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

I rise to speak on the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012, which is part of a package of legislation that once again demonstrates—

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senator Birmingham, I am sorry. Order, please! If you are not participating, could you leave the chamber.

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

Senator Feeney and Senator Ludwig are fighting over who gets to hear my speech. It is lovely.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

And it's me! I lost, so I get to hear it.

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

Touching, gentlemen! As I was saying, this package of legislation demonstrates so very, very clearly the absolute policy chaos that lies at the heart of this Labor government. What we see here are significant changes to Labor's carbon tax that is just a few months old. It is just a few months since this carbon tax commenced operation, and the government are already having to rewrite the rules. In doing so, they are in many ways backflipping once again on promises they made in relation to the carbon tax.

We know that the carbon tax is one of the biggest, if not the biggest, backflips in Australian political history. The Prime Minister's famous words were that there would be no carbon tax under a government she led—words put through the shredder immediately after the election when the Prime Minister, in a deal with the Australian Greens, determined that there would be a carbon tax under this government that she leads. Having implemented that carbon tax, having struck deals with the Greens and the crossbenchers to get it through, we now find, months later, that the government is introducing significant changes to the carbon tax. We have heard through the committee process that these changes have been lacking greatly in consultation.

The Australian Industry Greenhouse Network submitted to the Senate inquiry that:

… the ability to comment in detail on the original significant policy changes was limited by the lack of previous consultation and limited explanatory notes, as well as limited time for appropriate and comprehensive analysis of the issues.

The Australian Petroleum Production and Exploration Association highlighted that:

… the consultation process that has given rise to this package of bills has been inadequate.

Again we see policy on the run from this government, legislation on the run from this government—significant flaws that continue to do damage to confidence in the Australian economy and our standing as an investment destination.

What do these bills in particular do? The government will say, no doubt, the highlight measure of these bills is the linkage to Europe—that these bills will provide and facilitate initial linkage for Australia's carbon tax with the European ETS. 'Linkage' is one word for it; 'outsourcing' might be another. 'Handing over of complete control' is really in many ways what is occurring—because it has become clear that this is very much a one-way street. Initially, in fact, it is completely a one-way street. The deal that it is being done to date is solely for Australian companies to be able to buy European permits, but there is no opportunity for investment or activity in the other direction. So it is a one-way street in that regard.

But more significantly, because of the nature of the European scheme and the nature of the deal being struck, we see a situation where effectively the price of the carbon tax in Australia in future will be determined by decisions in Brussels rather than decisions made in Canberra. The price of the Australian carbon tax will be influenced by what happens to the price of the European ETS—directly influenced by what happens in that regard. We had that clearly stated by none other than the secretary of the Department of Climate Change and Energy Efficiency during Senate estimates, who made it very clear. I will quote the question that I asked of Mr Comley:

Senator BIRMINGHAM: If Europe were to take steps that saw them adopt a more ambitious target than they currently have, that would result in a higher carbon price in Europe and therefore a higher carbon price in Australia?

Mr Comley: Other things being equal, that is right.

That is right. If Europe decides to adopt more ambitious targets for emissions reductions it will result in a higher carbon price in Australia. I went on and asked Mr Comley:

Senator BIRMINGHAM: If Europe were to, as they are discussing doing, potentially restrict the number of permits that are available, that would result in a higher carbon price in Europe and all other things being equal, a higher carbon price in Australia?

Mr Comley's response:

That is right.

So: from none other than the secretary of the Department of Climate Change and Energy Efficiency, clear confirmation that the policy decisions taken in Europe, in Brussels, as a result of this linkage will have a direct impact on the rate of the carbon tax, the carbon price, in Australia. That, of course, is well recognised by those who made submissions to the Senate inquiry.

Qantas made clear their views, saying:

Of concern to Qantas is that the EU will have the ability to artificially control the price of carbon in Australia and the impact on Australian industries through the EU carbon price.

Qantas were not the only ones. The Cement Industry Federation also highlighted the fact that:

… it appears Australia has very little say over any major scheme changes that are contemplated by the European Union.

And:

The CIF is concerned that Australia's future scheme design, the setting of caps and the inclusion of allowable offsets, may be unduly influenced by the European Union …

So we see very, very clearly that what is highlighted as a hallmark feature of this legislative package—the EU linkage—in fact will leave us in a situation where Australia's control of the destiny of our carbon tax is limited because the European scheme will have a direct impact on the rate of that carbon tax.

We also see that it has had an impact on policy at international climate change negotiations. The Climate Institute appeared before the Senate inquiry and, in very prescient evidence, Mr Erwin Jackson from the Climate Institute said:

… our [Australia's] posture on the Kyoto protocol over the next few months will be important.

Why did he think it would be important? He thought it would be important because:

We have an agreement with the European Commission but that needs to be ratified by member states in terms of a mandate to negotiate a treaty. If Australia is not playing ball in Doha and not playing ball in Kyoto, that will have an impact on how European member states view the negotiation of the links between the two schemes …

What Mr Jackson is suggesting is that it would be necessary, in terms of playing ball on Kyoto—namely, a second commitment period for the Kyoto protocol—that European member states would see it as a condition for the negotiation of a treaty, for Australia to indeed take those steps, despite some of the preconditions that the government had previously set out for doing so. Miraculously, what happened in the last couple of weeks? Mr Jackson's predictions came true and the government has given the green light to that second commitment period, just as Mr Jackson predicted we would do, so as to allow and facilitate the approval of those European member states for the negotiation of the treaty.

So already we have seen that this deal is impacting on policy decisions in Australia. Already we have seen that this government is changing its policy approach to a second commitment period under Kyoto in response to the deal that it has signed with Europe. That is before we get to the point where, of course, we will see the higher prices or the influence of Europe set the rate in terms of Australia's carbon tax.

It is not just the influence that is of concern; it is also whether that influence comes from a scheme in which one can have confidence—whether there is integrity in that scheme. Extensive evidence was given by the University of Queensland. We heard from representatives of the University—Professor Paul Frijters and other academics—that there are real concerns about the integrity of the EU scheme. He talked about the verification approaches undertaken and, in doing so, highlighted that there was no uniform mechanism for the verification of what people report under the EU ETS. We know that in Australia we have had a greenhouse emissions reporting scheme in place for many years, predating the carbon tax. But in Europe they have a verifier that looks at the documentation provided. According to the witnesses from the University of Queensland, the verifier is supposed to do spot checks—but as yet there is no operational peer-review mechanism for these verifiers and hence there is a strong possibility that people choose the verifiers that go easy on them. That is, of course, an unverifiable statement in itself—precisely because there is no peer-review mechanism as yet. 'It is a murky world of verifiers,' was the evidence that we heard.

They claimed to have gone through some of the actual documents which verifiers have to send in and there was a lot of room for interpretation, or manoeuvring, in what we saw; there was a lot of room to manoeuvre on what you actually counted as the fuel that went into a company. Then there is the fact that there are different applications in place across European member states as to how their ETS works. Again, the University of Queensland highlighted that the incentives to, as it were, penalise your own companies are very limited within the European Union. These were some of their main concerns about why it is that we cannot have confidence in the nature of that European scheme.

The Institute of Chartered Accountants in Australia also highlighted concerns and indicated that in the EU emissions trading scheme there had recently been various instances of integrity issues around registry security and fraud. Then there are the issues not just of integrity but of how Europeans may deal with what is being seen as a problem of overallowance and overallocation. Again, the University of Queensland noted the potential for Australia to find itself in a situation where Australian companies are buying spare permits from the European Union without anything at all happening to overall carbon emissions—highlighting the futility and potential pointlessness of this exercise.

There are differences that exist as well. The European Union scheme, for all that it is held up as the grand design, does not capture such things as fugitive emissions, unlike the Australian scheme. The Australian Coal Association argued that in the EU the majority of permits have been, and continue to be, allocated without charge to the traded sector during a lengthy transitional period. The linkage with the EU ETS highlights the disadvantage imposed on Australian producers.

This legislation does not just link to the EU. It also provides for the abolition of the floor price that was in the carbon tax initially passed by this government. Why did they have a floor price in their legislation? According to Ms Gillard on 13 September 2011, the floor price:

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

As recently as August this year, Mr Combet argued that they were 'committed to the arrangements we have legislated'—commitments that I am sure Senator Milne thought would hold true. Time and time again the government restated its commitment to the floor price. They argued that it would provide confidence. In July this year Mr Combet said:

We've put in place a floor price and a price cap to provide some confidence over the first few years about the potential variability of the price.

Again, Mr Combet on the floor price:

This will reduce risks for businesses as they gain experience in having a market set the carbon price.

In this place, Senator Wong said:

It is the case that our policy does include a price floor which acts as a safety valve for investors in low-emissions technology by establishing a minimum price for the first few years of a flexible price period.

So much for safety valves; so much for the reduction in risk; and so much for the need for extra confidence that the government argued required this floor price. Within a few months the government has been all too happy to abolish it. Once again, it is an example of this government advocating and arguing for one thing and doing completely the opposite. That is what we have seen here; that is what we have seen throughout the carbon tax debate. And this is just another example.

Even advocates for some of these changes such as the Climate Institute have argued against the abolition of the floor price and highlighted again to the Senate inquiry some of what they thought were the beneficial effects of having a floor price. The coalition is not defending the existence of a floor price. Frankly, on this side we do not believe there should be a carbon tax at all. But we highlight that it was the government that put in place a floor price, started a carbon tax in July of this year and has now ditched that floor price it said was so necessary for certainty.

Despite all of these changes—the abolition of the floor price, the link to the EU and so on—what has been remarkable is that the government has provided absolutely no updated modelling and no evidence of what they expect the forward revenue of the carbon tax to be. It is still based on modelling that is now years old.

Again, we have seen that those who may actually give some serious thought to these matters are not willing to stand by that modelling. Mr Comley, the secretary of the Department of Climate Change and Energy Efficiency, indicated again during Senate estimates that he had no confidence in what the modelling suggests the carbon tax will be in the years to come. When asked whether he stood by the idea that it would be at $29 when the fixed price period ends, the best we could get from Mr Comley was:

I do not think the current market estimate is implausible.

When asked whether Senator Milne's prediction of a $50 carbon price could come true, Mr Comley said:

It is true … that in the recent past the European Union allowances did trade up to $50. … In the sense that European Union units have traded at that price so is it completely conceivable, it is not completely inconceivable.

So it could be $29 per tonne; it could be $50 per tonne. There are those who argue it could be less. The Climate Institute argued:

What can be predicted with confidence is that based on the proposed linkage and limits, Australian carbon prices in 2020 will likely be substantially higher than the recent forecasts …

That is what the Climate Institute told the Senate inquiry—'substantially higher than the recent forecasts'. So Labor's carbon tax, with its spread of costs across the economy that are already forecast to keep going up, according to the Climate Institute, will, in 2020, as a result of the changes in this legislation, be significantly higher than is forecast.

This legislation also makes a lie of government promises that they are interested in achieving lowest cost abatement. Why? Because it imposes a 12½ per cent quota on what is alleged to be the lowest cost abatement—the CDMs, the Kyoto carbon units. So, on those areas where the government have said, 'We're all about getting, through international linkage, the lowest cost abatement result,' they are now suddenly saying, 'But you can only do that for 12½ per cent'—another measure that was roundly condemned by a range of submitters to the Senate inquiry.

Whether it is in debates about lowest cost abatement, floor prices or the like, we see once again through this legislation a government in chaos, changing this big policy just after a few months, and doing the opposite in so many instances of that which they promised. (Time expired)

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

I rise today's to support the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related legislation.

What a disgraceful performance! At some point Senator Birmingham ought to have acknowledged that the whole point of the legislation that we have before us, the whole point of the emissions trading scheme which we have—and he persists in calling it a tax; it is an emissions trading scheme—is to try to reduce greenhouse emissions, consistent with the challenge we have with global warming.

I would remind the Senate that a new report for the World Bank that has been out this week, done by leading climate scientists at the Potsdam Institute for Climate Impact Research, has concluded that the planet is on track to heat by four degrees by 2100 if governments fail to change direction. Four degrees—that is an unliveable planet. This is the challenge that we are now trying to deal with.

The coalition obviously has no interest whatsoever in addressing the fact that global warming is accelerating. We should recognise that all the efforts we are making are not enough. We have to be doing far more. There have to be far higher levels of ambition than the currently agreed five per cent that the coalition thinks is adequate. I can tell you it is not adequate. The President of the World Bank, Dr Jim Yong Kim, notes that the impact of four degrees of warming would be devastating—there would be inundation of coastal cities, unprecedented heatwaves in many regions, extreme weather events and irreversible loss of biodiversity, including coral reef systems. He said that he hopes the World Bank report will shock us into action. Well, the World Bank has got another think coming. Nothing will shock the Abbott-led coalition into action, it would seem—nothing at all.

This report by the World Bank follows on from the report by the International Energy Agency, which says we are currently on track for 3.6 and greater degrees of warming. It says that only by leaving two-thirds of the fossil fuel reserves in the ground can we have a 50 per cent chance of avoiding two degrees of warming. I am going to say that again because the government needs to hear this, with its mad dash for coal seam gas, expanded coalmining around the country and massive increases in coal exports—again supported by the coalition. The International Energy Agency, not renowned for being a rabid green body, has said that two-thirds of fossil fuel reserves have to stay in the ground if we are to have a 50 per cent chance of avoiding two degrees of warming.

This is the challenge before us. It was the basis on which the Greens negotiated with the Prime Minister to provide government to the Labor Party; it was in exchange for delivering a carbon price in this period of government. Yes, the Greens drove that as part of the negotiation. It is why Labor is in government. And I am very proud to say that we now have a clean energy package negotiated in this period of government, and it will be the single piece of legislation for which this government is remembered in the longer term.

I say again that the International Energy Agency has said just this week—and I know that Senator Birmingham will not be able to stand to hear this, but I am going to report it to the chamber—that Australia's carbon price scheme is 'an example of the standard of leadership that the International Energy Agency has been calling for so that the energy sector can be protected from sudden and vacillating climate policy that paralyses investors and disrupts energy markets'. That is from the International Energy Agency. It goes on to say that Australia's implementation of carbon pricing marks 'the first major fossil fuel energy resource rich economy to take the most cost-effective mitigation measures'. It goes on to encourage supplementary policies to the carbon price that are required to successfully make a transition to a low carbon economy. It welcomed the establishment of the Clean Energy Finance Corporation—$10 billion into renewables. Of course the coalition opposes that, but the International Energy Agency recognises that it is a necessary complementary measure. In fact, the IEA calls for a further increase in energy efficiency and fuel efficiency.

What it says is that the design of the emissions trading scheme fits well with the International Energy Agency's findings on lessons from international experience, but with the exception of the free permits and cash given to coal fired generators. Once again the IEA and the Greens are totally in line here and completely out of sync with both Labor and the coalition, because the Greens do not want free permits and cash going to the generators. I foreshadow here, Mr Deputy President, that I have an amendment, which has been circulated to the chamber and which will go into the committee stage, to refer to the Productivity Commission the generosity of those gestures, that support and those subsidies to the coal fired generators.

I want to come back to the substance of the debate, the linking to the EU. Throughout the negotiations with the government on the carbon price, the Greens were concerned that, if we went with the hybrid model and we had the fixed-price period, we did not want the price to completely collapse at the end of the fixed-price period. You had to give some certainty into the future about a price trajectory for business so that they could start making decisions based on that. Once you lost the fixed-price period the problem always was that the price would collapse to the CER price because 50 per cent of the permits would be able to be bought overseas. That is the cheap price—the CDM price. It is cheap because of the lack of verification for a lot of those particular permits. Anyway, it would have collapsed to that, and the CER price is extremely low.

The Greens wanted to make sure that we went through the fixed-price period, and we got a floor price out. We actually wanted a floor price for much longer than three years, but we settled on three years as part of the negotiations. However, our big concern was always that come 2018 we would have a situation where we would fall off the price cliff again, and we would be back to the CER price. So we would have the fixed-price period, the floor price period and then go back to the CER price, which was likely to be very low. That was always a concern for the Greens.

So, when the opportunity came to link with the EU, we embraced it because it meant that the price would be the European price into the future; it would not be the CER price. I make this point specifically here because people often have this throwaway line, saying: 'Oh, if only the Greens had supported Kevin Rudd's CPRS. We would have had emissions trading earlier.' Yes, we would have, and what we would have had is a five per cent reduction target—completely, utterly and absolutely inadequate for the task of global warming—and no mechanism to increase the target. We would have been stuck with it. Because it allowed for unlimited overseas permits, as in up to 100 per cent, do you know what the price would be today, Mr Deputy President, if we had had the scheme agreed by Kevin Rudd and Malcolm Turnbull, both members in the lower house? It would be one euro. The price today would be a five per cent target and a carbon price of one euro, which I think at the moment is about $1.25 or $1.30—something like that. That is what the price would be.

Anyone out there who deludes themselves into thinking that Mr Turnbull and Mr Rudd had negotiated some marvel need to know that it would have been a five per cent target and $1.25 for the price. What sort of transformation in the Australian economy would there have been at a price of $1.25? Zero, zilch, none, I can tell you, Mr Deputy President! What is more, you would not have had the Clean Energy Finance Corporation put $10 billion into renewables; you would not have had the Carbon Farming Initiative; and you would not have had the $1 billion over six years into the Biodiversity Fund either.

So, when the opportunity came to link with the EU, the attraction for the Greens was that the EU would not link with Australia if there were a 50 per cent capacity to buy those CER cheap permits. They insisted that that come down. Bringing the CER limit down to 12½ per cent so that it is still possible to buy 50 per cent of your permits overseas, but with only 12½ per cent being the cheap CERs, means that the effective price for the Australian scheme at the end of the fixed-price period when it goes to flexible pricing will be the European price. And the European price means that anyone in Australian business now has price certainty in the trajectory, because they know that the price is going to be the European price and they can start planning for that.

As to this argument about a loss of sovereignty, that is an utter nonsense. Under the previous scheme, which Mr Turnbull agreed to, the Australian scheme price would, as I said, be set by the CER price, and that reflects primarily the Chinese price. If you want to go down the argument of overseas sovereignty, if you go with the CER price you are dealing with the Indian and Chinese price; if you go with the European Union your global price is your European price.

The good thing about the linking is that it is a significant step towards the global carbon price. It means that we are now linked with an emissions trading scheme covering 27 countries. It encourages linkages with other emissions trading schemes. We know that one is being introduced in South Korea and we know, for example, that just this week the first round of permit auctions also took place in California. That will be the world's second-largest emissions trading scheme. It is the ninth-largest economy in the world, and, whilst at the moment California is saying that it is not linking, just this week also I think that Parliamentary Secretary Dreyfus said that the two governments were setting up a forum to share experience and that the scheme designs were similar. What that suggests is that into the future there may be a possibility of linking with subnational schemes such as the Californian scheme. Certainly, China is going down the path where its pilot schemes are larger than the whole Australian scheme—its pilot schemes! So the big opportunities are there for that kind of linking.

As I indicated, we now have the issue where, yes, we have given away the Australian floor price. But we are doing so on the basis of: what will the European price be by the time we go to flexible pricing in 2015? If the European price is higher than the floor price, then we have set ourselves on exactly the trajectory where we were, if not better. The question is: what will the European price be in 2015? Of course, I do not know that. Forecasts are highly uncertain, and it depends on the state of the European economic recovery. But what I do think that I can definitely say is that the Australian carbon price will be higher from 2018 onwards under the linkage with the EU than for the previous scheme, where the price would have been set by China and India and be the CER price in 2018.

Now, the forward price for European Union permits currently ranges from A$11 to just under A$14, and reforms can be expected to lift the price. Currently, the European Union is engaged in a reform process. The European Commission will present a draft amendment to the EU's Emissions Trading Directive to backload 900 million permits to the Climate Change Committee next month. That would push back 900 million permits from 2013-15 to 2019-20, and I know that the European Union is trying to not only backload them but actually take them out and eliminate them from the scheme, therefore permanently driving up the price by taking out a whole lot of the permits in that auction scheme.

Coal-dependent Poland is currently opposed to the measure that the European Commission is trying to take, but Poland would need the support of several other members to block the move. A three-month scrutiny period is required. The ballot could occur in April 2013, but analysts are now generally expecting that it should go through the European Parliament for ratification in the second half of 2013. In fact I understand that the European Commission is also checking on whether it actually needs to get it through the parliament. But, either way, we can expect that next year this process of taking out 900 million units will occur, therefore driving up the European price.

That is the issue that the Greens looked at carefully. We are seeing that their forecasts for the European permit price in 2015, if this backloading can occur, range from 15 to 20 euros. If the European Union gets the backloading through next year, the projected price is 15 to 20 euros, and I remind the Senate that the floor price was going to be $15, $16 or $17 from 2015, 2016 or 2017. So, if indeed this backloading occurs, the Greens had argued that the valid reason for deciding to go with the European linkage would be that the price would be greater than the floor price, but the benefit is to give Australian businesses the price trajectory of Europe on which to base their thinking, and they would know that that is what they will be working on and why they will be doing it.

The European Commission also identified six options for structural reform to complement the backloading, such as tougher targets or cancelling permits, as I mentioned. That will take longer, but nevertheless it suggests to me that there is considerable thought going on in Europe about structural reform and, if that structural reform goes ahead, then clearly it could be an even better outcome in terms of carbon pricing.

When I say 'an even better outcome', I am talking about a higher price. We need to drive this transition to a zero-carbon economy as quickly as possible, and the best way of doing that is through the price. That will bring on renewable energy, the 100 per cent renewables we need, especially in conjunction with the $10 billion Clean Energy Finance Corporation and ARENA, which also the coalition want to abolish.

So you have a situation where all the coalition want to have is a five per cent reduction target, which is nowhere in the ballpark of what is necessary, and, after that, where are they going to get the money from to be able to do this? Tony Abbott, the Leader of the Opposition, goes out saying that he is going to abolish carbon pricing. That means that there will be $70 million a year, which is currently going to Tasmania for the hydro as a result of carbon pricing, gone. That is the windfall that I have delivered and this parliament has delivered for Hydro Tasmania. Seventy million dollars a year into the Tasmanian economy will be gone. The coalition will be voting against that. Senator Abetz will be taking that out of Tasmania.

Then we have the tax-free threshold. Until now the situation has been that you pay tax once you have earned $6,000. Now you do not pay tax until you have earned $18,200, and the coalition are going to say, 'Sorry, guys, you are going to go back and pay tax when you have reached $6,000.' If they do not, where is the money going to come from to be able to finance that change to the tax system?

Then you have the billion-dollar Biodiversity Fund. Only yesterday I spoke to rural leaders—some of them youthful, some of them not so youthful—from around the country. They really appreciate the Carbon Farming Initiative and, indeed, the Biodiversity Fund, because they are enabling connectivity in the landscape and paying them for stewardship that they did not formerly have, and they want that to continue.

So we have a situation now where the coalition is refusing to acknowledge the size of the challenge on global warming. We cannot afford a world with four degrees of warming. Five per cent is nowhere near the ballpark. I think it is a disgrace that Australia is signing onto the Kyoto protocol second commitment period and putting in a five per cent target. It is nowhere near enough. I am afraid that in Doha this year the rest of the world will see Australia's five per cent as locking in such a low level of ambition that it could actually undermine the capacity of getting to a global treaty by 2015 rather than driving it. I would have liked to see the government recognising all of the science, particularly the latest science that is coming in.

The government now has before it the draft IPCC report, the Intergovernmental Panel on Climate Change report. It has got that report. It knows how bad the science is showing the world is becoming under a warming scenario. Any kind of leadership on climate change would have said that it is time for getting ourselves onto a radical shift towards the low-carbon economy and getting on with it.

Instead of that, there is a decision to stick with five per cent, which is so far away from what is needed, and so drastically bad for our children and future generations. I look at the science and think to myself: how can people sitting in this parliament, thinking about future generations and intergenerational equity, possibly be thinking that it is appropriate to allow to get in place the feedback mechanisms from which there will be no return? That is the tragedy here. We are the first generation of people who will determine what life is like for every generation after us in a way that is irreversible. That is a shocking responsibility. It is a huge load of responsibility for us to carry, and this parliament is not shouldering that load to anywhere near the extent necessary.

The Greens are the only people in this parliament saying that the climate challenge is real, is urgent and needs to be dealt with at a level of ambition beyond where we are now.

But the link with the EU improves the carbon price. That is why I negotiated with Minister Combet to get the outcome that we have. We talked about it for several months. I am pleased with this outcome, and I would hope that the Senate will now support the Greens, when we get to the committee stage of the debate on these bills, refer to the Productivity Commission the absolutely excessive money going to coal fired generators and free permits and have them cut right back, because it is not justified by one iota. (Time expired)

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

I support the passage of the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and the other clean energy bills. Yesterday, Senator Mason made a rather boisterous contribution to the matter of public importance debate, where he made the point that it would be irresponsible for this generation of political leaders to pass on to the next generation and future generations the cost of policies and inaction. I must say that, when it comes to this particular policy area, I agree with him. But his words were hollow, because that is exactly what the opposition are doing in not supporting these bills and by pledging to wind back the emissions trading scheme should they come to government.

That was a point that was made quite well during the hearings of the Senate Select Committee on Scrutiny of New Taxes, which looked thoroughly into Labor's carbon price regime. On 20 August 2011 in those hearings Ms Meghan Quinn, general manager of the Macroeconomic Modelling Division for the Department of Treasury, made the point that delaying will cost future generations much more. She said:

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

The costs of delaying action on climate change will be passed on to future generations. That is why the approach that the opposition are taking to these bills and to the regime that Labor has set up is irresponsible, and that is why the words from Senator Mason yesterday were quite hollow.

Just this week we have been reminded of the importance of taking action on climate change. Another major report—this one titled Turn down the heatwas released by the head of the United Nations climate summit in Qatar. In it, the World Bank suggests that, unless significant action is taken to cut greenhouse gas emissions by the end of the century, the Earth is on track to warm by four degrees Celsius, with potentially disastrous consequences for our environment, particularly in this nation, and our economy. The changes associated with this would have dramatic and devastating effects on all parts of the world including Australia, the bank said, but in particular on developing and poor nations. Those countries will be the most vulnerable, and many of them are our neighbours in the South Pacific. Their economies and environments will be affected by a delay in responding to climate change.

In the light of such warnings it is important that we shoulder the responsibility and that we work within the international community to reduce global emissions for the good of our planet and for the benefit of future generations. That is why I am pleased to support these bills, which ensure that Australia is doing its part—importantly, in concert with other nations and the international community—to reduce emissions through a flexible, internationally linked emissions trading scheme.

This legislation will facilitate linking of Australia's emissions trading scheme with other countries' emissions trading schemes—this includes the EU emissions trading scheme—by removing the floor price that was to operate in the first three years of the flexible price period and by restricting the quantity of eligible Kyoto units that a liable entity can use to acquit their Australian carbon price liability to 12½ per cent of that liability.

This legislation will establish the flexible registry arrangements that will ensure linking with other emissions trading schemes in circumstances where direct links between registries cannot be put in place. Linking Australia's emissions trading scheme to the international market is in our nation's interests and indeed in the interests of Australian businesses. As Treasury modelling clearly demonstrates, without the ability to access international carbon markets and without the ability for Australian businesses to purchase international permits, the cost of meeting our emissions reduction target will double. Again, this is a point that was made quite eloquently and well during the inquiry by the Committee on Scrutiny of New Taxes into the carbon price, and in particular Loy Yang Power, when they appeared before the committee—

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

Order, Senator Thistlethwaite! It being 6.50, the debate is now interrupted. You will be in continuation.