Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I table three supplement­ary explanatory memoranda relating to the government amendments to be moved to the Carbon Credits (Carbon Farming Initiative) Bill 2011, the Carbon Credits (Consequential Amendments) Bill 2011 and the Australian National Registry of Emissions Units Bill 2011. The memoranda were circulated in the chamber on 5 July 2011.

CARBON CREDITS (CARBON FARMING INITIATIVE) BILL 2011

Bill—by leave—taken as a whole.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

by leave—I, and on behalf of Senators Birmingham and Colbeck, move coalition amendments (1) to (7) on sheet 7080:

(1)   Clause 5, page 14 (after line 2), after the definition of Kyoto unit, insert:

land, in relation to an eligible interest in an area of land, includes the surface and the subsurface of the land.

(2)   Clause 5, page 16 (after line 26), after the definition of native title, insert:

native title future act provisions means the provisions of Division 3 of Part 2 of the Native Title Act 1993.

[consequential – application of native title future act provisions]

(3)   Clause 44, page 70 (lines 24 to 29), omit subclause (7), substitute:

(7)   For the purposes of this Act, if the area of land is land rights land in a State or Territory, the Crown lands Minister of the State or Territory holds an eligible interestin the area of land.

[consent of State or Territory minister]

(4)   Clause 45, page 71 (lines 4 to 8), omit subclause (2), substitute:

(2)   For the purposes of this Act, the Crown lands Minister of the State or Territory holds an eligible interest in the area of land.

[consent of State or Territory minister]

(5)   Clause 45, page 72 (lines 27 to 32), omit subclause (7), substitute:

(7)   For the purposes of this Act, if the area of land is land rights land in a State or Territory, the Crown lands Minister of the State or Territory holds an eligible interestin the area of land.

[consent of State or Territory minister]

(6)   Clause 301, page 301 (line 26), before "This", insert "(1)".

[consequential – application of native title future act provisions]

(7)   Clause 301, page 301 (after line 26). at the end of the clause, add:

(2)   To avoid doubt, the native title future act provisions apply to any consent under this Act in relation to native title land.

[application of native title future act provisions]

These amendments are essentially designed to improve what is currently bad legislation because there are some important issues which have been identified by the WA state government and others around Australia. There is the potential for some real negative ramifications for states with significant areas of crown land if these amendments are not approved by the Senate. Of course, the Senate is the states house, so I am sure that senators on all sides of the chamber will reflect on their responsibilities to act as representatives of the states and will very carefully consider the amendments that the coalition is putting forward and, of course, then support them. They are sensible amendments that would improve what is currently somewhat flawed legislation.

I will go through the amendments in detail. As a senator for Western Australia, I will focus a little bit on some of the circumstances in WA to make a point, but it does have broader application. Of WA, 36 per cent is vacant crown land. The amendments that we are proposing would make the following changes. States need to have what would be described as an 'eligible interest' over crown land. Under the bill as drafted it is not clear at all that state governments would have an eligible interest over all crown lands and, given that the state could incur residual liabilities as a third party under the carbon maintenance obligations in the bill, for example, the coalition believes it is only reasonable that state governments should have a declared eligible interest in the land and be consulted before a carbon farming scheme is allowed. So amendments (3), (4) and (5) ensure that the relevant state minister in all states has an eligible interest over projects on crown lands.

There is also the issue of subsurface rights. It is important to make clear that subsurface rights are protected in the bill, particularly to avoid negative impacts on petroleum tenements. Amendment (1) addresses the subsurface rights issue by expanding the definition of eligible rights in land to include subsurface right interests in land.

Further, in relation to native title, exclusive possession native title holders under the bill have an eligible interest in carbon sequestration. This effectively gives them a right of veto and requires further consultation in addition to that required under the Native Title Act 1993 future act process. This kind of veto power would have negative ramifications on development and as such would not be in the national interest or in the interests of respective state economies. The amendment makes clear that the Native Title Act 1993 future act provisions apply to native title consents under this proposed legislation. The issue is addressed in amendments (2), (6) and (7).

In this context, I will read relevant correspondence that I received from the Minister for Mines and Petroleum, Minister for Fisheries, Minister for Electoral Affairs and the Leader of the Government in the Legislative Council in the great state of Western Australia. I will just read it in part:

I am writing to express the concerns of the Western Australian State Government with regards to the content which is intended to be drafted into the Commonwealth Government's Carbon Credits (Carbon Farming Initiative) Bill 2011 (CFI bill). I believe it is important that you … are aware of the potential implications of the proposed legislation to Western Australia's land and tenure system, and resource exploration and production. The concerns contained in this letter were expressed by the following State Departments: the Department of Regional Development and Lands, the Department of Mines and Petroleum, and the Office of Native Title.

According to the Proposed treatment of native title and land rights land under the CFI Bill discussion paper circulated by the Commonwealth Department of Climate Change January 2011, there are three ways that land interests are relevant to projects under the CFI bill:

So this bill will:

… deem that exclusive possession native title holders are eligible to participate in the carbon sequestration scheme; i.e. exclusive possession native title holders have 'eligible interests'. Further, no other person is taken to hold the applicable carbon sequestration right in relation to the project area or the legal right to carry out the project. As the holders of an eligible interest, the native title holders would need to provide their consent before any sequestration project may proceed on the land.

In Western Australia ownership of minerals and petroleum resources are vested in the State. Mineral exploration and mining entities may access rights to minerals, subject to payment of rents and royalties, by obtaining mining titles to exclusively explore and develop the mineral resources. Mining in Western Australia is administered under the State's Mining Act 1978. Similarly, exploration and production of petroleum is permitted only under the provisions of the Western Australian Petroleum and Geothermal Energy Resources Act 1967.

In the same way as an owner of freehold land has an interest in that freehold land, the State of Western Australia has an underlying interest in Crown land, including Crown land that is determined to be exclusive possession native title. The CFI bill however makes no provision for the State to be consulted or, as the holder of an interest in Crown land, to give consent for sequestration projects. As with any other party with an interest in Crown land, the State should also be required to give consent to any CFI scheme including any CFI scheme proposed on exclusive possession native title land.

There is potential for the State of Western Australia to have liabilities to third parties if a carbon sequestration project is created over Crown land without the State's consent. For example, the land could have been allocated for a major resource or other development, or the area may be subject to a contract to give tenure over that land. Conflicts may arise if mining or petroleum tenements are granted over areas where native title parties intend to or already have implemented carbon farming projects. There is no mechanism under the proposed legislation to address the potential conflict between a carbon sequestration project and existing and future mining and petroleum tenements. Therefore, the State of Western Australia would require notification and consent provisions in any carbon sequestration project to effectively prevent conflict with any other existing interests in the land.

If the legal right to carry out a CFI project ceased to exist or the project participant ceased to be eligible to participate in the CFI scheme, the State could incur residual liabilities as the owner of the land under the carbon maintenance obligation (CMO). The CMO will require that carbon stocks be maintained by subsequent owners. As persons having an interest in land could be affected by a CMO, one of the underlying principles of the CFI scheme is to ensure these persons provide their consent to the land being a part of the scheme. Accordingly, the Commonwealth proposes that native title holders and claimants must provide consent to use of the land for a carbon sequestration project, but fails to acknowledge the State's ongoing interest in Crown land.

As exclusive possession native title holders are going to be regarded as having an eligible interest in carbon sequestration and must give consent before any sequestration project may proceed on the land, this requires consultation and negotiation on top of that already required by the Commonwealth Native Title Act 1993 (NTA) future act process. Under the NTA future act process, arbitration is available to resolve disputes. However, under the Commonwealth's CFI scheme the native party effectively has the power to veto any proposed carbon sequestration projects. This is so, even if they only have future act procedural rights as a native title claimant, rather than rights of a determined exclusive possession native title holder. This right of veto would have negative ramifications in Western Australia and therefore the State Government strongly urges the continued use of the NTA future act provisions to apply to native title consents.

An additional issue is that the draft CFI legislation—

which has been transported into this bill—

does not indicate whether the scheme will affect subsurface rights or how any implications are to be managed if they were to occur. Accordingly, to avoid the scheme impacting on petroleum tenements, the State requests that protection of subsurface rights and access to these interests be guaranteed in the legislation.

And here is the important bit in relation to this:

Currently, 26.5% of Western Australia constitutes determined exclusive native title land. Within the boundaries of this land, there are 1059 mining tenements impacted by determined exclusive native title claims. Of these, 432 are live tenements and 627 are pending tenements. The total area of mining tenements over the determined exclusive native title claims is 18,740,919 ha, of which 5,197,420 ha are live tenements and 13,543,499 ha are pending tenements. Also, there are 23 granted petroleum titles impacted by determined exclusive native title and 20 under application.

The relationship between native title holders and other stakeholders needs to be the subject of careful consideration in the context of the Commonwealth's CFI proposal. The State has grave concerns that the current formulation of the Commonwealth's proposed CFI legislation could create considerable difficulties for the administration of Crown land in Western Australia. This is due to, firstly, Western Australia's unique position with regard to the extensive amount of land subject to determined exclusive possession native title … and the potential for significantly more land to become exclusive possession native title. Also, the State's concern is a result of the nature of Western Australia's land tenure system and the importance of resource exploration and production to the State. Accordingly, these circumstances need to be considered and addressed before the draft bill is finalised.

The State through its ownership of minerals and petroleum has interests in Crown land and therefore any scheme that enables any interest in carbon sequestration should require the State's consent.

And he goes on.

The reason I have read all of this into Hansard is this. The government is proposing legislation which the coalition supports in principle but which seriously needs to be amended to address these issues. We do not want to have negative, unintended consequences when it comes to economic development in this context in the state of Western Australia, because keeping econo­mic development strong by keeping the mining industry strong, and through strong development of our petroleum and mineral resources is, of course, in the national interest.

But this government is pushing ahead with a national mining tax which seeks to collect about 65 per cent of its revenue out of iron ore production in Western Australia over the next decade. If that were to go ahead, this government would of course have a very significant interest in what happens with minerals exploration and production in Western Australia. But that is separate legislation and I am not going to get too distracted. It is bad legislation which we will oppose because it is deeply flawed and comes out of a flawed process.

However, there are some issues here, in the context of the interaction between the carbon farming initiative legislation and native title legislation, and various other provisions that are relevant to state and territory governments, that have not been adequately addressed in this legislation. They should be addressed, in the interests of making sure that this legislation can operate effectively. But they also should be addressed to ensure the ongoing strong economic development in states like Western Australia, because that is in the national interest. Finishing off where I started, given that this is the states' house and the Senate was set up by our forefathers as the chamber of this parliament with a particular focus on the interests of states—every single senator in this chamber represents a state or territory in Australia—the issues raised by the Western Australian government are legitimate. They are issues that senators should consider very carefully. On behalf of the coalition and, in particular, Senators Birmingham and Colbeck, who join me in proposing these amendments for the coalition, I commend these amendments to the Senate. I hope that all senators will support them.

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

I rise to say that the Greens will not be supporting the coalition's amendments. We will not support amendments which undermine native title rights and, in particular, undermine the capacity of Indigenous people to maximise their benefits under the carbon farming initiative. We see this as one of the pieces of legislation which will genuinely provide opportunities for Indigenous people. I think it is appalling that what is being proposed is the agenda of the Liberal Western Australian government to undermine the rights of Indigenous people and to undermine the native title provisions.

I indicate to the chamber that the Greens not only will be opposing the coalition's agenda to undermine the rights of Indigenous people but also in a little while will be moving an amendment which expands the capacity of Indigenous people to maximise the benefits under the Carbon Credits (Carbon Farming Initiative) Bill.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

The government will not be supporting the amendments. The first amendment seeks to clarify that land includes the surface and subsurface, of particular interest to the West Australian government, which has raised concerns about potential negative impacts on petroleum and mineral tenements. The government accepts that there is policy merit underlying this amendment, but in this form it may not achieve the intended outcome. The government will consider providing clarification in regulations to clarify that a person who holds a mining lease in relation to an area of land holds an eligible interest in that area of land. For these purposes a mining lease is a lease or licence, however described, conferring on the holder the right to mine or recover minerals or petroleum on a specified area of land. A mining lease does not include a permit or licence to fossick, prospect, explore, assess or undertake other activities ancillary to the mining or recovery of minerals or petroleum.

The other amendments relate to Crown consents for projects being undertaken by exclusive native title or freehold land rights holders—that is, on Indigenous held land that is equivalent to freehold. The bill currently removes the need for any relevant minister, either the minister administering a land rights scheme or the state Crown minister, to consent to projects on Indigenous held land that is equivalent to freehold. These amendments which the government opposes would reverse this position so that the state Crown ministers would have a consent right—effectively a veto—on any projects on Indigenous held land that is equivalent to freehold.

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

I rise to support the amendments moved by Senator Cormann both on my behalf and on behalf of Senator Colbeck. This is an important matter which was considered by the Senate Environment and Communications Legislation Committee inquiry into this legislation. It identified a submission to the inquiry by the Premier of Western Australia, the Hon. Colin Barnett, who considered the carbon sequestration right provisions in the bill. He said in his correspondence to the committee:

… by a clear negative implication, indicates that the relevant State Minister does not hold an "eligible interest" in State Crown land if that land is not Torrens system land and is subject to a determination of exclusive possession native title.

The committee said:

Premier Barnett was of the opinion the bill 'arbitrarily limits and curtails the rights of the State over State Crown land' and 'the Bill is discriminatory in relation to the State's interests as the State is treated differently from private land owners'.

These are serious concerns, along with so many concerns the opposition has about the approach the government has taken to this legislation. They are and remain unresolved in the approach the government has taken. I urge the government to reconsider and engage in some discussion with the states about this matter. I was chatting to my friend and colleague the shadow minister for COAG this morning who informed me that the next COAG meeting has been deferred yet again. It seems that the government is reluctant to talk to the states about terribly much at all at present for fear of finding disagreeable premiers when it gets to the table or something. But on this matter it is important that the government speak with the states and get it resolved.

I note that there was broad discussion around issues related to native title in the committee report. Even in the majority government comments there was a finding and a recommendation:

… the government address obstacles to indigenous participation in the CFI, including resolving outstanding uncertainties in relation to participation by holders of non-exclusive native title.

Whilst Senator Cormann's amendment may address other matters, I challenge the minister to identify what steps the government has taken since its own senators identified that there were outstanding uncertainties surrounding this legislation and how it will operate in this regard. These are matters that it is important to resolve, and they are important for all stakeholders, be they the Indigenous groups that may see opportunities to participate or state governments that have a not unreasonable expectation that interests in crown land and the like are managed in a certain environment. What is the government doing to provide some certainty in the framework for all of these various stakeholders and to respond to the committee report and the recommendation, which was not a recommendation of coalition or opposition senators but a recommendation of the government's own senators? There were many recommendations about this legislation, and throughout this committee debate I hope that we will hear from the government what steps they have taken to address their own senators' concerns. If they have not taken steps then, of course, it again raises the question of why we are being asked to debate this legislation and finalise this legislation here and now without the full details of the regulations and complementary legislation on the table. Minister, I would again draw your attention to those remarks of Premier Barnett that were identified by the committee and, indeed, to your own government senators' findings in the committee report regarding outstanding uncertainties in this space.

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

In the majority report of the Senate committee that looked into this, recommendation 7 was:

The committee recommends the government address obstacles to indigenous participation in the CFI, including resolving outstanding uncertainties in relation to participation by holders of non-exclusive native title.

I understand what the minister, Senator Conroy, has said—that this would act as a right of veto. Could he expand on that? This was a recommendation of government senators in the majority report. It acknow­ledged the very serious concerns that were raised by the National Native Title Council and the Kimberley Land Council. The National Native Title Council said that the bill gave certainty to exclusive native title rights holders and treated them in a way that was 'fair and appropriate', and the govern­ment is to be commended for that in relation to the bill. But the NNTC, the National Native Title Council, said:

The failure to provide a clear pathway for non-exclusive native title holders into participation in offset projects is a major weakness …

When you consider the submission and evidence of the NNTC, it says, for instance:

Let us take Western Australia as an example. Approaching 20 per cent of the state is subject to an existing native title determination and, of that approaching 20 per cent, probably 90 per cent or 85 per cent is non-exclusive native title. This bill, other than by the mechanism of an Indigenous land use agreement with a state or territory government, provides no opportunity for non-exclusive native title holders to participate.

If you want to deal with Indigenous opportunity and this particular issue, there is enormous uncertainty. The National Native Title Council's significant concern is that:

… by sidelining the treatment of non-exclusive native title, by relegating the treatment of that issue to the Native Title Act, in fact the Carbon Farming Initiative bill is excluding non-exclusive native title holders from participation.

The Kimberley Land Council say:

The treatment of non-exclusive native title is discriminatory and fails to accord proper importance to the interests carried by native title.

…   …   …

The KLC observes that the effect of the proposed system would be to confer proprietary rights in carbon on holders of non-exclusive non-native title interests, while excluding non-exclusive native title holders simply by reason of the type of proprietary interest they hold. The KLC considers that there is a real risk that such an approach is inconsistent with the Racial Discrimination Act …

So my questions to the minister are: firstly, has the government got advice as to any potential breaches of the Racial Discrimination Act in relation to the concerns expressed by the Kimberley Land Council; secondly, how is the government addressing the, I think, very legitimate concerns of the majority of the committee, a committee that is chaired by a government senator and that has looked at this very, very carefully? Senator Cameron and his committee have done a very diligent job in exploring, I think very fairly, the concerns that have been raised. The committee recommended that the government address obstacles to Indigenous participation in the CFI. How does this bill address those concerns of the committee, and is there an issue with the Racial Discrimination Act? It is a real concern to me that the Kimberley Land Council has flagged that there could be a Racial Discrimination Act action taken because of this bill.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I am just taking as much advice as I can on your many questions, Senator Xenophon. I am told that our advice is that in no way does anything we have done breach the Racial Discrimin­ation Act. We are supporting the Greens' amendment, which I think addresses many of your concerns, and we are still in the process of some ongoing consultations about some other issues. I think the Greens' amendment deals with many of your concerns, and we are very supportive of that.

Question put:

That the amendments (Senator Cormann's) be agreed to.

The committee divided. [11:17]

(The Chairman—Senator Parry)

Question negatived.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

by leave—I move government amendments (1) to (12) on sheet BR233:

(1)   Clause 27, page 45 (line 24), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(2)   Clause 29, page 48 (line 14), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(3)   Clause 30, page 50 (line 11), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(4)   Clause 31, page 52 (line 9), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(5)   Clause 32, page 54 (line 10), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(6)   Clause 33, page 55 (line 2), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(7)   Clause 34, page 55 (line 25), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(8)   Clause 35, page 56 (line 16), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(9)   Clause 36, page 57 (line 4), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(10)   Clause 37, page 57 (line 29), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(11)   Clause 38, page 58 (line 27), before "the", insert "if the declaration relates to a sequestration offsets project—".

[land registration official]

(12)   Clause 215, page 244 (line 5), omit "section 75AA", substitute "section 75".

[technical correction]

The amendments to requirements to notify land registration officials remove an obligation on the scheme regulator to notify state land title officers of emission reduction projects because, of course, doing so would be unnecessary. As currently drafted, the administrator must notify the land registration official of all declarations, whether they be in relation to sequestration offsets projects or emission avoidance projects so the register can reflect that a carbon maintenance obligation may apply. Carbon maintenance obligations, however, only apply in relation to sequestration offsets projects. There is therefore as a consequence no need to notify land registration officials of declarations in relation to emission avoidance projects. Item 1 addresses this issue by ensuring that the administrator is only required to notify the land registration official of declarations in relation to sequest­ration offsets projects.

The item 12 amendment, in reference in a note in the CFI bill, corrects a minor drafting error. Clause 215 of the bill deals with audits, and the note in subclause (2) refers to the conduct of audits being dealt with in section 75AA of the National Greenhouse and Energy Reporting Act 2007. There is, surprisingly, no such section. Instead, the reference should be section 75 of that act. Amendments to the Australian National Registry of Emissions Units I will deal with subsequently.

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

I thank the minister and the government for moving these amendments. Obviously, as the minister has explained, the detail of these amendments is a sensible change. The detail will ensure that a copy of declarations is only required to be given to land registration officials if the declaration relates to a sequestration offsets project rather than an emissions avoidance offset project. That is the common sense way this should operate and, accordingly, the opposition will support the government's amendments in this regard. However, I note that these amendments relate to the declaration of sequestration offset projects. The need to declare such offset projects stems from matters of the permanence of such projects and the need for future landowners or interested purchasers of land to understand the obligations that flow from that ongoing permanence.

As a result, I bring to the minister's attention recommendation 3 of the Senate inquiry into this matter. It looked at matters of permanence and urged the government to continue monitoring scientific research relevant to the issue of permanence and to adjust permanence obligations to the CFI to reflect international consensus on this matter. That was a government senator's amendment and the coalition feels strongly that the matter of permanence needs as much clarity as possible. We note those who made strong submissions to the inquiry that the 100-year provisions were too long and would discourage some potential proponents from participating in the scheme. Equally, there were some who did not believe the 100 years was long enough.

The CFTA appeared before the inquiry and described the provision as the 'deal killer'. I will read an extract of the evidence that is highlighted in the inquiry. Mr Michael Kiely, Chairman of the CFTA, stated:

No farmer would be silly enough to agree to 100 years for soil carbon or 100 years for anything. A finance lender would want to know seriously the impact on the value of the property of agreeing to such a thing. We did some research into the 100 years thing and discovered it was a policy decision, not a scientific measure ...We believe that 100 years is a perverse outcome. The result is said to be necessary so buyers can be confident they are getting value—that is, genuine abatement—so they get nothing. There is nothing available for them. We have found examples where the IPCC and the Verified Carbon Standard have allowed other periods of time recently—20, 25, 30-odd years. We believe we could work within that sort of time frame.

AUSVEG, in appearing at the committee and in submissions, were also critical of the 100-year provision, stating:

... it would take a very brave farmer to agree to 100 year permanent arrangements in which they (and their children and grandchildren) will be held accountable for "natural disturbances such as drought that may cause carbon to be released from the soil".

Equally, placing all risk and costs as the growers' responsibility for "bushfire ... drought, or actions by neighbours or third-parties" belies the Government's own commitments to meeting its Kyoto obligations.

Given these serious challenges and immense uncertainty of carbon markets, it is quite unrealistic to expect vegetable and potato growers to sign 100 years commitments (with the threat of civil and criminal prosecution), undertake major investments, and change generational farming practices without any firm guarantees on the price they will be paid.

Another of those submitters which highlighted difficulty is CO2 Group Ltd. Its Chief Executive Officer, Andrew Grant, indicated:

It is a problematic issue in that, from an invest­ment perspective, after the growth period you have a long maintenance obligation with no income off it. Whether that is 100 or 50 years is rather semantic post the growth period. So, for argument's sake, say you have a 50-year growth period. You then have a 50- year permanence obligation.

I highlighted these examples of evidence given to the committee to bring the minister's attention to the government recommendation about the need to monitor the research relevant to the issue of permanence and adjust permanence obligations in the CFI. I also seek, for the benefit and record of this debate, his response to what processes the government will put in place to honour that recommendation and ask how they are going to respond to the concerns that were highlighted through the Senate committee process and what they will do in this regard. Again, I emphasise these were issues raised by the government dominated Senate committee not raised by the opposition. It is important for the stakeholders in this regard to actually get from the government some detailed response on the record as to how these issues will be dealt with going forward.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

It is something I dealt with in addition if I recall during my summing up speech. To be clear, it is an area where the government has recognised the need to keep this under review because the environmental integrity is the risk of the reversal buffer. The government accepts that there needs to be continuing monitoring of that. Particularly, it has recognised the need to keep this under review as further evidence is gathered of the potential risk that could occur.

The CSIRO is well placed to do further work in this area. Similarly, which you talked about, the permanence requirements which are relevant only for sequestration projects will also be monitored in light of international consensus on these issues. It is one of those areas where the government recognises some of the issues that you raise but it is important to put them in perspective. First of all to go through the approval process, if I use that broad frame, from the methodology being approved, the recognised offset entity, the project approval, reporting, crediting, the termination of transfer of projects through to compliance, all of that means that there are methodologies which will have to be dealt with. Then they can use those which adds to the framework to ensure that the project does actually provide that permanence and proponents will not have to hand back credits for losses caused by such things as you raised, namely the impact of a drought or a natural disturbance.

These carbon stores will recover as forests regrow. Of course we have seen across the eastern seaboard as droughts lift we return to, in some instances, other natural disturb­ances such as floods. But they too, as we have seen across Queensland, are recovered from. Having gone into some of these regions I have seen roads, infrastructure and bridges being rebuilt but also the return to farming in those areas which suffered damage. NRMs are also assisting in returning areas to their natural state. All of that means that the proponents will not have to hand back credits for losses caused by those instances that you raised specifically.

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

I ask the minister, in terms of the matters touched on by Senator Birmingham about the commercial concerns, whether there will be difficulty in financing if you are locked into this. I am not sure where the 100 years comes from. Maybe the proponent of the 100 years was a fan of Gabriel Garcia Marquez who wrote One Hundred Years of Solitude. I am not sure where that comes from.

Senator Milne interjecting—

It is a good book, Senator Milne.

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

You are showing off!

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

No, I am not showing off, it is a good book! The concern is this: did the government look at issues of commercial uncertainty by having such a period locked in? Has it received representations—presumably it has—in relation to this? It was reflected in the Senate inquiry about the impact that it could have on financing in some cases by virtue of the 100-year provision.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

The interesting issue here is the confluence of two matters. One is that we are happy to keep the permanence issue under review but it is essential to the environmental integrity of the scheme that we have to have that period which allows the scheme to operate and 100 years provides that permanency. The second matter you raised about the funding you could say that, with the way the commercial world works in relation to permanence, they are not coupled. You do not have to have, as I understand it, the commercial arrangement which matches that permanence. If you work through the schema, it is about the methodologies being approved. It is about the recognised offset integrity, the project approval, the reporting and the crediting. That is where the commercial entities will sit across that area and of course the termination of transfer of projects. You will have projects that will develop and have commercial outcomes and go for periods of time but that is distinct from the permanence. They are not interlinked in the way that you have described.

Question agreed to.

I move:

That progress be reported.

This motion is necessary to allow us to move to other business, I think by agreement with all those in the chamber.

Question agreed to.

Ordered that consideration of this bill in Committee of the Whole be made an order of the day for a later hour.