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

The committee is considering the Clean Energy Bill 2011 and amendments (4), (10) to (14) and (29) on sheet 7165 moved by Senator Xenophon.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

I understand that towards the close of business last night Senator Xenophon moved these amendments and I would like to respond on behalf of the government. The government opposes these amendments because they set out a less effective, less efficient and more expensive way of reducing greenhouse gas emissions in the electricity sector. The government and other members of the Multi-Party Climate Change Committee did consider a range of options to price carbon, including an intensity based approach. The government also consulted with the business community and other stakeholders on the viability of such a model in light of a set of agreed principles for pricing carbon. The government, the business community, the Multi-Party Climate Change Committee members and other stakeholders rejected this approach.

The amendments would weaken incentives to reduce emissions through energy efficiency. Treasury modelling based on conservative assumptions estimates that responding to carbon signals in electricity prices accounts for almost 50 per cent of abatement from the electricity sector to 2020. The response in the form of reduced electricity use delivers 60 million tonnes of emission reductions between 2013 and 2020. Conversely, these amendments provide even weaker incentives for households and businesses to reduce emissions than the amendments proposed under the CPRS. It reduces the effectiveness of the carbon price and requires that other more expensive abatement options must be pursued in instead, including greater purchases of international permits.

The amendments would entail a high budgetary cost. If this option were pursued it would require other initiatives to be cut back. Based on our very preliminary estimates, the effect of the proposed part 8A is to allocate around 2.5 billion permits to electricity generators over the next 19 years with a potential total value in today's dollars of over $80 billion. The amendment would lock in benchmarks by which carbon units are allocated to generators, ignoring real world uncertainties over future national targets and future electricity demand. This would likely render these benchmarks entirely inappropriate. It is for these reasons that the government is opposing these amendments proposed by Senator Xenophon.

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

I completely repudiate what the government has said in relation to this. Let us put the process into perspective. Part of this process is that this debate is going to be guillotined in less than an hour, which is completely unsatisfactory. The so-called Multi-Party Climate Change Committee was a committee that, by choice, the coalition did not participate in. I tried to get on it but was not allowed to participate in it. I wonder how broad it was in terms of seeking the best possible abatement solutions. The work done by Frontier Economics, using the same model as that used by Treasury, indicates that over 10 years this scheme, with less churn, less revenue burn and less inefficiency, would actually save $47 billion over 10 years. These are people that undertake work in the real world. They deal with governments of both political persuasions. They deal with industry. They deal with NGOs. I believe their research is impeccable. It demonstrates that what the government is proposing to do involves an enormous amount of churn. It involves putting a price on all carbon rather than a price above a baseline that you are seeking to achieve. It creates enormous inefficiencies. It creates distortions in our tax system. The intensity approach is equivalent to introducing a tax on emissions but providing a targeted reduction in a production or company tax. The carbon tax that is proposed here introduces a distortion and it will be a drag on the economy with little environmental gain. I maintain the position that this is a much more effective and efficient way of dealing with it. The so-called Multi-Party Climate Change Committee did not adequately look at the Frontier approach, an alternative approach that would have delivered a much better environmental outcome at a much lower cost to industry and to taxpayers.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I have not had a chance to contribute to this debate. I am very conscious of time and the guillotine that is coming. I have a couple of questions that I want to ask on the bills before us. Parliamentary Secretary, will regions that are significantly reliant on dairy farming—we have heard over the course of the debate about the impact on dairy farmers—be able to access the regional structural assistance package?

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

The carbon price impact on dairy prices is projected to be 0.4 per cent, reflecting the low emissions intensity of dairy processing and the impact of the exclusion of agricultural emissions from the scheme. Targeted assistance under the $150 million Clean Technology Food and Foundries Investment Program is the appropriate vehicle for addressing carbon cost issues in the dairy supply chain. I understand these issues were covered to some degree yesterday. I am very happy to continue with my briefing notes, so please indicate if you would like further information.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I think the modelling done by the dairy industry actually suggests that individual dairy farmers at the farm gate will be impacted to the tune of between $5,000 and $7,000 per family per farm, because it is energy intensive farming. It is not that the carbon tax is being applied to the act of farming; it is the electricity that farmers have to use to get the milk out of the cows, basically, and into the trucks and off to the processor and then to take the moisture out of it and get it onto the docks as one of our major exports, particularly in my home state of Victoria. I am not sure whether the food and foundries program deals with the socioeconomic impacts that the carbon tax will have on dairy farming communities, particularly, for instance, in South Gippsland, where I come from.

Given that, and the industry itself has been a loud advocate, I would like to draw the minister's attention to division 5 and the Productivity Commission inquiries that are outlined that will have a look at particular industries and aspects of our economy that may be adversely affected, particularly those industries that are emissions intensive and trade exposed. I would argue, and so would the industry and so, I am sure, would the VFF and the NFF, that dairy is such an industry. Is there any provision within any of the bills for the impact of the tax on this industry to be reviewed prior to 30 June 2015, which seems to be, from my reading, the first point at which this can be looked at?

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Thank you for that question. As I think has been stated on numerous occasions, the Climate Change Authority will have the capacity to look at what is happening in the various markets from time to time. So that would be the appropriate place, were any such observations made and the case for a review built. I am happy to give you a little more information, given that you raised farm costs. released a report in June 2011 that found electricity accounts were about 2.3 per cent of total dairy farm cash costs. Treasury modelling indicates that a 10 per cent increase in electricity would represent an increase of around 0.2 per cent in total farm cash costs. That is not dissimilar to other industries that are not eligible for jobs and competitiveness assistance. However, estimates of the impact of the carbon price on dairy farms include increases in fertiliser costs, but fertilisers such as urea are trade exposed and will be assisted under the Jobs and Competitiveness Program. So there is an opportunity there.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I have two more quick questions. Minister, how many workers in the Latrobe Valley will lose their jobs as a result of the carbon tax?

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

That is just a ridiculous question. You are obviously trying to move away from sensible questions on to making political statements like this. I believe that industry generally in Australia will in fact be strengthened—

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

A point of clarification from you, Mr Chairman. My voice raised at the end of the statement, indicating it was a question, and I am sure Hansard will reflect that and there will be a question mark after it. It was actually a question, not a comment.

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

We will take that as a question.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

My previous statement stands. I think a political point is being made. I believe that these provisions and the implementation of the clean energy bills will strengthen all of these industries, because they will put Australia at the forefront—

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

So I take it from this there are job losses.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

No, you cannot say there are job losses. You cannot just make it up in the course of the debate. The issue here is that all of these measures, as the opposition well know, will strengthen industry right across Australia, including preparing us for an economy that has low emissions. Scoff as they may, the opposition know full well that the clean energy bills that the government is putting forward provide Australia the opportunity to put our best foot forward. We will be able to achieve low pollution and the targets that we have discussed over many years now.

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

You went to the last election opposed to this.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

The other point I would like to make when the opposition stops interjecting is that this debate has had a significant work-out for many years now. Many of these issues have been traversed in great detail. I will certainly do my best to respond to specific questions about the impact on the dairy industry. I think I demonstrated that, but questions like this just take you back down to the bottom of the barrel. It would be nice if we allowed Senator Xenophon some time to debate his amendments this morning as well. I know he has many. I am prepared to respond to his amendments and I presumed he would be given the opportunity by the opposition to proceed through those forthwith, given the opposition has no more amendments.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

Maybe I can clarify this for the minister and use broader language, in fact the same language that is in Securing a clean energy future, to describe the sorts of impacts of the carbon tax that I am talking about. Rather than calling them job losses, maybe we will call them 'socioeconomic impacts'. Could the minister outline the modelling, projections or thought that has been given to the socioeconomic impacts of the carbon tax on the Latrobe Valley? Well, you have answered that as best you can, minister, but I would ask the same question about the Goulburn Valley in Victoria. It is a region of Victoria heavily reliant on horticultural production and obviously food processing makes up a key component of the local economy.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

I have a reference here from the Treasury modelling that I would like to read to you, because it makes specific reference to the Latrobe Valley. It reads:

The Latrobe Valley remains an important energy exporting region, even as existing coal plant is retired. The Latrobe Valley has significant transmission and distribution networks, making it ideal for investment in new and cleaner energy sources. Both modellers show more generation capacity located in the Latrobe Valley in 2050 than today, despite the eventual retirement of all existing emission-intensive brown coal generators. However, the results of the modellers vary considerably in the timing of retirements, and the composition and timing of new generation capacity.

That underlines my general statement that there are strong prospects here. The characteristics and the context of these changes through the Clean Energy Bill and the related legislation augur positively for the long-term future of Australia as a low pollution economy. It is a transition phase and one in which these bills are an appropriate first step.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I reiterate that my question was about the Goulburn Valley.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

I will see if I can find a specific reference to the Goulburn Valley. If there is one, I will ask the minister to pass that to you.

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

The Greens will not be supporting Senator Xenophon's amendments. We are not always opposed to baseline and credit schemes—in fact, the efficient building scheme that we have proposed and put before the parliament is a baseline and credit scheme. But the problem with doing it on the scale that would be needed to address the climate crisis is that, when dealing with the whole economy, the government would have to set arbitrary baselines for all sectors and industries. Obviously, we need the broadest coverage for any kind of serious climate mitigation and adaptation effort. It is really difficult to do this in a fair and economically efficient way right across an economy. Governments are likely to make mistakes in the baselines that they set. They may set a baseline that is way too low, for example, for aluminium or way too high for steel or whatever. The government would have to intervene all over the place, making mistakes, instead of handing it over to a cap and trade scheme that allows the market to work in the way that is set out by these bills.

Also, the whole idea here is to recognise that the effort to reduce emissions is global. We have to make sure that whatever we do in Australia works well with and complements other schemes around the world. The European Union has an emissions trading scheme. California, the eighth largest economy in the world, is going to emissions trading on 1 January next year. China is moving to four pilot emissions trading projects with a view to moving to a national scheme. What we need to do is to make sure that what we do in Australia will complement what else is happening around the world and work with it. That will reduce the costs in Australia, providing the lowest cost for the adjustment to a low carbon economy. That is why we cannot support the move to baseline and credit as set out by Senator Xenophon.

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

This scheme would be compatible. If you look at what is occurring in the United States, you will see that President Obama, in his February state of the union address, talked about having a clean energy standard, entirely compatible with what is being proposed here. This scheme was designed with that approach. This cannot be referred to simply as a baseline and credit scheme. The GGAS scheme designed by Frontier was such a scheme. But this has an absolute cap as well. I just wanted to correct that on the record and point out that those matters have been addressed in the context of these amendments. I am happy for a vote on these amendments to be held. There are a number of other amendments to be moved, and I am sure my colleagues will comment on those soon.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

The government has never supported the model that Senator Xenophon is putting forward, either now or previously under the CPRS.

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

The question is that amendments (4), (10) to (14) and (29) moved by Senator Xenophon on sheet 7165 be agreed to

Question negatived.

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

by leave—I move amendments (5), (18) to (27) and (31) to (36) standing in my name on sheet 7165:

(5)   Clause 5, page 14 (lines 1 to 3), omit the definition of emissions intensity.

(18)   Clause 161, page 214 (line 8) to page 216 (line 6), omit subclauses (2) to (4), substitute:

Issue of free units

(2)   On each of the following days:

  (a)   1 September in the eligible financial year beginning on 1 July 2013;

  (c)   1 September in the eligible financial year beginning on 1 July 2014;

  (d)   1 September in the eligible financial year beginning on 1 July 2015;

  (e)   1 September in the eligible financial year beginning on 1 July 2016;

the Regulator must issue a number of free carbon units equal to the number of units specified in the certificate as the annual assistance number.

Note:   For annual assistance number, see section 167.

(19)   Clause 161, page 216 (line 12), omit "or (3)".

(20)   Clause 161, page 217 (line 24), omit "or (3)".

(21)   Clause 161, page 217 (line 30), omit "or (3)".

(22)   Clause 161, page 218 (line 3), omit "or (3)".

(23)   Clause 165, page 221 (lines 12 to 15), omit subclause (3), substitute:

(3)   A certificate of eligibility for coal-fired generation assistance must state that a specified number is the annual assistance number in respect of the generation complex.

Note: The annual assistance number is worked out under section 167.

(24)   Clause 166, page 222 (lines 27 and 28), omit paragraph (2)(c), substitute:

  (c)   the emissions intensity of the generation complex is above a threshold of:

     (i)   1,000 tonnes of carbon dioxide equivalent per $1,000,000 of revenue; or

     (ii)   3,000 tonnes of carbon dioxide equivalent per $1,000,000 of value added.

(25)   Clause 166, page 222 (line 29), omit the note.

(26)   Clause 166, page 223 (lines 3 to 5), omit subclause (4).

(27)   Clause 167, page 223 (lines 6 to 30), omit the clause, substitute:

167 Annual assistance number

(1)   The annual assistance number to be specified in a certificate of eligibility for coal-fired generation assistance in respect of a generation complex is a number equal to 100% of the units above the emissions intensive baseline for the generation complex.

(2)   For the purposes of subsection (1), the emissions intensive baseline for a generation complex is calculated in accordance with the method set out in the electricity generation benchmark scheme.

Note:   For the electricity generation benchmark scheme, see Part 8A.

(31)   Clause 281, page 330 (table item 32, 2nd column), omit "factor", substitute "number".

(32)   Clause 303B, page 355 (lines 6 and 7), omit paragraph (4)(b), substitute:

  (b)   the emissions intensity of the complex is above a threshold of:

     (i)   1,000 tonnes of carbon dioxide equivalent per $1,000,000 of revenue; or

     (ii)   3,000 tonnes of carbon dioxide equivalent per $1,000,000 of value added.

(33)   Clause 303B, page 355 (line 8), omit the note.

(34)   Clause 303B, page 355 (line 19), omit "or 168".

(35)   Clause 303B, page 355 (line 22), omit "sections 5 and 168", "substitute "section 5".

(36)   Clause 303B, page 355 (line 23), omit "sections 5 and 168", "substitute "section 5".

This group of amendments provides for 100 per cent assistance to be given to emissions-intensive trade-exposed businesses. Under the current legislation, there is a very complicated formula to establish how much assistance these businesses should receive based on historical energy multiplied by emissions intensity minus 0.68 and so on. Under these amendments, all emissions-intensive trade-exposed businesses that are eligible for a certificate of coal fired generation assistance will receive 100 per cent assistance in respect of the units above the determined benchmark. This is not about giving business a blank cheque. It is about providing these emissions-intensive trade-exposed businesses with the support they need during a transition to lower carbon emissions. And whilst I will not be moving them at this stage because of time constraints, I should foreshadow that I have other amendments that introduce increased requirements for generators to receive assistance. It is about the blank-cheque approach: the amendments require greater compliance from generators if they are to receive assistance. The government already has conditions on generators receiving assistance, including a requirement for a clean energy investment plan to be provided to the regulator. But this group of amendments insert a requirement for the clean energy investment plan to include a commitment in terms of jobs that is more rigorous, if you like, so it is not a blank cheque. This series of amendments should be read in conjunction with that. Again, it is modelled on the basis of the work of Frontier Economics, using the same modellers and the same model that Treasury has used. I note that the government rejects the modelling undertaken by Frontier. Well, guess what? It is the same model—the same modellers, in fact—as used by Treasury.

I commend these amendments to my colleagues. They are about ensuring we have a smarter, greener and cheaper scheme in place. The revenue churn you will get with the government's scheme will be enormous, and we must do something to protect trade exposed industries. I note that Senator Ryan, in question time yesterday, expressed concerns about a local business in Victoria and the job impacts the scheme will have there. I am concerned about jobs in South Australia as well. It is about how you manage the transition to reduce carbon emissions.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

The government opposes these amendments. In general, the government's Energy Security Fund, given effect to by part 8 of this bill, will mitigate energy security risks as Australia transitions from high-emissions-intensive sources of electricity generation to more renewable and low-intensity sources. The assistance has been designed and carefully targeted to address the most severe impacts of the carbon price on coal fired generators. It has also been designed in a way to ensure incentives to abate are maintained and complement support for the transition to low-emissions and renewable generation.

The effect of these specific amendments would be that all coal fired generators, both black and brown coal, would qualify for assistance, and this assistance, combined with part A, would effectively mean that the generators had no carbon cost at all until 1 July 2017. This would mean that inefficient coal fired electricity generators would face no incentive to reduce emissions at all and that the comparative advantage of lower emissions generators, such as natural gas and renewable generation, would be significantly reduced. Our indicative estimates suggest that these amendments would increase the cost of assistance to generators by about one-third, or $1.5 billion, over the four years of free permit allocations. This is in addition to the over-$80 billion in assistance that would already be provided to all electricity generators to 2030 under the Senator's related amendments that we were discussing previously.

These amendments would add to the administrative complexity of the scheme by requiring generators to adhere to more onerous reporting requirements, including providing financial information such as revenue and value added data. These amendments would result in even weaker incentives for consumers to improve their energy efficiency, in contrast to the stated intention of the amendments tabled by Senator Xenophon to establish a white certificate scheme.

I think it is important to note that the amendment establishing part 8A does not define the emissions-intensive baseline referred to in the amendment to clause 167(2). So, in opposing these amendments, we consider that clause 168, which the next amendment, amendment (28), actually goes to, should stand as printed.

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

The opposition understands what Senator Xenophon is seeking to do here. We, and my colleague Senator Cormann in particular, have highlighted some of the inequities in the way assistance to coal fired generators is structured under this package. We accept that there are genuine concerns there; however, we do not think these amendments quite solve those issues. In particular, given the range of complexities and problems associated with this legislation, we are not supporting these amendments—but we certainly understand the concerns that drive Senator Xenophon to move them. I am not going to take any longer on this, because I am conscious a number of my colleagues still have questions they would like to get through in the very limited time left.

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

The Australian Greens will not be supporting these amendments to provide 100 per cent compensation or assistance to coal fired generators. We have been on the record, and continue to be on the record, as saying that we agree with Professor Garnaut that assistance is not required to provide energy security in Australia. This was a matter of intense debate as to whether coal fired generators, which have been one of the main drivers of greenhouse gas emissions in Australia, ought to be compensated. Surely, the basis needs to be how we keep energy security in Australia, because coal fired generators ought to have built into their business models some time ago the likelihood of carbon pricing. It is the failure to internalise the pollution from coal fired generators that is, in large part, giving us this massive problem across the planet. What the Greens argued was that we ought not to be compensating coal fired generators. They ought to have seen this coming—in fact, they have known it has been coming since the Kyoto protocol was signed. They have already built it into their whole business models, their shareholders know about it and frankly we think they are already given too much compensation—but that was part of the negotiations to get to the point we have reached. I argued, together with Professor Garnaut, that we did not need to compensate them to provide for energy security. However, the Australian electricity market operators wrote to the Multi-Party Climate Change Committee saying that they believed compensation was necessary in order to maintain confidence, if you like, from financial institutions. Hence, the issue is that we are ending up not with a worse environmental outcome but a waste of several billion dollars that, in the Greens' view, ought to be going to the transformation to the low-carbon economy, not propping up coal fired generation. It is not our job to maintain the equity in coal fired generators and prop up businesses that are last-century and have profited by the contamination of the atmosphere. So we certainly do not support increasing the compensation to coal fired generators.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

This is a very important issue, and it is worth me spending a couple of minutes outlining the Energy Security Fund free allocation and why it is targeted. Senator Xenophon, the government's energy security package and assistance arrangements have been put together carefully and deliberately to facilitate the transition of the sector to lower-emissions sources and maintain energy security. The rationale is clearly set out in the explanatory memorandum to the bill, and in particular I draw your attention to paragraphs 6.9 to 6.19.

The object of providing assistance in the form of free carbon units under part 8 and associated cash payments is to help maintain energy security by reducing the negative impact of a carbon price on the operation of high-emissions-intensive generators in the short term. This will help generators that face the most acute losses in the value of their assets. This assistance will also support investor confidence in the electricity generation sector, which will underpin investment in the new energy infrastructure needed to meet our future energy needs.

Highly emissions-intensive coal fired generators are likely to face an increase in the operating costs greater than the general increase in the level of electricity prices. Competition from less emissions-intensive generators, including less intensive coal fired generators which face lower costs under the mechanism, may cause more emissions-intensive generators to lose profitability. So allocations of free carbon units and cash support facilitate a smooth transition for highly emissions-intensive coal fired generators to a carbon price by reducing the short-term financial impact on them and maintaining long-term investor confidence in the sector.

The design of this assistance was informed by the Treasury modelling, which utilised two specialist energy market modellers to examine the impact of carbon price on electricity markets. This included both the National Electricity Market and the South West Interconnected System in Western Australia. The design of the assistance was also informed by consultation with energy market institutions, most notably the regulators, affected generators and analysis previously conducted during the design of the Carbon Pollution Reduction Scheme. Because it is focused on energy security risks, the assistance is not intended for every coal fired generator, many of which are expected to pass on a large proportion of their expected carbon costs. It is this pass-through of carbon costs which is then dealt with by the generous household assistance measures.

Allocations of free carbon units and cash payments under the fund are not designed to change the incentives of recipient generators to reduce emissions. The liabilities of recipient generators are not reduced by the allocation of carbon units under the fund. Recipient generators are free to sell the carbon units that they receive from the government, bank them for future use or use them to meet liabilities under the mechanism. This is achieved by delivering assistance based on the historical energy and emissions intensity of eligible generation complexes and not on ongoing production or ongoing emissions.

I hope this explanation and further detail has been helpful to the chamber.

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

I want to ask a couple of quick questions in relation to the modelling around agriculture. Senator Lundy, I know, has just said to one of my colleagues—and Senator Wong said last night—that there was an ABARES report released in June of this year which found that electricity counts for about 2.3 per cent of total dairy farm cash costs. Could you point me to that modelling? I have actually had a close look through the ABARES site looking for any modelling relating to the carbon tax and agriculture. The best I can find is a 2009 report which was, Effects of the Carbon Pollution Reduction Scheme on the economic value of farm production. That was 1 June 2009. I cannot find anything on any of the ABARES sites that relates to the impact of the carbon tax on agriculture.

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

Can I just indicate that the context of this assistance to industry needs to be considered in relation to the overall scheme of these amendments; that is, for a higher cut, a cut of at least 10 per cent, by 2020 compared to what the government is proposing. I note that Senator Milne did point out that you could aim for a higher amount in terms of the structure of the scheme, but I do not think the government is committing necessarily to anything other than a minimum of five per cent.

But the issue has to be this: it is clear that if you take an intensity based approach where you have less revenue churn, you have less recycling and fewer distorting effects in terms of the tax interaction effect you will get a better economic outcome and be able to achieve a deeper environmental one. The whole idea of this particular amendment—on the face of it one could ask why give coal powered stations this assistance?—is that it is a transition to ensure that you have that investment certainty and you have a situation in place where they will have to achieve those deeper cuts, but you allow for that transition. And by setting it I believe you will be encouraging investment in cleaner energy low-emission technologies by virtue of this scheme more so than by the government scheme. I do not want to get bogged down in relation to that but I just want my colleagues and those who are listening to understand that the intent of this amendment, in conjunction with all the other amendments that are part of the Frontier scheme, is to ensure deeper cuts at a cheaper price, which I think is essential.

But, of course, there is the overarching position that all these amendments should be put to the Australian people at the next election, because I think it is very important that there is a mandate for that. I cannot take it any further than that. I appreciate the constructive comments of my colleagues from the government, the Australian Greens and the opposition. I know there is not the support for it and I am happy to have a vote on it at this time.

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

While Senator Lundy is taking questions, can I ask her this question: are there any domestic or global events, economic or political, that would lead to the government agreeing to delay the commencement of this tax?

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Mr Chairman, through you to Senator Colbeck, the reference is the Australian Bureau of Agricultural and Resource Economics and Sciences, or ABARES, Australian dairy financial performance of dairy producing farms 2008-09 to 2010-11 published in June 2011. It is worth making the point once again that the carbon price will not apply directly to agricultural emissions, including dairy farming, and the Carbon Farming Initiative will provide an opportunity for alternative income for dairy farmers who undertake projects to increase carbon stored in their landscape or reduce emissions by changing farm practices. The government is currently working with the dairy industry on methods to measure emissions reductions from on-farm production, methods which will generate CFI credits and that can be then on-sold into the carbon market. This is an example of the carbon market working as a positive for farmers.

Notwithstanding these measures, there may be some indirect impacts on dairy such as increases in electricity costs. It is important to keep these costs in context. ABARES has estimated that the electricity is about two per cent or 2.3 per cent of farm cash costs and Treasury's estimate of a 10 per cent rise in electricity cost means that this increase, as I said before, would mean about 0.2 per cent increase in cash costs. For food and beverage processors, the government has also set aside $150 million under the Clean Technology Food and Foundries Investment Program and this will allow dairy processors to reduce their energy consumption and reduce electricity costs.

The opportunities under the CFI for farmers, as well as funding available for dairy processors, will reduce the cost down the supply chain for dairy products. An additional Treasury modelling released on 19 September estimates that the carbon price will have an impact of 0.4 per cent on the consumer price of milk. And the government, as we all know, is providing assistance to households in managing the cost impacts on consumer goods. I did mention the assistance under the Jobs and Competitiveness Program for fertilisers such as urea.

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

So that effectively confirms that there is no modelling specifically or broadly for agriculture for the carbon tax. There is a paper that talks about the efficiency of the dairy industry that does have some coverage of electricity prices, but there is nothing more broadly since the 2009 report by ABARES to model the impact on agriculture.

I want to move on to biomass. The government has decided to prohibit biomass as a potential alternative energy source under this package of legislation. Senator Xenophon has talked of compensation to the coal sector and the impact of this legislation on the coal sector, which is a valid point for him to raise. But in the context of actually doing something about mitigating carbon emissions, I really find it difficult to reconcile that the government has decided to prohibit the use of biomass, which has the potential to reduce CO2 emissions in comparison to coal by the order of 96 per cent. Carbon dioxide emissions per kilowatt hour of electricity produced from coal, at best practice, are about 955 grams per kilowatt hour. At current best practice from energy crops, biomass is 17 to 27 grams per kilowatt hour, so we are talking about a 97 per cent reduction in energy. The figures I have indicate that 3,000 gigawatt hours of energy could be generated from the use of biomass in Australia without harvesting an additional tree. So you are talking about almost three million tonnes of CO2 emissions that could be reduced by utilising biomass.

I would like the parliamentary secretary to give me some advice as to the rationale behind the government's decision to exclude biomass, given that the science of forest management is really quite clear that a managed forest will provide better carbon sequestration over the longer term than one that is just left to its own devices. In fact, some science was released just this week—Melsheimer et al in the Journal of Forestry in the United States—says:

Sustainably managed forests can provide greater carbon mitigation benefits than unmanaged forests, while delivering a wide range of environmental and social benefits including timber and biomass resources, jobs and economic opportunities, clean water, wildlife habitat, and recreation.

There is a lot of global science that matches that. Perhaps you could give me some advice as to why the government has decided to omit a resource which can provide significant mitigation of CO2 emissions, which is what the government's stated aim is, particularly in contravention of the science.

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Thanks, Senator Colbeck. The carbon price will provide incentives for biomass because it will be zero rated. I have some additional information here on a complementary related policy, the RET. The RET rules will protect native forests but allow for biomass to be used as an energy source. This is because the use of biomass for electricity generation or heat energy will not attract any liability under the carbon price—as I mentioned, it is zero rated—which will provide a competitive advantage to all power stations which use biomass as a fuel source. The exclusion of biomass emissions from liability is specifically provided for in section 30 of the bill. Those generators that use biomass, including wood waste from native forests, will become more cost competitive relative to generators that use fossil fuels, which will be subject to the carbon price.

However, the additional incentive from the RET for the burning of native forest wood waste to generate electricity could lead to unintended outcomes for biodiversity and the destruction of intact carbon stores. The current RET rules provide for the eligibility of native forest wood waste where wood wastes are from ecologically sustainable harvesting operations and wood wastes are manufactured wood products—that is, old furniture, construction wood waste, timber from demolished buildings or offcuts from construction or furniture or sawmill residue. The RET regulations are being amended to exclude wood waste from native forests as an eligible renewable energy resource, and this includes products, by-products and waste associated with or produced from the clearing or harvesting of native forests, subject to appropriate transitional arrangements for existing accredited power stations.

We have released an exposure draft of these regulations for consultation with interested stakeholders and, while the RET has not been a driver of the clearing of native forests, removal of native forest biomass from eligibility will provide one less potential financial incentive to clear native forests. There has been very little use of native forest biomass for bioenergy to date, so this change is not expected to impact significantly on investment or jobs in the forestry or wood processing sectors. I hope that is helpful to you, Senator Colbeck.

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

Senator Colbeck, just before I call you: I allowed the response from Senator Lundy in the first instance. It has now escalated. We are dealing with assistance to coal fired generators—the amendments moved by Senator Xenophon. I am happy to take contributions from senators in relation to that. Otherwise, we will dispose of the amendments that Senator Xenophon has been dealing with and then come back to you and I will give you the call after that—unless this is directly related to these amendments?

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

I still want to talk specifically to that particular issue.

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

The question is that the amendments moved by Senator Xenophon on sheet 7165—namely, amendments (5), (18) to (27) and (31) to (36)—be agreed to.

Question negatived.

Senator Xenophon, do you want to proceed with the second part of that block of amendments, in relation to clause 168—amendment (28)?

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

No, I do not. I wonder, Mr Chairman, if, while I am on my feet, I could move the voluntary action amendments now?

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

Yes.

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

by leave—I move amendments (6) to (9) on sheet 7165 together:

(6)   Clause 5, page 14 (after line 24), after the definition of exempt landfill emissions, insert:

expert advisory committee means a committee established under section 12C.

(7)   Clause 5, page 14 (before line 25), before the definition of externally-administered body corporate, insert:

expert advisory committee member means a member of an expert advisory committee, and includes the Chair of an expert advisory committee.

(8)   Page 25 (after line 8), at the end of Part 1, add:

12A Voluntary action

Object

(1)   The object of this section is to establish a mechanism to take into account voluntary action on climate change by entities other than liable entities so that:

  (a)   there remains an incentive for such voluntary action; and

  (b)   the impact of such voluntary action does not reduce the obligations of liable entities under this Act or the regulations.

Advisory committee on voluntary action

(2)   The Minister must establish an independent expert advisory committee with the following functions:

  (a)   to estimate for each year the level of voluntary action on climate change;

  (b)   to determine for each year, in writing, a voluntary action adjustment amount.

Note:   Expert advisory committees are established under Part 1A.

(3)   In undertaking its work, the committee must:

  (a)   consult broadly; and

  (b)   call for, accept and consider submissions from organisations and individuals about voluntary action undertaken and proposed to be undertaken; and

  (c)   publish on its website, at least twice a year, reports on its activities and its methods of estimating and accounting for voluntary action.

Voluntary action adjustment amount

(4)   The voluntary action adjustment amount for any year is an amount by which the committee determines the carbon pollution cap number for the following year must be reduced to account for voluntary action on climate change without reducing the obligations of liable entities under this Act.

(5)   The regulations may prescribe any of the following:

  (a)   factors the committee may take into account in determining the voluntary action adjustment amount for any year;

  (b)   factors the committee must take into account in determining the voluntary action adjustment amount for any year;

  (c)   a method of estimating the voluntary action adjustment amount for a year.

(6)   A determination under paragraph (2)(b) is not a legislative instrument.

Interpretation

(7)   In this section:

voluntary action on climate change means voluntary action taken by entities other than liable entities to reduce or offset greenhouse gas emissions, which is not otherwise accounted for under this Act.

12B Adjustment of carbon pollution cap number

     Despite any other provision of this Act or the regulations, if the committee established under section 12A determines an amount as the voluntary action adjustment amount for a year, the carbon pollution cap number for the following year is taken to be reduced by that amount.

(9)   Page 26 (before line 1), before Part 2, insert:

Part 1A—Expert advisory committees

12C Establishment of expert advisory committees

(1)   The Minister may, by writing, establish committees, to be known as expert advisory committees.

(2)   An instrument made under subsection (1) is not a legislative instrument.

12D Functions of an expert advisory committee

     An expert advisory committee has the functions that are conferred on it by this Act or the regulations.

12E Membership of an expert advisory committee

     An expert advisory committee consists of the following members:

  (a)   a Chair;

  (b)   at least 2, but not more than 4, other members.

12F Appointment of expert advisory committee members

(1)   Each expert advisory committee member is to be appointed by the Minister by written instrument.

(2)   A person is not eligible for appointment as an expert advisory committee member unless the Minister is satisfied that the person has:

  (a)   substantial experience or knowledge; and

  (b)   significant standing;

in at least one of the following fields:

  (c)   economics;

  (d)   law;

  (e)   Australian industry;

  (f)   climate science;

  (g)   energy measurement and reporting;

  (h)   greenhouse gas emissions measurement and reporting;

  (i)   greenhouse gas abatement;

  (j)   financial markets;

  (k)   trading of environmental instruments.

(3)   The Minister must ensure that:

  (a)   the Chair of an expert advisory committee is not a person covered by subsection (4); and

  (b)   a majority of the other expert advisory committee members are not persons covered by subsection (4).

(4)   This subsection applies to the following persons:

  (a)   an employee of the Commonwealth;

  (b)   an employee of an authority of the Commonwealth;

  (c)   a person who holds a full-time office under a law of the Commonwealth.

(5)   A person is not eligible for appointment as an expert advisory committee member if the person is a director, officer or employee of another person who is a liable entity for the eligible financial year in which the appointment is made.

(6)   An expert advisory committee member holds office on a part-time basis.

12G Period of appointment for expert advisory committee members

     An expert advisory committee member holds office for the period specified in the instrument of appointment. The period must not exceed 5 years.

12H Acting expert advisory committee members

Acting Chair of expert advisory committee

(1)   The Minister may appoint an expert advisory committee member to act as the Chair of an expert advisory committee:

  (a)   during a vacancy in the office of the expert advisory committee Chair (whether or not an appointment has previously been made to the office); or

  (b)   during any period, or during all periods, when the Chair of an expert advisory committee:

     (i)   is absent from duty or from Australia; or

     (ii)   is, for any reason, unable to perform the duties of the office.

Acting expert advisory committee member (other than the Chair)

(2)   The Minister may appoint a person to act as an expert advisory committee member (other than the Chair of an expert advisory committee):

  (a)   during a vacancy in the office of an expert advisory committee member (other than the Chair of an expert advisory committee), whether or not an appointment has previously been made to the office; or

  (b)   during any period, or during all periods, when an expert advisory committee member (other than the Chair of an expert advisory committee):

     (i)   is absent from duty or from Australia; or

     (ii)   is, for any reason, unable to perform the duties of the office.

Eligibility

(3)   A person is not eligible for appointment to act as:

  (a)   the Chair of an expert advisory committee; or

  (b)   an expert advisory committee member (other than the Chair of an expert advisory committee);

unless the person is eligible for appointment as an expert advisory committee member.

Note:   See subsection 12F(2).

12J Procedures

(1)   The regulations may prescribe the procedures to be followed at or in relation to meetings of an expert advisory committee, including matters relating to the following:

  (a)   the convening of meetings of the expert advisory committee;

  (b)   the number of expert advisory committee members who are to constitute a quorum;

  (c)   the selection of an expert advisory committee member to preside at meetings of the expert advisory committee in the absence of the Chair of the expert advisory committee;

  (d)   the manner in which questions arising at a meeting of the expert advisory committee are to be decided.

(2)   A resolution is taken to have been passed at a meeting of an expert advisory committee if:

  (a)   without meeting, a majority of expert advisory committee members indicate agreement with the resolution in accordance with the method determined by the expert advisory committee under subsection (3); and

  (b)   all expert advisory committee members were informed of the proposed resolution, or reasonable efforts had been made to inform all expert advisory committee members of the proposed resolution.

(3)   Subsection (2) applies only if the expert advisory committee:

  (a)   determines that it applies; and

  (b)   determines the method by which expert advisory committee members are to indicate agreement with resolutions.

12K Disclosure of interests to the Minister

     An expert advisory committee member must give written notice to the Minister of all interests, pecuniary or otherwise, that the member has or acquires and that conflict or could conflict with the proper performance of the member's functions.

12L Disclosure of interests to expert advisory committee

(1)   An expert advisory committee member who has an interest, pecuniary or otherwise, in a matter being considered or about to be considered by the expert advisory committee must disclose the nature of the interest to a meeting of the expert advisory committee.

(2)   The disclosure must be made as soon as possible after the relevant facts have come to the expert advisory committee member'sknowledge.

(3)   The disclosure must be recorded in the minutes of the meeting of the expert advisory committee.

(4)   Unless the expert advisory committee otherwise determines, the expert advisory committee member:

  (a)   must not be present during any deliberation by the expert advisory committee on the matter; and

  (b)   must not take part in any decision of the expert advisory committeewith respect to the matter.

(5)   For the purposes of making a determination under subsection (4), the expert advisory committee member:

  (a)   must not be present during any deliberation of the expert advisory committeefor the purpose of making the determination; and

  (b)   must not take part in making the determination.

(6)   A determination under subsection (4) must be recorded in the minutes of the meeting of the expert advisory committee.

12M Outside employment

     An expert advisory committee member must not engage in any paid employment that conflicts or may conflict with the proper performance of his or her duties.

12N Remuneration and allowances

(1)   An expert advisory committee member is to be paid the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is to be paid the remuneration that is prescribed.

(2)   An expert advisory committee member is to be paid the allowances that are prescribed.

(3)   This section has effect subject to the Remuneration Tribunal Act 1973.

12P Leave of absence

(1)   The Minister may grant leave of absence to the Chair of an expert advisory committee on the terms and conditions that the Minister determines.

(2)   The Chair of an expert advisory committee may grant leave of absence to an expert advisory committee member on the terms and conditions that the Chair determines.

12Q Resignation

(1)   An expert advisory committee member may resign his or her appointment by giving the Minister a written resignation.

(2)   The resignation takes effect on the day it is received by the Minister or, if a later day is specified in the resignation, on that later day.

12R Termination of appointment

(1)   The Minister may terminate the appointment of an expert advisory committee member for misbehaviour or physical or mental incapacity.

(2)   The Minister may terminate the appointment of an expert advisory committee member if:

  (a)   the member:

     (i)   becomes bankrupt; or

     (ii)   applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or

     (iii)   compounds with his or her creditors; or

     (iv)   makes an assignment of remuneration for the benefit of his or her creditors; or

  (b)   the member is absent, except on leave of absence, for 3 consecutive meetings of the expert advisory committee of which he or she is a member; or

  (c)   the member engages in paid employment that conflicts or may conflict with the proper performance of his or her duties (see section 12M); or

  (d)   the member fails, without reasonable excuse, to comply with section 12K or 12L.

(3)   The Minister may terminate the appointment of the Chair of an expert advisory committee if the Chair is:

  (a)   an employee of the Commonwealth; or

  (b)   an employee of an authority of the Commonwealth; or

  (c)   a person who holds a full-time office under a law of the Commonwealth.

(4)   The Minister may terminate the appointment of an expert advisory committee member if the member is a director, officer or employee of another person who is, or is likely to be, a liable entity for the eligible financial year in which the termination occurs.

12S Other terms and conditions

     An expert advisory committee member holds office on the terms and conditions (if any) in relation to matters not covered by this Act that are determined by the Minister.

12T Assistance to expert advisory committee

(1)   Any or all of the following:

  (a)   the Regulator;

  (b)   the Department;

  (c)   any other Department, agency or authority of the Commonwealth;

may assist an expert advisory committee in the performance of its functions.

(2)   The assistance may include the following:

  (a)   the provision of information;

  (b)   the provision of advice;

  (c)   the making available of resources and facilities (including secretariat services and clerical assistance).

12U Consultants

(1)   The Chair of an expert advisory committee may, on behalf of the Commonwealth, engage persons having suitable qualifications and experience as consultants to the committee.

(2)   The consultants are to be engaged on the terms and conditions that the Chair determines in writing.

These amendments are about recognising voluntary action. It is important that the government recognise and provide incentives for voluntary action without reducing the obligations of emitters. It comes down to having a carrot and stick approach: punish the polluters and reward those doing the right thing in terms of the longer term aspect of this scheme. Voluntary action by the Commonwealth, states and territories, local government bodies, other entities or individuals to reduce or offset greenhouse gas emissions which is not otherwise accounted for under the scheme should be rewarded. Voluntary action will also enable a higher abatement target to be achieved. I commend the amendments to the Senate.

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

I just want to speak to these amendments briefly. This issue of how to take voluntary action into account has been a rather vexed one. It came up in previous discussions during the government's former Carbon Pollution Reduction Scheme, and at that time a mechanism for incorporating voluntary action was talked about. We considered this at length in the multi-party climate committee—how you could incorporate voluntary action and therefore be able to reach more ambitious targets by adding voluntary action to whatever else was being done. But the issue is: how do you actually develop the methodology to account for voluntary action, especially if that voluntary action is taken by state governments, by particular businesses or individuals or indeed by community groups? There are a lot of community groups in suburbs and so on where people are saying, 'We want the action we take to be added on to the target; we do not want all this work we are doing to allow the polluters to pollute more, because every time we reduce emissions it creates the space within a target framework for the polluters to pollute more.' It is a vexed question. The way that we have resolved this with the legislation is that the Climate Change Authority—the independent authority that has been set up to set the targets, the trajectories, for the first five years and then every year after that for the scheme—is enabled to take into account voluntary action.

Specifically, what is being asked for is that the methodologies for voluntary action be developed by state or territory governments—like the ACT, for example; it has a very ambitious target and its additional effort ought to be able to be taken into account. This would enable state and territory governments, community groups or individuals to work on developing a methodology which they would then submit to the Climate Change Authority. If the Climate Change Authority deemed that that methodology was rigorous then that voluntary action would be incorporated into the target setting of the Climate Change Authority.

So, Senator Xenophon, you have quite correctly identified an issue that the community has been concerned about, because the community wants to make sure that every effort it makes actually leads to a reduction in greenhouse gas emissions overall and leads to an ability for us to increase the ambition of our target in the shortest possible time frame. So that is how we have gone about it because, in the absence of a methodology, it is very hard to make sure you get rigour, taking into account all the other facets of the package that we are legislating.

Senator Xenophon, the Greens will not be supporting your amendments, but we believe that, through the multi-party committee and the package of bills, we have actually taken into account the need to identify voluntary action, develop the methodology for it and take it into account. Really, the challenge now is for all of those people engaged in additional voluntary action to work on getting a methodology so that we can get it incorporated as quickly as possible.

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

I will address just a few issues. This has been part of this debate for some time, and the way in which this is dealt with under this package before the Senate is to pick up some of the changes in this regard which were included under the government's past package, the CPRS, and then some additional measures in relation to the Climate Change Authority. I will briefly scope those.

First, the government will take additional action into account when setting caps on pollution. Then of course companies and individuals can choose to buy and cancel permits issued under the carbon pricing mechanism or the carbon farming initiative; that would obviously have the effect of reducing the number of permits and credits available in the market. The government will establish a tax deductible pledge fund to help individuals access the carbon market, and the contributions to that fund will be used to buy Australian carbon permits, CFI credits and international units to be cancelled. Purchasers of accredited green power generated from January 2010 will be treated as additional to the national emissions reductions target. Accredited green power purchases from 1 July 2012 will also be taken into account when setting pollution caps. I think three of the four of those are essentially as per the previous legislation, obviously with the addition of the Carbon Farming Initiative.

The bill also requires—I think Senator Milne was referencing this—the authority to take voluntary action into account when recommending the level of the pollution cap. This would require the authority to assess voluntary action and its impact on emissions levels. There are provisions in the legislation requiring public consultation and timely publication of reports by the authority. The government has also committed to reviewing the methodology for measuring additional forms of voluntary action. I do, however, want to emphasise—in case there was any lack of clarity—that the bill also specifies that voluntary action is a matter for the minister to consider when setting the caps. Whilst obviously the authority provides the advice with the transparency that we have outlined, ultimately it would be a matter for the government of the day as to how that would be given effect. Given this framework we do not support Senator Xenophon's amendments.

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

This carbon tax, we are told, will transition to an emissions trading scheme in 2015. I would like to ask a couple of questions relating to the administration of an ETS. Firstly, how will the emissions trading scheme be regulated? Will, for example, the activities of the emissions trading scheme fall under APRA for regulation? It is really going to involve large financial transactions and the verification of—

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

Senator Eggleston, these questions are not relevant to the amendment that is currently before us. Are you able to ask them later?

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

No, I do not think I will have time, and other more general questions have been asked, Madam Temporary Chair.

The TEMPORARY CHAIRMAN: Your questions do need to be relevant to the amendment before the chair, which is around voluntary action to reduce emissions. Perhaps you might like to consider them in that respect.

I just wondered how voluntary action will be possible to protect the value of carbon credits traded under the emissions trading scheme or whether the assistance of a body such as APRA might be needed.

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

That was a valiant attempt by the senator to be at least relevant in terms of the words used if not the substance. There are a range of powers and other measures in the legislation which are about dealing with the prevention of fraud and criminal behaviour. I can go through those in detail. We referenced some of the penalties last night. There are also investigation powers, anti-money-laundering provisions, identity checks, powers to prevent suspicious or fraudulent transfers of units, and the regulation of financial services involving carbon units, which is consistent with the regime for shares and other financial products. These measures build on overseas experiences and should give confidence to investors and market participants. The compliance enforcement provisions are analogous to those which have been put in place for ASIC, the ACCC, the Renewable Energy Regulator, the Greenhouse and Energy Data Officer and other comparable officers.

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

I have another question about voluntary action. Given that this will be international trading, I wonder how voluntary action will be possible to verify the value of, say, an Indonesian rainforest purchased by somebody engaged in an emissions trading transaction. What safeguards will there be to protect the purchaser from duplicate trading and to verify the value of the asset purchased to trade off the Australian carbon emissions? Will there be an international register kept which persons interested in voluntary action may be able to access to verify the value of their trading? Is there an international dimension to this?

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

I apologise, but the question does not actually make sense to me.

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

You should be across your brief.

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

Senator Bernardi says it is because I do not understand it enough, but I just do not understand what is being asked about voluntary action and the international registry. Perhaps the senator may want to clarify the question.

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

Will there be an international body verifying the value of assets traded and can somebody interested in voluntary action access that register to see that the asset they purchased is what it claims to be and has the value that it is claimed to have?

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

Perhaps the best way of assisting here is to just reference the way in which international linking will be regulated. This really goes to the environmental integrity of international units. To step back from all the detail for a minute, the policy concept behind international linking is that this lowers the cost of meeting targets. It ensures that there is a lower cost on Australian households and Australian business by companies being able to source lower cost abatement elsewhere. It is important that it have environmental credibility. The government is very conscious of that. That is why the package before the chamber includes robust and appropriate restrictions to ensure only quality units can be used for compliance from the start of the flexible price period. Obviously this is not an issue during the fixed price period. Regulations will be made to ensure the government will not accept Kyoto units from particular projects, such as nuclear energy, industrial gas, destruction of projects and large-scale hydroelectric projects that do not conform to EU sustainability criteria.

As we discussed last night—I think it was in the answer to a question from, if I recall correctly, Senator Joyce—the integrity of international units will be assessed by the Climate Change Authority, which will make a recommendation to government as to which units should be permitted and which should be prohibited under the carbon pricing mechanism.

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

Before we proceed, I would like to draw the Senate's attention to the presence in the advisers' box of former Senator Andrew Bartlett and welcome him back here.

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

I am going to get out my long bow and quickly return to the answer Senator Lundy gave me a moment ago in relation to the use of biomass. Senator Lundy has confirmed that the government is using a non-science based approach to put forward a prejudice against native forest management and to try and align with voluntary action.

The TEMPORARY CHAIRMAN: Senator Colbeck, could we proceed with the amendment and then go back to this question, which is not—

I will be very quick. I will get this out of the way and Senator Lundy can respond to me. I just want to make this point, thank you, Temporary Chair.

The TEMPORARY CHAIRMAN: We can do that once we have voted on the amendment.

I have already conceded the call two or three times to put an amendment and then missed out on the call afterwards. I would like to finalise this point. We can do that without wasting any more time arguing about whether I get the chance to say what I want to say.

The TEMPORARY CHAIRMAN: I will ensure that you get the call after we have moved the amendment, unless you wish to speak to the current amendment.

Temporary Chair, I would like to finish what I am going to say and then I can let everybody else get on with the rest of the business.

The TEMPORARY CHAIRMAN: As long as it is relevant, Senator Colbeck.

I was just trying to come to that when you interrupted me, Temporary Chair. I come to a business in New South Wales which manufactures a product using native forest resources. They could replace 75 per cent of their current coal use for energy generation by using the saw wood, the wood waste that is generated on site. Under the current provisions that the government is proposing, they are prejudiced against because native forest sawmill waste is excluded from the renewable energy process.

I go back to the point I made before. This time I am quoting from Future Science: Life cycle impacts of forest management and wood utilization on carbon mitigation, which says:

We have that problem in Australia and we saw that, unfortunately, in the bushfires on Black Saturday. It goes on to say:

Thinning treatments can restore forest health and double carbon stores.

Just so that I do not get called out for quoting US based research, it then goes on to say:

I have a final question: what action is the government taking to rectify the flaws in the Climate Commission report, The critical decade, which have been identified by forest scientists in Australia?

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Very specifically in the bill we are debating now, section 30, titled 'Covered emissions from the operation of a facility', at part (3)—I would like to read it out to you to make this crystal clear—says:

For the purposes of this Act, a covered emission from the operation of a facility does not include emissions attributable to the combustion of:

(a) biomass; or

(b) biofuel; or

(c) biogas.

There is no carbon price liability for wood waste and there is no prohibition on it either. I do not think I can be any clearer.

The TEMPORARY CHAIRMAN: The question is that amendments (6) to (9) on sheet 7165 be agreed to.

Question negatived.

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

by leave—I move together amendments (1) and (2) on sheet 7173, standing in my name, on behalf of the opposition, and in the name of Senator Xenophon:

(1) Clause 111, page 145 (lines 6 to 17), omit subclause (2), substitute:

Issue of units

(2) The Regulator must not issue one or more carbon units to a person as the result of an auction unless the person has lodged a deposit that relates to the total amount of charges payable for, or imposed on, the issue of the units.

Note:   For rules about deposits, see section 113.

When balance of charge for a unit is payable

(2A) The balance of the charge for the issue of a carbon unit is payable in the year corresponding to the vintage year of the carbon unit.

(2) Clause 113, page 149 (after line 25), after subclause (4), insert:

(4A) A deposit specified under paragraph (2)(n) must not be greater than 10% of the total amount of charges payable for, or imposed on, the issue of carbon units to a person as the result of an auction.

This is the last chance the government has and the Greens have to avoid an even worse rise in and an even worse outcome for Australia's electricity prices than would otherwise be the case under this legislation. These amendments would ensure that at least 90 per cent of the up-front costs associated with the advance purchase of permits by electricity generators would be removed. These are important amendments because they ensure that unnecessary electricity price rises above the gross electricity price rises already imposed under this legislation could be avoided.

Electricity generators believe and have told all sides in this debate that without this amendment there will be a transfer of around $10 billion in working capital from Australia's electricity generators to the pockets of the Australian government. The ultimate risk with this occurring, if what they predict happens, is that the forward contracting of electricity in Australia will drop off. That does not sound very sexy but it is very important because, if the forward contracting of electricity in Australia drops off, the Australian electricity market becomes ever more dependent upon the spot market and the spot market price is ever more volatile and therefore ever higher. The electricity generators estimate that, with even just a five per cent drop-off in electricity prices, there will be an increase of between 10 and 15 per cent in electricity prices above and beyond the 10 per cent rise that the government forecasts as a result of their carbon tax. That is why these amendments are so important. They do not have any other bearing or impact on the operation of the carbon tax. Even Senator Milne has acknowledged that these concerns are an important consideration. Senator Xenophon has been convinced to pursue this. We had extensive questioning on this. I urge all members of the Senate to support these amendments.

Given that this is likely to be my last opportunity to comment in this debate, I would like to again highlight the contemptuous nature of the Labor Party in pursuing this tax. Be under no illusion that at the end of today Julia Gillard will be leading a government under which there is a carbon tax. In contrast to everything that she said before the last election, she will have backtracked on that, back flipped on that and backed down on that and will be delivering a carbon tax that she promised never to introduce, a carbon tax that will see all Australians face at least a 10 per cent rise in electricity prices and at least a nine per cent rise in gas prices. Under the government's own optimistic forecasts, we will see at least three million Australian households worse off and Australian industry made less competitive than industries anywhere else around the world. Just today we see evidence splashed across the front page of the Australian Financial Review demonstrating just how high this carbon tax is in comparison with the rest of the world. It is basically double the price of the European scheme, the only scheme that is vaguely comparable to what is being proposed in Australia.

As I heard one of my colleagues say, this is indeed a black day for Australia. It is a shameful day for Australian democracy that this government lacks the courage to take this to the Australian people. That is the final challenge I lay down. If this government has courage in its conviction, if it is genuine about this policy, then it should take it to the people. Before going to the Governor-General and recommending proclamation of the carbon tax, the Prime Minister should go to the Governor-General and call an election.

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

In response to the amendments, this is what the blood oath to repeal has come to. The opposition who have said to business, 'Don't buy permits,' now want them to be able to buy more permits and to defer the payment. Mr Abbott has said that in what is left of his political life he is determined to oppose and tear down this tax. He jets off to London while this vote is on foot. While he is in the United Kingdom he might want to talk to conservative Prime Minister Mr Cameron, who agrees with a price on carbon. The opposition are hypocrites. They come in here and say, 'We completely oppose this—

Opposition Senators:

Opposition senators interjecting—

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

Senator Wong, sit down, please. I will call the minister when there is quiet in the chamber.

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

I will not take up too much time in this debate, because I know Senator Cormann wants to contribute. I make the point that the opposition are seeking to amend legislation that they say they will repeal. The opposition are seeking to make it easier, on their submission to the chamber, for people to purchase permits when Mr Abbott's position is that no-one should purchase permits. If anybody ever wanted a demonstration of how the blood oath has gone pretty watery, you have got it today.

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

As we approach the end of this debate because of the Labor-Green gag that will cut this debate short, as we are talking about the last amendments, let me make a number of observations. Today is the day when Labor senators will lock in their betrayal of the Australian people. Today is the day when each single Labor senator will vote in breach of their solemn promise to the Australian people before the last election that there would be no carbon tax under the government led by Julia Gillard. The vote today will haunt every single Labor member and senator all the way to the next election. History will judge Labor members and senators harshly and, before then, the Australian people will judge Labor members and senators harshly at the next election.

After years of inquiries and debate, people across Australia understand that a carbon tax in Australia when our trading partners and competitors are not going down the same path—an economy wide carbon tax, an economy wide emissions trading scheme in Australia, when trade competitors and our trading partners are not doing the same—will be all economic pain for no environmental gain for the world. People across Australia understand that this is a tax which will push up the cost of everything, which will make Australia less competitive internationally, which will cost jobs, which will result in lower real wages and which will see emissions in Australia continue to go up.

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

Mr Chairman, I rise on a point of order. We are debating the amendments moved by Senator Birmingham. My point of order is on relevance. Senator Cormann is not addressing the amendments and the issue of forward contracting.

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

I draw Senator Cormann's attention to the amendments.

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

I can understand why the Greens are very touchy about this. The Greens voted in favour of a gag which in the past they said was evil. The Greens are embarrassed about the impact that this tax will have on the Australian people. The Greens are here wanting to protect the Labor Party because they know that Labor will pay a price for their betrayal of the Australian people at the next election. Of course, the Greens today will be celebrating because they have been able to suck the Australian Labor Party into their policy, even though they know it will be all economic pain for Australia without any environmental gain for the world. This is a tax which will impose a cost of $1 trillion in today's dollars on our economy between now and 2050. That is nearly the whole of our GDP for the whole year. It means that, effectively, between now and 2050 every Australian will have to pay for a whole year for nothing to pay for the impact of this carbon tax. And this Labor-Greens carbon tax will see $792 billion in our money go overseas to pay for permission for us to keep the lights on here in Australia.

The government released some modelling, and the modelling, of course, was completely inadequate. The modelling used assumptions that lacked credibility. The modelling used assumptions, for example, that the rest of the world would be part of a global trading scheme by 2016. That is not going to happen. The US will not have a trading scheme by 2016. China will not have a trading scheme by 2016—or ever. And the modelling that was done by Treasury never even assessed the impact of the carbon tax on jobs, yet we have a Treasurer, Prime Minister and Minister for Climate Change and Energy Efficiency who claim that the carbon tax will not have an impact on jobs. Let us be very clear: the government's modelling never even assessed the impact of the carbon tax on jobs.

The one thing that the modelling did show is that, supposedly, achieving a five per cent emissions reduction in Australia by 2020 is now cheaper than what it would have been if we had passed the CPRS. A couple of years later, starting later, it is now apparently cheaper to achieve a five per cent emissions reduction by 2020 under the carbon tax than what it would have been under the CPRS. So much for the argument prosecuted by the government that we need to act now because the price is going to go up; if we wait another couple of years, perhaps it will be cheaper again, Minister. Your argument just does not make sense.

And the government refuse to release the information in relation to their modelling that would have enabled proper scrutiny of that modelling by third parties. Clearly the government had something to hide. The political objective that the government pursued with the Treasury modelling was to send a message out into the community that somehow this carbon tax could be introduced without having much of an impact on people. They were intent on making people believe that there is just going to be a minimal impact—a 10 per cent increase in electricity prices, six per cent reduction in real wages by 2050, $1 trillion cost to GDP by 2050—but the Treasury modelling underestimates what the true impact of the carbon tax is going to be.

This is the world's largest carbon tax. The US has none and will not have one in the foreseeable future—perhaps ever. China has none and will not have one in the foreseeable future—probably ever. Europe does have an emissions trading scheme, but the price on carbon in Europe is less than half of what is proposed in Australia, significant sectors of the economy are excluded and there is up to 100 per cent protection for emissions-intensive, trade-exposed industries. So this carbon tax here in Australia is completely non-comparable with what is imposed in other parts of the world. The government makes the point that somehow India and China are making significant efforts. Don't look any further than the government's own modelling, because about India it says very clearly in black and white that the government does not believe that there will be any mitigation in India. In relation to China the government now believes that emissions in China by 2020 will be 1.8 billion tonnes of CO2 higher than what they thought three years ago when Kevin Rudd was pursuing the CPRS.

This is a tax which will push up the cost of everything. This is a tax which will make higher-emitting overseas manufacturers more competitive than even the most environmentally efficient business here in Australia. It will help higher-emitting businesses in other parts of the world take market share away from lower-emitting businesses in Australia. It will see emissions shifted from Australia to other parts of the world. That is not effective action on climate change; this is an act of economic self-harm.

Let me be very clear: the coalition will of course vote against this bad tax which is based on a lie. Labor will stand condemned for its role in supporting the Greens carbon tax policy by pushing this bad carbon tax through this parliament. We will vote against it and the next election will be a referendum on the carbon tax. If we win the next election we will look forward to opposition leader Bill Shorten sitting side by side next to Prime Minister Tony Abbott in voting against this bad tax, because we all know Bill Shorten knows that this is a bad tax for Australia. Bill Shorten knows that this is a tax which pushes up the cost of everything and which will cost jobs in particular in the manufacturing sector—and all of that without doing anything to reduce global greenhouse gas emissions.

I conclude my remarks on this amendment here. Yet again: Labor senators will stand condemned in history and, before that, at the next election for their role in pushing this tax through this parliament today. This is formalising their betrayal of the Australian people. This is locking in their broken promise. There can be no more emphatic promise than that there will be no carbon tax under a government led by Julia Gillard, and of course the only reason we are going to have one is that Prime Minister Gillard was too weak to stand up for the national interest against the bullying of the Greens.

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

Thank you very much, Chair.

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

Mr Chair, I rise on a point of order. You know exactly what is happening here, which is that—

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

I have recognised a party leader and that is in tradition with how the Senate has operated in the past. Senator Joyce is a party leader. He has the call over Senator Milne.

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

Yes. Given the recognition you have given, I ask you to ask the chair if that ruling by you is in order.

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

It is practice and it is already documented by the Standing Committee on Procedure. Senator Joyce, you have the call. There is no point of order.

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

It is a very sad day when Al Gore has more effect on the Prime Minister of Australia than the Australian voter. It is a very sad day when we have to cease this debate because the Greens have to go to Durban, where we now find out Leonardo DiCaprio will be there with Angelina Jolie, Arnold Schwarzenegger and Bono. It is a very sad day when these people are more important than the people of Blacktown, the people of Ipswich, the people of the suburbs and the people of the regions. It is a sad day when we introduce a new, broad based consumption tax delivered to every house whether they like it or not, paid on the price of the heater that keeps them warm, paid on the price of the air conditioner that keeps them cool, paid on the food that sustains them. It is a very sad day when we bring in a broad based consumption tax which basically ignores the working families of this nation in favour of a conceit and a frolic. The biggest beneficiaries of this tax will be the big banks through the commissions they will make on the future trading scheme over the will of working families and due to the actions of the Greens and the Labor Party, who have completely deserted their principles because they have now evolved into a higher being which lives in contempt of the Australian people.

This legislation is the height of foolishness for this nation, which as we speak is a mere $32 billion away from our next debt ceiling. When our nation's credit card is presented, the attendant will say, 'Transaction declined; please go see your bank.' It is a very sad day when we start progressing down a path of reorganising our nation and our economy on account of a colourless, odourless gas. It is the height of foolishness.

It is a very sad day when cheap power, one of our greatest competitive advantages, is given up. We have a choice here between cheap power and cheap wages; the Labor-Greens alliance have chosen cheap wages. They are opening the door so that those who compete against us can take away what remnants we have of a manufacturing industry. They will do it because they do not care. They have evolved into a higher organism; they do not care anymore. It is all theatrics—the theatrics of Bono, the theatrics of Schwarzenegger, the theatrics of Angelina Jolie and the theatrics of the Greens. That is what it is all about.

It is a very sad day when the weatherboard and iron and the bricks and tiles of the suburbs are subjugated to the will of the big banks. It is a very sad day when the Australian people find that they have been misled by a warrant which was made to them and on which they cast their vote—a warrant that said quite explicitly that there would be no carbon tax—and when the office of the Prime Minister is stymied and sullied and basically cast into the mud because of the will of a disparate corner of the chamber that has now, like a Praetorian Guard inside the Labor Party, taken control.

It is a very sad day when the minister responsible for the passage of this legislation is incapable of giving answers to any of the questions I ask because it does not matter—'You don't need an answer anymore.' This is all about allowing Senator Bob Brown and these people to have their time at Durban.

It is absolutely absurd to believe that this legislation will do anything to the temperature of the globe. Nothing is going to happen to the temperature of the globe because of this legislation; it will stay precisely on the course that it is on now. Whether the temperature is going up, down or sideways, this legislation will make no difference. People will be poorer—that will definitely happen—but this legislation will do nothing for the climate, even according to the comparative analysis.

It is absurd to think that, with the passage of this legislation, Hu Jintao in China will suddenly wake up and say: 'I've seen the light! I'm now going to participate in a carbon tax like Australia. I'm going to follow that lemming off the cliff.' It is absolutely absurd to think that Manmohan Singh in India is saying to the Indian people, 'No—you can stay on bikes; you can keep your standard of living so you can follow Australia.' It is absurd to think that Barack Obama is tossing and turning in the middle of the night worrying about what our position is. We are doing this only to ourselves. It is the ultimate act of self indulgence.

The Labor Party have deserted their principles. The Labor Party have deserted the working families of Australia. The Labor Party should remind themselves of one thing: it is totally absurd for them to believe that the Australian people will not remember this at the next election. At the next election, they will be waiting for you. I have seen this before in recent political history. If you think they have forgotten, fool is you. They will remember it, and we will make certain that every day we come and present this argument to you. Between now and the next election will not be a reprieve; you will be constantly reminded of the deceit that each one of you have shown the Australian people.

It was not just Julia Gillard who got elected on a false promise. It is not just Julia Gillard who has let the Australian people down but every person who made warrant to the electorate that they were part of a government which would not bring in a carbon tax. Each one of them has gone to the electorate and basically not told the truth. Now, apparently, we believe in this chamber that it is not important to tell the truth; it is not important to be clear about key policy objectives prior to an election. How did we get to this position?

What was the debate that brought this legislation about? Why did you desert not only the principles of your own party but also the principles of the whole of the Australian people? Why do you think that there is that palpable frustration—that white fury—which will descend on you because of the decisions you have made? Are the Australian Greens going to save the Australian Labor Party at the next election? No, they will not; you will be crucified at the next election. You have decided to walk away from faith, family and the Labor Party in order to allow the Australian Greens to run the agenda.

This legislation works on one false premise: you believe that carbon, as it is at the moment, is free—you believe that people get their power, their food and their fuel for free. People cannot afford things as it is now—they are struggling as it is now; life is hard enough as it is now—yet you have decided to desert them. You have decided to desert the people of Blacktown, to desert the people of Seven Hills, to desert the people of Ipswich, to desert the people of Rockhampton. You have deserted them for whom? You have deserted them for Dr Bob Brown, Al Gore, Angelina Jolie and Leonardo DiCaprio—and Tony Windsor, as a part-architect of this legislation, obviously also holds responsibility. The Australian people will not forget this. You have given us an arrow in our quiver which we will use against you time and time again. This is a very, very depressing day for Australia, and you watch at the end. The end of this will show absolutely, in cast iron, how out of touch this is. When this vote goes through you will see backslapping, hugging and a kissathon going on. What are you going to say to the person who lives with Black and Gold brand in their cupboard because they cannot afford the power as it is? What are you going to say to the worker who loses their job for some ridiculous concept of a green job? There are only two types of jobs in Australia. There are real jobs and cheap jobs, and you are about to give them cheap jobs and let our nation down.

The TEMPORARY CHAIRMAN: I understand that informal arrangements have been made for the last half-hour of the debate and consequently there will be two Greens speakers in sequence. The first speaker is Senator Milne.

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

Today is a great day in Australia's political history. It signals a change of direction for the nation—

Opposition Senators:

Opposition senators interjecting—

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

and it is a psychological shift which the coalition simply cannot cope with. It is a psychological shift from the fossil fuel past to a renewable powered future. It is overdue and it is urgent. With seven billion people—

Opposition senators interjecting—

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

Mr Temporary Chairman, I rise on a point of order. The interjections from opposite are disorderly. There is a full gallery here. The public deserves to hear what is going on. I cannot hear the speaker right next to me and I ask you to invoke the standing orders.

The TEMPORARY CHAIRMAN: I remind all senators, in particular those on my left, to please listen to the speaker in silence.

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

This parliament is delivering profound environmental, economic and social reform, and I can understand why the coalition, who oppose that environmental, social and economic reform, are behaving as they are. This provides a platform for a higher level of ambition on climate change because, as I was saying, with a planet with seven billion people and accelerated global warning we need to make sure that the platform we are delivering today has the capacity for upward flexibility so that we can do more. I am confident of the reforms we are moving to establish—the new Climate Change Authority and an 80 per cent target by 2050. We need to accelerate that to net carbon zero, but at least we have the potential to lift our ambition with the trajectory that we have set. We are bringing in an emissions trading scheme and therefore implementing the 'polluter pays' principle; we are establishing the Clean Energy Finance Corporation, which will be a massive investment in renewable energy; we are delivering on energy efficiency; and we are also making sure that there is a huge investment in Australia's biodiversity and ecosystems because we all know that our ecosystems are suffering as a result of climate change and overexploitation—no more so than on the Great Barrier Reef, which, right as we speak, is not only subject to global warming and the acidification of the oceans but also subject to degradation because of an insatiable appetite for fossil fuels which we need to get away from.

This is far reaching and transformative. It is being delivered because the people of Australia voted at the last election for a power-sharing parliament.

Opposition senators interjecting—

I know that the coalition cannot cope with that, but this is a power-sharing parliament and, as a result of an agreement with the government, there was an undertaking to deliver a carbon price mechanism in this period of government, which we have done through the Multi-Party Climate Change Committee, on which there were experts and Independents, Mr Oakeshott and Mr Windsor; from the government, with the Prime Minister, the Treasurer and Minister Combet; and of course from the Greens, with Adam Bandt, the Greens member for Melbourne, Senator Bob Brown, the Leader of the Greens, and me.

As I said, this is the foundation of innovation and transformation. This is our opportunity to rebuild the manufacturing sector in Australia, to diversify our economy and create jobs not only in the cities but right through rural and regional Australia. It is our opportunity to say to our grandchildren that we are at least now trying to take a whole-of-government approach to reduce greenhouse gas emissions in Australia and at last we will be able to stand up in global fora and say that Australia has started the process.

We accept that this is the beginning, but we also know that this legislation will not be repealed. That is why this is so historic. This is the day when Australia changes direction. This is the day when not only has Australia changed direction but also, with the psychological shift, business engagement and the innovation and the opportunity that is going to come from this, the coalition is on the back foot here. Its leader, Mr Abbott, has cut and run and headed to London for a meeting he does not have to be at for two days. He could have flown out tonight but he did not have the courage, because he cannot accept the fact that this nation has left him behind and embraced the future. I can understand why the coalition cannot see the future, but we can and we will deliver on it. (Time expired)

The TEMPORARY CHAIRMAN: Can I indicate to the chamber that the clocks will be set for four minutes for Senator Brown, two minutes for Senator Xenophon, nine minutes for Senator Abetz and 10 minutes for Senator Wong. I do that with the concurrence of the Senate. I remind senators to be orderly.

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

This is an historic day not just for this Senate and this parliament of this great nation but for seven billion people on a planet which faces great problems due to the impact of that human herd on the finite planet itself. What we are doing here today is legislating—albeit with reserve—to hold back the great nemesis of climate change for the whole future of humanity and indeed of our millions of fellow species on this planet. What we are doing here today—

An incident having occurred in the gallery—

The TEMPORARY CHAIRMAN: Order! Could I remind members of the public in the gallery that it is disorderly to interrupt debate by clapping and applause and to please desist.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Mr Temporary Chairman, I rise on a point of order. I think this debate will proceed better if constant interjections from the opposition were controlled a bit better. Senator Fierravanti-Wells has been screaming for the last five minutes. I ask that you ask for a bit more order and then I think the chamber will proceed in a more calm and orderly way.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

I rise on a point of order. On this most historic day, as some people see it, in Australia we are passing legislation that 90 per cent of the people in this parliament do not understand—and that is the truth.

The TEMPORARY CHAIRMAN: Senator Heffernan, that is not a point of order. Before I call Senator Bob Brown, I remind all senators that it is disorderly to interject and that courtesy should be given to the speaker. Senator Brown, you have the call.

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

I am particularly joyful that this great moment should be being shared by so many of the citizens of this country in the galleries here today. This is a democracy which is functioning. This is a democracy which is working in the interests not only of this generation but also of all Australian and global generations to come.

We are confronted not only to see how best we can line our pockets and take from the planet in our own time in a three-year cycle but also to go beyond that and ask ourselves whether people 50 or 500 years from now will thank us for what we are doing. And people 50 or 500 years from now will thank us for the passage of this legislation, with one caveat: they will know that this was timid, that it was short of the mark but that, nevertheless, in a divided parliament, it had a gallantry, a far-sightedness, integrity and honesty with future generations—which have the numbers in this chamber.

Senator Brandis interjecting—

The TEMPORARY CHAIRMAN: Order! Senator Brandis, you will have to withdraw that remark.

Senator Brandis interjecting—

Senator Wong interjecting—

The TEMPORARY CHAIRMAN: Stand and withdraw, please, Senator Brandis.

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

I withdraw.

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

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

Twenty-seven years after the Hon. Barry Jones, then Minister for Science, first raised in this great parliament the spectre of climate change, here we are taking real action. It has been too slow and it has been too short of the vision that you must expect of great parliaments, but here today we are making up for that inaction.

I congratulate the Prime Minister of this country, Julia Gillard, for her integrity in following through against the huge condemnation that has been levelled at her. I congratulate the Minister for Climate Change—now in the gallery—who has shown such fortitude and integrity in this legislation coming through the House and now into this chamber, and I congratulate his fellow ministers. I congratulate the Independent members for New England and Lyne, who were part of the committee which has led to this outcome. And I congratulate my deputy leader, Christine Milne, Adam Bandt and our Greens team for carrying this historic vote through to conclusion in this parliament.

It is a great day for Australia. It is a great day for the Barrier Reef, for the Murray-Darling Basin, for Ningaloo, for Kakadu and for this nation's future, and it is a great day for this planet Earth, upon which we all depend and which gives us inspiration, which gives us joy, which gives us happiness and which today we are acknowledging we must return something to.

The TEMPORARY CHAIRMAN: Prior to calling the next speaker, could I indicate to senators that the clocks have been readjusted to remove time from Senator Abetz and Senator Wong. Interjections will do this constantly, so please be respectful of speakers to come.

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

Before my final remarks on this legislation, let us go to the amendment at hand. The Electricity Supply Association makes it crystal clear that, if this amendment is not passed, if electricity suppliers must pay billions of dollars upfront for permits needed in years to come, it will be a windfall for bankers and a burden on consumers and will push up prices an additional 10 per cent on top of what they will increase already. That is why this amendment is essential.

Unlike others, I do not believe that Prime Minister Julia Gillard lied when she said just days before the last election that there would be no carbon tax under any government she led. But you do not have to lie to mislead and the Australian people have been mislead. This scheme is such a massive change. As economic changes go, you do not get any bigger than this. Leadership is about bringing the people with you and honestly and openly communicating with them, engaging them, and convincing them of the merits of your case is key to this. And the best and most transparent way to engage with the Australian people is to let the people have a say on such a fundamental reform. That is the primary objection, but, added to that, this scheme is a scheme that will churn and burn many billions of dollars for a minimal environmental impact. I cannot support these bills.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

For all the words uttered by Labor on the carbon tax since the last election, for all the taxpayers' dollars spent by Labor on sleek advertising campaigns on the carbon tax, for all the hiring of Tony Blair's spin doctor and a propaganda unit to promote the carbon tax, Labor have not been able to overcome the fact that they made a solemn promise to the Australian people that there would be no carbon tax. Indeed, 88 per cent of senators here were elected on a promise of no carbon tax. Yet today, if the Green website—oozing as it does with hubris and arrogance—is any indication, the parliament will pass this package of Orwellianly-named bills.

So Australians have a right to ask how their wishes can be so betrayed. Australians should ask, because the answer is that the once great Labor Party has sold its policy soul to the Greens for the sake of staying in power. In short, the ALP has betrayed the working families of Australia—remember that phrase?—those families that struggle with cost-of-living pressures and with uncertainty about their job security. The vote by Labor senators later today will be the ultimate exhibition of that betrayal. If the carbon tax is such good policy, why did Labor not promise a carbon tax during the election? They denied their intentions. They deceived the electorate because they knew it was bad policy and, what is more, they knew that the Australian people knew that it was bad policy.

The ALP may take some comfort that GetUp! supports this act of betrayal of the Australian people, this act of economic and environmental vandalism, but GetUp! support is just like green jobs—for every one you get, you lose half-a-dozen traditional ones. That is why the Australian Labor Party today is haemorrhaging and deservedly so. Labor's traditional base knows that under this package electricity will go up by at least 10 per cent, three million households will be worse off, job security will diminish and real wages will be lower. No wonder Labor promised no carbon tax at the last election.

Just yesterday we learnt of the economic and environmental damage this package will do. In the heart of the Prime Minister's own electorate Coogee Chemicals have set aside their plans for a world-class methanol plant for Australia. With it 150 jobs are gone. With it $1 billion worth of investment is gone. With it $14 billion of exports are gone. Why? So we can have a cleaner planet? No, in fact so we can have a dirtier planet as the facility will no longer be built in Australia but in China, where the facility will have four times the amount of carbon dioxide emissions it would have had in Australia without a carbon tax.

Only the genius minds of this Labor Party could think of a scheme that destroys our economy, jobs and wealth whilst simultaneously destroying the environment. But this carbon tax policy is just the latest instalment of Labor's successful economic-environmental policy mix. Think pink batts. Think green loans. Think solar panels. Think cash for clunkers. Who else could design a tax that will cost our economy $24 billion but still run at a loss over the forward estimates? With all these policy successes under their belt, the ALP now claim that their modelling shows we will all be better off. If they really believe we will all be better off with a $23-per-tonne tax on carbon dioxide emissions, I would urge them to double it or treble it because we will all be twice or three times better off. The Labor Party do not believe their own propaganda.

If they really think this dirty deal is such a good idea, why guillotine discussion in this most brazen of ways? The reason the Greens and the ALP are so anxious to cut debate short is that they know they have no moral authority from the public, from an electoral mandate. They know that countries like the USA, Canada, South Korea, Japan, New Zealand, France and the other 19 of the G20 are all backing away. Indeed, they are adopting a direct action approach, exactly as the coalition suggested at the last election. As the international community turns its back on carbon taxes, so too do the Australian people. The Australian people remember what Senator Wong in her former manifestation told them: 'We know that you can't have any environmental certainty with a carbon tax;' 'A carbon tax does not guarantee emissions reductions;' 'I have been very upfront about why I think a carbon tax isn't the most sensible thing for Australia.' A carbon tax was a bad idea then. It remains a bad idea today. Minister Wong knew it. Labor knew it. The people know it. The international community know it. But the ALP will nevertheless recklessly vote this dirty deal through the Senate, a deal which is the grossest betrayal of an electoral mandate in Australian political history, a deal which is economically reckless, a deal which perversely is environmentally damaging, a deal which will increase the cost of living for everybody, a deal which will cost jobs, and a deal which the coalition opposes, a deal which the coalition will seek a mandate to throw out after the next election.

In opposing the bills we in the coalition are saying yes to restoring integrity to our democratic process. We are saying yes to job security. We are saying yes to easing the pressure on the ever-increasing cost of living for the long-forgotten working families of Australia. We are saying yes to a better way through our Direct Action Plan, which is now being replicated all over the world, from the United States to France, from the New Zealand to Japan, from Canada to South Korea. The next election will be the referendum that people were denied on the carbon tax. We will seek a mandate from the people at the next election and we will accept their verdict. The big question for Labor is: will they be willing to give the people a voice and, if so, will they accept the people's verdict? Will Labor serve the Australian people or the Australian Greens? The Australian people know where the coalition stands: we stand with them. With the support of the Australian people, we dedicate ourselves to the repeal of this dirty deal. (Time expired)

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

Before I call Senator Wong, I indicate that Senator Abetz was heard in relative silence and the same courtesy should be extended to Senator Wong.

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

I rise to conclude the debate on the clean energy future legislation. It has been a long path to this day, a long path to get here. I start by thanking the many people who over many years served both Prime Minister Howard and in the last parliament and in this parliament served the government of the day to bring forward this policy and this legislation. I also say thanks to my personal staff in the last term who did so much work on the policy, much of which is reflected today. I want to particularly acknowledge the extraordinary work of Minister Combet and his team in the gallery today—a job extraordinarily well done. I also acknowledge the work of the Deputy Prime Minister but also, most importantly, the Prime Minister, who has had the courage and fortitude to deliver this reform. It is a reminder to this chamber that reform in this country is often opposed and that it requires leadership to deliver. Most of all I thank the members of the Australian community who in the face of the worst scare campaign we have seen in recent history have continued to say, 'Yes, we will act. Yes, we want to act.' I pay tribute to the many people—those here today and those beyond—who have turned their faces away from the fear and loathing campaign that Mr Abbott has engaged in.

Today marks the beginning of Australia's clean energy future and in a few moments we will commence voting on a package that delivers for future generations of Australians. This is a historic moment. This is a historic reform, a reform long overdue, a reform which represents a clear divide in politics in this country between those who look to the future and those who are mired in the fear campaigns of today, those who speak to hope and optimism and those who want to drum up fear, those who want action on climate change and those who simply want to deny and oppose. We on this side accept the science. We accept the need to act. We also, like John Howard and Mr Turnbull, accept the advice of economists and accept that putting a price on carbon is the most efficient mechanism to reduce emissions.

This is a Labor government that is determined to get the big things done, to do what is right, to put the national interest first even when this is not an easy thing to do. I say to all of those in this chamber: this is a Labor reform, a reform that reflects Labor's belief that we have never secured the prosperity of this nation by looking backwards. We have never secured the prosperity of this nation by standing still. We have never secured the prosperity of this nation by shirking reform. If that were the case, we would never have done things such as floating the dollar. We would never have brought down tariffs and we probably would never have got rid of Work Choices, which Senator Abetz so strongly advocated. This is a party that delivers reform, even when it is hard, for the future of the nation.

We are putting forward the bills today in a package that is true to the progressive principles of our party, a party that is focused on creating jobs, a party that since being elected has seen over 700,000 jobs created in the Australian economy. This is a package that we know will increase jobs, and this is the set of facts the opposition cannot bear. We can grow jobs. We can grow our incomes. We can grow our economy and put a price on carbon. They can never accept those facts, as advised by Treasury, by experts, by economists and by scientists.

Labor is a party who supports working families, and that is why we have unashamedly prioritised working families in the assistance which forms part of the package before the parliament—tax reform that triples the tax-free threshold, makes tax cuts and increases payments. We are the party that looks after pensioners, a party that has delivered historic reform to the age pension, which we have added to in the package before the parliament. This is a Labor package, a significant economic reform but a reform that looks after working Australians as we move to a clean energy future, consistent with Labor principles.

I stood in this chamber some two years ago to watch the parliament fall short of the challenge that faced the nation. Today I stand here confident the parliament will rise to the challenge. We have been debating the need to put a price on carbon for many, many years. There have been some 37 parliamentary inquiries since 1991. There have been policies on both sides, including policies from Mr Howard and Mr Turnbull, to put a price on carbon. We have been debating it and arguing it, but today we deliver.

It is important to remember why we are doing this and how this reform speaks to us about our responsibilities, because this is a reform not just for today but for tomorrow. It is a reform for our children. It is a reform that is about listening to the next generation and ensuring that their voices are not drowned out by the din of opposition and vested interests that we have seen on display today and in the months previously. It is a reform which recognises our need to act for the future.

We in this place do have an enormous responsibility and a great privilege, and it is of leadership. There is an onus on us to do what we believe is right for the nation today but also for the nation tomorrow. This is why this has always been such a difficult reform—because it is a reform where we are asking this generation of Australians to do something today in order to reduce the risk for future generations, in order to secure prosperity tomorrow, in order to build a different economy, a different set of jobs, a clean energy future. It has been a hard reform because they are asked today to do something for future generations, and that is why we have failed on so many occasions. It is to the credit of the senators in this chamber and of members in the other place that finally we have a parliament that is prepared to say: 'We will take responsibility. We recognise that we have the onus of acting not just for today. We recognise that we have a responsibility to people not yet born. We recognise that this is hard. We also recognise that this will be the subject of a ferocious fear campaign, but we should not be deterred.' It has taken us a long time to get here. Many people, including some from the other side, have worked hard to bring it to this point. Many people in departments across the government and personal staff as well as ministers have worked hard. What we are doing is ensuring that we fulfil the responsibility that is upon us in the chamber to look to the future. I commend the bills to the chamber.

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

The time allocated for consideration of the remaining stages of these bills has now expired.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Pursuant to contingent notice, I move:

That so much of standing order 142 be suspended as would prevent further consideration of the bills without limitation of time.

It is vitally important that the Australian people get the opportunity to see the damage that this package of bills will do not only to them personally but to the Australian economy as a whole. This denial of democracy that we have witnessed, this betrayal of a solemn election promise that we have witnessed, is bad enough. But what compounds that denial and that betrayal is the deliberate guillotining of this debate not once but twice. And then, having guillotined it twice, they seek to attack the Leader of the Opposition for not being here when the vote is about to be taken.

What we have seen throughout this debate is an unwillingness by the minister to answer the most fundamental questions. For example, where do you get your moral authority for this legislation when you went to the people saying that there will be no carbon tax? Do you claim an electoral mandate? Do you claim overwhelming support in the opinion polls? Well, you cannot do that. Do you claim that this is good policy? If it was good policy in November 2011, why was it such bad policy in August 2010 that all of those on the Labor benches were elected or re-elected on the promise of no carbon tax? They are unable to answer those fundamental threshold questions.

Nor are they able to tell us where the environmental dividend comes from with this legislation. We have the example of Coogee Chemicals. They are moving from Australia to China, where their carbon dioxide footprint will be four times as bad as it would have been in Australia without a carbon tax. They are unable to explain why the Kurri Kurri aluminium smelter is reducing its workforce. They are unable to explain why the working families of Australia—that great phrase of 2007—have now been discarded, along with their election promise of no carbon tax, like a soiled tissue to be forgotten and disregarded, as though working families and the solemn election promise meant nothing to the Australian Labor Party.

That is why we need more time to discuss these matters: so that the Australian people can see these issues fully ventilated. I suspect that if this was such a good policy—if this was such a winner for the ALP—they would want this debate to keep on going and do us slowly during the debate and win the public over. They know that they have betrayed their electoral mandate. The ALP know that they have betrayed their traditional supporters. They know that they have succumbed to a poor, light green imitation of their former great self. They have sold their political soul and their policy soul to the Australian Greens. What we are witnessing is the Greens tail wagging the Labor dog.

Each one of those senators opposite was elected on a party platform of no carbon tax. And yet we had the minister brazenly coming into this place saying that this is somehow historic and the right moral thing to do. Lying to the electorate has never been right; lying to the electorate has never been moral. This set of bills represents that lie and that deceit. That is why we as a coalition will continue to oppose these measures right up until the next election. If the Australian people give us a mandate to repeal those bills we will call on the Australian Labor Party to accept the verdict of the Australian people as one should do in a democracy. If the Leader of the Government in the Senate makes a contribution in this debate—the first time that he will rise to his feet in this debate—let him state the Labor Party case very clearly: will you accept the verdict of the Australian people after the next election? Will you accept what the grassroots Labor movement is telling you, and that is to junk the Greens and to junk the carbon tax package?

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

The smart ones know that.

Eric Abetz (Tasmania, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

The smart ones know that that is the case. We call on Labor to join us in accepting the verdict of the Australian people and to put this to an election. (Time expired)

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

This contribution by Senator Abetz again seeks to put off the judgment time; to put off the time at which the Liberal Party and the rest of the Senate get to vote on the bills. This debate has been going for 26 hours. We have had 37 parliamentary committee inquiries into the issue. This issue has been debated at great length in the parliament. The tactic from the opposition from the start has been to make the government use the guillotine. They have not engaged in the debate about the bills at all. I invite people to read their second reading and committee contributions. Their contributions are all anti-Greens bile that shows an obsession with the Greens. But they add nothing to the debate. So we have the last—or maybe the second-last, maybe the third-last—tactic to delay the vote, but nothing to contribute to the debate. The Liberal Party are purely oppositionist: they have nothing to contribute to the important public policy debate. And we have seen this again today; we just saw another contribution from Senator Abetz: nothing to contribute to the debate, bile about the Prime Minister, bile about the Greens—endless political rhetoric, nothing about the challenge of climate change, nothing about public policy solutions to that.

The parliament has had ample opportunity to debate these issues. We have canvassed this issue for many years. At one stage the Liberal Party, under former Prime Minister John Howard, would have voted for this legislation. They would have voted for this legislation because John Howard took this approach to the 2007 election. But, given how this debate has been conducted and the enormous amount of time we have committed to this debate, I move:

That the question be now put.

A division having been called and the bells being rung—

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

Mr Chairman, I seek leave to make a statement while the bells are ringing.

Leave not granted.

The committee divided [12:12]

(The Chairman—Senator Parry)

Question agreed to.

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

The question now is that the motion moved by Senator Abetz for an extension of time be agreed to.

The committee divided. [12:19]

(The Chairman—Senator Parry)

Question negatived.

The question now is that amendments (1) and (2) on sheet 7173, standing in the name of Senator Birmingham, on behalf of the opposition, and Senator Xenophon, be agreed to.

The committee divided. [12:25]

(The Chairman—Senator Parry)

Question negatived.

The question is that the Clean Energy Bill 2011 and 17 associated bills be agreed to without amendments or requests for amendments.

The committee divided.   [12:33]

(The Chairman—Senator Parry)

Question agreed to. Bills agreed to.

Bills reported without amendments.