Nick Xenophon (SA, Independent) Share this | Hansard source

There are two matters I would like to address—firstly, the amendment that is before the Senate at the moment. I can indicate that I will not be supporting the amendment for a number of reasons. Firstly, I support the principle of an efficient, well designed ETS. I do not believe that what has been proposed is such. It effectively keeps the existing model and framework which I found very problematic. I made no secret of the fact that I still believe the best form of an ETS is that modelled by Frontier Economics for Malcolm Turnbull and me when Malcolm Turnbull was opposition leader in 2009. I am concerned that this model keeps an estimated $9.2 billion in compensation to emissions intensive trade exposed industries. It keeps an estimated $5.5 billion in compensation to brown coal generators. It does not change prices for diesel aviation refrigerants. While the carbon price may drop initially, it will then increase until, under a floating carbon tax, it reaches an estimated $38 in 2020. That is based on modelling by Treasury and the Climate Change Authority. They modelled that it would rise to $25.40 in 2014-15 and $38 in 2020. It locks Australia into the European emissions trading scheme prices, which have been extremely volatile and subject to, I think, political considerations, which does not give investment certainty. It will continue to hit households and businesses through higher electricity and gas prices through that revenue churn and through a distortion of the merit order in terms of pricing and also in respect of the tax interaction effect—the multiplicative effect on taxes and on the economy. For those reasons, while I support that a well-designed emissions trading scheme is the best way forward, I support the comments made previously by Danny Price from Frontier Economics about his concerns about the structure of the scheme. I just want to make that clear.

I hope Senator Cormann is listening—I know he is engaged in conversation, but I am sure he can do two things at once—because I do want to put a question to Senator Cormann. It relates to discussions I have had with Minister Hunt over a number of weeks and again this morning about ensuring that the Direct Action approach of government would be more strenuous, more rigorous, more efficient, and more effective in terms of emissions abatement. I understand that Senator Cormann, after my discussions with Minister Hunt, will be making a statement so that it is on the record, and I would be grateful if he could be in a position to make that statement.