Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

As I was stating earlier today in relation to this amendment—which stems from the overwhelming support of economists and scientists for the need to act on climate change through an emissions trading scheme—the key feature of our existing carbon-pricing legislation is that it ensures that Australia meets its targets, and the stronger post-2020 targets, if it chooses to do so. Australia's existing carbon reduction policy suite has a greater capacity to meet our current and future targets because it features a legally-binding cap on emissions. That is the part that I want to highlight—the legally-binding cap—because the government is yet to demonstrate how its alternative policy can achieve Australia's minimum commitments. As I understand, all independent analysis to date indicates that emissions will continue to increase under its current proposed framework. Therein lies the problem with the government's policy: it is flawed.

The emissions trading scheme model is not flawed. It is backed up by scientists, economists and, in fact, a growing number of conservatives. This is interesting because we have a conservative government here in Australia, and yet today we have had Lord Deben, a UK politician, make very clear his views on the Prime Minister's direct action policy. He has actually accused the Prime Minister of recklessly endangering the future of the world. He has been really strong in regard to this issue because he sees it as an important issue facing our globe and, as a conservative, he sees that conservatives should be taking this a lot more seriously than our Prime Minister, Tony Abbott, is.

But he is not the only one. There is another conservative, Mr Henry M. Paulson Jr, from the Republican Party in the United States who has recently written a piece in the New York Timeshighlighting that Republicans must not shrink from this issue and that risk management is a conservative principle—as is preserving our natural environment for future generations. He highlights that a tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the cost of clean energy and create jobs as we, and other nations, develop new energy products and infrastructure. So there are a growing number of conservatives who very much support action on climate change in a form way beyond that proposed by our conservative government's direct action, which is Tony Abbott's key plank policy.

One thing I need to put to Senator Cormann is in relation to emissions trading schemes, to which this amendment refers. I understand that the Prime Minister, on his recent official trip to Canada, was telling reporters that emissions trading schemes were being discarded. On 8 June, he said:

There is no sign—no sign—that trading schemes are increasingly being adopted. If anything trading schemes are being discarded not adopted.

I understand the ABC's Fact Check has done some work looking at carbon pricing around the world, based on the Prime Minister's comments. This is available for all senators, because it is work done by the Parliamentary Library.

Fact Check found that there were emissions trading schemes in place across Europe, in parts of the US, Canada, New Zealand, Australia and Japan, and in South Korea a full scheme is legislated and scheduled to commence in 2015. Are new ones being adopted? Yes. Are schemes being discarded? No. So it is clearly a lie. For our Prime Minister to go half way around the globe telling the media and communities that emissions trading schemes are being discarded and not adopted is a complete furphy. It is not true.

I would like to thank the Parliamentary Library for doing that work. We know that after today Australia will be the only country discarding a legal cap on pollution, a price on pollution. Perhaps Tony Abbott was referring to the future—what may happen in the next 24 hours—when he was talking in Canada. He certainly was not talking about any other country. If he was, we have not found it. There is not one. This is the only country going backwards on climate change. This is the only country that will not support what so many other countries are doing in an effort to reduce their carbon emissions. Instead, it will put in place a flawed policy, known as Direct Action, which is neither direct nor having much action. Direct Action is all we have on the table. So, Senator Cormann, how can Direct Action or the Emissions Reduction Fund meet our emissions reduction targets?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The only thing we have on the table in front of us is an amendment from Senator Singh, on behalf of the Labor Party, which is proposing to keep the carbon tax by modifying it slightly and rebadging it. This is something the government does not support, which is why I have made it very clear that the government will not be supporting this amendment. I do not accept many of the assertions that Senator Singh has made.

This has been extensively debated now for many years. Repeating assertions that are not accurate does not make them true. The government has been very clear about the policy we are pursuing to reduce greenhouse gas emissions. We will be doing it through our Direct Action policy, which will achieve the five per cent reduction in emissions by 2020, on 2000 levels. The carbon tax is a tax that people across Australia have voted on. They voted against it. They want this carbon tax gone. That is the position we come with to the Senate.

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

Could the minister explain what this clean energy legislation to repeal the carbon price means, in terms of the fuel tax rebate? I understand it means a windfall gain now to the big miners, in particular, but also to everyone else who benefits from the fuel rebate. Could he indicate to the parliament how many millions of dollars will now be given to the people who are beneficiaries of this fossil fuel subsidy?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The rebate will be lower, because the fuel excise will be lower as a result of getting rid of the carbon tax. Getting rid of the carbon tax will flow through the whole economy. It will reduce not only the cost of electricity and gas, which will bring down the cost of living for families, but also the cost of doing business. This will help make Australian businesses more internationally competitive. It will help us create jobs. These are all good things. In relation to the specific question Senator Milne asked, if the level of the fuel excise goes down then the value of the related fuel rebate goes down as well.

I had reason to read a transcript earlier today reporting on some comments made by our chair, Senator Whish-Wilson. He expressed concern about the position adopted by the Greens not to support indexation of fuel excise. He suggested that if the government wanted to talk to the Greens we should approach them. I just want to say here on the public record that we are very keen to talk the Greens about making sure the value of this fuel excise is maintained, that the past real cuts and the value of the excise on fuel do not continue into the future.

Senator Milne would be well aware that in 2001 the value of the fuel excise was about 41.5 per cent. It is now down to 25 per cent. I understand that the position the Greens have adopted on the fuel excise is that they want its value to continue reducing on a regular basis. The coalition, however, as part of their efforts to repair the budget, are very keen to ensure the value of the excise is maintained in real terms by ensuring it keeps pace with inflation.

Given the comments Senator Whish-Wilson made earlier today at a doorstop interview—at the Senate doors, I believe—I want to put on the record that I am very keen to take up the offer Senator Whish-Wilson made for the Greens and the government to have a conversation on that.

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

The minister can play as many political games as he likes, but this is a really serious matter. When we designed the clean energy package, part of it was that the big miners in particular did not get the full fuel tax rebate. In fact, they got less 6c or thereabouts a litre—less 6c a litre. Abolishing the carbon price means those companies that now get a fuel credit are going to get that fuel credit plus 6c a litre. It is going to be a mega increase in fossil fuel subsidy to the big miners. This is at a time when the G20 is supposed to be talking about—and Australia signed on—getting rid of fossil fuel subsidies, not increasing them. Minister, I would like to know: does this legislation mean that the 6c a litre is now going to go back to the big miners?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I do not accept the characterisation of what we are doing as it has been put to the chamber by Senator Milne. I would also say, as an aside, given her references to big miners, the government believes that a strong mining industry is a good thing for Australia. We think that having big miners is a good thing for Australia. We want small miners to become big miners because the more small miners become big miners, the more jobs and opportunities there are for people across Australia to get ahead, to make a good living and to continue to build opportunity and prosperity in their lives. We do not accept the basic premise of what Senator Milne is putting to the Senate.

But in relation to the specific question, I will just point out a few facts. How is the equivalent carbon price applied to fuel? A business that uses fuel in off-road vehicles and in heavy on-road vehicles is normally entitled to a fuel tax credit equal to the amount of duty already paid on the fuel that they buy. The basic entitlement to fuel tax credits is 38.143c per litre—equivalent to the full duty on the fuel with applicable reductions created through various charges. Business off-road user fuel for industries other than agriculture, forestry and fisheries are charged an equivalent carbon price on fuel, which reduces the available fuel tax credit by a carbon charge. In the case of diesel, in 2013-14 the fuel tax credit was reduced by 6.521c per litre for a net fuel tax credit of 31.622c per litre. Abolishing the carbon tax from 1 July 2014 will restore fuel tax credits to their full right for all off-road business users, which will be 38.143c per litre. It stands to reason: if you are going to get a credit for the fuel that you have paid for and you are not using it for on-road usage—fuel excise is about user charge—but you are using it for off-road usage, whether it is for agriculture, mining or whatever, then, appropriately, you get a credit against that tax paid. It is a well-established policy position that, in years gone by, has enjoyed bipartisan support for very good public policy reasons.

I am intrigued as to why Senator Milne would ask me this question because she leads a party that stands for lower fuel taxes. The Greens want to keep cutting the real value of taxes on fuel. Every six months you want the real value of the tax on fuel to go down and down and down and down. It went from 41.5 per cent in 2001 to 25 per cent now. You want that to continue to go down and down and down. I am not quite sure why you are perturbed by what we are doing here because it is entirely consistent with what you are arguing elsewhere.

Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

Senator Cormann, I know that you often start your sentences with 'We don't accept the basic premise' or 'We don't accept the science or an emissions trading scheme' and the like. The Senate would like to know why. The question is: why do you not accept an emissions trading scheme? I outlined earlier today the difference between a carbon tax and an emissions trading scheme. I know that many of you once supported an emissions trading scheme. The question is: why do you not support an emissions trading scheme? I understand that the coalition felt, in the past, there was inaction by major emitters such as the US and China and that was a reason you put forward for holding back on acting on carbon pricing. But now we know that both of those countries have embarked on very ambitious plans to control their pollution. For example, the US is committed to reduce its national emissions by 17 per cent below 2005 levels by 2020. China has committed to reducing its carbon emissions per unit of GDP by 40 to 45 per cent by 2020. There is a range of activity in emissions trading schemes within those countries now in place and continuing to be developed.

The question is: why is the coalition of today, as opposed to the coalition of 2007 and 2008, so opposed to an emissions trading scheme? You are deplored by your own conservatives around the globe. The Prime Minister tried to create a coalition of the unwilling in Canada. That failed dismally because of the incredible amount of action going on in Western countries and in developing countries wanting to reduce their carbon pollution—and I applaud them for doing so. But our own Australian government does not seem to get it. I tried to explain really clearly the difference between a carbon tax and an emissions trading scheme. An emissions trading scheme is a market based mechanism. You would think that the Liberal Party, of all parties, would support a market based mechanism. That is what is before the Senate right now. This amendment is for a policy that the Liberal Party once supported, but now Senator Cormann starts his sentences with 'we don't accept the basic premise' or 'we don't accept the facts'—do not accept, do not accept. That is fine, but please explain to this Senate why you do not accept a market based mechanism to reduce carbon pollution for this country?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

My question to the Labor Party is: why don't you accept the verdict of the Australian people at the last election? The Australian people at the last election had two basic propositions in front of them. One was that we would scrap the carbon tax and we would not replace it with anything that looks like a carbon tax, that smells like a carbon tax and that flies like a carbon tax but the Labor Party tries to suggest somehow is not a carbon tax. Our position was that we would scrap it and we would not replace it with an emissions trading scheme in the form that you suggest.

Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

Why?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Senator Singh asks why. This has been extensively debated for many years. Indeed, I was the Chair of the Senate Select Committee on Fuel and Energy, which conducted the first comprehensive inquiry into the Rudd government's Carbon Pollution Reduction Scheme. I see Senator McEwen sitting behind Senator Singh. She was a member of that committee, together with then senator Steve Hutchins, a very fine senator indeed. I think former senator Don Farrell joined us on that committee at some point too when he came into the Senate.

We travelled around Australia and we asked questions about how this and that were going to work. Do you know what our conclusion was? Our conclusion was that all Labor's carbon tax, Labor's emissions trading scheme—you know it; call it whatever you want—was going to do was push up the cost of living in Australia, push up the cost of doing business, make us less competitive internationally and make it harder for businesses to employ people. It was an imposition on people across Australia without actually doing anything to help reduce global greenhouse gas emissions. Do you know why? Because every time you push up the cost of doing business in Australia, you help a business in another part of the world become more competitive and take market share away from us.

Let us take aluminium for example. Aluminium production in Australia is more emissions efficient than in China yet, by imposing an emissions trading scheme or a carbon tax, we are helping manufacturers in China take market share away from us. What we are doing is shifting production to China and other parts of the world where, for the same amount of output, emissions will actually be higher than they would have been here in Australia. So what we are doing is increasing emissions in the world through the scheme you are promoting.

I see Senator Bullock here from the great state of Western Australia. The emissions trading scheme that Labor put forward was going to make it harder for Australia to help reduce global greenhouse gas emissions. Do you know why? Because it was going to make it harder for LNG production to expand. Guess what? More LNG production in Australia, even though it means more emissions in Australia, actually helps us reduce emissions by more in other parts of the world because every bit of LNG that displaces coal and other energy sources in China or Japan actually helps to reduce emissions in the world by more. Yet your emissions trading scheme, your carbon tax, was making it harder for us to grow our LNG industry.

I said in this debate some years ago that if we are serious about wanting to reduce global greenhouse gas emissions then we should have a conversation about how Australia can best help the world reduce emissions. Do you know what? The way we can best help the world reduce emissions is by producing more LNG and using it to displace coal in other parts of the world, particularly where the coal is more emissions intensive than the good quality black coal that we have here in Australia. If we are serious about reducing emissions then we should boost our uranium production so we can export that to other parts of the world—to India and other places—where it can displace energy sources that are less emissions efficient.

The point here is that your emissions trading scheme in isolation of an appropriately comprehensive global agreement to put a price on carbon will actually hurt Australia, will hurt Australian families, will hurt Australian pensioners, will hurt Australian businesses and will be an impost on people without actually making a positive difference. You asked me why our position has changed since 2007-08. Do you know what? It changed because of Copenhagen. You might remember that former Prime Minister Rudd went to Copenhagen thinking he was going to be able to negotiate a global deal. Remember the descriptions that he used about our friends in China. I think he described the activity of some little creatures—and I will not use the words because they were particularly coarse and inappropriate. The previous Prime Minister went to Copenhagen. What became very obvious in Copenhagen was that there was no prospect of an appropriately comprehensive global agreement to price emissions. In that circumstance, our judgement about the national interest of Australia is that the best way that we can right now contribute to global emissions reductions in a proportionate way is through direct action.

Incidentally, Senator Singh mentioned the United States. Guess what? When then Prime Minister Rudd pursued his Carbon Pollution Reduction Scheme, the modelling he released at the time was based on the assumption that the United States would have a fully-fledged emissions trading scheme in place by 2010. It never happened. When the next modelling came out in 2011, in the context of the carbon tax under then Prime Minister Gillard, we were told that the United States would have a fully-fledged emissions trading scheme equivalent to the Australian scheme in place by 2016. It will not happen. What President Obama is doing in effect is pursuing direct action policies. That is what Australia is doing. That is what we are putting on the table. Unless you can have an appropriately comprehensive global agreement to price emissions then all you are doing is exposing our export oriented economy to distortions in terms of our international competitiveness. You are helping businesses in other parts of the world, many of whom will be more emissions intensive than our businesses here in Australia, take market share away from us.

As part of the Senate fuel and energy committee—and I am not sure whether Senator McEwen was there with us—we visited a nickel refinery out of Townsville as part of our research. The same proposition was there: if the production did not happen out of Townsville because it was becoming uneconomical to do so because there was a cost of production here in Australia that was not faced by our competitors in other parts of the world, then the business would just go to other parts of the world. We would lose the business and there would be fewer emissions in Australia but there would not be fewer emissions in the world. And guess what? If you really want to reduce emissions, sure, you can always reduce emissions by reducing economic activity. When East Germany and West Germany reunited and shut down a lot of economic activity in eastern Germany, guess what? There were fewer emissions because there was less economic activity.

We need to have a sensible debate about these things, but the truth, of course, is that this debate has been taking place for a very long time. This is a debate that has been going on now for the best part of the last seven years. The reason people voted against the carbon tax at the last election is that they know it does not work. In fact, the reason then Prime Minister Gillard went to the 2010 election promising that there would be no carbon tax under a government she led, the reason then Prime Minister Rudd went to the 2013 election promising that he had removed the carbon tax and the reason the Labor Party are all over the place in relation to this is that they know that people across Australia understand that this carbon tax does not work.

Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

No we're not; we're very clear. You're the one who's backflipped!

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Here we have the Labor Party saying that we have backflipped. No, I have explained the reason why our position has changed since 2007 and 2008, and that is that in Copenhagen in December 2009 it became very clear that the global context had changed. There was no prospect of an appropriately comprehensive global agreement—no prospect whatsoever. That situation has not changed. Of course, the Labor Party are still stuck in the past. They have not realised that the world actually has changed on them.

Guess what? People across Australia have understood, which is why at the last election, overwhelmingly, people across Australia voted to get rid of the carbon tax—because they want the benefits that come with that. They want the stronger economic growth. They want the improved job opportunities. They want the cost-of-living reductions that come with us getting rid of this terrible Labor-Greens tax that, quite frankly, should never have been introduced in the first place.

I heard comments earlier on how our emissions trading scheme under Labor's laws now is linked to the European scheme. That is actually a very incomplete statement, if I might say. With the European scheme, we might be linked to the same price under Labor's laws, but we are not actually linked to the same coverage. A lot of the businesses that are included in Australia under the Labor-Greens arrangement are excluded in Europe, to the point where, in competing with coal producers in Europe, if we kept this law in place, where the Australian arrangements would stay connected to the European emissions trading scheme, do you know what would happen? We would be paying the European carbon price but European coal producers would not. How does that make sense? In Europe, they are good at putting all these rules and regulations in place and saying: 'Here we are. We've got this market based mechanism, introduced and imposed by government structures'—with lots of regulation, by the way—but then they give free permits across the board. In fact, there were so many permits that the price collapsed. At the end of the day, in Europe, ultimately, nobody really makes any substantial payment under that scheme because it is just a big merry-go-round of money.

We can continue to go around and around in circles. We have an amendment in front of us which at least, finally, reveals the truth about Labor's position. Contrary to what they said in the lead-up to the 2013 election, when they said that they had removed the carbon tax already, and contrary to what Senator Bullock said in the lead-up to the WA Senate state election, when he said that Labor are scrapping the carbon tax, what we now see is that Labor want to keep the carbon tax and that all that Labor want to do in hoodwinking the Australian people is modify it a little. They want to give it a new branding. They want to change the way it moves—maybe instead of walking this way it will walk that way a bit—but essentially all the fundamentals are the same. They still want to push up the cost of living for Australians with a carbon price that goes up every year. They still want to push up the cost of doing business. They still want to reduce opportunities for people across Australia to get jobs in businesses that can compete internationally without this cost burden imposed on them.

Senator Singh asks me: why don't you accept an emissions trading scheme? I say again to Senator Singh: why don't you accept the verdict of the Australian people about your carbon tax? The people across Australia do not want your carbon tax. They voted against it and it is time that you stopped acting in defiance of the will of the Australian people.

Debate interrupted.