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

I present the explanatory memoranda and I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speech es read as follows—

CLEAN ENERGY BILL 2011

This House has been debating climate change for decades.

Parliamentary debate of this issue predates this building itself.

My predecessor as Member for Lalor, Barry Jones, once said this about climate change:

If we are only prepared to plan five years, 10 years, 15 years or 20 years down the track all the dangers that are feared can be avoided.

Those words were spoken twenty four years ago next week.

We have now had decades of heated public argument and political opinion.

Alongside decades of enlightened scientific research and economic analysis.

After all those opinions have been expressed, most Australians now agree:

•   our climate is changing

•   this is caused by carbon pollution

•   this has harmful effects on our environment and on the economy

•   and the Government should act.

And after all that analysis has been done, most economists and experts also now agree:

•   The best way is to make polluters pay by putting a price on carbon.

So that is the policy of the Government I lead.

And that is the plan which is before the House now.

A plan for a carbon pricing mechanism which means around five hundred big polluters to pay for every tonne of carbon pollution they put into our atmosphere.

A plan to cut carbon pollution by at least 160 million tonnes a year in 2020.

A plan for tax cuts, increased pensions and increased family payments.

A plan for clean energy jobs and investment ... a plan for a clean energy future for our country.

Today we move from words to deeds. This Parliament is going to get this done.

There will be a price on carbon from 1 July 2012.

The carbon pricing mechanism which begins its course through our Parliament today is the product of years of public policy discussion and development.

In the late 1990s, the Australian Greenhouse Office published papers setting out how a carbon price might work and sought public submissions.

Then the National Emissions Trading Taskforce established by the States and Territories, and the Shergold report set up by the Howard Government, embarked on extensive consultation processes.

Each generated wide ranging recommendations on designing the mechanism for a carbon price.

Further consultation on detailed design issues occurred through the Garnaut Review, the Green and White Papers, and in response to draft legislation supporting the former Carbon Pollution Reduction Scheme, defeated in the Senate.

In September 2010, the Government convened the Multi-Party Climate Change Committee to agree a way forward.

In February this year, the Government released a Climate Change Framework for public discussion.

In July, the Government announced the carbon pricing mechanism and, later that month, released draft legislation.

We received over 300 submissions on the draft bills and had extensive discussions with businesses, non-government organisations, other governments and legal stakeholders.

All adding to the literally thousands of submissions which have been made to Government on this issue over the years.

Many advocates and advisers have worked enormously hard.

I am grateful for the tremendous energy and seriousness with which so many have treated these exhaustive – even exhausting – discussions.

All part of the years of research and analysis which underpin the policy embodied in the legislation I introduce today.

I firmly believe no stone remains unturned, no voice unheard.

So this is the plan for Australia’s carbon price.

A modern policy approach, with efficient allocation and incentive to innovate, linked to global markets.

A fixed price for the first years – a well designed market from 2015.

Assistance for emissions intensive, trade exposed industries.

Evidence-based emissions targets. Abatement at the lowest economic cost.

All adding up to a new bottom line: Where polluters pay.

THE LEGISLATION BEFORE THE HOUSE

Let me turn to the main features of the Clean Energy Bill 2011.

Application of the mechanism

The Bill provides that the carbon price will be paid by liable entities, which have facilities that emit 25,000 tonnes or more of carbon pollution a year.

It will also cover landfills that emit 10,000 tonnes or more, where these are within a specified distance of landfills that emit 25,000 tonnes or more.

Large users of natural gas will be liable parties in their own right, while natural gas suppliers such as retailers will pay a carbon price for the emissions that arise from the use of the natural gas by smaller customers.

Around 500 entities will have mandatory liabilities under the carbon pricing mechanism.

Around 500 polluters will pay.

To determine liability, the carbon pricing mechanism will draw on information reported under the National Greenhouse and Energy Reporting System, an established measurement system for greenhouse gas pollution developed under the Howard Government and which commenced on 29 September 2007.

The carbon pricing mechanism will not apply to agricultural emissions, legacy emissions from landfill facilities, and emissions from landfill facilities closed before 1 July 2012.

The Bill recognises that there are different ways in which businesses structure their affairs.

It specifically deals with joint ventures – a common feature of resource and energy projects.

And it allows businesses to transfer liability under the mechanism within their corporate groups.

Moving from a fixed to a flexible price

The Bill provides for a fixed carbon price for three years, starting at $23 per tonne of carbon pollution.

A fixed carbon price, set out in legislation, provides business with certainty as our plan begins – and allows for a manageable transition to carbon pricing.

After three years, the scheme automatically transitions to a fully flexible cap and trade emissions trading scheme.

From this time on, a cap will be placed on national emissions and the carbon price will be determined by the market.

The Bill also provides for a price cap and a price floor to apply for the first three years of the floating price period.

This will limit market volatility and reduce risk for businesses as they gain experience in having the market set the carbon price.

Pollution caps

At the heart of an emissions trading scheme is a cap on carbon pollution.

These caps will guarantee reductions in carbon pollution and allow us to achieve our long term target of an 80 per cent reduction from 2000 levels by 2050.

Achieving this target will take more than 17 billion tonnes of carbon pollution out of the atmosphere between now and 2050.

In 2050 this will cut 9 out of every 10 tonnes of pollution compared to what would happen without our plan.

Under the arrangements that this Bill would put in place, pollution caps will be set by the Government with advice from the expert, independent Climate Change Authority.

If caps are not set, then default caps will apply, which reflect Australia’s unconditional, bipartisan commitment to reduce our greenhouse gas pollution by 5 per cent below 2000 levels in 2020.

To provide stability and notice for business, cap-setting regulations will be made well in advance.

International linking

The Bill makes provision for the Australian carbon pricing mechanism to interact with credible international efforts to reduce carbon pollution.

International linking gives liable parties access to a broader range of abatement opportunities, which helps contain costs and helps promote international action on climate change.

Liable parties will be able to meet up to half of their obligation through the use of international carbon units.

This will ensure that only robust, environmentally credible international units are allowed to be used for compliance.

Jobs and Competitiveness Program

The Government understands that there is nothing more important to families than having a job.

So we will take special measures to support jobs and keep Australia competitive internationally.

The Bill makes provision for certain industry assistance measures, which will ensure that our industries are in the best position possible to manage a smooth transition to a clean energy future.

The Jobs and Competitiveness Program will assist emissions-intensive, trade-exposed industries in making that transition to a low-emissions economy, while protecting Australian jobs and competitiveness.

It will allocate around 40 per cent of the revenue raised by the mechanism to this purpose.

The effectiveness of the Program will be subject to ongoing review by the independent Productivity Commission.

The many activities the Program may cover are dealt with in Regulations, to be published in draft by the Department of Climate Change and Energy Efficiency later this month.

These regulations have been designed in close consultation with the affected businesses and can be adapted over time as needed.

Energy security

The move to a low-emissions economy will pose an adaptive challenge for our energy supply industry.

The Government will implement measures to underpin a successful energy market transition and maintain secure energy supplies.

The Bill provides for an Energy Security Fund to provide assistance to Australia’s most emissions-intensive coal-fired generators.

This will underpin ongoing confidence in the sector and support new – and much needed – investment in new energy sources and infrastructure.

Assistance will be conditional on meeting tests relating to maintaining energy security, as well as publishing Clean Energy Investment Plans setting out their intentions for new investments and other matters.

In addition to these legislative measures, the Government will seek to close around 2000 megawatts of highly polluting generation capacity by 2020.

Closing down some of our high pollution coal-fired capacity makes room for investment in low pollution plant and starts the transformation of our energy sector in a responsible way.

Governance

The carbon pricing arrangements will be supported by robust and independent governance arrangements.

The Clean Energy Regulator will work with liable entities to ensure compliance with the mechanism and is specifically charged with educating and advising them about it and how they may comply.

The Regulator will have appropriate and proportionate powers to monitor compliance, and where problems emerge, to take action to address them.

Enforcement and penalties are focused on those who have obligations under the mechanism – not on the general public.

The Regulator is a public body, bound to act in the public interest and in accordance with the constraints imposed by the Bill and by other Commonwealth laws.

Reviews

In addition to the specific advice to be provided to the Government on issues like pollution caps, the Bill provides that the mechanism will be reviewed over time by the independent, expert Climate Change Authority.

This scrutiny will ensure its ongoing relevance, robustness and integrity.

Package of Bills

This Bill is part of the Government’s total package of clean energy legislation implementing the carbon pricing mechanism and related reforms.

The Clean Energy Bill 2011 sets out the core provisions of the carbon pricing mechanism – its architecture and its review arrangements.

Consequential amendments are made to other Commonwealth laws to integrate the carbon pricing mechanism with existing laws on climate change, economic regulation and taxation.

These changes are set out in the Clean Energy (Consequential Amendments) Bill 2011.

The implementation of an effective carbon price on transport through the fuel taxation, customs and excise system is achieved through the Clean Energy (Fuel Tax Legislation Amendment) Bill 2011, the Clean Energy (Excise Tariff Legislation Amendment) Bill 2011 and the Clean Energy (Customs Tariff Amendment) Bill 2011.

Charges under the carbon price mechanism are dealt with in the Clean Energy (Unit Shortfall Charge—General) Bill 2011, Clean Energy (Unit Issue Charge—Fixed Charge) Bill 2011, Clean Energy (Unit Issue Charge—Auctions) Bill 2011,

Clean Energy (Charges—Excise) Bill 2011, Clean Energy (Charges—Customs) Bill 2011, and the Clean Energy (International Unit Surrender Charge) Bill 2011.

The price impact of the Government’s plan will be modest – but I know family budgets are always tight.

So most of the money raised from the carbon price will be used to fund tax cuts, pension increases and higher family payments.

The Government has taken the opportunity to give pensioners extra help.

Every older Australian who relies solely on the pension will be among the four million Australian households who get a “buffer” for the budget, with the extra payments being 20 per cent higher than their average extra costs.

And the Government has taken the opportunity for tax reform as well.

We’ve more than tripled the tax free threshold.

Combined with other changes, this means that 450 000 people – who earn between $16 000 and $20 500 – will have all their tax cut. They will now pay no tax.

A tax reform which rewards work – which builds on our Budget changes to lift workforce participation and spread the benefits and dignity of work to every Australian.

The assistance to households provided through the tax and transfer system is delivered through the Clean Energy (Household Assistance Amendments) Bill 2011, the Clean Energy (Tax Laws Amendments) Bill 2011 and the Clean Energy (Income Tax Rates Amendments) Bill 2011.

The Climate Change Authority is set up by the Climate Change Authority Bill 2011, which also sets out its functions. Similarly, the Clean Energy Regulator is established by the Clean Energy Regulator Bill 2011.

AUSTRALIA’S CLEAN ENERGY FUTURE

We govern in a world of change, a world that is transforming.

My task as Prime Minister, my Party’s task in Government, this Parliament’s task as it meets today, is to lead our country through this transformation.

Not to hide from change ...

... to make change work for us.

To use our strength today to build strength for the future.

The jobs of the future are clean energy jobs.

Employment is projected to grow strongly with a carbon price.

Around 1.6 million jobs to be created to 2020 ... a further 4.4 million to 2050.

The investment of the future is clean energy investment.

All up, the carbon price will support $100 billion worth of investment in renewables in the next forty years.

The Australian economy will continue to prosper while cutting carbon pollution.

Real gross national income per person is expected to increase from today’s levels by around $9,000 per person to 2020 and more than $30,000 per person by 2050.

If we can do all this:

Cut carbon pollution.

Keep growing our economy.

Keep growing jobs.

Why wouldn’t we act?

So the Government will act.

And the Parliament should support us.

THE RIGHT SIDE OF HISTORY

There is a reason votes on legislation in this House are recorded.

There is a reason these matters are decided in an open vote.

It is so every member in this place can be judged.

Judged on the decisions they make here ...

... judged on where they stand on the great issues of our national debate.

Judged by every Australian.

Judged now ... judged in the future.

Because the final test is not: are you on the right side of the politics of the week or the polls of the year.

The final test is this: are you on the right side of history.

And in my experience, the judgement of history has a way of speaking sooner than we expect.

To newer members of this place, I say, just ask those more senior members who sit opposite.

Ask those who voted in this house against Medicare in 1983.

How smart did that look in 1984?

Ask those who voted in this house against universal superannuation in 1992.

How smart did that look in 1993?

Ask those who voted for WorkChoices in 2005.

How smart did that look in 2007?

Yes, the judgement of history comes sooner than we expect.

And the demand for policy leadership comes hard on its heels.

Nothing hard ever gets easier by putting it off.

And if you don’t do what is right for the nation, then you shouldn’t be in Parliament.

It’s time to deliver the action on climate change we need.

To do what is best for Australian families, what is best for future generations, what is best for this country.

To act on climate change.

To cut carbon pollution.

To build a clean energy future.

To create clean energy jobs.

I see a great clean energy future for our great country.

I know we can get there.

CLEAN ENERGY (CONSEQUENTIAL AMENDMENTS) BILL 2011

The Clean Energy (Consequential Amendments) Bill 2011 contains consequential and transitional provisions relating to the Clean Energy package of legislation.

These amendments along with the associated bills the Government is introducing today will give effect to our plan to move our economy to a clean energy future.

The science of climate change is clear. Peer-reviewed science is clearly telling us that climate change is occurring, and that human activity is contributing through carbon pollution, and that we need to respond by cutting pollution and driving investment into clean energy.

Scientists are also clear that Australia faces huge economic costs from climate change across a range of sectors including energy supply, water, agriculture, and infrastructure.

No responsible Government can ignore these facts.

Therefore the question is not should we cut our pollution, but what is the best way to cut our pollution at least cost and ensure continuing economic growth.

Mainstream economists are clear in their verdict. A carbon price is the cheapest and most effective way to cut pollution and drive investment in clean energy.

It allows us to fulfil our obligation to future generations, to do all we can to leave them a better place – to act on our responsibility for intergenerational equity.

Put simply, we should never lose sight of our responsibility as Parliamentarians to leave our nation in a better place than we inherited it for future generations.

Mr Speaker, we have been debating these issues for decades. The time for inaction has long passed – it is now time for this Parliament to show leadership and to take action on climate change.

It is time to make an economic reform to end the years of uncertainty around carbon pricing policies.

Business needs certainty so that it can respond to innovative and new clean energy and renewable energy opportunities. Investors need to make long-term investment decisions.

Investors know a carbon price is coming but need clarity about the rules they need to apply for investing in assets with lives of 30, 40 or 50 years. Until this reform is made, and this legislation passed, these investments will be stalled.

This legislation provides the transparency and details that industry needs.

And the package the Government is introducing today provides a holistic approach by encompassing renewable energy, energy efficiency and land measures.

It is a package that recognises the need for action now. That recognises that delay would just cost us more.

It is a package that will maintain strong economic growth and provide new opportunities for industry. By 2020, while our carbon pollution will have reduced, national employment is projected to increase by 1.6 million jobs.

A broad-based, market-driven mechanism like a carbon price is the cheapest and most effective way to cut our pollution.

Carbon pricing sends a clear market signal to investors and consumers about the pollution content of goods and services. A carbon price will drive structural change in key sectors. At the same time industries will continue to grow.

The measures in this bill bring together in a coherent way the existing programs under the National Greenhouse and Energy Reporting Act, the Office of the Renewable Energy Regulator, and the soon to commence Carbon Farming Initiative, under the responsibility of a single Clean Energy Regulator. The bill provides consistent reporting arrangements, equitable taxation treatment, and greater security for investors and businesses.

National Greenhouse and Energy Reporting

The National Greenhouse and Energy Reporting System (or NGERS) is the national framework for the reporting of information on greenhouse gas emissions, energy consumption and energy production. It was put in place by this Parliament in 2007 when those opposite still believed in taking action on climate change, and had a commitment to heed scientific and economic advice. The Act was specifically intended to underpin an emissions trading scheme to start no later than 2012.

Consistent with the Government’s commitment to the streamlining of reporting of greenhouse and energy data, the National Greenhouse and Energy Reporting Act 2007 will be the starting framework for monitoring, reporting and assurance under the carbon pricing mechanism.

This system provides a sound structure for monitoring, auditing and compliance. A rigorous compliance framework is essential to underpin the carbon pricing mechanism.

A number of changes are proposed to strengthen the Act and align it with the requirements of the carbon pricing mechanism. Under the amendments, a single report will satisfy both an entity’s reporting requirements under the mechanism, as well as current reporting requirements under the Act.

Coverage of synthetic greenhouse gases

As part of the carbon pricing package, synthetic greenhouse gases will be subject to an equivalent carbon price using existing legislation. Amendments are made to the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, and associated legislation, to give effect to that commitment, using the existing import and manufacturing levies in place. The levies will be adjusted annually to reflect the prevailing carbon price. This Parliament first brought synthetic greenhouse gases under the ozone protection regime in 2003 on the basis of implementing our obligations to the United Nations Framework Convention on Climate Change.

The provisions ensure that the destruction of waste synthetic greenhouse gases which are imported into Australia is not affected. This is important because Australia has the only approved destruction facilities in our region and deals with the destruction of gases on behalf of a number of our Pacific neighbours.

Establishment of the Clean Energy Regulator and Climate Change Authority

The bill contains a number of consequential amendments relating to the establishment of the Clean Energy Regulator and the Climate Change Authority.

As well as administering the carbon pricing mechanism, the new regulator will take over administration of greenhouse and energy reporting, the renewable energy target and the Carbon Farming Initiative. This necessitates a number of legislative amendments to replace three existing statutory office holders—the Office of the Renewable Energy Regulator, the Carbon Credits Administrator under the Carbon Farming Initiative, and the Greenhouse and Energy Data Officer—and transfer their functions to the Clean Energy Regulator.

Measures to prevent market manipulation and misconduct

The amendments to the Corporations Act 2001, and the Australian Securities and Investments Commission Act 2001 will provide a strong regulatory regime to reduce the risk of market manipulation and misconduct relating to emissions units.

Australian emissions units and eligible international emissions units are to be financial products for the purposes of chapter 7 of the Corporations Act 2001 and division 2, part 2 of the Australian Securities and Investments Commission Act 2001. The bill amends these acts accordingly.

Responding to industry feedback on the exposure draft legislation, there are also measures to provide greater security of title for holders in good faith of Australian carbon credit units, carbon units and eligible international emissions units.

Taxation amendments

Schedule 2 of the Bill amends various taxation laws to clarify the income tax and goods and services tax treatment of emissions units, and to provide a refundable tax offset for certain new depreciating assets used in conservation tillage farming practices.

The main consideration in designing the tax treatment of units is that the tax treatment should not compromise the main objectives of the scheme. This means that tax should not influence decisions between purchasing, trading and surrendering units or alternatively reducing emissions. The preferred tax treatment will help implement the scheme and reduce compliance and administration costs for taxpayers and the Australian Government.

For income tax, the amendments establish a rolling balance treatment of registered emissions units which is similar to that for trading stock. The result of the treatment is that the cost of a unit is deductible, with the effect of the deduction generally being deferred through the rolling balance until the sale or surrender of the unit.

The proceeds of selling a unit are assessable income with any difference in the value of units held at the beginning of an income year and at the end of that year being reflected in taxable income. Any increase in value is included in assessable income and any decrease in value allowed as a deduction.

The bill also amends the goods and services tax law to make a supply of an eligible emissions unit GST free. The amendments will promote certainty about the application of the normal GST rules to scheme transactions and reduce compliance costs for businesses. While the agreement of the States and Territories to this approach has been sought, not all jurisdictions have responded. For this reason the commencement of the GST-free treatment for eligible emissions units will be contingent on an announcement being made through a notice in the Gazette that the agreement of all States and Territories has been obtained.

The conservation tillage offset, also provided for in the bill, will provide primary producers with a refundable tax offset for 15 per cent of the cost of a depreciating asset that is an eligible no-till seeder (as defined in the bill). To claim the offset, a primary producer will need to hold a Research Participation Certificate to demonstrate that they have completed a survey about their farming practices.

Conclusion

The consequential amendments contained in this bill are important for the efficient and effective operation of the carbon pricing mechanism. They seek, where possible, to streamline institutional and regulatory arrangements and minimise administrative costs within the scheme.

The Government’s objective in its Clean Energy Future Plan is to implement the cheapest and most effective way of moving our economy to a clean energy future – of providing our children the future they deserve.

This package of legislation has been designed to secure our environmental and economic security at least cost. There is no credible alternative.

We need to act now in order to mitigate and reduce the risk posed by climate change for the future of our economy, our environment and our society.

CLEAN ENERGY (INCOME TAX RATES AMENDMENTS) BILL 2011

The Clean Energy (Income Tax Rates Amendments) Bill 2011 is part of a package implementing the carbon pricing mechanism and related reforms to build Australia's clean energy economy for the future.

This bill, and the related Clean Energy (Tax Laws Amendments) Bill 2011 that I will also be introducing today, deliver on the Government's determination to assist households with the cost of living impacts of a carbon price.

But these bills do much more than that.

These b

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

Mr Acting Deputy President, I seek your guidance. Minister Ludwig moved several unrelated matters in the one motion. I seek your guidance as to whether that can be done—moving a motion to adjourn the house and other matters.

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

Senator Fifield, the motion was to adjourn the debate on the second reading.

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

Sorry, Mr Acting Deputy President, he spoke very quickly.

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

Mr Acting Deputy President, perhaps I could just clarify what you said. Admittedly Senator Ludwig spoke very softly and very quickly, but I thought he moved three particular motions at the same time. Could you just explain exactly which motion we are voting on at the moment?

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

The minister moved to incorporate the second reading speeches, and he moved adjournment of the debate. That is the matter we are voting on: adjournment of the debate.

The Senate divided. [19:09]

(The Acting Deputy President—Senator Bishop)

Senator Arbib did not vote , to compensate for the vacancy caused by the resignation of Senator Coonan.

Question agreed to.