Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

My question is to the Minister for Climate Change and Water. I refer to the minister’s welcome announcement this morning that emissions trading will start in 2010 and ask: is the minister aware that modelling for the National Emissions Trading Taskforce concluded that, under trading, only modest abatement will actually take place before 2020 and result in an increase in electricity prices of 10 to 25 per cent? Minister, why not proceed quickly with a mandatory energy efficiency scheme that can have a much earlier effect and reduce the cost impact?

Alan Ferguson (President) Share this | Link to this | Hansard source

Senator Allison, I would remind to address your questions to the chair, not directly to the minister.

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I thank Senator Allison for her question. First on the issue of the NETT’s modelling. I am aware of that and I make the point that what an emissions trading scheme can achieve in terms of abatement of emissions obviously is dependent on what your trajectory is. We have made clear that this will be a cap and trade scheme—and Senator Allison has a long history of interest in these issues—and the design of the cap and trade scheme is that the government makes a decision on what is the level of emissions up to which it issues permits, thereby setting a cap on the emissions across the economy.

As I have repeatedly said, the issue of what that trajectory will be is something that the government will take a very careful and methodical approach to. We will take a very careful approach because we understand that this is a significant reform, hence the economic modelling that has been undertaken, hence the Garnaut report which obviously will canvass a range of issues, as has already been flagged in Professor Garnaut’s interim report. Obviously, also, we will consult with the community and with industry. So we are very clear that we will set the appropriate trajectory and we will do so after consideration of all of these matters and after the release of the green paper.

In terms of energy efficiency, the senator is right; there are potentially gains to be made through energy efficiency. These are matters which the government is working on. Certainly the relevant ministerial council, I am advised, in the past has previously looked at these issues, and these are issues which are being addressed in the context of the climate change and water subgroup of COAG, which I chair.

I suppose the emphasis that I would make for Senator Allison is that there are a great many policies which have to be put in place to ensure that we achieve the lowest cost shift possible to a low carbon future. That is what the government is focused on. The government will ensure that we take this reform methodically and carefully and we will do so with a very clear eye on securing Australia’s ongoing economic prosperity. As I have previously outlined, the scheme will include measures to assist households, particularly low-income households. We are very mindful of these issues. As I previously went through in answer to a question from Senator Brown, there are a number of policies which the government is implementing to achieve abatement. Emissions trading is at the heart of our approach to reducing Australia’s greenhouse gas emissions but there is obviously a range of others, the renewable energy target being one of them.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I thank the minister for her answer and ask her, as I have done on a number of occasions in this place, how will the trajectory be determined? Will it be determined on the question of how much we can afford or are we seriously going to reduce greenhouse emissions with a view to stabilising atmospheric change?

On the subject of energy efficiency, can the minister acknowledge that the National Framework on Energy Efficiency is failing on implementation, enjoys no ministerial support and is hamstrung by disputes and resistance from vested interests and parts of the bureaucracy? What is the minister’s commitment to implementing aggressive end-use energy efficiency actions?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

There were two parts to that. The second part was an assertion I was asked to agree with or not agree with. Clearly, there are many aspects of that proposition, which is really an issue of opinion for you, Senator Allison, not a question to me. Can I remind you, in terms of energy I do not actually represent Minister Ferguson in his portfolio. I am happy to take the question in so far as it relates to the climate change portfolio, but I understand that Senator Carr is the appropriate minister.

In answer to the first part of your question about how the Australian government would approach the setting of our trajectory, I have on a number of occasions outlined that. We will be considering a range of issues. We will be considering the economic modelling. Of course we will consider the science and we will consider Professor Garnaut’s report as well as the outcome of our consultations with the community and industry.