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

What is direct action? There are lots and lots of questions about this, and I am concerned that the coalition government has no intention of ensuring that Australia meets our internationally committed target of a five per cent reduction on 2000 levels by 2020. Our climate policies must be capable of achieving Australia's maximum internationally committed targets of up to 25 per cent reductions by 2020. Notably, a failure to demonstrate a credible plan weakens our ability to play a constructive role in the new agreement that will cover all major emitters from 2020. Australia's existing policies give certainty in this regard.

The key feature of the existing carbon-pricing legislation ensures that Australia can meet its targets and stronger post-2020 targets if it chooses to do so. Australia's existing carbon reduction policy suite has a greater capacity to meet our current and future targets because it features a legally binding cap on emissions. These features are the ability to set legally binding annual caps on carbon emissions and for liable entities to access international carbon permits to comply with these caps. These features provide confidence that Australia's carbon policy framework is sufficiently robust to manage the risks and uncertainty of future emissions drivers at reasonable cost. These features also allow significant flexibility. The government can choose to adjust Australia's emissions trajectory through the caps, or companies can choose within certain limits how best to fulfil their obligations, whether by reducing their emissions, by producing domestic and international permits or by a combination thereof. Meanwhile, direct action has no commitment to targets beyond 2020 and there is uncertainty within the policy about how it can even achieve these 2020 targets.

The government is currently yet to demonstrate that its alternative policy can achieve Australia's minimum commitments, and all independent analysis to date indicates that emissions will continue to increase under its current proposed framework. The coalition government's lack of long-term funding commitments under direct action further confirms Labor's view that the coalition government has no long-term commitment to meaningful action to address climate change. Mr Anthony Wood from the Grattan Institute, in evidence before the committee that I participated in, highlighted how direct action can have no longevity as a policy without further significant budget appropriations. Mr Wood said:

My understanding from every conversation I have had with the senior representatives of the government is that direct action has been targeted directly to achieve the five per cent target by 2020. That is shorthand obviously. Many have criticised whether it might even to that but just focusing on your question there is fundamentally no reason why the emissions reduction fund, which is the centrepiece of direct action, could not be expanded but because it is funded on budget, which is by its very nature of the instrument different from an emissions trading scheme or of renewable energy target, it would require additional budget appropriations in future times to be able to achieve that outcome.

The source of funding for the direct action policy was raised as a concern by the Australian Council of Social Services. Its submission to the committee highlighted that there is no benefit for low-income Australians from one year of reduced power prices if the direct action policy is funded by reducing programs on which these people rely. This has been the centrepiece and one of the main points that the government has relied on in trying to trash this program. Of course, programs that low-income Australians rely upon are right in the coalition's sights, with moves already to scrap the income support payment, schoolkids bonus and low-income super contribution.

A 2010 Auditor-General's report into the administration of climate change programs raised serious concerns about the effectiveness of a direct action policy:

The Emissions Reduction Fund is a grant/tender scheme similar in structure to several previously implemented in Australia.

The 2010 Administration of Climate Change Programs report of the Auditor-General evaluates the success of a range of programs aimed at reducing Australian greenhouse gas pollution. The assessed greenhouse gas pollution reduction policy that most closely resembles the ERF was the Greenhouse Gas Abatement Program. The Auditor-General’s finding was that the actual abatement achieved by the GGAP program was substantially less than originally planned, with only 30 per cent of planned emissions abatement being achieved.

This underperformance was partly due to delays in finalising funding agreements, but also because of the termination of 40 per cent of funded projects—largely due to organisations bidding with unsustainably low quotes for pollution reduction, before abandoning projects when costs were higher than anticipated. The OECD considers that capital subsidies, as per the direct action policy, were among the most expensive ways of reducing emissions. The CEO of the Clean Energy Finance Corporation, Mr Oliver Yates, in evidence to the committee highlighted concerns with financing emissions reduction programs with grants rather than loans:

Our experience is that providing people with debt creates discipline and ensures that the person who is borrowing from the state uses that money carefully. Our own view is that, if you are given money for taking an action, you are less likely to be as cautious as you would be if you were borrowing the money to achieve that outcome.

That evidence highlights the major concern that the coalition is not serious about reducing Australia's carbon emissions. The direct action policy has no guarantees of funding and no guarantees of reducing emissions. The Australian Conservation Foundation said:

If it passes into law, the Clean Energy Act Repeal Bill will remove Australia’s legislated cap on pollution. Government has indicated the—

replacement—

Emissions Reduction Fund scheme will have no legislated cap on pollution, nor any mechanism … to ensure that Australia’s pollution reduction targets are satisfied. Government has also committed to capping spending on the ERF scheme.

The Senate inquiry also made clear that the coalition government has no clear policy rationale or evidence base to support its direct action policy. The policy is being developed in the absence of economic modelling. This was made clear by both officials from the Treasury and the Department of the Environment during hearings of the inquiry.

I understand that Treasury has previously done extensive work examining emissions trading schemes but has done no work under this government looking at direct action. Previous work done by Treasury supported emissions trading as the most efficient policy framework for Australia, over and above that of direct action policies.

So my question to the parliamentary secretary is: what is the direct action? What is the government's direct action replacing, given that you will not consider the Labor Party's view on the ETS?