Monday, 8 February 2010
Carbon Pollution Reduction Scheme Bill 2010; Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2010; Australian Climate Change Regulatory Authority Bill 2010; Carbon Pollution Reduction Scheme (Charges — Customs) Bill 2010; Carbon Pollution Reduction Scheme (Charges — Excise) Bill 2010; Carbon Pollution Reduction Scheme (Charges — General) Bill 2010; Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2010; Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2010; Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2010; Customs Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2010; Carbon Pollution Reduction Scheme Amendment (Household Assistance) Bill 2010
Debate resumed from 4 February, on motion by Mr Combet:
That this bill be now read a second time.
I wish to speak on the misnamed Carbon Pollution Reduction Scheme Bill 2010 and related bills. Carbon in its natural state is graphite. Is that what the government is attempting to ban? If you cannot get the basic terminology right even in the title of the bill, how are we supposed to believe that you are across all of the other issues relating to this?
Today I want to talk about that old adage that we all know to be true: whenever a Labor politician has a good idea, Australians have less money. Be it interest rates or inflation deficits or taxing anything and everything, Australians know a Labor government means that they will have less money in their pockets. The ETS legislation is a continuation of what all Australians know as the third certainty in life: that is, death, taxes and Labor pinching money out of your back pocket.
This ETS will rob the average Australian—or, just for the Prime Minister and his focus group, ‘working families’—out of their hard-earned money. The ETS is a highly complex engine for converting the useful, deployed wealth of our society into the least useful, most wasteful and insoluble substance on earth—pure profit for rich individuals. As we have seen overseas, the cap-and-trade systems create a speculative bubble which the finance industry loads up to suck vast sums of money out of middle- and lower-class wage-earners—those working families.
With the aid of an intellectually corrupt edifice, the ETS, the Labor Party has created a legal exchange for the bankers and financiers to strip money out of the working class. This money will be put straight into the retirement accounts of hedge fund managers and speculative money spinners. Prime Minister—or, should that be, cap-and-trade of the notorious pirate ship, Labor’s ETS tax—your government is trading not in carbon but in misery. Your pirates want to pillage the wallets of working Australians.
The process is that banks and investment houses position themselves in the middle of a growing speculative carbon bubble and sell to their clients investments that they know are junk. A few traders, fund managers and savvy financiers then make millions inflating the price of that commodity. Essentially, these financiers are peddling an element on the periodic table that is free to anybody any time. In the end game, the financial bubble caused by the carbon bubble goes bust, leaving millions of ordinary citizens broke and starving. The government will then ride to the rescue of us all by lending us back our own money at interest. Thank you, cap-and-trade.
Banks and financial institutions worldwide are preparing to do it all again—creating what may be the biggest and most audacious bubble yet. We have Mr Rudd and Ms Wong to thank for all that goes bust, though. The new carbon credit market is a virtual repeat of the commodities market casino that has been kind to Goldman, except it has one delicious new wrinkle: if the plan goes forward as expected, the rise in prices will be government mandated. Goldman will not even have to rig the game; it will be rigged in advance.
Here is how it works. If the bill passes, there will be limits for coal plants, utilities, natural gas distributors and numerous other industries on the amount of carbon emissions—also known as greenhouse gases—they can produce per year. If the companies go over their allocation, they will be able to buy allocations or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billion worth of carbon credits will be auctioned in the first seven years. One of his top economic aides speculates that the real number might be twice or even three times that amount.
The feature of this plan that has a special appeal to speculators is that the cap on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. That means that the volume of this brand new commodities market, where the main commodity to be traded is guaranteed to rise in price over time, will be upwards of a trillion dollars annually. For comparisons sake, the annual combined revenues of all electricity suppliers in the US total $320 billion. The plan is for money-spinners to get in on the ground floor of paradigm-shifting legislation, make sure that they are the profit-making slice of that paradigm and make sure that the slice is a big slice.
The economic impacts of an emissions trading scheme for an Australian workers are mixed—both good and bad, depending on which end of the economic scale you sit. For low-income earners, the cost-of-living increases will push many elderly and poor into abject poverty. A crazy situation when you consider that my state, Western Australia, is at the beginning of another resources boom, which has already put upward pressure on everyday prices. No possible compensation the government is offering will fully cover the inflated cost-of-living increases. Many pensioners, seniors and veterans are already struggling with everyday bills and necessities. An ETS will put everyday items out of reach.
There are Australians who will benefit from an ETS, though—people who have seen it all before, a group of individuals whose job it is to turn ordinary commodities into tradeable profit. I am of course referring to bankers, fund managers and traders, who are circling the carbon market ready to turn the scheme into their next casino venture. What do I mean by casino venture? I am talking about financial institutions betting their houses on the market, which will wildly inflate the price of carbon credits. In this way those banks and financiers who foresaw this boondoggle and got it off the ground floor will all retire as wealthy people. They have a vested interest in seeing this legislation being enacted and have much to lose if it does not. Labor has put us in an all or nothing economic situation.
Our Prime Minister railed against the excesses of our market systems as the GFC hit fever pitch. It was, after all, market forces that inflated, caused and created the great bust of 1998. Yet on the greatest moral issue of our time where does he turn to solve these issues? The market. This new commodity market will see prices swing wildly up and down. Ultimately, a speculative bubble will be created, paper fortunes won and lost, and then it will all go horribly wrong when people realise the credits they are trading in are in fact worthless. The people who will be hit hardest are the mum and dad investors who will get caught up in the hysteria caused by the ETS—a huge, highly complex engine for converting the useful, deployed wealth of society into pure profit for rich individuals. The PM commented in Hansard on Tuesday, 2 February:
The Prime Minister has obviously not been following the crisis in climate science: the junk science, the corruption, the collusion and the endemic lack of peer review. The member for Page talks about consensus. Think about consensus on religion here for a second. The consensus of trained experts is that a Christian god, in consensus terms, particularly in Australia, exists. So why do you reject that consensus? The fact is there is no such thing as consensus science. If there is a consensus, it is not science and if it is science it is not consensus—period. I will quote the late, great Michael Crichton on some of the history of consensus science and the damage that it can do:
In past centuries, the greatest killer of women was fever following childbirth. One woman in six died of this fever.
In 1795, Alexander Gordon of Aberdeen suggested that the fevers were infectious processes, and he was able to cure them. The consensus said no.
In 1843, Oliver Wendell Holmes claimed puerperal fever was contagious, and presented compelling evidence. The consensus said no.
In 1849, Semmelweiss demonstrated that sanitary techniques virtually eliminated puerperal fever in hospitals under his management. The consensus said he was a Jew, ignored him, and dismissed him from his post. There was in fact no agreement on puerperal fever until the start of the twentieth century. Thus the consensus took one hundred and twenty five years to arrive at the right conclusion despite the efforts of the prominent ‘skeptics’ around the world, skeptics who were demeaned and ignored. And despite the constant ongoing deaths of women.
There is no shortage of other examples. In the 1920s in America, tens of thousands of people, mostly poor, were dying of a disease called pellagra. The consensus of scientists said it was infectious, and what was necessary was to find the ‘pellagra germ.’ The US government asked a brilliant young investigator, Dr. Joseph Goldberger, to find the cause. Goldberger concluded that diet was the crucial factor. The consensus remained wedded to the germ theory.
Goldberger demonstrated that he could induce the disease through diet. He demonstrated that the disease was not infectious by injecting the blood of a pellagra patient into himself, and his assistant. They and other volunteers swabbed their noses with swabs from pellagra patients, and swallowed capsules containing scabs from pellagra rashes in what were called ‘Goldberger's filth parties.’ Nobody contracted pellagra.
The consensus continued to disagree with him. There was, in addition, a social factor—southern States disliked the idea of poor diet as the cause, because it meant that social reform was required. They continued to deny it until the 1920s. Result—despite a twentieth century epidemic, the consensus took years to see the light.
Probably every schoolchild notices that South America and Africa seem to fit together rather snugly, and Alfred Wegener proposed, in 1912, that the continents had in fact drifted apart. The consensus sneered at continental drift for fifty years. The theory was most vigorously denied by the great names of geology—until 1961, when it began to seem as if the sea floors were spreading. The result: it took the consensus fifty years to acknowledge what any schoolchild sees.
In the Australian context the views of our Nobel Prize winners, Warren and Marshall, ran counter to the consensus view on ulcers and, in fact, Barry Marshall induced ulcers within himself to demonstrate the cause. Once again, the consensus rejected that and they are now Nobel Prize winners. On 3 December Australia’s Chief Scientist, Penny Sackett, was warning that climate oblivion was only a few years away:
Like the world’s leading climate scientists, Professor Sackett argues that there are about five years to avoid the dangerous damage generated if average global temperatures increased by more than 2 degrees above pre-industrial levels. As it stands now, she said, a 1.3 degree temperature rise is all but ‘locked in’.
‘To meet the 2 degree target, we must halt increases in global emissions by about 2015, and then decrease them dramatically and steadily thereafter.’
12:22:01 But as the Australian reported recently, ‘the consensus is receding faster than a Himalayan glacier’. It said:
Australia’s Chief Scientist, Penny Sackett, told the Australian last night that she shared Professor John Beddington’s concerns—
Professor Beddington is the British chief scientist—
Professor Sackett said climate change was a scientific reality but there was a need for absolute openness and rigour in the presentation of evidence, including recognition of which aspects of (the) science were imprecise and required further research.
I recall Professor Sackett giving evidence to the science committee and that she was not aware of the fact that the relationship between temperature and carbon dioxide is logarithmic. It is a relationship that goes back over 100 years and is represented in all the IPCC reports. She has the belief, but this fundamental relationship eluded her at the time.
I have heard a lot of argument about precautionary principle. The government has used that argument a lot. Let us turn it around. The government wants to impose a great big new tax on the Australian people. Consider this: what if it is wrong? What if the vaunted consensus position changes? After all, if you had been making an argument 40 years ago for controlling the climate, you would have been looking at a scheme to stop the coming ice age, given that the scientific consensus at the time was that we were headed towards another ice age.
Consider this: the government has proposed a great big new tax that is designed for one purpose and one purpose only—that is, to reduce carbon dioxide emissions. Consensus changes and the Australian people will have to pay this tax forever. The beauty of our scheme is that it is flexible. If the consensus changes, the policy can be changed. Our policy has distinct environmental advantages, including improving crop yields, getting more efficient underground transmission infrastructure and improving visual pollution.
We hear a lot of discussion about how the world agrees that the ETS is a wonderful scheme. Think about this: the ETS has not been particularly effective in Europe. It has not been particularly effective at reducing CO2 emissions and certainly it has not been a very stable commodity to trade. Insanity is to keep doing the same thing and hoping for a different result. Even Britney Spears, of all people, sings:
Fool me once, shame on you; fool me twice, shame on me.
The government’s ETS tax has no mechanisms to actually reduce CO2 emissions. It is just a tax, and then they hope that the market will drive solutions. The government is corrupt enough in their view of this thing that they will not even consider the one method that really can bring down CO2 emissions—that is, nuclear power. Labor’s criticism of our scheme is based on soil carbons not being counted in international agreements. Who cares? Does the environment know if a molecule of CO2 is removed from the atmosphere using soil sequestration or tree sequestration? Clearly, the environment does not give a damn where the carbon dioxide is sucked into. It just demonstrates how badly constructed international agreements are on this, as evidenced by Copenhagen.
Kerry O’Brien, Tony Jones and David Koch criticise from the safety of not allowing counterargument on their programs. I have challenged both Koch and Jones to have me on to discuss the science—funnily enough, they lack the guts to interview me on it. The members for Leichhardt and Lowe have suggested that members on this side who might agree with an ETS—and there are precious few of them, I might add—should cross the floor. How about letting some of the sceptics on the other side of the House cross the floor? I know of at least four cabinet ministers who are sceptics, but they do not have the guts to say so in public, never mind crossing the floor.
On 2 February, Minister Combet said:
What we have from the other side here is political opportunism, a recognition on the basis of their lack of acceptance of the science—their lack of respect for internationally peer reviewed science in the IPCC fourth assessment report.
We have seen numerous problems with the IPCC fourth assessment report. We have seen numerous instances where propaganda articles from the WWF and Greenpeace are taken at face value and simply accepted as if they were peer reviewed science. On the other hand, there is the issue around Phil Jones, one of the lead authors with the IPCC and head of the University of East Anglia’s Climate Research Unit, when he talked about changing the definition of what constitutes peer review. (Time expired)
That was a performance by the previous member. He talked about conspiracy theories, pirates, bankers as devils and money-spinners all coming out of this legislation, the Carbon Pollution Reduction Scheme Bill 2010 and related bills. I find it unbelievable and I think most of Australia would as well, as they have with the Liberal Party’s policy on this, which is really a policy of convenience: ‘We need a policy, so we’ll have a policy.’ They have not dealt with the real issues that the government are endeavouring to do deal with in these bills. There has been much discussion on these bills already and it seems almost impossible to come up with more reasons as to why this legislation needs to be passed. I look at it this way: I have lived in this country all my life and I have watched the seasons come and go. I have seen changes in the elements over the last 50 years or so. I guess it has been about 50 years since I started taking notice of climate and changes in the weather. Growing up in the country, of course, it was always something that was talked about and looked at, and one noted what was happening.
I have also noted that climate conditions have become more unsettled in the latter part of my time on earth. I do not know enough about all that science to say that global warming is actually occurring, but I do feel that the climate is changing on an irregular basis and there are many reasons for it to do so. There are some natural reasons for climate change, such as volcanic activity, changes in vegetation, bushfires and their aftermath, tidal patterns, river paths, the phases of the moon, wet seasons, dry seasons and a whole host of natural changes due to the cycles of weather, which influence what is going on at ground level.
To this you add the activities of man and the animals we share the earth with. Man had has been able to influence and change some of the natural influences of climate through being able to harness some of our natural resources to make living in our world easier. We do like electricity to help us cook and heat and to make life more comfortable. We like having wood from our forests to build our houses, to make our furniture and to enjoy the nature of it. We enjoy eating fresh vegetables, fruit, grain, meat and fish and processing them—and, of course, we like our wine and the good old amber fluid. We also have the tendency to fight each other. In order to have these basics of life, to be able to provide everyone with these commodities and to have a surplus for trade, we have manipulated their production.
If you have, as most people do, a basic understanding of chemistry, then you understand that when you add elements to the atmosphere there will be changes, some of them good and some of them not altogether desirable. With any sort of mass production there is a waste stream—emissions, if you like. That waste stream also has to be dealt with, whether by recycling it, by reusing it in some way or by disposing of it safely. We do those things a lot better than we used to, when we started mass production. Whatever we do, and however we do it, there is an element of cost. There will always be an element of cost. If, therefore, we are trying to minimise man’s effect on the earth, then there is an expense attached to it. We have been aware of that for some time.
There is the cost of dealing with waste. When people live together in high-density environments, the land cannot deal with the waste naturally. We have to intervene—to take it away, to pump it out or do something else to deal with it. This is the same with whatever product or activity we are coping with, whether it be the waste from a steel mill or the waste from a chicken coop. Hopefully you would put the chicken poop back into the ground to make it better—we have learnt to take some of the waste from our production and turn that into a plus for us as well. It all has a cost attached to it in some way.
Science has helped in many ways to deal with waste, whether it be by recycling it, reusing it, rendering it inert or carefully destroying it—but, whatever you do, or how careful you are, there is always a bit left over. I expect it is a bit like when we take something apart and put it back together—there is always something left sitting on the kitchen table or on the workbench that does not seem to belong anywhere. There is always something, and sometimes these things tend to add up.
So I say to Mr Abbott: it does not matter how much you bluster and carry on about a great big tax; I am afraid you are already paying for it, and have been paying for it for centuries. What the government is trying to do, without the help of the opposition, is to make waste a tradeable commodity so that it makes sense economically to do something about it. There is nothing new in paying for emissions. It has just become a little more urgent that we all help to pay—and by ‘all’ I mean on a global scale. It therefore makes economic sense to start setting some boundaries domestically, so that we can keep up with change.
This government is also keen to ensure that some of the less economically fortunate in our community do not suffer unduly from change. That is why we are proposing to help relieve them from taking on a greater burden in their day-to-day lives by allowing some household assistance as the change occurs. It seems likely that we will need to do more to alleviate the problems of our waste streams, but what is less certain is by what quantity and how much that will cost. So there is a need for some risk management—a bit of insurance, if you like.
In an article entitled ‘Climate change: hedging your climate-change bets’, appearing in Science in October 2005, Richard A Kerr says that:
… uncertainty can justify an alternative to cost-benefit analysis called risk management, an approach people take when they buy insurance. “Uncertainty is the reason you buy insurance,” says Yohe. Insurance does nothing to reduce the chances that your house will catch fire, he notes, but “it decreases the consequences should the bad event occur. People are willing to pay premiums for insurance because that spreads the risk.”
Under risk management, decision-makers would consider the range of possible outcomes and then try to avoid the worst by, for example, levying a tax on the carbon in fossil fuels that becomes the greenhouse gas carbon dioxide. The tax would reduce the urgency of making more sweeping decisions. At the same time, it would keep in play more ambitious goals such as holding greenhouse gases to even lower levels. All the while, scientists would be learning more about the risks of global warming.
So insurance companies are already thinking about how to deal with risks of climate change. I read another article entitled, ‘An answer to climate change: weather hedging for everybody’, which talked about a weather insurance exchange project. It does not exist at the moment but, given the right ambience, it might be a good model to help farmers mitigate the risks of experiencing a drought. Hedging is a way of spreading the risk, so I guess that these bills are starting to deal with the risks presented by any change in the environment—whether the science agrees or does not agree on what is actually happening.
I have just finished an inquiry into how farmers are dealing with climate change. Many farmers have already started to change farm practices and to come up with new ideas to deal with the changing weather patterns. We need to be able to give them tools and certainty so that their risk mitigation practices can be put into place. The emissions of which I have been speaking are of course known as ‘greenhouse gases’. Many chemical compounds found in the earth’s atmosphere act as greenhouse gases. These gases allow sunlight to enter the atmosphere freely. When sunlight strikes the earth’s surface, some of it is re-radiated back towards space as infrared radiation, or heat. Greenhouse gases absorb this infrared radiation and trap its heat in the atmosphere. Many gases exhibit these greenhouse properties. Some occur naturally, some are produced by human activities, and some are exclusively human made. If it were not for naturally occurring greenhouse gases, the earth would be too cold to support life as we know it. Without the greenhouse effect, the average temperature on earth would be about minus two degrees Fahrenheit rather than 57 degrees Fahrenheit, which we currently experience.
Sometimes you can have too much of a good thing, and allowing too much greenhouse gas into the atmosphere can overload the sink, the oceans, so it collects in the atmosphere, causing heat to be retained. It is these excess greenhouse gases that need to be reduced so that their potential effects can be minimised. Now for a little science, thanks to the BBC’s weather program, which explains the cycle very simply—if one can get this debate into simplicity. Carbon dioxide is probably the most important of the greenhouse gases, as it accounts for the largest proportion of the trace gases, and it is currently responsible for 60 per cent of the enhanced greenhouse effect.
Most of the carbon dioxide was removed from the atmosphere as early organisms evolved photosynthesis. This locked away carbon dioxide as carbonate minerals, oil shale, coal and petroleum in the earth’s crust when the organisms died. This left 0.05 per cent in the atmosphere today. Atmospheric carbon dioxide comes from a number of natural sources, mainly the decay of plants, volcanic eruptions and as a waste product of animal respiration. It is removed from the atmosphere by photosynthesis in plants—that is, absorption through the leaves of plants—and by dissolving in water, especially on the surface of our oceans. Carbon dioxide stays in the atmosphere for approximately 100 years.
The amount of carbon dioxide taken out of the atmosphere by plants is almost perfectly balanced with the amount put back into the atmosphere by respiration and decay. Small changes as a result of human activity can have a great impact on this delicate balance. Burning fossil fuels releases carbon dioxide stored millions of years ago. We use fossil fuels—including petrol, diesel and kerosene—to heat homes and businesses and to power factories. The use of wood and wood products releases the carbon stored in trees and also results in less carbon dioxide being removed from the atmosphere, hence the need to replant more trees. The majority of the carbon is not lost, though, as it is stored in whatever we make the wood into, such as houses, furniture, paper and all the other wood products we use.
The concentration of carbon dioxide in the atmosphere has increased more in the Northern Hemisphere, where more fossil fuel burning occurs. Since the Industrial Revolution the concentration globally has increased by about 40 per cent. It is this equation that needs to be balanced.
In order to tackle climate change, we must consider two fundamental elements: limiting the carbon pollution that has an influence on climate and putting a cost or price on that carbon pollution. By combining these two means, we can start to deal with climate change and we can also open the door to investment in low-carbon technology and allow carbon trading to help pay for change.
The purpose of these bills is to give us all some certainty on what we can do, how we can do it and what it will cost. Even if the Leader of the Opposition thinks the whole business of climate change is crap, he has missed the point of these bills and in the process is slugging the taxpayer instead of those putting out most of the emissions. His scheme just does not work and, as far as I can see, it is unfunded as there is no means by which he can collect funds from the emitters to help alleviate pain and drive change which is what we have to do. In fact, he seems to be creating a great big tax, not on himself but on his children and on his grandchildren. I think he should get off his despot horse and start looking at reality.
These bills are complex, but they are an insurance for our future and an incentive for our children and our children’s children to act now. Spending $10 a week now instead of $100 in 30 years is something I think we should be doing. We should not push this aside as something that we cannot deal with. We must deal with it; this government is dealing with it. It has these bills back in the parliament and hopefully, maybe in some miracle way, we can resolve this matter through the Australian parliament and achieve what I believe our nation needs to achieve—that is, to pass these bills. I support these bills.
I rise to speak on the Carbon Pollution Reduction Scheme Bill 2010 and related legislation. All of us here are accountable not just to our constituents but also to the generations that will come after them and after us. It is our job as members of parliament to legislate with an eye to the long-term future, to look over the horizon beyond the next election and ensure that, as far as we can, what we do today will make Australia a better place, a safer place for future generations to live in. Climate change is the ultimate long-term problem. We have to make decisions today, bear costs today so that adverse consequences are avoided, dangerous consequences are avoided many decades into the future. It is always easy to argue we should do nothing, or little or postpone action. But we are already experiencing the symptoms of climate change, especially here in Australia with a hotter and drier climate in the southern part of our nation. The rush to construct desalination plants is just one expensive testament to that.
Climate change is a global problem. The planet is warming because of the growing level of greenhouse gas emissions from human activity. If this trend continues then truly catastrophic consequences will ensue, from rising sea levels to reduced water availability to more heatwaves and fires. In December, just a few weeks ago, we had confirmation from three leading scientific organisations—the UK Met Office and, in the United States, NASA and the National Oceanic and Atmospheric Administration—that the past decade, the years from 2000 to 2009, was the hottest since record-keeping began, even hotter than the decade before which was the second-hottest decade on record and the decade before that which was the third hottest on record.
Climate change policy has to recognise these real risks, these real threats to the safety of our planet. It is an exercise in risk management and no reasonable person could regard the risk as being so low that no action was warranted. That has been the view of political leaders for many years from both sides of politics, none more eloquently than Margaret Thatcher herself. Prudence demands that we act to reduce our greenhouse gas emissions and do so in a way that is consistent with and promotes global action to do the same. Right now both sides of politics are agreed that Australia should, regardless of whether any international agreement is reached, reduce our emissions by 2020 so that they equal a five per cent cut from 2000 levels. This is a 21 per cent cut from the 2020 business-as-usual levels. Both sides of politics agree that, depending on the nature of the international agreement reached, greater cuts of 15 or 25 per cent should be made.
It is not enough to say that you support these cuts, you must also deliver a strong, credible policy framework that will deliver them. In line with the Copenhagen Accord, the nations of the world are making commitments to reduce their emissions and those commitments will form the basis of the negotiations that will continue at Mexico City this year. Australia should be taking action now in advance of and in order to promote a global agreement. While our emissions are only a small share of the global total, we are in per capita terms one of the highest emitters. How can we credibly expect China, with per capita emissions less than a quarter of ours, or India, with per capita emissions less than one-tenth of ours, to take our call for global action seriously if we, a wealthy developed nation, are not prepared to act ourselves?
This transition from a high-emission economy to a low-emission one cannot be achieved without major changes to the way we generate and use energy and in the way we manage our landscape. This requires substantial new investment especially in electricity generation, which has increased by 45 per cent since 1990 and represents now a little more than half of our total emissions. Decisions to build new power stations and replace old ones will involve tens of billions of dollars over the next few decades and a critical element in making those decisions is being able to form a view about the direction of carbon pricing. Given that the cheapest fuels are generally the dirtiest, in the absence of a clear carbon price signal new capacity is likely to be coal rather than gas or rather than renewables.
This need for leadership and direction from government on the pricing of carbon, on the level of emissions, was one that was apparent to the previous government. That is why in 2006 Prime Minister John Howard established the emissions trading task group headed by Dr Peter Shergold, the Secretary of the Department of the Prime Minister and Cabinet. The task group also included leaders from the industries most directly affected, such as transport, aluminium, mining, agriculture and power generation. In 2007 the Howard government adopted the Shergold task group’s recommendation to establish an emissions trading scheme in advance of and in order to promote a global agreement, and we began to introduce the necessary legislation. As the Shergold report observed:
An Australian emissions trading scheme, with a carbon price set by the market, would improve business investment certainty. This is particularly the case for projects with a high degree of carbon risk. There is growing evidence that investments are being deferred due to uncertainty about the future cost of addressing climate change. Without a clear signal on future carbon costs, these investments will not be optimised. There is a risk that a higher carbon profile will be locked in for the life of the capital stock.
Plainly stated, in the absence of a clear carbon price signal, either no new investments will be made or investments will be made in new carbon intensive infrastructure because they are more profitable in a world where there is no price on carbon emissions.
An ETS works by setting a limit, or a cap, on the amount of carbon dioxide and its equivalents which the total covered industry sectors can emit. These industries are required to acquire permits to emit CO2 within that overall cap. I note that the government does not set the price of carbon; it sets the cap on emissions and the rules of the scheme, and then it is up to the market, the laws of supply and demand, to set the price. It does not give quotas to particular industries or firms. The cap is across the economy and is set at a level of emissions which will over the relevant period enable us to meet our target. These permits can be purchased from the government or from other permit holders, or can be offset by purchasing a carbon credit from someone, like a farmer, who is taking action which reduces atmospheric carbon.
Only a small number of businesses—around one thousand big emitters—will have to buy permits. The direct impact of the ETS, therefore, for almost all Australians is via increased energy prices. The New South Wales Independent Pricing and Regulatory Tribunal, IPART, estimates that in 2013, for example, the cost of the CPRS will comprise 15 per cent of a typical electricity bill in New South Wales. It is estimated by the Treasury overall that the CPRS will add about 19 per cent to electricity prices.
The scheme will raise a substantial amount of revenue over the period to 2020, but it is not designed—nor should it be—to raise additional net revenue for the government, as taxes do, since the funds raised by the sale of permits will be returned to compensate lower income households and assist businesses, especially those which are emissions intensive and trade exposed and cannot readily pass on the increase in energy costs. The white paper estimates the CPRS will result in a one-off increase in the CPI of 1.1 per cent, compared to the 2.8 per cent one-off increase in the CPI caused by the introduction of the GST. Most households will be compensated for this increase in costs either in whole or in part. I should note that the largest component of increases in electricity prices in New South Wales, for example, over the next five years is in fact additional network charges to recognise the increased investment in the security and reliability of electricity infrastructure. Those increases, unlike the CPRS element, are not the subject of any compensation.
But, given we have an apparent bipartisan agreement that emissions should be reduced by five per cent of 2000 levels by 2020, is an emissions trading scheme, this CPRS, at a general level the best policy to achieve the desired outcome? Believing as I do, as a Liberal, that market forces deliver the lowest cost and most effective solution to economic challenges, the answer must be yes. Because more emissions-intensive industries and generators need to buy more permits than less intensive ones, lower emissions activities, whether they are cleaner fuels or energy efficient buildings, are made more competitive. A brown coal fired power station, for example, pumps out four times as much CO2 as an efficient gas fired one. Gas is expensive and clean; brown coal is cheap and dirty. If there is no cost charged for emitting carbon, there is simply no incentive to move to the cleaner fuel.
Until 1 December last year, there was a bipartisan commitment in Australia that this carbon price, this exercise in reducing emissions, should be imposed by means of a market based mechanism—this emissions trading scheme. At their core, therefore, these bills are as much the work of John Howard as of Kevin Rudd. The policy I am supporting here today as an opposition backbencher is the same policy I supported as John Howard’s environment minister. And why did we in the Howard government believe an emissions trading scheme was the best approach? It was because we as Liberals believed in the superior efficiency of the free market to set a price on carbon. As the Shergold report observes:
Market-based approaches have the potential to deliver least-cost abatement by providing incentives for firms to reduce emissions where this is cheapest, while allowing the continuation of emissions where they are most costly to reduce.
The Rudd government’s approach has broadly embodied the same principles, although there were problems and flaws with its initial design. But extensive modifications were made in May 2009 and again in November 2009, when changes were agreed between the government and the opposition following the negotiations between Senator Wong and the member for Groom and me.
These changes have made it into a scheme that appropriately balances environmental effectiveness and economic responsibility. In fact, the proposed scheme very closely resembles the outline of the Howard government’s original 2007 proposal, in both its incidence and its timing. As we have seen in recent days, alternatives such as direct regulation or subsidies will be far more costly to the economy, no matter how hard their designers seek to argue the contrary. I quote again from the Shergold report on this topic:
An alternative to regulating emissions abatement is subsidising abatement activities from government budgets. For example, government could target specific projects, requiring estimation by government of additional abatement relative to ‘business as usual’. However, if not carefully implemented, project-specific approaches can involve administrative overheads for both government and project proponents.
Under a market based mechanism, like an ETS, if a firm reduces its emissions intensity by acquiring more efficient equipment or, for example, by generating power from burning gas rather than coal, it will need to buy fewer permits per dollar of output. There is a clear, transparent and immediate incentive—a clear price signal—encouraging investment in lower emissions technology. However, if a scheme operates whereby the government pays the firm to reduce its emissions intensity, leaving aside the impact on the budget and the demand therefore for higher taxes, there is firstly going to be a substantial and contentious debate about what the correct baseline is, and then whether it will actually be reduced. Because most capital equipment, especially in the energy sector, has a life running into many decades, as long as 50 years in some cases, the business sector is going to require assurance that any government subsidy will match the life of the asset—so running well beyond 2020. In other words, any scheme has to have a lifetime which matches the lifetime of the investment. If government wants business to make long-term investments to lower emissions, its commitment must be long term as well, which is why a subsidy scheme which terminates in 2020 will achieve very little. Arguments of considerable ferocity will arise as to whether a new piece of equipment would have been bought anyway, with the risk that the government ends up funnelling billions of dollars to companies to subsidise their profit without achieving any real additional cuts in emissions.
All of us in this House know that industries and businesses, attended by an army of lobbyists, are particularly persuasive and all too effective at getting their sticky fingers into the taxpayers’ pocket. Having the government pick projects for subsidy is a recipe for fiscal recklessness on a grand scale, and there will always be a temptation for projects to be selected for their political appeal. In short, having the government pay for emissions abatement, as opposed to the polluting industries themselves, is a slippery slope which can only result in higher taxes and more costly and less effective abatement of emissions. I say this as a member and former leader of a political party whose core values are a commitment to free markets and free enterprise. The Shergold report went on to say this about this very issue:
Financing subsidies and specific project-based interventions also impose costs on society from their use of taxation. If these approaches were to be used extensively to achieve large-scale abatement, the economy would suffer losses in economic and administrative efficiency. In contrast, market-based approaches to emissions abatement involve the explicit pricing of emissions, allowing the market to determine the cheapest source of emissions reduction.
As the Productivity Commission observed in its submission to the Garnaut review in 2008:
Unlike prescriptive command and control approaches, an ETS leaves it to producers and consumers—who have better information about their own production costs and preferences than governments—to work out the most cost-effective way to reduce emissions. In this way, the targets are most likely to be achieved at lowest cost to the economy and community.
Before I leave the question of non-market based approaches to emissions reduction, I should note that I was very pleased to see the recognition of soil carbon, carbon forestry and biochar in the coalition’s alternative policy. One of the key achievements of our negotiations with the government last year about the CPRS of course was to secure the recognition of this type of agricultural offset, the potential for which, as I have argued for some time, is very considerable. However, there are a couple of points I should make about soil carbon in particular.
While it is possible to increase the level of organic carbon in soils by changing the management of the land in question, it is quite another thing to ensure that this increased carbon level is permanently maintained. Soil carbon levels fluctuate with the season, with rainfall and of course depending on the use of the land. There is a great prize here, but before billions of dollars are invested in soil carbon credits there will be considerable work required to agree on appropriate measurement and management methodologies. If in fact there are hundreds of millions of tonnes of very low-cost agricultural offsets capable of generating carbon credits then they are all potentially available in the ETS—
I thank the parliamentary secretary for his courtesy. As I said, if in fact there are hundreds of millions of tonnes of very low cost agricultural offsets capable of generating carbon credits then they are all potentially available in this ETS, in the CPRS proposed here in this legislation, and they will lower the cost of permits. In other words, if polluters can buy carbon credits for $10 a tonne from farmers, permit prices will adjust down to that level. Of course, the great virtue of a market based scheme is that instead of the government decreeing what the best and cheapest offsets are, the participants in the market work it out for themselves. That is why, once agricultural offsets are recognised under the emissions trading scheme—and that is the plan with this legislation—there is enormous potential for farmers and other landowners to generate real revenue. However, it should be noted that until those offsets are recognised internationally, they will not be of assistance in meeting our five per cent 2020 target.
One of the leading Australian biochar advocates wrote to me the other day and said:
While I worked in Government for a significant part of my life I am horrified by the prospect of a ‘fund’ from which public servants give handouts to grow trees—it just does not work—we have to have a market price and a market system …
Is the ETS proposed in these bills the right design and is this the right time to act? The answer here, too, is yes. Most other large emitters have also committed to substantial quantitative reductions in their greenhouse gas emissions over the next decade. Many have already acted to achieve those targets. The European Union has had an ETS since 2005 and in phase 3 of its scheme is enforcing it with increasing stringency. In line with the Copenhagen accord, China has committed to a 45 per cent reduction in emissions per unit of output by 2020 and the Chinese are already investing massively in cleaner energy sources, both of which point to a ‘shadow’ price on carbon already in force across the Chinese economy.
I note that the Chinese commitment is to reduce emissions from their ‘business as usual’ rate. They recognise that business as usual is not good enough and that they must reduce their emissions intensity and then reduce the absolute level of emissions. Japan has pursued lower emissions and higher energy efficiency for three decades. Brazil has committed to lowering its emissions by more than a third against its projected business-as-usual 2020 emissions. I note again that our commitment to reducing our emissions by five per cent from 2000 levels is equivalent to a 21 per cent reduction from our projected 2020 emissions without a CPRS.
While Copenhagen was disappointing, it did nonetheless for the first time see the developing nations—particularly the major ones, such as China and India—make commitments to reduce their emissions. That was an enormous breakthrough. There is a global commitment to act so as to keep temperature rises this century below two degrees Celsius. The notion that this ETS would put Australia out in front of the world is, sadly—I wish it were not so—completely wrong. Far from being in front of the world in action to reduce emissions, we start behind because our per capita emissions are so large and because our sources of energy are overwhelmingly dependent on burning coal. We should not forget that when the Howard government committed to an ETS in 2007 the world was much further away from concerted global action than it is today. Indeed, the Shergold report noted:
The prospects for comprehensive global action in the near future look poor.
But the Shergold report, in recommending an ETS, observed:
…waiting until a truly global response emerges before imposing an emissions cap will place costs on Australia by increasing business uncertainty and delaying or losing investment.
This legislation is the only policy on offer which can credibly enable us to meet our commitment to a five per cent cut to emissions by 2020 and also has the flexibility to enable us to move to higher cuts when they are warranted. So for those reasons I support this bill. The arguments I have made for it are no different to those I have made, and stood for, for the last three years.
During my time as Leader of the Opposition I often defended the right of my colleagues from time to time to cross the floor and vote in accordance with their strongly held personal beliefs. This is a longstanding and treasured principle of the Liberal Party and very different to the tradition of the Labor Party. In that context, I commend the courage of my colleagues Senator Troeth and Senator Boyce who crossed the floor to support this bill and effective action on climate change late last year. The importance of this issue, the expectation that Australians have that their parliamentarians will lead on it, the fact that the emissions trading scheme being considered is nearly identical to the proposal put to the electorate by the Howard government in 2007 and my strong and longstanding personal commitment to effective action on climate change make it impossible for me to vote against this bill, amended in terms as agreed between the coalition and the government last year.
The proposed ETS is a balanced, substantive and timely step forward on an issue of immense importance. By relying so heavily on market forces to address this very severe challenging problem, the ETS is far more in the great traditions of modern liberalism than any other available policy response. After all, I have always believed that Liberals reject the idea that government knows best and embrace the idea that government’s job is to enable each of us to do our best. This ETS allows Australian businesses to make their own decisions as to how to reduce their emissions. Government sets the rules and, in particular, sets the cap on total emissions and then lets the market work out the most efficient and effective outcome. Schemes where bureaucrats and politicians pick technologies and winners, doling out billions of taxpayers’ dollars, neither are economically efficient nor will be environmentally effective. For those reasons, I will be voting in favour of this legislation.
Today I rise in this chamber for the first time as the very humble yet proud member for Higgins. At the outset, I want to place on record my thanks to the people of Higgins for their trust in me to represent them. I will always honour that trust. They have in me, just as they had in the previous members for Higgins, someone who will work hard for them, who will listen to them and fight for them and who will respect and defend the values and traditions that have made this country great. Higgins has in me someone who will not make decisions ruled by fear or the short-term media cycle. To do so sacrifices the future of this country on the altar of political expediency today, for the decisions that we make today here in this parliament will shape our future. We face big challenges, and I will not duck the task of tackling those challenges.
Higgins has a strong tradition and a proud legacy. The people of Higgins have been represented well in the past—two prime ministers in Harold Holt and John Gorton, a strong local member in Roger Shipton and, most recently, a federal Treasurer in Peter Costello. Each man made a significant contribution to this country. Holt introduced the child endowment scheme, Gorton implemented a program to provide financial assistance to non-government schools and Shipton advocated on many small business issues. Family, choice, wealth creation—these threads bind the Higgins tradition.
In particular, I honour the contribution of my immediate predecessor, Peter Costello, a great Australian and a man who is both a mentor and a friend. Not only was he a much loved local member but his economic vision and achievements ensured a brighter future for all Australians. His legacy, while understood today, will be properly measured and appreciated in the years to come. Since Higgins has produced such giants of Australian politics, it is probably a good thing I am wearing heels.
Higgins is a lively inner city electorate, with landmarks like Chapel Street, the Yarra River and the Chadstone Shopping Centre. It is also a diverse electorate. Workers’ cottages abound in Windsor; flats and apartments dominate South Yarra. A vibrant gay community enlivens Prahran. Toorak has its mansions; Malvern, its parks and gardens. You cannot pass through Camberwell and Glen Iris without seeing children playing cricket or kick-to-kick. Parents push prams in Ashburton and Malvern East. The cafe culture is alive and well in Koornang Road, Carnegie and High Street, Armadale. Throughout, there is a deep vein of multiculturalism: some communities are particularly localised, like the strong Greek communities in Murrumbeena and Hughesdale; others, like our dynamic Jewish and Chinese communities, are spread throughout the electorate.
One thing, more than any other, binds this diversity together: aspiration. Higgins is full to the brim with aspiration—young couples, renting for the moment but desperate to own their own homes; families wanting the best for their children, scrimping and saving to provide them with the best opportunities in life; small business people, rolling up their sleeves, taking a chance and creating jobs; and older residents who have worked hard throughout their lives, whose accomplishments prove what can happen when you dare to pursue your ambitions.
The story of Gwen Dixon and her late husband, Alec, is a classic Higgins story of aspiration. Alec was born in the early 1900s and lived in what was then the very working class suburb of Windsor, one of seven children. He left school at 14 and worked as a plumber’s apprentice before he got a job on the wharves. Years later, he met Gwen. They got married, rented a house and in true entrepreneurial fashion started a small business together. Gwen made felt ties; Alec sold them door-to-door. Keen to make a home for their family, they rented a shop in Windsor and started a milk bar. They worked in the shop during the day and lived above it at night. They took risks. They employed people. Later, they set up a grocery business, going into debt to buy a small shop in South Yarra, a business they worked in together for over 30 years.
When they could, Alec and Gwen moved to a house in Windsor, renting out half of it to make ends meet. They took one holiday in their working life and that was on their retirement. Instead, they put money back into their business and the education of their two children, sending them to independent schools in their secondary years to give them the educational opportunities that they themselves had been denied. Today, we are joined by 92-year-old Gwen Dixon in the public gallery. I could not have asked for a finer grandmother.
The same spirit of aspiration that drove my grandparents drove my parents. The first of their families to go to university, they worked hard and sacrificed to give me and my siblings a quality education. If not for their love and sacrifice, I would not be standing here today.
I joined the Liberal Party because we are the party which helps people to fulfil their aspirations; those opposite are just as likely to stamp them out. In my view, the best path to our collective prosperity involves giving individuals, families and businesses the freedom, opportunity, and encouragement to build and secure their own futures. That is why I am here. I want to create the best possible environment that allows people to pursue their aspirations and one that values family as the bedrock of our society—to be nurtured and protected.
Believers in big government think Canberra can and should solve every problem. I do not accept this. Government action invariably involves some concession of liberty to the state. But that concession should be limited to what is vital. Canberra simply cannot know what is best for every person and every situation. The brainpower of 22 million people, each given the freedom to create solutions for their families and communities and to create businesses which create jobs, will always yield better outcomes. Always.
When government does act, it should look to maximise choice and opportunity. Non-government alternatives are important. We need to encourage private health care, private health insurance and independent schools, not undermine them. At the same time, it is critical to have strong public health and public school systems. We need to demand excellence and achievement from both to ensure real opportunities for all Australians.
Basic fairness and compassion mean a strong social safety net is essential. But I want as few people as possible to rely on it. In particular, we need to break the nexus of intergenerational welfare dependency, a problem tragically apparent in some of our Indigenous communities and, equally tragically, not confined there. Our policies must encourage self-reliance and resilience. Social policy cannot be implemented without a strong economy. A strong economy is the ultimate form of social policy—with it comes the chance of a job and a higher standard of living; the chance to fulfil aspirations.
This brings me to the first key set of issues that I want to touch on today. This side of the House has a proud history of strong economic management. Indeed, it seems that one of our defining roles as a political party is to repair the national balance sheet and to restore a framework that encourages productivity and growth. Unfortunately, one of the challenges that will face a future coalition government will be the same challenge that faced the last one: paying off Labor’s debt. While some form of stimulus package was appropriate in response to the global financial crisis, the current government’s package was excessive and poorly targeted. As a result, present and future generations face higher taxes to pay the interest bill. At a time when our population is ageing, money will be diverted from critical health, aged care and infrastructure budgets.
At the risk of oversimplification, the main reasons why Australia has performed well to date through the global financial crisis are because Australia was in a net cash position heading into it, because our monetary policy was, by and large, appropriately managed over a sustained period by our independent Reserve Bank; because our banking and prudential system was first class; and because we had a strong bilateral trade relationship with China which enabled us to piggyback on her own massive stimulus spending. These are all achievements of this side of the House. Let there be no doubt—I am for less debt and for living within our means. I am for a strong economy.
There will always be those who use a crisis to further their own agendas. Already the government has gone beyond its mandate at the last election and significantly reregulated the labour market in a way which will smother our competitiveness and jobs growth over time. We cannot afford to repeat this mistake in our financial markets. I have long taken an interest in markets policy and regulation as a lawyer, as a policy adviser and most recently in the finance industry. A sober review is appropriate and it may be that some improvements can be made. However, a wholesale reregulation of our financial markets would undermine the companies and industries which are so fundamental to our growth. In this place I will seek to maximise the competitiveness of our economy and our productivity, not to undermine them.
One area which is critical to this is taxation policy. We need to attract foreign investment; we need to attract the best talent from offshore; and, equally importantly, we need to retain our own talent. That requires a competitive taxation system, not a populist one. We need a taxation system that is not simply a merry-go-round of money but one that promotes workforce participation and wealth creation. This is all the more critical given the projections for our population size and composition set out in the latest Intergenerational report. It is clear we need to provide incentives for people to save and to stay in the workforce longer.
We all await the release of the Henry review into taxation and the government’s response. The challenge for the government is not simply to use the Henry review as an excuse to introduce higher taxes in its bid to find new revenue, nor should it introduce new taxes which would pull the rug out from under our all-important resources sector. Each would be the wrong response and would undermine the competitiveness of our economy. More importantly, lower taxation is fundamentally the right thing. Once the basic services of government are funded, individuals are best placed to choose how they spend their money.
The second key set of issues I want to touch upon concerns innovation, a natural product of aspiration and a key to Australia’s future. Australia’s prosperity has been built on both our people and on our abundant natural wealth. However, our mineral resources are finite, and changes to our climate and water scarcity pose ongoing challenges for agriculture. Put simply, we cannot assume that our natural wealth will underpin our long-term prosperity. Our mining and farming sectors will remain critical for years to come. But now is the time for our country to invest significantly in education which drives productivity and innovation. Government needs to encourage new businesses and industries to flourish.
Innovation should also be a core plank in our strategies to address the twin challenges of energy security and climate change. Both are critical issues facing not just this country but countries all over the world. For many years Australians have led the way in medical research. There is no reason why we cannot lead the way in energy research. Indeed we are uniquely placed to develop solar, wind, geothermal, clean coal and innovative water solutions to maximise our energy independence and to reduce our impact on the environment.
Climate change is not the only area of environmental policy where action is required. As our population grows, our water supply has been and will continue to be increasingly stretched. National leadership is required. Future generations of Australians will rightly condemn us if we hide behind our federal system as an excuse for inaction.
The structure of our Federation has not kept pace with developments in water policy. To our great shame, the Murray-Darling Basin is a looming environmental catastrophe. If the states are not willing to refer their powers on water onto Canberra, a referendum will be necessary. But I do not agree with those who would use this as a Trojan Horse to centralise ever-increasing power in Canberra in other areas. While it is right to ask how our Federation can work better, we must be careful not to undermine the elaborate system of checks and balances which has sustained Australia as one of the world’s great democracies.
Energy and water security are by no means our only national security challenges. We face instability in our region and beyond. The threat of terrorism is ever present, both through traditional means and emerging threats such as cyber attacks. We must continue to invest in Australia’s defence infrastructure, but recognise that this alone is not enough. Our alliances have been critical in the past, are essential today and will continue to protect us into the future. But so too will investment in our region: in democratic structures and institutions, and in foreign aid—not just because foreign aid is morally right, but because of the huge national security benefits that it brings. Above all, we must maintain our vigilance.
I spoke earlier of families as the bedrock of our society. The changing nature of work poses particular challenges to the aspirations of families across this country. Families come in all shapes and sizes, and roles within families vary. A woman is increasingly likely to be the only, primary or co-breadwinner, whether by choice or necessity. Parents are having children later in life and then trying to balance parenting with their careers. Increasingly, grandparents are taking on more of the parenting responsibility. This creates enormous challenges. We want mothers, fathers and grandparents investing time in their children and grandchildren’s development. But we also want our best people in the workforce, adding to our productive output.
No-one has yet worked out how to be in two places at once—so there are no simple solutions. Indeed, the right solutions vary from family to family. In some cases, the right solution will be for one parent to stay at home as a full-time carer. In others, both parents will need to work or want to work. Governments should not discriminate amongst different family arrangements or put in place incentives which cause discrimination by others. It is important for our businesses to offer the flexibility necessary to allow our best and brightest to contribute both to the ongoing growth of their businesses and to the ongoing nurturing of our young.
But families are not just about parents caring for children; they are also about children caring for parents. Similar principles apply. Senior Australians built this country through their aspiration, sweat and taxes. They have a right to dignity and security. At the heart of this is flexibility and choice—giving power to older Australians and their families to determine their future according to their needs.
These are some of the national issues which drive me and which should occupy the attention of this place in the years to come. But local issues are also important to my constituents. It is tempting for federal politicians to say that local issues are not ‘our issues’. I do not accept that. I will continue to campaign to help those crying out for better community safety through closed-circuit television cameras in Prahran and more police in Ashburton. With my community, I will continue to fight state Labor’s flawed planning policies which are damaging the character of our area. In short, I will be an advocate for the people of Higgins, on local issues as well as national ones.
No-one who stands before this House does so without the support of a great many people. Let me start by thanking my wonderful team in Higgins and all of the volunteers, supporters and staff of the Liberal Party who worked so tirelessly on my campaign. I am blessed to have so many wonderful friends. I am not so foolhardy as to attempt to list them all today, but each has enriched my life and I thank them all. Some of those friends are now colleagues here and in the other place. I have valued their counsel for many years, but I have valued their friendships even more. I am excited to join them, and my other new colleagues, to strike a blow for Liberalism and good government.
Of course, it would be hard to embark on this life without the love and support of a strong family. I have both. I pay tribute to my parents, Karen and Dan O’Dwyer; and I can always count on my siblings, Kate, Tom and Nicki, to be there, through everything, and to keep it real.
I would not be here today without the love, encouragement and advice of my husband, Jon, whom I met at university 15 years ago and who shares this political passion with me. I am so happy to be on life’s journey with him.
I will never forget that politics is about people and that people can make a difference. That is why I am here. I look forward to playing my part in building an even better Australia and thank the House for its indulgence.
I would like to acknowledge and congratulate the member for Higgins on her first speech. I note that the Liberal Party’s poll ratings have improved since she replaced the previous member for Higgins and I wish her well in her important task of representing the voters of that electorate. I also want to acknowledge the contribution of the speaker before her in this debate on the second reading of the Carbon Pollution Reduction Scheme Bill 2010, the member for Wentworth. It was one of the most outstanding speeches that we have heard in this parliament in recent years, both for its courage and for its logic. That the truth on climate change is inconvenient has been famously said, but the fact that the member for Wentworth has shown this willingness to follow the truth wherever it might lead adds immeasurably to his stature as a parliamentarian.
Yesterday was the one-year anniversary of Victoria’s Black Saturday bushfires—a moving outpouring of emotion and grief at unimaginable horror and loss: 173 lives lost, thousands of homes and properties destroyed, the work and the memories of a lifetime vanished, reduced to rubble. It was also a great testimony to the power of the human spirit to endure and continue. Black Saturday was the hottest day that many parts of Victoria have ever experienced—46.4 degrees Celsius in Melbourne. It happened following a decade of drought. It happened at end of the hottest decade Australia has ever witnessed—and each successive decade in Australia in recent times has been warmer than the last. In the words of the old Buffalo Springfield song: ‘There’s something happening here.’
Climate change is not some vague scientific theory about what might happen in 100 years time; it is a reality happening right here, right now, in Australia. Bob Dylan sang, ‘The times they are a-changin’,’ and they are. He also sang, ‘You better start swimmin’ or you’ll sink like a stone.’ That is true too. The impacts of global warming are serious and they are worldwide. In Canada, the Winter Olympics have run into problems because a very warm winter has meant little or no snow cover on mountains where events are scheduled to be held. Training sessions for competitors have been cut back so as not to damage the snow that is there. It is not just the melting snow of the North Pole and Mount Kilimanjaro and the snowfields; glaciers are melting too. This will cause floods in places like Tibet, Bangladesh and China, displacing millions of people, causing boat people and refugees. It will also cause food shortages once the water has gone. We will also see food shortages arising from drought. We can already see it here in the Murray-Darling Basin. We now hand out billions of dollars in taxpayer assistance to farmers every year on account of these so-called exceptional circumstances, which just keep happening.
If we do not do act now, we will leave to our children and to their children a bleak future with sea level rises and food and water shortages—a future regularly punctuated by extreme weather events such as cyclones, droughts and firestorms like the Black Saturday inferno. So this clutching at straws that we have seen in recent times, in the face of the considered opinion of such moderate, cautious and well-informed agencies as the CSIRO and the Bureau of Meteorology—to say nothing of the thousands of scientists around the world who have studied the ice cores, studied the changing composition of the atmosphere and studied the planet’s temperature, rainfall and climate records—is utterly irresponsible. It is recklessness. It is indifference towards the future. To say that all the work we have seen does not mean anything is just wilful blindness. It is a terrible sell-out of our obligation to future generations. The only explanation I can offer for it is the saying that ‘it is pretty hard to get a man to see something when his pay packet depends on his not seeing it’.
As an example of the kind of thinking I am concerned about, I want to bring to the attention of the parliament a letter, dated 23 November last year, which I and, I assume, every federal MP received from True Energy Australia Pty Ltd, opposing the Carbon Pollution Reduction Scheme—that is to say, opposing the bills we are now debating. In the letter, True Energy says it is a subsidiary of CLP, which is listed in Hong Kong, and it is a global investor with significant investments throughout the Asia-Pacific and a market capitalisation of $18 billion. The letter states that True Energy’s parent company, CLP, owns the 1,480 megawatt coal fired Yallourn power station. Disturbingly, the letter claims that the federal government is in danger of breaking an agreement with China, exposing it to a claim for many hundreds of millions of dollars. The letter claims that the Australia-Hong Kong bilateral investment treaty obligates the federal government to ensure that investments made in good faith by Hong Kong companies are properly treated. The letter goes on to say that, consequently, if the CPRS results in a major devaluation of a Hong Kong investment—such as the 1,480 megawatt coal-fired Yallourn power station owned by True Energy’s parent, CLP—the investor would have rights to take legal action against the Australian government to recoup losses, which would be significant.
I do not believe this is legally correct; but, if it is, it is an outrageous fetter on Australian sovereignty. We should not be entering into agreements which stop us taking action to protect our environment or limit us taking action to pass on to our kids an Australia that is in as good shape as the Australia that our parents gave to us. This kind of bullying by foreign companies displays a complete lack of concern for Australia’s national interest and it shows the downside of allowing Australia’s energy companies to be foreign owned. Energy companies have no business complaining that action on climate change might impact on their bottom line. In the first place, in the design of this legislation—both in its initial version and, even more so, following negotiations with the opposition last year—the government has gone out of its way to cushion energy companies from the impact of the change and provide a transitional path to a carbon constrained economy. Secondly, these companies have been on notice for years that the world needs to and wants to move away from fossil fuels. The previous Labor government announced a policy to cut carbon emissions. The Kyoto protocol was adopted way back in 1997. Energy companies have been on notice for years that this was coming. Warren Buffett said: ‘When the tide goes out you can see who’s been swimming naked’—and that applies here. Energy companies have indeed been swimming naked—failing to move to renewable energy sources—and it is high time they put on some clothes.
The opposition has reneged on its pre 2007 election position that it would bring in a carbon trading scheme, and now says it will not support any type of carbon trading scheme. All those opposite, except the member for Wentworth, have forgotten about this commitment. The new Leader of the Opposition has produced an alternative plan, but this plan will not cut carbon emissions. It has no cap. It has no enforcement arrangements. It is a recipe for increasing carbon emissions, when we need to reduce them. The Leader of the Opposition is fiddling while Australia and the planet burns. His policy is all about delivering to those in the Liberal Party room—that climate sceptic tank—who voted for him. The Leader of the Opposition will never seriously tackle global warming. His heart is just not in it.
There has been some polling released today which has been reported as reflecting support for the Leader of the Opposition’s position. Let me make two observations about this polling. Firstly, it shows that the emissions trading scheme is supported by 56 per cent of those polled. So there is a clear majority who continue to support the bills that we are debating now. Furthermore, when people were asked to choose between the approach of the Prime Minister and the approach of the Leader of the Opposition to climate change, 43 per cent preferred the Prime Minister’s approach and 30 per cent preferred the Leader of the Opposition’s approach. So those who would like us to become a nation of climate sceptics need not break out the champagne just yet.
Secondly, it is perhaps true that the climate change cause has taken a bit of a hit in the wake of the Copenhagen talks—and I will have a bit more to say about those talks presently. It is foreseeable that some people will ask the question: ‘Why should we take action if other countries aren’t taking action themselves?’ It is a reasonable question, but ultimately it is a counsel of despair. If we take the view that we are not going to do anything until everybody else does, then the planet will go to hell in a hand basket. This would be a monumental failure of leadership; it would be a monumental abdication of our responsibility as members of this parliament. I think the time has come for people of goodwill around the world to think about penalties for those nations which refuse to pull their weight over global warming. I will leave that discussion for another occasion. But, in the first place, we have to pull our weight; we have to come to this discussion with clean hands. And this means starting to reduce our greenhouse emissions, as many nations in Europe and around the world are doing.
I acknowledge that Copenhagen was a failure. There is no purpose served by trying to pretend otherwise. As Mark Lynas said in the Guardian, after all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back and drained away. Mark Lynas was attached to one of the delegations and present during the behind closed doors negotiations at Copenhagen. He has reported on what happened as follows, and I think it is something that the House ought to be cognisant of. He said:
China wrecked the talks, intentionally humiliated Barack Obama and insisted on an awful ‘deal’ so Western leaders would walk away carrying the blame. …
China’s strategy was simple: block the open negotiations for two weeks and then ensure that the closed-door deal made it look as if the West had failed the world’s poor once again.
Mr Lynas said Sudan behaved at the talks as a puppet of China:
…one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes and then left its proxies to savage it in public.
Mr Lynas said that at late-night meetings as the heads of state from two dozen countries met behind closed doors Barack Obama was present for hours with Gordon Brown and other prime ministers, including the Danish Prime Minister, who chaired the talks, and UN Secretary-General Ban Ki-moon. Only about 50 or 60 people were in the room. The Chinese Premier, Wen Jinbao, did not attend the meetings personally, instead sending a second-tier Foreign Ministry official to sit opposite Obama. Mr Lynas said the diplomatic snub was obvious and brutal, as were the practical consequences. Several times during the session the world’s most powerful heads of state were forced to wait around while the Chinese delegate went off to make telephone calls to his superiors. Mr Lynas said:
It was China’s representative who insisted that industrialised country targets previously agreed as an 80 per cent cut by 2050, very serious targets, be taken out of the deal. ‘Why can’t we even mention our own targets,’ asked German Chancellor Angela Merkel.
Brazil’s representative also pointed out that this position was illogical. Why should rich countries not announce this unilateral cut? But the Chinese delegate blocked it. Mark Lynas said this is because China did not want the talks to succeed and wanted the rich countries to get the blame for Copenhagen’s lack of ambition. He said:
China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking year in global emissions, essential to restrain temperatures to two degrees Celsius, was removed and replaced by woolly language suggesting that emissions should peak ‘as soon as possible’. The long-term target, of global 50 per cent cuts by 2050, was also excised.
Mark Lynas said no-one else, perhaps with the exception of India and Saudi Arabia, wanted this to happen. The Chinese delegate also moved to remove the 1.5 degrees Celsius target so beloved of the small island states and low-lying nations who have most to lose from rising seas. He said:
President Nasheed of the Maldives, supported by the British Prime Minister Gordon Brown, fought valiantly to save this crucial number. ‘How can you ask my country to go extinct?’ demanded President Nasheed. The Chinese delegate feigned great offence—and the number stayed, but surrounded by language which makes it all but meaningless.
It is clear to me that the talks failed to achieve anything like the action that is needed to stop the earth’s temperature from rising to dangerous levels with unpredictable consequences and that the dynamics at work which are preventing global agreement need to be shifted or else the crippling impasse at Copenhagen will continue indefinitely.
That is no excuse for Australia to sit on its hands now. Previously when the Howard government was sitting on its hands and refusing to act on climate change the states stepped up to fill the vacuum and started to put in place their own arrangements and mechanisms. I think this will happen again if the Senate insists on blocking action to reduce carbon emissions. A vacuum will be created and the states will move to fill it, as they did before. It is not just nature that abhors a vacuum; politicians do too. The states can either move in a regulatory direction such as requiring new buildings to install solar panels and things like that—and the opposition could hardly complain about this given that they have said that they prefer direct government action to the market—or the states may act as before to introduce their own emissions trading regimes, which they have suspended and put on hold since the election of the federal Labor government. The opposition would only have itself to blame should this occur.
People complain that this creates costs for business, but no-one has ever claimed that action to tackle global heating would be cost free. What we have said is that Nicholas Stern is right: the cost of inaction will exceed the cost of action. At present the costs of inaction are being borne randomly and unfairly. They fall on the victims of bushfires and the victims of drought. They fall on the tourism industry of the Great Barrier Reef and the snowfields. In particular they fall on the next generation and the one after that. These costs need to be shared fairly, and that is what carbon trading is all about. I do not think anyone sees carbon trading as a silver bullet to solve all the problems but rather as part of a suite of measures necessary to tackle a complicated, deep-rooted global problem. These measures include the increased renewable energy target and funding for research to reduce emissions from cars and from coal and from agriculture. I want to put in a plug here for energy efficiency. It does not get as much attention as some of the other initiatives but there is a lot of potential to reduce carbon emissions through the more efficient use of energy in housing and in transport. One of the reasons I will be voting for these bills is because I believe putting a price on carbon will help us drive energy efficiency. I urge policymakers in both government and business to drive energy efficiency and tackle the culture of energy waste and profligacy which has sprung up in recent decades.
I believe that future generations are going to judge us on our performance over this issue. If we fail to make the difficult decisions and succumb to political opportunism and fear campaigns, I fear that we will not be given very high marks. I believe we have it in our capacity to do better, and I urge the House to support this legislation.
I rise, I think for the third time in the last 12 months, to speak in the House on the complex issue of climate change. Today I rise to support the Carbon Pollution Reduction Scheme Bill 2010 and associated bills. I repeat what I have said on previous occasions: this side of the House is committed to taking action on climate change. This side of the House believes that it is not only in our immediate interest but in the interests of those to whom we intend to bequeath our standards of living and our Australia in the future. It is one of those things that we ought not take for granted. As parents—and I imagine that there are many parents up in the galleries—we do want the best for our children. We see that in education and in just about every aspect of our lives. As parents we want to bequeath to our kids the same standards, if not better, than those we grew up with. That is a natural position for us as parents to take—maybe it is magnified in my case because I am a grandparent. We are looking for the betterment of the environment that we wish to leave to our families, to our future generations.
That is why this is a such a significant debate in this House. It is significant because it is something that we have already agreed to. As everyone here, including those who are in the galleries, are aware, it is not that long ago that a unanimous position was adopted that both the opposition and the government alike would work with the science of climate change and come up with a responsible and efficient mechanism by which we could approach it. I grant you, Mr Deputy Speaker, that it was not necessarily the total solution, but it was certainly a positive direction in which we could move towards ameliorating the effects of climate change to protect future generations. We did that in company with the opposition, through the then Leader of the Opposition, Mr Turnbull. As a matter of fact, we went on to have a series of negotiations with the opposition. Throughout these negotiations one of the crucial things was that the opposition agreed to put various amendments on the table—a series of amendments. As you would recall, Mr Deputy Speaker, we had already introduced our CPRS legislation and the opposition wanted a series of amendments.
Those discussions took place over a period of around six to eight weeks, and, wouldn’t you know it? We on this side of the House agreed with every single one of those amendments. In good faith bargaining you would say, ‘That’s a deal.’ But, no, we have come back here to find that members on the other side of the chamber now want to change not only what the deal was but also the rationale behind it. They disagreed, to the point that they changed leaders, that they went into a bona fide set of negotiations with us with a view to entering into an agreement if we could reach an accommodation on their specific amendments to the CPRS legislation.
As I said, we had actually reached an agreement. For some of us, I think, there might be certain views on whether our agreement should have been on all of the amendments. Nevertheless, we found an agreement through good-faith bargaining with the other side of this chamber to work on those differences, and we agreed to a package which we say was a solution by which the CPRS could go forward. What do we see now? Scurrying around on the other side, as they want to slink off and disagree with the whole concept.
I do not know who the joke was played on, whether it was on this side of the House or on the Australian community, but these are the people who went to the 2007 election, under John Howard, with the notion for an energy trading system. That was one of their policies. The only difference they had with us on that, except in some of the detail, was that they wanted their policy introduced by 2012, whereas we had a position that ours must be introduced by 2010. During the course of the debate, they got to a midway point where they said they would agree to an energy trading system provided it could be introduced by 2011. There was always going be that difference.
This is the same mob who come in here today and want to argue against the CPRS. There will be a litany of reasons as to why they oppose it. What this mechanism will do is put a price on carbon, which will allow the market to determine the price. I would have thought that having the market involved in determining the price of carbon would be appealing to the general philosophy of the Liberals. Clearly, in this instance, it is not. The reason it is not is that they were opposed outright to having any form of price put on carbon, opposed outright to having any form of ETS established, because they wanted to change the policies when they changed leaders of the party.
As I have said, this is a very significant debate. It is a debate not just about Australia here and now but about Australia in the future. Either we stand and be counted and make a difference or we invite the question: why are we here? I listened intently to the first speech of the member for Higgins. Despite the fact that we might have some differences in political outlook, I gathered from her speech, and I compliment her on it, that she is here to make a difference. I would think it goes without saying that every member of this chamber is in politics in order to make a difference. There cannot be any greater issue that we need to pursue at this stage—people have referred to it as the greatest moral issue of the time—than looking to the protection of our environment and address the effects of climate change. This is something that we need to focus on in building this country and setting a path for the future. To do that we need a solid suite of policies. At the centre of that is what was identified some time ago when the Stern report was brought down—that is, having an ETS established, one of the most efficient forms of regulation, putting a price on carbon and being able to generate the various low-carbon-emitting industries and technologies that flow from having a price on carbon.
I have had the opportunity of working for renewable energy companies in the past. I am still in contact with those companies now. I know their frustration in not having a price set on carbon and in not being able to commercialise their technologies for the betterment of this country. These are things that must be taken into account.