Ian Campbell (WA, Liberal Party, Minister for the Environment and Heritage) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. The memorandum was circulated in the chamber today.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

I feel the need to place on the record that, despite my office contacting Minister Macfarlane’s office with regard to the proposed amendments, the government was unable to see its way clear to supply the amendments to the opposition. I do not know whether anyone else received them before they were tabled during the conclusion of the second reading debate on this legislation this morning. If that is an indication of the approach that the government intends to take to this chamber when it is proposing to amend legislation—on the basis that it believes it has the numbers to do those sorts of things—so be it, but I make the point that the minister’s office can do a lot better.

If we are about scrutinising legislation and getting a proper outcome, the opposition ought to get copies of proposed amendments before the debate commences in the chamber, unless it is impossible to do so. If the amendments are, as I hear across the chamber, minor and technical, there is even more reason for the opposition to receive them early, for an understanding to be gained about them rather than needing to ascertain that during the course of the debate in the chamber. Minor and technical they may be, but I think courtesy ought to be shown by the minister’s office—not the minister in this chamber but Minister Macfarlane’s office—and the amendments should be circulated or some indication of intention circulated before the event.

Ian Campbell (WA, Liberal Party, Minister for the Environment and Heritage) Share this | Link to this | Hansard source

I think it is entirely appropriate that I apologise to senators for the late circulation of these amendments. I think that Senator O’Brien makes an entirely legitimate point. The unique nature of the situation as explained to me by the minister’s office is that these amendments, as I understand it, did flow from the Senate committee report. It is a very good process when a Senate committee inquires and we find alterations that can improve the legislation. As most senators know, this is the first day back. There are, I think, processes in the government parties similar to those in the opposition parties in terms of party procedures. We all know that it is important that all members of the Senate and, from the government’s point of view, members of the government have a chance to have a say on these things. We did in fact have a government members committee process and a government members meeting. I think in the opposition they call them caucus meetings. I think the Greens probably have party meetings these days now they have a few members. I think the Democrats still meet as a party. So that is the reason—they had to be cleared by our processes. The government is often asked to respect the caucus processes when we are seeking agreements on things. I do apologise to all senators who feel they have been disadvantaged due to the late circulation. But I know that the minister and I both sought to have the amendments circulated as soon as they had cleared all of the government processes.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise to draw attention to the Greens amendments that have been circulated. I hope that people have the amendments in front of them. In my speech in the second reading debate I spoke about the need to have an energy efficiency target. We currently do not have a national target. It is one way of ensuring that we have a benchmark against which to measure any appreciable changes in terms of energy efficiency. It also gives us the opportunity to bring in measures that will allow us to meet the target.

As it stands, the Energy Efficiency Opportunities Bill 2005 simply asks companies to do their audit but does not require them to implement any of the findings that they might achieve as a result of their report. So they report, essentially, and then do nothing. There is no requirement, no enforcement, no compliance and no accountability. The only thing with the government’s legislation is that they report publicly. Then the hope is that, by osmosis, after they report they will be somehow inclined to implement the changes.

What I am doing with these amendments is facilitating the establishment of a national energy efficiency target by amending clause 3 so that the object of the bill will be not only to promote the identification and implementation of measures to reduce energy consumption through energy efficiency but also to facilitate the establishment of a national energy efficiency target. The second part of the amendment to the object of the act will require corporations to not only undertake an assessment of their energy efficiency opportunities to a minimum standard and report but also implement their identified energy efficiency measures.

In order to do that, what I propose is that the minister establishes a task force of experts to report on the implementation of a national energy efficiency target. So the amendments are not actually establishing the target at this particular time—the object of the first amendment that I am moving is to facilitate the establishment of a national energy efficiency target through the establishment of a task force of experts to report on that. I have set out in further amendments the actual nature of the task force to be established and the make-up of the task force. The amendments would require that the task force report to the minister within 18 months of the commencement of the act and that the task force then lodge that report in both houses within 12 months. So it would actually set up a parallel process. The Energy Efficiency Opportunities Bill would come into effect but, parallel with that, there would be a task force established to look at setting up a national energy efficiency target. That is the first objective of the amendments which are going to be moved in a moment.

The second objective of the amendments to be moved in this discussion relates to an energy savings fund. What we are proposing is to set up an energy savings fund to encourage energy savings, address peak demand, stimulate investment in innovative energy savings measures, increase public awareness and acceptance, encourage cost-effective energy savings measures and provide funding for contributions made by the Commonwealth for the purposes of national energy regulation. As I said in my speech in the second reading debate, the purpose of the fund is not to provide money for the renewable energy industry but, rather, to help to promote this whole idea of energy efficiency.

Given the announcement that the proposal for smart meters will go to the COAG meeting this week, clearly the Commonwealth is intending that the states fund the roll-out of the smart meters. It is unlikely that the states will agree to that. No doubt some compromise will be reached. But specifically one way to do it would be to establish an energy savings fund which was partly funded by the Commonwealth but also where the minister was able to require corporations to make a contribution to the fund. Then there would be a pool of money to assist in the roll-out of national strategies to in fact harvest the energy savings through energy efficiency.

The problem I have with the government’s bill is not the principle of it but the fact that it requires no implementation. That is why I am moving for that. That is probably all I need to say on that. I take it, from the way that the amendments have been set out, that the amendments to clause 3 and after clauses 20 and 38 will be put as one.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Could I just clarify that what you are moving at present is amendments (1) and (5) to (7) on sheet 4784.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

That is right. That is what I am speaking about at this point in time and, accordingly, I move Greens amendments (1) and (5) to (7):

(1)    Clause 3, page 2 (lines 4 to 17), omit the clause, substitute:

3  Object

        (1)    The objects of this Act are to:

             (a)    facilitate the establishment of a national energy efficiency target; and

             (b)    promote the identification and implementation of measures to reduce energy consumption through energy efficiency.

        (2)    In order to achieve its objects, this Act:

             (a)    requires the Minister to establish a taskforce of experts to report on the implementation of a national energy efficiency target; and

             (b)    requires corporations to undertake an assessment of their energy efficiency opportunities to a minimum standard in order to improve the way in which those opportunities are identified and evaluated; and

             (c)    requires corporations to publicly report on the outcomes of that assessment in order to demonstrate to the community that those businesses are effectively managing their energy; and

             (d)    requires corporations to implement identified energy efficiency measures contained in their energy assessment; and

             (e)    establishes an Energy Savings Fund.

(5)   Page 15 (after line 24), after Part 6, insert:

Part 6A—Implementation of identified energy efficiency measures

20A  Requirement to implement identified energy efficiency measures

        (1)    A registered corporation required to lodge an assessment plan in accordance with Part 5 must identify as part of the plan a program of energy saving capital improvements (the energy audit) which have a payback period specified in subsection (5).

        (2)    A portion of the saving identified in the energy audit required by subsection (1) must be made within three years from the commencement of this Act.

        (3)    The regulations shall include provision for a registered corporation to delay the implementation of an energy audit lodged under subsection (1) if the registered corporation provides satisfactory evidence of an intention to implement the energy audit.

        (4)    A registered corporation must provide an annual summary of the implementation of the energy audit of the previous year and a summary of the proposed implementation of the energy audit for the following year for the register to be maintained by the Secretary in accordance with section 12.

        (5)    The regulations must set a sliding scale to progressively lower the duration of the energy payback period from not more than two years in the financial years 2006-2007 and 2007-2008 to not more than four years by the financial years 2010-2011 and 2011-2012.

(6)   Page 29 (after line 28), at the end of Part 8, add:

Division 7—Energy Efficiency Target Taskforce

38A  Establishment of Energy Efficiency Target Taskforce

The Minister must before the expiration of 3 months after the commencement of this Act establish an Energy Efficiency Target Taskforce to inquire into and report on the establishment of a national energy efficiency target.

38B  Membership

The Minister will appoint 4 members to the Energy Efficiency Target Taskforce with  the following expertise:

             (a)    one member representing industry;

             (b)    one member representing conservation interests;

             (c)    one member representing the Commonwealth who shall convene and chair the taskforce;

             (d)    one member with expertise and qualifications in energy conservation.

38C  Report of the Energy Efficiency Target Taskforce

        (1)    The Taskforce is to report to the Minister within 18 months of the commencement of this Act.

        (2)    The Minister must cause a copy of the report of the Taskforce to be tabled in each House of Parliament within 5 sitting days of receiving it.

(7)   Page 29 (after line 28), after Part 8, insert:

Part 8A—Energy Savings Fund

38D  Establishment of Energy Savings Fund

The Energy Savings Fund is established by this section.

38E  Purposes of Energy Savings Fund

        (1)    The purposes of the Energy Savings Fund (the Fund) are to provide funding:

             (a)    to encourage energy savings; and

             (b)    to address peak demand for energy; and

             (c)    to stimulate investment in innovative energy savings measures; and

             (d)    to increase public awareness and acceptance of the importance of energy savings measures; and

             (e)    to encourage cost effective energy savings measures that reduce greenhouse gas emissions arising from the use of energy; and

              (f)    to provide funding for contributions made by the Commonwealth for the purposes of national energy regulation.

        (2)    It is not a purpose of the Fund to provide funding for investment in low emission power generation, or any other kind of power generation, where the primary purpose of the generation is to generate energy for sale into the power grid.

38F  Payments into Energy Savings Fund

There is payable into the Fund:

             (a)    all money received from contributions required to be made to the Fund under section 38H; and

             (b)    all money appropriated by Parliament for the purposes of the Fund; and

             (c)    the proceeds of the investment of money in the Fund.

38G  Payments out of Energy Savings Fund

        (1)    There is payable from the Energy Savings Fund any money:

             (a)    approved by the Minister to fund all or any part of the cost of any energy savings measure that the Minister is satisfied promotes a purpose referred to in subsection 38E(1); and

             (b)    approved by the Minister to fund all or any part of the contributions that the Commonwealth is required to make for the purposes of national energy regulation; and

             (c)    required to meet administrative expenses related to the Fund; and

             (d)    required to meet administrative expenses of the Minister in connection with the Minister’s functions under this Act.

        (2)    In exercising the Minister’s functions under paragraph (1)(a) (but without limiting the generality of that paragraph), the Minister may:

             (a)    approve selection criteria from time to time to be applied to determine the kinds of energy savings measures that will be eligible for funding from the Fund; and

             (b)    require a person or body seeking funding for an energy savings measure to do either or both of the following as a precondition to applying for or obtaining funding:

                   (i)    to submit an energy savings action plan that includes details about the measure;

                  (ii)    to provide any other information requested by the Minister about the measure; and

             (c)    obtain and have regard to any advice, recommendations or other information provided to the Minister by a committee appointed by the Minister, or by any other person or body that the Minister considers relevant.

38H  Minister may require registered corporations to make contributions

        (1)    The Minister may by regulation require registered corporations to make an annual contribution for a specified financial year to the Fund.

        (2)    A regulation made for the purposes of subsection (1):

             (a)    must specify the annual contributions payable by each registered corporation to which it applies (being an amount that does not exceed the maximum amount, if any, prescribed by the regulations); and

             (b)    may specify that an annual contribution may be paid by instalments during the financial year to which the regulation applies; and

             (c)    must specify the time or, in the case of an annual contribution that is payable by instalments, the times at which any contribution required under the regulation is to be made; and

             (d)    may be made before or within the first 3 months of the financial year to which it relates.

The proposal is to set up a task force in parallel with the bill in order to work towards an energy efficiency target and to put in place an energy savings fund.

Ian Campbell (WA, Liberal Party, Minister for the Environment and Heritage) Share this | Link to this | Hansard source

I thank Senator Milne for running through the background to the amendments. The senator has outlined a fundamentally different approach to that taken by the government. Quite frankly, I think we are both aiming at the same direction. I think all parties in this place agree that climate change caused by the emission of greenhouse gases into the atmosphere is an incredibly serious problem for Australia and for the world. All parties would agree that urgent action is required to address that.

The government would reject the allegations made or propositions placed in the speeches of a number of senators in the second reading debate that the government is not acting. The record shows that under the leadership of John Howard—and, quite frankly, three successive environment ministers and resources and energy ministers—the government has taken actions across a portfolio of emission sources and through a number of programs to provide in many areas leadership to the whole world and to create a framework that sees the levels of emissions as a proportion of GDP significantly reduce. That is the first thing you need to do if you want to address greenhouse issues within a growing economy. The major parties would agree at least that you need to keep the economy strong and expanding to keep job security, jobs growth and prospects for people who are coming into the workforce within Australia and within developed countries and, at the same time, to see reductions in greenhouse gas emissions.

From a global point of view, there is a moral imperative to see strong economic growth continue and to see the benefits of that growth go to developing countries so that the very many millions of people on our planet who live in a situation of poverty, malnutrition and susceptibility to disease receive the benefits of strong worldwide economic growth. Opportunities such as getting an education and access to good health care and nutrition to keep us alive are things that we take for granted, but they are things that people in many parts of our own region and many parts of sub-Saharan Africa cannot dream about or even contemplate. In fact, mortality for many people in those parts of the world is still at an age of only five.

All of us would want to make sure that the measures that we put in place to save the planet from dangerous climate change do not harm the prospects of a strong economy. Simply put, that means that the measures that we put in place to deliver energy efficiency or greenhouse gas abatement—any of the measures that we put in place to effect a policy—need to obtain a dual objective. That was the very clear message of British Prime Minister Tony Blair to his G8 colleagues. A very strong theme throughout the Montreal meetings of the United Nations Framework Convention on Climate Change, the first meeting of the members of the parties to the Kyoto protocol and the 11th meeting of the conference of the parties to the UN framework convention was that the measures that we put in place must address those realities.

The Australian government, by any sort of objective assessment—and I cannot be objective because I am a part of it; I am clearly quite biased—across a whole range of areas, including energy efficiency, is providing a lot of leadership that many other countries are following. That is why Australia, particularly through the Australian Greenhouse Office—which is a part of my portfolio that I am particularly proud of—is sought out around the world for policy advice and assistance for so many things: energy efficiency, particularly the programs to do with appliance labelling; much of the work that we have done in terms of measurement and design of tools to measure efficiency in buildings; and the work we have done with water efficiency labelling, which has a significant greenhouse benefit. All those programs are things that Australians should in fact be proud of.

I do not think there is any difference between our position and the position of Senator Milne and the Greens on achieving the outcome. What she has described in her amendments is a more interventionist approach—one that would have significantly larger costs to industry and therefore to the economy and, more specifically, to consumers, but with potentially much lower benefits.

The way I explain how we should be going about this policy is that, with the money that is available in the government sector and in the private sector—be it within the corporate sector or the household sector—we should be achieving the greatest greenhouse gas reduction outcome for a given level of investment. We do not need to set up under legislation, as Senator Milne has proposed, a whole new energy efficiency target task force structure to guide us in how to design a new energy efficiency measure. We have actually done the homework over a period of years to create what we believe is a sensible energy efficiency framework for the country—and it does build on work that is being done in the states. A lot of the state governments, to their great credit, have done work with varying degrees of success in building energy efficiency into their own regimes through legislation, regulation or a mix of voluntary measures.

Of course, at this week’s meeting of the Council of Australian Governments, where climate change cooperation is on the agenda, a number of quite specific measures will be discussed by first ministers on Friday. This is an incredibly important step forward for Australia, because although I think all governments have been putting in place many constructive and positive measures, trying to get more uniformity, cooperation and information exchange across governments, a clearer guide for industry—a clearer set of policies where they can be agreed where there is a coming together of the policies—means that there will be more efficiency from a government point of view. Our proposition applies to larger companies. It targets 250 companies, but these companies consume about 60 per cent of business energy use, so it is incredibly efficient if we can address the activities of these companies.

We often have what I think is a slightly surreal debate with Labor and the Greens. We had a debate last night on a television program that will go to air down the track. The opposition and the Greens’ spokesperson, Senator Milne, accused us of having everything that we are doing as voluntary. She said that we are relying on the goodwill of business in our greenhouse measures. That is simply not true. This measure is a mandatory measure. We are requiring for the first time, and in many cases for the first time anywhere in the world, that companies go through an incredibly expensive process to identify energy efficiency and to put into place plans. We have also put in place a whole range of other mandatory measures which are part of our greenhouse strategies. The mandatory renewable energy target scheme was one of the first of its type in the world, and it remains our policy. There is nothing voluntary about it. It requires energy producers to buy renewable energy certificates or to produce a certain percentage of their energy output from renewable sources. It is far from voluntary. It was one of the first mandatory renewable energy programs in the world, and many others have been copied. This is another mandatory measure.

What the Greens and other critics of this bill are saying is that we need to enforce on companies some overall efficiency measure. This of course ignores the fact that all of the companies that we are targeting have very different operations. What, no doubt, the implementation of this bill will show, when all of these companies go through the mandatory efficiency audits, is that the capacity for efficiency improvements from company to company is likely to be quite different. The bill’s effects are similar to those of the Greenhouse Challenge Plus program, which allows companies voluntarily to sign up to a greenhouse strategy, to report their greenhouse gas emissions, to report on plans to reduce those and to report performance against those plans—and, again, that is a world-leading program for corporations; I think we have signed up about 770 companies to that program. Under this bill it will be mandatory for companies to go through this process of identifying their operations and energy efficiency using sophisticated tools and, quite often, sophisticated online reporting tools.

Of course, under the implementation of this legislation we will be harmonising the company energy efficiency reporting with that under the Greenhouse Challenge Plus program. So we are not putting more red tape on companies; we are ensuring that their energy, effort and financial support go into reducing greenhouse gases and improving energy efficiency and are not spent on just compliance and red tape. We are trying to make it a lot easier for companies to go through their reporting.

However, what we have found in pursuing the Greenhouse Challenge program, and now the Greenhouse Challenge Plus program, is that when companies go through that process and identify where the emissions are coming from—and, in this case, where the energy efficiency is—they find it to be very much in their best interests to reduce emissions. There are huge financial benefits to companies from reducing waste and reducing emissions they do not need to make. In the case of energy efficiency, the department believes, through previous experience and investigation, that there are savings of 10 to 30 per cent across many companies. On average each of these companies spends around $3 million per year on energy. If you can get a 10 to 30 per cent saving, that is up to nearly $1 million a year. I am sorry to sound like a Treasury person again, but if you do the net present value of a $1 million a year saving it is a huge increase in the value of the company.

I heard Senator Milne and others talking about the importance of having a price signal in carbon to get companies to reduce their carbon emissions, a proposition that is quite right. I have always agreed that a price signal and ultimately a broad based market trading system would be a desirable way for the economy to invest in reducing greenhouse gases. It is just a matter of designing a system that is efficient, that has low transaction costs and that does not adversely affect employment and the economy in Australia. That is the challenge—that has always been the challenge.

What we have here is a price signal to companies to improve their energy efficiency. We are requiring them to do an audit and find what they can do in terms of improving energy efficiency. As a result of this bill, they will be able to put a price on it and calculate exactly what the financial benefits to them will be. I do not accept the criticism that this will not create a good outcome. Companies will find it in their best interests, just as they have done under the Greenhouse Challenge Plus program, through which Woodside have reported savings of 350,000 tonnes a year, Cement Industry Federation have reduced greenhouse gas emissions by 1.5 million tonnes a year, Queensland Rail have achieved greenhouse gas abatement of approximately 229,000 tonnes a year and Godfrey Hirst Australia have achieved a 60 per cent reduction in greenhouse gas emissions through recycling initiatives. These companies have done this under a regime where they analyse their emissions, look at how they can reduce them and then report on them. It is about transparency and customer advice and it has proved to be effective.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

I should be even-handed in the way that I deal with these amendments. I was critical of the minister’s office for not circulating the government’s amendments to the Energy Efficiency Opportunities Bill 2005. I must say that the opposition had no knowledge of and did not sight the Greens’ amendments until well into the second reading debate on this bill which, given the nature of and the detail in the amendments, makes it extremely difficult for the opposition to embrace the proposals in the amendments—not least because they propose to set up another fund under the control of a government minister.

We know what this government has done with funds that it has taken from industry or consumers. I am thinking of Dairy RAP, for example, through which $70 million, give or take a couple of million, found its way into all sorts of projects which were supposed to help the dairy industry—like wine appreciation courses at one of the private schools in Toowoomba, or a polocrosse field which seems to be nothing more than a fence and a gate and a shed. That field, which is also in southern Queensland, got many thousands of dollars.

We have had all sorts of inquiries into that sort of funding. We have had inquiries into a variety of successor programs through which millions of dollars have been used by this government to pork-barrel electorates around the country to try to shore up the haemorrhaging National Party vote in parts of the country. In those programs the National Party minister or, indeed, parliamentary secretaries assisting the minister had the sign-off and  final approval for millions of dollars. So for the Greens to propose an amendment which requires us to put more money in the hands of the government—money that seems to be under the control of a minister on first glance at the amendments—is something that we are concerned about. We would require some convincing before we were prepared to support that.

As I represent the member for Batman, Martin Ferguson, in this chamber, the first point I make is that the advice from his office is that there has been no consultation about these amendments. The amendments arrived just before one o’clock today. The fact that there has been no consultation puts Mr Ferguson’s office in a difficult position of making a call on behalf of the Labor Party in relation to these substantial and not inconsequential amendments. It is quite unfair for Mr Ferguson’s office to be placed in this position. I entreat Senator Milne and her colleagues to seek to consult about any serious amendments they want to put, rather than drop them on the table during a debate and expect a meaningful contribution from other senators and other parties in relation to them.

Progress reported.