CARBON POLLUTION REDUCTION SCHEME BILL 2009 [NO.2]
October 28, 2009
Mr CHESTER (Gippsland) (8.21 pm) — I rise to speak on the Carbon Pollution Reduction Scheme Bill 2009 [No. 2] and cognate bills. In joining the debate I feel compelled to state my ongoing disappointment with the government’s handling of this issue. I agree with one thing said by the previous speaker, the member for Lowe, and that is that this is a very serious and very complex issue. But I fear that the government is pursuing a political strategy rather than an environmental strategy. Everything from the timing of the proposed legislation before the House to the comments of the Prime Minister and the ministers themselves is about achieving some form of political advantage on the back of community concerns over the forecast impacts of climate change. I fear that the government has become so obsessed with its political strategy that it has turned its back on Australia’s national interest.
I will be supporting the amendments being put forward by the coalition and the negotiations which are currently underway with the Minister for Climate Change and Water in an attempt to try to minimise the damage that this scheme can do to the Australian economy. I make the point, however, that it makes absolutely no sense whatsoever to pursue this legislation before we have a clear understanding of what action, if any, our major trading partners and the rest of the world are prepared to take on the environmental challenges we are faced with. I fear that without a global agreement we are voting to give foreign companies a competitive advantage over our own companies. We are voting for more expensive power and transport costs. We are voting for more expensive food. We are voting to increase costs for all our small businesses. We are voting for a massive new tax on every part of our lives.
I believe the government has failed to make the case and answer some of the most basic questions in relation to the CPRS. It has not come clean with the Australian public and been honest about how much extra it is going to cost to build a house in a new CPRS environment.
How many jobs in regional areas will be affected by this legislation? How does Australia’s cutting its emissions without any global consensus actually achieve any global environmental outcomes? I fear that the government has developed a strategy for spinning this issue to the broader Australian public, but it has not trusted the Australian public with a full explanation of the complexity of this scheme. I appreciate that it is a very complex scheme, but the government has not even tried to explain it in clear language, and in fact I think it has embarked on a course of deliberately hoodwinking the Australian public into believing that this is the answer to their concerns about climate change. The government has failed to explain to the Australian public how this legislation threatens their job security without achieving, as I said before, significant global environmental benefits.
As Australians have come to understand this legislation, it has been a bit like when you leave a prawn out in the sun. The prawn looks fine at first, but when you leave it out there for a bit longer it starts to smell. This legislation is a bit like that. It looks fine at first, but the more you look at the scheme the more it starts to stink.
I think the Australian public is just starting to understand now that there is a lot more to the CPRS legislation than originally met their eyes. My concern is that the government has embarked on this strategy, deliberately taking advantage of the goodwill of the Australian public. There is goodwill out there to try to take action for sustainable environmental management, but I do not believe that the government has taken the Australian public into its confidence and explained exactly what the impacts of the scheme will be.
My disappointment with the bills before the House and the government’s strategies is consistent with the views of many Gippslanders who have contacted my office. To begin with, the government has not been honest about how Australia’s setting a target of a five per cent reduction in CO2, when its total emissions are 1.4 per cent of total global emissions, is going to save the Great Barrier Reef and Kakadu National Park, as the Prime Minister quite often states in this place. How does Australia, when we are talking about a five per cent reduction of a 1.4 per cent total, achieve what the Prime Minister refers to as such a massive environmental achievement? It is an enormous con and it does not stand up to any scrutiny whatsoever. The member for Mackellar was right earlier this evening when she described it as a hoax. It is a cruel hoax and it is a betrayal of the goodwill of the Australian public. There is support, as I said, for action on climate change, but Australians are being conned into believing that this is the answer. There is no Australian solution to climate change in isolation. There needs to be a global commitment.
Another disappointment I have is that the government has not told the Australian public what the CPRS will cost in the impacts on each region. That is one of the great frustrations for the people of my electorate, particularly the Latrobe Valley, where the absence of any regional impact statement has made it almost impossible for the community to get an understanding of the cost-benefit ratio of this legislation. My electorate is one of the most exposed to this policy of any community in Australia—perhaps even the most exposed when you consider the existence of the Latrobe Valley brown coal power generators, the oil and gas industry, quite a large dairy industry and the Macalister Irrigation District. The power industry in the Latrobe Valley is the most important industry to my community bar none. I have previously informed the House that the Latrobe City Council has commissioned its own analysis, an independent report, on the economic importance of the Latrobe Valley coal and electricity industries.
The report was prepared last year and showed that the coal and electricity sectors provide $802 million per year or 21.2 per cent of the gross regional product of the Latrobe Valley. There are 125 people employed in the coalmining sector and 1,705 people employed in the electricity supply sector. The flow-on impacts or flow-on benefits from these industries provide enormous opportunities for private contractors and the overall wealth of the Gippsland Latrobe Valley region and the broader Victorian economy.
The broader Gippsland impacts could be enormous if industries in my region are disadvantaged as a result of the Carbon Pollution Reduction Scheme. I fear that several thousand jobs will be at risk in my electorate over the next 10 to 15 years under this scheme. Unfortunately, that is my back-of-the envelope assessment because the government, as I said, has refused to be honest with the people of Gippsland and actually undertake the modelling and let us know the costs and benefits of its plans.
We had the Australian Chamber of Commerce and Industry’s report earlier this year, which found that rural and regional areas will be adversely affected and could lead to increased urbanisation. It was interesting when the Treasurer was in here before speaking about the support from business.
The Australian Chamber of Commerce and Industry put out a statement at the same time as it released its report in June this year. The organisation represents some 280,000 small and medium sized enterprises. The statement said:
The study argues that SMEs — small and medium sized enterprises— particularly those involved in manufacturing, face prices set in international markets due to import price parity. As a consequence, trade-exposed SMEs have limited opportunities to pass the costs on to their customers, but most are not eligible for assistance under the proposed CPRS transition package. Increases in energy and transport costs will impact directly on SME employment and profitability … the study finds that the CPRS in its current form will generate additional costs that would erode firm profitability between 4 and 7 per cent on average.
The Treasurer likes to tell us that businesses would not face significant impacts because they are not among those large emitters. But there you have the Australian Chamber of Commerce and Industry indicating a drop in profitability of between four per cent and seven per cent, which the government would know, if anyone on their side actually ran a business, is a very significant concern for them indeed. The New South Wales government tabled a report which found that regional areas could have a 20 per cent decline in economic activity.
So there are some of the reports that have looked at the impacts on rural and regional communities of the CPRS legislation before the House. In my electorate we have key industries that will be impacted directly by the CPRS, including the electricity generation, the dairy industry and the oil and gas activities in Bass Strait. These are the jobs that we have now. I take up the contribution from some speakers on the government side who have suggested that there are thousands of new jobs to be created. Well, Gippslanders would rather have the jobs they have in hand right now than some airy-fairy promise about jobs which may come down the track. There are major plans for expansion of the gas production in Bass Strait, but the industry has several concerns with how it will be affected under the government’s plans. Some of those concerns the government has failed to address, which the industry has brought to my attention, include the fact that, in the absence of the details, it is not possible for the industry to have clarity as to the eligibility or levels of assistance included in the scheme under debate.Therefore, it is not possible to have any confidence that the competitiveness of Australian based industry will be maintained relative to our international competitors.
In terms of the treatment of the emissions-intensive trade-exposed industries, one of the consequences of the government’s proposed two tiers of assistance of 60 and 90 per cent is that the Australian emissions intensive trade-exposed industries will bear costs associated with the CPRS that are not borne by our international competitors. That will result in the potential for the Australian industries being priced out of the global market. Keep in mind the gas industry is trading into a global market and some trade exposed industries may not qualify for any assistance whatsoever. It does make a mockery of the Australian Labor Party’s 2007 election commitment to:
Ensure that Australia’s international competitiveness is not compromised by Australia’s response to climate change [and to] Ensure that Australian operations of emissions-intensive trade-exposed firms are not disadvantaged by emissions trading.
Clearly the oil and gas industry is one which has grave concerns about whether the government is true to its election promise in that regard. I do recognise that there could be future opportunities in my electorate related to the opportunity for renewable energy technology, clean coal and capture and storage. But these are jobs in the future which may or may not develop as the areas of technology are developed.
There are real concerns in the Latrobe Valleyregion, for example, regarding clean coal and capture and storage: we are talking about decades down the track, rather than the jobs which are just around the corner. We would look at an initiative such as wind energy, which has been the subject of much debate throughout the broader Gippsland region, and there have been constant calls from the community for more control for local communities to have their say on the siting of what is an industrial activity on agricultural land.
Given the seriousness of the issues before the House, you would have thought we would have had a very mature level of debate in this place, but many times in the past six months I have been disappointed with the juvenile level of debate and the attempts to typecast members as either true believers or as climate change sceptics. This is a place where I believe there is room for robust debate and for dissent on issues of significance to the Australian economy and the Australian community in general. But the government has been deliberately divisive in the way it has treated the whole issue of the emissions trading scheme and climate change in general. We have seen the propaganda advertising campaigns of last year which have been designed to scare people, particularly children, and it does no credit to the Prime Minister or his government that it embarked on this course, which I believe is a political strategy much more than an environmental strategy.
Not for a second do I want anyone to believe I am anything other than a committed environmentalist; I am very much a pragmatic and practical environmentalist. I am a member of Landcare and Watermark—a group committed to sustaining the Gippsland Lakes and protecting our local waterways. I believe in practical environmental work, rather than some of the posturing we have seen from members opposite as they lecture us on what is appropriate in our communities. It is ironic that we are having this debate on the environmental future of our nation when, at the same time, the government has cut funding to the professional facilitators involved in the Landcare organisation. So I am one who believes in sustainable management of the environment, and there is not a single person in Gippsland who will disagree with me about the need for practical environmental measures. But, as I said earlier, I believe this is more of a political strategy being driven by the government than an environmental strategy.
The CPRS before the House poses a far greater risk to the future of Australian agriculture than much of the climate change forecasts we have talked about. I certainly support efforts by the coalition to have agriculture excluded and recognise the opportunities for future abatement, which will have great potential for our rural sectors in the future. I have said previously that I was disappointed with the way the government has sought to divide our nation in its treatment of the CPRS legislation and by its constant attacks on people who raise any concerns about the CPRS. It really is driving a wedge between Australians who are instinctively uncomfortable with some of the extreme green religion and doomsday scenarios that are out there. There are many people in my electorate who are committed to working hard to protect the environment, they are doing the work right now on the ground, and I am frustrated by the way the government has sought to typecast people as believers or sceptics when we have so many people who are prepared to volunteer their time and effort to help create a sustainable environment in our own electorates.
Gippsland is at the pointy end of this debate. It is one of the region’s most exposed in Victoria and possibly Australia, but the government still has failed to inform us what the impacts will be on our key industries: the brown coal power generation, the oil and gas industry and the agriculture sector.
The Latrobe Valley in particular should be proud of its contribution to the wealth of our nation over many decades, but it has been vilified by this scare campaign and the divisive nature of the government’s campaign in relation to climate change. In the Latrobe Valley we have massive reserves of brown coal, which has underpinned economic development in Victoria for many decades, and we will still depend on that brown coal for a reliable and secure baseload energy supply in the future. We need the Latrobe Valley power generators to remain commercially viable and to invest in the research and the technology required for a cleaner coal future, which I referred to earlier. The government has offered generators $3 billion in compensation, but the loss in asset value is more likely to be in the vicinity of $10 billion. It has been left to John Brumby, the Premier of Victoria, to stand up for the generators because no-one in the Rudd government has been prepared to do so.
I refer to an article in the Age on 23 October headlined ‘Brumby in cash plea for polluters’. It said:
Senior Federal Government sources told The Age that Premier John Brumby had this year become “the leading advocate” for more compensation for coal-fired plants.
An industry consultant agreed, saying:
“I think Brumby and a couple of his ministers do more lobbying than the industry.”
The source suggested the Premier was concerned about the financial shock of the scheme causing generators to close, disrupting power supply.
“If you’re the Premier and the lights go out, well, your lights are going to go out pretty soon afterwards,” he said.
That just about sums it up. Welcome to the real world, members of the government who think you can implementation these changes and inflict this massive loss on the asset values of Latrobe Valley power generators without any impact whatsoever. If the power generators are not financially viable under this government’s CPRS, we are all in for a shock in terms of the reliability of our baseload power supply in this nation. Yallourn power station management has already indicated that it has reduced its maintenance. Once you have a power station reducing its maintenance workload, it is inevitable that the reliability of supply will be affected. I have said it previously in the House and I will say it again tonight—to paraphrase Rupert Murdoch and many others—I am one who is prepared to give the planet the benefit of the doubt in relation to the issue of climate change, and I do accept that we are going to need changes to the way we manage our economy into the future, but we need a strong and sustainable economy to deal with some of the challenges presented to us.
The mitigation measures which have been talked about by others, if sea level rises occur anywhere near the levels predicted, will require vast amounts of infrastructure to be moved or protected, and we are going to need to do that from a position of economic strength. That is important for the government to consider in its handling of this issue.
That gets us to probably my biggest disappointment with the government’s handling of this issue, and that is that it has been prepared to place Australia’s national interest second in its pursuit of a political strategy. I fear that there is a risk of Australian jobs being lost as a direct result of implementing a scheme which puts us at a competitive disadvantage in terms of our trading partners. Under the Rudd government’s model before the House, we run the risk of jobs being exported from Australia to nations which do not have a comparable scheme. A fear that is regularly expressed to me in my electorate is that we will send jobs offshore—we will also export our carbon emissions to those nations—and the net result will be a deterioration in the world’s environment because the nations which take the jobs will have less stringent environmental protocols than Australia.
Any scheme which transfers jobs in high emitting industries from Australia to foreign nations is likely to result in a poor environmental outcome. I fear that this scheme will add to economic uncertainty in Australia and export jobs to foreign nations, resulting in increased global emissions.
In conclusion, I will come back to where I started. Proceeding, ahead of negotiations in Copenhagen, to lock Australia into any scheme is premature at best and likely to result in negative economic consequences. I say ‘likely to result’ because, quite frankly, the government has failed to do its homework in terms of the economic modelling and has refused to be honest with the Australian public and outline the full impacts of this scheme. We have not seen any modelling on the impacts on individual regions, particularly in the context of the deterioration in the global financial situation over the past 12 months. It simply lacks common sense to proceed down this path without full knowledge of where the rest of the world is prepared to go and without knowing what our major trading partners and some of the biggest emitters are prepared to do. The bills before the House are flawed and represent a massive breach of trust with the Australian community. Even the most fervent climate change advocates will acknowledge that Australia acting alone will not have a significant environmental impact. The government is prepared to inflict enormous economic pain on regional areas like Gippsland and the Latrobe Valley for insignificant environmental gain.
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