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

I table three supplementary explanatory memoranda relating to government amendments to be moved to the Renewable Energy (Electricity) Amendment Bill 2010. The memoranda were circulated in the chamber today.

On behalf of the government, I thank senators in this place for the various conversations and negotiations we have had on this legislation. I have hope that there is broadly an interest in passage of this legislation forthwith. The government believes it is in the interests of the clean energy sector for us to do so. We have certainly engaged in dialogue with the opposition, the Greens and Senator Xenophon, and I had a brief discussion with Senator Fielding as well. I thank the parties represented in those discussions for the constructive and cooperative way that those discussions have been engaged in, and I thank again Mr Macfarlane for his negotiations on behalf of the opposition.

I seek leave to move government amendments (1) to (8) on sheet AL260 together.

Leave granted.

I move:

(1)    Schedule 1, page 3 (after line 15), after item 4, insert:

4A Subsection 5(1)

Insert:

clearing house price has the meaning given by section 30LA.

(2)    Schedule 1, page 4 (after line 7), after item 8, insert:

8A Subsection 5(1)

Insert:

GST inclusive clearing house price has the meaning given by section 30LA.

(3)    Schedule 1, item 58, page 15 (before line 12), before section 30M, insert:

        (1)    The clearing house price is:

             (a)    subject to paragraph (b)—$40; or

             (b)    if the Minister, by legislative instrument, specifies a lesser amount as being the clearing house price for the purpose of this subsection—the amount so specified.

        (2)    The GST inclusive clearing house price is the amount equal to 110% of the clearing house price.

        (3)    Before making an instrument under paragraph (1)(b), the Minister:

             (a)    must take into consideration:

                   (i)    whether the total value, in MWh, of small-scale technology certificates created in 2015 exceeded or is expected to exceed 6,000,000; and

                  (ii)    any changes to the costs of small generation units and solar water heaters; and

                 (iii)    the extent to which owners of small generation units and solar water heaters contribute to the costs of small generation units and solar water heaters; and

                 (iv)    the impact of the clearing house price, and the number of small generation units and solar water heaters installed, on the electricity market, including on electricity prices; and

             (b)    may take into consideration any other matters that the Minister considers relevant.

        (4)    If the Minister is considering a matter mentioned in paragraph (3)(a), the Minister must obtain, and take into consideration, independent advice about that matter.

        (5)    An instrument made under paragraph (1)(b) must not be expressed to commence earlier than the first 1 April following the making of the instrument.

        (6)    If:

             (a)    an instrument is made under paragraph (1)(b); and

             (b)    on a particular day (thetabling day), a copy of the instrument is tabled before a House of the Parliament under section 38 of the Legislative Instruments Act 2003;

then, on or as soon as practicable after the tabling day, the Minister must cause to be tabled before that House a written statement setting out the Minister’s reasons for making the instrument.

(4)    Schedule 1, item 58, page 15 (line 22), omit “$44”, substitute “the GST inclusive clearing house price”.

(5)    Schedule 1, item 58, page 16 (line 15), omit “$44”, substitute “the GST inclusive clearing house price”.

(6)    Schedule 1, item 58, page 16 (line 17), omit “$40”, substitute “the clearing house price”.

(7)    Schedule 1, item 58, page 17 (line 28), omit “$44”, substitute “the GST inclusive clearing house price”.

(8)           Schedule 1, item 58, page 17 (line 31), omit “$40”, substitute “the clearing house price”.

These amendments give effect to the clearing house price. There was some discussion in the Senate committee hearing in relation to the clearing house price. These amendments improve the operation of that clearing house and have regard to a number of the issues raised in the Senate committee report. I am happy to respond to any questions as required.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

On behalf of the opposition, I indicate our support for these amendments moved by the government. We recognise that this is an important mechanism being introduced in an attempt to provide some certainty of price, particularly in the early years of the operation of the LRET. We have had numerous representations made to us about some of the issues around banked certificates and how they will be discharged into the market. As a result, we think that it is sensible to find a mechanism to ensure that they are discharged in a tidy manner that ensures some degree of certainty for price. In relation to my own state, I have had representations from companies such as LMS Generation, a landfill gas power generator, who highlighted small future projects that might be delayed or put off in future years should something not be done to ensure that there is not a large flow of banked credits onto the market next year, therefore holding down the LRET price in the early years of the scheme. I understand the manner in which this is being presented ensures that any costs borne by electricity users in the early years will be offset in the latter years of the scheme.

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

I was anticipating that Senator Milne would speak but, given that these amendments deal with an issue that a subsequent Greens amendment deals with, I might just outline how the government is dealing with the issue, unless Senator Milne wishes to speak first.

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

No.

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

Okay. If you turn to amendment (3) and look at 30LA(3), it will be clear from that that the minister has the capacity, after taking into account independent advice, to look to various changes to deal with a situation where the small-scale technology certificates created in 2015 would exceed or be expected to exceed six million megawatt hours. As I said, we believe that this deals with one of the issues raised in the Senate committee report—and, while I am on my feet, I will thank Senator McEwen and other senators for their prompt and sensible consideration of this legislation. These amendments deal with one of the issues that were raised in the context of that report, about whether or not the growth in the Small-scale Renewable Energy Scheme would be substantially more than that anticipated. This provision enables what we think is a sensible and robust decision-making framework to address those issues should they arise.

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

I indicate for my colleagues that I have a number of amendments that I propose to move. There have been some hold-ups. I have had discussions with the government, the opposition and my colleagues in the Greens in relation to them. I hope to be in a position to file amendments very shortly. That should not hold up the progress of the committee stage, but I just want to foreshadow that there will be some further amendments that will be filed pretty shortly.

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

Minister, in relation to the increase in cost of electricity under the proposals of the government in this legislation, have you done any modelling? My concern is with commercial ventures such as abattoirs and those sorts of businesses. With the proposed legislation, have you done any modelling and can you inform the Senate of what expected price rises we may see in electricity? I asked that in all seriousness, as it is one of my concerns. Even though I support renewable energy—the more renewables we can use, the more finite resources we can leave for future generations—I just have some concerns over the actual costs or the projection of increased costs of electricity because of this legislation.

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

I understood from Senator Birmingham that the opposition were supporting these amendments. In relation to the question of costs, I have outlined to your colleague Senator Boswell on a number of occasions what we estimate with regard to the current renewable energy target, although it will depend on when you model a price on carbon. The modelling I think I provided publicly and explained to Senator Boswell in the context of the estimates hearing was 4.2 per cent for the current renewable energy target—that is, the legislation that you have already supported. With the enhancements in the government bill—prior to these amendments obviously, because this modelling preceded the amendments—it will be an additional 0.2 per cent. That is a cumulative cost between 2010 and 2014 of 4.4 per cent.

Question agreed to.

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

I move Australian Greens amendment (2) on sheet 6114:

(2)    Schedule 1, page 35 (after line 9), after item 65, insert:

65A  After section 40

Insert:

        (1)    The required GWh of renewable source electricity in section 40 for the years 2011 and 2012 must be increased as specified in declarations made under subsection (3) for the relevant year.

        (2)    The Regulator must, by 10 May 2011, make the following calculations in respect of the large-scale generation certificates on the register of large-scale generation certificates as at 30 April 2011:

             (a)    the total of the number of registered large-scale generation certificates and the number of large-scale generation certificates that are pending registration in the register (total A);

             (b)    the number of registered large-scale generation certificates that are pending surrender (total B);

             (c)    the number of registered large-scale generation certificates that are pending voluntary surrender (total C);

             (d)    the number of registered large-scale generation certificates that have been created on or after 1 January 2011 under Subdivision A of Division 4 of Part 2 (total D);

             (e)    the number of registered large-scale generation certificates that are subject to eligible pre-existing contracts for transfer from one party to another party (total E);

              (f)    the figure (total F) that is the result of:

                           total A – (total B + total C + total D) + total E;

             (g)    the figure (total G) that is the result of:

                           total F – 16,200,000;

             (h)    the figure expressed in megawatt hours (total H) that is the result of:

                           total G ÷ 2;

and publish the results of those calculations on the Internet.

This amendment refers to the issue of banking. As we know, each year there is a surplus of renewable energy certificates that are banked or saved for future years. This surplus equals about a year’s worth of demand and it helps the liable parties, the electricity retailers, manage their obligations.

By splitting the renewable energy target into large-scale renewables—that is, essentially wind and small-scale schemes—the bill we are dealing with, the Renewable Energy (Electricity) Amendment Bill 2010, ensures that the RECs from the small systems do not crowd out investment in the large renewable energy systems. But the problem is that between now and the end of this year there will be a lot of renewable energy certificates produced from the small systems and they will be eligible to be used towards the large-scale target. So the real question is: how many of those certificates are going to be generated between now and the end of the year and what will that do to the price of certificates in the large-scale system?

The government modelling suggests there will be 16.2 million renewable energy certificates banked by the beginning of next year. If that is roughly correct it would be fine; it would provide the liquidity that is required in the large-scale market. But the trouble is that the industry calculates the number of banked renewable energy certificates will more likely be 23 to 25 million, with AGL saying that it could be as high as 32 million certificates. If the number is that high then you will see exactly the same situation as we have now. We will have a collapse in the price, and so there will be a further delay in investment in large-scale renewable energy. We do not want that to occur. This amendment basically says that if the number of banked renewable energy certificates is higher than the government expects as a result of its own modelling—that is, higher than 16.2 million RECs—the target in the subsequent two years will be increased. For example, if 24 million RECs were banked that would be an excess of 8 million RECs, so the target would be increased by 4 million in 2011 and in 2012 to deal with the problem.

I have raised this matter with the government several times. I am really concerned about the modelling. The government modelling got it so wrong last year that we have ended up in the situation of being back here. At the time when this legislation to increase the target to 20 per cent first came in, I pointed out that all of the renewable energy certificates from the small system would crowd the market and collapse the price and that there would be no incentive for large-scale renewables. I moved an amendment to put those on top of the target, and that was voted down by the coalition and by the government. Nobody actually challenged the government’s modelling, and the government got it wrong.

I am really worried that the government’s modelling of 16 million RECs is wrong again, and that is why I have moved this amendment. I am grateful to the minister for the discussions that we have had in this regard. I believe that the baseline here should be the government’s modelling, 16 million, and anything above that should be added on to targets in future years, so I am moving the amendment to that effect.

I am aware that the minister has had some discussions around this and is thinking of maybe 20 million. The question I would like to pose to the minister is: since the government’s modelling is 16.2 million, why is the government thinking of 20 million as the threshold? Is the government’s modelling wrong? Is industry right? Why has the minister settled on that figure, if indeed she has? I wish to foreshadow that if the government does move its own amendment in this regard then it is likely that I will be seeking leave to withdraw mine. I want to give advance warning to the chamber that that is under consideration.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I appreciate the sentiments that Senator Milne is expressing. As I said in relation to the first amendment—perhaps when it was more appropriate for this one and a later government one—the coalition is eager to see some certainty for future price in relation to the LRET, particularly taking into account the number of credits that are currently proposed within the scheme.

However, we do note that the government has proposed amendments, which are to be considered later, dealing with a mechanism to try to clear some of the banked credits. We can only take the government’s modelling and advice at its word. I look forward to hearing Senator Wong respond to Senator Milne’s specific questions around that. However, the opposition is not inclined to support this amendment of the Greens, noting that the government has proposals for different mechanisms to address, at least in part, the issue that is being raised.

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

Firstly, as we have certainly seen in the RSPT debate and the CPRS debate there are always arguments about modelling. There are always a range of assumptions involved in modelling. My recollection, and I could be wrong, is that the price that was assumed in the previous modelling of solar PV was actually higher than it has trended down to. That is not a bad thing, in the sense that making solar panels more cheaply indicates that that market is becoming more mature and the capacity for unit cost to reduce is increasing.

In these amendments we have sought, after quite a lot of discussion, to try and strike a reasonable balance between the different policy objectives which are of importance here. One of those is electricity cost. Another is a proper assessment of a reasonable allocation of risk in terms of different aspects of the modelling altering—who should properly bear the risk of that and to what extent?

The third thing you have to balance, obviously, is the issue of certainty. The government is absolutely committed to providing industry with as much certainty as is possible and reasonable, given that the whole purpose of this legislation is to drive investment in renewables, both large and small. In relation to the business certainty issue, which arises in the context of banked renewable energy certificates, we have held lengthy discussions with industry and with members of the clean energy sector about what a reasonable level of certainty would be in order to facilitate the investments that I think all of us want. In discussions with various stakeholders, the figure of 20 million has been indicated as reasonable to enable various decisions to be made with a degree of certainty whilst ensuring a reasonable balance of risk is borne by both industry and electricity users under the scheme.

We think that the 20 million target is reasonable, given discussions with the stakeholders. It is the case that our modelling suggests 16.2 million by the end of the year. Under this amendment, even if that level of 20 million is not correct, industry knows the way in which government will deal with those additional renewable energy certificates. We understand that if there are a far greater number of renewable energy certificates banked at the conclusion of this year then that may have an impact on investment decisions which we believe are in the national interest. So we think this is a balanced position. It is a position that reflects a substantial amount of consultation with industry. It provides a level of certainty that is appropriate and, for that reason, the government will not be supporting the Greens amendment. I will be moving the government’s amendment, which has already been foreshadowed and circulated, in relation to dealing with this banked RECs issue.

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

I thank the minister for taking on this issue, for giving it the consideration she has and for putting in a threshold, if you like. I do think it is important and industry have indicated very strongly their concern. I would like to know, though, from the minister the assumptions behind the government’s modelling for the 16.2 million so that, by the end of the year, we can understand what is going on with the government’s modelling in relation to these matters. If the assumptions have been so wrong before, don’t we need to know who is feeding assumptions into these models and what level of consultation is going on with industry to ensure the assumptions going into the models bear some resemblance to the reality of the market? The minister may wish to take it on notice, but I would like to know the assumptions behind the 16.2 million RECs. I appreciate the government’s move to 20 million. My amendment states that the figure should be 16.2 million but anything above that should be added on to the target in the two subsequent years. Before I seek leave to withdraw the amendment, though, I would ask the minister to just outline at this time, to save having the debate later, how those additional RECs will be accommodated in the government’s proposal.

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

Firstly, in relation to the modelling I have released publicly the modelling report, which includes, from recollection, an iteration of the assumptions contained in it. Secondly, Senator Milne, as I said, we are taking the position we are taking consequent upon a substantial amount of consultation with the industry. The amendment that I will be moving will provide that if the net stock of banked RECs at the end of 2010 exceeds 20 million there will be adjustments to the 2012 and 2013 targets and, as an offsetting adjustment, the annual targets will be reduced over the period 2016 to 2019 by the same amount. So the total number of renewable energy certificates generated over the decade will remain the same.

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

I appreciate the fact that by backending the system, so to speak, hopefully, by the time we get to 2016 we will already have a much higher renewable energy target than we now have and that it ought not matter at that point. As the minister herself has indicated, this sector is moving fast and it is no doubt very difficult for the parliament to even keep acknowledging that. Since this legislation was brought in here only last year, solar systems, for example, have come down in price by 40 per cent. Take us out to 2016, and if we cannot improve substantially on 20 per cent renewable energy by then then we are not doing our job. Frankly, we should be moving to a target of 100 per cent renewables as quickly as possible. I am delighted to say that today a report was released in this parliament by Beyond Zero Emissions, based at Melbourne university, outlining how you may achieve 100 per cent renewables in a decade, by 2020. We have a way to go beyond 20 per cent to get to 100 per cent by 2020. So I am not too concerned about backending the system in the way the minister is suggesting, because we will be reviewing this target much sooner and no doubt we will achieve the level of ambition that I think many people in this country, and the Greens of course, support. Therefore, Madam Chair, since the government is addressing this issue of the banked RECs and putting in a threshold of 20 million—I would have liked it to have been less—nevertheless it is dealing with the issue, I seek leave to withdraw Australian Greens amendment (2) on sheet 6114.

Leave granted.

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

I would invite Senator Milne, if we could, for the efficacy of the debate, to possibly defer the next item because I understand there are some discussions going on behind her which may resolve some issues. Perhaps, if she is so minded, we could move to Australian Greens amendments (4), (9) and (1).

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

Yes, that would facilitate the debate considerably. I would like to move on and visit that item a little later in the debate, if we may. I seek leave to move Australian Greens amendments (4), (9) and (1) on sheet 6114 together.

Leave granted.

I move:

(1)    Clause 3, page 2 (lines 7 to 11), omit the clause, substitute:

        (1)    Each Act, and each set of regulations, that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

        (2)    The amendment of any regulation under subsection (1) does not prevent the regulation, as so amended, from being amended or repealed by the Governor-General.

(4)    Schedule 1, page 61 (after line 22), after item 110, insert:

110A  At the end of subsection 17(2)

Add:

           ; (c)    biomass from native vegetation of any kind.

(9)    Schedule 1, Part 2, page 80 (after line 4), at the end of the Part, add:

Renewable Energy (Electricity) Regulations 2001

137  Paragraph 8(1)(d)

Omit “; and”, substitute “.”.

138  Paragraph 8(1)(e)

Repeal the paragraph.

139  Subregulations 8(2), (3) and (4)

Repeal the subregulations.

140  Subregulation 9(2)

Repeal the subregulation, substitute:

        (2)    For section 17 of the Act, biomass from native vegetation is not an energy crop.

141  Subregulation 20AA(1)

Omit “subsections 23B (2) and”, substitute “subsection”.

These amendments deal with the issue of biomass from native forest vegetation. The Australian Greens are moving to ensure that biomass from native forest vegetation will no longer be an eligible renewable energy source. This is an absolutely critical issue in the climate change debate, the biodiversity debate and the forest industry future debate, so it has garnered the interest of people around the country.

As a matter of context, I will just indicate that over the last decade the market for native forest woodchips has collapsed totally around the world, such that the native forest logging industry is in complete disarray. It has collapsed in Tasmania; it is on the verge of collapse in Victoria. There is no market for the export of native forest woodchips. This is for two reasons. One is because a wall of plantation timber has come on stream from all around the world and is outcompeting native forests into the Japanese pulp and paper market because plantation woodchips are of a higher, more even quality for the purposes of pulping. Also, because they are younger timber, they require less chlorine in the bleaching process, and you can get to a chlorine-free bleaching process if you use plantation timbers. The upshot is that the market for native forest woodchips has collapsed.

The second reason that the Japanese are not buying Australian native forest woodchips is that they recognise that they have to achieve Forest Stewardship Council certification and they are not going to get it for logging primary forests. There is a global focus now on protecting the world’s forests and on protecting biodiversity. We are this year in the United Nations International Year of Biodiversity. Next year is the United Nations International Year of the Forests, and the year after that is Rio plus 20. We are in a global negotiation currently on reducing emissions from deforestation and degradation.

There is a fantastic opportunity in Australia right now with the collapse of the native forest industry to move the industry into downstreaming the existing plantation estate. The benefit of ending native forest logging is not only because of its biodiversity and carbon benefits but also because every time a government subsidises the logging of native forests it reduces the price that you can get from downstreaming plantation timber, so it is not in the interests of the plantation industry to have governments continuing to subsidise native forest logging. What is the point of subsidising native forest logging, dropping the price and undermining the price of plantations at exactly the same time as you are providing managed investment scheme tax benefits for the planting of those plantations?

Now we have a scenario where the industry has turned up at the parliament saying: ‘Give us another handout. We want the renewable energy target to include burning biomass.’ This is the rescue package for the native forest logging industry. They do not have an industry at the moment. It has collapsed. So what they are trying to do is say, ‘Let us cut down native forests, burn them in furnaces, generate renewable energy certificates and sell them as green energy.’ They are not green energy. They are known colloquially in the market as ‘dead koala certificates’. They are known that way in the market for a reason: it is completely unjustifiable in economic, biodiversity or carbon terms or any kind of decent debate to say, ‘We need a make-work program for cutting down native forests now that we’ve got no market, so we’ll set up furnaces and we’ll burn them instead.’

As it currently stands, the way the legislation is structured, you can only generate a renewable energy certificate from burning native forest residues if they are generated from a higher use, so the debate is now on as to what constitutes ‘a higher use’. The way it is currently structured has been interpreted to be a higher value use, and as a result the industry has not been able to access the renewable energy certificates in the way it would like. But it is now seeking to do so.

I can tell you that there is a proposed native forest furnace in the southern forests of Tasmania at Southwood. There is a proposal for one in north-west Tasmania. Gunns had a proposal for a native-forest-burning furnace at its pulp mill in the Tamar Valley. There is a proposal for one at Orbost, in Victoria. There is one proposed for Eden as well, and the one at Eden is already in the planning process. The promoters of that native-forest-burning furnace are saying that it is critical to them to access the renewable energy certificates as part of the RET.

If there is any suggestion at all that the logging industry can get a lifeline for continuing logging native forests in the absence of a market by achieving access to the RET then it needs to be knocked on the head immediately, and that is why I have moved these amendments. If we are serious about climate change, we need to now say that in the absence of any market we need to transition people out of native forests into working in the plantation estate. That does not mean that people lose their jobs; it means that people transition out of one type of forestry into a different type of forestry.

We have been facilitating that transition with millions and millions of dollars for a very long time. Into the Tasmanian Community Forest Agreement, for example, $72 million was poured, in order to help people get out of the high conservation value forests. We have had millions poured in, right around the country—in fact, $250 million went, as the Community Forest Agreement, to Tasmania. And it is an utter and absolute disgrace that Forestry Tasmania so badly manages the forest estate in Tasmania that they have made a loss. They have no cash at all, and so they have dipped into the Commonwealth funds that were put into the Community Forest Agreement. They have dipped into it for cash reserves because they have got none. Their cash at the end of the financial year was something like $3.3 million, and there is no way they have got the money to pay back right now what they have dipped out of their Commonwealth grant. I have reported this to the federal minister. I have reported it to the Auditor-General. And I am very keen to know how it is that Forestry Tasmania can access specific grant money for operating expenses to give them a cash reserve because they cannot, it seems, get an overdraft for themselves.

So this industry is in crisis in Tasmania. It is in crisis in Victoria. It is in crisis right around the country. This is the opportunity to fix the problem, not to throw them yet another subsidy so that they can just keep limping along, because governments cannot continue to run a native forest industry in the absence of a market. And creating a market in renewable energy would be immoral at a time when we need to be protecting the carbon stores and the biodiversity and transitioning to that plantation estate.

That is why this is a crucial amendment—to make sure that this cannot be exploited as a loophole and a make-work program. And it is not a figment of my imagination. Just have a listen to what the industry players had to say on The 7.30 Report last week—that that plant at Eden depends on this. But also, in the pulp and paper strategy that the government released recently, it said that the native forest industry depends on getting native-forest-burning furnaces up. This REC will be part of doing that, and it will be a wreck for biodiversity and for any hope of achieving a solution.

Right now the conservation movement and the timber industry are sitting down and trying to find a way to a 100 per cent solution to this issue, and if this is not removed from the REC now then this will continue to be there as an opportunity to undermine the solution that is within our reach. So this is critical. We need to be doing it right now. And that is why I am moving this critical amendment that takes away any loophole or lack of clarity and removes biomass from native forest vegetation as an eligible renewable energy source.

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

I was not going to participate in this but I could not resist the opportunity to come down and put an alternative to the view that we do not admit native forest offcuts, sawdust or by-products into renewable energy. What do we do with those? Do we bury them? Do we tip them down the creek? How do we get rid of them? When you have a sawmill, when you saw logs, the by-product is sawdust. You cannot escape it—well, there probably is one way you can escape it: you do not have timber. These propositions that Senator Milne has put up have to be answered, because they are so unreliable and so stupid that someone has to put up some opposition to them.

I can recall that, maybe a year ago, a friend of mine had a sawmill at a place called Allies Creek. It was a beautiful little turnout: 14 or 15 houses, a community hall, and 60 to 70 jobs. He was shut down. Some of the people who worked for him, the saw doctors, were on $60,000 a year. One ended up counting koala bears. No-one worried whether there were any koala bears there, but they had to find him a job, so it was, ‘Go out and count koala bears.’ He was degraded. People who had been very proud of what they did were so degraded that they were put on a job that had no meaning. Their self-confidence was destroyed. Their jobs were destroyed. Their way of life was destroyed.

The by-product of that—of closing down that 60-job sawmill—was that there were about five acres, two football fields, which had to be dug up and the sawdust and log shavings had to be buried. That would have run a generator—I forget for how long; for six months or something like that. But, no—it had to be destroyed; it had to be buried. I do not know what the CO2 footprint was for burying that sawdust and those timber offcuts but they covered an area about the size of two football fields.

We have to approach this issue with some balance. There does not seem to have been any consideration by the Labor Party, and certainly not by the Greens, for the jobs of these blue-collar workers. They are completely expendable, according to the Greens. They do not even consider them. ‘Don’t worry, we’ll send the boys out to count kangaroos or koalas,’ or to paint rocks or do something that is meaningless and mentally destroys them. Those are the implications in some of the amendments that Senator Milne is moving. They have to be answered in the Senate. We cannot just let Senator Milne get up and make wild accusations that will lead to the continued loss of jobs without answering them. The answer, Senator Milne, is: what do you do with the by-product of timber? You just do not leave it there; it has to be destroyed or put somewhere. Do you put it in the ground at great extra cost? I would think that pushing tractors and diggers around would increase the level of CO2 emissions. I think these issues have to be ventilated and I hope, as I look to our spokesman on this, we will not be supporting these amendments. Senator Birmingham, can you—

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Make your comments through the chair, please, Senator Boswell.

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

Through you, Madam Temporary Chairman, I ask Senator Birmingham, and he confirms that we will not be stupid enough to support amendments like these.

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

Like Senator Boswell I need to put on the record some comments in relation to what Senator Milne has said and, most disappointingly, in relation to some of the misinformation that she has put about with regard to the forest industry, where the industry is at, what might be possible and what products should and could be used in the timber coming out of Australia’s forests.

Senator Milne quite frequently gets up in various forums and in this chamber to talk about the volume of plantation wood that exists and its capacity to take the place of native forests. That completely ignores the fact that a lot of Australia’s plantations have not been managed for sawlogs. They have not been managed to provide the high-quality timbers that Australia needs and continues to use for a range of things, such as the veneers that go into making the fine furniture in this place, the timber for our homes, fine flooring and things of that nature. These are high-quality-value products that are only able to be derived from Australia’s native forests. It is important that we get full value out of all the product ranges that come out of our native forests. For Senator Milne to assert that we can just move everybody out of the native forest industry to the plantation industry is just plain dishonest. It is not true; it cannot be done. Our plantations have not been managed for those types of quality timber, and they need to be.

When you look at what else is going on, you need to look at things such as the ongoing biodiversity of Australia’s forests. If we want to convert large areas of Australia’s native forests to plantation, which we will have to do if we are to have the supply, Senator Milne should push on with what she is doing. But that is not what we want to do. In Tasmania, we have the quite extraordinary situation where Senator Milne and Senator Bob Brown talk about the destruction forever of Tasmania’s native forests, and for that matter the native forests around the rest of the country. They say that these forests have been destroyed forever and that those that are left must be protected. Yet the really confounding thing is that, in Tasmania right now, 28-year-old regrowth forests that have been regrown from clear-fell and burn operations are now being claimed by the Greens and their friends as high conservation value forests that should be protected.

When you really look at that, what you understand is that the quality of the forestry management in Tasmania is of such a high standard that they are regenerating high conservation value forests, or forests that the Greens would like to claim as being of high conservation value. That can give the Australian community real confidence that the management processes of Australia’s forest industries, particularly in Tasmania but those in other states as well, is of such a standard that, when they get to the age of 28 years, the Greens now claim them as being of high conservation value, even though in their own language they were ‘destroyed forever’ by the forest industry when they were clear felled and burned. The inconsistencies in the arguments put forward by the Greens are plain for everybody to see.

If biomass were to come on stream in Australia, the industry estimates that 3,000 gigawatt hours could be generated from the existing waste that exists today, without transferring from any other product—that is, without touching another tree, without touching another single branch or leaf. So there is enormous capacity to generate energy at a reasonable cost, which is one of the issues that we face in this, by utilising the existing waste. We are not talking about conversion from other uses. Senator Milne tries to put this up as a saviour for the native forest industry. That is not what they are looking for. They want to use the existing waste. Yes, there have been proposals around the country for a number of years to generate energy at places like Southwood and the north-west coast of Tasmania, because there is a significant amount of wood waste from forestry operations in those regions. Rather than burning it in the open and creating a smoke problem, which the Greens and their friends all ring the local radio about on a regular basis, why not use it to generate energy at a reasonable rate? It just makes sense.

When you look at that use in comparison to, say, burning coal, you find that coal generates something like 955 grams of CO2 per kilowatt hour. This information comes from the WWF, from a brochure they have been using in Europe. Europe has a 15 per cent of energy target from biomass by 2020; they are talking about generating 15 per cent of their entire energy from biomass by 2020. There are 35 times fewer CO2 emissions over the lifecycle from using biomass rather than coal. Here we have the capacity to use a product that is significantly cleaner and is a renewable energy source, yet the misinformation and the misrepresentation of our forestry industries by the Greens is just outlandish. It is just ridiculous when, having said that these forests were destroyed by forestry operations, they then come back 28 years later and claim them as high conservation value forests. The hypocrisy of this is just extraordinary and it needs to be exposed for what it is.

Progress reported.