Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The question before the chair is that amendment (1) on sheet 7168, moved by Senators Birmingham and Xenophon, be agreed to.

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

This is a very important amendment because people who live across Australia should be given an opportunity to have a say given the significant economic costs that the government wants to impose on the Australian economy. In that context, and given some of the statements that the minister has made during this debate and during question time today, I would like the minister to advise the chamber whether she stands by the government's own modelling of the impact of the carbon tax on the Australian economy—that by 2050 it will lead to a GDP which will be $100 billion lower, which will lead to real wages being nearly six per cent lower by 2050, which, of course, will lead to CO2 emissions being 43 million tonnes higher than they currently are. Do the minister and government stand by those findings of the government's own Treasury modelling?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The government does stand by the Treasury modelling, which shows that Australia can put in place a price on carbon, grow jobs, grow the economy, grow national income and reduce emissions from what they would otherwise be.

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

The minister cannot even get herself to concede the point that her government's own Treasury modelling shows that, by 2050, GDP will be $100 billion lower than it would be without a carbon tax and that real wages will be six per cent lower than they would be without a carbon tax. Is there any point in time in the future when the government expects that the reduction in real wages, compared to a scenario without a carbon tax, is going to plateau? I refer to chart 5-12 on real wages, which has been published on page 88 and just keeps going down and down and down. Is there a time when this downwards trending line, which is the change in real wages under the government's carbon tax, is actually going to plateau? Is it expected to then increase again or will it continue to reduce, reduce and reduce further? If so, why should people not be allowed to have a say on whether they are happy to have a carbon tax under which emissions will continue to increase, where real wages will be lower than they would be without a carbon tax and where the economy will be smaller than it would be without a carbon tax?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think there were two propositions. One was that I was being asked to give an indication of what might happen mid-century. Obviously, what I would say to the senator is that, whilst I have enormous regard for Treasury modellers, I think they would acknowledge that when you are looking at 2050 it is difficult to be completely precise about what will happen in that time frame. But I would also make the point that the findings of the modelling are as I outlined earlier: continued growth in the economy, jobs and income, as well as the reduction in emissions from what they would otherwise be. That is the consistent set of findings from this modelling and the previous modelling. I would also make the point that the modelling does cost the costs of climate change. So we do not have in that modelling the counterbalancing set of costs that the senator does not want to talk about, which are the costs of climate change to our economy, the costs of climate change in terms of the risk that future generations of Australians will have to contend with. I think that is an important point. We do not propose this set of legislation simply as an environmental policy. It is an economic policy. It is changing the way the economy works and it is providing an economic solution to what ultimately in many ways is an economic problem, which is that we externalise the costs of pollution, we do not trap them in any way; what we do is simply defer them to the next generation and beyond. I think the senator is speaking in relation to the opposition's amendment—or Senator Xenophon's amendment, which is the same. I make this point: this is an amendment about delay in relation to a policy where we know that delay increases the costs. In this chamber we are debating policy which has been the subject of debate in this country for almost two decades. There have been some 37 parliamentary inquiries since 1991 and a number of public reviews, including the Prime Ministerial Task Group on Emissions Trading, commissioned by Mr Howard, headed by Dr Shergold, which reported in 2007 and which led to the policy to price carbon through an emissions trading scheme, which the senator used to support. We have had debate in the context of the CPRS, which I think had 60-odd hours of debate—I might be wrong on that but I think that is about right. We have had lengthy debate and many Senate inquiries, including a number, I think, in which Senator Cormann was engaged.

I disagree with their position but I accept that the opposition oppose this. I do not accept the basis of their opposition. They used to support this when they were more sensible when it came to economic policy and policy more generally. They are simply trying to delay something they oppose. They have consistently done that in the course of this debate. The government's view is that it is time that the country acted, for the reasons we have outlined.

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

This carbon tax will of course do nothing to prevent climate change from occurring. In fact, as we have argued before, this carbon tax in Australia, in the absence of an appropriate and comprehensive global agreement, might well worsen climate change to the extent that it will increase emissions in other parts of the world. I just want to go back to the question at hand, the question that the minister clearly does not want to answer: the impact of this carbon tax on our GDP. It is our job here in the Senate to get the government to answer some questions, and ultimately the Australian people should be able to have a say before an economic change of this magnitude is imposed on the Australian economy—which is, of course, what this amendment is all about.

The minister says that there is a cost of delay and that it is important to act now because, that way, action will be cheaper than it otherwise would be. That does not seem to be the conclusion of the Treasury modelling. If you compare the Treasury modelling of the impact of the carbon tax with the Treasury modelling of the impact of the CPRS, even though the government is now starting a couple of years later, according to the Treasury modelling, the cost of acting now, a couple of years later, compared to the cost of acting when the government put forward the CPRS, has actually gone down, if we are to believe the government's Treasury modelling. The cost is actually lower now than it would have been if we had acted three years ago, in 2008. If it is cheaper to act now than it was three years ago, how much cheaper is it going to be to act in three, five or 10 years time? Perhaps in other parts of the world they are not going to have the same difficulties, quite frankly, in transitioning the economy from one which is very export oriented, which is very emissions intensive and which relies on a significant resource endowment as one of its competitive advantages. Why would we go ahead of the rest of the world to this extent when clearly the longer we wait the more costs are going down?

Back to the question at hand: given that the Treasury's own modelling—and the minister says she stands by the modelling—shows that, by 2050, GDP would be $100 billion lower that year alone than it would be without a carbon tax, and given that GDP will be lower every single year between now and 2050 than it would be without a carbon tax, has the minister assessed the cumulative impact on Australia's GDP? Is the minister aware of what the cumulative cost to Australia's GDP is going to be between now and 2050, according to the Treasury's own modelling? Does the minister know what that cost is in today's dollars?

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I find it quite amazing that we are still, at this stage, debating these issues of delay and the costs associated with the scheme, because we have been over this issue so many times in this place. The fact is that all of the expert advice from economists and scientists states that the longer we delay taking action on carbon pricing, the greater the cost for our economy. The fact is that the cheapest, most efficient means of reducing emissions in our economy is through a market based mechanism, a philosophy that used to be believed by those opposite but, since there has been a change in the leadership, no longer is the policy of the Liberal Party. There have been numerous studies, many of them parliamentary in nature—37-odd inquiries—where the issue has been canvassed: the fact that carbon pricing is the cheapest way to go, and the delays associated with that. And of course there are studies from economists.

Senator Cormann interjecting—

Senator Wong interjecting—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I remind people on both sides of the chamber that we are working through a debate and Senator Thistlethwaite is speaking.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Madam Temporary Chairman. We can go back to the Stern review, which was the pacesetter, really, in terms of international studies and the economics associated with pricing carbon and the costs associated with delaying. That was six years ago, and we are still debating this issue here in the parliament. The Australian public is still waiting for action. Australian businesses are still waiting for action to ensure that there is certainty. Senator Cormann has questioned the minister in respect of costs associated with delay. This is an issue that Senator Cormann should be well versed in. It is an issue that has been canvassed and discussed in detail in the Senate Select Committee on the Scrutiny of New Taxes inquiry into the carbon pricing legislation, which he chaired. I think there were four occasions on which Treasury officials appeared before that committee and they underwent quite rigorous and detailed questioning from all sides, particularly on questions associated with the modelling.

I draw Senator Cormann's attention to the final report of the Scrutiny of New Taxes committee into a carbon pricing mechanism and, in particular, to the government senators' dissenting report where the issue of delay and the costs associated with that is highlighted. I also draw Senator Cormann's attention to the questioning that was undertaken during that process when Ms Quinn and other Treasury officials appeared before the committee and the issue associated with delay was put to Ms Quinn. The question was: 'Had Treasury done any analysis of the costs associated with delaying the introduction of a carbon scheme in the Australian economy?' Ms Quinn's quite detailed response illuminated the fact that there were costs for the Australian community and economy—households and businesses—associated with delaying the introduction of a carbon pricing mechanism in our economy. She said:

The analysis that we did suggests that a delay in global action by three years adds around 20 per cent to the first year of global mitigation costs and delaying entry by a further three years adds a further 30 per cent to the first year of mitigation costs. This suggests that, as you delay, the costs only get greater through time ...

This is the evidence that Treasury officials gave to Senator Cormann's committee, to the Senate, associated with the issue of delaying entry of a carbon pricing mechanism. It accords with all of the studies that have been done by economists. It accords with all of the scientific evidence. It accords with the view, I might add, that previously existed in the Liberal Party under the leadership of John Howard, the Shergold report and other inquiries—

Senator Ian Macdonald interjecting—

The TEMPORARY CHAIRMAN: Senator Thistlethwaite, I am going stop you again. Senator Macdonald, you do not have the call unless you are standing.

Senator Ian Macdonald interjecting—

The TEMPORARY CHAIRMAN: You know that is not right. Senator Thistlethwaite, try again.

Thank you, Madam Temporary Chair. It accords with all of the credible economic studies, the credible modelling—

Senator Ian Macdonald interjecting—

The TEMPORARY CHAIRMAN: Senator Macdonald, you know that you cannot interject like that across the chamber.

It accords with all of the studies that have been undertaken both internationally and domestically. It accords with the modelling that has been conducted by a number of credible modelling agencies. It accords with the government's overall view of the reasons behind this policy. It accords with the Treasury's analysis of why an emissions trading scheme and a market based mechanism is the most efficient means of reducing emissions for the least cost in our economy. Of course, it accords with that typical traditional Liberal Party philosophy that markets work efficiently, which has not been adopted by those opposite under the leadership of the Leader of the Opposition, Tony Abbott.

In all respects, Senator Cormann is aware of what the modelling shows on this issue. He is aware of the international studies which suggest that delaying the scheme increases the cost. He is aware of the fact that, if we are going to be serious about introducing a scheme that will provide incentives across the economy, we need a market based mechanism. That is borne out in the evidence of Ms Quinn to the inquiry chaired by Senator Cormann. So I find it quite amazing that we have had eight hours of debate on this issue in the committee of the whole and we are still tossing around the platitudes and the rhetoric associated with this issue. It is about time that we got onto debating the actual amendments.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I understand that Senator Cormann was expecting a response to the question that he had asked the minister. I did not know that she wanted to finish before I jumped up.

The TEMPORARY CHAIRMAN: You jumped first, Senator Nash.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am happy to respond, but you jumped, Senator.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

Thank you.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am asked about GDP and GNI. I refer to the modelling at page 98 of the Treasury document, where the findings are that real income continues to grow with carbon pricing. There is an explanation as to why GNI has been focused on, although GDP is also measured. It states:

GNI is a better measure of welfare because it also accounts for that part of domestically generated income that accrues to non-residents, including that part required to pay for abatement sourced overseas. It also accounts for foreign generated income that accrues to domestic residents.

Australia's GNI per person ... in both domestic policy scenarios—core and high price—grows at rates only slightly below those expected without carbon pricing. In the core policy scenario, GNI per person in today's dollars will be $9,000 higher in 2020 than it is today and more than $30,000 higher in 2050—an increase that is smaller than in the medium global action scenario, in which Australia does not price carbon, by just $320 per person in 2020 ...

Real income will continue to grow under a carbon price, but at a slightly reduced rate as the domestic economy transforms—

Senator Cormann interjecting—

You wanted an answer, Senator. I am providing you an answer.

Senator Cormann interjecting—

If you would let me finish. You asked about GNI and GDP. I am going to do both. It continues:

From 2010 to 2050, GNI per person grows at an average rate of 1.1 per cent per year in the core policy scenario compared to 1.2 per cent per year, if carbon levels continue unabated along their upward trajectory. That is, Australia's GNI per person continues to grow at a rate only around 0.1 of a percentage point per year slower than it would without carbon pricing.

I am also asked about GDP. I wanted to place on the record why the GNI measure has been preferred. GDP is also discussed in the report and, as I previously indicated, GDP continues to grow with carbon pricing and will be nearly three times as large by 2050 as it was in 2010. GDP grows in the core policy scenario by 2.6 per cent per year to 2050, slightly lower than the rate of more than 2.7 per cent per year in the medium global action scenario. This shows that we can continue to grow our incomes and our economy as well as jobs with a price on carbon. I again make the point that the Treasury modelling does not cost the cost of climate change, something that the senator wishes to disregard but which is actually very relevant to the reason Mr Howard signed up to a price on carbon.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I was going to stand up and just directly ask some questions but I cannot help but comment on the fact that, the government having given us an extraordinarily truncated opportunity to deal with the committee stage for these bills, we have now seen for the second time today Senator Thistlethwaite jumping up and contributing to this particular part of the process. That is just extraordinary. There is absolutely no reason, apart from padding out some sort of filibuster—goodness knows why—for this from the senator on the other side, who did not even ask a question. It is just another example of the process of this place having gone completely pear shaped under this government. On the one hand on the other side they say: 'Hurry up, hurry up. Let's get all this done with. You know you are going to vote against it. Why are you even talking about this, coalition?' And yet we have senators on the government side coming in and blithering on with not so much as a question at the end of it all. That is an extraordinary way for a government to run the chamber.

I would like to raise a few issues here as part of looking at the amendment put by my very good colleague Senator Birmingham on behalf of the coalition around the very fact that the government should wait until after the next election to introduce a carbon tax. I know we have canvassed this before, so I am not going to go into it at length, but it just seems absolutely extraordinary that the government and the Prime Minister, Julia Gillard, will not wait until after another election to bring this carbon tax in. Why not? I wonder why not, colleagues. We all know why not. She is not game to take it to the Australian people because the people out there across these communities are saying loud and clear that they do not want a carbon tax.

The Prime Minister said before the last election, 'There will be no carbon tax under the government I lead.' In his comments earlier, Senator Xenophon was a little bit magnanimous in his view that it was not actually a lie to the Australian people. I think it was a lie to the Australian people. Regardless of that, Senator Xenophon agreed that—

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Madam Temporary Chairman, I rise on a point of order. I believe that Senator Nash is breaching standing order 193 in making that remark.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The debate has gone very widely in this area. I do not think there is a point of order, but I draw Senator Nash's attention to the issue at hand.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

Interestingly, Senator Xenophon is supporting this amendment to not have a carbon tax start until after the next election. So regardless of your view as to the intent of what the Prime Minister said before the last election, the Australian people deserve to be able to have a say on this piece of legislation, which they have been denied by the Prime Minister, Julia Gillard, and the Labor government. That is just simply wrong. That is why we are moving this amendment. It is so the Australian people can have their voices heard and have their say, because, goodness knows, they have not had an opportunity to do that up until now. Obviously, with the Greens and Labor banding together in their usual coalition form, it looks like they still will not get a say. We can tell that this amendment is not going to be successful. Much as we hoped it would be, we can tell it is not going to be successful.

One of the things about this legislation, this carbon tax, is the impost that it is going to place on our agricultural communities. It is quite extraordinary. The government like to say that agriculture is not included. When they say that, they refuse to properly and correctly say that agricultural emissions are not included. I can tell you, colleagues, as you all well know, the financial burden that is going to be faced by our farmers because of the introduction of this carbon tax is going to be huge. Electricity, fuel, fertiliser and transport will be affected, just for starters. There is nowhere for those costs to be passed on to. Farmers are the bottom of the food chain and there is nowhere for those costs to be passed on to. That might not be a concern for the government but that greatly concerns me and my colleagues on this side of the chamber in the coalition.

I would like to ask the minister if she could perhaps enlighten the chamber on what modelling has been done to determine the average electricity cost increase across the farming community. I understand the minister may not have specific details, but I am interested in even just an average cost increase across those communities. Also, what assistance, if any, has been considered by the government or is in place to assist those farmers with the increased electricity costs?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

First, in relation to the cost impact on communities, the way in which that assessment has been undertaken has been on the basis of households and the CPI impact. One could extrapolate, I suppose, to different communities on that basis. The CPI impact on prices is about 0.7 per cent in 2012-13. That is an average cost of $9.90 a week. In terms of the break-up of that, food is less than $1 a week on average, electricity is about $3.30 a week, gas is about $1.50 a week.

In relation to the assistance, nine out of 10 households will receive some assistance through tax cuts and/or payment increases. Of those, two out of three will get tax cuts or increased payments that cover their entire average price impact. Around four million Australian households will get an extra buffer with assistance that is at least 20 per cent more than their expected price impact. There will be an increase in payments of about 1.7 per cent. This includes increases to pensions, family tax benefits, disability support payment, carer payment and other allowances. There is assistance to self-funded retirees who receive the healthcare card, who receive the same dollar amount as the age pension. There are also the tax cuts to which I referred earlier whereby we will be tripling the tax-free threshold.

Agricultural emissions are excluded from the carbon price mechanism. The government, after discussions with Mr Windsor and Mr Oakeshott—I am sure that warms the cockles of Senator Nash's heart—through a bill that passed the parliament earlier this year, is giving farmers, forest growers and landholders access to carbon markets worth hundreds of millions of dollars each year by 2020. As part of the clean energy future plan the government announced seven new land sector based measures with over $1.7 billion worth of funding over the next six years. These measures include carbon farming futures; the Indigenous Carbon Farming Fund; the Biodiversity Fund; the Regional Natural Resource Management Planning for Climate Change Fund, which includes support for NRM organisations; the Carbon Farming Skills initiative; the Non-Kyoto Carbon Fund, which enables government purchase of land-sector abatement which is not counted towards Australia's emissions target, so that is more generous than under the CPRS to landholders; as well as the Land Sector Carbon and Biodiversity Board to provide information and advice on the implementation of measures.

In addition you will recall, Senator, that in answer to your colleague Senator Williams—you may not have been in the chamber, although, to give credit where credit is due, you have been quite disciplined about being here—we had a discussion about the assistance that would be provided under the $150 million food and foundries program.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I thank the minister for her answer. She referred to a whole range of things, but not specifically to an average increase in electricity costs for farmers. I do not know if the modelling has not been done, and I understand the minister will not have everything at her fingertips, but it is a significant issue. It is quite concerning for farmers and people across regional communities that, when asked a very simple question about the average increase in electricity costs to farmers, the minister was not able to give the chamber a straight answer. I think that is very concerning because it indicates perhaps a lack of attention or understanding of the importance of this issue.

The minister did mention in her answer that there was a calculation based on small businesses or householders. If I understood it correctly, there is small business and householder assistance. Family farms are classified as both, so has that been taken into account when determining any assistance? I also ask the minister, given that the government has recently released the National Food Plan, what impact of the carbon tax on farming and agriculture has been taken into account when formulating that plan. There is going to be a significant impost on farmers and right across our regional communities, through farming businesses and the flow-on effects. That significant impost has to impact on farm profitability—there is absolutely no doubt about that. So to what extent was the carbon tax impact taken into account in the development of the National Food Plan?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

In relation to the price impact, Senator, I understand what you are trying to ask me but, with respect, we did not assess cost impact by occupation. It would be very difficult to work out how you would do that. What you do do is economy-wide modelling that assesses the impact on prices. As I said to you, it is about 0.7 per cent. And I have outlined to you the assistance mechanisms that would be provided for households, including farming households, through the tax system, through the payments system, through the pension system, through family tax benefits and, of course, through the tripling of the tax-free threshold.

I do not know if you were asking about fuel but, as you know, the government made clear how fuel will be included or not included in the scheme. Essentially, the mechanism is that on-road use is out, off-road use is in, except for agriculture, forestry and fisheries. So there is quite a significant amount of assistance being provided through the household assistance package that I have outlined. I am not sure what more the senator would want.

I have spoken about the CFI, the Carbon Farming Initiative. I have also made the point that agriculture is excluded. I would also advise that the Treasury modelling shows that gross output in the sector would be slightly higher with a carbon price than without. Under the food and foundries program, special assistance will be provided to the food-processing, metal-forging and foundry industries. The government will provide grants worth up to $150 million over six years to the food-processing industry. All businesses in the food-processing, metal-forging and foundry industries will be able to apply for funding under this program. The government understands that these industries are important to specific rural and regional areas. Funding will be on a current investment basis.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I am at an absolute loss, and I do not want to take the minister out of context, but did you say that you could not calculate the increased electricity cost to farmers or you chose not to? I am just trying to get a very clear understanding.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am saying that the electricity price impact is modelled across the economy. You do not assess by occupation. It would be like saying that we should work out what the electricity cost to someone in a different occupation is. If the question is what is the impact on the agricultural sector, that is a different question to the impact on an occupation. I have outlined what the response to that is and I have outlined the additional assistance which is in place. I make the point that you are looking at about a 0.7 increase on the CPI across the economy.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

Thank you for that, Minister. I am sure that there are farmers and people in regional communities across this country who are going to be absolutely gobsmacked by the fact—and I take your point, Minister; you say it is across the industries—that the government has obviously made no attempt to actually understand what the impact of the electricity cost increase is going to be for farmers.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Again, I am not going to be verballed. I made the point about occupation. If the senator is asking about industry sectors, I am happy to respond as best I can. When she is talking about agriculture or industry, is she talking about farming communities, particular farming households, or their businesses?

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I will most certainly clarify what I would like to know, because the minister is quite correct—there is a very big difference between the electricity impact on households and the electricity impact on farming enterprises. It is entirely different. My apologies to the chamber if I was not clear. I would like know: leaving household electricity increases aside, what is the average cost increase per farm of the electricity increases that are going to occur as a result of the carbon tax?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Senator, probably the best way to answer this is to recognise that the macromodelling across the economy recognises the 0.7 per cent increase. It might be that there is some differential between different industries in terms of carbon price impact, and I can illustrate that by reference to dairy farms. The carbon price impact on dairy prices is projected to be 0.4 per cent, which reflects the low emissions intensity of dairy processing and the impact of the exclusion of agricultural emissions—

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

In the essence of time, could I just ask the minister to clarify—and perhaps if I clarify: I am not asking for the overall impact. What I want to know is the on-farm increased electricity costs that farmers will have to pay because their electricity bill goes up. I am not that interested in the overall effect on the increase or the decrease of the cents-per-litre price or anything else. Just very simply, how much extra on average will a farmer have to pay for their non-household electricity increases as a result of the carbon tax?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am advised that electricity cost increases are likely to be in the order of 10 per cent, and I think I have made that clear previously. I might provide the information on dairy, because I think that is of some use. A carbon price impact on dairy prices is projected to be 0.4 per cent. This reflects the low emissions intensity of dairy processing and the impact of the exclusions of agricultural emissions from the scheme.

I am also advised that ABARES released a report in June of this year which found electricity accounts for about 2.3 per cent of total dairy farm cash costs. Treasury modelling has indicated that a 10 per cent increase in electricity would represent an increase in around 0.2 per cent of total farm cash costs. This is not dissimilar to other industries outside of the jobs and competitiveness assistance stream. I also remind the senator that there is also the $150 million available under the clean technology program to which I have referred.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

Thank you for the answer, Minister. I think we are now getting a little closer to some sort of indication of what the impact is going to be. Thank you for the figure of 10 per cent, again reiterating that there is nowhere for these costs to be passed on. Minister, I did ask in the first instance if you could give me an average figure. Obviously the work has not been done. Now we do have the 10 per cent figure on the record. Before I move on, could the minister perhaps answer the second part of my question, which related to the national food plan.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I do not have any advice on that, Senator. That would be a matter properly addressed to Senator Ludwig. If I can get any further assistance in the course of the committee debate, I will do that. I am not trying to be difficult; I just do not have advisers who were involved in the preparation of the food plan.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I do appreciate that. Thank you, through you, Madam Chair, to the minister. Perhaps at some stage between now and lunchtime tomorrow the minister might like to give us some advice on that through this process. That would be quite useful. Also, the electricity costs which have been referred to certainly provide a significant disincentive when it comes to irrigated agriculture. A lot of these costs are going to fall to the irrigation community. We know they are going to be significant, looking at the 10 per cent cost that the minister has just referred to. They are going to be huge in a lot of cases for a lot of these farmers. What I am interested in is irrigated agriculture. Minister, you would be very well aware of all of this. The increased electricity costs are going to provide a real disincentive for irrigators to install piped and pressurised systems so that they can be far more efficient in what they are doing. Isn't it the case, then, that the carbon tax, by placing these increased electricity costs which we have just been discussing on farmers, is going to have the very perverse outcome of providing a disincentive to farmers being more efficient when it comes to irrigated agriculture?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think that is a rather long bow, Senator. I know that you will not agree with me, but certainly Malcolm Turnbull is on the same page as this government around the importance of improving the efficiency of the irrigation sector. We have been engaged in that, so I think that is a rather long bow to draw.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

You might think that, Minister, but I could not possibly comment! It stands perfectly to reason, though, and I think it is a very valid question: if the increased electricity costs are going to be a disincentive for more efficient irrigation, isn't that going to be a perverse outcome of the carbon tax? It is going to end up being worse for the environment rather than better.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As the good senator would know, there have been fluctuations in electricity prices for a range of reasons, including because of the uncertainty that she and her party, along with the Liberal Party, are seeking to impose. Firms in the electricity generation sector have made clear to the opposition that the policy of repealing the carbon price and telling people that they should not buy forward contracts and trying to foment as much as uncertainty as possible will also lead to an increase in electricity costs. So do not come in here talking about electricity cost increases, when your policies are about ensuring there is uncertainty and when you know the advice from the sector is that electricity costs will increase.

It is true that there will be an increase in electricity costs. We are accounting for the fact that that is likely to be passed on to consumers by ensuring that there is reasonable provision, through tax cuts, increased pensions and increased payments. I would also point out that this government is investing many millions of dollars in increasing the efficiency of irrigation, and has done far more on that—consistent with Mr Turnbull's policy; I will, again, give credit where credit is due. I am sure you were very pleased when that was announced as your policy, as well. We are very keen to improve the efficiency of irrigation. The programs that we have in place—that you never had in place—demonstrate that.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

As the minister has alluded to, the price of electricity does fluctuate—of course it does; everybody understands that completely—but the carbon tax is going to create for people and businesses an increase in electricity costs that would not otherwise be there if this government were not giving the Australian people a carbon tax.

I will just go to the issue of compensation, which the minister just alluded to, in terms of the passing on of costs and what would be dealt with. I would like to ask the minister about the clean energy advance. My understanding is that this will go out as an up-front payment for welfare recipients. I have had some concerns raised with me, because when the government introduced the $900 cheques during the global financial crisis there was a spike in the sale of plasma TVs and other goods emanating from China. It is quite a perverse outcome of the carbon tax as we see things being bought from China. And there was also an increase of money spent in the clubs at the time of the $900 cheque.

Perhaps the minister might assist me. I am trying to get an understanding about whether there is going to be a lump sum up-front—I believe it is going to take into account an 18-month period—to go towards those electricity and energy costs. What assurances can the government give the chamber that that lump sum that is paid to those recipients will be used for electricity and energy costs?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I want to place on record how much I object to the way this opposition continues to try and use quite a clear reference to China constantly in this debate and in the economic policy debate. What we saw from your leader and Mr Hockey on the IMF was outright xenophobia. The debate that you engage in in relation to carbon, which constantly goes on about China and India, I think is beneath you. You may as well join One Nation. Seriously! I and other senators in this place who have very clear views on this are really tired of this debate. I do not agree with you, Senator Nash, in your policy on climate. I disagree; I think it is wrong, but I respect that that is your position. I do not respect the way you continue to reference goods made in China and pollution in China. What world do you think we live in? It is just extraordinary.

I also make the point that the senator dismissed the stimulus package and the household component of that. The advice from Treasury, which Dr Henry has referenced, was to ensure that there was an early stimulus in the household sector. That was a key aspect of the government's stimulus package which kept this country out of recession and which ensured that some 200,000 Australians, who would have been on the dole queues, are not. So you might want to dismiss it as simply buying goods made in China—keep saying that; I am sure you will—but it was an important stimulus package in terms of making sure the economy did not slip into recession. We actually think we should manage the economy in order to benefit working Australians and to protect jobs. In relation to the detail of the question, household assistance will initially involve an increase in payments of, I am advised, 1.7 per cent, with a lump-sum clean energy advance paid in May and June 2012. This will provide certainty to households that they are being assisted, even before the carbon price starts, and it will help them to get ready for the carbon price. The advance will enable householders to improve the energy efficiency of their homes if they wish and to reduce their energy expenditure in ways that may not be possible without a lump-sum financial boost.

I am advised the clean energy advance payment will cover a period of six, nine or 12 months depending on the payment category. Most pensioners and allowees will receive one advance covering a nine-month period from July 2012 to March 2013. Family tax benefit recipients will receive an advance covering the 12 months from July 2012 to July 2013.

I think, Senator, there has been some suggestion by the opposition that it would be a payment covering 18 months. I am advised that is not correct. I understand that one single advance will not cover 18 months; however, some recipients will receive two advances. These include individuals such as students on youth allowance. They will receive two advances, one which covers the 12 months from July 2012 to July 2013 and another which covers the six-month period from July 2013 to January 2014. The different coverage of these advances reflects the different indexation periods for government payments. If people transfer to a different rate of government payment during the period covered by the advance, they may be eligible for an immediate top-up payment of their advance. This will ensure that no-one will be disadvantaged if their circumstances change after they have received their advance.

People will start receiving fortnightly clean energy supplements along with their regular government payments immediately after the end of the period covered by their advance payment. The payment of the advance and then the supplements will ensure there will be no period in which relevant Australian households are not assisted with the impact of a carbon price.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I do thank the minister for her advice that I perhaps join the One Nation party. I can assure her I am entirely comfortable with the Nationals and have no intention whatsoever of leaving the Nationals or joining any other party. The minister may have taken my comments rather sensitively, but in pointing out the purchase of goods from China I was merely pointing out the irony of Australians purchasing product from a country whose emissions are significantly higher than ours. The minister might not see that, but it is entirely up to her to view things in the way that she sees fit. The Australian people know that the emissions in China are growing at a rapid rate, so goods purchased from China are coming from a country with a much greater rate of increase in emissions than is the case in this country. It is as simple as that, and it is a fair point to make. Can I ask the minister in terms of compensation—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Who's sensitive?

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I think the minister's interjection then was that I was being a bit too sensitive. I could be wrong.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

At least I didn't say 'precious'!

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

You can say 'precious' if you like, Minister. For anything to have an impact, colleagues, you actually have to care whence it is delivered, and, unfortunately for the minister, I do not particularly.

In terms of the compensation that we have been discussing, there is no continuation down the track, obviously, of the lump sum payment. I take into account that payments will increase 1.7 per cent with the CPI increase as we go along the track, but could the minister explain for the chamber how compensation will work, how it will be determined and how it will be delivered once we have a fluctuating price under an emissions trading scheme in 2015?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Household assistance will be permanent and ongoing. It will be indexed to CPI to ensure it keeps pace with household cost of living and it will not reduce. I am advised that the commitment is that once a year, in the budget context, the adequacy of the payments will be ensured through the review process.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

Could the minister perhaps give us some detail on the calculation, the process, that is going to be used? I understand the minister said that compensation will be ongoing. What I am very interested in, though, is that on a day-to-day basis we are not going to know what the price is going to be because it is going to fluctuate. As colleagues will know, this is going to become the product of paper pushers and traders. We are going to have a fluctuating price, so we will not know what it is going to be from day to day. I am interested in whether the minister could enlighten the Senate on the process of the calculation of the compensation that is going to be needed when on a daily basis we may well have a fluctuating price?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am surprised the senator is still asking me questions given she does not care what I say.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

I think now it is my turn to be verballed by the minister. I did not ever say that I did not care what the minister said; I just said that I did not care what the minister thought, certainly of me. The minister knows full well what I was saying and perhaps she might care to answer the question.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I will try and assist the senator. I think she is suggesting that the prices will fluctuate. I make the point that in the first three years it is a fixed price, and post that, there will obviously be a market price, and the adequacy of assistance will be assessed each year in the budget context to enable the price to be reflected in terms of the assistance. I also make the point that, as part of the clean energy package, there are some three rounds of tax cuts. These are the ones the senator is going to have to explain to her constituents that she is opposing because her party cannot afford to deliver them, and they really cannot afford to deliver them. If they are telling you that in the party room they are wrong. I would say also that my recollection of the income distribution in regional areas is that there are a lot of people to whom you will have to explain that you are going to make them pay more tax. There are three rounds of tax cuts. What the government has committed to ensures that there will be assistance to cover the projected impact of a carbon price out to the end of the decade. In 2011-12, the effective tax-free threshold moves to $16,000, in 2012-13 to $20,542 and in 2015-16 to $20,979. The government has already committed to tax cuts to provide assistance to cover the projected impact of a carbon price out to the end of the decade. I again emphasise: household assistance payments and tax cuts will be ongoing and will be permanent. Clean energy payments will be indexed to the CPI, which means they will keep pace with the cost of living, including the CPI impact of any further changes to the carbon price. I am sorry, I think I said three rounds of tax cuts; I should have said two.

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

I have a number of questions of vital interest to Northern and remote Australia, an area for which I have portfolio responsibility for the coalition. I also have questions about the impact of the carbon tax on the Defence Force, for which I also have a small role in opposition. Unfortunately, I am going to have to confine myself to about half an hour of questions because a lot of my colleagues have a lot of questions to ask and because the Greens and the Labor Party have got together to curtail debate on these bills. We were promised the whole of this week. We came back specially for this additional sitting week for a whole week of questions on the carbon tax bills, but the Greens with their normal antidemocratic approach have joined with the Labor Party to curtail debate on these 18 bills, which will now finish at lunchtime tomorrow. Here we are, being absolutely curtailed, because the Greens have no interest in free speech. In fact, the Greens and the Labor Party get people up here to filibuster. They do not ask a question, they just fill in what limited time there is by getting people up to make pathetically inaccurate and puerile speeches in the committee stage of the debate.

The minister takes sensitive issue when we mention that China is the biggest emitter of carbon in the world. Why do we mention it? Not because we are anti-China; we love China. Why do we mention that India is a big emitter? Not because we do not like India; we love India. In fact, we would like to sell them some uranium. We mention it because they are two of the very biggest emitters, and neither of them is doing anything like this nationwide, economy-wide carbon tax on coal that will impact on their industries. They are not doing it, because they do not want it to impact on their industry. We mention often that the United States is also a big emitter of greenhouse gases, but it is not going to do anything. Even Canada, an emitter a bit like Australia, has made it clear that it is not going to do anything like this nationwide carbon tax.

I will mention my questions briefly, so the advisers can be a little bit prepared, because I do not think I will get a chance to ask them in detail before the dinner break. My questions are about proposed section 145 of the main bill, in relation to the coal industry. I will ask some questions about the coal industry, because it is such an important industry to Northern Australia, including Northern Queensland, and because so many jobs in the coal industry are at risk because of this carbon tax.

I will ask some detailed questions about the sugarcane industry, which is also a very important industry to Northern Australia and which is a paramount industry in the area of the Burdekin in North Queensland, where I come from. I am not sure if the minister has ever been there, but if she had she would know that the Burdekin grows the very best sugar cane in the world. Why? Because it is a dry area in the tropics. There is lots of sunshine, but they irrigate very heavily from underground with electric pumps. I would like the minister to tell me later on, and I will be more detailed with the question, exactly what modelling has been done, insofar as the sugarcane industry is concerned, about the huge increase to their cost of production that will occur because of the increase in the cost of electricity. At the moment, fortuitously, the sugar industry is doing okay—world prices are pretty good at the moment—but we remember when, only 10 years ago, the Commonwealth had to put in a $440 million rescue package to save the industry because prices were rock bottom. If that happens with this increase in electricity prices you are going to wipe out a lot of the economy of North Queensland.

I will ask the minister, again because it is of such importance to North Queensland, Northern Australia and remote Australia, about the impact of the carbon tax on the tourism industry. We know that electricity prices are going to go up. We also know that the cost of freight is going to go up when the carbon tax applies to the big trucks that take goods and services into the more remote parts of Australia. The tourism industry is going to be slugged, but it does not seem to be in line for any compensation packages such as the $300 million assistance package given to the steel industry. Why does the steel industry get some favourable treatment but not the tourism industry, which is so important?

Sitting suspended from 18:30 to 19:30

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I understand Senator Macdonald has additional questions, so I will yield in favour of him shortly. However, some questions were asked previously regarding the assistance package. I referenced a review process and, in response to Senator Nash's questioning, I want to indicate that the review of household assistance is referenced at page 114 of Securing a clean energy future: the Australian government's climate change plan, and it states:

The Treasurer and the Minister for Families, Housing, Community Services and Indigenous Affairs, in consultation with relevant ministers, will annually review the adequacy of household assistance in the Budget process. This review will examine the real value of the assistance provided on the introduction of the carbon pricing mechanism taking into account:

• movements in prices for a consumption basket used in calculating the assistance;

• the indexation arrangements for the assistance provided, including the adjustment for the bring forward; and

• any new information about the weights of items in the consumption basket.

In addition to these annual reviews, there will be a review of the household assistance package in parallel with the carbon pricing mechanism review in 2013-14

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | Link to this | Hansard source

Thank you for that information, Minister. Once those annual reviews have taken place, if it is deemed that the compensation over the previous 12 months has not been appropriate or of the required level due to the fluctuations, will there be a retrospective payment to cover that period? I am just trying to understand how that will work.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think what underlies the question is an assumption that the assessment by Treasury about the likely CPI impact is wrong and would therefore fluctuate substantially. Bear in mind that two out of three will receive assistance at least equivalent to the average price impact. So the government has already built that buffer in to reflect the potential for some difference in the price impact from what would be assumed as a result of the Treasury modelling. This is analogous in many ways to the way the impact of the GST on prices was calculated.

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

Just before the dinner break, I was halfway through asking some questions of the minister. I was lamenting the fact that, because of an unholy deal between the Greens and the Labor Party, the time for asking questions has been severely curtailed so that this whole process has to finish by lunchtime tomorrow. Temporary Chairman Marshall, you would recall that we have come back to the Senate this week—the House of Representatives is not sitting; this is an additional week, over and above the parliamentary sitting—so that we can fully explore these 18 complex bills. But we are being severely restricted by this arrangement between the Greens and their mates in GetUp!—none of whom have any interest in democracy, free speech or proper parliamentary debate—in an unholy alliance with the Labor Party. As a result of that, my colleagues and I have very limited time to speak on these bills and to get the information the Australian public need to fully understand and comprehend this toxic new tax.

I have given the minister's advisers some idea of the questions that I am going to ask, so I hope that they will be well-prepared to brief the minister when I do ask the questions. Senator Birmingham and Senator Xenophon have moved a very substantial amendment that I want to spend a couple of minutes supporting. It is an amendment that says that this package of bills should not be implemented, should not be approved by the Governor-General, until after the next election. For those listening, I want to explain why we are moving this amendment. It is because nearly every member in the lower house ran to the last election on a campaign promise that there would be no carbon tax under a government led by Ms Gillard. It was a solemn promise by Ms Gillard a couple of days before the last election and it was reinforced by the Deputy Leader of the Labor Party, Wayne Swan. 'There will be no carbon tax in this term of government.'

Of course here we are in the closing stages of debate—though much truncated—on legislation which will impose a toxic Australia-wide carbon tax. We live in hope that some of the Labor people might do what their constituents want them to do and come across and join us in opposing this toxic tax. I know many of them would like to. Many understand that their colleagues in the House of Representatives will be annihilated at the next election because of the breach of that solemn promise and because Australians clearly do not want this toxic carbon tax, particularly when nobody else in the world has one. This tax will do nothing to stop global emissions from Australia. In fact, after this enormous new tax is imposed, on the government's own modelling, emissions are going to increase by 2020. It is not going to do any good at all.

Members of the Labor Party are all saying now that this is an essential tax for Australia, that it is essential Australia leads the world in introducing a nationwide carbon tax. I want to ask every one of the members of the Labor Party—and I want them to answer this when next they speak—what did they say to Ms Gillard a year ago? They are all saying the tax is so good now. Did they pick up the phone to Ms Gillard and say: 'Don't you dare do this, Ms Gillard. You've just promised you won't introduce a carbon tax, but we think it's so good.'

Senator Wong has been speaking for the last week on how good and how essential a carbon tax is for Australia. I would like to know what Senator Wong did a year ago when Ms Gillard promised the Australian people she was not going to introduce it. Did Senator Wong ring Ms Gillard and say: 'Hey, buddy, this is not on. This tax is so good.' Senator Wong has been telling us for the last week how good this all is. I would be interested to know, if she thinks it is so good now, whether she rang Ms Gillard a year ago, when Ms Gillard promised every Australian she would not be introducing this tax, and said: 'Listen, buddy, you're wrong. You can't do this. I'm not going to go with you. I'm not going to run on your campaign promises. I'm going to make my own comments. I'm going to tell the Australian people, "No, I'm for a carbon tax."'

What about all of the other senators here? I want to know whether Kirsten Livermore, the member for Capricornia, rang Ms Gillard a year ago and said: 'I believe this carbon tax is just so good. If you're going to promise not to do it, if you've said you're not going to have it, I'm going to campaign against you.' I want all the Labor members to search their souls and tell me: did they ring Ms Gillard a year ago when she promised not to introduce this tax? I would be very interested in the answers. I am sure it did not happen. Or perhaps they rang her and Ms Gillard said to them: 'Look, I've had to promise this because I know people hate it and if I said we were for it then we wouldn't get elected. I agree with you that we should have a carbon tax, so just shut up for the next couple of days. Don't say anything. We'll pretend we are not going to have a carbon tax. As soon as we get in, we'll introduce the carbon tax.'

I have heard a lot of comments in this chamber about how John Howard changed his mind on the GST, and I concede that, yes, he did. He had said we were not going to have a GST, but then he prepared a GST—the whole tax system. He put it out, chapter and verse, line by line, detail by detail, to the Australian public and then he said to the Australian public: 'Look, previously I said there wouldn't be a GST. Now I think we do need a GST, so this is what I propose. I'm now going to go to an election. If you agree with me that this GST is good for Australia then vote for me at the election. If you don't believe it's good, vote for the Labor Party.' What did Australians do? They returned John Howard and he introduced the GST.

This amendment by Senator Xenophon and Senator Birmingham simply says: 'Have the courage to do what John Howard did. If you think this is so good, if you think this is going to save the world, put it to the Australian people. Let them have a say.' If this amendment is passed, that is what will happen. The confirmation of this new policy regime will start only after the next election, and what could be fairer than that? I would like anyone to tell me what could be fairer than that. Even under the Labor Party's proposals, the Greens' proposals, this does not start till 1 July next year, so there is no hurry. I cannot understand why we are guillotining it through the Senate tonight and having a couple of hours tomorrow morning on these 18 complex bills, because it does not start for another seven months at the very earliest. What is the rush? We know why: Senator Brown and Ms Gillard want to go to South Africa and strut the world stage saying, 'We've done this.' All the other countries will simply laugh at them.

I certainly support this amendment. Senator Xenophon has some interesting amendments on another approach to carbon reduction, and they deserve full debate. But I can tell Senator Xenophon that he is not going to get the time. You have got literally a couple of hours tonight and a couple of hours tomorrow. About 15 speakers from our party want to speak, and all we get is Labor Party people jumping up, giving 15-minute speeches and stopping us from even asking questions. This whole thing is a travesty of parliamentary democracy, and I hope that those listening to this debate will understand just how low the Labor Party and the Greens have sunk. With the Greens we would expect it, but most people expect that the Labor Party, when they made a solemn promise not to do something, would honour it. Sadly, that is not the case.

As well as supporting the amendment, I want now to go to the questions I foreshadowed before. I ask questions about the coal industry because it is so important in Queensland, the state I represent in this chamber. Proposed section 145 of the main bill contains a clause that permanently locks coalmining out of the traditional assistance arrangements regardless of future market conditions or the outcome of any Productivity Commission reviews of the effectiveness and scope of the emissions-intensive trade-exposed arrangement. This is a dramatic shift from the previous CPRS legislation, introduced by Mr Rudd but withdrawn. I ask the minister: why this change of approach? Why is the coal industry being attacked in this way?

Also, in relation to the coal industry, there is $1.68 billion for the Carbon Capture and Storage Flagships Program—nowhere near the 13.2 billion committed to renewable technologies—and another $3.2 billion managed by the Australian Renewable Energy Agency. At least $1.68 billion is something. Treasury modelling of the Clean Energy Future package acknowledges that carbon capture and storage will make an important contribution to meeting Australia's emissions reduction target. Its exclusion from the Clean Energy Finance Corporation is clearly inconsistent with this funding. Carbon capture and storage should have the same access to a competitive process for this funding as the suite of other low-emission and renewable technologies.

I want the minister to explain to me why the government has taken this approach with the carbon tax in relation to those two issues. I would appreciate the minister's answers. Then I want to ask a couple of questions about the tourism and sugarcane industries. Regrettably, that will be the only time I will have to participate in this debate tonight, even though I have literally thousands of other questions. Perhaps the minister could address those two questions in relation to the coal industry.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Senator Xenophon was seeking the call. My contribution in response will be quite long. I am happy to let Senator Xenophon respond first.

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

Thank you, Minister. Senator Macdonald is right. I believe the process is unsatisfactory, but the longer I talk about how unsatisfactory and unfair it is, the less time I will have to move the amendments I need to move, which have been on the table for quite some time and which are worthy of debate, relating to significant and substantial amendments to the bill. I wonder could the coalition indicate whether they would be prepared, once the minister has responded to Senator Macdonald's substantial questions, to have a vote on this very worthy amendment—which I have co-sponsored with Senator Birmingham—that these bills be delayed until after the next election. Even if I dealt as efficiently as possible with my amendments, it would take me the best part of an hour. So I indicate that I am keen for this question to be put in the next 25 to 30 minutes. The incredible time constraints are not exactly fair, given that we should be debating this very important piece of legislation for at least the rest of the week. Given all that, I flag to my colleagues that I am very keen for this particular question to be put in the next 25 minutes.

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

To answer Senator Xenophon, as everyone in this chamber knows, Senator Birmingham is leading the case for the coalition and is in charge of managing the very limited time allowed to those of us on this side of the chamber. I cannot answer your question Senator Xenophon. I assume that would be his approach, but he will indicate that to you the moment he comes into the chamber, which I am sure will not be very long. In light of that, I have been here long enough to know who is going to get the call next.

As well as the two questions I have asked on carbon, I might put to the minister my questions on the tourism and sugarcane industries. Hopefully the minister can wrap them all up and at least give some information to those industries. In relation to the sugar cane industry, senators and those listening to this will recall that Senator Nash gave a very detailed explanation of irrigation. Where I come from, the Burdekin district of North Queensland, we grow the best sugar cane in the world. Why? We have lots of sunshine and very little rain but the cane grows magnificently because it is irrigated by underground water. Pumping the water out of the aquifer requires a lot of energy, and the bills for electricity for sugarcane farmers in the Burdekin district are astronomical. I want to know from the minister what assistance sugarcane growers can expect with what is almost their single greatest cost.

While on the subject, I refer the minister to the Army's Lavarack Barracks in Townsville, a huge establishment and the home for many of Australia's very professional defence forces. There is magnificent work done there. Our soldiers most often leave from there to go to Afghanistan and Iraq. These days, unlike the old days, the soldiers all have air-conditioned barracks. The work being done out there on new buildings is astronomical. I have asked on notice—and I do not have the answer from the government yet: what is the electricity bill for Lavarack Barracks? I do not expect the minister to have an answer to that, but I can tell you that it will be enormous, in the tens of millions of dollars a year. I await the government's answer.

What additional funds will go to the Australian defence forces to pay for the increased cost of electricity which they will have to pay civilian suppliers? The defence forces are already under the pump, having to save $20 billion under the Labor Party's regime. That means there is less fuel for planes, ships and tanks, and fewer bullets to fire in training. I would like to know what plans the government has to increase funding to the defence forces to pay for the increased cost of electricity. Finally, I would like to ask the minister what programs are going to be put in place to help the defence industry.

I have heard Labor Party speaker after Labor Party speaker say we have got to have this tax because it is the only way we can save the Great Barrier Reef and, if we do not save the Barrier Reef, the tourism industry is going to be in trouble. I think anyone listening to this broadcast will know that Australia emits less than 1.4 per cent of world emissions of carbon. Under the government's proposal, they are going to reduce that by five per cent. So that is five per cent of 1.4 per cent. You can work out the arithmetic yourself, and it is not much. We have asked, time and time again, what that is going to do for world emissions and, therefore, the stopping of climate change. I have always said the climate is changing. Of course, as everyone knows, it has been changing for millions of years. Remember that we used to be covered in ice once. The centre of Australia was once a rainforest. Of course, the climate changes. It has been changing for eons and will continue to change for eons. But I want to know what the reduction of Australia's 1.4 per cent of world emissions by five per cent will do to do that is going to save the Barrier Reef. If China, the United States, Canada or India do nothing, if the Europeans say they are doing nothing and effectually do nothing, and if none of the other developing countries are doing anything, then what is Australia's five per cent of 1.4 per cent going to do to save the world and to save the Barrier Reef?

What it will do is put up the costs of every tourism operator on the Barrier Reef, and it will put them out of business. What Australia does is not going to make one iota of difference to the Barrier Reef or indeed to emissions or to global warming—if there is global warming. It will certainly not make any difference to the climate change that has been happening for 20 million years, but it will affect the industries very prominent and very important up in North Queensland, where I come from. Thousands of small businesses up along the coast of Queensland and north of Bundaberg rely on the Barrier Reef. This tax is going to destroy their business because they are not getting any relief. They use a lot of diesel but the diesel tax credit is going, as I understand it. Labor's carbon tax will not do a thing to save the Barrier Reef but it will destroy the businesses of all those tourism operators.

The Great Barrier Reef goes up into the Torres Strait and the islands. I also want to know what packages the government is going to put together for all of those people who live in remote areas of Australia and who only get their goods and services by the trucks, planes and ships that bring the goods in. Most of those use fuel that is not going to be in any way assisted, so we have this double whammy in remote and distant Australia.

So I would be interested in answers to those questions. The minister has indicated she has some comprehensive answers, because I have given her notice before the dinner break of these and I would be very keen to hear them. I conclude by saying for those who are listening to this broadcast—and I know a lot of people do listen to the broadcast of parliament because they like to know how democracy works and how this parliament of Australia works—

Senator Xenophon interjecting—

Yes, or doesn't work! Thank you, Senator Xenophon. I say that because the debate has been so curtailed. Much as I would like to ask the dozens and dozens of other questions that I have, I am not going to be given the chance because of this very truncated, undemocratic guillotining of this debate. I hope the minister has had time to get her advisers to succinctly give me the answers to those questions. I will then concede to other of my colleagues who want to participate in this debate.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

That was a very long contribution by Senator Macdonald, including a very lengthy contribution about by how much the debate has been curtailed. I would make the point, Senator, that the opposition chose to bring on another matter for debate earlier today and took at least an hour out of the debate allocated to this committee stage. So that was a decision of theirs.

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

You set the rules.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Senator, I listened to you in silence.

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

Well, be honest.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I listened to you in silence, Senator. I would ask that you give me the same courtesy. There was also lengthy reiteration of past matters. I do not propose to respond to them. The only point I would make is that, first, the opposition has the same reduction target by 2020. So if the senator does not believe it is sensible for Australia to be reducing its emissions by five per cent by 2020, on 2000 levels, he should take that up with Tony Abbott. The difference is that the policy that the senator supports will cost the taxpayers who elect him more than the government's policy. It will cost taxpayers more each year—$1,300 without assistance in a picking winners, doling out grants program that is bureaucratically driven. I have placed on record a number of times in this debate why we on this side of the chamber believe it is important to price carbon, both in terms of moving the Australian economy to being a cleaner energy economy and also responding to the challenge of climate change, a position that is not remarkable; it is a position that Mr Turnbull shared, that Mr Howard shared and that the Conservatives in the United Kingdom share. I think Margaret Thatcher was one of the first world leaders to talk about climate change. So these are not radical positions.

I am asked some specific questions. Firstly, I would make a few points on sugarcane. I understand this was raised in some of the committee discussion—although maybe not. The agricultural sector is excluded from coverage under the carbon pricing mechanism. Sugarcane farming will not be directly liable to purchase permits under this mechanism. In addition, the government has agreed to exclude fuel used in agriculture, fisheries and forestry. I am also advised that the sugarcane industry may be able to generate credits under the Carbon Farming Initiative which will be linked to the carbon pricing mechanism by, for example, reducing burning of the above-ground biomass of the sugarcane crop, reducing fertiliser use and sequestering carbon in soils. A number of inputs to farming, such as fertilising chemicals, are priced in international markets and therefore unlikely to rise significantly with a carbon price. The government is providing assistance to producers of fertilising chemicals through the Jobs and Competitiveness Program because they are not expected to be able to pass through their carbon costs. Manufacturers of urea, a key input to fertiliser production, will be eligible for assistance under the Jobs and Competitiveness Program at the 66 per cent assistance level. Manufacturers will also be eligible for assistance under the $1.2 billion clean energy program. This includes $150 million dedicated to manufacturers in the food and beverage processing sector as part of the Clean Technology Food and Foundries Investment Program.

As I indicated to Senator Nash previously, Treasury modelling indicates that electricity prices may rise by about 10 per cent under a carbon price. However, I would note, as I previously indicated, that ABARES has estimated that electricity makes up about 0.9 per cent of total input costs for broadacre farming, even assuming full cost pass-through by electricity suppliers. This implies a very small impact on total production costs.

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

But not for sugar. In relation to sugar I asked you specifically.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

In relation to sugar, I make the point that in 2007 the Sugar Research and Development Corporation published a report looking into the impacts of climate change on the sugarcane industry. The report stated:

The predicted temperature rises and other climatic changes will have implications for:

I am referring to findings of the Sugar Research and Development Corporation. The report also stated—

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

Yes, but that is not addressing the question I asked you.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am making the point, Senator—you may not like the answer—that even the sugar industry itself has recognised the impact of climate change on it. Given that the sugarcane industry is—I will not deal with that; I am sure that the senator knows that.

I also make the point that some evidence was given by Mackay Sugar at the committee hearing on 5 August which pointed out that, whilst there was what was described by the business development manager as 'a short-term cost impost':

In the long run, the proposed carbon tax policy provides opportunities to Mackay Sugar. … in the longer term, a carbon price is likely to promote diversification projects for our business. As a large sugar manufacturer, Mackay Sugar generates considerable quantities of renewable energy using by-products of the annual cane crop. … under the proposed carbon tax Mackay Sugar will be largely exempt from direct greenhouse gas emission liabilities. Also, a carbon price will drive our business to improve overall energy efficiencies and reduce the use of supplementary coal fuel at our factories.

I think that has responded to senators on the sugarcane industry.

In relation to tourism, I make the point that, first, international aviation is not subject to a carbon price. I know from the number of questions that I have been asked in question time that the senator might not have recalled that. The domestic industry is subject to a carbon price. That has been factored into the cost-of-living impact of 0.7 per cent to which I referred earlier and which forms the basis of the Household Assistance Package. I also reference the effect on the tourism industry—for example, the Great Barrier Reef—of climate change, just to remind us that there are economic costs to climate change to which we need to have regard.

In relation to coal, I have answered a number of questions previously from the senator. We do not believe that it is appropriate to classify coalmining as emissions-intensive trade-exposed because most Australian coalmines do not release a great deal of pollution per tonne of coal produced and are expected to face relatively minor cost impacts in the carbon price. The policy issue is a small number of underground mines which are extremely gassy, which have high volumes of fugitive emissions. I have gone through—I think on Thursday—the assistance that the government is providing to this sector. I also make the point that, despite the sorts of scare campaigns that the senator has been part of, we continue to see increasing investment in the coal industry, including a takeover bid on the day that Mr Abbott suggested that this was the death of the coal industry.

I am also asked about CCS. The Clean Energy Finance Corporation is intended to deliver investment into renewable energies and low-pollution technologies such as co-generation. This is in addition to the government's existing support for clean coal technologies, which will continue to be delivered through our existing programs, which include the CCS Flagships Program and the Global Carbon Capture and Storage Institute.

In relation to defence, Senator, the government does fund defence. The 'enormous cost' that you are talking about would be, obviously, the electricity price increase, to which I have already referred. I note that the defence budget in 2011-12 was some $26 billion, so I suggest that we perhaps should keep in context the additional electricity costs.

I think that has dealt with most of the issues the senators raised.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I have some specific questions in relation to the impact on health services, Minister. Given the time constraints, I refer to Minister Combet's media release of 16 September. He refers to Treasury modelling showing that the average price impact on health services will be around 0.3 per cent. Is this t into account in the government's Household Assistance Package? Also, that reference appears to be in the committee's interim report. Can you tell me where in the Treasury modelling documents this information relating to the 0.3 per cent appears? How was that figure calculated, and how much is it in dollar terms? Is that per household, doctors surgery or hospital clinic? Will there be any effect on the price of medicines manufactured in Australia? Those are two separate questions, one relating to the services and one relating to the medicines manufactured.

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

The question is that the amendment moved by Senator Birmingham and Senator Xenophon be agreed to. Those of that opinion say aye—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thought Senator Singh was seeking the call, so I was holding off. Senator Fierravanti-Wells, I will just get some advice on the press release. I do not have that in front of me, so I will come back to you on that point.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

If you do not have it, Minister, I have a copy here.

The TEMPORARY CHAIRMAN: Senator Fierravanti-Wells, you do not have the call. Senator Singh.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I did want to raise the fact that the opposition at least talked briefly about the science. Senator Macdonald did touch on the science in relation to the clean energy bills and the fact that the science shows that the climate has changed; it has changed over—

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

Aeons.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

millennia. What Senator Macdonald missed when talking about the science was that in the current Holocene—that is, the present warm period that we are in—a lot of the change in the climate has been caused by humans. That is why we are in the situation we are in and why we are trying to do something about it. According to Professor Will Steffen, one of the climate commissioners, one trillion tonnes of carbon dioxide in the atmosphere today is of human origin. That means something like 30 per cent of the carbon dioxide in the atmosphere has been caused by humans. Yes, the climate has changed, and it has changed because of our contribution to it. That is why we are trying to do something about it. That is why we are trying to ensure that our climate and our ecosystems—including the Great Barrier Reef, which Senator Macdonald touched on—are protected into the future and that our ecosystems remain in the equilibrium in which they need to remain.

As Senator Macdonald said, other nations in the world are not acting as fast as he would like or all of us would like. But if we all had the attitude that others are not acting and therefore we should not act, if we all had the attitude of putting our heads in the sand and not doing anything about this global issue that has no boundaries—the carbon dioxide in our atmosphere that has in part been caused by humans does not have boundaries—or if we did not have the attitude of leading as a developed nation in our Asian region then we are not setting an example for other countries to do something about this issue. In the meantime, they are actually doing something about this issue; they are acting. Even India and China are acting on the issue of carbon in the atmosphere.

Senator Fierravanti-Wells interjecting—

The TEMPORARY CHAIRMAN: Order! Senator Singh, you have the call.

Senator Fierravanti-Wells was obviously not here earlier this evening, nor last Thursday, or she would have realised that her Senate colleagues have wasted much of the time of this in committee debate on not asking questions. In fact, every time Senator Macdonald gets on his feet, he eventually get round to his question or he spends at least half of his time talking about the fact that he is not getting enough time to ask questions, without asking a question!

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

Mr Chairman, I rise on a point of order. Under standing order 116 this is a time to ask questions of the minister. This senator has spoken several times and never asked a question. She and her colleagues have guillotined debate on this issue and prevented the opposition from having a proper opportunity to discuss it. Mr Chairman, I suggest that you draw her attention to the standing orders and require her to ask a question, if she has one, or sit her down so that those who do have questions can ask them of the minister.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr Chairman, I rise on a point of order. I do not think there is a point of order. As Senator Macdonald has demonstrated on many, many occasions, he comes into this chamber and has quite a lengthy preamble to—

The TEMPORARY CHAIRMAN: Senator Polley, you are now debating the issue. You are not addressing the point of order. There is no point of order. But I do take this opportunity to remind all senators of the question that is before the chair, and that is the question which all senators should be addressing their remarks to. I am happy to apply it, if that is what the Senate wishes. Senator Singh.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Chairman. I am happy to ask a question of Senator Macdonald: does he believe in climate change? That would be the first decent question to ask. Does he actually believe in doing something about it that would lead to a low-carbon future in this country? In relation to being in committee and the opposition having an opportunity to ask questions, the opposition have wasted so much time on not asking questions. They are not getting into the detail of the clauses in these bills because they have not done their homework. They do not understand the degree of detail in these bills so they have chosen to gloss over the in committee stage by frivolously grandstanding and giving second reading speeches rather than getting into the nitty-gritty of what we are here for, which is to look at the detail of how these bills will work in reality when they become legislation tomorrow.

Senator Macdonald did touch on the science. In relation to the slight touch on the science that he made, we are here to try and reduce carbon pollution. If we do not try and reduce carbon pollution, the world risks serious effects from climate change. He seems not to care about the rest of the world, only Australia. Therefore, it does not matter that other parts of the world are not acting as fast as they should be—and, in light of that, Australia should not be acting. But Australia itself faces acute risks from not acting on climate change. Australia is a very hot and dry continent. This means that, among the world's developed countries, Australia itself faces acute risks. Studies have indicated that warming of more than two degrees Celsius will overwhelm the capacity of many of the natural ecosystems in Australia to adapt. With that level of warming, for instance, the survival of the Great Barrier Reef, which Senator Macdonald referred to earlier—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr Temporary Chairman, I rise on a point of order. I do have some specific questions which require specific answers.

The TEMPORARY CHAIRMAN: But what is your point of order?

What we have here is not a question being answered. There is nothing Senator Singh has said yet that is addressing a question.

The TEMPORARY CHAIRMAN: There is no point of order.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I have actually addressed the issues that Senator Macdonald raised in relation to the science in his earlier questioning in this place. I have tried to explain to him the science because clearly he does not understand the science.

Opposition senators interjecting—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Mr Temporary Chairman, I rise on a point of order. It is disorderly to continue interjecting. The opposition have been listened to in relative silence for most of this debate. I listened—

Senator Bushby interjecting—

See? They are even interjecting now.

The TEMPORARY CHAIRMAN: I accept the point of order. I am calling all senators to order on a regular basis. I would ask all senators to cease interjecting. Senator Singh, you have the call.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

As I referred to earlier, Senator Macdonald and Senator Joyce raise the fact that we are in committee and that they are running out of time when in fact it is them who have not asked their questions every time they have been on their feet. They have instead wasted so much time having speeches in the second reading debate—

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

That is an outright lie. Get her to withdraw that.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

We can go back through the Hansard and have a look.

The TEMPORARY CHAIRMAN: I am not sure what you said then, Senator Macdonald, but I will just ask senators again to come to order.

As I said earlier, regardless of the fact that carbon pollution has an effect on the entire planet, Australia itself is at acute risk. If it is only Australia that those opposite care about in relation to this issue then at least for the sake of Australia they should be supporting the bills in front of them, because Australia, the Great Barrier Reef and the ecosystems in this hot and dry continent are at grave risk if we do not act. I support that by again going back to Professor Will Steffen, the director of the ANU Climate Change Institute, who has provided on umpteen occasions a lot of peer reviewed evidence as to why we need to be acting on climate change and why we need to be giving incentive to those large polluters to change their current practices to, in effect, change our economy, the same as has already been done in the EU and a number of other parts of the world.

I refer those senators opposite to the Climate Commission's website because it talks about carbon pricing being not a new concept but something that has been in place in parts of the world for a number of years. In fact, in the US, when they were dealing with acid rain back in the mid-1990s, they introduced a price on acid rain pollution, which was passed in 1995, to reduce sulfur dioxide pollution from power plants. The pollution dropped by three million tonnes by 2002. That is a clear example of how putting a price on pollution does actually work and how it has already worked in another part of the world. This is not a new thing. The opposition are making it a bigger deal than it really is. Yes, it is a major piece of reform for this nation, but it is something that so many parts of the world are acting on and getting on with. Why? It is because they believe in the science. I think the stumbling block here comes back to the fact that those senators opposite do not believe in the science and they do not believe in what those peer reviewed science reports are telling us.

If we were to go back through some of the things that Senator Macdonald has said, that seems to be fairly much the case. I know he said earlier that he does believe in climate change, but I do not know what that actually means. I think it means that he just believes the climate changes and we all keep rolling along. He does not believe that human input has something to do with—

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

Mr Temporary Chairman, I rise on a point of order. Now that the Manager of Government Business in the Senate is here, I just wonder whether he could give us some indication as to whether this filibuster is going to keep going on. There are a number of us who want to ask some questions—

The TEMPORARY CHAIRMAN: Senator Ronaldson, if you are going to interrupt a speaker you must do so on a point of order. You cannot do so to simply ask the manager—

I am just asking whether this is going to be the norm for the rest of the night.

The TEMPORARY CHAIRMAN: Senator Ronaldson, there is no point of order. Resume your seat.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I think it is necessary to remind the opposition that the vast majority of economists understand the best way to spur the action necessary to both preserve our environment and remain competitive in a low-emission future is the package currently before the Senate. It is necessary also to remind the opposition that the overall architecture of the clean energy package is similar to the emissions trading scheme that the coalition, under the direction of John Howard, once were in favour of and supportive of. To come in here and continue to be so negative and fear mongering and misleading in relation to the package in front of you has to be for no other reason than for political gain, for gain in the poll, for trying to ensure that you are misleading the public in the hope of votes rather than actually standing for anything on principle or standing for anything of meaning when it comes to this important piece of reform.

We know that Senator Cormann, for example, is not a senator of principle anymore since his backflip from being supportive in 2007 of the CPRS or an ETS to now not being so.

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

Mr Temporary Chairman, I rise on a point of order. Senator Singh accuses the opposition of misleading the Australian people for votes and yet that is exactly what she did at the last election. She was elected on the back of a lie.

The TEMPORARY CHAIRMAN: Senator Colbeck, you cannot interrupt another senator speaking unless you are rising on a point of order. There is no point of order.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I will end on this. What tomorrow will bring to the Australian community and especially the Australian business community is confidence for businesses who are wanting certainty in relation to this new piece of economic reform. It is good for this nation. It is good for our children. It is good for the environment. And it is good for this parliament to get on and start moving forward, accepting the science and accepting the fact that we need to act on climate change.

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

Before I give the call to Senator Joyce, you have a point of order, Senator Fierravanti-Wells?

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Can I just have some direction here. I asked the minister a series of very specific questions in relation to the impact on health services. I also have a series of questions in relation to aged care, other specific matters—

The TEMPORARY CHAIRMAN: Is there a point of order, Senator?

Can I just ask: is the minister now going to answer my questions? And then, when she has finished, will I be interrupted by yet another person on the other side or will she answer all my questions this evening?

The TEMPORARY CHAIRMAN: Senator Fierravanti-Wells, that is not a point of order and that is not a matter for the chair to determine.

When am I going to get an answer to my questions?

The TEMPORARY CHAIRMAN: Senator Joyce, you have the call.

Senator Wong interjecting—

Senator Fierravanti-Wells interjecting—

The TEMPORARY CHAIRMAN: Order! There needs to be less chatter across the chamber. Senator Joyce, you have the call.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I am quite happy for you to have the call, Minister.

The TEMPORARY CHAIRMAN: Are you relinquishing the call?

As long as I get the call after she has finished.

The TEMPORARY CHAIRMAN: I am not determining that at this point in time. I have given you the call. If you do not want the call I will then go to the minister.

Okay, go to the minister.

The TEMPORARY CHAIRMAN: Minister, you have the call.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I offered across the chamber to the senator, as is the normal case in these processes, saying, 'I have an answer on your specific question; do you want me to give it?' and she told me where to go.

Senator Fierravanti-Wells interjecting—

You may not have used those words, that is true.

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

Senator Fierravanti-Wells, you rose on a point of order?

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

My point of order is the minister should withdraw that. I did not tell her where to go, and she should correct the record.

The TEMPORARY CHAIRMAN: That is not a point of order.

Senator Joyce interjecting—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

This is very disciplined from the opposition! I am not quite sure to whom I respond. If the senator is offended I will withdraw that, but I do make the point that I gave her the courtesy, as I try to, of indicating that I had an answer on the specific question and instead I got some diatribe about process.

In relation to the question about the 0.3 per cent, I am advised that detail on that is available on the Treasury website. There is a note entitled 'The impact of a carbon price on household expenditure as modelled by the Treasury for the Clean Energy Future package announced on 10 July 2011 by the government'. That note sets out a more detailed breakdown of Treasury's modelling of the impact of a carbon price via CPI subgroup. If you turn to table 1, that table shows a range of the CPI subgroups, and included in that is health services, average price impact per week, and I have here 10c—I will just check that that is right—which is 0.3 per cent. So, in response to the senator's question, that is the locus that that figure came from. I think that is the basis of the assertions, to which she was referring, by the minister I represent.

I also make the point, and I suspect the senator would recall this better than I in relation to public hospitals, which I think she asked about, that the government's funding of public hospitals is subject to indexation arrangements. Senator Sinodinos is nodding. I do not have anyone in the advisers box to recall precisely the rate of indexation but my recollection is that it is significantly above CPI because health costs obviously rise above CPI, and if I am incorrect in that I will come back to you. To the extent that there is any increase in costs from the carbon price I am advised that current and future funding arrangements would automatically ensure that public hospitals continue to be properly funded within the arrangements.

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

Before I give Senator Joyce the call, let me again remind all senators of the question before the chair, which is that amendment (1) be agreed to.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Minister, I want to read out a section of the Constitution. I know this has been brought to your attention before but we are still waiting for a distinct answer. Section 114 states:

A State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain any naval or military force, or impose any tax on property of any kind belonging to the Commonwealth—

obviously nothing we have to worry about there, but the next bit is where it is distinct and I need a distinct answer—

nor shall the Commonwealth impose any tax on property of any kind belonging to a State.

Minister, do the states of the Commonwealth of Australia own power-generating assets?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am sure Liberal senators will be very pleased that Senator Joyce is reprising Senator Williams's argument from some hours ago. I have answered that question; I refer to that answer.

I also indicate to senators I understand that Senator Fierravanti-Wells may have had further questions on the health issue or other issues. I indicate to Senator Xenophon—I know he is on the phone—that the government is very happy to proceed to voting on his amendment which is before the chamber, if we wish to proceed. I can give that commitment on behalf of the government. I am happy to respond directly to Senator Fierravanti-Wells on a question, but we are quite happy to proceed with voting on this particular amendment. There are a number of subsequent amendments Senator Xenophon has also circulated and flagged.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Minister, I know that in your previous answer to Senator Williams you said 'referring to legal advice'. I have not asked you that. I have asked you a very distinct question, Minister. Do you know of any state of the Commonwealth that owns power-generating assets—yes or no?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I have answered that question previously. I refer to my previous answer.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

So the answer was yes?

The TEMPORARY CHAIRMAN: The question is that the amendment be agreed to. Senator Joyce?

I am presuming from her silence that the answer to that question is yes, that the states do own power-generating assets. Is that correct?

The TEMPORARY CHAIRMAN: I do not think you can seek the call again, Senator Joyce.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Minister, you specifically addressed the issue of hospitals. My question was how much the 0.3 per cent is in dollar terms. I think you may have mentioned that; was that the 10c? I also asked whether that was per household, doctor's surgery or clinic. The other part of that question was about the effect on the price of medicines manufactured in Australia. They were the health questions. I then have some aged-care questions.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

In relation to health, I will put this on the record and, if I am wrong, I am sure the very capable advisers will tell me. I am not sure that there is any further disaggregation than the CPI subgroup to which I referred. The health services CPI subgroup includes hospital and medical services, optical services and dental services, and the price impact was the 0.3 per cent average price impact per week of 10c. Obviously that is a consumer impact, so that is not an institutional impact. I have information in the CPI subgroup of pharmaceuticals. I will seek advice as to whether there is any disaggregation that is available as between those domestically and internationally produced and manufactured. The CPI subgroup for pharmaceuticals is also 0.3 per cent and the average price impact is here as less than 10c a week.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Thank you. With respect to aged care, operators have had concerns in relation to residents. In your figures on residential aged care in Australia there are two different figures in relation to operational residential places, one of $182,850 and another of $179,749. For the purposes of, say, about 180,000 in residential aged-care facilities, can you explain to me if increasing the pensioner contribution to providers from 84 per cent to 85 per cent will cover the increased cost for providers? Could you tell me what modelling was used? When will it be reviewed and will aged-care homes be counted as a single residence? There are, on your figures, 2,772 aged-care facilities. Will they each be counted as a single residence? How has the calculation been done?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am not sure on the last issue, Senator. I will see if there is anybody here who can assist. But, in relation to aged care, you would be aware that the package includes amendments to the Aged Care Act 1997 to allow a portion of the clean energy payments paid to eligible residents in residential care to flow to providers. This will enable providers who meet some of their residents' costs of daily living to meet the increased costs relating to the carbon price. The arrangement will ensure that household assistance is shared fairly between residents and providers.

As the senator pointed out, the maximum standard resident contribution payable by most eligible residents of aged-care homes will increase from 84 per cent to 85 per cent of the total basic pension amount. This increase will mean that aged-care homes will receive 52 per cent of the clean energy payments and pensioners will retain 48 per cent of their clean energy payments. The basic daily fee will remain the same for non-pensioner residents of aged-care homes who do not hold a Commonwealth seniors health card and who will not receive clean energy payments. Instead a new government aged-care supplement equal to one per cent of the basic pension will be payable in respect to these residents. I will see if there is any information I can provide in relation to the last issue and come back to the senator on it.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

While I am at it I might ask some other questions in relation to the $140 compensation for lifesaving equipment used at home. One hundred and ten thousand pensioners and concession card holders who use lifesaving equipment will get $140 extra a year each to help pay for the high cost of electricity. That divided by 52 is $2.70 per week. Does the calculation take into account how much it costs to operate a dialysis machine at home every week? Can you tell me what modelling was used to calculate that $140? Was it Treasury modelling? If not, what other modelling was it and which document does it appear in? I am also interested in people with other conditions that do not require special equipment but who may need extra heating and cooling because of an inability to control body temperature—for example, people with Parkinson's disease or multiple sclerosis. What is their position? How soon after the carbon tax is introduced will this subsidy be reviewed? Are the calculations that have been done—for example, on the issue of dialysis—on the basis of the number of people in hospitals today?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

We will do what we can to assist you. In relation to your question on single residences, I am not sure that is a term that we are familiar with in this context. It may be a term that is in the Aged Care Act; I am not sure. But the advice I have is that providers will receive a proportion of the clean energy payment of each resident. I do not know if that assists, Senator.

In relation to the essential medical equipment payment, the government has made a decision to put in place a payment of $140. This is to cover the change in running costs due to a carbon price of a kidney dialysis machine, which is the highest energy use machine expected to be covered by the payment. It is paid in addition to any state or territory government rebate or subsidy for essential medical equipment or thermoregulatory dysfunction. It has been designed to cover the additional cost impact of running medical equipment over and above the existing cost, which is subsidised through state schemes. The payment will be available for people with medical needs, or their carers, who are covered by an eligible concession card, require equipment or additional heating or cooling in their home as a result of a medical condition and hold, or contribute to the payment of, an energy account. It is not intended to provide assistance for the full operating costs of life-support machines. Rather, it is intended, as I said, to assist with increases in the running costs of life-support equipment due to the carbon price. It is also targeted at those who are most in need, hence those people covered by a concession card.

I am also advised that the list of equipment and medical conditions which will qualify a person for an EMEP are being developed in consultation with stakeholders. However, equipment eligible for a rebate or subsidy under a state or territory scheme as at 30 June 2011 will be included. I have a number of other points but I do not think they are relevant.

Again, I say—I see the senator rising—that the government would like to vote on the amendment before the chair. The government is quite happy to do so. I am very happy to continue answering questions, but the failure of the committee to vote on a single amendment, having sat all of the day plus four hours on Thursday, says something about the way in which the opposition are choosing to conduct this debate.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I have some short questions to finish off the health component of this amendment. They relate to GP surgeries. Obviously power bills are expected to increase by 10 per cent across the board. How does the government propose that GPs are going to pay for higher power bills? Does the government envisage that patients will be charged more and that consultation times will be cut or will surgeries be forced to turn the lights off? Can the minister assist me in relation to how—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Come on, be serious. Surgeries turning the lights off—

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I am just asking the question, Minister.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Come on. You are not seriously suggesting that—

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Well, answer the question. You do not want to answer the question? You have not worked it out?

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Fierravanti-Wells, have you finished your question?

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

No, I am simply saying to the minister that power bills are going to go up. Unless patients are going to pay more doctors are going to have to look at how they meet those costs in their surgeries.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think the suggestion that medical practices will simply turn their lights out really demonstrates the extent of the scare campaign the opposition want to be part of in this.

I am advised that to the extent there is any flow-on of carbon pricing to the cost of private medical practice, this will be captured through current Medicare indexation arrangements, which are linked to the CPI. Question put:

That the amendment (Senator Birmingham's and Senator Xenophon's) be agreed to.

The committee divided. [20:45]

(The Chairman—Senator Parry)

Question negatived.

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

I have a series of amendments to move and I would like to get on with it. I know that time is short because the debate has been truncated, which is very unfortunate—

An opposition senator: Gagged.

'Gagged' would be a good word, but I have to make the best of a very bad situation. By leave—I move amendments (2) and (3) on sheet 7165:

(2)   Clause 3, page 5 (before line 14), before subparagraph (c)(i), insert:

(ia)   take action directed towards reducing Australia's net greenhouse gas emissions to at least 10% below 2000 levels by 2020; and

(3)   Clause 3, page 5 (line 17), omit "that action", substitute "those actions".

I will be ruthlessly efficient with these amendments because I know time is incredibly short. These amendments introduce a target reduction of emissions to 10 per cent less than 2000 levels by 2020. Under the government's legislation, the only specified target is a reduction to 80 per cent below 2000 levels by 2050, but we have heard earlier today that the amendments will lead to a five per cent target by 2020. It is important to note that this target is more ambitious than the government's own target. It is important to note that this target is based on modelling undertaken by Frontier Economics, commissioned by me and the opposition back in 2009, showing that there is an alternative approach that is more economically efficient and can achieve this target of 10 per cent below 2000 levels by 2020.

Having said that, it is very important that any legislation that is of this significance to the economy must be dealt with in the context of giving the people of Australia a say on this issue. That is a non-negotiable position, from my point of view. But it is also important that we have a debate about the policy. My concern is that the coalition's Direct Action Plan just does not do that. It is a simplistic plan that will not deliver the best outcome in terms of reducing greenhouse gases and doing so in the most economically efficient way. An intensity based scheme will see economic cost savings because the scheme will result in lower energy price rises, and this will make the low-carbon transition more acceptable to consumers. Furthermore, through a range of additional efficiency initiatives, the Renewable Energy Target and a white certificate scheme, which I have amendments to introduce to establish, I believe that having a higher target will actually drive investment and drive supplementary emissions reduction targets to support it.

This is not a criticism, but I think it is interesting to note that, when this was being debated two years ago, the Greens moved for an unambiguous 25 per cent cut by 2020. I did not support that; I did support a 20 per cent cut based on Frontier Modelling data. But I think it is important to note that right now all this bill will deliver is a five per cent cut by 2020, and that to me is not satisfactory. I also want to make the following points. Frontier Economics used the same modellers, the Monash University Centre of Policy Studies, and the same model, the Monash Multi-Regional Forecasting model. What has been modelled here means less impact on small businesses. The problem is that you have a situation where the big end of town, the big emitters, will be compensated but the small and medium enterprises will not. I do not believe the coalition's Direct Action Plan deals with that. We will see a massive spike in electricity prices. We will see enormous uncertainty, and my concern is that, if you do not push up prices as much, you do not need to compensate as much and as such you have less revenue churn, and less revenue churn is the key here to having an efficient scheme.

I think it is also worth noting that recycling involves a tax interaction effect. I would welcome a contribution in this debate from Senator Sinodinos, for instance, who has long experience in issues of policy in his former role as chief of staff to the Prime Minister's office in the Howard government. But I think it is very important that we look at the tax interaction effects. We also need to look at the impact that this will have on the small business sector. The small business sector will be hit very hard by this, and there is a better way of getting a much better outcome.

This is a fundamental issue. This is, in a sense, a litmus test about having an efficient scheme. The difficulty here is that this scheme involves a combination of carrot and stick. The government scheme seems to involve a lot more stick and less carrot. Once you recycle revenue, you will have distortions in the economy. You will have a situation where you will cause, I believe, significant damage given the design of this scheme, and I think we can do better. The Frontier scheme provides that way forward. I know the coalition will not be supporting it at this stage, but I ask that you keep your options open.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

They did for a brief period.

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

Sorry?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

For a brief period they did.

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

For a brief period they did—thank you, Senator Wong—but they walked away from it. But this is still good policy. Senator Wong admires me for my loyalty and she accuses me of my loyalty to Danny Price of Frontier Economics. But I am loyal to good public policy, and I think it is important that we put this in perspective. In terms of the breadth and magnitude of economic effects, this scheme is arguably the most significant policy change in Australia's history, and as such there is a substantial onus on the government to demonstrate that, whatever policy is introduced, it is the best that can be developed. I believe we have not done that in relation to this scheme. If we look at the distortionary effects of such a scheme and at the impact on taxes then I think we will see a significant flow-on effect on the economy which will be negative.

Let us look at what the Obama administration proposed at the beginning of this year: having a clean energy standard. That is consistent with the Frontier scheme. That is consistent with a more efficient approach to achieving a better outcome. That is why I would urge my colleagues in the coalition to at least consider this—if not now, some other time. The fact is that the direct action scheme will not cut it. The direct action scheme will not provide the long-term benefits and a much more efficient way of dealing with this policy problem. But, again, I make it clear that I move these amendments against the backdrop of ensuring that the Australian people have a say before any such scheme is implemented.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As a matter of courtesy I thought I should just put the government's position on the record, but if Senator Joyce wishes to indicate the opposition's first then I am happy to go afterwards.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

No, I have questions with regard to the amendment.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

On the amendments before the chamber that Senator Xenophon has spoken to, the government does not support these amendments. The government does stand by its 2020 target range of five to 15 or 25 per cent below 2000 levels by 2020 on the terms that we have previously indicated. The senator would be aware from earlier discussions that the architecture in this legislation does differ from the CPRS in a number of important respects. The first is in relation to the fixed-price period, which is obviously a three-year period. The second is that these bills create the Climate Change Authority and task it with providing independent advice on pollution caps and carbon budgets that must be considered by the minister administering the legislation when setting the initial and subsequent pollution caps by regulation, which of course are disallowable instruments. I think we have discussed that issue earlier. So, for those reasons, the government will not be supporting Senator Xenophon's amendments.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

On this amendment pertaining to carbon reduction, the minister said agriculture is not included. Is she aware of anywhere in her legislation—noting that at this point in time I have asked her three questions and been unable to get an answer on any of them—where there is any future review period for the inclusion of agriculture?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The government's position is that agriculture is excluded permanently.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

So you categorically say to this chamber that nowhere in your legislation is there the suggestion that there will be at a future date—maybe around 2030—a situation where there is, by a range of other agreements, the inclusion of agriculture?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The reference to 2030 may be that the Treasury modelling assumed that other nations—or some other nations—will cover agriculture at 2030. I am advised that that was not assumed for the revised modelling, which reflected the government's position of permanent exclusion here in Australia.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

So it is now saying that there is no future inclusion of agriculture. I will take your word for that. I want to go now to schedule 1, part 2, section 278, subsection 7, where you talk about carbon dioxide equivalence. It is on page 54. Minister, to your knowledge, in your carbon dioxide equivalence, is methane from organic sources such as grass scientifically the same multiplier as methane from mineral sources such as coal?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Senator, first, I am not sure of your reference, because proposed section 278 of the Clean Energy Bill is a different proposition. It may be the explanatory memorandum. But methane is methane.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Is it?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

It is CH4 from memory.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

That is interesting. I direct you, then, to the Clean Energy (Consequential Amendments) Bill 2011, on page 54: proposed section 278, amending section 7 of the National Greenhouse and Energy Reporting Act 2007. Since methane is methane, as you stated, do you therefore disagree with the PhD thesis of a number of people from Sydney university who say the multiplier of methane from organic sources is completely different, as far as greenhouse gas emissions go, to that of mineral sources?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am having difficulty extrapolating from clause 278, which substitutes a definition of carbon dioxide equivalence, to the proposition you are making about someone's PhD. I am sorry if I am not able to make that leap, but I am having some difficulty.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

What is the multiplier on carbon dioxide—that is, the uplift factor that you give to methane?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am not sure that that is in the legislation. That is a question of scientific fact, so I will see if I can get some advice on that. I am not sure that that is prescribed in the legislation.

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

I note that we are debating Senator Xenophon's amendments (2) and (3), relating to a target range of emissions reductions. Senator Xenophon is moving for that target—for the benefit of people wondering what on earth is going on with the interjections here. The issue is: should we be setting a higher target than five per cent? The point at issue is that one of the problems with the legislation that came before this parliament previously was that the level of ambition on greenhouse gas reduction was too low and in no way met the scientific reality. We all know that Australia has signed on to constrain global warming to less than two degrees above pre-industrial levels. That actually means that we should be aiming to get down below 450 parts per million to 350 parts per million globally, if we are to actually give ourselves an opportunity for a safe climate.

The target range that is on the table will be determined by the Climate Change Authority. That is the big advantage and is actually one of the most crucial parts of this whole package: the fact that we are going to set up a Climate Change Authority, which has as its mandate to take into account the latest science, to look at what is happening around the world and to set emission reduction trajectories for the first five years of the scheme, and then annually after that. That is the role of the independent climate authority.

In my view, to now say that we are going to give that climate authority a political directive is wrong. The whole point of this is to give the Climate Change Authority the power to make a recommendation consistent with the science. As Professor Schnellnhuber, who was here recently from Germany, said, if the political reality does not match the physical reality then it is useless. That is the problem that we have had to date—that the level of ambition does not match the physical reality of climate change and what we need to do. So the expectation is that the climate authority, taking into account the latest science, will be setting a much steeper trajectory than has ever been projected or talked about in this parliament—and that would certainly be my hope. As to 10 per cent, I do not think it is enough anyway.

Senator Xenophon interjecting—

No, the government does not have a five per cent target. The government's legislation has five per cent as a default if the parliament has a disallowance for whatever is recommended; otherwise, whatever is recommended stands. The Climate Change Authority will make a recommendation to the government of the day. The government of the day will then make that regulation, and if it does not choose to regulate what the climate authority recommends then it will be forced to explain that. But if it is a default position, with a disallowance, it would be a minimum of five per cent. That is a default position; it is not the position that we would expect to come from the Climate Change Authority. And it needs to be very much higher.

In fact, if you look at the conditions the government previously set for whether it would move to 15 or 25 per cent, I would argue that the conditions for meeting 15 per cent are already there. Most people who have looked at those conditions would argue that. However, having set up a structure which provides for a Climate Change Authority to look at the latest science and to work out that trajectory, I do not think it is appropriate that we then give them a political fix. There is no point in having a Climate Change Authority if you do that.

Additionally in this legislation is the Clean Energy Finance Corporation and ARENA, which will drive renewable energy. In my view—and it is not just my view; it is also the view of ClimateWorks—the investment that is going to come in renewable energy and energy efficiency is going to double the level of emissions reductions from that which Treasury has already modelled and calculated. The expectation is that the emissions reductions will be much more substantial than has been calculated. Further to that, in the package there is a clear undertaking from the government to expedite a white certificate scheme on energy efficiency. That is something that the Greens have had on the table for a long time. Expedite means expedite—to bring that forward.

Together with those initiatives, I expect that we will see a substantially faster shift because Treasury has been incredibly conservative in its modelling. I think there will be a significant shift once this legislation becomes law and takes effect on 1 July next year. I think the transformation in the economy is going to be a lot faster than people think. In fact, we have to hope that that is the case because the reality of the climate science is that the way the trajectories are currently going, including our own here in Australia for greenhouse gas emissions with business as usual and globally, we are going to reach the point where it will be too late to secure a safe climate. That is the reality that we are all talking about. That is the seriousness of the climate emergency we now face.

We have to hope that not only will the climate authority take on board the latest science and set a steep trajectory, understanding that the earlier you act, the cheaper it is in the longer term, as Sir Nicholas Stern pointed out very clearly, but also that it leads to a massive investment in renewables and efficiency, much greater gains and therefore an acceleration of the effort that we are able to put in in the economy.

That is why I am not prepared to vote for something that compromises the whole structure we are trying to set up and that seriously underestimates the level of emissions reduction we need in the time. As the Intergovernmental Panel on Climate Change pointed out, we needed global emissions to peak and then start coming down by 2015. There is no prospect at this point of global emissions peaking by 2020, and the scientists have now said it needs to happen by—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Mr Temporary Chairman, on a point of order: we are trying our very best to ask succinct questions that are to the point and brief—I think the last one I asked was no longer than two minutes—because we know that by—

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Joyce, what is your point of order?

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Where is the question that Senator Milne is asking?

The TEMPORARY CHAIRMAN: That is not a point order.

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

It might interest Senator Joyce to understand that there has been an amendment moved by Senator Xenophon and I am responding to the specific amendment—unlike Senator Joyce, who failed to use his opportunity in the general debate time to ask his questions and have them answered and is now contesting something that is quite irrelevant.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

On a point of order, Mr Temporary Chairman: I believe that Senator Milne is definitely misleading the Senate. I have asked three questions, Senator Milne. I have had an answer for none of them. The last question I asked, the minister could not even find the document. The attendant could find it but—

The TEMPORARY CHAIRMAN: Senator Joyce, you are engaging in debate. That is not a point of order.

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

I know that Senator Xenophon has put a considerable amount of work into his amendments, to his credit, and that is why I am taking his amendments seriously and responding to him in an appropriate manner as to why the Greens will not be supporting them. Unlike Senator Joyce, I am actually speaking to the relevant amendment before the chamber at this point in time.

Whilst I understand why Senator Xenophon has moved the amendment that he has, the new structure we are putting in place is reminiscent of the British climate change authority, which has led to huge leaps and bounds in that country such that they are now going to reduce their emissions by 50 per cent on 1990 levels by 2028 or 2030. That is because they put their faith in an independent climate authority on which there are climate scientists. That is precisely what we are hoping will come from the climate authority—that is, for once we will have serious science engaged and serious recommendations made to government where the physical reality and the political reality actually have to meet.

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

I will do this in less than two minutes because I know time is very short. There is a fundamental misapprehension about these amendments. These amendments are about substantially reducing the economic distortions that the proposed scheme would create. By doing so, you can actually be more ambitious in your targets.

The amendments that have been proposed are based on the Frontier Economics modelling. They will include increased permit allocations to emissions-intensive trade-exposed industries and the electricity sector based on the emissions intensities for each sector.

This approach can be called an intensity target—

says Frontier—

an output based allocation, a performance standard or a “feebate”. What it means is that emitters are penalised for emissions intensity above the standard, but rewarded if emissions intensity is below the standard. It preserves the same incentive to reduce emissions but it does not raise tax revenue (or electricity prices) in the same way as a tax or a cap and trade on all emissions. This intensity approach is equivalent to introducing a tax on emissions but providing a targeted reduction in a production or company tax—the carbon tax introduces a distortion but the effective reduction in other taxes (by rewarding lower emissions) reduces these distortions and hence the size of the tax interaction effect.

That is what this is about: it is about having a much more efficient way to achieve the same intent, the same outcome, and you can actually go for a more ambitious target. It is about less churn, it is about fewer distortions to the economy and it is about dealing with the tax interaction effect that even Professor Garnaut says needs to be addressed.

My 90 seconds are up, but I think it is important that it be put on the record that this is about a much better, smoother way of transitioning to a low-carbon future.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Could I just get a clarification that you are moving your amendments (2) and (3)?

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

Correct.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

On that issue, Senator Xenophon, from the substance of that contribution, it seemed to me to be an argument in support of your amendments (4), (10) to (14) and (29), which are the ones that set out the electricity generation benchmark scheme. I am happy to respond to them now but I thought we were on (2) and (3).

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

Very quickly, as I am so conscious of the time constraints: the argument is that you can go for a deeper cut if it is more efficient. They are linked together—the minister is right—but I am trying to save as much time as possible so I can get these issues on the record.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I will formally respond to the benchmark amendments, which are (4), (10) to (14) and (29), when they are moved. I think I have responded already to the target amendments. I know we are jumping around a fair bit here, and I am very happy for us to vote on Senator Xenophon's amendments. We could at least get two amendments voted on tonight.

In relation to the issue that Senator Joyce, I think, was raising, I am advised that Australia follows IPCC guidelines to seek global warming potentials for greenhouse gases. The current global warming potential for methane in the National Greenhouse and Energy Reporting Regulations 2008 is set at 21—that is, obviously, a tonne of methane is equivalent to 21 tonnes of CO2. The IPCC guidelines currently do not differentiate between different sources of methane when determining global warming potential. I understand the senator is referencing an academic debate about that, a very interesting one no doubt but probably not relevant to the bill before the chamber. The global warming potential of methane from agricultural sources is obviously not relevant to this legislation as agriculture is not covered. I have responded already to Senator Xenophon's amendments and am very happy to vote on them.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I think it is extremely relevant if we find the IPCC is actually out of date. It is also terribly relevant when we find people such as Professor John Christy, the atmospheric scientist for the IPCC, saying global temperatures are warming but there is very little we can do about it and the warming is vastly less than predicted. Also, the tangent for the warming is not anywhere near what the initial modelling said it would be. In fact, it is vastly less, which means that they are looking for other sources of how this could interact. All the science has been dutifully left behind by the Labor Party's overwhelming desire to launch a new tax on Australian citizens whether they like it or not. Be that as it may, let us go to other areas which just flummox me.

Apparently, Minister, you cannot find this document but the attendant can. That worries me a little. I have it in duplicate now because I thought maybe I had gone mad and maybe it did not exist, but no, the attendant brought it out for me. Here it is—the Clean Energy (Consequential Amendments) Bill 2011. Page 41 says:

Units in certain accounts cannot be surrendered

(1)The regulations may provide that, if there is an entry for a Kyoto unit in a specified Commonwealth Registry account, the unit cannot be surrendered under the Clean Energy Act 2011.

What exactly does that mean—you may, cannot? That is like saying you may, cannot leave the building, you may, cannot go home tonight. What on earth are you saying?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I understand that what that references is that the units the Commonwealth is holding on the nation's behalf cannot be surrendered for a liable entity.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Why did you put the word 'may' in there?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think that is a little embarrassing, Senator. I mean, really.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Are you saying there is a difference between permissive and prohibitive?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am sure Senator Brandis could give you a very lengthy explanation of the way in which the word 'may' is often used in regulation-making powers in federal legislation and I am sure he would do that far more eruditely than I propose to do here.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

How can you have an affirmation and a possibility in the one sentence—I may, cannot? What exactly do you mean? It is like everything else in this, like every other question I have asked you yesterday and tonight, where you do not have an answer. How can you have may and cannot? It is a non sequitur. It makes no sense. Like everything else in this act, like the idea of cooling the planet from a room in this building, it makes no sense. Nonetheless, let us go on to other things. What is the process of becoming a prescribed international unit?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I understand that it is advice from the Climate Change Authority on the credibility of international units.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Is that an answer or a repeat of my question?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I understand there is a regulation-making power—I cannot find it at the moment, Senator. I am sure it is in this bill. I now have a copy of this bill. I was looking at the other bill.

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

There are a lot of them.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

There are a few, that is true—thank you, Senator Birmingham.

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I do not think he was saying it in a supportive sense.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I will take what I can at this point in the evening.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

There are people listening to this debate. I asked: what is a prescribed international unit? Your answer was something like, 'There is a regulation. It may be—I haven't got the bill in front of me at the moment.' Where is the answer to that question?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The reference, I assume, to prescribed international units is on page 40. This is in relation to the Australian National Registry of Emissions Units Act 2011 and there is a reference in section 3 and onwards relating to prescribed international units. The prescribed international units, as I understand it, Senator—and I will come back to you if my understanding is incorrect—can be used under the Australian system to ensure they are credible. They need to go through a process, and this set of regulation-making powers ensures that there is a process in place which ensures they are credible.

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

I want to address the matter of the amendment before the chair. We have heard Senator Xenophon move this amendment and we have heard responses from the government and from the Greens on the amendment. I understand the government's position, which is of course sticking to the five per cent target and wanting to work for international fora. Indeed, there is consistency on that front between the government and the opposition. However, I did hear Senator Milne talk about how, during the CPRS debates, the level of ambition was too low. I remember Senator Milne's contributions then. I think what Senator Milne was seeking at that stage was something along the lines of a 20 or 25 per cent unconditional target by 2020.

I want the Senate to note that Senator Xenophon has put on the table an amendment that would allow the Greens to vote for higher action than the government's policy and that the Greens are not voting for that. Senator Xenophon's amendment is very clear that it would have an object in the act—not necessarily binding but at least it would be a statement of intent—that Australia's net greenhouse gas emissions reductions be at least 10 per cent below 2000 levels by 2020. Once upon a time the Greens would have jumped at the opportunity to support an amendment like this. They would have bent over backwards to support this. They would have been amending the amendment to take the 10 per cent to 20 per cent or 30 per cent. But instead, this time around, because we have this sort of mutually captive arrangement happening opposite whereby the Gillard government is held captive by the Greens but equally the Greens seem to be held captive by the Gillard government, the Greens are stymied from speaking up for what they want. Senator Milne keeps coming back to the fact that everything will be determined by the Climate Change Authority. She places great store and puts great stock in her belief that the Climate Change Authority will take out of the hands of the government of the day any real setting of these targets. So I want to seek one reassurance from the minister. I refer the minister to the Climate Change Authority Bill 2011 and, in particular, the proposed section 18 on the appointment of authority members. I would invite the minister to provide an assurance to the Senate in committee that the Australian Greens will in no way, shape or form play any role in the appointment of authority members.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am sorry, but I was a bit distracted for a minute because I thought you were addressing Senator Milne, so I am afraid I went to some other aspect. My recollection is that these are cabinet appointments or certainly ministerial appointments. I am now told these are ministerial appointments which would generally go to cabinet.

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

I thank the minister for the answer. Yes, indeed I note that they are appointments by the climate change minister by written instrument and that the proposed section 18, in division 2, has a very long list of potential fields in which they may have expertise. Let me put the question a different way. Can I have an assurance that the climate change minister or anyone acting on his behalf will not consult with the Australian Greens about who should be appointed to the Climate Change Authority?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think it would be normal to consult reasonably widely on something like this. The important point is whatever consultation with whomever occurs. There are times, Senator, when we consult with members of your side on appointments. As finance minister, I know that you get to sign off as the co-signatory on a number of appointments. So that is done on occasion. What I can say is that the appointment is a decision for the minister, and generally such appointments would be the subject of the normal cabinet process.

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

I understand that a name has been touted already for the chair of the Climate Change Authority.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Is that a question?

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

Yes. It is Mr Bernie Fraser.

Senator Wong interjecting—

Yes, announced; I am sorry. However, can I find out whether any consultations or discussions have taken place to date as to who the other seven members of the authority may be?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I do not really have anything to add other than what I have put on the record already about the process by which appointments are undertaken. If the implication is that the process is untoward, I would have thought Mr Bernie Fraser was hardly a radical appointment.

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

Of course the reason for going down this path is that Senator Milne is putting such store in the operations of this Climate Change Authority. Senator Milne is willing to oppose a legislative amendment that would encourage greater rates of emissions reductions because she has such faith and such confidence that this Climate Change Authority will clearly do her bidding for her, so will clearly deliver the outcome that the Greens wish to see. I would hope you can understand, Minister, the concern on this side. We are worried about this. If this is to be an independent authority then it should be truly independent. That means it should not be filled with people who come in with positions that the Greens have encouraged so those people share those with the Greens to start with and have predetermined outcomes in mind in any way, shape or form. If this is to be independent then it needs to have absolute integrity surrounding it. So there is genuine concern here that, because the Greens have put such stock in this, they are willing to throw out everything they used to stand for in terms of the types of amendments that they would vote for in this place. They are actually willing to vote against an amendment encouraging higher emissions reductions targets.

Michael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

Extraordinary.

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

It is extraordinary, Senator Ronaldson. It is amazing to think that the Greens would not be voting for higher emissions reductions targets in this chamber and that the only reason that Senator Milne can give is her supreme confidence that this Climate Change Authority will deliver for her. Minister, you, on behalf of the government, reassure us time and time again that the government remains committed to the five per cent reduction target by 2020 and that, of course, there would have to be a change to international circumstances. Well, Senator Milne argues that the international conditions have already been met for a 15 per cent reduction. So, minister, perhaps firstly you could tell me whether you agree with Senator Milne that the international conditions have already been met for that 15 per cent reduction. Again I invite you to provide a cast-iron assurance to the Senate in committee that the Greens will not be playing a role in the appointment of members to this authority.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The government will appoint people to the authority who are appropriate to appoint. The conspiracy theory which I think is being put forward is really a very long bow to draw. I think the government's intentions around appointing people who are independent and have integrity are demonstrated by the appointment of the chair. I understand that the Chief Scientist is also an ex officio member of the authority, and I would assume that the senator would not be suggesting that the Chief Scientist of the country was some sort of mouthpiece for the Greens Party.

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

Note that I only asked about the seven authority members.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I accept that, Senator, but I am making a point about the authority. I have made our position clear in relation to targets. I have already done that in this debate. The government stands by its previously announced five to 15 and 25 per cent targets.

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

Do you agree the conditions have been met?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As you would recall, Senator, the government has also announced the conditions associated with those. If you have a question of Senator Milne, that is a matter that should be addressed to her. The bill before the chamber in terms of the fixed-price period and the default caps references the bipartisan five per cent target. However, there is this architecture, which we are discussing now, which is the Climate Change Authority. I am very happy to continue talking about this. If the senator has nothing further on this point, my invitation to the chamber is that we vote on Senator Xenophon's amendment.

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

I find it an extraordinary contribution by Senator Birmingham because it reveals a fear that an independent authority may well come up with a climate reduction trajectory that is far greater than what the coalition are actually prepared to do. That shows that they are not serious about reducing greenhouse gas emissions consistent with what the science requires. I once again point out to Senator Birmingham that there is no way you could imagine in your wildest dreams that a five per cent reduction by 2020 would be enough to bring you into constraining global warming to less than two degrees, as Australia has signed on to in international agreements.

I want to put on the record that the Greens brought the proposition of the British climate change authority to the Multi-Party Climate Change Committee because we believe that it has worked extraordinarily well in the UK. We looked at the appointments to the Committee on Climate Change there and found eminent people such as Lord Robert May, for example, an Australian who is a former chief scientist who is on that committee. There are other chief scientists. The most eminent people are on that British committee. They take the science seriously and then they provide that scientific advice to the British government. It has worked extremely well as a model in that country not only for setting emission reduction targets but also for overseeing the whole of the climate legislation and the adequacy of that legislation in the UK. It is charged in the UK with advising the government on whether the suite of legislation in that country is enough to deliver on the targets.

This is a different way of addressing greenhouse gas emission reduction targets. It is a way of taking it out of the scientific ignorance that is demonstrated in this place on a regular basis and actually putting some decision making into the hands of those who understand the real emergency that is global warming. As I said, it would be my expectation that a Climate Change Authority that is given a mandate of taking on board the latest science, a trajectory to get us there and a carbon budget to get us there will certainly be recommending very substantial greenhouse gas emission cuts and getting us onto a trajectory that gives us a chance of coming in under what we have agreed to globally. What is more, it will put Australia on the front foot in terms of what will happen when we do get to the point of the globe taking these matters seriously, because Australia will have made a substantial start to transformation—not, as you would have it, in a situation where the maximum you are prepared to commit to is a five per cent reduction, which is nowhere near the physical reality. Your political reality is nowhere near the physical reality that the planet needs.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I have just a brief question. Minister, in this legislation, what is the longest term that you can go to jail for, in your penalty clauses?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Senator, I think everyone in this chamber knows what you are doing. You are just going through the bill, trying to find provisions, asking questions you are not interested in, in order to give the appearance of asking questions, and then, in between, going on about cooling the planet from a room in Parliament House and other such contributions which demonstrate your biases around this debate. I make the point that the cooling—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

It is a distinct question. It just needs a very distinct answer—or, just like all the other questions I asked, say you do not know. What is—

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Senator Joyce, is this a point of order?

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Yes, the point of order is one of relevance, Chair. I asked: what is the longest term you can go to jail for under this legislation? It is in there. I just want to confirm it with the minister, if she can tell us.

The TEMPORARY CHAIRMAN: Senator Joyce, there is no point of order there. I draw your attention back to the amendment that is before the chair. Minister.

Senator Joyce interjecting—

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think it is very funny that Senator Joyce always likes to call me incompetent! Anyway, Senator, I am not sure that public debate is advanced by you just thumbing through legislation and looking for particular provisions. I am advised that the heaviest penalty under the act is up to 10 years. I cannot recall at this stage precisely what the offence for that is. I am sure I could get advice on that and find the particular provision, but I am sure, Senator, that would also not alter your view about—

Senator Joyce interjecting—

Senator, I listened to you in silence.

The TEMPORARY CHAIRMAN: Senator Joyce, is there a point of order?

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I distinctly want to know what it is for. I know that if I kill someone I can get seven years, so I am really interested in what takes 10 years, out of the climate change—

The TEMPORARY CHAIRMAN: Senator Joyce, it is disorderly to interrupt a minister or anyone in here unless there is actually a point of order.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I was going to say—through you, Mr Temporary Chairman—that I am sure that, no matter what answer I give on any matter, Senator Joyce will not alter his opposition to pricing carbon. As I have given him credit for previously, at least he is one of the few on that side who has not changed position. I will see if there is anything further that I can provide on that issue and I will do so if possible, but I invite the senator to perhaps do this chamber the courtesy of allowing Senator Xenophon's amendment to be voted on, or at least allowing his shadow minister, who is supposed to be handling this legislation—

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Just say you can't answer.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

You really are rude, Senator Joyce. I am pretty robust, but it is just discourteous to the chamber. I invite the chamber to move to voting on Senator Xenophon's amendment. We are very happy to do so. If there is anything further I will come back to Senator Joyce.

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

Very briefly, I did not want Senator Milne's last contribution to go unanswered. If you looked at it in isolation in the Hansard you would be forgiven for thinking the Climate Change Authority was going to set emissions reduction targets for the entire world. Of course, its role is to set emissions reduction targets for Australia. Senator Milne talked about the only consideration for the Climate Change Authority to be that of the science. Yes, of course, that is important; but, equally, as we on this side have argued time and time again, that has to be considered in the context of what everybody else is doing. Perhaps to do as Senator Milne has done on occasions in this debate, I will simply refer her to clause 289( 2) of the Clean Energy Bill, which outlines that, whilst the science is a relevant factor for the Climate Change Authority to consider when looking at Australia's future targets, there are a range of factors, not least of which are the economic and social implications associated with various caps.

Chair, I do not want to detain the chamber any further on the amendment proposed by Senator Xenophon. As I stated before, the opposition stands by its commitment to a five per cent target by 2020. If we ever see any fair dinkum process in the international fora towards higher and better action around the rest of the world, we will stand ready to look at higher targets for Australia.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I apologise, Senator Xenophon but, given that I have been called 'incompetent', I probably should give an answer to Senator Joyce. He is not here but I will put it on the record. I am advised that the levels of the civil penalties in the legislation reflect the seriousness of the contravention and provide disincentives to non-compliance. Most penalties are financial penalties applying to corporations. Executive officers of corporations are only liable if sufficiently culpable. The maximum penalty is 10 years or 10,000 penalty units, and a court will decide what type and level of penalty is appropriate in the circumstances of a particular case.

A large maximum penalty allows for significant penalties to be imposed in the worst cases of deliberate action to, for example, asset strip a company to avoid liability. The provisions are based on the Crimes (Taxation Offences) Act 1980, which also has maximum penalties of imprisonment of 10 years. The penalty is also consistent with 10-year imprisonment penalties provided for in the Criminal Code for serious fraud offences such as obtaining financial advantage by deception and conspiracy to defraud the Commonwealth.

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

I would like a vote on this amendment but, before I do that, I want to point out that, when the coalition commissioned Frontier Economics jointly with me back in 2009, the slogan of the coalition was that this scheme, the Frontier approach, was smarter, it was greener, it was cheaper. I know the coalition have moved on since that time, but I do ask them to consider whether they acknowledge that the robust modelling of Frontier Economics—the same people who did the Treasury's modelling, the same models used by Treasury—is a scheme that would lead to $47 million in savings for a similar period, until 2020, compared to the government's scheme with a deeper target to be achieved. Can the coalition indicate why they walked away from that, when they had the modelling? They had the work done but they are no longer supporting it. I just want there to be some good public policy here. The coalition know that I support them in opposing this legislation for a whole range of reasons somewhat different perhaps from theirs. To what extent will the coalition revisit the Frontier approach for a longer term policy?

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

I apologise, Senator Xenophon. I erred in not following Senator Wong's lead by indicating that I was going to respond to those aspects when we got to amendments (4), (10) to (14) and (29). Why don't we put the one we are on and then Senator Wong and I can both respond to the next one?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Hear, hear.

The TEMPORARY CHAIRMAN: The question then is that Xenophon's amendments (2) and (3) on sheet 7165 be agreed to.

Question negatived.

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

By leave—I move amendments (4), (10) to (14) and (29) on sheet 7165 together:

(4)   Clause 5, page 12 (after line 31), after the definition of director, insert:

electricity generation benchmark scheme means the scheme under subsection 181D(1).

(10)   Clause 93, page 127 (after line 14), after paragraph (a), insert:

(aa)   the total number of free carbon units issued in accordance with the electricity generation benchmark scheme; and

(11)   Clause 99, page 129 (after line 5), after paragraph (b), insert:

(ba)   in accordance with the electricity generation benchmark scheme; or

(12)   Clause 102, page 135 (after line 22), after paragraph (1)(a), insert:

(aa)   the total number of free carbon units with that vintage year issued in accordance with the electricity generation benchmark scheme; and

(13)   Clause 115, page 152 (after line 5), before subparagraph (1)(a)(i), insert:

(ia)   in accordance with the electricity generation benchmark scheme; or

(14)   Clause 116, page 152 (after line 24), before subparagraph (1)(a)(i), insert:

(ia)   in accordance with the electricity generation benchmark scheme; or

(29)   Page 241 (after line 15), after Part 8, insert:

Part 8A—Electricity generation benchmark scheme

Division 1—Introduction

181B Aim and objects

(1)   The aim of this Part is to create incentives for the electricity generation sector in Australia to reduce emissions.

(2)   The objects of this Part are:

  (a)   to create incentives for abatement of emissions while mitigating the price impact of electricity wholesale prices on users; and

  (b)   to ensure that any increase in energy costs is a gradual increase for all users; and

  (c)   to promote lower emissions and improved price signals in relation to electricity generation; and

  (d)   to provide orderly transitional arrangements in respect of all electricity generated in Australia until 2030.

181C Simplified outline

     The following is a simplified outline of this Part:

  (a)   require a recipient of free carbon units to relinquish units; and

  (b)   impose reporting or record-keeping requirements on a recipient of free carbon units.

Division 2—Formulation of the electricity generation benchmark scheme

181D Electricity generation benchmark scheme

(1)   The regulations must formulate a scheme (to be known as the electricity generation benchmark scheme) for the issue of free carbon units in respect of all electricity generated in Australia.

(2)   For the purposes of regulations made under subsection (1), the allocation of free units to electricity generators under the scheme for a year is the product of:

  (a)   the electricity production for the year; and

  (b)    the electricity generation allocation factor for the year;

     where:

electricity production for the year means the total number of megawatt hours of electricity generated by the generation unit in the financial year.

electricity generation allocation factor for a year means the amount specified in the following table for the financial year:

  (3)   The electricity generation benchmark scheme must provide that free carbon units must not be issued to a person in accordance with the scheme unless the person:

  (a)   meets such requirements as are specified in the scheme; and

  (b)   has a Registry account.

(4)   The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2013.

181E Relinquishment requirement

(1)   The electricity generation benchmark scheme may provide that, if:

  (a)   a number of free carbon units have been issued to a person in accordance with the scheme; and

  (b)   any of the following subparagraphs applies:

     (i)   a specified event happens;

     (ii)   a specified circumstance comes into existence;

     (iii)   the Regulator is satisfied about a specified matter;

the person is required to relinquish a number of carbon units ascertained in accordance with the scheme.

(2)   Part 11 relating to compliance with relinquishment of carbon units applies in relation to the scheme as if a reference to the Jobs and Competitiveness Program was a reference to the electricity generation benchmark scheme.

(3)   The number of carbon units required to be relinquished by the person must not exceed the number of units mentioned in paragraph (1)(a).

181F Reporting requirement

Scope

(1)   This section applies to a person if free carbon units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

(2)   The electricity generation benchmark scheme may make provision for and in relation to requiring the person to give one or more written reports to the Regulator.

181G Record-keeping requirement

Scope

(1)   This section applies to a person if free carbon units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

(2)   The electricity generation benchmark scheme may make provision for and in relation to requiring the person to:

  (a)   make records of information specified in the scheme; and

  (b)   retain such a record, or a copy, for 5 years after the record was made.

181H Other matters

(1)   The electricity generation benchmark scheme may make provision for and in relation to the following matters:

  (a)   applications for free carbon units;

  (b)   the approval by the Regulator of a form for such an application;

  (c)   information that must accompany such an application;

  (d)   documents that must accompany such an application;

  (e)   the method of calculating the number of free carbon units to be issued to a person in accordance with the scheme.

(2)   The electricity generation benchmark scheme may provide that an application for free carbon units must be accompanied by a prescribed report.

(3)   The electricity generation benchmark scheme may provide for verification by statutory declaration of statements in applications for free carbon units.

181J Ancillary or incidental provisions

     The electricity generation benchmark scheme may contain ancillary or incidental provisions.

Division 3—Compliance with reporting and record-keeping requirements under the electricity generation benchmark scheme

181K Compliance with reporting and record-keeping requirements

Reporting requirements

(1)   If a person is subject to a requirement under the electricity generation benchmark scheme to give a report to the Regulator, the person must comply with that requirement.

Record-keeping requirements

(2)   If a person is subject to a requirement under the electricity generation benchmark scheme to:

  (a)   make a record of information; or

  (b)   retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

(3)   A person must not:

  (a)   aid, abet, counsel or procure a contravention of subsection (1) or (2); or

  (b)   induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

  (c)   be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

  (d)   conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

(4)   Subsections (1), (2) and (3) are civil penalty provisions.

Note:   Part 17 provides for pecuniary penalties for breaches of civil penalty provisions.

I will briefly discuss these amendments. It was touched upon in the debate earlier—Senator Wong is quite correct in relation to that—that these amendments establish an electricity generation benchmark scheme designed to provide incentives to electricity generators to reduce emissions. The purpose of the scheme is to create incentives for the electricity generation sector to reduce emissions and they will not result in the price rises that will occur under the government's carbon price scheme—price rises that small businesses and medium businesses will not be compensated for. The big end of town, the emissions-intensive trade-exposed industries, will be compensated but not the small and medium business sector.

Under these amendments there are provisions for a number of free units to be allocated each year and also for a formula to reduce the number of permits issued under a benchmark for each year until 2030—a formula that has been modelled by Frontier Economics, a formula that has been subject to robust scrutiny and analysis. The implication of this benchmark is that it will preserve the incentives for all generators to reduce emissions, it will reduce the average cost to consumers and it will provide for a smoother transition to an emissions trading scheme, which the government has indicated it will do in three years time.

The final part of these amendments detail various requirements in compliance provisions for the operation of the scheme. In effect, an electricity generation benchmark scheme will bring the government's legislation in line with the Frontier Economics intensity based scheme. The allocation of a number of free units each year and the use of a formula to reduce the number of permits issued under a benchmark for each year until 2030 will encourage the electricity sector to reduce their emissions without substantially increasing energy prices to consumers. That is the key. If you want to do this, do it in a way that will smooth out the transition and reduce the price shocks. You will still get there in the end, but you will actually get to a deeper target. That is what this amendment is about. It is about a smarter policy—a policy that the coalition was at least interested in back in 2009. That is the substance of this amendment.

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

Senator Xenophon, can I acknowledge firstly, as Senator Wong has, your continued commitment to the policy of a benchmark and trade type scheme. Can I equally acknowledge that it is certainly better policy than what we have from those opposite. Those opposite's policy is a veritable 'money-go-round'. It is simply a tax-and-spend churn. As I have highlighted before, it is remarkable that they can bring in around $9 billion a year, churn it around through the bureaucracy, spit it back out in a variety of ways and means and then end up with a deficit at the end of it. There is really nothing more inefficient than that type of activity.

Your policy, Senator Xenophon, does at least seek to minimise that churn. It does seek to provide a policy framework that does not unduly apply unnecessary costs. The coalition believes that the target that Australia is looking at at present can be achieved through measures where you do not have to apply the type of cost, tax, price et cetera on to generators as discussed. But I do acknowledge that your contribution is a valuable one to this debate and the policy that you continue to advocate is something that certainly should continue to be discussed if for no other reason than to ensure that there is a demonstration that there is a far more efficient way of discussing pricing options, if that is where you want to go, than the government's pricing options on the table.

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

It is clear from observing this debate how palpable Senator Xenophon's frustration is at how expeditedly his amendments are not being handled. It is clear also that there are many people in this chamber who are interested in this debate and the detail of it. I also understand that the government and the Greens want to limit the debate on it, hence the gag order that is in place for tomorrow.

But one of the important things that I think the Senate needs to take note of today is the fact that there has been filibustering by the government. Unfortunately, the filibustering has been by many senators who were elected at the last election under that clear promise by Ms Gillard that there would be no carbon tax under the government she led. Clearly that was a misstatement. It was a false statement. It was an outrageous deceit played out upon the Australian people and they on that side of the chamber are complicit in doing so.

In consideration of the limit that this government is putting on debate and the fact we have only one hour for consideration in committee tomorrow morning, it is my intention to move later on that the Senate continue to sit tonight to enable the committee stage of the Clean Energy Bill 2011 and the 17 related bills to continue until at least 11 pm, with the adjournment then being proposed. This one-hour extension of time tonight would simply make up for the time that has been taken up by the government members who have been talking in this committee stage and in this debate even though they went to the last election promising not to introduce a carbon tax and promising not to support it. In order for me to achieve this aim, I need to move that the committee report progress and seek leave to meet at a later hour. I move:

That progress be reported.

Question put.

The committee divided. [21:52]

(The Chairman—Senator Parry)

Question negatived.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

It being after 9.50 pm, I shall report progress to the Senate.

Progress reported.