Carbon Pollution Reduction Scheme Bills 2009: Second Reading
Tue, 11 Aug 2009
8:07 PM - Senator David Bushby
I also rise to speak tonight on the Carbon Pollution Reduction Scheme Bill 2009 and the associated package of bills that the government has put before us to implement its plan for a cap-and-trade emissions trading scheme, commonly referred to as the CPRS. As we are all aware, the end goal in implementing an ETS is to achieve a reduction in global greenhouse gas emissions. And why are we trying to reduce global greenhouse gas emissions? The answer is: because the ‘settled’—and I use that word in quotation marks—science is that anthropogenic, or man-made, CO2 and equivalent gases are increasing in the atmosphere to such an extent that it is affecting our climate and, further, that those effects will have a disastrous consequence for the planet and its future.
When concern about the issue first gained significant public traction some 10 or 15 years ago this phenomenon was called ‘global warming’, because it was argued that it would increase global temperatures. Since then, the label applied to the stated impact of man on the climate has been changed to ‘climate change’. This better allows proponents of the phenomenon to claim any extreme weather event—whether it be a heatwave, heavy snowfall, hurricane, cyclone, severe storm or flood caused by torrential rainfall—to be the direct result of anthropogenic impacts on climate.
As I understand it, the potential impact of man-made CO2 and equivalent gases on the climate was first seriously discussed in scientific circles—and here I admit to not having researched dates thoroughly—in the early 1970s, around the same time as the alternative theory that the gases and pollutants mankind was pumping into the atmosphere was going to form a barrier between the sun and the earth that would bring on the next ice age. And this latter theory is what my first recollection is of arguments about mankind’s impact on climate—having been taught of the ice age concerns by a teacher in around 1978.
Incidentally, I am acquainted with a retired American scientist, Mr Jim Pleasants, who worked at NASA in the US throughout a period including the early 1970s. He rose during his career to senior management level and was responsible for such relevant projects as sending an instrument that measured ozone and aerosols into earth’s orbit. He has told me that there was a heated debate going on at that time by leading scientists in America between those who argued mankind’s activities would heat the earth and those who argued it would cool it. Their main concern was that unless they took a united front they would look foolish and find it harder to attract research funding. As such—and, I am told that Mr Pleasants was present when this occurred—this group of leading international scientists flipped a coin to decide what impact they would pursue. And, of course, the coin came down on warming.
According to my acquaintance, that coin flip, which he says occurred in around 1972, was the start of the global warming movement. Since those days, that movement has very effectively developed from an issue debated and considered only by a small group of scientists to a much broader and wider issue that concerns many people worldwide. The public relations around the issue have been very effective. Claims of loss of natural features such as the Great Barrier Reef, sea-level rises of up to 100 metres, the timely coincidence of extreme weather occurrences such as hurricanes, droughts and heatwave-induced bushfires—despite the fact that all of these occurred regularly, and usually more severely, in the past—and of course the extinction of polar bears, have proven very effective in convincing well-meaning and caring people of the need for action.
And there is no doubt that millions of people around the world, despite having no actual knowledge or understanding of the science upon which the movement is based, now faithfully accept as fact that mankind’s activities are affecting the climate in a manner that will have disastrous consequences for the planet, its peoples and its environment. And my use of the word ‘faithfully’ was quite deliberate. The sad reality is that the movement has taken on what cannot be seen to be anything other than a religious quality—a status that categorises everyone as a ‘believer’, a ‘sceptic’ or, even worse, a ‘denier’.
Anyone who dares to question the assumptions upon which the phenomenon is based is immediately ridiculed and his or her academic credentials, intelligence, gullibility and motive are immediately called into question. Worse, such sceptics and deniers are also belittled and blamed for not accepting that we have to make huge changes—changes that will come at great human cost—for the common good of the planet. Effectively, they are accused of heresy. One only has to look at the behaviour of the Minister for Climate Change and Water, Senator Wong, in this place, when anyone dares question the assumptions upon which the need to implement these bills are based. There is no doubt that she approaches such heretical behaviour as if she were the high priestess of the religion, with a sworn duty to seek out and expose nonbelievers: those who would undermine the faith—those dastardly sceptics and deniers!
Even today she employed this tactic, naming Senator Bernardi at least four or five times. If she were allowed to, I suspect she would like to burn at the stake all who dare question the truth of the science behind climate change. However, despite the religious fervour demonstrated by many campaigners for climate change action, and the fact that most people who are concerned about climate change have that concern without the scientific expertise to fully analyse the facts—meaning that they essentially take it on faith—it is also apparent that there is a seemingly strong acceptance of this phenomenon by many, if not most, in the scientific community. These are people who one would expect might have the knowledge and understanding of the science to fully inform their decision to accept the phenomenon and its associated threats as real and imminent. But the fact remains that not everybody accepts this as fact. And the really interesting thing to me is the large number of prominent and impeccably credentialed scientists who have raised issues and concerns—very relevant and strong issues and concerns—about the science upon which most, if not all, of the assumptions about man-made climate change are based.
I am not a climate scientist. Despite completing first year physics and chemistry at uni I do not even claim to be a scientist. As such, I readily acknowledge that I do not have the expertise, knowledge and capacity to satisfy myself, through scientific inquiry and experimentation, that this science—the science upon which the assumptions of man-made climate change are based—is in any way proven in a scientific sense. As such, I have no choice but to rely on the recommendations and comments of those who do have that expertise, knowledge and capacity to make such inquiry.
As mentioned, the weight of scientific support seems to back the believers. Given the huge research industry that has developed around climate change, a cynic would suggest that this is not surprising. But, regardless of why it appears most scientists support the man-made climate change issue, I am greatly concerned by the large number of very prominent scientists who fall in the category of what many would call deniers—people like Emeritus Professor Garth Paltridge, an atmospheric physicist who was a chief research scientist with the CSIRO Division of Atmospheric Research before taking up positions in Tasmania as Director of the Institute of Antarctic and Southern Ocean Studies and CEO of the Antarctic Cooperative Research Centre. His specialty is fluid earth sciences, climate and Antarctica—a field highly relevant to the very issue underlying these bills. Yet, using this very expertise and the skills acquired over a lifetime of research and study in the fields of science so relevant to the issue, he queries the scientific evidence upon which claims of man-made climate change are based.
The science I did do at uni and before that taught me that all scientific theories are just that—theories. They stand to be proven or disproven on the basis of the evidence and stand on the basis of the evidence. I stand to be corrected, but belief in a concept did not come into any aspect of scientific research or theory. Given the fact that so many scientists, like Professor Paltridge, have concerns about the actual science behind climate change and raise real issues about the verifiable evidence that is used to back that science, I have no choice but to refuse to believe what I am told is truth and to declare myself a ‘sceptic’ when it comes to the issue of mankind’s impact on the climate. This does not mean that I am a denier, as such—again, I acknowledge that I do not have the skills to assess the issue myself at a scientific level. What it does mean is that I do not accept that the science is in on climate change. Although not commonly used as such these days, to be considered a sceptic was a compliment once, when people used it in the sense of the ancient Greek sceptics movement—one where people refused to merely accept what they were told and actively questioned, tested and sought evidence to prove or disprove statements and beliefs.
Madam Acting Deputy President, you might ask what this means about my thoughts on the need for action to address climate change, such as that major action included in these bills. You may be surprised to hear that I am accepting of the need for action. This is due to the advisability of prudent and sensible risk management. As mentioned, I do not know whether man-made climate change is real or not but, despite having real doubts, I think it is in everyone’s interest to take action that increases efficiency, reduces pollution and recognises the finite resources of the planet—particularly if, in doing so, any risk of real consequences of man-made climate change are minimised. However, I do not accept that we should as a nation take action that will undermine our national interests or those of Australians, particularly if that action is unlikely to deliver any actual benefits, whether to the environment in general or more specifically in reducing global emissions of CO2 and equivalent gases.
There are plenty of options open to the Australian government that will achieve positive environmental outcomes, regardless of the issue of climate change, without threatening the economic and social welfare of Australians. The coalition and Senator Xenophon’s release yesterday of research commissioned from Frontier Economics provides one such alternative emissions trading scheme. As noted by shadow minister Andrew Robb, this research proves the Rudd government’s scheme will unnecessarily drive up electricity prices, destroy jobs and expand the size of government in Australia, while doing little about actual emissions.
The modelling was conducted using the same model and basic parameters as the government’s own modelling. The results show that this alternative approach would provide for a greener, cheaper and smarter ETS—greener because of a doubling of the target; cheaper because it will be 40 per cent cheaper than the government’s scheme, a $49 billion saving to our economy over the next 20 years; and smarter because it will ensure that there are more jobs, more Australians in work, with higher wages, particularly in regional Australia. The Frontier research shows that, with the right model, a logical and well-planned ETS can deliver an unconditional 10 per cent reduction in Australia’s 2000 greenhouse gas emissions by 2020, compared to the Rudd government’s five per cent unconditional target; wind back average household electricity price rises from the $280 under the current legislation to just $44 in the near term; and have a net gain in employment in regional Australia of 70,000 jobs, compared to the government’s scheme.
Importantly, this research also gives certainty to Australia’s agricultural sector, by leaving it out of the cap while providing an opportunity for it to be rewarded by generating carbon offsets. Lower electricity prices will also greatly reduce the indirect costs of the government’s ETS that would be faced by hundreds of thousands of small businesses. For example, under the CPRS, a typical dairy farm would face extra costs of $8,000 to $10,000 per year. Under Frontier’s proposals, this would be reduced by 80 to 90 per cent. Separately, the coalition has also committed itself to a doubling of the compensation for loss of asset value proposed for the electricity generators, from $4 billion to $8 billion—and up to $10 billion. This will provide the capacity for this sector to invest in low-emissions technology and see a rapid reduction in their carbon footprint. The generator sector contributes 50 per cent of all emissions.
I have been a part of a number of inquiries looking into the proposed legislation as contained in these bills through my membership on the Senate Select Committee on Fuel and Energy and the Senate Standing Committee on Economics, and I can tell you, on the basis of those inquiries, that the overwhelming body of evidence on the government’s CPRS shows that it will not effectively achieve its aim of reducing global greenhouse emissions, particularly when it is generally acknowledged that a global response would be required to achieve such a thing. In that regard, we have seen no evidence that an international agreement is imminent, nor is it at all likely that the great number of our main trade competitors will assume a price on carbon. And it is clear on any objective analysis that the CPRS, adopted without an international agreement to prevent carbon leakage, would have exactly the opposite impact of that intended and would simply shift emissions generation from those nations assuming a price on carbon to those without such a price—effectively adversely impacting upon the ultimate goal of reducing global greenhouse emissions.
Professor Warwick McKibbin, widely respected economist, academic and member of the board of the Reserve Bank of Australia, stated:
The problem is that the environmental effectiveness is not an Australian issue, it is a global issue, but the cost is an Australian issue … We need a system where the global outcome environmentally is beneficial, and us cutting with no one else cutting does not deliver anything.
There seems to be strong acceptance of the fact that the likely outcome of implementing the CPRS in its current form is that Australia would suffer severe economic consequences and job losses, without providing any notable reduction in global emissions.
Given the likely absence of a global consensus on reducing emissions, it becomes important to understand the effects on Australia of going it alone, as it were. Under questioning, the Department of Climate Change has admitted that the government has not clearly enunciated the degree to which, or method by which, the proposed CPRS will actually contribute to a global emissions reduction. This lack of global focus in the CPRS exposes Australia to some severe flow-on effects in terms of Australian jobs and the economy.
As mentioned, there is much evidence to suggest that it is almost certain that many of our employers and industries will move their operations offshore in the absence of comparative emissions abatement schemes in our competitor countries—not to maximise their profits, as some on the other side might say, but to remain competitive with their competitors in countries that are not saddled with crippling carbon costs as part of a flawed ETS, not to mention the restrictive and uncompetitive IR laws they are now again saddled with! And, in many cases, the option of shifting offshore will not be viable or attractive, and the comparative disadvantage that Australian businesses will be shackled with will mean that Australian businesses will simply have to shut their doors as they find they can no longer compete or downsize, or they will have to cancel future expansion plans.
In each of those scenarios, not only would there be a highly adverse effect on the Australian economy and on jobs but there would almost certainly be an increase in emissions offshore—carbon leakage. And, given that Australian industry is often world’s best practice in terms of emissions, the production of goods outside Australia will likely be at a higher emission cost per unit than the equivalent production in Australia—again, not a desirable outcome. Professor Anthony Owen, from Curtin University of Technology, clearly explains carbon leakage with respect to the Australian situation. He said:
I do not think Australia, with such a small percentage of the world’s emissions, can really dominate … It is really up to the international community and, in particular, the world’s large emitters to come forward with a policy which addresses that issue. It is a serious issue, of course, leakage. If Australia drives offshore some of its energy-intensive industries, they may well create more emissions offshore than they would have with the same output in Australia.
Under questioning by the Senate Select Committee on Fuel and Energy, Mr Noel Cornish, chief executive of BlueScope Steel, stated that ‘we would see the loss of manufacturing industry and the loss of jobs in Australia for no global greenhouse gas improvement.’ The suggestion has even been made that it may actually be more efficient in a greenhouse-gas emission context for government to actively seek an expansion of emissions-intensive industries in Australia, as our industries and energy production operate at a generally more efficient level than many other countries, thereby reducing overall global emissions of CO2 and equivalent gases. The reality of this suggestion is pretty hard to argue against but totally contrary to the direction that the government is taking.
A key characteristic of our economy is that many of our businesses will face much difficulty passing on to their customers additional costs imposed by an ETS. This is due to the small size and degree of openness of our economy, which means many of our industries are price takers, both in terms of their inputs and their outputs, and cannot pass on the costs of the CPRS to their customers. We are price-takers in the steel, coal and aluminium industries. The CPRS in its current form would see significant reductions in competitiveness and threaten the viability of some operations. But it is not just our industries with import and export exposure that face considerable financial hardships under the proposed CPRS. Australia’s electricity generators will be significantly disadvantaged under the proposed scheme, and this is particularly so due to the lack of smooth transition arrangements provided for by the scheme.
A fact that can hardly be missed at present is that we are in the middle of a global financial crisis. Despite the significant effects of this global financial crisis it would seem that the government failed to take into account the changed global economic environment when designing its CPRS or modelling its economic impact. Treasury officials have confirmed time and again that no modelling was done on the impact of the global turmoil on the projections for the impacts of the CPRS. Given the current model’s inflexibility and design flaws that render it completely ineffective in adjusting to unexpected or abrupt changes in the economy, the government’s proposed CPRS will further exacerbate this trend. With our economy delicately poised and skating around recession, the timing could not be worse. Some of our major industries will face costs that they are unable to pass on at a time when we simply cannot afford it.
Before the election then opposition leader Kevin Rudd made several promises in respect of climate change and how he proposed to deal with it. He made a promise to establish an ETS. He promised that this ETS would generate deep cuts in global greenhouse emissions. He promised that this would occur in such a way that Australia’s export and import competing industries would not be disadvantaged. The promised scheme is now in a state of total and utter chaos. It constitutes an ill-considered attempt to meet a tokenistic deadline and fails miserably to provide measures that will actually achieve any of its hastily promised and politically motivated goals. The promise of making deep cuts in global greenhouse emissions will not be met by this CPRS. The promise of protecting our trade exposed industries will not be met by this CPRS. In fact, all that will be achieved by this CPRS are job losses, economic destruction and the exporting of our emissions-intensive trade-exposed industries overseas, most probably to countries with lower, if any, environmental standards—which will ultimately mean an increase in global greenhouse emissions. Australia deserves better.
As I noted when I started, I am not convinced that the sky is falling as a result of mankind’s impact on climate. But I also consider that there is a lot to be gained through adopting cleaner, more efficient and sustainable ways of generating electricity. But the CPRS will not achieve this outcome. (Time expired)