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senate vote 2011-11-08#1
Edited by
mackay staff
on
2014-01-24 12:32:43
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Title
Bills — Clean Energy Bill 2011, Clean Energy (Consequential Amendments) Bill 2011, Clean Energy (Income Tax Rates Amendments) Bill 2011, Clean Energy (Household Assistance Amendments) Bill 2011, Clean Energy (Tax Laws Amendments) Bill 2011, Clean Energy (Fuel Tax Legislation Amendment) Bill 2011, Clean Energy (Customs Tariff Amendment) Bill 2011, Clean Energy (Excise Tariff Legislation Amendment) Bill 2011, Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment Bill 2011, Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2011, Clean Energy (Unit Shortfall Charge — General) Bill 2011, Clean Energy (Unit Issue Charge — Auctions) Bill 2011, Clean Energy (Unit Issue Charge — Fixed Charge) Bill 2011, Clean Energy (International Unit Surrender Charge) Bill 2011, Clean Energy (Charges — Customs) Bill 2011, Clean Energy (Charges — Excise) Bill 2011, Clean Energy Regulator Bill 2011, Climate Change Authority Bill 2011; in Committee- Bills — Clean Energy Bill 2011 and related bills; In Committee
Description
<p class="speaker">Stephen Parry</p><p>The committee is considering the Clean Energy Bill 2011 and amendments (4), (10) to (14) and (29) on sheet 7165 moved by Senator Xenophon.</p> <p class="speaker">Kate Lundy</p>- <p class="speaker">Barnaby Joyce</p>
- <p>Mr Chairman, I seek leave to make a statement while the bells are ringing.</p>
- <p>Leave not granted.</p>
- <p>The committee divided [12:12]</p>
- <p>(The Chairman-Senator Parry)</p>
- <p></p>
- <p></p>
- <p>Question agreed to.</p>
- <p class="speaker">Stephen Parry</p>
- <p>The question now is that the motion moved by Senator Abetz for an extension of time be agreed to.</p>
- <p>The committee divided. [12:19]</p>
- <p>(The Chairman-Senator Parry)</p>
- <p></p>
- <p></p>
- <p>Question negatived.</p>
- <p>The question now is that amendments (1) and (2) on sheet 7173, standing in the name of Senator Birmingham, on behalf of the opposition, and Senator Xenophon, be agreed to.</p>
- <p>The committee divided. [12:25]</p>
- <p>(The Chairman-Senator Parry)</p>
- <p></p>
- <p></p>
- <p>Question negatived.</p>
- <p>The question is that the Clean Energy Bill 2011 and 17 associated bills be agreed to without amendments or requests for amendments.</p>
- <p>The committee divided. [12:33]</p>
- <p>(The Chairman-Senator Parry)</p>
- <p></p>
- <p></p>
- <p>Question agreed to. Bills agreed to.</p>
- <p>Bills reported without amendments.</p>
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<p>I understand that towards the close of business last night Senator Xenophon moved these amendments and I would like to respond on behalf of the government. The government opposes these amendments because they set out a less effective, less efficient and more expensive way of reducing greenhouse gas emissions in the electricity sector. The government and other members of the Multi-Party Climate Change Committee did consider a range of options to price carbon, including an intensity based approach. The government also consulted with the business community and other stakeholders on the viability of such a model in light of a set of agreed principles for pricing carbon. The government, the business community, the Multi-Party Climate Change Committee members and other stakeholders rejected this approach.</p><p>The amendments would weaken incentives to reduce emissions through energy efficiency. Treasury modelling based on conservative assumptions estimates that responding to carbon signals in electricity prices accounts for almost 50 per cent of abatement from the electricity sector to 2020. The response in the form of reduced electricity use delivers 60 million tonnes of emission reductions between 2013 and 2020. Conversely, these amendments provide even weaker incentives for households and businesses to reduce emissions than the amendments proposed under the CPRS. It reduces the effectiveness of the carbon price and requires that other more expensive abatement options must be pursued in instead, including greater purchases of international permits.</p><p>The amendments would entail a high budgetary cost. If this option were pursued it would require other initiatives to be cut back. Based on our very preliminary estimates, the effect of the proposed part 8A is to allocate around 2.5 billion permits to electricity generators over the next 19 years with a potential total value in today's dollars of over $80 billion. The amendment would lock in benchmarks by which carbon units are allocated to generators, ignoring real world uncertainties over future national targets and future electricity demand. This would likely render these benchmarks entirely inappropriate. It is for these reasons that the government is opposing these amendments proposed by Senator Xenophon.</p> <p class="speaker">Nick Xenophon</p><p>I completely repudiate what the government has said in relation to this. Let us put the process into perspective. Part of this process is that this debate is going to be guillotined in less than an hour, which is completely unsatisfactory. The so-called Multi-Party Climate Change Committee was a committee that, by choice, the coalition did not participate in. I tried to get on it but was not allowed to participate in it. I wonder how broad it was in terms of seeking the best possible abatement solutions. The work done by Frontier Economics, using the same model as that used by Treasury, indicates that over 10 years this scheme, with less churn, less revenue burn and less inefficiency, would actually save $47 billion over 10 years. These are people that undertake work in the real world. They deal with governments of both political persuasions. They deal with industry. They deal with NGOs. I believe their research is impeccable. It demonstrates that what the government is proposing to do involves an enormous amount of churn. It involves putting a price on all carbon rather than a price above a baseline that you are seeking to achieve. It creates enormous inefficiencies. It creates distortions in our tax system. The intensity approach is equivalent to introducing a tax on emissions but providing a targeted reduction in a production or company tax. The carbon tax that is proposed here introduces a distortion and it will be a drag on the economy with little environmental gain. I maintain the position that this is a much more effective and efficient way of dealing with it. The so-called Multi-Party Climate Change Committee did not adequately look at the Frontier approach, an alternative approach that would have delivered a much better environmental outcome at a much lower cost to industry and to taxpayers.</p> <p class="speaker">Bridget McKenzie</p><p>I have not had a chance to contribute to this debate. I am very conscious of time and the guillotine that is coming. I have a couple of questions that I want to ask on the bills before us. Parliamentary Secretary, will regions that are significantly reliant on dairy farming—we have heard over the course of the debate about the impact on dairy farmers—be able to access the regional structural assistance package?</p> <p class="speaker">Kate Lundy</p><p>The carbon price impact on dairy prices is projected to be 0.4 per cent, reflecting the low emissions intensity of dairy processing and the impact of the exclusion of agricultural emissions from the scheme. Targeted assistance under the $150 million Clean Technology Food and Foundries Investment Program is the appropriate vehicle for addressing carbon cost issues in the dairy supply chain. I understand these issues were covered to some degree yesterday. I am very happy to continue with my briefing notes, so please indicate if you would like further information.</p> <p class="speaker">Bridget McKenzie</p><p>I think the modelling done by the dairy industry actually suggests that individual dairy farmers at the farm gate will be impacted to the tune of between $5,000 and $7,000 per family per farm, because it is energy intensive farming. It is not that the carbon tax is being applied to the act of farming; it is the electricity that farmers have to use to get the milk out of the cows, basically, and into the trucks and off to the processor and then to take the moisture out of it and get it onto the docks as one of our major exports, particularly in my home state of Victoria. I am not sure whether the food and foundries program deals with the socioeconomic impacts that the carbon tax will have on dairy farming communities, particularly, for instance, in South Gippsland, where I come from.</p><p>Given that, and the industry itself has been a loud advocate, I would like to draw the minister's attention to division 5 and the Productivity Commission inquiries that are outlined that will have a look at particular industries and aspects of our economy that may be adversely affected, particularly those industries that are emissions intensive and trade exposed. I would argue, and so would the industry and so, I am sure, would the VFF and the NFF, that dairy is such an industry. Is there any provision within any of the bills for the impact of the tax on this industry to be reviewed prior to 30 June 2015, which seems to be, from my reading, the first point at which this can be looked at?</p> <p class="speaker">Kate Lundy</p><p>Thank you for that question. As I think has been stated on numerous occasions, the Climate Change Authority will have the capacity to look at what is happening in the various markets from time to time. So that would be the appropriate place, were any such observations made and the case for a review built. I am happy to give you a little more information, given that you raised farm costs. released a report in June 2011 that found electricity accounts were about 2.3 per cent of total dairy farm cash costs. Treasury modelling indicates that a 10 per cent increase in electricity would represent an increase of around 0.2 per cent in total farm cash costs. That is not dissimilar to other industries that are not eligible for jobs and competitiveness assistance. However, estimates of the impact of the carbon price on dairy farms include increases in fertiliser costs, but fertilisers such as urea are trade exposed and will be assisted under the Jobs and Competitiveness Program. So there is an opportunity there.</p> <p class="speaker">Bridget McKenzie</p><p>I have two more quick questions. Minister, how many workers in the Latrobe Valley will lose their jobs as a result of the carbon tax?</p> <p class="speaker">Kate Lundy</p><p>That is just a ridiculous question. You are obviously trying to move away from sensible questions on to making political statements like this. I believe that industry generally in Australia will in fact be strengthened—</p> <p class="speaker">Bridget McKenzie</p><p>A point of clarification from you, Mr Chairman. My voice raised at the end of the statement, indicating it was a question, and I am sure <i>Hansard</i> will reflect that and there will be a question mark after it. It was actually a question, not a comment.</p> <p class="speaker">Stephen Parry</p><p>We will take that as a question.</p> <p class="speaker">Kate Lundy</p><p>My previous statement stands. I think a political point is being made. I believe that these provisions and the implementation of the clean energy bills will strengthen all of these industries, because they will put Australia at the forefront—</p> <p class="speaker">Michael Ronaldson</p><p>So I take it from this there are job losses.</p> <p class="speaker">Kate Lundy</p><p>No, you cannot say there are job losses. You cannot just make it up in the course of the debate. The issue here is that all of these measures, as the opposition well know, will strengthen industry right across Australia, including preparing us for an economy that has low emissions. Scoff as they may, the opposition know full well that the clean energy bills that the government is putting forward provide Australia the opportunity to put our best foot forward. We will be able to achieve low pollution and the targets that we have discussed over many years now.</p> <p class="speaker">Cory Bernardi</p><p>You went to the last election opposed to this.</p> <p class="speaker">Kate Lundy</p><p>The other point I would like to make when the opposition stops interjecting is that this debate has had a significant work-out for many years now. Many of these issues have been traversed in great detail. I will certainly do my best to respond to specific questions about the impact on the dairy industry. I think I demonstrated that, but questions like this just take you back down to the bottom of the barrel. It would be nice if we allowed Senator Xenophon some time to debate his amendments this morning as well. I know he has many. I am prepared to respond to his amendments and I presumed he would be given the opportunity by the opposition to proceed through those forthwith, given the opposition has no more amendments.</p> <p class="speaker">Bridget McKenzie</p><p>Maybe I can clarify this for the minister and use broader language, in fact the same language that is in <i>Securing a clean energy </i><i>future</i>, to describe the sorts of impacts of the carbon tax that I am talking about. Rather than calling them job losses, maybe we will call them 'socioeconomic impacts'. Could the minister outline the modelling, projections or thought that has been given to the socioeconomic impacts of the carbon tax on the Latrobe Valley? Well, you have answered that as best you can, minister, but I would ask the same question about the Goulburn Valley in Victoria. It is a region of Victoria heavily reliant on horticultural production and obviously food processing makes up a key component of the local economy.</p> <p class="speaker">Kate Lundy</p><p>I have a reference here from the Treasury modelling that I would like to read to you, because it makes specific reference to the Latrobe Valley. It reads:</p><p class="italic">The Latrobe Valley remains an important energy exporting region, even as existing coal plant is retired. The Latrobe Valley has significant transmission and distribution networks, making it ideal for investment in new and cleaner energy sources. Both modellers show more generation capacity located in the Latrobe Valley in 2050 than today, despite the eventual retirement of all existing emission-intensive brown coal generators. However, the results of the modellers vary considerably in the timing of retirements, and the composition and timing of new generation capacity.</p><p>That underlines my general statement that there are strong prospects here. The characteristics and the context of these changes through the Clean Energy Bill and the related legislation augur positively for the long-term future of Australia as a low pollution economy. It is a transition phase and one in which these bills are an appropriate first step.</p> <p class="speaker">Bridget McKenzie</p><p>I reiterate that my question was about the Goulburn Valley.</p> <p class="speaker">Kate Lundy</p><p>I will see if I can find a specific reference to the Goulburn Valley. If there is one, I will ask the minister to pass that to you.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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