The committee heard that households in some states could expect a greater-than-quoted reduction, while in others, where rates or usage are not so high, the reduction would be less. Mr Tony Wood, the energy director at the Grattan Institute, said to the committee that the savings generated from removing the carbon price will be less than they would have been when it was first imposed. Other prices have risen over time. The carbon price has been internalised by business and unpicking it in exact terms is nigh on impossible.

All of this would be fine in normal debate. People would understand that the Prime Minister is debating prices in average terms and would expect some reduction. However, given this Prime Minister's penchant for absolute honesty in debate, if the repeal bills do one day pass this place, I will be watching eagerly for the results of any research into changes in electricity and gas costs and I will hold him to account if his absolute guarantees are not met. If he is off even by a few dollars, it will be another promise broken by this new coalition government. Their record of broken promises is getting longer and longer by the day.

What of promises? What of commitments?

The coalition has, on numerous occasions, both in opposition and in government, said it is committed to our internationally declared target of a five per cent reduction on 2000 levels by 2020; however, its Direct Action Plan is still in the draft stage, even though it has been policy since 2010.

Direct Action does not appear to be adequately funded through to 2020 and the Prime Minister has said that there will be no further funding. Either a promise will be broken on the level of abatement through to 2020 or the promise of no further funding will be broken. If the new coalition government is to find more funding for Direct Action there is a real concern in the community that it will reallocate funding from existing environment programs or from social welfare. The Australian Council of Social Services highlighted in its submission to the inquiry that there is no real benefit for low-income Australians from one year of reduced power prices if Direct Action is funded by reducing programs on which these people rely.

Programs that low-income Australians rely upon are right in the coalition's sights for termination. The schoolkids bonus and low-income superannuation contribution are set to be abolished. A $6 GP tax is all but certain to be included in this budget. We have the new coalition government saying that things will be better, prices will be less, cost of living will be easier and there will be more opportunity, and yet these repeal bills do not provide guaranteed funding or guaranteed emissions and they will carve a huge hole in our nation's budget, resulting in large cuts in funding to education, health and public services. There are no guarantees for long-term price reductions or increases in opportunity over the long term.

These repeal bills are a backward step, leaving households and businesses vulnerable to a shock in future years. The necessity to act on climate change only grows stronger each year. The immediate and long-term costs of allowing warming greater than two degrees are the core reason for acting now with a policy suite that is designed to scale-up over time. Removing this policy suite for the sake of a reduction in utility costs in one financial year, which may not actually eventuate, is not only reckless but also irresponsible.

Despite the shallow rhetoric of the new coalition government that they believe in climate change and support action, it is clear from these repeal bills that nothing could be further from the truth. If these repeal bills pass, we the parliament will leave Australia with no credible emissions reduction policy. We will leave the 46th and 47th Parliaments of Australia with much harder decisions in the future. I urge senators to vote no on this bill.