Jenny McAllister (NSW, Australian Labor Party, Assistant Minister for Climate Change and Energy) Share this | Hansard source

Thanks, Senator Duniam. I think there is an underlying premise in your question: that the amendments before the chamber today substantially depart from the model that was presented earlier. In truth, as we've been very clear about in our public commentary on the process we were going through, we have been willing to take helpful suggestions that strengthen the policy intent and the implementation arrangements for the proposal we took forward. We think that the additional reforms that are before us today in the form of amendments are sensible. They provide arrangements in relation to transparency and certainty in the operation of the mechanism. But the fundamental analysis is as I have already described it to you.

There was, as has been discussed at estimates and in the committee process for this bill, some modelling work that was undertaken around opportunities for onsite abatement on facilities. There has also been very broad consultation over a very long period of time with a very broad range of people. I do note that a broad coalition of business leaders and groups support the reforms, principally because they provide policy and investment certainty for large emitters. It's also the case, and it has been widely noted, that around 170 facilities already covered by the safeguard mechanism are already covered by net zero commitments that they have made in response to other drivers in their businesses. That represents 86 per cent of scheme emissions, and a third of the publicly listed companies that are in safeguard facilities use an internal carbon price for investment decisions, with half using a price of more than $100 a tonne. These things are already part of business decision-making, and the feedback that we have has been overwhelmingly supportive of the approach.

In part that is because the proposed reforms have been designed to provide sufficient flexibility to moderate and mitigate any cost impact. I point to three features of the scheme: the hybrid approach to setting baselines moderates the initial scheme impact while encouraging production to occur where it's less emissions intensive, which lowers the overall economywide cost; there are flexible compliance options, including borrowing, multi-year monitoring and the use of domestic offsets which will help safeguard facilities meet their obligations at a lower cost; and, as we have just been discussing in relation to the Powering the Regions Fund, assistance will be available to ensure businesses are not competitively disadvantaged.

I make this final point: there are costs that arise from inaction, and so, without a credible domestic policy to reduce industrial emissions, Australia's exports may increasingly be subject to import tariffs or to carbon border adjustments imposed by our trade partners. As I think former Treasurer Frydenberg said rather publicly, Australian businesses may also face increased capital costs in an environment where global financial institutions and decision-makers are taking coordinated steps to align investment with the transition to net zero.