Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The government this week are asking the Senate to support passage of a package of no less than 11 separate bills, the Carbon Pollution Reduction Scheme Bill 2009 and related bills, to give effect to their Carbon Pollution Reduction Scheme, as they call it. This scheme represents one of the most dramatic and far-reaching interventions into the Australian economy ever proposed by an Australian government. Its passage and entry into force would have enormous impacts on the Australian economy and the economic circumstances of millions of Australians. The government knows there is no Senate majority for this legislation, yet it is determined on what is nothing more than a cynical political exercise.

This legislation should be withdrawn for a number of reasons. Firstly, it proposes a scheme which will not commence operation for another two years. There is absolutely no justification for the government’s insistence that the parliament deal with it now. Secondly, the government is seeking to legislate an emissions trading scheme for Australia well in advance of the UN meeting in Copenhagen in December, which will determine the extent to which, if any, the world is prepared to act in concert on CO2 emissions. It is utter folly for Australia to legislate a scheme prior to the Copenhagen conference. And, thirdly, the United States, currently the biggest emitter, is currently considering the issue of an ETS. It is, in our view, cynically irresponsible to propose that the Australian parliament lock in an Australian ETS prior to the US—as I said, the biggest emitter of CO2—before it determines whether or not it will commit to an ETS and, if so, the nature and design of such a scheme.

For these reasons, the opposition condemns the government for its naked political opportunism in forcing the parliament to consider its so-called CPRS at this time. Not only is the timing of this legislative initiative to be condemned, so too should the very name given to this package of legislation be condemned by this parliament. It is regrettably typical of this spin-driven government to use such a grotesquely Orwellian approach to the description of this legislation. For no more than base political purposes, the government has called its emissions trading scheme a ‘carbon pollution reduction scheme’. This is of course the perpetuation of a cruel hoax on the Australian people, childishly simplistic and misleading. The scheme proposed does not deal with carbon. It purports to deal with something quite separate—carbon dioxide emissions—and the scheme does not deal with pollution.

Whatever the climatic role of human induced emissions of CO2, CO2 is not by any stretch of the imagination a pollutant. CO2 is, as we know, a clear, odourless, colourless gas vital to life on earth. Indeed, CO2 is essential to a healthy environment. One of the most cynical and deceptive manoeuvres of the climate change fanatics is to seek to convince people that CO2 emissions are pollution, to demonise CO2 per se. Anyone with any understanding of science knows this to be a complete falsehood. Indeed the Rudd government knows it too. Its own environment department’s website has a link to the official Australian National Pollutant Inventory, which lists 93 pollutants. Surprise, surprise, carbon dioxide is not listed among them. Mind you, after this speech, I bet some poor public servant will be bullied into adding CO2 to the list. So even the government’s own official list of pollutants, all 93 of them, does not include carbon dioxide.

It is also typical of this deceitful and spin-driven government to so cynically misrepresent the nature of carbon dioxide. Of course this whole extraordinary scheme, which would do so much damage to Australia, is based on the as yet unproven assertion that anthropogenic emissions of CO2 are the main driver of global warming. I want to commend Senator Fielding for his questioning of the government over the causes of global warming. The Rudd government arrogantly refuses to acknowledge that there remains a very lively scientific debate about the extent of and the main causes of climate change, with thousands of highly reputable scientists around the world of the view that anthropogenic emissions of CO2 are not and cannot be the main driver of the small degree of global warming that occurred in the last 30 years of the 20th century.

No-one, of course, disputes the reality of climate change. Of course the climate is constantly changing—it always has; it always will—but the main drivers of the small degree of warming that occurred in the 20th-century and the extent to which we should be concerned about it are hotly disputed in scientific circles. One of the world’s most eminent atmospheric scientists, Professor Richard Lindzen of the prestigious Massachusetts Institute of Technology, recently observed:

The notion of a static, unchanging climate is foreign to the history of the earth or any other planet with a fluid envelope. The fact that the developed world went into hysterics over changes in global mean temperature anomaly of a few tenths of a degree will astound future generations. Such hysteria simply represents the scientific illiteracy of much of the public, the susceptibility of the public to the substitution of repetition for truth, and the exploitation of these weaknesses by politicians, environmental promoters, and, after 20 years of media drum beating, many others as well. Climate is always changing.

That is Professor Richard Lindzen, one of the world’s most eminent atmospheric scientists, who I suspect knows a little bit more about this subject than Senator Penny Wong. On Tuesday, June 23, writing in the Australian, Professor Peter Schwerdtfeger, Emeritus Professor of Meteorology at Flinders University, in Adelaide, reinforced this:

Repeatedly in science we are reminded that happenings in nature can rarely be ascribed to a single phenomenon. For example, sea levels on our coasts are dependent on winds and astronomical forces as well as atmospheric pressure and, on a different time scale, the temperature profile of the ocean. Now, with complete abandon, a vociferous body of claimants is insisting that CO2 alone is the root of climatic evil.

I fear that many supporters of this view have become carried away by the euphoria of mass or dominant group psyche. Scientists are no more immune from being swayed by the pressure of collective enthusiasm than any other member of the human race.

To acknowledge the reality of continuing scientific debate is not to say that Australia should not act in concert with other nations to give the planet the benefit of the doubt and to seek a global agreement to contain CO2 emissions. To the extent that anthropogenic CO2 emissions may be a cause of the limited global warming that has occurred, and to the extent that that warming is considered to be damaging, internationally coordinated measures to contain emissions at the least possible cost may be warranted. Indeed, as someone trained in economics, I proclaim the virtue of an approach based on ensuring the most cost-efficient use of finite resources. The world has not measured up to that standard in relation to its use of energy. But, given the continuing scientific debate, it is especially important that a country like Australia only take steps in relation to CO2 emissions that are in concert with the rest of the world and clearly involve the least cost and most economically efficient means of CO2 containment.

The government’s CPRS clearly fails that test. The case against this scheme was convincingly made by my colleague the member for Goldstein, Mr Robb, in his speech on this bill in the House of Representatives. I also commend the work of my coalition colleagues on the Economics Legislation Committee in their reports on these bills and of Senator Xenophon on his minority report, which is a well-argued condemnation of this CPRS. I should also make mention of the critical analysis of this CPRS undertaken by the Select Committee on Climate Policy, chaired by my colleague Senator Colbeck, which exposed the CPRS’s many, many flaws.

Not enough is made of the reality of Australia’s circumstances in the consideration of measures to contain anthropogenic CO2 emissions. Australia contributes a little over one per cent of the planet’s CO2 emissions. If we were to completely shut down the Australian economy tomorrow, Australia’s CO2 emissions would be fully replaced by China within nine months. It is indisputably the case that nothing Australia does on its own can have any impact whatsoever on the earth’s climate. The deceit perpetrated by climate change fanatics that an Australian ETS will save the Barrier Reef is utterly contemptible. The manic determination of the government to impose this scheme on Australia also ignores the reality of the Australian economy.

Australia’s economy and our higher standard of living have been built upon our access to relatively cheap and abundant supplies of energy generated by coal-fired power stations. This is regrettably not well understood in this parliament let alone in the wider community. It was my privilege to serve as Minister for Industry, Science and Resources for three years in the Howard government, an experience which reinforced this fundamental reality about Australia: all the great manufacturing and value-added industries of Australia, which this Labor government professes a commitment to, have been built on and are sustained by access to cheap, reliable energy derived from coal. That is why an ETS, essentially an energy tax, is such a threat to this country. As Terry McCrann so accurately said in the Australian of 20-21 June:

... an ETS threatens to kill the Australian economy. It is a direct attack on our core comparative advantage: bluntly, the production of CO2.

Power generated from cheap and abundant coal is a, perhaps the, core building block of both our standard of living and our entire economy.

That is a reality which this government wilfully ignores. What we see here is a Labor government sacrificing workers in energy-intensive industries on the altar of green votes. The cruel joke is that all those thousands of jobs to be destroyed by Labor’s CPRS will be in vain, because this scheme will make absolutely no difference to the global climate. Most Australians clearly do not understand what an emissions trading scheme is, how it would work and what its consequences would be. That is perfectly understandable. I suspect most of the Labor caucus has no idea, either. Essentially it will be a very substantial tax on energy, and that is why Labor’s flawed CPRS is such a threat to our economy, dependent as it is on relatively cheap supplies of energy. Hence the utter folly of Australia designing and implementing this scheme ahead of the rest of the world.

Labor’s CPRS is a serious threat to many regional economies and the jobs they support, and I commend Senator Fiona Nash for her eloquent espousal of their cause. In my own state of South Australia it is estimated that it will cost 2,000 jobs by 2020 in the minerals industry alone. As a senator for South Australia, I do not see how I can possibly vote for this legislation, nor do I see how any government senators representing South Australia can vote for it. While the financial capitals of Melbourne and Sydney may relish the creation of a new financial instrument to be traded by 20-something bankers, the people of a state like mine will pay the price in a higher cost of living, in industries and jobs destroyed and in a reduction in competitiveness—all for zero environmental gain.

It is also reprehensible that Labor would seek to legislate this serious attack on the Australian economy at a time when, as Mr Rudd constantly reminds us, we face a very serious set of economic circumstances. Mr Rudd loves to remind us of the seriousness of the so-called GFC and its threat to Australia. Indeed, it is his justification for the most massive explosion in government spending, government deficits and government debt seen since the 1930s. Yet, while talking endlessly about our serious economic situation, he seeks to fit Australia up with a set of concrete boots called his CPRS. As Geoff Carmody, one of Australia’s most eminent economists, wrote in the Financial Review on 23 June this year:

The CPRS is ‘the GST from hell’, delivering negative protection. Why should any country unilaterally tax its exports and effectively subsidise its imports, for no global emissions reduction?

At a time when policy should be wholly directed at maximising the efficiency, productivity and international competitiveness of the Australian economy, Mr Rudd seeks to impose a unilateral massive new tax on Australian industry and consumers which will damage our economy and do nothing to combat global warming. The government’s pursuit of this legislation at this time is nothing more than an act of vanity on the part of Mr Kevin Rudd. This most vain of prime ministers wants to strut the stage at Copenhagen in December with a legislated ETS in his back pocket. He and his government propose to sacrifice Australia’s national interest on the altar of his vain desire for international acclaim from the vast UN bureaucracy being built around climate change policy.

The Australian parliament should not even be considering legislation for an ETS until we know the outcome of the UN’s Copenhagen conference and the US Senate’s consideration of the Waxman-Markey bill. The Australian people agree with this view. An Australian Newspoll conducted on the weekend of 24 to 26 July showed that 53 per cent of Australians wanted their government to either delay the introduction of an emissions trading scheme until after the Copenhagen conference or not introduce an emissions trading scheme at all. On that basis, and for the reasons I have outlined to the Senate tonight, I urge the Senate to reject this package of bills.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I also want to contribute to the debate on the Carbon Pollution Reduction Scheme Bill 2009 and related package of bills. In doing so, I want to first of all put both my credentials and those of my party on the table for that purpose. It has been suggested by senators opposite in this debate that coalition senators are ignorant about climate change, are unsympathetic, do not understand the imperatives facing the world and do not have any affinity with the needs of the environment. I remind all members of the Senate that the party I belong to has a long and proud history of protecting and acting on the needs of the environment. It is the party which introduced Australia’s first pollution control legislation at the state level, the party that ended sandmining on Fraser Island, the party that, a little over a decade ago, set up the world’s first greenhouse agency, the party that ended whaling in this country, the party that introduced a renewable energy development scheme for the first time and the party that sponsored the Global Initiative on Forests and Climate. It is also the party that, over the life of the Howard government, was able to ensure that Australia was one of only five or six countries in the entire world which actually met its Kyoto emissions targets. It was not Spain, Canada, Japan, New Zealand or the United States of America but Australia, under John Howard, that actually did reach those targets.

Personally, I can also claim a commitment to action of that kind. As the Australian Capital Territory Minister for Environment, Land and Planning, in 1997 I travelled to Nagoya in Japan, where, on behalf of the ACT community, I signed the Cities for Climate Protection charter. In doing so, this territory became the first in Australia to sign up to Kyoto-like targets for greenhouse gas reduction. I will inform the Senate what those targets were, because they will make an interesting contrast with the policy of the present federal Rudd Labor government. More than a decade ago, the ACT Liberal government committed to reduce our greenhouse emissions in this territory to 1990 levels by 2008 and then to further reduce those emissions by 20 per cent on 1990 levels by 2018. It was a leadership signal from a territory that has often provided leadership signals in public policy. It was universally applauded by this community at the time, including by the ALP opposition. It put a heavy emphasis on community or householder action in dealing with climate change and it encouraged and stimulated investment in the sorts of things that we would all like to see, such as new green technologies. Incidentally, that commitment was torn up by the present Stanhope Labor government in 2005 and replaced by a much less ambitious greenhouse target.

So the Liberal Party generally are entitled, and certainly I am specifically, to enter this debate with a sense of commitment and understanding of the needs of the environment. I acknowledge that climate change is a key issue for our generation—some would say it is the biggest issue in our generation. It is more than a campaign tagline, more than a bumper sticker and more than an opportunity to argue who is greener than the next person. It is a complex interlacing of science and politics and it deserves all the careful consideration we can muster based on all the available evidence. It deserves detailed analysis of economic and social impacts of various climate change responses and, in all those terms, it deserves bipartisanship.

But we will not see bipartisanship on this issue. The question is: why? The reason is that the Labor government in this debate at this time is committed to not achieving bipartisanship. It is committed to achieving, in fact, conflict on this issue. Why? Because it wants a trigger in its pocket to fight the next election with a double dissolution and the opportunity to make political advantage out of the disagreement in this place on climate change. It sees more political advantage in conflict than it does in consensus.

I want senators to consider some of the features of this debate to illustrate the point I have just made. All the parties in the Senate, other than the government, have expressed serious reservations about the government’s CPRS. It has no supporters, apparently, in this chamber other than the members of the government, and one wonders what some of them privately think about the scheme. The chorus of critics outside the parliament, on the other hand, are legion. Bodies like Greenpeace, the Australian Coal Association, the Wilderness Society, Woodside, Tim Flannery, the Minerals Council and the Australian Chamber of Commerce and Industry are all against the bill. Even the government’s own premier carbon scheme architect, Ross Garnaut, has stepped aside from the bill that has been presented in its current form.

What would you imagine that a government faced with such a difficult position in the Senate and with such opposition from other senators and outside the chamber might do to deal with this legislation, particularly given that it did not go to the last election with a particular form of legislation? It said it would develop its legislation and scheme after it got to government, so there is not even a mandate to rely on. It now has this opposition to its present scheme. You would imagine it would want to negotiate. But the Rudd Labor government is not interested in negotiating on this issue, even given that it has an opposition which is saying that it is willing to support an emissions trading scheme if it is properly designed, which indeed set in train an emissions trading policy when it was in government, which has even now offered to help the government double its emissions target from five per cent to 10 per cent unconditionally. You would think in those circumstances negotiation might be sensible, might be a rational move in favour of getting its legislation through. Yet it has eschewed negotiation as comprehensively as is possible. At every chance it has had the government has branded any mention of alternatives to its Carbon Pollution Reduction Scheme in its current form as the sabotage by climate change deniers. Instead of taking the extended hand that has been offered by the opposition, Senator Wong, the relevant minister, has said she is not interested in that. Indeed, she plays politics at every opportunity.

I also want senators to note the language that has been used in the course of this debate. I have sat either here or upstairs listening to the contributions of, I think, all of the government senators who have contributed so far to this debate. It is full of references to the blocking of this legislation by the coalition, to the coalition deniers, to the coalition sceptics, to how the coalition is short-sighted, to how the coalition are dinosaurs. Isn’t it interesting that there is no reference in these oft repeated remarks to the position or the bona fides of the crossbenchers, particularly of the Greens? I have heard not one reference in the course of this debate. The reason is very simple. The politics of this debate are not about attacking the Greens or Senators Fielding or Xenophon. The politics are about positioning the coalition for what the government anticipates and hopes, perhaps, is an election around climate change. Deliberately stepping away from constructive negotiations in these circumstances is more than a missed opportunity; it is a disgrace. A world at risk of serious change, I believe, deserves better than that.

I want Australia to take a strong position on climate change. I want us to be in the vanguard of action in this area of policy, and I think we can be. I want a partnership with the Australian people, who have shown such enormous commitment to action on climate change in recent years. And I oppose these bills before the Senate tonight not because they take us too quickly or too far down the path of climate action but because they simply do not do the right things; they simply do not do enough. They are ill-conceived. They are too damaging for the gains that they propose to make. They do not engage the Australian people, individuals and communities enough in the process of change. They are a lost opportunity. They are a political vehicle more than they are a vehicle for action on the environment.

The original listing—and this is a further point to illustrate how politically this government is driving this process—of these bills assumed an implementation date of 2010. We were told categorically that there was a timetable the government wanted to meet and that the timetable was inflexible—it had to be met. Senator Wong said in February this year, when opposing any changes to the government’s timetable for an ETS:

... the longer we delay, the higher the costs. The longer we delay in making this economic transformation, the higher the costs … the Government remains committed to the 2010 start date.

A great deal changed between February and May, when the Prime Minister announced:

... the start date of the Carbon Pollution Reduction Scheme will be delayed one year to commence from 1 July 2011.

But, as Senator Minchin has pointed out, there has been no change to the timetabling of this legislation. Despite a further year before it is due to commence, despite the fact that there are important meetings taking place in Europe at the end of this year on these very issues, the government has not budged at all on its original timetable. It still says it has to be passed as soon as possible.

The question is why. The reason is not the requirements of the scheme. It is not that there is some imperative to have the scheme in place by August or September or December of this year. It is that the politics of the electoral cycle make it imperative that the government has its position staked out on the ground as soon as possible.

We know that the government’s timetable is entirely false, based on what the United Nations itself—which is running the conference in Copenhagen—has said about what it is necessary for states taking part in that conference to do before the conference itself. The UN climate office head, Yvo De Boer, was asked recently if it mattered if Australia arrived at Copenhagen in December for the climate change talks without an ETS in place. He responded, ‘Quite honestly, no.’ He went on to say:

What people care about in the international negotiations is the commitment that a government makes to take on a certain target …

Again, in those circumstances, why does the legislation have to be passed right now? Why does a scheme which does not start for two years need to be passed by the Senate at this point in time? The answer is that it is not about climate change and it is not about protecting the environment. That is extremely sad.

The other point which I think is distressing to the point of being tragic is that the government’s approach with this legislation runs the very serious risk of draining the support and enthusiasm of Australians for positive, realistic, effective action on climate change, because it will be very clear to Australians that it is such a blatantly political instrument rather than an effective public policy tool. As Australians, we should have a plan that is based on action by industry, action by major polluters and also action on a community level that allows people to participate and be part of change. It should be a plan that rewards green choices, that provides incentives for research and development in green industries, that promotes green technologies and green jobs and that promises not just a top-layer tax but a shift in thought and action nationwide which results in a new generation of environmentally conscious Australians who are willing to act in an appropriate way. The Leader of the Opposition said this week that we as a nation can be world leaders in this field. I think that is absolutely true, but it does depend on engagement with the Australian people.

What could government do to stimulate that community involvement? It could, for example, offer rebates to Australians to install solar panels. It could fund research and development to improve existing land, water and vegetation management. It could invest in low emission technology. But, of course, we know that in all these areas the government has a track record already—a track record of failure. The solar panel rebate is the most visible example of that. Without ceremony, the $8,000 solar panel rebate was means tested, its effectiveness was reduced, thousands of people who had made plans to install solar panels withdrew those plans because of the new means test and the rebate itself was ultimately and prematurely axed.

In the case of the Renewable Remote Power Generation Program, Minister Peter Garrett emailed solar and wind companies on 22 June this year, three minutes after the program had actually been cut, to advise them of their fate. That program had provided rebates to more than 7,000 installations, with a further 1,100 in the pipeline. It had commenced in 2000 and a total of $300 million had already been invested. It had all made a difference to the environment, but the government decided to axe it. Why? Because its objectives are not about the environment.

We heard in Senate estimates this year about how the government had taken a very successful agency, Land and Water Australia—which had invested in the management of Australia’s land, water and vegetation resources in a way that had produced real dividends for the environment—and simply axed it, despite the very handsome return it had made on management of the environment and control of emissions. The Low Emissions Technology Demonstration Fund has not being left alone either by the Labor government. The program supported projects such as carbon sequestration into underground aquifers, drying and gasification of coal to reduce electricity generation costs by 30 per cent, carbon by 30 per cent and water consumption by 40 per cent and new solar electricity generation with panels 1,500 times more efficient than is currently the case. The program was cut in 2007, and I really wonder what those opposite hoped to achieve by way of action at the community level to take up those technologies and make a difference.

I think that what we will see with the passage of this legislation, if it becomes effective in Australia, is people seeing higher energy costs, lost jobs, a decline in the viability of many rural industries and a great deal happen that is not good in their communities; but they will not see a difference made to global emissions by virtue of those steps. If they were to see a great deal of pain for not much gain, it would be perfectly understandable for them to say that this was a plan that did not deliver what was promised. Climate change fatigue and cynicism will grow, and that would be, I think, a tragic consequence.

I believe that Australia can and ought to be in the vanguard of action on climate change. I do believe that we need to act and that Australia has a role to play in that. I believe that an effective, strong emissions trading scheme as part of a plan for emissions reduction in this country is possible and achievable on a bipartisan basis.

It is regrettable in the extreme that, because of this government’s determination to use the issue of the environment for other purposes, that is simply not possible. Nonetheless, the coalition is perfectly right in opposing this legislation—in sending a signal to the government that it will not accept its posturing and posing on the environment as a substitute for real policy. We owe Australians more than that. Indeed, that is the decision that we have taken and will carry through with the decision to oppose this legislation tonight in the Senate.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I also rise to speak tonight on the Carbon Pollution Reduction Scheme Bill 2009 and the associated package of bills that the government has put before us to implement its plan for a cap-and-trade emissions trading scheme, commonly referred to as the CPRS. As we are all aware, the end goal in implementing an ETS is to achieve a reduction in global greenhouse gas emissions. And why are we trying to reduce global greenhouse gas emissions? The answer is: because the ‘settled’—and I use that word in quotation marks—science is that anthropogenic, or man-made, CO2 and equivalent gases are increasing in the atmosphere to such an extent that it is affecting our climate and, further, that those effects will have a disastrous consequence for the planet and its future.

When concern about the issue first gained significant public traction some 10 or 15 years ago this phenomenon was called ‘global warming’, because it was argued that it would increase global temperatures. Since then, the label applied to the stated impact of man on the climate has been changed to ‘climate change’. This better allows proponents of the phenomenon to claim any extreme weather event—whether it be a heatwave, heavy snowfall, hurricane, cyclone, severe storm or flood caused by torrential rainfall—to be the direct result of anthropogenic impacts on climate.

As I understand it, the potential impact of man-made CO2 and equivalent gases on the climate was first seriously discussed in scientific circles—and here I admit to not having researched dates thoroughly—in the early 1970s, around the same time as the alternative theory that the gases and pollutants mankind was pumping into the atmosphere was going to form a barrier between the sun and the earth that would bring on the next ice age. And this latter theory is what my first recollection is of arguments about mankind’s impact on climate—having been taught of the ice age concerns by a teacher in around 1978.

Incidentally, I am acquainted with a retired American scientist, Mr Jim Pleasants, who worked at NASA in the US throughout a period including the early 1970s. He rose during his career to senior management level and was responsible for such relevant projects as sending an instrument that measured ozone and aerosols into earth’s orbit. He has told me that there was a heated debate going on at that time by leading scientists in America between those who argued mankind’s activities would heat the earth and those who argued it would cool it. Their main concern was that unless they took a united front they would look foolish and find it harder to attract research funding. As such—and, I am told that Mr Pleasants was present when this occurred—this group of leading international scientists flipped a coin to decide what impact they would pursue. And, of course, the coin came down on warming.

According to my acquaintance, that coin flip, which he says occurred in around 1972, was the start of the global warming movement. Since those days, that movement has very effectively developed from an issue debated and considered only by a small group of scientists to a much broader and wider issue that concerns many people worldwide. The public relations around the issue have been very effective. Claims of loss of natural features such as the Great Barrier Reef, sea-level rises of up to 100 metres, the timely coincidence of extreme weather occurrences such as hurricanes, droughts and heatwave-induced bushfires—despite the fact that all of these occurred regularly, and usually more severely, in the past—and of course the extinction of polar bears, have proven very effective in convincing well-meaning and caring people of the need for action.

And there is no doubt that millions of people around the world, despite having no actual knowledge or understanding of the science upon which the movement is based, now faithfully accept as fact that mankind’s activities are affecting the climate in a manner that will have disastrous consequences for the planet, its peoples and its environment. And my use of the word ‘faithfully’ was quite deliberate. The sad reality is that the movement has taken on what cannot be seen to be anything other than a religious quality—a status that categorises everyone as a ‘believer’, a ‘sceptic’ or, even worse, a ‘denier’.

Anyone who dares to question the assumptions upon which the phenomenon is based is immediately ridiculed and his or her academic credentials, intelligence, gullibility and motive are immediately called into question. Worse, such sceptics and deniers are also belittled and blamed for not accepting that we have to make huge changes—changes that will come at great human cost—for the common good of the planet. Effectively, they are accused of heresy. One only has to look at the behaviour of the Minister for Climate Change and Water, Senator Wong, in this place, when anyone dares question the assumptions upon which the need to implement these bills are based. There is no doubt that she approaches such heretical behaviour as if she were the high priestess of the religion, with a sworn duty to seek out and expose nonbelievers: those who would undermine the faith—those dastardly sceptics and deniers!

Even today she employed this tactic, naming Senator Bernardi at least four or five times. If she were allowed to, I suspect she would like to burn at the stake all who dare question the truth of the science behind climate change. However, despite the religious fervour demonstrated by many campaigners for climate change action, and the fact that most people who are concerned about climate change have that concern without the scientific expertise to fully analyse the facts—meaning that they essentially take it on faith—it is also apparent that there is a seemingly strong acceptance of this phenomenon by many, if not most, in the scientific community. These are people who one would expect might have the knowledge and understanding of the science to fully inform their decision to accept the phenomenon and its associated threats as real and imminent. But the fact remains that not everybody accepts this as fact. And the really interesting thing to me is the large number of prominent and impeccably credentialed scientists who have raised issues and concerns—very relevant and strong issues and concerns—about the science upon which most, if not all, of the assumptions about man-made climate change are based.

I am not a climate scientist. Despite completing first year physics and chemistry at uni I do not even claim to be a scientist. As such, I readily acknowledge that I do not have the expertise, knowledge and capacity to satisfy myself, through scientific inquiry and experimentation, that this science—the science upon which the assumptions of man-made climate change are based—is in any way proven in a scientific sense. As such, I have no choice but to rely on the recommendations and comments of those who do have that expertise, knowledge and capacity to make such inquiry.

As mentioned, the weight of scientific support seems to back the believers. Given the huge research industry that has developed around climate change, a cynic would suggest that this is not surprising. But, regardless of why it appears most scientists support the man-made climate change issue, I am greatly concerned by the large number of very prominent scientists who fall in the category of what many would call deniers—people like Emeritus Professor Garth Paltridge, an atmospheric physicist who was a chief research scientist with the CSIRO Division of Atmospheric Research before taking up positions in Tasmania as Director of the Institute of Antarctic and Southern Ocean Studies and CEO of the Antarctic Cooperative Research Centre. His specialty is fluid earth sciences, climate and Antarctica—a field highly relevant to the very issue underlying these bills. Yet, using this very expertise and the skills acquired over a lifetime of research and study in the fields of science so relevant to the issue, he queries the scientific evidence upon which claims of man-made climate change are based.

The science I did do at uni and before that taught me that all scientific theories are just that—theories. They stand to be proven or disproven on the basis of the evidence and stand on the basis of the evidence. I stand to be corrected, but belief in a concept did not come into any aspect of scientific research or theory. Given the fact that so many scientists, like Professor Paltridge, have concerns about the actual science behind climate change and raise real issues about the verifiable evidence that is used to back that science, I have no choice but to refuse to believe what I am told is truth and to declare myself a ‘sceptic’ when it comes to the issue of mankind’s impact on the climate. This does not mean that I am a denier, as such—again, I acknowledge that I do not have the skills to assess the issue myself at a scientific level. What it does mean is that I do not accept that the science is in on climate change. Although not commonly used as such these days, to be considered a sceptic was a compliment once, when people used it in the sense of the ancient Greek sceptics movement—one where people refused to merely accept what they were told and actively questioned, tested and sought evidence to prove or disprove statements and beliefs.

Madam Acting Deputy President, you might ask what this means about my thoughts on the need for action to address climate change, such as that major action included in these bills. You may be surprised to hear that I am accepting of the need for action. This is due to the advisability of prudent and sensible risk management. As mentioned, I do not know whether man-made climate change is real or not but, despite having real doubts, I think it is in everyone’s interest to take action that increases efficiency, reduces pollution and recognises the finite resources of the planet—particularly if, in doing so, any risk of real consequences of man-made climate change are minimised. However, I do not accept that we should as a nation take action that will undermine our national interests or those of Australians, particularly if that action is unlikely to deliver any actual benefits, whether to the environment in general or more specifically in reducing global emissions of CO2 and equivalent gases.

There are plenty of options open to the Australian government that will achieve positive environmental outcomes, regardless of the issue of climate change, without threatening the economic and social welfare of Australians. The coalition and Senator Xenophon’s release yesterday of research commissioned from Frontier Economics provides one such alternative emissions trading scheme. As noted by shadow minister Andrew Robb, this research proves the Rudd government’s scheme will unnecessarily drive up electricity prices, destroy jobs and expand the size of government in Australia, while doing little about actual emissions.

The modelling was conducted using the same model and basic parameters as the government’s own modelling. The results show that this alternative approach would provide for a greener, cheaper and smarter ETS—greener because of a doubling of the target; cheaper because it will be 40 per cent cheaper than the government’s scheme, a $49 billion saving to our economy over the next 20 years; and smarter because it will ensure that there are more jobs, more Australians in work, with higher wages, particularly in regional Australia. The Frontier research shows that, with the right model, a logical and well-planned ETS can deliver an unconditional 10 per cent reduction in Australia’s 2000 greenhouse gas emissions by 2020, compared to the Rudd government’s five per cent unconditional target; wind back average household electricity price rises from the $280 under the current legislation to just $44 in the near term; and have a net gain in employment in regional Australia of 70,000 jobs, compared to the government’s scheme.

Importantly, this research also gives certainty to Australia’s agricultural sector, by leaving it out of the cap while providing an opportunity for it to be rewarded by generating carbon offsets. Lower electricity prices will also greatly reduce the indirect costs of the government’s ETS that would be faced by hundreds of thousands of small businesses. For example, under the CPRS, a typical dairy farm would face extra costs of $8,000 to $10,000 per year. Under Frontier’s proposals, this would be reduced by 80 to 90 per cent. Separately, the coalition has also committed itself to a doubling of the compensation for loss of asset value proposed for the electricity generators, from $4 billion to $8 billion—and up to $10 billion. This will provide the capacity for this sector to invest in low-emissions technology and see a rapid reduction in their carbon footprint. The generator sector contributes 50 per cent of all emissions.

I have been a part of a number of inquiries looking into the proposed legislation as contained in these bills through my membership on the Senate Select Committee on Fuel and Energy and the Senate Standing Committee on Economics, and I can tell you, on the basis of those inquiries, that the overwhelming body of evidence on the government’s CPRS shows that it will not effectively achieve its aim of reducing global greenhouse emissions, particularly when it is generally acknowledged that a global response would be required to achieve such a thing. In that regard, we have seen no evidence that an international agreement is imminent, nor is it at all likely that the great number of our main trade competitors will assume a price on carbon. And it is clear on any objective analysis that the CPRS, adopted without an international agreement to prevent carbon leakage, would have exactly the opposite impact of that intended and would simply shift emissions generation from those nations assuming a price on carbon to those without such a price—effectively adversely impacting upon the ultimate goal of reducing global greenhouse emissions.

Professor Warwick McKibbin, widely respected economist, academic and member of the board of the Reserve Bank of Australia, stated:

The problem is that the environmental effectiveness is not an Australian issue, it is a global issue, but the cost is an Australian issue … We need a system where the global outcome environmentally is beneficial, and us cutting with no one else cutting does not deliver anything.

There seems to be strong acceptance of the fact that the likely outcome of implementing the CPRS in its current form is that Australia would suffer severe economic consequences and job losses, without providing any notable reduction in global emissions.

Given the likely absence of a global consensus on reducing emissions, it becomes important to understand the effects on Australia of going it alone, as it were. Under questioning, the Department of Climate Change has admitted that the government has not clearly enunciated the degree to which, or method by which, the proposed CPRS will actually contribute to a global emissions reduction. This lack of global focus in the CPRS exposes Australia to some severe flow-on effects in terms of Australian jobs and the economy.

As mentioned, there is much evidence to suggest that it is almost certain that many of our employers and industries will move their operations offshore in the absence of comparative emissions abatement schemes in our competitor countries—not to maximise their profits, as some on the other side might say, but to remain competitive with their competitors in countries that are not saddled with crippling carbon costs as part of a flawed ETS, not to mention the restrictive and uncompetitive IR laws they are now again saddled with! And, in many cases, the option of shifting offshore will not be viable or attractive, and the comparative disadvantage that Australian businesses will be shackled with will mean that Australian businesses will simply have to shut their doors as they find they can no longer compete or downsize, or they will have to cancel future expansion plans.

In each of those scenarios, not only would there be a highly adverse effect on the Australian economy and on jobs but there would almost certainly be an increase in emissions offshore—carbon leakage. And, given that Australian industry is often world’s best practice in terms of emissions, the production of goods outside Australia will likely be at a higher emission cost per unit than the equivalent production in Australia—again, not a desirable outcome. Professor Anthony Owen, from Curtin University of Technology, clearly explains carbon leakage with respect to the Australian situation. He said:

I do not think Australia, with such a small percentage of the world’s emissions, can really dominate … It is really up to the international community and, in particular, the world’s large emitters to come forward with a policy which addresses that issue. It is a serious issue, of course, leakage. If Australia drives offshore some of its energy-intensive industries, they may well create more emissions offshore than they would have with the same output in Australia.

Under questioning by the Senate Select Committee on Fuel and Energy, Mr Noel Cornish, chief executive of BlueScope Steel, stated that ‘we would see the loss of manufacturing industry and the loss of jobs in Australia for no global greenhouse gas improvement.’ The suggestion has even been made that it may actually be more efficient in a greenhouse-gas emission context for government to actively seek an expansion of emissions-intensive industries in Australia, as our industries and energy production operate at a generally more efficient level than many other countries, thereby reducing overall global emissions of CO2 and equivalent gases. The reality of this suggestion is pretty hard to argue against but totally contrary to the direction that the government is taking.

A key characteristic of our economy is that many of our businesses will face much difficulty passing on to their customers additional costs imposed by an ETS. This is due to the small size and degree of openness of our economy, which means many of our industries are price takers, both in terms of their inputs and their outputs, and cannot pass on the costs of the CPRS to their customers. We are price-takers in the steel, coal and aluminium industries. The CPRS in its current form would see significant reductions in competitiveness and threaten the viability of some operations. But it is not just our industries with import and export exposure that face considerable financial hardships under the proposed CPRS. Australia’s electricity generators will be significantly disadvantaged under the proposed scheme, and this is particularly so due to the lack of smooth transition arrangements provided for by the scheme.

A fact that can hardly be missed at present is that we are in the middle of a global financial crisis. Despite the significant effects of this global financial crisis it would seem that the government failed to take into account the changed global economic environment when designing its CPRS or modelling its economic impact. Treasury officials have confirmed time and again that no modelling was done on the impact of the global turmoil on the projections for the impacts of the CPRS. Given the current model’s inflexibility and design flaws that render it completely ineffective in adjusting to unexpected or abrupt changes in the economy, the government’s proposed CPRS will further exacerbate this trend. With our economy delicately poised and skating around recession, the timing could not be worse. Some of our major industries will face costs that they are unable to pass on at a time when we simply cannot afford it.

Before the election then opposition leader Kevin Rudd made several promises in respect of climate change and how he proposed to deal with it. He made a promise to establish an ETS. He promised that this ETS would generate deep cuts in global greenhouse emissions. He promised that this would occur in such a way that Australia’s export and import competing industries would not be disadvantaged. The promised scheme is now in a state of total and utter chaos. It constitutes an ill-considered attempt to meet a tokenistic deadline and fails miserably to provide measures that will actually achieve any of its hastily promised and politically motivated goals. The promise of making deep cuts in global greenhouse emissions will not be met by this CPRS. The promise of protecting our trade exposed industries will not be met by this CPRS. In fact, all that will be achieved by this CPRS are job losses, economic destruction and the exporting of our emissions-intensive trade-exposed industries overseas, most probably to countries with lower, if any, environmental standards—which will ultimately mean an increase in global greenhouse emissions. Australia deserves better.

As I noted when I started, I am not convinced that the sky is falling as a result of mankind’s impact on climate. But I also consider that there is a lot to be gained through adopting cleaner, more efficient and sustainable ways of generating electricity. But the CPRS will not achieve this outcome. (Time expired)

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

A lot has been said about the government’s Carbon Pollution Reduction Scheme—by the government, by the opposition, by the Greens, by the crossbenchers, by environment groups, by industry and by regular voters who just want Australia to play its part in finding a solution to this global crisis. The details can seem complex, but I think there are some simple truths that virtually all of us can agree on. Anthropogenic climate change presents us with the most pressing and complex policy problem that we have ever faced. I believe that the environmental debate is over. The time for action was some time ago. We need to act and we need to get this right. There is a great urgency in relation to this. For those who are climate change sceptics, who are doubters, who say the science does not stack up, I say: at least from a risk point of view, consider the evidence of literally thousands of climate change scientists who say we need to act on this. If we get this wrong, if the climate change sceptics are wrong, are they willing to literally bet the planet that they are right and thousands of climate change scientists are wrong? I think that is the key to this. My plea to Senator Joyce, whom I regard as a friend and colleague, is to look at the risk factors, look at this as an issue of managing risk. If you are doubtful about the science, at least look at the whole issue of managing this very significant risk, because there is no going back if we get this wrong.

I want to take this opportunity to pay tribute to the Australian Greens. I know that I may not see eye to eye with them on the best way to address global warming, in all respect to the Greens. But one thing that needs to be acknowledged is that the Greens have led the way on this issue. They were the canaries in the coal mine, if you will, warning us that global warming will end up seeing us all fall off our perches unless we act. For many years, the Australian Greens and the environment movement have made a serious contribution to focusing all our attention on this looming crisis. This crisis is pressing because the window of opportunity we have in which to take the sort of abatement action needed to avoid irreversible dangerous and potentially catastrophic climate change is small. On the basis of the findings of the March 2009 conference in Copenhagen, the window of opportunity is getting even smaller.

This issue is complex, because it has all the features that policy, whether at a global or national level, usually struggles to deal with. According to Lord Anthony Giddens, the former Director of the London School of Economics and former adviser to President Bill Clinton and Prime Minister Tony Blair, there exists what is called the Giddens paradox, where we ought to act on an issue such as climate change but somehow we are paralysed because global warming is something that is not seen as tangible enough. Recently, Lord Giddens was interviewed on the BBC. What he said is pertinent to today’s debate. Lord Giddens said that climate change is a completely different political issue from any that we have ever had to face before, because it is about catastrophic risk. But most of that risk is in the future. It is not visible in people’s day-to-day lives. Hence, most ordinary citizens get on with their day-to-day lives and push it to the side as a potential threat. He said: ‘It’s a paradox, because if we wait until it does become visible, if we wait until there are enormous shifts in weather patterns which are really threatening, it is too late by then to do anything about it, because unlike other issues once the emissions are in the air we know of no way of getting them out of there and they are likely to be there for centuries.’

Abatement has large up-front costs with benefits that accrue in the relatively distant future and with some degree of uncertainty. A solution also requires attention to the development aspirations of poorer countries and the emission trajectories that will result. Recently, I spoke to my friend and mentor Tim Costello, the CEO of World Vision. He was recently in Africa and met with the Prime Minister of Ethiopia, who is very concerned about issues of abatement, which I will speak to later. But the fact is that developing countries are bearing the brunt of climate change. They are already seeing the effects of climate change. Developing countries need to be part of a global solution and Australia needs to play a leadership role in relation to that. There is a concern that those who do nothing will still benefit from the actions of those who do a lot. If we are not careful, we could end up creating an environment that favours what Professor Garnaut describes as ‘free riders’.

All these factors need to be considered as we choose the right design for an emissions trading scheme. In a country like Australia, which has a small, open economy, we cannot assume that what works in certain other parts of the world will work here. We need to have a scheme that works for our economy and our environment. It makes sense from a legislative and ethical point of view that Australia takes an early lead in emissions reduction in order to break the potential international deadlock and motivate other nations to also play their part. Australia has a real role to show leadership, particularly in our region.

In taking such action, Australia needs to adopt a scheme that is credible internationally and sustainable domestically. It is important to lead by example, but it is also important that we set a good example. If we choose the wrong scheme and irrevocably damage the economy or do not save the environment, or both, we will serve as an excuse for other nations not to act. That is why we must get this right. International credibility will be to a large extent a function of the abatement targets Australia sets for itself and the way we achieve those targets. Clearly, the overarching goal is environmental: the reduction of greenhouse gas emissions. Abatement is the significant key to this and will fundamentally be investment driven.

We also properly need to address adjustment or adaptation issues. In relation to that, it is fair to say that the green and white papers have neglected this issue. I do not believe that there is any mention in either the green or the white paper about the issue of adaptation. The adaptation story is vital for two reasons. Firstly, a lot of climate change is already locked in through the accumulation of greenhouse gases in the atmosphere. The effects of it are real. One of the reasons why the Murray-Darling Basin is in crisis is climate change. That is real; we are seeing the effects of that now. Those communities are at the forefront of that. The Lower Lakes are seeing the effect of that; the Coorong is seeing the effect of that. We need to act.

Secondly, even assuming a global agreement on reduction that makes significant cuts to greenhouse gases, there will still be some residual climate change, given that it is almost inevitable that sea temperatures could rise by two degrees. That creates an adaptation in the longer run. I believe that much more attention needs to be given in any policy—if it is to be effective—to the issue of adaptation. It is simply not good enough for the states to have this responsibility. There is nothing wrong with the states dealing with adaptation issues, but we need to have a federal approach. An approach where adaptation is tackled federally is the right approach. Leaving it to the states would not provide an approach that is comprehensive or cohesive enough and would ignore the fact that climate change knows no state or indeed international borders. Water management is an obvious example of that. That is why, with respect to climate change, much more needs to be done in respect of adaptation. I look forward to the government’s response in relation to that. It is a real issue of concern that needs to be progressed in this debate.

In terms of the economy, we need to be able to afford this. We need to have a credible economic scheme to reduce greenhouse gases. If the government wants the economy to grow and grow green, it has to ensure that business is given certainty and is able to access the resources needed to change its ways. The government also has to take seriously the issue of carbon leakage. We need to ensure that Australian industry is not unfairly disadvantaged. As Senator Bushby mentioned in his contribution previously, we do not want to see carbon leakage to countries that just do not care and where there will be even more emissions for the same amount of output. What is wrong with the government’s CPRS and the broader government approach? I note that the Minister for Climate Change and Water referred to the Frontier scheme outlined yesterday as a ‘mongrel’. I think that this ‘mongrel’ has a lot of fight in it, and I have to say that, if the government’s CPRS were a dog, the only merciful thing to do would be to have it put down.

An unconditional cut of five per cent is ridiculously low. Given the punitive structure of the government’s scheme, aiming for five per cent will cause a lot of pain for no real environmental outcome. There are also real problems with many of the assumptions the government has made when modelling the scheme. For one thing, it assumes that job seekers are so mobile that retrenched workers in the Pilbara or in Newcastle will be able to become, for instance, insurance agents in Melbourne or Sydney overnight. It would be a nice world to live in but it is clearly not the world we live in. This is not a criticism as such of the government’s economic modelling. In fact the Frontier model used the same modellers as the government in relation to this. It is all about making the transition from a high-carbon to a low-carbon economy, but you need to smooth it out and get it right otherwise you will cause short, sharp shocks to the economy. Also, there will be a huge dislocation in regional communities. That is what the Frontier modelling has shown.

The Frontier modelling has also shown that there is a better way forward in terms of getting more significant abatements. My concern is that the government has portrayed its CPRS almost as pure cap and trade. But it is not. You could say that there is a bit of mongrel in that scheme on the basis that there are gateways, concessions and compensation because of the huge increases in the price of electricity for consumers and significant revenue churn, and also because emissions-intensive export industries get compensation, which, in a way, goes against pure cap and trade. I believe that it is unnecessarily brutal on the economy with little to show for it in terms of the sorts of cuts that we need to aim for.

For these reasons I, along with the coalition, commissioned the leading economics firm, Frontier Economics, to test the government’s model and suggest alternative approaches. I note that Senator Feeney earlier today wondered whether I would become a Liberal because of my cooperation with the coalition. I can indicate that in my first speech I actually made reference to the fact that in my misspent youth I was a member of the Liberal Club at Adelaide University. I put my involvement with them down to a youthful indiscretion and I do not have any plans of rejoining the Liberal Party or indeed any political party; it was too traumatic an experience for me back then.

Frontier knows a lot about this kind of economic modelling. Danny Price, as managing director, and his team were responsible for creating the world’s first mandatory emissions trading scheme in the form of the GGAS scheme for the Carr Labor government in New South Wales in 1999. That was a scheme where their brief was quite limited; it was simply a baseline and credit scheme. It was all carrot and no stick, if you want to put it in those terms. The scheme was very effective in reducing emissions given, I think, a constrained brief in terms of what they had to work with, but it was an emissions trading scheme nonetheless. It worked and it was effective, and these people know what they are talking about. Frontier have worked for governments of both persuasions and for NGOs. They have worked internationally and they know their stuff, particularly in relation to electricity generation. That is why this scheme needs to be looked at seriously by the government. This scheme delivers unconditional carbon-emission cuts of 10 per cent on 2000 levels compared to the government’s unconditional five per cent cut, and there is plenty of scope for even deeper cuts, especially when effective global agreement is reached. The modelling also saves the economy $49 billion in gross domestic product over 20 years in real terms, and that is a significant amount. It also creates higher job growth, especially in regional areas, compared to the government’s scheme, where you would see that significant dislocation in regional communities. That is something that needs to be avoided at all costs, because for those regional communities, whether it is Geelong or Newcastle or South Australia’s iron triangle, it would be a regional disaster. If we are talking in the vicinity of 10,000 jobs, and that is one of the figures that the modelling has indicated, taking 10,000 jobs out of any of those regions would be a disaster. Even if it were one or two thousand jobs it would have a significant effect; it would dislocate so much.

The Frontier scheme also achieves low rises in retail electricity prices of five to 10 per cent compared to the 40 to 50 per cent expected under the government’s plan, so you will not need the compensation. You will have a situation where you do not have the revenue churn that you would have with the government’s scheme. By using a baseline of intensity you do not have that churn, you do not have the economic distortions and you do not have the economic inefficiencies that arise in terms of both the direct and the indirect costs.

Let us also look at the whole issue of electricity, which is responsible for over 40 per cent of emissions. If you consider the massive price increases we will get under the government’s CPRS, you will have a situation where households will be compensated, as the government indicates, despite how inefficient that could be. You will not need that level of compensation if you go down the Frontier path. If you have a situation where there will be literally tens or hundreds of thousands of small and medium businesses in this country facing massive increases in their electricity, it will affect production and it will affect job growth. It will be a kick in the guts to every small, medium and large business in this country. Also, under the Frontier scheme the agricultural sector is protected through exclusion, bringing it in line with the American and European schemes. There is also an opportunity for rural producers to make off-farm income through carbon offsets, and that is very important. Put simply, the scheme is greener, cheaper and smarter.

I am disappointed that the initial response from the government was to knock this on the head. The Minister Assisting the Minister for Climate Change, Greg Combet, attempted to mock the Frontier modelling yesterday without actually having seen it. The government—and in particular the minister, Senator Wong—was equally confused when it equated the plan with one proposed in Canada, when even a cursory reading of the modelling would have shown that it is not a replica of the Canadian scheme and has in fact moved way beyond that, because it actually has hard caps and it takes into account some of the concerns that were expressed earlier by the government in the discussions and commentary in relation to the Canadian scheme. Another member of the government described it as a magic pudding. How can you possibly say that it is a magic pudding when you won’t even look at the ingredients?

I do note that the Greens are concerned about this, but they have indicated that this scheme goes for a higher cap than the government’s scheme. I actually think we need to go for higher caps. We need to listen to the scientists and go to 450 parts per million, or even below, by 2050; 350 million parts per million seems to be the growing scientific consensus in order to mitigate or avoid the disastrous consequences of climate change.

My concern is that we need to have the transition. My plea to my colleagues on both sides of the chamber and to my cross-bench colleagues, the Greens, is that we need to have that transition. There will still be coal power for a number of years but let us have cogeneration with gas. Let us fast-track renewables. Let us have incentives in place, which I believe we can have with the Frontier scheme, for investment certainty. If you want the transition from a high-carbon to a low-carbon economy, it will involve billions and billions of dollars worth of investment. I believe that unless there is consensus and bipartisan support in this parliament you will not get that investment certainty. This goes beyond one, two or even three election cycles because you need to lock in that degree of investment certainty for the massive transformation the economy will need. If we ignore that, then we face real problems with energy security. My fear is that if we ignore the risks involved, if we ignore the fact that we do need to have that energy security until we get the renewables on stream—the base load renewables such as geothermal—in the years to come, we will have a massive public backlash because people will not want their lights to go out, they will not want their refrigerators and air conditioners to stop working. These are the things we need to consider.

We need to reward good behaviour and punish bad behaviour and to create a change in behaviour. That is the beauty of the Frontier scheme. I think we all need to pull our heads in on this; we all need to start thinking about the world and stop thinking about the world of politics. We need consensus because if we do not get that consensus, we will all pay. If the economy is to grow, and grow green, it will need massive amounts of new investment in new technologies. This will not happen unless the economic environment is stable.

I cannot support this scheme in its current form. I will not be supporting the Carbon Pollution Reduction Scheme Bill 2009, but I think it is important that we continue to talk between now and when this bill comes back—presumably in November. I have confidence that Senator Wong is the best and most capable minister to shepherd this legislation through the parliament for the government. I also believe that we need to have that consensus bipartisan approach in order to deal with the most fundamental policy and economic issue this nation has ever faced.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I stand tonight to place on record my opposition to the Carbon Pollution Reduction Scheme Bill 2009 and related bills and to make a few brief comments about the reasons why.

Senator Xenophon has just noted that this is one of the most impacting pieces of legislation ever to come before the Australian parliament. The legislation is effectively a tax on good and services and it is to reflect the damage done from CO2 emissions and its effect on our environment. But the ETS and the legislation before us is poorly framed and it is too important to rush. The government is rushing this legislation for political purposes, and, I believe, inappropriate reasons are at the heart of the government’s objectives in regard to these bills. We must get this legislation right; it is too important not to. The timing is critical. Here we are, in August, debating this legislation and the government wants it passed and rushed through, yet the largest economy in the world, the United States, still has not passed its similar ETS legislation, and nor have we had the Copenhagen climate conference, which is scheduled for later this year. Why would we be leading the world in such a way with the fear that we might get it wrong? We must get it right.

I quote from the executive summary of the Frontier Economics report that was released just yesterday:

In terms of the breadth and magnitude of economic effects, the CPRS is arguably the most significant policy change in Australia’s history. As such there is a substantial onus on the Government to demonstrate that whatever policy is introduced it is the best that can be developed.

We know, not only from the Frontier Economics report but also from numerous other commentators and experts in the field, that the government has not got it right. Let me say at the outset that I am not an expert, I do not have the background or expertise in science, but I have read the various papers and reports about these matters and I base my views on those and on my own experiences as a Tasmanian senator. I also note that the opposition supports a properly framed and carefully put together emissions trading scheme and other measures to ensure that the consequences and damage to our environment of the CO2 emissions is taken into account. I will come to those shortly.

It should be noted that it was actually the Howard government that first introduced the emissions trading scheme—in fact, under the former minister, Malcolm Turnbull. Mr Turnbull should be commended for his foresight and vision, as he has been demonstrating in more recent times regarding this matter. In terms of renewable energy of course, we remember the initiative and the leadership of Dr David Kemp, the former minister for the environment, who together with the Howard cabinet, put together the mandatory renewable energy target, which was some 9,500 gigawatt hours by 2010, which essentially was an initiative to encourage renewable energy. It really kick-started the various renewable energy initiatives all around Australia.

As a Tasmanian senator, I know only too well the importance of hydropower and wind power and other senators know the importance of renewable energy more generally, whether it be solar or whatever. So why isn’t the government willing to sit down to negotiate, to consult and to discuss with the opposition and indeed others their contributions to get it right? Clearly, the government has not got it right and I think it demonstrates hubris and arrogance on the part of the government that it is willing to insist that this be an express effort that must be rushed through. It wants to ram this legislation through the Senate and through the parliament when it should really do the right thing: withdraw the legislation and work with the opposition and with experts in the field to ensure that we get it right and that the timing is correct so that the contributions of the Copenhagen climate change conference can be taken into account.

I also note that the government has floated the idea of a double dissolution, with threats as to the possibility of that. I am not afraid of that. I say to the government over this issue to bring it on, because we know that the government’s legislation will increase power costs for the average Australian family and for small businesses and large businesses alike. This will be a jobs destroyer for Australia. In fact, this will be less green and will provide fewer benefits as to the environment than other models that have been drafted and put forward. So the government has got to pull back and get this legislation right.

There are three parts to addressing the concerns. Obviously, there is the emissions trading scheme, the renewable energy measure—a 20 per cent measure by 2020—needs to come into place and there are energy efficiency measures. They are three key broad initiatives that need to be undertaken by any government and any community to ensure that we get this right. The Minister for Climate Change and Water, Senator Penny Wong, said the Frontier Economics report was a mongrel of a report. That is a shocking overreaction from a minister.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

She hadn’t even read it.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I accept that, Senator Ronaldson. We know that her reaction was inappropriate. What sort of behaviour was that? Does she demonstrate any shred of credibility in her role as the relevant minister? That was a shocking overreaction, and I call her to account and to think again without being so abusive and without being on her political high horse in behaving in such a way. We know from the report that was tabled yesterday and that is now in the public arena that the ETS will add a cost to as many goods and services as possible to reflect the damage that greenhouse gases are doing to the environment. The report that Frontier Economics put out noted that the Rudd government’s ETS will unnecessarily drive up electricity prices, destroy jobs and expand the size of government. The report shows that the scheme can actually be made twice as green at a much lower cost to consumers and the broader economy with a net improvement of 68,000 in regional jobs. That is a fantastic outcome. In short, it is greener, cheaper and smarter.

So what else does it say? It treats the electricity generating sector in a less punitive manner, whereby household power bills need rise by only about five per cent in the near term, rather than by the immediate 25 per cent that the Carbon Pollution Reduction Scheme, put forward by the Rudd Labor government, would trigger. We know that households in Tasmania have recently, as of 1 July, been copped with a 15 per cent increase in power bills. This is exactly what they do not want at this time. Five years into the scheme average annual household power bills would only be $45 higher, rather $280 higher under the government’s CPRS. That needs to be taken into account. Rather than the loss of 26,000 regional jobs revealed by modelling of the CPRS, the changes proposed by Frontier Economics would lead to a net gain of 42,000 in regional Australian employment and overall the cost to the Australian economy over the next 20 years in net present value terms would be reduced by $49 billion, or about a third. That would certainly be a good outcome; that is for sure. As I have said, the power costs issue is very important in Tasmania. This is a very sensitive issue right now. Households are copping it in the neck as a result of Labor’s management—or mismanagement—of the economy in the state of Tasmania.

I have mentioned Mr Turnbull. I also want to commend Andrew Robb, our relevant shadow minister on this matter. He is quoted as saying that the lower electricity prices would also greatly reduce the indirect costs of the government’s ETS, which would be faced by hundreds of thousands of small and mid-sized businesses. We know how important that is for Tasmania, as we are a small business state with over 35,000 small businesses and with nearly 50 per cent of the private sector workforce being in the small business sector. We know that these businesses are copping it in the neck at the moment and are on struggle street. This is exactly the wrong time and this is the wrong type of policy being put forward by the Rudd Labor government, and it is going to hurt them. We do not want that to happen.

In terms of agriculture, I turn to a point that I know Senator Heffernan and Senator Cormann and others in this place who are concerned for rural and regional Australia and the agricultural community in general are very concerned about. It is that agriculture needs to be taken into account. For example, Mr Robb said in a contribution that under the CPRS a typical dairy farm would face an extra cost of $8,000 to $10,000 per year. That is a huge cost on a dairy farmer and his or her family. Under the proposals of Frontier Economics, this would be reduced by 90 per cent. The coalition policy supports a doubling of the compensation proposed for electricity generators from $4 billion to $8 billion to $10 billion in order to provide greater fairness and investment certainty for firms in this industry.

At this point I just want to say there are a number of major employer groups in Tasmania that are very important in my community. Rio Tinto, for example, is one of those. Under the CPRS in the first decade there would be an additional cost of $80 million, a permit decay of $60 million and, as a result of the renewable energy target, a $70 million cost. So $210 million would come off the aluminium smelter’s bottom line. It is very hard for an industry like that, like Rio Tinto, to pass that on to their customers. In fact, it is nigh on impossible. So what are they going to do? They will have to cut back in other areas, whether it be employment, social investment, capital investment or other operating expenditure.

But with any renewable energy target, which certainly I strongly support, a true 90 per cent exemption would enable the resource sector to sustain employment and wealth generation and the government to facilitate growth and development in that sector. In Tasmania, that is critical. The renewable energy sector is vitally important. Nearly 100 per cent of our energy comes from hydro, comes from wind. We are very proud of that in Tasmania and we want to ensure that it prospers and grows. I recently met with Alex Beckett of Hydro Tasmania and had an excellent briefing with him, and I appreciate that very much. What we do know is that under the government’s proposal, industries such as Rio Tinto, TEMCO and Nyrstar—which are export-oriented industries—will go offshore. They will set up and operate in China or India, and the consequences will be very serious.

I draw to the Senate’s attention A socioeconomic analysis of selected MEG industries’ contribution to the Tasmanian economy, a report written by Dr Bruce Felmingham, a well-regarded economist. If five of those Major Employers Group industries disappeared the economic impacts would be very serious indeed. The report says:

• The withdrawal of the MEG 5 would reduce the output of Tasmanian industry by $3.638 billion annually.
• Their withdrawal will reduce Tasmania’s GSP by $1.802 billion or 12% of its real income.
• Withdrawal would lead to a fall in the annual wage income of $479.58 million.
• The job loss amounts to 7,035 fte positions.

The cost to social wellbeing is astronomical. So there are consequences of this type of legislation, and we need to take those into account. The opposition’s policy, or at least the Frontier Economics report, has put forward some very sensible contributions and I hope those are taken into account. We need to support business, large and small, and investor confidence—and that needs to come back and fast.

In terms of renewable energy, yes, Tasmania does have it. Indeed, Hydro Tasmania are the largest generator of renewable energy in Australia. Hydro own and operate throughout Tasmania 29 hydro power stations worth $4.8 billion. They have a number of renewable energy projects through their wind development, the Roaring 40s. It is a joint venture company between Hydro Tasmania and China Light and Power. Tomorrow I will meet with Matthew Groom of Roaring 40s for a briefing with respect to some of their concerns and to provide encouragement to proceed with their renewable energy target of 20 per cent by 2020. It is something that I support, and I know others do too. But we need to decouple that legislation from the package of legislation before us so that they can get on and invest, develop and prosper, whether it be through hydro upgrades and development or wind farms. In Musselroe Bay, in north-east Tasmania, in the electorate of Bass, what is the local member doing to support that development? I have not heard much, and the community has not heard much. We need a proactive representation on the part of the federal member for Bass and all members of parliament to support these types of development. They have developments at Woolnorth and Cathedral Rocks, with wind farms totalling 206 megawatts through the Roaring 40s. They have a lot of good things happening, and we need to make that 20 per cent target by 2020 and achieve that as soon as possible.

I have mentioned that the Mandatory Renewable Energy Target started under the Howard government, and that was an incentive for Hydro to invest in the way that it has. Since 2002 Hydro Tasmania has spent approximately $180 million on those various initiatives. With respect to new wind energy projects stemming from Hydro Tasmania’s 50 per cent owned Roaring 40s, that includes over 500 megawatts already in operation and under development and a total construction pipeline of 1,000 to 1,500 megawatts potentially worth over $1.5 billion. We have the Waterloo Wind Farm in South Australia and 140 megawatts from the Musselroe Bay wind farm in Tasmania. These are the opportunities. These are the things that can happen if we get this legislation right, if we frame it correctly, if we take into account the importance of agriculture and give them a fair go. One of the nine principles that were released a few weeks ago by the opposition leader referred to agriculture. He said the fifth principle was:

As in the Waxman Markey legislation—

in the USA—

agricultural emissions should be excluded from the scheme and agricultural offsets … biosequestration or green carbon) should be included.

Let us give them a fair crack of the whip and give them a fair go. Rudd has got it wrong on this count. I also note that amongst those principles the scheme design must ensure that general increases in electricity prices are no greater than comparable countries to minimise the impact on all trade exposed industries. That is exactly the point. You have to take into account those major employer groups that we rely on for fair power prices so that they can have a go and employ the people that they have and continue to grow, prosper and make a job of it. This is why we have to get all of these things right. I commend Greg Hunt for the work he has been doing in promoting the renewable energy target and promoting coalition policy. He said in a speech on 30 July, ‘A vision for a solid continent’, to the Appropriate Technology Retailers Association of Australia:

We want to do the right thing by renewable energy. But to link the RET with the ETS was a new low in political game-playing.

He is absolutely right. It should be decoupled and the government should come to the party and fix it pretty much straightaway.

It seems the Frontier Economics proposal is greener, cheaper and smarter. But, look, let’s put it all on the table. Let’s talk, discuss and see if we can work it out together. I call on the government to release their Treasury modelling. It has not been released with respect to the CPRS. That is a disgrace. They did this in the May budget when they forecast a 4.5 per cent GDP growth and everybody asked, ‘How is that possible?’ Independent experts said, ‘How is that possible?’ Nobody could work it out. They did not have the guts to release their Treasury modelling. They have to get it right for the sake of Australia and for the sake of Australian families.

Debate interrupted.