Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the Greens amendment (R16) on sheet 5886 be agreed to.

Question negatived.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

I move opposition amendment (1) on sheet 5872:

(1)    Schedule 2, item 8, page 13 (after line 26), at the end of section 38B, add:

        (3)    Regulations made under subsection 38AA(1) must determine a food processing activity, to the extent that it is trade-exposed, to be an emissions-inten-sive trade-exposed activity. The partial exemption of an emissions-intensive trade-exposed food processing activity for 2010 and any later year is to be calculated to be equal to 90% of the additional renewable source electricity acquisition obligation of the activity during the relevant year.

        (4)    In subsection (3):

additional renewable source electricity acquisition obligation means the amount of renewable source electricity that the activity is required to acquire under this Act after the commencement of the Renewable Energy (Electricity) Amendment Act 2009 in addition to the amount of renewable source electricity that the activity was required to acquire under this Act before the commencement of the Renewable Energy (Electricity) Amendment Act 2009.

The amendment seeks to provide trade assistance to Australian dairy and livestock farmers and food processors. It seeks to protect Australian farming families against costs being passed backwards from food processors that would lead to substantial farm gate income losses. It seeks to protect the future viability of farming in Australia by providing assistance to Australian trade-exposed food processors, including dairying and abattoirs.

The amendment requires regulation to determine that food processing activities, to the extent they are trade exposed, be given a 90 per cent exemption from liabilities associated with the RET. It seeks the same protection for farmers as that given to industries such as cement, newsprint, glass and those sorts of industries. Processed agricultural products are among the most trade exposed in the world and any additional cost imposed on Australian production cannot be passed on to customers. These costs will inevitably be passed back to farmers.

Can I quote the case of the Murray Goulburn dairy cooperative. They are a high energy user and trade exposed. The RET squeezes their profit margins to the extent they will have a lot of trouble competing in export markets. They cannot sustain the cost increases and will be forced to pass the costs back to dairy farmers or actually go out of business. Murray Goulburn Co-Operative told the Senate Standing Committee on Economics that liabilities under the CPRS would result in income losses to its 2,500 farming members of between $5,000 and $10,000 and that the RET would impose an additional $1 million in 2010, rising to over $2 million by 2020. I have been told by regional Queensland abattoirs that the RET costs will start at $315,000 in 2010 and rise by $850,000 by 2020. Like dairy, these additional costs cannot be absorbed and will be passed back to the graziers.

The Australian Dairy Industry Council’s submission to the economics committee inquiry states:

Although dairy processing is highly trade exposed in most products – the main activities do not meet the cut-offs for EITE classification …

We believe this is a flaw in the CPRS system which will see less competitive food processing and farming in Australia and lead to carbon leakage. Our major competitors in the world dairy market will provide support for dairy processors and exclude farm emissions or will not have an ETS at all.

I refer to the Australian Financial Review article ‘Burke seeks to calm fears of farmers’. What he is saying in here, in short, is that we should synchronise our dairy industry with New Zealand. I understand that Senator Wong had a very delightful evening the other evening as she sat next to Murray Goulburn. She had an introduction to the dairy industry, and I am sure after an hour’s discussion that she would have been right across—

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

My grandfather was a dairy farmer.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Her grandfather was a dairy farmer and she has been told about the dairy industry. Senator Wong, you did mention yesterday some breaks that the Productivity Commission could give the dairy industry. I do not think they are going to be terribly helpful, but I would like you to explain again how the dairy industry goes through the Productivity Commission to get some benefits. You did indicate that yesterday, but could you reiterate how the Productivity Commission can assist the dairy industry. And can the dairy industry make a direct representation to the Productivity Commission or do you have to give it a tick? Could you also refer to the Burke statement that he believes the dairy industry should be synchronised with that of New Zealand, who are the biggest exporters in the world and with whom we compete very heavily, bringing their cheese and other milk products into Australia. The earliest they will get an ETS and a RET, if they do get them, will be in 2018.

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

First, obviously the dairy industry in Australia, given the competition with New Zealand, particularly with Fonterra, is an important issue. The New Zealand parliament has in fact already passed its emissions trading scheme, although it is not in operation as yet, pending some legislative committee review, from memory. But I would say that both prime ministers have indicated in previous discussions—and also I have had discussions with my New Zealand counterpart—the possibilities of harmonising the Australian and New Zealand schemes in the future. So that is a matter where the two governments are considering those possibilities. A lot more work would need to be done, because obviously Australia does not actually have a scheme as yet, but that preliminary work is being done in order to consider that, because there would obviously be some benefits in the two markets being integrated. So that is one set of issues, and that work will continue. If we are going to harmonise, we will actually have to have our own scheme, Senator Boswell! That is a prerequisite.

You asked a question about the Productivity Commission possibilities. I am happy to provide those words again, Senator Boswell. I have provided them to the opposition formerly—yesterday. I do not know if the relevant shadow ministers have had a discussion with the National Party, but these words were provided to the opposition and their representatives as part of the negotiations and they were also read into Hansard.

What the government agreed to do in relation to the Productivity Commission is extend the capacity which already exists under the CPRS white paper if an industry which does not qualify for industry assistance—I should take a step back. In terms of assistance, the first point for any industry, if they believe that they should and can qualify for assistance under the CPRS, is to make application accordingly and to work with the department on assessing whether or not they are sufficiently emissions intensive to qualify for assistance. I do not know if the dairy industry has formally started that process or not. If they are eligible then there are a quantity of free permits available in accordance with the government’s policies. If they are not eligible, what we did include as part of our agreement with the opposition to pass this bill was enable the existing provisions of the white paper in relation to industries who do not qualify for assistance to extend that to industries impacted on by the renewable energy target. So these arrangements allow firms, including those that do not qualify for industry assistance—I perhaps erroneously suggested that this option was open only to industries that did not qualify for assistance; it is potentially open to both: industries that have assistance and those that do not. So I will read again the words I read out yesterday, Senator Boswell, that form part of the agreement with the opposition:

… the government will extend the current potential review provisions under the Carbon Pollution Reduction Scheme—as set out in the white paper at section 12.7.4—to industries potentially affected by the renewable energy target once the renewable energy target has commenced. These arrangements allow firms, including those that do not qualify for industry assistance, to make representation to the government to request that the government commission the Productivity Commission to undertake an assessment of the renewable energy target’s impact on their industry. The government will not necessarily refer all requests to the commission; it will take into account the nature and details of the request.

The Productivity Commission will make an assessment of this industry’s circumstances, taking into account the range of factors unrelated to the scheme that will also affect the profitability of firms and industries, such as exchange rate movements, capital and labour costs, and commodity price movements. It will assess whether the introduction of the renewable energy target—including the assistance provided under the renewable energy target and Climate Change Action Fund assistance programs—will substantially adversely affect the industry in which the firm is located within the next five years, result in carbon leakage and be likely to result in the premature closure of an industry that would be likely to be competitive in a carbon constrained world. Taking into account all of the above, the commission will make recommendations to the government about whether it should provide additional support to this industry from the Climate Change Action Fund and the appropriate mechanism for that support.

That is what was read into Hansard yesterday and provided to the opposition yesterday as well. I think that answers your questions in relation to the Productivity Commission issue.

I would also make the point that the government is opposing this amendment, Senator Boswell, and there are a range of reasons for that. The first is that there is not an activity definition for food processing and, as you know, food processing would encompass a diverse range of businesses which would have very different levels of exposure to changes in electricity prices, whether from the renewable energy target or the Carbon Pollution Reduction Scheme. This is precisely why the government has chosen to go down the route of providing assistance on the basis of activities rather than industries. ‘Industries’ can be very broad notions that cover a whole range of activities, some of which are very energy intensive and some of which are not; therefore, if you provided assistance on the basis of industries, you would get a less fair form of assistance, a less fair architectural assistance. We welcome the fact that the opposition has recognised this by, in this bill, essentially endorsing the architecture for assistance under the CPRS which is based on activities. We think it is important that assistance be fair.

It would be unfair to provide more assistance to a firm that was, arguably, engaged in food processing but had a lower exposure to electricity price increases than another firm that was not doing food processing but had higher energy use. You would essentially be saying, ‘We’ll give more to one sector because it’s called food processing, even if they have less liability.’ We do not think that is a sensible or fair way to provide assistance. We think the fairest way is to do what we have done, which is to assess the potential cost impact and the exposure to cost increases by looking at the energy intensity of activities. On that basis, you provide assistance across the economy fairly. So the government is not minded to support this amendment.

In addition, neither the renewable energy target for which you voted when in government, Senator Boswell, nor, for example, the Victorian renewable energy target provided any exemptions to the food-processing sector. The John Howard renewable energy target, which was introduced under the previous government, did not provide an exemption for this sector.

In addition to the Productivity Commission possibility, as I said, food-processing businesses may qualify for assistance under the Climate Change Action Fund to implement, for example, low-emission technologies, energy efficiency technologies. I note there is some capacity in some of these industries to abate, and in fact a number of industries and firms have been very responsible in seeking, ahead of the introduction of the Carbon Pollution Reduction Scheme and the renewable energy target, to reduce their liability by becoming more energy efficient. For example, I know from my private discussions with Murray Goulburn that they have significantly reduced their emissions over their, I think, eight sites over the last few years. Fonterra, which the senator referred to, has also cut its energy use by around 15 per cent since 2002-03. Obviously, reducing energy use reduces your exposure to cost increases flowing from these bills. So, Senator, I appreciate where you are coming from, but we do not think this is the fairest or most sensible way to provide assistance to that industry or to any other industry.

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

Unfortunately, there seems to be a really high degree of confusion about the CPRS and the RET. In my view, that was caused by the government coupling the legislation in the first place. Out in rural and regional Australia people were looking at the combined impact and trying to understand what it would mean if they went together and so on, and that led to the high level of confusion. Now that they are decoupled and there is no CPRS, we are just talking about the impact of a renewable energy target price.

I am also interested in the fact that the coalition, in its negotiations with the government, reached an agreement with the government that it would support the government’s legislation in exchange for certain concessions. It is very clear to me, from what has happened here, that the coalition dropped all its other demands to get specific demands on the big emitters, particularly the aluminium sector. They got what they wanted for aluminium and dropped support for emerging technologies. They ought to be under no illusion that anybody out there is not aware that they dumped solar thermal, geothermal and wave.

The industry understands that Senator Abetz has withdrawn all the opposition amendments. I am interested in why the National Party, as part of the coalition, did not insist on them and instead preferred to get outcomes for the aluminium rather than the farming sector. The coalition withdrew every amendment but this one. This is clearly a concession to the National Party, a grandstand, because they did not fight for it. It is not part of the deal. This did not get up for the National Party. The coalition decided to support the bill, dump this amendment and get a concession, some form of words about a reference to the Productivity Commission. That is the reality, and I think that anyone who does not see it that way, who cannot see that when push came to shove they preferred aluminium and coal gas to the dairy industry—

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

Senator Nash interjecting—

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

Well, it’s true—otherwise that would be part of the deal. It is also true that that is why there is no reference to the emerging technologies—those amendments were withdrawn. The industry says the coalition made them a promise and then reneged on it, and they did renege on it. Let’s understand that.

Let’s go specifically to the renewable energy target and the points that are being made in relation to food processing, and I take the minister’s point in terms of the definitional issues that need to be established here. The Greens have long supported a renewable energy target. As the minister has just indicated, the mandatory renewable energy target has gone on for a very long time and there have not been exemptions for this sector. There have, of course, been exemptions for aluminium, which I will get to in a minute when we get to the next amendment. That is something that has been spread across the whole community and, as a result, it is less of an impost.

I will be interested to see what the Productivity Commission has to say when these matters are referred in the future and to see what the government comes up with in terms of how it might work in association with the CPRS if it is ever passed. But, at the moment, I think there is total confusion in the National Party about these two issues. That is the result of the government linking them. I accept that, now that they are decoupled, we should be looking at this purely in terms of impost. I remind Senator Boswell that a number of other countries also have renewable energy targets—it is not a case of trade exposure when other countries operate under these targets as well. In fact, by bringing in the renewable energy target and spreading it across the system, as the pool price is depressed, everybody benefits by the reduced wholesale pool price.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Hearing what Senator Milne just said, the opportunity is there for the Greens today—if they have a concern for food processing, as the National Party does—to support this amendment and have food processing removed. I acknowledge your desire, Senator Milne, to represent regional issues and regional people; to look after food labelling; and to make sure that we keep Australian product on Australian tables and support the Australian processing sector. If you are authentic, that can be done so easily. All you have to do is support this amendment and you will have done those things, and you will have displayed your authenticity.

This issue is one that is a clear call about where you stand on the production of food inside Australia. Quite obviously, if the Australian food production industry is made unviable it will move overseas, and food production that is overseas uses food from overseas; therefore, we start once more to put further weight on the capacity of Australians to eat Australian product produced in Australia. You need there to be a nexus, in both geography and locality, between the production facilities and the food. If the production facilities go overseas they will quite obviously have to use food from overseas.

The challenge is that this is an amendment, regardless of people’s views on other issues, that specifically deals with keeping Australian food on Australian shelves—produced by Australian farmers and employing Australian working families in its manufacture and all the things associated with it. Therefore, I am strongly in support of it. I commend Senator Boswell. He has been pursuing this all the way through. Senator Boswell has really taken this issue on board. It is reflects his time in the Senate—as a father of the Senate—and his passion in supporting such places as Golden Circle, his passion in always going to bat for regional industries and his passion to look at the detail and how it affects things on the ground. This amendment needs to be supported if we want to have a clear statement about looking after the production of Australian food that is supplied by Australian farmers and put on the supermarket shelves for us to eat.

I am also interested in getting back information from Minister Wong about the Climate Change Action Fund and exactly where that money comes from. I also would like to know that if this amendment fails—and I hope it does not—are we then in the hands of the Productivity Commission to try and protect Australian manufacturing workers’ jobs in the food industry and to protect Australian farmers who supply that process? Is it not just a little bit nebulous to rely on the possible musings of the Productivity Commission when we can make it quite clear? This is a most important thing. The Australian people are focused on food sovereignty. They are focused on the capacity for the Australian nation to eat Australian product that is produced by Australian farmers. This amendment can do it and if this amendment succeeds we will have put that issue to bed. I think that would be an extremely decent thing to do.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

It is interesting to listen to this debate. Why are we moving an exemption here for food processing? It is because we are concerned about the escalating price of electricity for food processing—the extra cost. Here we are, standing up for food processing. We have seen the coalition roll on getting something for aluminium. Some of the other industries are still very nervous about it. Food processing misses out because the Nationals went missing, and here they are trying to get some scraps off the table and scrambling around the chamber trying to get enough votes to guarantee that they are looked after. But, no—they were sold out. The Nationals should not have agreed. How can they stay in with the coalition when they are selling out food processing, which is in rural and regional areas? It is a disgrace. Where are your principles on this one? You have sold them out. Mums and dads are being sold out because the electricity prices are going to go through the roof. I tell them they can send their bills to the Prime Minister, but he is not going to pay either.

We needed to look at this issue a lot harder. We have had a week since the Senate report was out. There are other models that maybe we should be considering; rather than getting mums and dads, the diary industry and the food processing to foot the bill for risky renewable energy. I am for renewable energy. Let us be simple here. The sun shines, and if we can get it from the sun, why not? If we can get it from the wind—the wind blows. If we can get it from a hot core in the earth, by all means do so. But do you know how much these cost? People out there genuinely think it is free. I have spoken to people on the street and they think this is free. They think renewables are a great idea because the sun shines and the wind blows. They do—they are great ideas. But do you know how much they are going to cost? They cost a lot of money. They are not viable. Wind energy is not viable. Solar energy is not viable. Geothermal is not viable. They are expensive and they are propped up with subsidies. And who is paying those subsidies? The mums and dads of Australia are paying.

And here we are worried about the food processing industry. We should be worried about mums and dads. We should be worried about all the others. They have been sold out by the coalition. You did not have the guts or the stamina to hold on even longer because you are worried about holding this bill up and coming back to it a second time. You are making sure. Many years ago, when we invested in energy for electricity, the government took the risk—not mums and dads. They were state owned. We have had no debate about this at all. Even yesterday we were debating and saying: ‘Look, we have got to keep some aside for geothermal because we have got wind and solar. And, even though it is attractive, it will not do base load.’ This is a dog’s breakfast, seriously. We are passing this, and we are putting our hands into our pockets for the investors and the bankers, and mums and dads are footing the bill. I will support this amendment but we should not have been supporting the rest of it. It is disgraceful. It is a dog’s breakfast.

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

Senator Fielding talks about viability, and that is fair enough, in terms of renewable energy and emerging technologies. Can I just say that what will not be viable is if we do not have comprehensive policies in place to deal with climate change. There are doubters—and I do not criticise Senator Fielding for this; he has these views—but it seems to me that the preponderance of scientific evidence is that unless we take action to deal with greenhouse gases there could be irreversible climate change. So all I ask the sceptics out there to do is to consider, from a risk management point of view, that if there is a risk of catastrophic climate change we ought to do everything possible to deal with it, because the consequences of not dealing with it will simply be too great and they will be irreversible. We are already seeing issues in relation to climate change—there is the debate about the Murray-Darling Basin. Whether you think it is anthropogenic or not, there will have to be considerable adaptation to deal with that.

I cannot support this particular amendment for several reasons. It is not because I do not support Australian made goods—and I am very grateful to Senator Joyce for co-sponsoring a bill along with Senator Brown earlier today on food labelling and truth in labelling, so that when consumers go to their supermarket shelves they can have a genuine choice as to whether they are buying Australian goods and not have to deal with the misleading labels we have now. In relation to this issue in the context of the renewable energy target, the modelling indicates in the order of four per cent over 10 years. That is nothing to be sneezed at, but it is still a relatively minor, absorbable cost of business in the context of this particular bill. The real challenge will be in the context of the government’s CPRS legislation and that is why it is important we get that right, because it is predicted that there will be electricity price increases in the order of 40 to 50 per cent.

I know the Liberal Party is considering the Frontier Economics modelling; it is not their policy. Well, I can say that in my party room it is my policy in the sense that it is important that we go down a path where you can mute electricity price rises and you do not have revenue churn, because that is where the real challenge will be. So I indicate to Senator Boswell and Senator Joyce, who are passionate advocates for their communities, for food processing and for regional industry, that the real challenge will be to get the CPRS right to ensure that we do not have massive spikes in electricity prices. This is not the bill to deal with this. It is important that we get the modelling right in the CPRS legislation. I think hiving off food processing in relation to this particular bill is bad policy. It is important that we get the big policy issue right, and that is the design of the CPRS.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I thank Senator Xenophon for that rare insight into his party room! I am sure we are all a lot better off for knowing how things operate in that party room. To respond to Senator Fielding, it seems that Family First have adopted the Labor Party approach of getting out to a focus group to see what little slogan works and then repeating it ad nauseam. It seems as though the latest slogan is ‘sold out’. But can I say to Senator Fielding: just because you repeat it 10 times does not make it a fact. It might sound good, it might be great rhetoric, but it does not make it the truth.

The simple fact is that overwhelmingly the Australian people want this upgrade of the renewable energy target to go through. We as a coalition had a decision to make as to whether we simply blocked the legislation at this stage or allowed it through. With the Carbon Pollution Reduction Scheme, there was no urgency for that legislation—the government itself had delayed the starting date by 12 months; there was no need for it to be carried. However, there is a lot of investment, there is a lot of concern and I think there is a community expectation that this legislation be passed as soon as possible, therefore we entered into good faith negotiations with the government.

Can I disabuse Senator Fielding if he honestly believes that the National Party sold out in relation to food processing: they did not. I think everybody knows that they are the absolute champions in this place of rural and regional communities and of rural and regional jobs—and, if I might say so, no other senator has as long, distinguished and proud a record of doing that as Senator Boswell has. So to try to pin something like that onto Senator Boswell defies the history of, what—30 years in this place?

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

27.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Twenty-seven years in this place—over a quarter of a century of excellent advocacy. To suggest that somehow he has sold out just defies the evidence of over 25 years of active advocacy by Senator Boswell. What we as a coalition sought to do was get as good a deal as possible. It is a matter of regret that the government has not come to the party on this aspect, and that is why we are moving our amendment.

In relation to Senator Wong’s contribution, she told us that the approach being undertaken by the coalition and the National Party is not the fairest system to provide assistance to protect the food-manufacturing sector. For the sake of the argument, I am willing to concede that point. Just tell us what the fairest system would be and we would then look at that. It is not an argument to say, ‘Yours isn’t the fairest system, so we won’t have a system at all.’ That is where the National Party in this place in particular can hold their heads up high because they have at least, along with the coalition, come up with a system. It might not be the fairest, it might not be the best—but guess what? It is the only one being put on the table, and that is why we believe it is worthy of support.

As for Senator Milne’s provocative comments, I do not know why she repeated them. I could understand the nonsense yesterday because she was being broadcast. We are not being broadcast today, but still we had a repetition of the arguments, which are completely unsustainable. In relation to the new and emerging technologies, we did seek a deal with the government. To our regret, they did not accept our suggestions.

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

Why aren’t you moving that as an amendment—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

If you had not increased your carbon footprint by flying to Sydney and back overnight for some film, you would be aware that we have indicated that we are going to move a private member’s bill, hopefully within a matter of weeks. We will be introducing it as a separate bill into this place and hoping to get the support of the Senate. If we had not got that deal, and Senator Milne knows this, we could have been like a dog in a manger—not get out of it and then block the whole legislation. Is that what the Australian Greens wanted—that, for the sake of that section, we block the legislation and not let it go forward? I do not think so. That is why we had a balancing act. We can see the benefits of supporting this legislation going through, albeit that it has major faults, such as in the emerging technologies and food manufacturing. In relation to the emerging sector, we will be moving our private member’s bill.

In relation to the so-called ‘big emitters’, I remind the Senate yet again that Australia’s ‘big emitters’ are in fact some of the cleanest manufacturers in the world. I have got a funny feeling that even today we might hear about the closure of an energy intensive plant somewhere in this country, partially because of the projected introduction of a carbon pollution reduction scheme. People’s jobs will be lost. Senator Fielding, by the way, is right here—renewable energy is more expensive than the way we do energy at the moment. But the way we do energy at the moment has certain environmental consequences, and we are trying to wean ourselves off that type of energy. That is why the Howard government introduced renewable energy targets. We have always said it should be staged, systematic and done in a way that does not mug the economy along the road of transition. That is why we started with a modest target today. Hopefully, we will be voting for an increased target but, if we increase the target too quickly, we will make the energy intensive industries less competitive on the world market. That will mean the closure of our manufacturers in this country. But guess what? The world demand for cement, aluminium and zinc will still be there, and, if we are not making it in Australia, it will be made in China or Russia or India or Brazil or Indonesia or Vietnam.

Now tell me this: for a tonne of zinc produced in any of those countries, what are the CO2 emissions in comparison to a tonne of zinc produced in Australia today? In China, it is threefold—six tonnes of CO2 per tonne of zinc produced compared to only two tonnes of CO2 in Australia. So, by us pricing our manufacturing sector out of world markets through increased power prices, we will in fact see higher pollution levels throughout the world. That is the consequence of the dogmatic, ideological attitude of the Australian Greens when it comes to these matters.

I indicate on behalf of the coalition our support for Senator Boswell and commend him for his long advocacy in this area. I think Senator Fielding’s comments to the father of the Senate and his party were inappropriate, because Senator Boswell has been an excellent advocate in this area for many, many years.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

I was just pointing rudely across the chamber at Senator Wong in an attempt to find out if she was going to answer the question about the Climate Change Action Fund.

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

When I get the call, I will respond to the question.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

There have been certain accusations levelled by Senator Fielding and by Senator Milne. It was a difficult decision to support this legislation because it does increase the cost of electricity. As I have said before, if you increase the cost of energy—and it is not four per cent; it is about seven per cent on an increased ETS, when it comes in—it not only impacts on every working family but also gets passed through to every industry. So it was a difficult decision. It was probably one of the hardest decisions we have ever had to make, and the thing that pushed us over the line to vote for this was the fact, as Senator Wong included in her speech, that there were millions and millions and millions of dollars invested on the word of the coalition and the Labor Party. These people acted in good faith and took us on our word that we would go down the road of a renewable energy target. At that stage, I do not think anyone knew what it meant, but they went out and invested. Some of those people are National Party customers—the sugar industry, for one, has put millions into the gas.

So what were we to do? Should we have walked away from our word and left these people high and dry? They went out and invested on our say-so. That is not the way the National Party do business. Our word is our bond, and we stick to it. That is the area that we got pushed over the line. Were we going to walk away from people who invested money on our say-so? The answer was that we could not. That does not necessarily mean that I agree with this. I think it increases the price of electricity. I think it increases it on top of an ETS. I think wind power is not only unreliable but dangerous to our birds and all the other things that the Greens stand up for. It just clutters up and is very dangerous for our endangered species. I do not hear the Greens talking about that. I just want to say that we stuck to our word, and that word was, ‘You go out and invest and we’ll cover it.’ Maybe we were right and maybe we were wrong, but at least we stuck to our word.

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

I will endeavour to respond to a number of the propositions that have been brought, including Senator Joyce’s question. I will start by suggesting that the debate today and yesterday really demonstrates the lack of wisdom in the opposition, the Greens and the Independents in voting against the CPRS legislation even going in committee. Essentially, much of the debate has been about the CPRS. We could have had this debate, but you shut down debate because you did not want to debate it. As parliamentarians, many of the contributions in this debate have really dealt with the Carbon Pollution Reduction Scheme, something you did not want to debate in committee. Senator Boswell said, ‘People took us at our word.’ Whilst I disagree with a lot of Senator Boswell’s policies, I think that is something he cares about. I would suggest to him he should care about it in relation to an emissions trading scheme. That was your policy. That was your policy before the last election.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

No-one invested money in it, though!

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

So a policy is able to be given away if no-one acts upon it? Is that the proposition, Senator Boswell? I mean, really. You went to the Australian people supporting an emissions trading scheme and your party has demonstrated—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

But not your scheme.

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

I will take that interjection. Senator Abetz said, ‘Not your scheme.’ I do not think Senator Joyce has made that clear. He just says, ‘No, no, no, no, no, full stop’ to an emissions trading scheme. Did no-one in your party room or in your government actually talk to the National Party when you made that election promise? Is that what happened?

Can I suggest that some of the questions—and I do not want to labour this too much—from the chamber about things like the Climate Change Action Fund and the household compensation package demonstrate just how not seriously some senators in this debate have taken their responsibility as parliamentarians. You have come into this debate and asked the government questions about policy that has been on the books for over eight months. It was published and announced by the Prime Minister. Yet you still know so little about the Carbon Pollution Reduction Scheme that you are asking whether we have a household compensation package, which has been publicised, and whether we have a Climate Change Action Fund, which has been on the books and talked about and discussed not only in the white paper but in many speeches. It is known to many industry groups. That really demonstrates that you voted against the CPRS without considering the detail at all. That really demonstrates that the coalition’s position on the CPRS is driven by very blind ideology, not by analysis of the policy. I hope that changes. I hope that those in the coalition who care about action on climate change—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Why can’t you negotiate on the CPRS like you can on renewables?

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

I will take that interjection, Senator Abetz. He asked why I could not negotiate on the CPRS like we did on renewables. It is because you came to us with your propositions. You came to us with a position. You came to us with amendments. You did not and you have not come to us—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

You have said all along, ‘No negotiation.’

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

You have not come to us with a position supported by your party room when it comes to the Carbon Pollution Reduction Scheme. The more you interject on this, Senator, and thrash around, the more you demonstrate the ridiculous position that the coalition has been in when it comes to action on climate change. You cannot even put forward amendments on a policy that is of such national importance. You cannot even do that.

On the Climate Change Action Fund, Senator Joyce, you asked about the revenue source. The revenue source is the auction revenue from the permits under the CPRS. My recollection is that there is some budget funding in the 2010-11 year but it is balanced over the forward estimates. All of those details were laid out first in the white paper released in December and were indicated in the budget papers released in May. If you want a Climate Change Action Fund, the source of the revenue is CPRS revenue—the scheme you have voted against.

Senator Abetz said, ‘If this is not the fairest system, what is?’ Senator Abetz, it is the one you have supported. We are very pleased that you are supporting that. I will just remind you again of what you signed up for. The government will replicate the industry assistance provisions from the CPRS for the purpose of the RET. The government will use the same eligibility thresholds under the CPRS as for the RET. A separate eligibility assessment process for activities that will be provided partial exemption under the RET will not be necessary. As CPRS eligibility assessments are finalised, these will be used as the basis to determine eligibility under the RET and prepare appropriate regulations. It is a pity you were not briefed sufficiently, Senator Abetz. It is a fairer system—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

We didn’t sign up to this for food manufacturing.

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

I know you are thrashing about.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Order!

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

Thank you.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

You cannot rewrite history.

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

The fairer system is the system the government has been proposing all along, which is the one the coalition has signed up for. I have explained—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

We didn’t.

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

Would you like me to read it back at you again, Senator?

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

We told you at all times we would move an amendment on food processing.

The Temporary Chairman:

Order! Senator Wong, I would ask you not to respond to interjections. Senator Abetz, I would ask you to maintain order and not interject.

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

You can always tell when Senator Abetz is getting sensitive. He interjects on a machinegun basis. He does not stop talking and starts to thrash around like a fish on a hook. The fairer system is the one that the coalition has agreed to, which is the activity based assistance on the basis of emissions intensity that the government has put out under the CPRS, which the coalition is now agreeing to utilise in relation to the renewable energy target. I have gone through already why we do not support this amendment. I do not propose to traverse that again. If we are able to proceed with voting on this particular set of amendments, that would be good. We have three more amendments after this before we are able to vote on the legislation.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Obviously, a lot of the questions that we ask here are not so much for our information but for the information of the Australia people. To get it on the record, what is clear from what the minister said is that the Climate Change Action Fund is going to source its money through the sale of permits through the CPRS. The CPRS is another piece of legislation. This legislation was supposed to be decoupled—that is, there is supposed to be no connection between the two. Quite obviously, there is. If we are going to be financing the food production industry with revenue from another piece of legislation, then it is to be queried as to whether there is true decoupling.

What we want, and this is why we have moved this amendment and why it gets to the source of the issue, is to make sure that the decoupling is truly authentic and therefore we want to make sure that food production is outside the scheme. Therefore, we have to pass this amendment. What the government has put up in regards to the ETS—the ‘employment termination scheme’ or ‘extra tax system’—or the CPRS, the cunning plan to get them to a double dissolution, with RS standing for what the economy will look like when they have finished, is putting immense duress on the food production industry. They gave the guarantee that they would decouple it, and they have not. To bring about a proper decoupling, we have to make sure that the food production industry is outside.

Minister, you clearly put on the record for the Australian people—and I thank you for that—the connection between the CPRS and the renewable energy target. In doing that, you have also confirmed that you have not actually decoupled the two pieces of legislation. Senator Wong is nodding. She acknowledges that they are not decoupled. There is no authenticity to the promise that you gave to the Australian people that you would decouple them. That means that you are now going to use the food production industry—the farmers, the working families who work in those plants—as pawns in your little game. That is completely unfair. You should not do that. One of the pawns in your little game is also going to be the capacity of Australian farmers to put Australian produce on the shelves of shops in Australia. And who are we going to replace those people with? We are going to replace them with the people who produce food that we import from overseas. They are going to have no renewable energy target or cunning plan reduction schemes or cunning plan RSs. We are going to take it backwards.

If you truly believe in catastrophic climate change—if that is what it is all about; if that is the be all and end all; if that is the thing that you have to put at the forefront of everything; if no matter what that is the goal and all other things should be put aside except that—then quite obviously you have to look at nuclear power. But you cannot do that, because that is a sacred cow. You cannot talk about nuclear power; you cannot mention that sacred cow; you have to leave that one alone.

What we are going to do if we do not pass this today is bang up the dairy farmers. It is dairy production that is going to cop it in the neck because of this.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

What about abattoirs?

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

And the abattoirs and the canneries. It is the food production people who are going to cop it, because the Labor Party want to use that section of the economy, that section of the community and that section of regional Australia as a little pawn in their game. There should have been proper decoupling—decoupling that the government gave a guarantee, a warrant, that they would do. But they have not done it. The minister admitted this. She nodded in the chamber and said, ‘That’s exactly what we’re doing.’ She said that over there. She said: ‘That’s exactly what we’re doing. We’re keeping the two tied together.’ Why are you doing that? You gave a guarantee that you would not do that, Minister. But you are doing that. So you are being a little bit mischievous in the way that you are conducting things here. Maybe you should go back to Murray Goulburn and have dinner with them again and say: ‘What we intend to do with you, dairy producers of Australia, is use you as a little pawn in our game. You are now a political football.’

Let us be fair about this. You have heard it in the chamber. This is about connecting the two schemes. This is about putting duress on the whole process in full knowledge of what is going to happen to dairy. This is a clear connection. She has told us that the action fund is connected to the CPRS. Therefore, you have the duress. That is what we are up against. This ETS is a most insidious new tax that is going to come into play with words such as ‘catastrophe’ and ‘abomination’ connected to it. But the realities are economic realities for the people who government policy will affect. I ask you, Minister, to honour your commitment and decouple as you promised that you would.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I could not resist on this one. Here we have a partner of the coalition now worried about whether it has been decoupled or not. The coalition yesterday trumpeted that it had been decoupled. And here we have them now, just before the vote on the RET, an admission that it has not been decoupled. How can you operate? Seriously. That is what you have just said. You have admitted that it is not decoupled. The minister has just admitted that it is not decoupled. This is an absolute farce.

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

I will not delay the chamber but I think it is interesting that the coalition have been out overnight saying that their greatest achievement in this was the decoupling of the legislation. Either it is decoupled or it is not. Senator Joyce now believes it is not. So either the coalition were duped or they did not understand it, or Senator Joyce is wrong. I would like the minister to clarify: did the government dupe the coalition and this is in fact linked, or have they decoupled it and the Nationals do not understand it? Could we have clarity about that?

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

I suspect Senator Milne probably should address that question to Senator Abetz, but I am happy to have a go. Again we seem to be debating the CPRS rather than the RET, but I want to respond to Senator Joyce’s intervention.

He suggested that this is a game. This is not a game. This is about tackling climate change and increasing investment in renewable energy. This is about the government providing fair and consistent assistance to industries and providing certainty to business. It is about the government doing what we said we would do before the election and it is about the government doing what we believe is right for the nation. We do not do this because we think it is a game. We do this because we accept the consensus science about what climate change means to this nation now and what it will mean in the future.

I said in the CPRS debate that the ability of the nations of the world, including Australia, to prevent any climate change is already lost to us. But what this generation of political leaders have is the opportunity to lessen the risk for our children and for those who come after us. I for one think that is a responsibility we should discharge properly. It is not a responsibility we should walk away from because we are frightened or because we are too weak. So I reject in the strongest terms, Senator Joyce, the way in which you have characterised the approach. You can have an argument with us on the policy, but what you are implying is just incorrect. I do not think it is consistent with the way many Australians understand this issue.

In relation to coupling and decoupling I am reminded of Lenore Taylor’s article about the way in which this discussion has gone on. The amendments that the government moved in the House, which we announced on the weekend, did not make the commencement of assistance under the RET conditional upon the passage of the CPRS. So that is true. But the effective consequence of the agreement with the coalition is precisely what the government have been arguing for—that is, that we should build the renewable energy target assistance onto the architecture of the CPRS assistance. Frankly, I am not sure that it assists in the political debate—clearly it assists inside the coalition and possibly in terms of the Greens trying to have a go at the coalition or the government for the agreement we have come to—whether you say that the date of commencement is the coupling or decoupling or that the architecture of the assistance is the coupling or decoupling. But I can tell you that, from the government’s perspective, we think this was a sensible compromise because it deals with the policy issue about which we were always concerned, which was to reflect industries’ view to us that we needed to consider the cumulative cost. We are pleased that the coalition were able to come to a view. I will quote from Mr Turnbull’s press release that referred to what has been agreed, which is using the Carbon Pollution Reduction Scheme of assistance, or design of assistance, where that is described as ‘appropriate protection for emissions-intensive trade-exposed industries such as aluminium’. So we are pleased with that.

Obviously senators can conduct this debate how we want, but my suggestion to the chamber is that we are not debating the CPRS. With respect to Senator Milne, we are actually not debating whether the coalition got it right. She has put a view about that and I accept that. We are actually debating an amendment on food processing. We will then have an amendment from the government and two amendments, I think, from Senator Milne, which the government is happy to debate and proceed. Obviously this matter has precedence, I think, through you Madam Temporary Chair, until 12.45 pm. I express again, as I expressed last night, the government’s keenness to get this legislation through for the reason that Senator Boswell correctly alluded to—that is, this is investment-sensitive legislation. This is legislation on which a lot of private sector investment hangs and we are keen to pass it and give that signal to Australian business.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

All we can do is put before the chamber Senator Boswell’s amendment to protect food production industries, specifically the dairy industry, the abattoir industry and the canning industry. The numbers in the Senate will determine what happens to it.

I clearly put before the chamber before we vote that, if we do not support this amendment, we will leave the dairy industry especially, because it has a huge carbon footprint, and behind that the abattoir industry out there. I do not believe that there are numbers present in this chamber for the support of the government’s ETS or CPRS, or whatever acronym they want to devise for it next time; therefore, there will not be capacity for a so-called climate change action fund to exist which would be able to sponsor or assist with the cost impost of the renewable energy target on these industries.

I do acknowledge that the Australian community in general has a view about renewable energy and that it wants to progress that issue. If you are trying to be conciliatory, it is in the nature of trying to be conciliatory that you move towards something even though you might not totally agree with it. In some instances you might not agree with it at all but you still try, for the benefit of what is desired, to move in that direction. But you try to do that in a form that will alleviate the unnecessary consequences for other sections of the economy.

We cannot put any more pressure on the production of Australian food. We cannot put any more pressure on the food-processing sector. You cannot have a farm if you do not have somewhere to process what you produce. This chamber can pass this amendment, and if it passes the amendment we can excise food production from the renewable energy target and give some confidence to the food production sector that their future is important. We talk about what is terribly important. The minister talks about what is extremely important for kids, and I agree with that. But I will tell you what is really important to families: affordable food. It is very important for working families in Australia to be able to put food on the table that they can pay for and not to have the whole dietary component of their lives changed by government policy and regulation. That will happen if you keep putting these imposts on. This is a common-sense amendment that takes food production out of this legislation. As time progresses, other things can happen, but at the moment it is a huge slug to the food production industry—and I draw your attention specifically to the issues in the dairy industry.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I do not want to labour the point, and I will not—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

But you are.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

No. This is important. What will happen here is that the National Party will run out to the dairy industry and the food-processing industry and say, ‘We tried to look out for you and we tried to help you but we just couldn’t do it on the floor.’ Where were you when you agreed to this? Seriously—where were you when you agreed to this? Did you even know that it was agreed to? Did you really know what time it was agreed to yesterday? Were you really consulted about this being one of those things that would be dropped off the table?

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

The amendment was tabled, Senator Fielding.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I understand that. What I am saying is that you had the power. It is a bit like when Joyce came into this chamber—

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

It is Senator Joyce.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

Through you, Chair, it is a bit like when he came into this chamber and said, ‘I’ve saved Christmas Day and Anzac Day under Work Choices.’ He never did. It was a crock then and he is doing the same thing again today. He is saying, ‘Well, I tried.’ You have not saved anything. This will go down on the votes today, but it is unfortunate that you had the power, with the coalition, to make sure that the food-processing and dairy industries were looked after, and you failed.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

I want to clarify something. If this goes down today, it will not be because the coalition have not voted for it. The coalition will vote for it. If we get defeated, then that is the will of the Senate. It is not the will of the coalition; it is the will of the Senate. Senator Fielding, I think Family First was built on honesty and integrity and you are not showing either of those capacities at all. You are being very disingenuous.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

Mr Temporary Chairman, I rise on a point of order. That is way over the mark.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I ask you, Senator Boswell, to carefully consider the comments that you make.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Just briefly, I think it is a bit rich that Senator Fielding comes out with these inflammatory comments and then gets a bit upset when people pull him up on them. Senator Fielding, the issue is a simple one. It is about mathematics. We have 37 votes; we need 39. The purpose of being in committee is to try and obtain those votes. Maybe you can assist—that remains to be seen—if you give your commitment that you will support it. Then we will need one more. That is what we call the process of the Senate. There is a little article that we have called democracy, Senator Fielding. You should have a crack at it one day.

Question put:

That the motion (Senator Boswell’s) be agreed to.

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

by leave—I move government amendments 1 to 4 on sheet BF213:

(1)    Schedule 2, item 8, page 14 (line 2), omit “Authority’s”, substitute “Regulator’s”.

(2)    Schedule 2, item 8, page 14 (lines 4, 7, 11 and 15), omit “Authority”, substitute “Regulator”.

(3)    Schedule 2, item 14, page 15 (lines 17, 28 and 30), omit “Authority”, substitute “Regulator”.

(4)    Schedule 2, item 14, page 16 (lines 3, 12, 17, 21, 26, 28, 29 and 32), omit “Authority”, substitute “Regulator”.

These are minor amendments dealing with an administrative matter and clarifying that the Renewable Energy Regulator, who administers the current Mandatory Renewable Energy Target scheme and who will administer the expanded Renewable Energy Target scheme, will be responsible for administration of partial exemptions in relation to emissions-intensive trade-exposed activities under the RET scheme. When the Carbon Pollution Production Scheme comes into force, the Renewable Energy Regulator will be absorbed into the Australian Climate Change Regulatory Authority, which will administer these partial exemptions. The proposed amendments simply replace several references made in the Renewable Energy (Electricity) Amendment Bill 2009 to the Australian Climate Change Regulatory Authority, known as ‘the authority’, with references to the Renewable Energy Regulator, ‘ the regulator’, as the authority will only come into existence once the CPRS legislation passes. Consequential amendments in the CPRS legislation will give effect to the requisite change of reference from ‘regulator’ to ‘authority’ in the RET legislation at the appropriate time. These provisions are to commence on the day in which the act receives royal assent.

Question agreed to.

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

The Australian Greens oppose clause 17 in the following terms:

(17)  Schedule 2, page 12 (line 1) to page 18 (line 15), Schedule TO BE OPPOSED.

I would seek agreement of the Senate that the debate be a cognate debate on amendment (17) and amendment (18). In other words, let us have one debate and two votes. That would facilitate the time. It is the same issue and so I would hope that the Senate agrees this is an appropriate way to proceed.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

There has been no opposition indicated to the chair, Senator Milne, so proceed.

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

Thank you. This amendment from the Australian Greens moves to see that there is no partial exemption for emissions-intensive trade-exposed activities. This is in complete opposition to what the government and the coalition have agreed, which is to provide exemptions to the renewable energy target. I seek some information from both the government and the coalition, if they have any, in relation to this matter. I would like to start with the principle of: why would you want to exempt anyone from having to pay their fair share of a transition to a low-carbon, zero-carbon economy and expand the renewable energy target? Why shouldn’t the price be paid by everybody? As you know, when you exempt sections of the economy from paying, other people have to pay more. In this case, by exempting the aluminium sector—and there are all the other sectors that you have provided exemptions to—the taxpayers, the consumers, actually have to pay more because somebody has to pay for the renewable energy target being achieved and, if those big emitters do not pay, the community will.

We just heard the National Party talking about food processing. It means that the community is going to pay a higher price and so will have less money to spend on the products that the National Party is talking about. In fact, the Treasury gave evidence about this at the inquiry. Treasury’s Ms Meghan Quinn said:

It is the case with all analysis with CGE models that if you restrict coverage of a particular component, whether it be what part of the economy is faced with an emission price or which elements of the economy are covered by a particular scheme, we find typically that narrowing the scope on which the policy acts increases the economic costs to the economy in aggregate. It obviously has different impacts at the sector level, but narrowing the focus on a particular component tends to raise the aggregate economic costs of any policy.

It is actually bad policy to say, ‘We want to have a renewable energy target but we are going to exempt these industries.’ In principle, that is a bad idea. We should be spreading the cost so that everybody has an obligation to see the transition to a low-carbon, zero-carbon economy.

Having said that, I want to go to the question of aluminium. We all know, especially those of us who have lived in Tasmania for a long time, that the aluminium sector has never paid a fair price for energy. That is because the Tasmanian government fell over itself to provide cheap bulk power contracts in order to attract energy-intensive industries to Tasmania. That is the history of why we have Comalco in Tasmania. They came to Tasmania and received secret bulk power contracts, which were give-away power contracts to the aluminium sector. In fact, something like 60 per cent of the energy generated in Tasmania was given as bulk power contracts to energy-intensive industries at very cheap prices, and the rest of the community subsidised that. During the Labor-Greens accord, the Labor Party in Tasmania agreed to make public the bulk power contracts, but of course they reneged on that once we got into government. It is a written part of the Labor-Greens accord that the community be told what those contracts mean.

At the moment, Minister Wong, the mandatory renewable energy target does not, as I understand it, offer exemptions for the aluminium sector. So why aren’t they complaining about having to pay the mandatory renewable energy target? It is because they are not paying it. We know that in Victoria, for example, the Victorian taxpayer pays the share for the aluminium sector. I bet the people in Victoria do not know they are doing that. The Victorian government said that they would subsidise the Portland smelter so that the aluminium sector would not have to pay. The reason the aluminium sector is now wound up about this legislation is that, for most of them, their bulk power contracts will come up for negotiation some time in the next decade. They want to make sure that, when their price negotiation comes up, they are sheltered from having to pay a renewable energy target. If that is the case, they are already not paying. Why are you exempting them in the future when their profits over the last couple of decades have been mega profits? Why are you sandbagging them now? The first question is: which of the aluminium smelters around the country is actually paying the mandatory renewable energy target at the moment?

The second point concerns the actual price that the aluminium sector pay. They claim that this legislation is going to put a huge impost on them, that it is impossible and that they will have to go offshore. We know that that is a load of nonsense. We did not hear any evidence to that effect in the inquiry. None of them said that they would shut up shop and go offshore, because they all admit that what they need is a stable environment in which to work. They need a skilled workforce and a reliable supply of baseload power. That is why they are not going to leave the country. In fact, the best way to put them out of business is to keep on sandbagging them and then let them establish themselves in other countries where there is a large supply of reliable renewable energy. In other words, the only way to make them competitive is to have green aluminium.

We should be expanding renewable energy so that in the future energy-intensive industries generally will be able to insulate themselves against carbon prices by accessing a large and reliable supply of renewable energy. That is a standard case in point. Comalco’s long-term bulk power contract was supplied by hydro, but it may not be in the future. It will be buying from the wholesale market. It may well go away from having hydro power because it will be accessing whatever it gets through Basslink, and that could be baseload coal for all we know. The issue here is that, for energy-intensive industries to be competitive in the future and to insulate themselves from the high carbon price which is coming, they will need large, available and reliable sources of baseload power in the renewable sector.

Why should they not have to pay, as everybody else pays, to get those energy sectors up and running and expanded all over the country? Overseas, geothermal is already providing baseload power to smelters. Why should not the aluminium sector have to pay something towards the development of, for example, geothermal or solar thermal in Australia so that they have large, reliable sources of renewable energy power in the future? What you are saying is that taxpayers should pay for that development so that the aluminium sector can take advantage of it in the future. I think, in the scheme of things, that it is completely inappropriate not to make them pay.

The third point that I would make is in relation to the actual price. There were four reports done that are in the public arena. One has not been published—the one that was done for the big energy users. I suspect it was not made public because it did not provide the answers on price that they wanted. The argument has been very strongly put that, because you are bringing renewables such as solar into the energy generation sector, they are going to shave off the peaks. What these reports have all argued is that there is going to be downward pressure on the pool price because of the renewables bidding in. That was very clear evidence given, for example, by Mr Upson of Infigin Energy. There were also reports from Rome Consulting and the Clean Energy Council which pointed this out, but the one that the government focused on was the McLennan Magasanik Associates report. It said, ‘The RET is expected to have a modest impact on electricity prices.’ Retail prices are expected to increase on average around 3½ per cent above the business as usual scenario in the period 2010 to 2020.

However, the report said that the average pool price impact is going to be between minus four and plus eight. The position I put to you is that, if the aluminium industry do not have to pay the renewable energy price, the target price, but the rest of us do and, as a result of that, the pool price falls, they then get a windfall gain. They get a windfall gain because they do not have any of the risk—government absorbs the risk—and they get a windfall gain as the pool price is forced down. I would like the minister to tell me whether she believes, and whether her analysis is, that the pool price is going to come down. If it is, why are you exempting the aluminium industry from paying the RET, because it could be strongly argued that the pool price might actually fall far enough to cancel out the renewable energy target price?

There is no doubt that electricity prices are going to rise due to a range of factors. In part, that will occur as a result of a carbon price being established in the future. It will occur as coal, ultimately, has to pay its way—although in this country, the way things are going, coal will always be let off the hook. But, anyway, at some point electricity prices are going to rise. What we are saying here is that renewable energy is going to drive down the wholesale price. Why should the rest of us sandbag aluminium and let them achieve a windfall gain? If they are not paying the RET, why should they benefit from the lower future wholesale price? I am very keen for the minister to explain that and to tell me about the analysis from those other reports that I mentioned—the Roam Consulting report, for example.

There was also a study for the Business Council of Australia. That report estimated that, ‘The RET will make wholesale electricity prices lower than they otherwise would be.’ I repeat: ‘lower than they otherwise would be’. So why would you want to exempt them when the price is going to be lower than it otherwise would be? It is a classic case of privatising the profits and the benefits and socialising the costs. If these companies do not have to pay then, as Treasury has said, everyone else will pay a higher price. They do not pay, but then they get the benefit from the lower wholesale prices. They get another windfall gain after decades of having been sandbagged by consumers and by the government. I think it is really incumbent upon the minister to explain.

The other point I would strongly make is this: the aluminium industry are being exempted because they are supposedly trade exposed. Is that really the case? It implies that smelters elsewhere are not covered by a mandatory renewable energy target. But let me tell you that there are many countries that now have renewable energy targets. Japan has set a target for an additional 16,000 gigawatt hours of renewable energy by 2014. Japan already sources 10 per cent of its electricity generation from renewables—this target is additional to that. So is aluminium from Australia trade exposed to Japan because of this RET? No, of course it is not.

The EU has a renewable energy target of 20 per cent. There is no specific target for the share of renewable energy in electricity generation—the target is across several sectors, including transport. My point here is that the EU has a renewable energy target. The UK has a renewable energy target and Japan has a renewable energy target.

Consider the United States. California has a mandated requirement for 33 per cent of electricity to come from renewables by 2020. The Waxman-Markey bill includes a combined efficiency and renewable electricity standard for the United States as a whole which incorporates a target of 20 per cent by 2020. It also includes energy efficiency measures, as our target is going to do—I was trying to put such measures on top of the target to increase it.

So are we trade exposed against California or the rest of the United States? Are we trade exposed against Japan? Are we trade exposed against any of these places? No, we are not. So if we are talking purely about the impact of a renewable energy target on the aluminium industry, they are not trade exposed. So why are we exempting them when they are not trade exposed? (Time expired)

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

There were a number of things in there, albeit nothing new. It is the same old mantra and, I might say, the same old telling of half the story. Yes, the renewable energy targets referred to by Senator Milne are right, although she did not tell us what the actual percentage would be with the increase in Japan. That would have been an interesting figure. But, even with their renewable energy targets, did Senator Milne take us through the exemptions that are available to various industries in Europe, in Japan, in the United States? No, she did not. There is only one reason she did not do that: she knew it would debunk her argument, because country after country has included them. Indeed, the Waxman-Markey bill to which she referred has special protection for any energy-intensive trade-exposed industry. We know that to be the case, but why didn’t she mention it? Because time and time again the Australian Greens go out to the Australian population telling a deceptive story because they only tell half of it. What they say is true but it is misleading. If the whole story were to be painted on the canvas, the picture would be so very different. We know that to be the case and we have got another example today.

Senator Milne’s contribution, rhetorical as it was, started off with the question: why would you want to exempt anyone from paying their fair share? We do not want to exempt anyone from paying their fair share; of course we do not. But I suppose it depends on what your definition of ‘fair’ is, and according to the Greens ‘fair’ includes throwing hundreds and thousands of Australians out of employment. We know that with the renewable energy target—and Senator Milne herself said, and I wrote it down—electricity prices will rise. Of course they will, and that is why we as a coalition say: to transition your economy to be less carbon dependent, you do it in a stepped and staged manner so you protect your economy and jobs. We could get up here today and say, ‘Aren’t we great? We have a 50 per cent renewable energy target.’ It sounds good but for the fact that lots of people would lose their jobs and we would devastate our economy. What is more, we would also devastate the world environment. Why is that? Because, if our aluminium smelters become uncompetitive on the world market due to increased energy costs, they will close down. I think, as I speak, there is an announcement being made today about a facility in Queensland being closed down, partly because of their concerns about what the Carbon Pollution Reduction Scheme will mean for their future operations, with the loss of jobs.

Do you think the world demand for that particular product is going to decrease? Of course it will not. The demand will still be there for that product, but it will no longer be made in Australia and we will be importing it, undoubtedly, from China, Indonesia or Vietnam. I ask the Australian Greens and I ask the Australian public: do you honestly believe that the closure of a manufacturing facility in Australia and its transplanting to one of the countries I have just mentioned will leave a lesser carbon footprint on the world environment? Of course it will not.

I have used the example of zinc manufacturing before in this debate: in China, three times the amount of CO2 is produced per tonne of zinc in comparison with zinc production in Australia. If you make zinc manufacturing non-competitive on the world market, you will see Australian zinc manufacturing close down. The world demand for zinc will still be there; it will just be made in China, where they put three times as much CO2 into the atmosphere per tonne of zinc produced than we do in Australia. But somehow we are to put our hand on our heart and say, ‘Aren’t we good environmentalists? We have stopped polluting by two tonnes of CO2 per tonne of zinc produced; aren’t we good?’ knowing full well that, as a result of that action, zinc being produced in another country is putting three times the amount of CO2 into the atmosphere.

The Greens recipe is not only to mug Australian jobs, to mug Australian wealth and industry; it is also to mug the world environment. There will be a worse outcome. It is about time that the Australian Greens realised the consequences of their policies. I would also say that you know the debate is taking an interesting turn when the Australian Greens start providing gratuitous business advice to various industries, telling them how all the industry and other analysis is wrong but the Greens have somehow got the answers to all the problems and that their energy costs will really be cheaper! I do not know how Senator Milne got to that convoluted conclusion. After having said that electricity prices would rise, she then tells us that somehow electricity will in fact be cheaper.

Well, I am not aware of any business or any businessperson in this country that is so wedded to carbon-producing electricity generation that they would not want cheaper electricity if it could be obtained from a renewable source—I know of nobody. So it is just pure fantasy to believe the Greens’ approach on this issue—that somehow business is doing itself in the eye by not accepting the cheaper energy that would result from renewable energy. I think we are all agreed, and Senator Milne herself said this, that renewable energy will cost more. That is a price we need to pay if we want to shift our dependence on carbon-producing energy sources. But we need to do that in a transitional way that will protect the Australian job market, protect Australian industry and, what is more, ensure that we do not have carbon leakage into other parts of the world. So we as an opposition indicate that we will be opposing Green amendments (17) and (18) on sheet 5816 revised.

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

It is obvious that Senator Abetz did not actually read the Senate committee report on this. What is interesting is that some of the large aluminium sectors in their annual reports do not even note the impact of the government’s legislation in terms of their operations. I did not hear Senator Abetz name the aluminium smelters that are going to close down around the country. I have not heard them say they will close down. Of course they are rushing around here wanting more, but they are not saying that.

The 2008 annual report from ALCOA this year makes only general comments relating to the risks posed by climate change regulations and does not foreshadow facility closures or job losses in Australia. That is a funny thing, Senator Abetz—if ALCOA were so worried about it, why didn’t they mention it in their annual report? Why didn’t they threaten to shut down around Australia? Rio Tinto Alcan’s annual report for 2008, published early in 2009, noted that production had fallen by 450,000 tonnes per annum, attributable largely to the impact of the economic downturn. Despite this, the report contained the following assessment by Mr Tom Albanese, chief executive:

The fundamentals of the aluminium industry nevertheless remain strong. Higher energy costs are raising the aluminium cost curve, particularly in China, to the advantage of lower cost producers like Rio Tinto Alcan.

Dr Liu did explain when that report was made that Mr Albanese was referring to Rio Tinto Alcan’s global operations, which include Canadian assets using hydropower, not specifically to their Australian operations.

The point I was making that Senator Abetz clearly did not understand—unlike, I am sure, the minister because she has followed this debate—was on the issue of the wholesale pool price. Senator Abetz clearly does not understand that issue. I note that ROAM Consulting said:

Increasing REC generation will depress pool prices below base case levels … the reduction in pool prices will be offset by the cost of RECs to the retailers (due to the necessity of meeting the expanded MRET—

or mandatory renewable energy target. So here you have ROAM Consulting saying increasing renewable energy will depress pool prices. As I indicated, the Business Council of Australia said:

Although retail prices are higher under the RET scheme (due to the obligation on retailers to surrender RECs), wholesale prices are lower, as … renewable generators typically have low marginal costs, and also because they receive a REC revenue “subsidy” that lowers the revenue they require from the energy market to justify their investment.

I am really keen to know from the minister why these industries are trade exposed and with which countries. In view of the fact that all these places have renewable energy targets, I want to know why we are exempting them when in the future their competitive advantage depends on having a large baseload supply of renewables. I also want to know, Minister, why you would want to give them a windfall gain and, if you would not, whether you will support the amendment to say that they must not get a windfall gain as a result of these exemptions if the pool prices fall in the way that is expected. If you believe they will not get a windfall gain then there is no problem with you voting for it—it is not going to happen, apparently. I will be very interested to hear what the minister has to say, particularly on the pool price issue.

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

I am very pleased that I actually have the opportunity to respond because there have been a lot of questions raised and people being more interested in having a further debate in the chamber than having the government respond—which is fine, if that is how they wish to proceed.

Let’s go through the various questions that the senator asked. I will go to the technical one. She has raised this with me previously, and I thought we had finished the discussion. Perhaps we are simply not of the same view about this. The senator refers to the wholesale price. It is the case that the modelling demonstrates—and of course this is modelling—quite a range of potential impacts on wholesale price. I think the senator herself referred to the MMA modelling, which suggested a range between minus five and eight per cent to 2020. It did of course indicate an average increase of 0.5 per cent. However, what people pay is not the wholesale price; what people pay is the retail price, which of course is the wholesale price plus the REC liability. So the reality is that the wholesale price may be relevant for your speech; in terms of public policy consideration, it is not what we look at to consider the potential price impact on a sector or particular sectors, because you need to consider the REC liability.

The second point is on the fair share argument. We agree people should pay their fair share. That is our argument against those in this place who argue for trade-exposed industries to get 100 per cent exemption. That is our argument when some industry sectors seek 100 per cent exemption. This is an argument about who funds the costs of transforming the Australian economy, whether it is via CPRS or the renewable energy target. The question is how best to spread those costs. I accept that Senator Milne has a different view. The government’s view is that we do have to recognise the potential cost impact on very high energy users. The reality is that, although the cost impact for the RET alone is small for most industries, the aluminium industry probably faces a cost impact, with our other policy mechanism, that is around 10 times that of other industries. I am sorry, Senator Milne, but we do think that is relevant. That is something the government has to consider. We are not proposing 100 per cent exemption for anyone. The thresholds in the CPRS which are agreed as the basis for assistance via partial exemption under this legislation are 60 per cent and 90 per cent, depending on their exposure to the cost increases.

The senator asked who was paying for the current mandatory renewable energy target. This government does not make policy on the basis of what state governments may or may not do. We have to make a policy decision for this legislation that is transparent, that is across the economy and that is certain. We did not accept the coalition’s original position that aluminium and other sectors—but particularly aluminium I think—should be exempted for the existing renewable energy target as well. We said that, from the Commonwealth’s perspective, we do not think that exempting and assisting somebody to reach a target that is already in place is good policy. We think there is an argument to provide assistance for the impact of the expanded policy, and that is what we have done. In response to your asking who is paying for the current MRET, that is not information that is comprehensively in the public arena. It is information in relation to contracts to which the Commonwealth is not a party. From the Commonwealth’s perspective, we have not exempted people from the existing renewable energy target.

Senator Milne asked about the price impact and made what I think is a reasonable point. She said that when you make decisions about exempting you are shifting the costs from one sector to another. That is precisely the policy issue—I do not want to go back to the CPRS—that is challenging—

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

Yes, you do.

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

Actually, you are the one that did not want to debate it.

Opposition Senators:

Opposition senators interjecting—

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

I will debate you, Senator Cormann, anywhere. You are the one who refused to debate CPRS in this chamber. There is a question of judgment about the best policy framework and how best to spread the costs across the community. Senator Milne may or may not have heard me say that a decision to exempt one sector or another further from the carbon price, which is analogous to the RET price, imposes costs on other parts of the economy. We have taken that into account. We have had to balance the need, in our view, to assist particular industries, given their very high potential exposure under this policy, with the need to ensure that people pay their fair share.

I may not have previously indicated our assessment of the extended or wider assistance. Again, I emphasise that nobody gets away with 100 per cent exemption. There would be a 0.8 per cent increase in electricity prices between 2010 and 2020 as a result of that policy decision. Without any assistance or exemptions, we approximate that the impact of RET alone will be about three per cent between 2010 and 2020. We estimate that the impact of these decisions around industry exemption, made for the reasons I have outlined, will be around an additional 0.8 per cent. Yes, we have made that judgment, one that the coalition has supported, because we believe that we have to recognise the greater exposure to cost for some sectors than for others.

On the issue of the windfall gain test, because we are having a cognate debate, the fact is that the calculation of windfall gain is not an easy proposition. I know that implementation issues may not be front of mind in this discussion, but to calculate a windfall gain the government would be required to estimate what prices would otherwise have been for any particular entity and therefore to calculate what its actual financial position is as compared to not offering this assistance. A lot of hypothetical and detailed calculations would be required. We do not think it is sensible to get involved in an ongoing windfall gain discussion or process as the way to deal with this issue. Our view is that the way this is best dealt with is to ensure that assistance is less than 100 per cent. That comes back to the issue that you do not want to provide more assistance than is required. The way we have done that is to say that we will not exempt for the existing MRET and we will only exempt 90 per cent or 60 per cent, depending on the level of emissions intensity, for the remaining renewable energy target—that is, the expanded target. We think that is a more sensible way to deal with the prospect of windfall gain. So the government will not be supporting the Greens amendments.

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

I also asked the minister: how are we trade exposed when these other countries have a renewable energy target? But I will just put that to one side for a moment and go back to something else she said. As she rightly pointed out, the wholesale price plus the RET gives you the retail price. If you are not paying the RET because you are exempted, and your wholesale price goes down, you are making a windfall gain. That is the reality and that is the point that I am making here: if the wholesale price goes down by the same or more than the RET cost, they are making a windfall gain. I am really horrified to learn that the Commonwealth just does not know which of these big energy users is already being protected from the MRET obligations by state governments. What we effectively now have is cost shifting from the states to the Commonwealth, because currently the states are picking up the obligation and not passing it on. So the aluminium sector is already protected in Victoria—they just press on, and the taxpayers in Victoria do that.

The issue then becomes: if the Commonwealth now steps up and says, ‘We will exempt them from the RET,’ then what is happening here is that the states will not have to keep on paying that obligation into the future when those contracts are renewed. In fact, what the Commonwealth has done is shifted the decision of the states to sandbags those industries across to the consumers of Australia. When people go to the supermarket they will have less money to spend because they are paying more for their electricity bills so that the aluminium sector does not have to pay it and state governments do not have to pay it. So it is a nice little cost shift from state governments to the consumers via the Commonwealth because of what is happening here.

Senator Abetz made quite a big statement about all those countries that I mentioned. I talked about California, the European Union, the UK, Japan, Canada and China all having renewable energy targets. I would like Senator Abetz or the minister if she can, since Senator Abetz seems to be the expert on this, to tell me which countries shield their energy-intensive industries from their renewable energy target and to what extent. It is a wild claim by Senator Abetz. He may have the Waxman-Markey bill, but let him stand up here and explain to the Senate exactly what he is talking about. I know the minister is going to respond to me in the moment.

On the issue of windfall gain, the minister’s explanation was just to say, ‘Oh, well, the RET is on top of the wholesale price, and therefore the retail price blah, blah.’ I want to know about that connection between the two. She talked about transparency, and I think the community deserves to know which of the energy-intensive industries around Australia is already paying the mandatory renewable energy target. It seems to me that none of them are, even though they are not exempted. They are being paid for by the taxpayers of Australia, no doubt through state taxes, to offset the costs that the state governments are shielding them from. What we have here is a scream from the aluminium sector, who are not paying for any obligation as it currently stands. I think that is most unfortunate.

None of them are talking about leaving the country. They all admit the benefits they have by working in Australia. They all talk about the fact that they like a stable political scenario. They want reliable baseload power. They want a skilled workforce. They have got all of those things in Australia and they are not packing up and going anywhere very soon. They do not even threaten to their shareholders that they are. You would think if this was a major problem for them they might actually put it in their annual reports, but they do not. The renewable energy target is not the problem that they contend it to be. I really cannot see the government’s problem with saying that they agree that there ought not to be windfall gains, and acting accordingly. Otherwise we are basically saying that the people who should help to transform the economy to a low-carbon or zero-carbon future, the people who should be paying to create the jobs in the renewable energy sector and in rural and regional Australia, should be everybody except the industry sectors we are talking about here—that, for some reason, we all should pay so they can benefit. I have made the point that they are energy intensive and so in the future they need renewable energy. They need it because they will pay higher prices for coal fired power unless they can get it, and we are facilitating that outcome.

While I am on that subject, I was interested to hear earlier from the National Party about rural and regional Australia and jobs and so on. I note that the National Party did not support the Greens amendment last night to take the 1.5 kilowatt hour cap off off-grid solar in particular. That affects every community, particularly Indigenous communities, but the Northern Territory cattlemen, for example, were very keen to have that supported because they recognise that this is going to kill off-grid renewable energy around Australia. This is going to seriously undermine any further rollout, and yet we had the National Party opposing it. The government opposed it as well, although I concede that the minister has said she will look at it. I am glad about that because I absolutely want to see the roll out of renewables and I hope that there can be some agreement. I regard COAG as the lowest denominator outcome for anything, but I also appreciate that the minister has said they will try to expedite consideration of that matter. That is another matter entirely, but I would be interested to hear from Senator Abetz about those countries that do shield their energy-intensive industries from their renewable energy target and to what extent; if the minister can provide it, well and good.

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

Senator, in relation to what is going to COAG, I note you were paired last night and were not here to move your amendments. I provided that advice to the Leader of the Greens and to the chamber twice, I think, and I have also provided it to you privately. So I do not know that I would suggest that extending this debate on a bill that I understand everyone is going to vote for—perhaps not Senator Fielding—is a sensible use of the chamber’s time. I can reiterate it to you again if you wish.

In relation to trade exposure, we do have a test in the white paper, which is the test that companies conducting activities seeking exemption would have to meet, and I would refer you to that. It is the case for a range of these firms that they are competing in the markets where the international price is set not necessarily with regard to increased electricity costs as the result of renewable energy policies.

In relation to the cost-shifting argument, I would make two points. The first is that the senator comes in here making a whole range of assertions as fact about contracts to which she is not a party and the Commonwealth is not a party and which are by their very nature commercial-in-confidence. I make no comment about those contracts; they are not contracts that the Commonwealth is a party to. She can have an argument about the history in Tasmania; I am not party to that. We make policy on the basis of what we think is sensible policy across the economy.

We are not exempting for the current MRET—I want to say that again. We did not accept that amendment, for the very sound reason that it seemed to us that compensating and assisting industry for a liability that was already in place and for which there was no Commonwealth assistance was not sensible. What we are assisting with is a proportion, a partial exemption, of the expanded liability.

In relation to the assertion about wholesale price, we could have a modelling argument for a number of hours. I would say this to the senator: there are a range of modelling outcomes in relation to wholesale price. There is credible modelling in the MMA report commissioned by the Department of Climate Change which suggests the average increase in the wholesale price would be half of one per cent. We are only providing partial exemption for the extended liability under the extended renewable energy target; we are not providing exemption for the existing renewable energy target. In those circumstances, my advice is that a windfall gain is unlikely. If the modelling is not accurate in a range of ways, and if the design of the policy requires reconsideration, we have said that there will be a review in 2014 to consider these issues. That would be an issue amongst a number of other issues that could be dealt with in those circumstances.

I think I have addressed and responded to all the issues that were raised by the senator.

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

I would like to know whether the government took into account the modelling other than the McLennan Magasanik modelling and whether those other reports, by Roam Consulting et cetera, were taken into account as well. It seems to me that only the government’s report gives that increase. All the others talk about the downward pressure on the pool price. So I am very interested to know if the government considered those other modelling reports. I note the government did not name any countries in the context of trade exposure or any countries that have the renewable energy target. She talked about meeting the test; I am interested to know which countries this is going to apply to and how.

In terms of the transparency issue, the minister says she does not know what the contracts are with these energy intensive industries, but she is giving them an exemption anyway. Surely, the due diligence of the Commonwealth should have been to establish which energy intensive industries are paying the mandatory renewable energy target to start with. No, they are not exempted—that is absolutely right—and they ought not be exempted. It has been a decision of state governments to pay it for them. It is a choice of state governments to subsidise them, which is fine if they want to do that. So why would you now exempt them into the future when their contracts are up for renewal? I just do not understand why the Commonwealth would make a decision to exempt them when they are not paying already and, essentially, will have no intention of paying.

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

In relation to the other modelling, yes, the government took all relevant modelling into consideration before making its decisions. In relation, again, to the assertion about government policy, this discussion is a bit like groundhog day. We do not make government policy on the basis of state government policy which may or may not be in place and private contracts which are commercial-in-confidence to which the Commonwealth is not a party. We make judgments about what is the best policy position from the Commonwealth’s perspective, and that is what we have done.

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

I hear the minister’s frustration about this debate, but the frustration is shared by the community, who want to actually have answers to these questions. It is the community who are going to pay a higher price because the government has made this decision. I note that she said that she took all relevant modelling into account. I would be interested to know specifically which modelling was taken into account in addition to the McLennan Magasanik modelling.

While we are talking about modelling, last night I read into the Hansard what Hugh Saddler had to say about the percentage of the existing renewable energy target that is taken up by solar hot water and heat pumps. He estimates that, of the existing target, it has around 24 per cent. He went on to say that he thinks it will have 20 per cent of the expanded space in renewable energy by 2020. The minister says, no, their modelling shows much less than that. I ask the minister if she would provide the modelling that shows that the assessment of Dr Saddler, who is an expert in the field, is wrong. I would be very interested in seeing that modelling.

I conclude by saying that the Greens believe the community is desperate to get renewable energy out there and expanded. They want to have that opportunity to be able to reduce carbon emissions and they are prepared to pay extra for renewable energy. But to have included in these measures the coal gas and the burning of native forests, to be giving these massive exemptions to the polluters and to refuse to rule out a windfall gain is not going to make the community feel the kind of enthusiasm in the transition to a low-carbon future that I think they would have liked to have felt. It remains to be seen, of course, as this begins to operate, what does happen to the pool prices. I think it is tragic that the review is not going to occur before 2014. If the government had accepted the Greens’ proposition, there would be a review in two years. I believe that that would have been an appropriate thing to do because I believe there are going to be a lot of outcomes that are not what the government is anticipating.

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

Very briefly, and with some reluctance, I cannot support the Greens amendments because I am concerned about the issue of the contractual arrangements in relation to the state governments. I think there is a real concern there. Whilst I understand the reservations of the Greens in respect of compensation, I think you do need to have a degree of compensation on a transitional basis to move from a high-carbon to a low-carbon economy. On the basis of those concerns, I cannot support these amendments.

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

Senator Milne asked me a question on the issue of heat pumps which was canvassed last night, when she chose not to be here in the chamber, and I dealt with that question. I have responded on the modelling that the government took into account. Perhaps I could take on notice precisely which other modelling was considered in formulating the government’s position and see if we can provide any further information. I do not think there is anything further, except what Senator Milne asked me, that I have not already addressed.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

The question is that schedule 2 stand as printed.

Question agreed to.

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

I move amendment (18) on sheet 5816 revised:

(18)  Schedule 2, item 14, page 16 (after line 11), after subsection 46B(1), insert:

     (1A)    Regulations prescribing a method for calculating a liable entity’s partial exemption for the year in relation to an emissions-intensive trade-exposed activity must take into account any electricity price reductions resulting from the implementation of the renewable energy target and must avoid giving a liable entity a windfall gain.

Question negatived.

Bill, as amended, agreed to.

Renewable Energy (Electricity) (Charge) Amendment Bill 2009

Bill—by leave—taken as a whole.

Bill agreed to.

Renewable Energy (Electricity) Amendment Bill 2009 reported with amendments; Renewable Energy (Electricity) (Charge) Amendment Bill 2009 reported without requests; report adopted.