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

I table five supplementary explanatory memoranda and an addendum to the supplementary explanatory memoranda relating to five of the bills. These memoranda were circulated in the chamber today.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I overheard a comment from my colleague Senator Milne that we might as well point out the obvious at the outset, which is that this committee is now dealing with a whole raft of amendments and changes to the Carbon Pollution Reduction Scheme legislation and the Minister for Climate Change and Water is tabling explanations as to what she is doing in the debate. The process is one of guided ignorance. The government and the opposition have been negotiating these amendments over the last couple of days. There is a rush to have the amendments come in to be debated. I am not going to prolong it except to say we are now dealing with billions of dollars of Australians’ money through a deal stitched up between the government and the Turnbull opposition without any airing of that deal with the public. There has been no committee to allow the public or business to feed in to this outcome which is going to divert billions of dollars of their money into the big polluting industries. There has been no committee because the Rudd Labor government and the Turnbull coalition voted that down today.

I have never known of a process in here where so much has depended upon the government and opposition getting together and treating the Australian public with utter contempt when it comes to the ability of the Senate to service their interests and take in information from the wider public, including the scientific community which is so important but which has effectively been shut out and had a deaf ear turned to it by this minister, this government and this opposition. There is no point in railing about that because the numbers are in here, and numbers rule in politics. It is the planet that is at stake, and the process here is one that is clearly going on the record but it is one that the government will live to regret and the coalition will live to regret. It is just a pity that the onrush of climate change—and the minister spoke about that in question time today—is only used as a veneer for the government’s failure to act in a proper fashion.

The amendments we are dealing with here will no doubt go through because the government and the opposition are providing the numbers for it. The debate becomes one in which the outcome is known regardless of the content and the submissions in the debate. The first thing the minister does is table her explanation for what is going on with the debate already underway. It is a signal of what a bereft process it is for anybody who thinks this is, as the opposition itself has described, perhaps the most important legislation to restructure Australia since Federation. The opposition, in league with the government, is treating the Senate and the people of Australia with contempt. At the outset that is a sign of where this committee is going to.

I predict there will be no changes here. There is going to be no listening ear from this minister. There will be no listening ear from the numbers that have it in here. There has been no committee. The Australian people, their businesses and the scientists who want to be heard on this issue, and should be, have been effectively locked out by the process. The government and this minister—is it for or failing climate change?—will live to rue the process that is unfolding here in the next couple of days. That is up to her; that is up to the government; that is up to the opposition.

My colleague Senator Milne, who has had a very large input into the debate on this issue and will continue to do so, has brought forward a series of amendments on behalf of the Greens. We will be speaking to those. We are not going to delay this debate. There is no point in that. But we will be heard; we will put on record the alternative; and we will test the government through the amendments because it is not just a matter of us voting for or against government amendments here. It is a matter for the government and the opposition to vote for or against the amendments that Senator Milne is bringing forward on behalf of the Greens. That is on the record, it will be on the record and it is something that we will be referring to in the future, as climate change continues to grow in the way in which it wreaks havoc on Australia’s environment, its lifestyle, its economy, its employment opportunities, its export income and the hopefulness and happiness which a community which respects future generations truly, through legislating in their interest, has a right to enjoy but which it is being deprived of in large measure by this legislation now before the committee.

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

I am not sure if the opposition is represented other than by Senator Williams. Do you have a frontbencher for this debate?

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Ronaldson’s supposed to be here.

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

I thought I might give you some time—

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

I would suggest, Minister, that you proceed in the absence of any other personnel.

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

I thought I might just raise that slight technical issue. I would like to make some brief comments. We are keen on this side of the chamber to proceed with the substance. However, there are some things which Senator Brown said which I do not intend to respond to over and over again if they are said over and over again but which I will respond to on this occasion. It is the case that amendments are being moved. It is also the case that the Greens chose not to attend a briefing that I arranged for them with departmental officials which occurred prior to these amendments being publicly announced. They sent a staffer along who was there for 15 minutes and left. They are entitled to do that. If they do not wish to be briefed by the government on the amendments, that is a matter for them. But I make the point that it is difficult to take Senator Brown seriously, coming into this place saying he does not know about or understand the amendments, when the Greens party made so little effort to acquaint themselves with the detail of these amendments at a briefing that the government organised.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

While the Senate was sitting.

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

In fact the Senate was not sitting. We made the effort to do that as a matter of courtesy for the Greens, Senator Fielding and Senator Xenophon. I simply make that point. As I said, the Greens do not have to attend briefings. That is entirely a matter for them. But it is a little unfair to come into this chamber and say, ‘We haven’t known about these amendments,’ if you do not avail yourselves—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Were you there?

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

I was with the Prime Minister.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You’ve got an excuse already.

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

Senator Brown says he is annoyed about me not being there. I would not have thought that a left-winger would be so worried about status. I would have thought a left-winger would be keener on content. I had a bit on yesterday, Senator Brown.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

And you’re arrogant enough to think we didn’t.

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

No, it was not arrogance. I was in cabinet, in caucus, with the Prime Minister or doing a media conference with the Prime Minister. I simply make the point that we did offer that. If the Greens do not wish to attend—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

If you arrange a meeting with senators, you be there.

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

Senator Brown suggests that he did not want to turn up because I was not there. It is an interesting requirement. I am happy to meet with Senator Brown if that is his request. I was not able to provide the briefing, so we sent a deputy secretary, from memory, of the department and some of my staff to provide that briefing. If Senator Brown does not want to attend, that is fine. But I think it is unreasonable—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Who do you think you are?

The Temporary Chairman:

Order! Senator Brown, the minister gave you the courtesy of listening to your remarks. Perhaps you could reciprocate.

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

As I said, I was not of the understanding that it was a requirement of any senator in this place that a detailed briefing on policy required the attendance of the minister or else the person would not attend. I would have thought, if you were interested in content, you might have been interested in attending. Whatever the reason for it, as I said, the Greens are entitled not to attend if they do not wish. But I am not sure that the criticism that they do not know what is in the amendments holds much water.

There has been an enormous amount of consultation with the community on this debate. I described earlier today some 13—I think it was 13, but I could be wrong—inquiries that Senate, House or joint committees conducted in relation to climate change matters since we came to government. Let us consider just this legislation alone. It has been in draft form to one Senate committee. It has been again to a Senate committee post the bill being introduced. It was introduced into the parliament in May. It has been before the Senate previously, when the Greens voted against the legislation. It has now come back before the parliament at this point. There have been a green paper, a white paper and substantial consultation in relation to this legislation. It is the case that some final amendments now have been negotiated with the opposition. We hope that the opposition will therefore support the legislation. Without the opposition’s support, this legislation will not become law. It is quite clear that the crossbenchers—the Greens and Senator Fielding, which is a rather unusual alliance—and others will vote against this legislation.

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

What about me!

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

I apologise, Senator Xenophon. I forgot to mention you. So the government is not able to do what it told people it would do prior to the election, which was to introduce an emissions trading scheme, without getting the opposition’s support. I now seek leave to move government amendments (1) and (2) on sheet BE242 together.

Leave granted.

by leave—I move government amendments (1) and (2) on sheet BE242:

(1)    Clause 2, page 2 (table item 2), omit “The 28th day”, substitute “The 42nd day”.

(2)    Clause 2, page 2 (table item 2), omit “before the 28th day”, substitute “before the 42nd day”.

These amendments simply propose a 14-day delay in the commencement of the CPRS legislation. I am advised this will ensure a smooth handover of responsibilities from existing regulators to the new regulator, given that, if the bill is passed at this time, the handover period would include a Christmas break.

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

I want to make some comments very briefly in relation to the matters that were raised. I am grateful for the briefing the government provided through the minister’s chief of staff. Brenton Prosser from my office attended and it was useful to get that information. I think it is fair though to say that there have been a number of significant changes. In relation to these particular amendments I will get guidance from you, Temporary Chairman, as to whether it is appropriate to ask this question. As a result of the changes that have been negotiated with the opposition, has any modelling been done in relation to the impact of those changes on, for instance, electricity price rises and the effectiveness of the scheme in terms of abatement? In other words, to what extent does it change the parameters that the government has already put with its existing modelling? That is my broad question. I suppose it would relate reasonably to this whole issue of extending the time of commencement.

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

I think it is appropriate to put that question to the minister. She may or may not choose to answer it.

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

The government has not done any additional specific modelling on these amendments. My advice is that the changes proposed do not alter the results of previous modelling, which has been released publicly, in relation to the likely, for example, CPI impact including electricity prices. There has been a minor change to anticipating the impact on CPI which was disclosed in the MYEFO, the Mid-Year Economic and Fiscal Outlook, which indicated because of an anticipated lower carbon price that there was a minor reduction in the impact of the scheme over the first two years from 1.2 per cent to 1.1 per cent.

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

Could the minister advise whether it is proposed to do further modelling as result of the negotiations with the opposition? If so, will that be released in due course? Will the government have an update on its figures on the impact in terms of abatement, electricity prices and other price rises in the community?

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

Obviously, given MYEFO you will see that the government will continue to monitor its own forecasts about not only this policy but a range of other policies. That is normal government practice. The Treasury modelling which was undertaken last year is, as I have said in this place before, the largest modelling exercise in Australia’s history. We are not proposing to redo that at this stage, but the government will always continue to monitor its own forecasts including in relation to the projected effects of this scheme.

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

I am not expecting the government to model from scratch—that would be ridiculous—but is it proposed that there may be some supplementary modelling from the department as a result of the changes negotiated with the opposition?

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

I am advised that the department will undertake an analysis. For example, there are a range of projections associated with the scheme which we will have to ensure continue to be accurate. I have to say that is not a one-off process for these amendments. That is a reasonably regular approach to considerations of, for example, where Australia’s emissions are, what the impact of various policy parameters are and so forth.

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

To follow Senator Xenophon on that, I note with interest that the government recalculated the subsidy to households as a result of the mid-year economic forecasts but there were no other adjustments in the cash payments available in the scheme. Can the minister explain to me why it was only for households that the financial adjustment was made?

While I am on my feet, I want to put on record the facts of the matter in relation to the briefing that the minister just spoke about. The fact is the government has been negotiating with the coalition for many, many weeks. Prior to that the Greens provided the minister with our amendments in full, so she has had them for that period of time. When it became obvious that a deal was to be concluded, I wrote to the minister saying that the Greens would like to have a briefing in confidence before the deal was announced. That did not happen. On the morning in question we received a letter from the minister saying we would get a briefing at 12 o’clock, bearing in mind that the Senate was to sit at 12.30 with the bells ringing at 12.25. My staff rang the minister’s office and asked whether the minister would be there in person or whether she was just sending her staff. We were told that it would be staff. We asked why 12 o’clock when clearly the coalition party room was dealing with the matter at that very moment; therefore the deal should have been made available to other people. We were rudely told that if we wanted to play politics, that would be an end to it.

The issue is that 12 o’clock was the briefing with the minister’s staff and a departmental adviser. When my staff arrived, the minister’s staff were late. They did not get there until after 10 minutes past 12, and the bells rang at 25 minutes past. So let us not have any nonsense here about how long a time was provided at that particular time to brief us on the entire package of amendments that the government had negotiated over many weeks with the coalition. In the course of this committee debate, we will get to trying to find out—no doubt Senator Xenophon and the Nationals will be quite keen to know—the exact details of the deal, and we will go through it in that time. But I think it is disingenuous to be suggesting that there was some comprehensive briefing arranged.

While I am at it, as I provided the minister with my full amendments at least six weeks ago, it was extremely disingenuous—when the minister had our amendments to show that the Greens opposed compensating the energy-intensive trade-exposed industries for their profitability but supported compensating them for their trade exposure—for the minister to say on national television at least twice that the Greens opposed any form of compensation. That is not true. Our amendments were with her. They are still with her. They are before the Senate now and they will demonstrate that that simply was not the case.

I return to my original question as to why the only adjustment was in household compensation and why other cash payment compensation in the scheme does not seem to have changed.

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

The adjustment to the household package was reflective of the lower than expected carbon price. That change resulted from a change in parameters in relation to MYEFO, and accordingly the dollar compensation which had previously been calculated was obviously calculated in relation to a higher carbon price; I think the change was from $29 to $26 for the first year of a floating price under the scheme. Accordingly, the government agreed that we would adjust the household assistance to reflect the lower than previously expected impact on CPI and the lower than previously expected impact on household expenses.

The government is maintaining its commitment, and we have made that quite clear publicly. It has maintained its commitment to 120 per cent compensation for the overall costs of the scheme for low income earners and will continue to make a significant contribution to middle-income families. In relation to the other expenditure items under the scheme—I am not sure which ones the senator is referring to—obviously there are a significant number of programs where assistance is provided in the form of permits, so you would not adjust that. You would cost it differently in the sense that a permit cost post MYEFO might be different to the projected cost pre MYEFO, but, for example, for the electricity sector and the emissions-intensive trade-exposed programs, they are provided in the form of permits. So an adjustment to the carbon price projection is not going to affect the number of permits. It may reflect the costed value in terms of the forward projections.

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

The question is that government amendments (1) and (2) on sheet BE242 be agreed to.

Question agreed to.

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

The minister will not be surprised to know that I have a number of questions around the area of agriculture. Obviously there will be some significant potential impacts in that area, and I have received a lot of correspondence and communication from those farmers out in the community who are extremely concerned about the impacts of the potential ETS on their farming businesses and their farming practices. While, of course, we are well aware that ‘agriculture’ has been excluded, there will be a number of embedded costs within the emissions trading scheme itself that will impact on those farmers. I firstly ask the minister if she could give me some indication—I will start with a very simple area—of the impact of fuel and of how any increases in fuel prices through the emissions trading scheme will impact on the farming sector.

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

Prior to the amendments negotiated with the opposition, the government had already announced that, for a transitional period of three years, we would offset the increase in fuel cost as a result of the carbon price for the agriculture and fishing industries. Subsequent to the negotiations with the opposition, the government has agreed to the opposition demand that that fuel credit should be extended to forestry. The assistance in this transitional measure involves the offset, either in excise or in other taxation on fuel, offsetting for three years the increase in fuel costs due to the introduction of the CPRS and therefore a carbon price.

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

Minister, you might explain—I think this is what you said—the excise and other taxation arrangements. Firstly, in relation to the excise, could you explain to the Senate how that is going to work given that—as the minister would of course know—current arrangements for farmers are that they pay but that they get a rebate for the excise anyway. If the arrangements are around the excise provision, how will there be a benefit for farmers in that and how will that operate?

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

Senator, I do not seem to have the Treasury officials here who could answer some of the details of that question, because that obviously is dealt with in one of the other bills, but I will see if I can endeavour to get them here shortly. What I can say to you is that, whatever taxation arrangements are utilised to deliver that, the government has made clear that that offset will apply to the industries I have outlined.

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

Thank you for the indication that those Treasury officials might be here to answer that. I would say that is a very significant component not only for farmers but across the primary industry sector. It is one that would probably be top of mind for most of our agricultural producers. If the Treasury officials are not able to attend themselves, perhaps some of the other officials might be able to get that information for us in a reasonable time frame. Minister, as part of that answer you also mentioned other taxation measures, apart from the excise, that would apply to the arrangements surrounding fuel. Perhaps you could indicate what they were as well.

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

I have really responded to that already, Senator.

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

As a separate measure entirely, if you would like to answer that at the same time as the Treasury officials give that information, that would be highly appropriate. Given the fact that this is going to be one of the biggest issues, I would have thought that information might have been readily available. Minister, I think you indicated there would be three years for the offset in the fuel cost. Does the Senate take from that that after that three-year period there will be no further assistance in the provision of offsetting that fuel cost for agriculture?

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

Senator, I might be able to assist you by referring to the white paper released in December 2008 which actually went through this. You may not have had an opportunity to read it. Chapter 17.6.3 goes through the fuel tax adjustment. I can photocopy it and pass it across to you if you would like. It indicates that we will:

… reduce excise and excise-equivalent customs duty (fuel tax) on 1 July 2010—

this was obviously in place before we deferred the start of the scheme—

for all fuels currently subject to the general rate of 38.143 cents per litre. The tax cut will be based on the effect of pricing diesel emissions.

We also indicated:

The Government will periodically assess the adequacy of the initial fuel tax cut and adjust fuel taxes accordingly. At the end of the three years, the Government will review this adjustment mechanism.

The Government will automatically assess the fuel tax rate every six months. Assessment will be based on the average permit price for the previous six months. If the average price exceeds the price used for the previous cut, there will be a further fuel tax cut. Any reductions will take effect on 1 February and 1 August each year.

There is some further assistance, which I could read out but, as I said, chapter 17, pages 16, 17 and 18, deal with this issue also in relation to other fuels.

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

I am the first to indicate that my knowledge of this in terms of the detail is not at the level the minister’s is. I put that to the minister and thank her for her answer. For those listening, though, just so we can get a very simple answer which perhaps might be helpful to those who really want to understand this, could the minister explain for us in very simple terms if it would be correct to say that after three years there will be no assistance? I understand the minister just mentioned something about a review. I am sorry, that was extremely complicated. Do I understand that after the three years there will be a period of review? Perhaps you could answer that a little more simply, Minister.

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

Senator, what I said was that at the end of the three years the government will review this adjustment mechanism. I do not know how much more simple I can make it than that. I can try if you would like.

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

If you had said that in the first place, Minister, it might have made it a lot easier. I could have just asked what process the review will take and what the criteria upon which the government will base any further assistance in terms of fuel for the agricultural industry will be.

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

I have to say it is unusual for a member of the National Party to take such an interest in this scheme. Generally they are just telling us why it is such a bad idea.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Williams interjecting—

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

I am being civil. Senator, the details of that review have not been finalised or formalised. It is some three years hence. The government is simply saying that we are giving transitional assistance to those sectors because we do understand there is the need to adjust over time and that we would review at the three-year time frame the adjustment mechanism at that point. I am not sure I can really add to that. If you are asking me whether we have set up a committee and determined how it would occur, no, that is not the case. It is obviously a decision government would need to make down the track.

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

Thank you, Minister. I do indeed take a very keen interest in all the detail of this. Just because I do not have the same view as you does not mean I do not have an incredibly detailed level of interest in this particular piece of legislation. I do thank you, and we will look forward to getting some responses in terms of the detail. I would say it is probably rather concerning then for the agricultural industry to know that after a three-year period the process for any kind of review to determine whether or not there should be any further assistance is still being determined. I think that would lead to a great deal of nervousness for a lot of our farmers. Perhaps the minister might not be aware of the significant financial component that fuel does indeed make up for the costs that our farmers have on an ongoing basis in terms of running their farming businesses. Can I turn to the impact of the increase in electricity prices for the farming sector. What work has the government done to determine what impact, firstly, in general, those increases in electricity prices will have on the profitability of the farming sector?

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

Senator, I can provide you with some details, if my adviser could hand me back my brief, of the impact on electricity prices. There have been a range of modelling exercises done which have been in the public arena. I seem to recall you may have even asked me about one of them during question time or at some point. If I can also go back to the fuel tax issue, you are asking me about a review in 2014, given the one-year fixed price and the later start to the scheme. In relation to household electricity prices, the increase in electricity prices which was released from the Treasury modelling I think last year is around $1.50 a week—this is an average increase or the household impact—in the first year of the scheme and about $2.50 a week on average in 2012-13.

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

Minister, thank you for that and, given that farmers live in houses, I am sure that will be very useful for them also. In essence, I did not ask you about the farmers’ household prices. I asked you what work the government had done on the impact of the electricity increases on the farming businesses themselves, not the farmers living in their houses. They have a pretty good idea of how much that is going to go up. I am keen to understand what the government has done in determining the impact of electricity prices on the farming businesses, not the households.

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

As I said, a range of studies has been done, but I do not have all the names of them to hand. I know of at least one if not two or more reports by ABARE which looked at the projected impact of the scheme on the agricultural sector. I will be happy to provide those—I do not have them to hand now. They are public documents. They have been in the public arena.

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

I ask a short question along the same lines as Senator Nash. In relation to the whole issue of electricity prices, are the modelling assumptions based on other countries coming into the scheme or are they based on Australia having a stand-alone scheme? I am happy to put that on notice. I am just seeking some clarity on the whole issue of electricity prices.

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

This is a question that goes to the modelling which was released last year, so my memory might be hazy. My recollection of that modelling is that we did make assumptions for various scenarios, all of which were referenced in the modelling documentation. We made assumptions about the extent of the action taken internationally, including some assumptions about the extent to which each nation—particularly those economies that will have a very significant impact on the global trajectory—had acted. I am not able to detail all of that. That was quite a detailed piece of work that was undertaken and released in October last year. The basis of the assumptions behind the various modelling scenarios in the Treasury modelling did need to extend to the extent of action taken in other nations.

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

I do not want to delay the committee stage any more on this particular issue—although I think Senator Nash wants to—but could the minister take on notice, even in broad terms, to bring that back to us and to update us on whether anything has changed since that time. That would be very useful.

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

Can I be clear about what Senator Xenophon wants because, as I said, I can give him a copy of Australia’s low pollution future: The economics of climate change mitigation, the October 2008 modelling, but is he seeking something other than that?

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

Perhaps the most expeditious way of doing this would be for me to talk to the minister’s office to clarify that we are talking about the same page literally. My question is: to what extent have there been any changes in modelling assumptions about electricity price rises since that time? I am happy for you to take that on notice or for that to be communicated by the minister’s office.

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

Minister, if we have done the modelling on the presumption that other countries are coming into a carbon reduction scheme, and currently they are not, would that not mean our modelling is now completely out?

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

I will listen to Senator Williams, whom I try and listen to because he is a good bloke. He is said to be civil, and I will try and be civil, but I think it is really—perhaps inappropriate is too strong a word—regrettable that Senator Joyce continues to make assertions in this place which are incorrect. He knows that action is being taken in other nations. He conveniently forgets all of Europe, which has been under an emissions trading scheme for quite a number of years. He conveniently forgets New Zealand, which has a very big agricultural sector and which has already legislated its scheme. He conveniently ignores the fact that President Obama is trying to get one through his congress and was elected with a policy to reduce emissions and has adopted a cap-and-trade policy. He conveniently forgets that the Japanese government has pledged to introduce one. The premise of his question is factually incorrect.

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

I will conveniently ask a few more inconvenient questions. Does the extent of the modelling that you had done now match the extent of global participation in a carbon emissions trading scheme?

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

The modelling assumed a range of scenarios. If Senator Joyce’s question is, since he often talks about them, about China and India, it certainly assumed much later entry into reduction in emissions or, to explain it better, a much later set of actions from developing countries than developed nations. That was already something the government included as part of its assumptions. Obviously the difference between the way in which developed countries like Australia have to undertake action and developing countries such as China and India have to take action will differ. But my recollection is—and, again, this is from October 2008—that the assumptions were of a range of scenarios which included different dates by which different nations might start to restrain and reduce their emissions.

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

In that range of scenarios and in your costing of that modelling—because that is very important—is your modelling premised on these countries coming in at an early stage, a latter stage or somewhere in between? To take one country as an example, is the United States in your modelling in or out?

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

The modelling released last year—in fact, some 13 months ago—included a range of assumptions about where nations would act, and those assumptions did vary depending on the nation. I would make the point that the United States, as I think I read out in question time today, has committed to reduce its emissions—not by as much as some would like but it has made that commitment politically. It is not yet implemented because obviously—a bit like what we have been going through here—there is political debate associated with the way in which that should occur.

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

I am trying to drill down here. Because your modelling has met budgetary forecasts, it comes to a cost. You do not have a range of budgetary forecasts; you have a specific number and a specific outcome. So I am asking a specific question: does that modelling include the United States being in or out? Does it include China being in or out? With all due respect, New Zealand is not going to have a major effect on global commodity prices for Australia. So let us take the two big ones. Is China in your modelling forecast or out, and is America in or out?

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

As I said, there are a range of assumptions in the modelling—from memory, reductions of five, 15 and, I think, 25 per cent—that we released which are on the public record and which make different assumptions about when different nations will act. I would be very happy, if you would like, to get one of the modelling people to explain it to you because they are interesting people. But your question does not have a yes or no answer because the scenarios had to assume different points at which different nations would act.

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

This modelling formed part of the budgetary outlook?

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

This modelling was the largest modelling exercise this nation has ever undertaken, Senator, and it was undertaken by the people who worked for Mr Costello when you were in government. The modelling was released publicly by the Treasurer and me in October last year.

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

I asked a very specific question: does the modelling form part of the budgetary outlook—yes or no?

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

I do not quite understand the way in which the question is posed, but I think Senator Joyce is getting at this: the assumptions that Treasury use to calculate what they believe the likely carbon price will be would include a range of parameters, and they would include reference to this work that Treasury had previously done. You may have been out of the chamber, Senator Joyce, but I had an exchange with Senator Milne in which we discussed why MYEFO had changed the projected carbon price. A range of assumptions by Treasury went into that. Obviously one of the assumptions is the likely international price of carbon, and behind that assumption are a range of assumptions about what the rest of the world is likely to do and about the nature of the global carbon market.

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

There are a range of assumptions and I am very aware of it because they talk about the carbon price internationally going, from memory, from $29 to $26 and the reduction in payments going to houses. So we have a specific number—29 becoming 26. I am asking you the question: in the modelling that came up with that price, is the United States of America in or out of a carbon trading scheme?

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

Could you repeat that?

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

Yes, I can, and all night if I have to. In the modelling of that price is the United States of America in or out of a carbon trading scheme? You cannot have a range of variances and say they are sort of in and sort of out. They are either in and it models through to a price, or they are out and it models through to a price. They cannot be in and out at the same time.

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

I think we are going around in circles here because you are asking me a yes or no question when there is not a yes or no answer. You are asking a question about a range of assumptions behind a very complex modelling exercise—all of which were released publicly and in relation to which the government modelled a number of reduction targets. Yes, there were assumptions made about United States action—just as there were assumptions about China’s actions, India’s actions and so forth—because you have to do that in order to get some sense of what the likely carbon price is. It was a highly complex and sophisticated process that was gone through, and it was quite transparent.

If the question is, ‘Did the modelling assume a cap and trade system being in place in America by a certain time?’, then of course that is not how it would work. The assumption is not what the mechanism is; the assumption is that the nation will take action. And they may do it by other means. In fact my recollection is that there has been some suggestion in domestic politics in the US that the EPA would utilise its powers to regulate industry so as to effectively impose an emissions reduction policy if the cap and trade bill does not proceed. So, Senator Joyce, if your question is, ‘Did we assume certain nations had a CPRS?’—to use your first intervention—then the answer is no. We assumed that nations would take action. There were different times assumed for different nations, which is logical—of course what the US does is going to be different to what China does—but we did not assume, and I might be corrected here, any specific policy mechanism to drive that change.

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

So, Minister, what action did you assume the United States had taken and what action did you assume China had taken when you came up with the price per tonne of carbon of $29, which then became $26?

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

Senator, I assume you know, from being in government, that Treasury uses a great many assumptions behind its budget projections. So I could not answer for every single parameter which was assumed, for example, in MYEFO. I can tell you that the MYEFO assumption about the reduced carbon price was made because the Australian dollar was assumed to be at a higher level and therefore, following through, there was an assumption as to a lower Australian dollar carbon price. So I am not sure what your question really goes to—perhaps I am misunderstanding it. Again I say that we did not assume in our modelling any type of policy action, because that is a matter for domestic policy; we assumed, consistent with, I think, what is logical, that you would see action at various times by developed nations and that you would see growth and then decline by developing nations, particularly India and China.

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

I just want to follow up on the minister’s statements in relation to the mid-year economic forecast and the assumption about the exchange rates in the government’s decision to redirect $5.7 billion away from households and towards the polluters. The government is assuming that the current high exchange rate of around A$1 to US92c will continue into the future and thus lower the cost of the CPRS for households. Whilst you could assume that is consistent with normal budget process, assuming that the current exchange rate will continue into the future, on this basis the government is redirecting a total of $5.7 billion out to 2019-20.

My observation in recent years is that foreign exchange rates are volatile and notoriously difficult to predict. There are many reasons why your assumption that these exchange rates are going to continue as they are may in fact not be valid—for example, Australia’s current interest rates are higher than the rest of the world therefore encouraging financial capital inflow and raising the value of our dollar, but as the rest of the world recovers their interest rates could be expected to increase thus reducing demand for the Australian dollar. The demand for our mineral resources might be less than expected, reducing our exports and demand for the Australian dollar. As other currencies strengthen against the US dollar—for example, the euro—that will push up the US dollar permit price, and that is something that is beyond Australia’s control.

Therefore what I am asking you, Minister, is: does the government reasonably expect that in the long run interest rates will continue at their current levels? What happens if the Australian dollar and costs to households are higher than anticipated by the government’s agreement with the coalition? What are your contingencies for assisting households if this is the case since you have redirected $5.7 billion out to 2019-20 on the basis of exchange rates? From the way we are looking at it, the assumption that you have made to justify the transfer of money from households to business is that there will be stability in foreign exchange markets. I find that extremely difficult to defend as a contention, so I am really interested to know: what is the contingency if indeed interest rates do not continue at their current level and what happens if the Australian dollar falls and the cost to households is greater?

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

In that scenario the government already have a mechanism in place to ensure that our commitments to households are retained. There is a white paper commitment, which continues to be the government’s commitment, that we would review the adequacy of assistance to households every year—‘in the budget context’ is, I think, the wording used. That commitment is maintained. I have previously outlined the 120 per cent or more of overall cost-of-living increase for low-income earners, and we will provide additional support to middle-income earners. As you would know, Senator Milne, because you do take an interest in this scheme, the revenue obviously reflects the carbon price. So in the scenario that you talk about the government will be able to scale the assistance to the carbon price. That is what we would propose to do.

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

Minister, you have said that you have changed the price of the permits by reason of the appreciated Australian dollar. Would you have to change the price of the permits if the United States of America did not come into the trading scheme to the extent that you modelled it in 2008?

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

The government and I do not change the carbon price. Treasury’s forecasts of the carbon price changed. I just wanted to make sure that was clear. I refer the senator to the MYEFO where the explanation of the parameter change was set out. If the senator does not have a copy, I can provide him with one. That parameter change—assumption is not quite the word to use in these circumstances—was clearly spelt out. I will come back to you, Senator Nash.

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

Minister, I refer you to the very front of the white paper from the Australian government where it says:

The Commonwealth expressly disclaims liability for any loss, however caused and whether due to negligence or otherwise, arising directly or indirectly from the use or reliance on information contained in the White Paper by any person.

Do you deem the permits to be a property right?

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

I am advised that they are at law a property right. While I am on my feet, I wonder whether I could provide some assistance to Senator Nash.

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

I am planning on going back to some of that.

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

While I am here, I am going to deal with it, if that is okay. In June 2009 ABARE published a paper entitled ‘Effects of the Carbon Pollution Reduction Scheme on the economic value of farm production’. I have parts of it here. The percentage in total on-farm input costs because of the CPRS, relative to the average calculated over 2003-04 to 2007-08, were as follows: in 2011—this is assuming agriculture is not covered—all broadacre industries were 0.06 per cent; wheat and other crops 0.05 per cent; mixed livestock crops 0.05 per cent; sheep 0.07 per cent; beef 0.05 per cent; sheep/beef—I am not quite sure why that is a different category—0.07 per cent; and dairy 0.18 per cent. That was a 2011 forecast, as I said, in an ABARE publication from June 2009.

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

What is that figure of 0.08 in regard to? It is 0.08 of what?

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

Sorry, I thought I indicated that. These are per cent increases in total on-farm input costs because of the CPRS, relative to the average over the period 2003-04 to 2007-08. What I read out for each industry was the ABARE calculation for 2011.

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

The modelling has put forward a price which will be taken as a recommendation into the future as to what that property right is worth?

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

I am not sure I understand the question. Are you suggesting that the government is somehow indicating the worth of the permit? No, the government is not. What the government is doing, which is a responsible thing to do, is making assumptions about what the likely price of carbon will be for the purposes of projecting revenue and expenditure, as well as the likely economic effect of the scheme.

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

But the recommendation in the modelling deals with certain circumstances, and in the modelling it appears—you might refute this—that the extent of involvement in action by the major emitter, the United States of America, to reduce carbon emissions is beyond the action that America is currently taking—or is that misguided?

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

I think we are traversing the same ground. I said there was a range of assumptions in the Treasury modelling. The Treasury modelling has been made publicly available. There were different assumptions about when action would be taken. We did not assume any specific policy mechanism to reduce emissions. In other words, we did not make an assumption about whether the US would have a cap-and-trade system or do it by regulation. We made assumptions about when countries would start to take action.

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

You talk about a range of assumptions and the extent to which the United States will take action, but we have come up with a specific price in the modelling. That would suggest that you have to come up with a specific type of action and try to correlate the specific type of action that you presumed the United States would take. Is that the extent to which the United States has taken that action or not? Can you please explain to me how a range of actions from the United States—from no action at all to a 20 per cent reduction; I do not know what your range of actions is—could be all incorporated at exactly the same time to come up with one price?

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

The first point I would make is that you are assuming that no action is already being taken, because the Waxman-Markey Bill has not passed yet. In fact, there are already mechanisms in place. For example, there are the renewable energy and fuel efficiency policies of various state governments which are seeking—not as much as I am sure many of us would like—to reduce emissions in the United States.

I again say the assumptions in MYEFO are about the likely carbon price. Obviously, like any budget forecast, they may change. Senator Joyce is an accountant and he knows that budget forecasts may change, and obviously the government would have to ensure the scheme is calibrated when it starts and that the scheme continues to be calibrated against the future projections. That is why we have built in annual reviews, as I said in answer to Senator Milne—in order to ensure that the commitment to compensate and assist Australian families continues to be met.

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

I am aware of budgeting and, unfortunately for me, I am an accountant. There are a whole range of baseline assumptions that are made. You cannot make a model out of a range of assumptions. You have to be specific if you want to come to a specific price. Otherwise, you must deliver a range of outcomes and a range of prices. If America are as advanced in the action as you presumed then the demand for permits will be higher. If they are below expectations then the demand for permits will be lower. If there was a presumption in the 2008 modelling that Copenhagen would be successful then the demand for carbon will be higher, the price will be higher and the assumptions about what you will gain on the income side of your budget will be extensively advanced from where it will be if there is not a successful outcome at Copenhagen and you have to purely rely on a domestic set-up.

This is why it is so important to find out exactly what the correlation currently is between the assessments of Treasury and where the world actually is at this stage. The answer that there are a range of assumptions seems to deny us the capacity to hear in this chamber exactly what the assumption was about this point in time. You stated that you are not happy with where the United States is at this point in time in your quote—without verballing you—that you ‘would like them to have been further along’. Is that also the view of the Treasury modelling?

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

Senator Joyce, if I may, I respectfully suggest you are conflating quite a number of issues here. I want to make clear a number of things. The first is that we did not assume in the modelling, nor has Treasury assumed, a specific outcome for Copenhagen. That was one of the assertions you made. That was not assumed.

The second is that you seem, Senator Joyce, to be suggesting that the assumptions about carbon prices were wildly inaccurate. I am advised that the current international carbon price is around $22, so I would have thought an assumption that, as at 2012, the carbon price will be in the order of $26 seems reasonably sensible. Senator Joyce seems to be suggesting the current government has pulled some trick or is wildly inaccurate in its assumptions about the carbon price. As I said, it is reasonably close. You would assume that there would be an increase in the carbon price over the next couple of years. It is around $22 currently. If Treasury forecasts change in relation to the carbon price—as they change in relation to a great many factors, as the senator knows—certainly in relation to Australian households the government has built in an annual review in the budget context to ensure we maintain our commitments.

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

I rise to ask a question about the modelling. The minister quite rightly says that Treasury modelled, I think, five, 10, 15 and 25 per cent reductions between the Treasury and the Garnaut modelling, which used Treasury’s assumptions and so on. Why did the government refuse to model 40 per cent when it had been shown in the other modelling that there was virtually no difference in cost, or very little difference in cost, between a five per cent reduction and a 25 per cent reduction? Why did the government refuse to ask Treasury to model the 40 per cent reduction when the Greens wrote and asked the government to do so?

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

The government did make a decision about what it regarded as being both an ambitious and a credible target, being a target that we could reach. I understand the Greens position that they would seek a 40 per cent target—that is well known. That is not the government’s position. The government took the view that a 25 per cent reduction, as the upper end of the likely 2020 target range for consideration, was an appropriate and responsible target. It does, of course, imply a very substantial reduction between 1990 and 2020. My recollection is that that is something in the order of a 48 per cent reduction in the carbon footprint of every Australian over that period, which is a significant reduction. So the government made a decision as to what we regarded as sensible and appropriate targets to model, and that has informed the decisions that were made. We also took the advice in relation to this of Professor Garnaut, who considered that 25 per cent by 2020 was an appropriate target for Australia in the event of an ambitious global agreement.

One of the difficulties or challenges in this debate is that there is a lot of focus on one milestone, which is the 2020 milestone. We have to remember that 2020 is one of the milestones on the way to a far deeper reduction in emissions. That is what the world has to do and that is what Australia has to do. The government’s election commitment was to a 60 per cent reduction by 2050, which is obviously very significantly beyond 25 per cent. The Prime Minister made clear—last year, I think—that in the event that we believed a more significant midcentury reduction should become Australia’s target he was prepared to make it so, subject to receiving a mandate for same at a subsequent election.

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

The question was about why you would not get Treasury to model it, especially when the modelling had shown that the cost of five, 10, 15 and 25 per cent reductions were virtually the same. Why would you not, if you were keen to reduce emissions, model further out from that to see if there were a point at which there was a step change in costs in which you might make a decision on it? If the modelling showed there was very little in costs between five and 25 per cent reductions, why would you not have gone out to 40 per cent?

Secondly, at the time that this discussion was happening, at the COP in Bali the road map had identified, albeit removed from the text and put in a footnote, 25 to 40 per cent, and the minister herself would be aware of that since she was chairing the umbrella group which supported removing 25 to 40 from the text. Since the Bali UNFCCC said that developed countries should reduce their emissions between 25 and 40 per cent, why would you not have modelled it in line with what the rest of the world was asking of developed countries?

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

I have a couple of points. The senator suggests there is not a different economic cost. I just sought advice because I could not recall what the starting carbon price for a 25 per cent reduction was, and the Garnaut model of 25 per cent had a starting carbon price of some $52. So I do not think it is correct to say that the costs are virtually identical. I think that is one of the difficulties in this debate. I respect the Greens having a different policy position on this issue, but I disagree with the assertions that these do not come with different economic costs. The reality is that the transition of our economy—which, as the senator knows, is a highly carbon intensive economy—from one that is highly carbon intensive to one that is low polluting is very substantial economically, and where we differ from the Greens is that we believe that transition has to be dealt with responsibly and effectively. We want to support industry and Australian jobs through that process of transition, so I am a little unclear why the senator says there are virtually identical costs.

Regarding the point about what the rest of the world was asking, I am trying to recall if there is any developed country that has promised that level of ambition. We do face a significant challenge in reducing our emissions precisely because we are such a high per capita emitter. That is not an excuse. We should not use that as an excuse to not act, which is what occurred for too many years under the previous government, but it does demonstrate the scale of the structural change to our economy that we have to achieve in order to reduce our emissions.

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

The point I was making is in relation to the Treasury’s own modelling, which showed that there was very little difference in impact on the gross national product over time. That is what I was referring to and that is what Sir Nicholas Stern’s report showed as well: under all these scenarios there would still be considerable growth in the economy; it would just be marginally lower than otherwise would have been anticipated. That is the point that I am making. The minister still has not explained why she would not have modelled the Bali road map, since that is the road map that was understood and agreed for developed countries.

The minister also says she does not know of any other countries that have named that level of ambition. I can inform the minister that Britain has said that it would go with a 34 per cent target. The Norwegians, I think, have an even higher target than that. I will check that in a minute. Scotland has gone for a 42 per cent target. So there are other countries. The Europeans have said they will do 20 per cent by 2020 and go to 30 per cent in the context of a global agreement. I would be interested in knowing what the Treasury did say about the impact on GNP over time in those different scenarios.

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

I do not have that document in front of me. I am advised that the difference in GNP impact was one of 1.7 per cent as opposed to two per cent. In current dollar terms, I am also advised, that is approximately $3.5 billion or more.

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

A very basic question: is there anything in the legislation that specifically prescribes under a legislative instrument where the money collected from the CPRS must be expended, or is it only the statements by the minister and the government that suggest where it might be expended?

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

If the question is whether or not the revenue is hypothecated, it is not, but the commitments around expenditure are more than just statements. There are some commitments which are in the legislation—from memory, the energy sector adjustment scheme permit. The number of permits is in the legislation, so that is clear. From memory, there is also reference in the legislation to the EITEs—emissions-intensive trade-exposed—assistance, which of course will also, in relation to the activity definitions, have how that will be delivered in the regulations. But it is not hypothecated revenue, if that is what the question is.

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

It is more the expenditure that I am looking at. You talk about the ETS being in regulation, but I am asking for anything in the actual legislation which we are about to vote on: is there anything in that legislation that actually prescribes where money is going to be spent from the money that is collected?

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

I have explained that there is, for example—I should have mentioned this—one bill which deals with household assistance. That is one of the bills before the Senate currently. There is another set of bills which deals with the fuel tax expenditure, and that is also before the Senate. For the ESAS—I apologise, I think I called it energy sector, it is the Electricity Sector Adjustment Scheme—there are provisions in the primary legislation. The ET framework is referenced in the legislation and, I think, also in the explanatory memorandum. So, it is not just press releases, this is government policy. We know that business and households want certainty around this framework, and we have sought to provide it.

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

What is the total amount that is actually prescribed to be expended via the legislation, not by regulations or by statements?

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

I am not sure that I could give you a breakdown of which parts of the money were subject to legislation as opposed to delegated legislation—I think that was, essentially, the question? For example, in the explanatory memorandum which was provided in relation to the primary legislation, the government, in fact, put out the fiscal balance table, which indicated how much revenue was being allocated to different aspects of the Australian community: how much was being allocated to emissions-intensive trade-exposed, how much was being allocated to households and how much was being allocated to the Climate Change Action Fund. As I said, there is, in fact a household assistance bill, which is one of the bills currently before the Senate.

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

I just wonder if the minister could point out to the committee what the difference is in GNP out to 2050 between a five per cent, a 10 per cent, a 15 per cent and a 25 per cent cut in emissions?

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

Senator Milne, you might have those figures in your head, but I do not have GNP impacts out to 2050. I will endeavour to see if I can provide those.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The minister explained that the difference between a 25 per cent cut in greenhouse gases over 1990 levels by 2020 and a 40 per cent cut was 0.3 of one per cent of gross national product, or $3.5 billion. I think those are the figures she gave to the committee. They indicate that regardless of which you choose there will be a significant growth continuing in the economy when you get to 2020.

When you look at $3 billion or $3.5 billion in 2020 it is very small indeed, compared to the amount that the government suddenly found it could give to the coalition in reaching a deal yesterday in 2009 dollars to get a political fix, which we are now dealing with. It underscores the importance of Senator Milne’s original question. Having known that the Intergovernmental Panel on Climate Change was recommending that the developed countries have a 40 per cent cut by 2020, that it was a target which would achieve a measure of safety way beyond a 25 per cent reduction and that it would, in particular, raise the chances of protecting the Great Barrier Reef—which under this legislation is enormously endangered—and the Murray-Darling Basin and its food producing potential—the minister herself is talking about a 90 per cent potential reduction in this century in its ability to produce food, and this legislation that she has before the parliament is going to do very little to insure against that drastic outcome and many other damages coming to Australia—the question still is: how on earth, except for saving a political argument based on reality and facts that should be available to this committee, did the government make a decision not to model 40 per cent?

That is what the global scientists were saying who informed the government and it was, as Senator Milne said, part of the Bali deliberations. It was very much publicised at the time. It has always been part of the debate in Australia. If you take the Greens out of the debate, you are left with the leading climate change scientists in Australia, who are always calling for their preference—a 40 per cent reduction by 2020. But the government, deliberately, with forethought and with a great deal of political consideration, not only decided not to model a 40 per cent reduction but to refuse a very clear request from the Greens to have that reasonable and responsible alternative, which would make this country much safer from climate change, modelled. I put it to the committee that the reason for that is the government did not want to face the reality that that modelling would have shown it was a very reasonable and responsible option—economically as well as in every other way.

This government and this minister studiously refused to allow that modelling to occur so that when we were debating this tonight we could not have that alternative debated from a point of public interest let alone Senate common sense. This minister, this Prime Minister and this government deliberately set out to refuse this Senate and this parliament crucial information to be able to evaluate whether the prime call for scientists to make this country safe was within reasonable economic reckoning. It was deliberate and with aforethought. It was a studied effort to stymie the parliament’s and the public’s right to know whether that alternative was a reasonable one. If you just look at the figures that the minister has revealed about the 25 per cent reduction over the five per cent reduction, a simple extrapolation will tell us that the 40 per cent reduction would have allowed the economy to continue to grow and would have made this country much, much safer, and the government did not want the public to know that.

Before it allowed such modelling to take place the government took a decision that for its own political reasons it did not want this hugely important piece of information to be made available to the House of Representatives, the Senate, the parliament, the people of Australia or business in Australia. It is an abrogation of responsibility not done by mischance, mistake or oversight but a deliberate and studied abrogation of the right of the parliament to be informed. The government made a decision based on its own selfish politics against the wider interests of the Australian people and their right to be informed. Let that be on the record, because it was a disgraceful decision made by the Rudd government not to have an enlightened debate on the alternatives which the best scientific minds in this country said we should be debating here tonight. I cannot go further to express the absolute disgust that should be expressed about that behaviour from the minister, the Prime Minister and the government in cheating this assembly and the people of Australia of their right to have a full and informed debate on a scientifically based option which we should have adequately and equally debated before this chamber tonight.

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

I think the one thing I do agree with Senator Brown on in that contribution is that it is possible to grow the economy and reduce emissions. We do believe that as a government. We also believe that if you set targets you should ensure you achieve them and that means taking action and introducing a scheme that delivers that. We also believe that we have a responsibility as the national government to manage the transition. I do not think the proposition that you can ignore the impact of a higher carbon price on different sectors of the economy or disregard it is a sound one. The reality is a higher carbon price will fall very differently depending on the industries involved. Obviously over time what you do want to do is encourage the economy as a whole to move to a much more low polluting economy; you want to encourage the development of clean energy jobs; you want to encourage much more energy efficient processes and new industries. I think the question here is how you achieve that and how you manage the transition. We do think there is a significant economic difference, particularly on a sectoral basis, between, for example, a starting carbon price of $50, $60 or $70 and a starting carbon price which is lower. I think that is self-evident, and the question is: how do you best manage that transition?

On the senator’s figures, when I said approximately 3.5 billion—and that was some mental arithmetic being done by some of my departmental officials here—that was in 2009 terms for each year, not one off. I just make the point that out to 2050 it is obviously a much bigger number. The GNP differences in the different scenarios modelled are set out on page 149 of the Treasury modelling. They range between minus 5.1 at 2050 to minus 6.7. We agree you can grow your economy. You can continue to grow jobs and reduce emissions. The government absolutely believes that. That is why we reject some of the scaremongering in this debate and we believe that as the nations of the world increasingly move towards those low carbon goods and services the world will increasingly move towards a global carbon constraint. We do want Australia to be able to compete in that world. In addition, we also know the costs of climate change to this nation. That is why we are doing what we are doing.

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

What were the main factors that brought about the downward assessment on the price that Garnaut expected permits to kick off at? I do not know what that price was—$56 or something in that range. Now we are at $26 in the modelling.

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

The modelling that I was referring to was Garnaut’s minus 25. The modelling for MYEFO assumes minus five for the purposes of budgeting. Obviously, if Australia goes for a more significant reduction at 2020 then those parameters will change. Again I emphasise that the government will adjust household assistance to continue to meet the commitment we made that 120 per cent of low-income households’ overall costs will be met.

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

What is the differentiation in involvement in international trading between those two figures?

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

Both scenarios assume international trade. My recollection is the Garnaut modelling assumed a much deeper and more liquid international carbon market because it was predicated on an assumption of greater action. I do not want to speak for Professor Garnaut—my recollection might be hazy—but his report looked at different scenarios. The 25 per cent scenario was in the context of an ambitious global agreement where other developed economies were doing more and developing economies were taking action consistent with an environmental objective of atmospheric stabilisation around 450 ppm.

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

So the Garnaut model is predicated on, as you state, deeper action and, therefore, a more advanced permit system. The MYEFO is now predicated on less action and that has an effect on the price. Therefore, the deepness of action, to use a clumsy phrase, correlates to price. Yet we do not seem to be able to get to a clear and decisive statement about what extent of action the current price is actually predicated on. You have now clearly elucidated for the chamber that variations in action produce variations in prices. The range of actions that were predicated in 2008 are obviously different to where the world is now. What is the state of action that we are now at? Is it in line with what was predicated in 2008?

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

I am advised—and this is how I should have answered your question, with hindsight—that the five per cent modelling and costings assume what we call a 550 ppm scenario. The Garnaut 25 per cent assumed a 450 ppm scenario. Obviously one is a greater level of reduction than the other and has a consequently higher carbon price. The greater the level of reduction, the higher you would anticipate the carbon price to be.

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

We know that parts per million of carbon dioxide are going to be neither predicated nor affected by what happens in Australia—that is without a shadow of a doubt—or at least the minutia that it would be affected by is so minute it is ridiculous. So are you now saying the MYEFO is predicated on 450 parts per million?

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

I am advised the wording is consistent with 550 ppm.

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

We are getting somewhere here. What form of reduction in the United States of America would the 550 parts per million be predicated on?

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

We are really traversing old ground.

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

I want to get an answer.

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

Senator, you are asking a one plus one question when the answer is much more complex than that. You seem to be suggesting, if I have understood you—and I may not have understood you, because I am finding it a little difficult to follow the argument—that somehow the government’s figures are all wrong because we assume that the US will have a cap and trade scheme by 2011 on the dot. That is not how the modelling works. You are talking about action over decades. That is what it will take to start to reduce the growth in global emissions—to get them to peak and then decline—and that is what it will take to stabilise the atmosphere. We did not assume a specific outcome for Copenhagen. We did not assume particular action by the US. This is all in the documents which were released last year. For the purposes of that modelling, we did assume action by developed nations over a period of time. We did assume action over different periods by developing nations consistent with their emissions growing and then declining over time. I do not know how much more I can assist you, because you want a simple answer, a yes-no answer, to a question where there is none.

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

With all due respect, Minister, it appears there is no answer at all. The premise of one plus one is perfectly right. One plus one gives an answer. It is two. What we seem to have is a question of, ‘What is one plus one?’ and the answer we are getting is, ‘An apple, a pear and Tuesday morning at sunrise.’ It is really quite simple: are we on track? The modelling has to be based on something. It cannot be so nebulous as to not be able to be defined in any way, shape or form, because the whole thing is premised on an aspiration of collecting $70.2 billion in the next six years. That is a pretty precise figure. I am asking a very simple question: is the consistency of your expectations of global action in line with where the modelling was in 2008 or not?

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

The modelling looked out to 2050 from memory. You are asking me a question about whether in the last 12 months things have happened such that I might change my view on the accuracy of advice to government on a modelling task which went out for 40 years. That is why this is not a one plus one question.

In relation to what lies behind your proposition about whether or not others have acted, it might assist you to know what has been put on the table. Senator Milne referenced the European Union targets of minus 20 to minus 30. They are coming off a lower level, which I am sure you would know, Senator Milne. I think their Kyoto target was 92 per cent off 1990 so obviously their reduction in percentage point terms from where they are is reasonably comparable to that proposed by Australia—but I digress. The European Union target is minus 20 to minus 30 on 1990 levels; they have an established ETS. Japan has announced a target of minus 25 per cent on 1990 levels and has planned an ETS and a renewable feed-in tariff.

Mexico has committed to reduce emissions by 50 million tonnes annually until 2012 against business as usual and by 50 per cent below 2002 levels by 2050. That was announced in June 2009 by President Calderon. The Russian Federation has officially announced a reduction of minus 10 to minus 15 on 1990 levels. The Republic of Korea on 17 November announced its intention to reduce emissions to 30 per cent below business as usual by 2020. The draft legislation in the United States proposes a very significant reduction of up to 30 per cent on 2005 levels, so it is a different baseline, and they are legislating for a suite of policy measures including an ETS. Brazil’s President Lula announced on 14 November 2009 that they would reduce emissions by between 36.1 and 38.9 per cent relative to business as usual by 2020. The majority of that target is a reduction in the rate of deforestation.

China has announced that it will increase its share of non-fossil fuel energy consumption to 15 per cent by 2020. It will increase forest coverage by 40 million hectares, forest stock volume by 1.3 billion cubic metres by 2020 and it has indicated it will announce a reduction in carbon dioxide emissions per unit of GDP by what is described as a ‘notable margin’. So we look forward to that announcement. India has a national energy efficiency plan, which includes a cap-and-trade market, to save about five per cent of India’s annual energy consumption by 2015 and reduce annual carbon dioxide emissions by 100 million tonnes. India also has a solar target of 20,000 megawatts by 2020.

President Yudhoyono of Indonesia has announced a BAU, business-as-usual, reduction target of 26 per cent below BAU by 2020 and is willing to increase that to 41 per cent with overseas support. We are of course working quite closely with Indonesia on reduction in emissions from deforestation. South Africa announced a peaking year last year where it indicated it would work to peaking by 2020 to 2025 at the latest, stabilising for up to a decade and then declining. I put those on the record, Senator Joyce, because behind your question appears to be a suggestion that no-one else is acting and they are and so should we.

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

I think they are acting very well. Their acting is almost Shakespearean to some extent. The issue is that their acting and our legislation are two different things. I look forward with foreboding to your monitoring of how India and China actually go with their commitments. It will be something to watch someone tearing around about Hubei province or the Punjab to see how they are going with their carbon emissions. It is also going to be fascinating to see what we tell the United States when their depth of action, as you put it, is not quite what we expect when the Waxman-Markey bill finally finds its way, even if it does, out of the United States Senate. As far as the President of Brazil, I wish you all the best. These are all noble gestures. I note also with a sense of irony or paradox that I think if we did a correlation for all those nations that you just mentioned between the position taken by those nations at Kyoto and where they are now, it is going to be a rather depressing outcome for our nation.

To move on to another issue, with the amendment to exempt agriculture, is there anything exempted in that, Minister, that was not already not in place because your transition period was going to be 12 to 15 months? Is there anything in that exemption that would otherwise have been in place in 2011?

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

Senator, as you know, we had a policy which did not include agriculture in this bill but we would consider it for inclusion in 2015 with that decision to be made in 2013. We have agreed with the opposition’s demand that agriculture be excluded indefinitely, so our previous policy position, which you have been, I think, quite critical of, is no longer the government’s policy position.

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

Confirming this, what you are saying is the much lauded exemption of agriculture is really nothing more than what was, at inception, the status quo?

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

I just wanted to check. My recollection is and I think my advice is that there is in fact an amendment to ensure beyond doubt that agriculture is excluded consistent with the agreement with the opposition.

Senator Nash, I have been provided with some advice on fuel credits. I am advised that we are proposing to use an existing arrangement which is the arrangement in relation to fuel tax credits. Agricultural producers will simply claim CPRS credits on their BAS. The agricultural sector will receive CPRS fuel credits to offset the impact of the scheme on agriculture’s fuel costs in the first three years of the scheme as I have advised. We will utilise CPRS fuel credits because agricultural users do not directly benefit from the cent-for-cent excise reduction which is applied for other fuel users.

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

At what rate will that happen?

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

I am advised that that will be set in advance closer to the commencement of the scheme, when we have clarity around the cost impact and therefore the excise reduction which is required.

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

Okay. In very simple terms, will that be a percentage of the impact? What will be the criteria around which that is determined?

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

It will be calculated on the cents-per-litre impact of the carbon price.

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

So it will be the cents-per-litre impact. But what percentage of that impact will the government determine is an appropriate level of assistance?

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

The commitment is to fully offset, so the assumption will be made. I think we said this would be put in place twice a year. Prior to the first in a year, you would make an assumption about the cost impact. The commitment is to fully offset.

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

To be absolutely clear, it is fully offset for the three years and after that the review will take place. All right, thanks. Minister, thank you very much for supplying those figures from ABARE around the percentages for the input costs—although I think ABARE was the same organisation that predicted the price of a barrel of oil some time ago. I think you said that is a percentage of on-farm input costs. What inputs were taken into account in determining those figures?

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

Perhaps I was not clear. What I was reading was the electricity impact. You asked me about the electricity price increase. There were also electricity, freight and fuel. I did not read those out because I was asked about electricity. I do not know if it is easier if I simply get someone to copy this and provide it to you, Senator. Would you prefer that I do that?

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

No, Minister, you are doing an excellent job. I may have heard incorrectly, but when you read those figures I understood that you said they were input costs, and that is fine. But what you are saying is that the percentage figures you gave to me before relate only to electricity—is that correct?

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

That is right. I did not read the part of the table which dealt with electricity, freight and fuel. Would you like me to read that?

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

Minister, I thought you just said they did relate to electricity and only to electricity.

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

There are a number of figures and columns here, and they are described as input costs. I read the column dealing with electricity. There is also a column which deals with the cumulative cost of electricity, freight and fuel, and I am offering to read that table out if you would like me to.

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

Marvellous. That would be very helpful.

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

Again, this is electricity, freight and fuel, but I emphasise that these are assumed 2015 costs, not 2011 costs. I gave you 2011 figures for agriculture. In percentage terms it was: broadacre industries, one per cent; wheat and other crops, 1.3 per cent; mixed livestock-crops, 1.2 per cent; sheep, one per cent; beef, 0.8 per cent; and dairy, one per cent. I should emphasise—I will check this, but this is my recollection—that this assumes no change.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

To what?

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

No change in how any aspect of those industries may respond—for example, by changing practices or implementing more efficient processing. So this assumes no change in behaviour.

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

That is on the assumption, I would assume, that that change in behaviour might reduce some of those other costs. Is that what the intimation is?

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

I am just trying to explain the figures.

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

Thanks, Minister. I wonder if you could indicate for the committee whether inputs such as chemicals, fertiliser, cement and packaging have been considered at all in determining what the input cost changes are going to be as a result of the ETS.

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

I think you said ‘cement’ at the outset, didn’t you? I just make the point that cement has been given assistance under the government’s scheme as an emissions-intensive trade-exposed activity on the basis that the industry do not believe they can pass on the price.

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

I want to go back to when we were talking about the decision that the government made not to model beyond 25 per cent. I just want to know when you made that decision, because my recollection is that the government had just been elected at the end of 2007 and that the Bali road map was in December 2007. Developed countries were clearly being asked to reduce their emissions by between 25 and 40 per cent in December 2007. When did the government make the decision not to model beyond 25 per cent? Can we clarify what you said about Professor Garnaut’s role in your decision not to model beyond 25? Are you suggesting that it was his idea not to do that or that the government made the decision that it would not be done, whether by him, Treasury or whoever?

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

I do not think that, in relation to Professor Garnaut, that was what I said. I made the point that Professor Garnaut modelled, chose and put a view about 25 per cent. This is going back to last year now, but my recollection is that he did that by working back from the 450 ppm to considering what was an appropriate share for Australia as at 2020. There were decisions made about what should be modelled over a period of time. There was certainly a discussion about assumptions. There was consultation. My recollection is that it was Treasury which in fact conducted the modelling.

We are just trying to recall when various decisions were made in relation to Professor Garnaut’s decision, Senator. I am sorry, I might have to take on notice the sequence of that. This was last year sometime. Certainly Professor Garnaut looked at the 450 ppm and worked out the 25 per cent. The government made a decision to model five and 15 per cent in addition to that. I think Professor Garnaut might have modelled 10 per cent as well. So it was a five, 10, 15 and 25 per cent modelling which was undertaken. I understand the Green’s position in relation to 40 per cent. I think I have indicated to you the government’s view about a 40 per cent reduction by 2020. I again say I think what we have to look at is not just one milestone but the turning around of the trajectory. Without action on climate change this country’s emissions will go to 120 per cent of our emissions at 2000. So a 15 or a 25 per cent reduction is a very significant reduction of what we would otherwise be doing. That is why the government would like this legislation passed.

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

Thank you. Actually, it is interesting, because all the government has said is that the government made a decision that it would not go beyond 25 per cent. I am asking: when did the government make that decision? I would really like to know when that was the case. I would also like to know, if you did not model beyond 25, on what basis you made the decision to not model beyond 25. In the absence of any information, why was 25 it? Was it because you were not looking at the impact on GNP out to 2050 and so on but rather, from what you were saying before, the sectoral impact of various carbon prices, and that you made a political decision about what some of those sectors could bear as far as what the Labor Party could bear in terms of the politics? I really would like to know when. The rest of the world deserves to know why Australia would not model the Bali road map range. I want to know when that decision was made and why it was made.

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

I made the point that this was probably one of the largest modelling exercises anywhere in the world in terms of other countries deserving or not deserving to know. Senator Milne, I understand you have a different policy position; I respect that. I do have to put on record my objection, every time there is a difference of policy position that the government takes, that you impute it is because of some base political motive. It seems to escape the Greens that fair-minded people might come to a different view because they come to a different view. It is not because we have been corrupted. It is not because we have been got to. It is not because we somehow do not care about the environment. We just have a different view about what the best way forward is. There is no great conspiracy associated with it. We simply do not have the same view as you about what the appropriate policy is. We do not have to personalise this. I just disagree with the policy proposition you are putting. I again say my recollection—and I would like to hedge this because we are talking about things which occurred last year—is that in fact Professor Garnaut looked at what an ambitious global agreement would look like and then considered what Australia’s reasonable share of that would be, and that was the 25 per cent that he included in his report to the government. Then the government did choose to model a range of scenarios other than 25 per cent.

In relation to the comments about the carbon price, I put those on the record, as you know, Senator, in response to your earlier proposition—and I might be paraphrasing here—that there was virtually no difference in economic cost. I was making a policy point that the difference in GNP is there, but that is not the only issue that you need to look at when you consider the policy implications of different carbon prices. That was the only point I was making.

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

Thank you for your response, Minister, but the point is that it is not a judgment about whether people come down on different sides of a policy question; there has to be a basis for coming down on a different side of a policy question. That is why I am asking the question: how did you choose 25 if you did not know what 40 was going to cost? That is the point that I am making. I am just trying to understand. As I said earlier, given that with five, 10, 15 and 25 there was not very much difference in the GNP out to 2050, what I tried to understand and what the Greens wanted to know was whether there was a point between 25 and 40 per cent in which there was a major step change, in which case you could clearly see that at that point there would be a significant difference in the GNP ramifications over time and you could logically say that was the point at which we could not manage it et cetera. But we do not have anything. All we have got is that the government made a decision not to model it. In the context of the 25 to 40 per cent Bali road map, it is actually an insult to the rest of the world that we did not model the road map. That is what we came home from Bali with. That was the ask from the developed countries—to make that cut, 25 to 40, and I simply do not understand when the government made the decision to just jettison what the world had asked for in Bali and not model it so that you would not know. It is not that you chose a different figure; it is that there is no basis on which to have chosen it.

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

Senator, I do not think it is correct to say the world asked for 40 per cent. The Bali road map referenced the 25 to 40 per cent as one scenario and called on developed countries to put forward mitigation targets and called on developing countries to take, I think, measurable, reportable and verifiable actions. So I think your construction of the international context is perhaps a little skewed, if I could suggest that.

We have a view that 450 or lower is in Australia’s interest. That is what we have outlined as one of the conditions of our 25 per cent target and I think is in the legislation from memory. I know the Greens seek 350. The world has already passed 350 ppm. We think 450 or lower is in Australia’s national interest because it gives us a 50 per cent chance of stabilising the increase in warming to two degrees. We know that that is a more reasonable proposition than six or seven degrees. I think there is a policy issue here. It is about how you transition an economy. That is the fundamental difference in views between the government and the Greens. We take the view that a 25 per cent reduction, which is the top end of the government’s target, is ambitious and credible. It is more off our Kyoto target, which is an important indicator, than many if not most other developed country targets. We also take the view that you do not achieve a target by talking about it; you achieve it by getting on with the action that is needed to reduce emissions. That is why we want passage of the legislation.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

There is not much more to be gotten out of this except to sum it up. The minister came back from Bali, with, as she says, one of the scenarios being 25 to 40 per cent—but, noticeably, that is the one that the Intergovernmental Panel on Climate Change, including top Australian scientists, wanted to see brought into action—and decided to model from 25 per cent down, not up. The decision was made by government not to model the 40 per cent option. In other words, it decided to dismiss a vital option before it had the information about it. It is pretty vital because the minister herself in her presentation said that the 25 per cent would give a 50 per cent chance that the world would go on beyond two degrees of warming, with all the catastrophic consequences of that. She and this government are prepared to take that risk on behalf of the future generations who are going to have to put up with the options. It is playing dice on a huge scale in studied ignorance.

If the government had modelled 40 per cent and decided it was too expensive, that is one thing, but it made a decision beforehand, and one of the reasons it made that decision was that it did not want to upset the huge lobby from the polluters, and it inherently knew that. The minister smiles at that, but she has given no explanation for not modelling 40 per cent, except to say the government did not do it. You would expect in a contribution like this she would give reasons for it, but there are none. It is appalling procedure to dismiss such an important scientifically based, safer option for this country and the planet through the expedience of not looking at it, not studying it. It is a dereliction of duty.

There is not much more to be said about it. The minister can say, ‘That is a Greens option,’ and it certainly is, but more importantly than that it was a Bali option, it was and remains a global scientists option and it was a safe option. That is the important thing about it. It is a very much safer option, according to the minister’s own judgment—and that judgment is based on what the intergovernmental panel itself is saying. To settle for a 50 per cent chance that we would trip into catastrophic climate change and not model an option which would have made us much safer was a complete dereliction of duty. It was a political decision by the government overriding its obligation to look at what was a safer option for this nation.

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

Senator Joyce has left the room, but I thought I might refer him to (xi) of Australia’s low pollution future: The economics of climate change mitigation which sets out, perhaps in clearer terms, the assumptions about the rest of the world. There are two scenarios—and I will not bore the chamber by reading them out. The Garnaut minus 10 and minus 25 assumed one set of scenarios in relation to the international action, CPRS minus five and CPRS minus 15. Various assumptions were made about different groups of economies: for example, international emissions trading gradually expanding, developed economies participating from 2010, developing countries joining over time and global participation by 2025. That is an indication of some broad explanation of the assumptions that Senator Joyce was asking about.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Minister, I want to take you back to the cost of electricity and ask you to explain some things to me. I believe that where a household earns less than $60,000 a year—I imagine that is a gross wage or is it a net wage?—it will receive a 120 per cent rebate on its electricity account. Could you explain the brackets—I believe the first is from zero to $60,000—and whether that is gross wage or net wage? Those electricity users get a 120 per cent rebate. I think the bracket above that is $60,000 to $100,000 and they get a 50 per cent rebate on their electricity bills. I want you to clarify for the chamber how a household income is defined. When we look at a household’s income, and take a typical example of a mum, a dad and perhaps their eldest son working, are those three incomes part of the household income or is it just the parents’ income? Another example might be a family with three children: mum is a part-time worker, dad is working, the eldest son might be an apprentice mechanic and the other two younger children might still be at school. Do you take the gross of the total household income to determine those brackets for the changes in rebates? And is it gross income or net income?

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

First, it is not a rebate. We deliver assistance through the tax and welfare system. It is very important to note that. We deliver through the tax and welfare system through various means. Whether it is low-income tax offset or family tax benefit or other allowances, that is how the assistance will be delivered. That is how it is delivered in the bills before the chamber. Because of that, we utilise the existing definitions of low and middle income which already exist in the social security system. For example, a low-income single person is defined as somebody earning $30,000 or less, which is linked with the minimum wage, whilst the top end of middle income for a couple with children is defined in the advice to me, and I hope this is correct, as $160,000. That is related to the particular threshold in relation to family tax benefit B. So there are a range of different definitions of what would be low and middle income—as there are currently in the social security system, as I am sure the senator would know.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

How does household income affect what benefits are returned to the consumer by government payment or tax deduction? Is that what you are saying comes under the family allowances? Just going on what I had explained to me yesterday by Mr Macfarlane, he was saying that household income would determine those levels of changes. The question I ask is: is it a total of everyone in that household working—for example, if the parents are working and one of the children is working? Is that how it works?

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

As I said, we are using criteria eligibility and thresholds that already exist in the tax and welfare system. As you know, the eligibility for family tax benefit B is an issue of income and the number of children, and we are utilising existing markers in the social security system to determine what assistance is provided and how. In terms of how we assume it, Treasury models various cameos—various types of households—and looks at what the average overall cost increase would be for a particular household type, and that assumption is used to calculate how much additional assistance should be delivered through the tax and welfare system. I understand those are available on the Department of Climate Change website.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

On another totally different issue, I believe under the Kyoto agreement that carbon in the soil, and soil sequestration of carbon, are not included. Is the government going to take an argument to the gathering in Copenhagen next month that the storing of carbon in the soil should be acknowledged? Does the government have the goal of realising that carbon can be stored in the soil and that it can be increased? I know it is very good for the soil and I have seen a lot of improved farmland as a result of it. Is your government going to take that argument to Copenhagen so that the conference actually realises soil carbon?

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

As you know, there are international accounting rules for carbon. This is a good thing because in the international community we want everyone to play their part and do their fair share. To know what is fair we need to be able to measure it. Accounting rules provide ways and methodologies for measurement of what a tonne of carbon is and therefore what has to occur in order for it to be regarded as being sequestered.

Through the negotiations, Australia has advocated for what we regard as more sensible accounting rules. There are some anomalies, and one, which I think you would be aware of, is where there is difficulty in differentiating between the emissions from natural disturbances such as bushfires and emissions from human activity. This is important because a country should not have to account for emissions from disturbances like a bushfire but should be able to account for land management activities that are properly measurable. There are certainly potential benefits in soil carbon and a whole range of other sequestration opportunities. The issue is: can we measure that properly? Can we ensure that we have consistent measurement of that? Australia is absolutely advocating for a better set of rules that reflect our national circumstances, and this includes a more comprehensive and fairer way to look at land sector management.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

My final question at this stage, Minister, refers to those bushfires and the emissions that you are saying are excluded from human behaviour. Bushfires in the country have around 50 tonnes per hectare of fuel levels on the ground, and, if we look at bushfires such as those of Black Saturday in Victoria this year, I believe 450,000 hectares burnt. That was some 90 million tonnes of carbon dioxide in the atmosphere. Around 200 tonnes per hectare is what the scientists believe is a result of bushfires. You mentioned land management. Surely it would be in the interests of everyone to actually manage that land properly, especially national parks, and to take actions to reduce the fuel levels in preparation for the prevention of severe bushfires?

I come back to the point that so much of Australia is now locked up in national parks but is not managed. We are now seeing the threat that people in the New South Wales national parks service—some 200 people—will be put out of work. Surely a serious argument to reduce carbon dioxide emissions around Australia would include those bushfires and looking to take appropriate action to reduce fuel levels. In much of our country—hundreds of thousands of hectares—there is simply a fire bomb waiting to happen because a lot of that land is locked up and left. Hence we face huge amounts of carbon dioxide being put into the atmosphere. Surely this must be a priority for your government.

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

I think that is very similar to a question you asked me in question time on either Monday or Tuesday this week. I know that this is an area of particular concern to you but, as I indicated to you then, the management of national parks is not a federal government responsibility; it is a state government responsibility. In relation to agricultural soils and biosequestration through soil carbon and biochar I would just make the point that, in the absence of those things being included and being capable of being included in the international rules, what we have committed to the opposition is to promote these through the voluntary market. We will implement a national carbon offset standard to provide a market for abatement from sources that are not counted currently under the international rules. They include: agricultural soils; grazing and cropland management, including biosequestration through soil carbon and biochar; and a range of other things which are contained in the offer document, which I think you would have seen.

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

I know Senator Xenophon is keen to ask some questions but I have a question that relates directly to what the minister has just said. Does the government envisage that the credits created in the proposed voluntary market are going to be of equivalent value to those created in the Kyoto compliant CPRS market?

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

Obviously it is a question of what the voluntary market is willing to pay for it. But, as a matter of logic, you would not anticipate that it would be the same. The benefit of it, I think, is that it does provide a ‘learning through doing’ opportunity. So if we have a range of land management practices and agricultural practices that do have environmental benefits in terms of sequestration and that are not yet ready to be counted because the research and methodology and measurement associated with those is not at a point where it should be then it is a sensible thing to try and develop methodology that enables those to be in the voluntary market so that, through doing that, it makes it easier to make the transition to the internationally agreed framework when that recognises these activities.

So I suppose it is a staged process whereby if we can demonstrate that this works well as a voluntary measure and there are sound methodologies then I think that will be good evidence internationally for Australia to continue to advocate for what we regard as more comprehensive and more sensible international accounting rules. But to do that we have to show that this can be done robustly and sensibly, that it can be measured and that people can have confidence that a tonne of carbon sequestered through these activities is in fact a tonne of carbon sequestered.

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

I would like to go back to the point raised earlier in relation to the 350 parts per million figure. I think the minister acknowledged there are some countries saying, in terms of the science, that that would be a more desirable target than 450 parts per million in terms of managing the risks inherent in climate change and temperature rises. My question is: in relation to the construct of these particular bills, is the government constrained if the evidence provided down the track indicates that we need to go to 350 parts per million rather than the current target?

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

I think it is important to remember that the time at which stabilisation will be likely to occur will be well after all of us have gone—we are talking about next century, because there is already so much stock in the atmosphere. So I think that, with respect, this is a bit of a false debate—that might be too strong a way of putting it—or perhaps a misleading debate when we talk about targets whilst we are not acting and Australia’s emissions continue to rise. We know that every year we delay we emit more and we lock in more growth in our emissions. That is the policy reality. To get to 350 parts per million you have to go through 450 parts per million first. Let us be clear: to get to 450 parts per million is an enormous challenge for the world. It will require international action and cooperation on a level that probably humanity has not really achieved to date because it will require everybody to be part of it and it will require us fundamentally to change our economies.

Clearly the scheme does allow us to continue to reduce emissions. Under the provisions of cap setting and gateways we set caps for five years and up to 10 years ahead we will set a range of data—that is, what we call a gateway. We will continue to set caps. Obviously over time if we as an economy and as a nation do far better—and I hope we do; I hope we are much more energy-efficient and much quicker at adapting and changing—then we will have the capacity to go further. But it will take some time.

I think it is wrong to think about us locking in a particular outcome for 2020 or 2025. Those targets will be set after Copenhagen, and we have laid out in the white paper the process by which that will occur. I cannot speak for future governments but I can say that this government, in setting its targets, will consider action around the rest of the world and a whole range of environmental and economic factors.

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

An earlier line of questioning from Senator Milne was about modelling higher figures—I think Senator Milne was referring to a 40 per cent target. Can the minister advise whether there was any consideration given to at least looking at the additional costs of modelling a higher figure? Was that considered in the extensive modelling exercise of the government? For instance, was it largely a linear exercise? Was any consideration given at least to what the costs would be of undertaking that further modelling?

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

I just make the point—Senator Xenophon and I have talked about a lot of modelling—that this should not be just a battle of the modellers. There have been an enormous number of different modelling reports commissioned by industry, by Senator Xenophon and by the government through Treasury. They are important but they are not determinative in the sense that government still has to make a decision about what it thinks the right policy outcome is.

At the front of the Treasury modelling which was released last year, it is clear the way this was approached by Treasury and Professor Garnaut was to look at where you want to get to—that is, to 450 or 550 parts per million; I think we also looked at 510 parts per million, from memory, which was the CPRS minus 15—and then to work back and ask what a reasonable share is for Australia at 2020. I again emphasise that there is a political debate here about whether the target should be 15, 25 or 40. I have made the point that we have to get to 40. We are actually having an argument about whether that should be on the table now, through this legislation, for 2020—Senator Milne says yes—or is that something that Australia would achieve some years later, perhaps around the middle of the next decade. So some time around 2025 you would assume, if we have a linear reduction, you would get to that level of reduction, if you achieve 25 per cent at 2020.

This is not about a milestone; it is about a path downwards. The question is what is the judgment about the appropriate path for the nation, bearing in mind that this is not an easy adjustment. I wish it were. I wish that we had a no-emissions source of energy for baseload tomorrow, but we do not. I wish we were able to work out how we could quickly transition so many emissions intensive industries to being much more efficient. I wish we could simply develop clean energy, low pollution industries quickly, but these things are inherently an economic transition. This is fundamentally a discussion about how we best make the economic transition, because it is the economic transition which will deliver the result for the climate.

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

These questions are along a slightly different path and relate to the issue that was raised earlier by Senator Williams on the issue of household assistance. What analysis or modelling has been done on the additional assistance provided by the government to households for the anticipated increase in electricity prices, the 120 per cent compensation that has been referred to? What impact will that have on abatement within households? And, in this context, did the government consider a white certificate type scheme or approach being used to maximise that reduction in abatement? The concern that has been expressed to me is that, if households are simply getting extra compensation that is not tied in with abatement activities or white certificates, people can go and buy a plasma TV or other energy-guzzling appliances and that you will not maximise the benefit in abatement.

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

I am not an economist, but I think the first proposition that is important to recognise is that we are delivering assistance, as I answered to Senator Williams, through the tax and welfare system. The relative price signal will still be there. In other words, people will still face an increase in their energy costs of the amounts I have spoken about. We will offset that for a significant number of Australian families through the tax and welfare system, but the relative price will change. I know white certificates have been discussed, but the most recent consideration by the International Energy Agency in fact suggests that white certificates may not be the most effective way of achieving energy efficiency measures. Obviously, there is more work to be done on energy efficiency. The government has made some steps on energy efficiency through Minister Garrett’s portfolio and the COAG agreement, but there is no doubt that is one of the, I think you would call it, complimentary policy areas that we will need to continue to work on in the years to come, because that is a source of abatement and reduction in emissions, and it is obviously lower cost.

The introduction of a carbon price to include some of the costs of climate change into our economy is an important way of starting to give that signal. Right now, as you know, we do pay the costs of climate change—they are just not visible in the same way. They are not visible in terms of the prices that businesses face. The costs and the economic decisions and investment decisions a business makes do not have the costs of climate change visible. We think it is important to have that, because that is how you actually start to change how your economy operates.

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

I want to follow up a few things with the minister and I would like to go back to bushfires. Up until now, as I understand it, one of the reasons why we have opted not to include our land-use sector is that the emissions from our bushfires would be quite significant. You said that Australia is working to have bushfires excluded from our accounts. I would like to know, since the majority of bushfires in Australia are deliberately lit, whether the emissions from bushfires generated by human activity count. Secondly, in relation to land clearing, if you succeed and Australia does not have to account for the emissions from bushfires, does it mean that a person can light a bushfire to clear land in order not to pay a carbon penalty?

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

I think I used bushfires as an example. I was making reference to the way in which the international accounting rules do not differentiate between human disturbance and natural disturbance. I think not just Australia but a number of countries have said that that is problematic in terms of trying to encourage what Senator Williams talked about, for example—abatement activity in the land management sector or the agricultural sector, subject to appropriate methodologies and measurements being developed. That is the point I was making, and I may not have expressed it clearly.

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

Yes, I know that is the point you were making, but I also understand that at the international negotiations Australia is pushing to have fires, as natural disturbances—bushfires, if you like—excluded from having to be counted in Australia’s accounts. I would like to know if that is Australia’s position in the negotiations, and I am asking this second question: how do you determine whether a bushfire is a natural disturbance—that is, caused by a lightning strike—as opposed to most of our bushfires, which are deliberately lit? What are you pushing for in the negotiations in relation to that issue? That is an important one. The second thing is: if you succeed in having the emissions from bushfires taken out, wouldn’t that mean that Australia would automatically get a substantial reduction in its emissions from actually doing nothing?

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

The reason I am having difficulty is that we seem to perhaps have a factual difference. My recollection is Australia has not elected under the Kyoto rules to include—

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

That’s right.

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

So when you say we are pushing at the international negotiations to not have it included, I do not quite understand the position. I think the position is as I have articulated, which is that Australia—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Senator Bob Brown interjecting—

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

I am sorry, Senator Brown?

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You’ve elected to exclude it.

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

I am sorry—I am really not clear, Senator Milne, about the question you are asking. Can I also say I do not have my international negotiators here to advise me in relation to your question about what Australia is pushing for at X negotiations. I do not have those officials here, but I think the position is as I articulated—about Australia, amongst a number of other countries, suggesting that the current accounting rules do include both natural disturbance and active, human disturbance, and that does not necessarily lead to the best outcomes.

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

That is precisely what I am saying—that currently that is the case. That is why Australia has opted for the position we have. But I understand that Australia, in the current negotiating process, is trying to change the accounting rules to have natural disturbance excluded from the way that emissions are accounted for in the future. If natural disturbance were excluded then the accounting rules would be changed, if that is what was agreed, and then Australia would opt in. That would mean that bushfires in Australia would not be counted in Australia’s inventory, which means we would automatically get a substantial reduction in our emissions from not actually doing anything. The question I am asking is this: if you want to exclude natural disturbance, as in bushfires, and since most bushfires are deliberately lit, are you pushing in the negotiations to have bushfires taken out and how are you going to account for the different emissions—the emissions from a fire that is deliberately lit, which is not a natural disturbance, and a fire caused by a lightning strike, which is a natural disturbance?

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

This is a factual difficulty I am having. I do not believe—other than in managed forests, where they may be counted—that bushfire on agricultural land, for example, is counted. It is not currently counted in our inventory. That is the premise I disagree with. I think that is the advice. As I said, I do not have—

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

Yes, I know that. Are you pushing for the change in the accounting rules?

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

You are suggesting, Senator, we are pushing for a change to exclude something that is not included in our current inventory.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The minister said that forest management for fires is included but may not be included. The question Senator Milne is asking is: as far as forest management is concerned—leave aside agriculture—is Australia moving to exclude bushfires which involve forests from future inventory?

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

My understanding is we are negotiating for broad coverage with appropriate accounting rules in this area. If you want further detail on that—this is a highly technical area that is not covered for us in the legislation—I am happy to provide that advice but I would have to take it on notice.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I thank the minister for taking it on notice. It is highly technical, but it is information that is being sought in the committee system and which cannot be dismissed because it is highly technical. I would like to ask, in the same arena, about the provisions that have come out of the agreement of the last couple of days. What changes have been made relating to the forest sector?

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

Can you explain what you mean by the ‘forest sector’? Are you talking about land management or other policy mechanisms?

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We are talking about land management, including native forests and plantation forests.

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

The offsets aspect of the proposal indicates:

The Government will introduce amendments to provide for crediting of abatement from agricultural emissions and other sectors not covered by the CPRS … that are counted towards Australia’s international climate change obligations …

This is subject to the development of robust methodologies. In that section there is a reference to ‘avoided deforestation’. Second, in the voluntary market offsets section there is reference to the voluntary market opportunities in relation to enhanced forest management. In addition, the government has said it will:

• provide credits for regrowth forests on deforested land (legally cleared between 1990 and 31 December 2008);
• provide credits for soil carbon on deforested land (for land legally cleared between 1990 and 31 December 2008) from 2013;
• include conditions for forests earning forest credits to have adequate water entitlements and planning approvals; and
• require that offset projects do not involve, or include material obtained as a result of, clearing or harvesting of native forests.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Thank you. I will come back to this when the relevant amendments come up, so it may be that the minister will have more detailed information then, but when it comes to credits for regrowth on legally cleared land between 1990 and 2008 I ask what the definition of regrowth is and if the minister could say what the difference is between this and the pre-existing situation—in which, presumably, there was no crediting for whatever happened on legally cleared land between 1990 and 2008.

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

It is the case that these are new arrangements.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Can the minister explain in what way they are different from the pre-existing arrangements?

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

What I read out were the changes that have been negotiated that were not contained in the previous scheme.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Could the minister give an indication of the cost of the new arrangements, who will benefit from them and what the difference will be in terms of the greenhouse-gas-equivalent emissions or absorption that are taken account of?

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

In relation to those sources of abatement which are included in the CPRS, subject to appropriate robust methodologies, and that count towards Australia’s international commitments, obviously the benefit there is for those persons who can abate and, therefore, obtain a permit. The value of that permit is the value. In relation to the national carbon offset sector—this is the voluntary market—that will obviously depend on what the voluntary market is willing to pay for that activity. In terms of funding, we have included $50 million in additional funding for R&D investment. This is primarily on-farm. We have also included a $40 million green carbon fund to build the resilience of natural ecosystems under threat from climate change.

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

To go back to the bushfires: I am still a little bit perplexed. As Senator Williams has pointed out, the emissions of the Victorian bushfires were more than the emissions of Australia. Either you have bushfires that are actually going to be accounted for or you are not going to include them, in which case the whole thing is a fallacy.

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

I will give a short answer now because, as I said, the official who deals with this is not one of the officials in the box. I am advised that through the international negotiations we are seeking to address the problem of exceptional natural disturbances that are not controllable by human management.

I think the policy issue that is problematic here is that if you have a very large and exceptional bushfire that is treated as part of your emissions, I am advised that it can be multiples of your annual inventory. So if there is a wild variation or large fluctuation, then obviously you would not want those sorts of exceptional circumstances to be included in the country’s national inventory.

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

This makes the whole thing fallacious. You are saying that we are going to count carbon emissions from that fire, but we are not going to count carbon emissions from that other fire. What someone is going to say is, ‘Well, they were both started by a lightning strike and therefore they are both natural.’ If the carbon emissions of the Victorian bushfires were greater than the total carbon emissions of Australia, this is going to cause a slight problem. What happens if I see a lightning strike that I could have put out, but I let it get away—is that a natural fire or an unnatural fire?

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

There are very clear international rules about how these emissions are counted—how our national inventory, as it is called, is counted. We release these figures—I cannot recall when the last one was, but these are public figures. I am happy to take these questions and I will ask the department to get the official who is the expert in these areas here tomorrow morning because I do not have an official who is an expert in the international accounting rules in the box. I make the point that we have had some three hours of debate, and we have done one amendment. Senator Joyce, I am very happy to have a discussion with you about it for a number of hours, but you have already made it clear that you are going to vote against the bill.

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

With all due respect, my voting against the bill is not the issue. I am here on behalf of the Australian people, and specifically the people of Queensland, to ask questions of the executive—of which you are a part. The job here is that I ask the questions and you answer them.

Now we have got the situation where if there is a lightning strike, and I see the lightning strike, it is a natural start to a fire—if I let it get away and it burns out half of New South Wales or half of Queensland that is a natural occurrence and I should not worry about it—but if I drop a cigarette butt—and I know you should not smoke—that is an unnatural fire and it must be accounted for. Who is going to be wandering around the scrub to determine which fires are natural and which ones are unnatural?

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The minister is not answering that question.

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

I will just make this comment. I have said that I do not have the official here. I have given the chamber an assurance that I will ensure he is here tomorrow morning. We can continue this debate about a highly technical issue, talking about lightning strikes and cigarette butts, but I do not think that is going to assist. We on this side of the chamber advocate for consistent and coherent international accounting rules that do encourage appropriate practices. That is what we do. If you want technical detail about bushfires, I have said I will bring the official. I do not have the official here tonight. Senator Joyce or Senator Brown, you can continue to talk about this issue, but I have indicated to the chamber that I will ask the official to come tomorrow morning.

Again, I make the point: we are debating the Carbon Pollution Reduction Scheme. We are not debating the international accounting rules.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Yes you are.

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

They are not a matter for decision in this chamber.

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

With all due respect, the carbon pollution reduction rules are definitely part of this. In fact, they are substantially the premise of this legislation, which is what we are discussing.

We cannot talk about unnatural and natural fires because the person is not here. I find that peculiar in the extreme, seeing it is such a glaringly obvious question. If this thing is going to stack up, you would expect the person to be here—especially when we are in the middle of the bushfire season, for goodness’ sake, and this town that we are sitting in tonight is one that was devastated by a bushfire. It seems an interesting question that should have been able to be answered. It obviously blows an absolutely mammoth hole in the whole carbon accounting process if it is unable to be answered. If you say you are going to leave it out, the whole thing is fallacious. If you say you are going to put it in—boy, haven’t we got a major problem coming our way. I think you should use about $70 billion of your $70.2 billion to invest in the rural bushfire brigade, otherwise we are all going to be broke.

You talked about the depth of action that is currently present in the world and you gave a great endorsement of that, and how we have a premise that nothing is happening but you assure us that something is. From the assertion you gave with that great rendition of all the countries and the things they are doing, can you please now tell me—for whatever time frame you want—what the current global prediction is for parts per million under the current trajectory of all those countries and all the things they are doing; how they are going and where we are going to be—in five years or 10 years time, I will leave that up to you.

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

I do not know if that calculation has been done but, if I may say so, that would be quite misleading because we are going through a process leading up to Copenhagen and then at Copenhagen where countries are progressively making commitments. You might make a judgment this week and the level of ambition in international pledges would be different next week or the week after depending on who pledged, and I laid out some of the pledges on the table for you. For example, what China’s notable margin is in its emissions per unit of GDP or its emissions intensity targets will be a very significant factor, because that will give an indication of what sort of change from business as usual China will be striving for. It would be somewhat misleading now—and frankly, inaccurate—to try and construct current pledges or current commitments and to work out what that would lead to when we know the whole purpose of Copenhagen is to try and get a clear commitment to global action, and there are a number of countries which have said they will set a target and they will come to Copenhagen with targets. But they have not yet done so.

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

I would like to ask a question on something a little different. I am very concerned about the money that is going to be paid to the developing countries for their mitigation actions, and I am told there is a recent UN report that calls for existing climate change funding of $21 billion to be astronomically increased to $500-$600 billion a year. I think you owe it to the Australian public to give us a price on what we are going to pay for asking the developing countries to become part of climate change action. I have asked you this question on a number of occasions and you have ducked it. I think you should be prepared to tell Australia what the cost is to developing countries. We are told it could be up to $600 billion a year. If that is the case, what is Australia’s share of that and how will that be worked out? On a population proportion, a world proportion, an area proportion—

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

Capacity to pay.

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

On capacity to pay? And if it is capacity to pay, who makes the judgment of the capacity? Is it by GDP? This is important. Senator Milne says it is very important. If it is going to be a couple of billion dollars I think the people of Australia deserve to know. In a couple of weeks time you will be going over to Copenhagen and you obviously have this amount of money apportioned in your budget. You are not going to go over there and try and work out the amount of money that Australia owes on the back of an envelope. You know now—and if you do not know now you should know—how much you are prepared to pay to get developing countries to join the climate mitigation process.

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

Firstly, rather than the situation that the senator described—I think he said ‘pay developing countries to join’—the better way of thinking about it is that climate finance internationally from developed countries is necessary to support developing country action on climate change.

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

Senator Milne interjecting—

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

I am sorry, Senator Milne. Do you have something to say?

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

Senator Joyce interjecting—

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

Order! Let the minister speak and then you can ask further questions.

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

I do not know why people in this chamber have such an issue with China. Part of the reason for international climate change finance is that it is in our interests to encourage developing countries to take a different path and not follow the path that we have followed which is to become more highly polluting. We want to support low pollution development and low emissions development, and it is in Australia’s interest to do that. The Prime Minister has said that once a global agreement on climate finance is shaped Australia would always be prepared to put forward our fair share. There is no global agreement as yet as to what those long-term financing arrangements should be. Obviously that is one of the things that need to be worked through at Copenhagen, so I am not able to give you the answer you want, Senator Boswell. What I will say is that there has been a range of figures put out for the global contribution. There have been figures put out by the United Kingdom. I think Gordon Brown talked about a figure of 100 billion by 2020 from memory. The EU has more recently put out another proposal, and these are all looking at 2020 figures. These are still things which are being developed, and I again make the point that—

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

What was that second figure?

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

The European Union put out some figures, I think, last month. I think they were higher than the UK figures because they were in euros. I do not have that figure right now. My recollection is it was the equivalent of 140. It might have been €100 billion. This is the global—

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

€100 billion.

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

Yes, €100 billion at 2020. Senator Boswell, I make the point that one of the things that is not yet determined or agreed is what proportion of that is private finance and what proportion is public. For example, I have said publicly on a number of occasions that the scale of the transition that is required is beyond the capacity of governments alone to finance. That is why we need cap-and-trade systems to give private sector the incentive to invest in abatement activities in developing countries. We need the private sector to get that incentive. That is a good thing. These are still matters that will be the subject of discussion and negotiation. I cannot really add to the Prime Minister’s words that Australia obviously wants an agreement, is finalised and would be prepared to put forward its fair share. I again emphasise that the mix of how that would be funded, publicly and privately, is still something that is the subject of negotiation.

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

That is very interesting, but ‘fair share’ can mean anything. Is it a fair share of $100 billion? Is it $1 billion or $10 billion? You will be going to Copenhagen, and I am asking you what offer you are going to put on the table. People are getting very concerned about this. They think they are being taken for a ride on the emissions trading scheme, and that sends them into overdrive. But when they realise that they have to pay someone for else’s climate change they just get absolutely furious, and I do not blame them. If they are going to pick up the tab they should know what they are going to pay. It is their money. It is not your money. It is the public’s money. It is the working families’ money. It is the battlers’ money. It is the businessmen’s money. It is not your money. You should tell the Senate how much money it is going to cost. You can have a guesstimate. Are you telling me that you are going over there with a completely blank page, that you do not know what it is going to cost, that you have not worked out what it is going to cost, that you have no idea what you are going to put on the table or that you do not care what it costs?

This is a serious parliament, and if you want to be taken seriously you have to tell the people. You have to take them into your confidence. If you think this is such a great idea you have to get out there and sell it. People are ringing us up and emailing us, and they want to know what the cost is. What can I tell them: ‘It’s going to be your fair share’? What is our fair share? No-one knows what our fair share is. How are you going to calculate our fair share? The people of Australia deserve to know this. They deserve to be able to open their computers tomorrow or the next day and access the information that is provided by the Senate and you as a senator in the executive. I do not think you are being particularly forthcoming about this. You have dodged it for the last three months. I have asked you continually, and you tell me it is a ‘fair share’. Forget about Ron Boswell; that does not really matter in the scheme of things. People out there want to know what it is going to cost, so please tell them.

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

I will follow on from Senator Boswell on exactly the same issue. I can probably elicit a little more of the framework that Senator Boswell is asking about. He and I come at this from different points of view, but we agree—

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

You vote with him though.

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

Quite right. The Greens do not support the government’s scheme because it is not environmentally or economically efficient. I agree with Senator Boswell that the Australian people need to know what Australia’s approach is to the issue of equity as part of a global agreement. There are two aspects to what is being negotiated. One is the target that we put on the table in Copenhagen. The other is the finance mechanism: how much Australia is prepared to contribute to the global financing. As you would be aware, Madam Chair, I have an amendment to put into the legislation to ensure we do put in financial support for developing countries. Either way, it is going to be required.

As has just been said, the European Union have said that they think €100 billion out to 2020 is probably what is required. They have said recently that €5 billion to €7 billion will be needed per year over the three years from 2010 to 2012 as fast-start finance. I understand that there was a pre-COP ministerial meeting last week. As the minister, you obviously either were there or had your officials there. I note that Japan announced at that fast-start finance meeting a figure of $9.2 billion to 2012. So Japan has put that on the table as its fast-start finance. The European Union have said they think €5 billion to €7 billion would be their fair share in that three-year period. What did Australia put on the table as fast-start finance between 2010 and 2012 at that ministerial meeting?

In the broader context, what does Australia regard as the parameters for judging what our fair share of burden-sharing should be? Are we looking at capacity to pay, a formula for who took early action, a formula on the historic legacy or a formula on population growth? What are the parameters that we are going to be negotiating on to say what our fair share ought to be? I have a very strong view that, if we are not going to cut the mustard in our effort on the target, we will end up quite rightly having to contribute more in terms of the global financing figure. It would be unjust to opt out on both. Senator Boswell is right: people who are following these negotiations want to know what Australia’s position is in putting money on the table for the financing mechanism so that there will be a global deal. Without a fair financing mechanism there will be no global deal.

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

Senator Milne suggested that I must have been there. I do not know if she noticed, but we were sitting last week and I was here. So, no, I was not at the pre-COP ministerial meeting because we sat last week. Australia has not made any formal offer in relation to financing. I have made that clear. When the terms of the international agreement are clear, obviously, any announcement of any funding by Australia would clearly be made public. Senator Boswell, I agree with you—we do not agree on this bill and we do not agree on a lot of things—but, yes, if Australia does make these sorts of policy decisions, the Australian government should explain it, absolutely. But there has been no announcement and no pledge of funding at this stage.

We do know that financing arrangements are the subject of negotiations. Some countries have made offers, many have not and there is a lot of discussion about the mechanisms and frameworks for that. As I said to you, Senator Boswell, and you have asked me the question in the chamber before, there is also a very live discussion about what proportion of that is public finance and what proportion is private finance and there are different views about that. These continue to be issues that Australia and others will negotiate and consider and it is the case that climate finance is something that needs to be looked at—and why is it? It is because we do need to try and encourage developing nations to take a lower pollution development path. It is actually in our national interest to do that because if you believe, as the government does, that climate change has an effect on this country then we do have an interest in trying to support reductions in emissions elsewhere and/or adaptation.

We do have an election commitment which is being delivered to an International Climate Change Adaptation Initiative of $150 million. That money is being expended by AusAID and other mechanisms and that is primarily focused on Australia’s region, so from memory, the Pacific, PNG and East Timor—I might be wrong on that, but that is my recollection. We also have consistent in fact with Mr Turnbull’s own initiative prior to the last election a $200 million International Forest Carbon Initiative which assists developing countries in reducing emissions from deforestation, which can account for around 18 per cent of global emissions—that is, deforestation and forest degradation. Through that program, Senator Boswell, we are working in Indonesia; we have demonstration activities there. We are working with the Indonesians on how we can help to support them in reducing emissions from deforestation given that is a significant source of emissions. These are partnership arrangements. The sorts of figures that are being discussed are global figures at 2020 and there is no agreement as yet about the proportion of public and private finance or the mechanism.

That is the status of the negotiations. I think the merit of some of the assistance to date is that there have been some very good projects in the Pacific, for example, and also in Indonesia arising out of Australian assistance just as—as Senator Boswell will know—under both governments Australia provided aid and continues to provide development aid to many developing nations.

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

I am a little perplexed about the lack of clarity that surrounds all of this. If we take the assumption—and there has been much discussion this evening around assumptions and how they relate to this whole process—that at some point this assistance will go forward perhaps the minister might like to inform the chamber, given the current level of Commonwealth debt which is around $115 billion would the minister envisage that we may well potentially in the future be in a situation where we are borrowing money from China to give back to China to enable them to go down this lower pollution development path?

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

I have to say I find a little bit disturbing the way in which both the Greens and the National Party keep talking in these terms about China.

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

I have not mentioned China.

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

You did, Senator.

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

Madam Temporary Chairman, I rise on a point of order. I have not mentioned China at all or by interjection; it was others, but I wish to make a very strong point of order and ask the minister to withdraw. I have not mentioned China at all in any context in this whole evening.

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

On the point of order, Senator, if I misheard you then I apologise and I withdraw, but I thought you interjected in relation to China when Senator Boswell was on his feet. If you did not, absolutely, I withdraw. In relation to Senator Nash, there are already developed countries, including Australian firms, investing in China under the CDM. Do you really have a problem with that? Do you really have a problem with an Australian firm investing in a renewable energy project in China in a way that displaces emissions which would otherwise be emitted from a coal fired power station—is that such a bad public policy position?

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

I think that perhaps the minister has overreacted to that somewhat. I merely posed the question: given the debt level the country has, is there the potential that we will need to borrow money to be able to assist the developing nations and might China be in the future a country that we would look to borrow money from? That was not a disparaging remark about any country whatsoever; it was merely a straightforward question. Whether the minister says yes or no or has a particularly different answer, it was simply a question: is that a possible course of action?

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

Senator, I think most people would know what sort of scaremongering lies behind your question. I think most people would know that. Frankly, Senator Nash, I would have thought better—

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

Madam Temporary Chair, on a point of order: I ask the minister to withdraw that. The minister is off on a frolic of her own. I asked a very straightforward question. There was nothing disparaging or scaremongering about it.

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

Senator Nash, there is no point of order. Do you wish to ask a further question?

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

Yes, I do. On another matter—

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

Could I follow up on this?

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

Yes.

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

Thank you. Following up on the question that I asked before in relation to the financing mechanism, I asked what negotiating parameters Australia was taking to the negotiation in relation to framing what would be a fair burden share. I am aware that capacity to pay, early action, historical legacy and population are four of the parameters some countries are using, and others are using a variety of those and others. I am just asking: in terms of what we are taking to Copenhagen, what are the parameters around which we are going to be negotiating our burden share in relation to a finance mechanism?

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

First, these are obviously the subject of discussion in the negotiation. The OECD has put forward a range of parameters and ideas, from recollection. I know the European Union, in their proposal, also spoke of categories—I think those that you identified. These are matters still under discussion, and I do not think it would be correct to say that Australia has a rigid view about these issues. We think that ultimately this comes down to getting agreement around what people think is a reasonable way to approach this. I keep emphasising this: we have made no announcement, nor have we put forward any pledges to finance, and we have also said that we need to consider the very important role of private finance. One of the live issues in these discussions, as I have said in response to a question from Senator Boswell, is the mix of private and public funding. I would have to say that that is still a matter under discussion.

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

The minister may well be aware that certainly the Nationals are receiving thousands and thousands of emails at the moment begging us to say no to this ETS, so I think it might be worthwhile to ask the minister to clarify, taking on board her earlier comments that some countries are already doing a certain amount towards the reduction of the carbon pollution. Can the minister explain very clearly for the Senate and those people listening at the moment what the global situation will be as a result of those who are undertaking some kind of carbon pollution reduction scheme if no other countries come on board when Australia does?. I just want to be very clear that I am talking not about any countries coming on board in future but about the existing ones. When this scheme does come in, if it gets through the chamber in the manner that is being put forward to the Australian people at the moment, exactly how much will the world’s emissions reduce by? I ask this question because it is one of the key questions that are being asked via my National Party colleagues consistently: exactly how much will the reductions be when Australia goes down this CPRS road without any other countries doing it at the same time?

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

Again, it is regrettable that the National Party choose to put things on the record which are simply not true. You again asserted, Senator Nash, that—

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

We want an answer.

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

I am happy to answer, Senator Joyce, and I have never run away from a debate with you.

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

Senator Nash interjecting—

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

If I can answer, Senator Nash—

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

I would just like a clarification. I ask the minister to clarify what it was that we placed on record. I simply asked a question about what the reduction would be—

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

From the Australian scheme.

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

from the Australian scheme. I do not see that I placed anything on record.

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

I thought you referred, Senator Nash, to a scheme where no other countries were acting.

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

It doesn’t really matter. What’s the effect of the—

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

I will take that interjection. He says it does not really matter. The point is that it does. I think it does matter in this debate to try and at least have a discussion that is factually based. The fact is—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Just answer the question.

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

Oh, you are here? Are you on that side at the moment, Senator Macdonald?

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

Senator Macdonald, the minister is on her feet.

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

It is wrong to keep asserting that no other country is acting.

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

How much will the Australian scheme reduce carbon emissions by?

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

A very simple question.

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

We know—

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

We don’t, actually.

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

I would like to answer the question, but Senator Macdonald and Senator Joyce might like to have a discussion among themselves. I suppose that would be an option.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Can’t you answer the question?

The Temporary Chairman:

Order! Senator Wong is attempting to answer the question and I would appreciate some order while she does that.

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

Thank you, Chair. First, the extent to which Australia’s national emissions are reduced will depend on what the government sets the Australian targets and caps at. We put on the table a range depending on how much the rest of the world is doing. That range is between five and 15 per cent off 2000 levels, or 25 per cent off 2000 levels if the world is doing an ambitious agreement. The extent to which the world acts will be a question of what targets and reductions all nations of the world are prepared to put on the table. That is self evident. So the extent to which a global agreement can achieve a particular environmental outcome will be a question of how much all of us are prepared to put on the table. Unlike the National Party, the government does not believe that simply because Australia produces about 1.5 per cent of global emissions we should just say, ‘It’s not our problem.’ If everybody sits back and says, ‘We’ve got to wait for everyone else to act, not just some,’ we will all still be waiting. That is the reality. It is just simple logic. If we all sit there and say, ‘I’m going to wait till they do it and they do it and they do it,’ everyone will still be waiting. So we take the view that if you believe climate change is real and is bad for Australia then we have to do our part and try to help build a global agreement.

Progress reported.