Additional Comments and Qualifications
Senator Michaelia Cash
Introduction
The evidence presented to the Committee during this Inquiry,
both in written and oral form, confirms that there is significant conflicting
scientific evidence about the cause and extent of climate change. Despite this
conflict, I subscribe to the position articulated by Rupert Murdoch that when
it comes to carbon dioxide emissions "the planet deserves the benefit of
the doubt".
However, the only action that should be taken by a
Government to reduce carbon emissions is responsible action. Action taken at
the expense or detriment of the Australian people should not be supported.
The Government's current Carbon Pollution Reduction Scheme
(CPRS) if agreed to in its present form, will result in action being taken at
the expense of the Australian people. But worse than that, its implementation
in its present form is likely to achieve the perverse outcome of Australia
contributing to an increase in global emissions.
The CPRS manifestly fails to achieve the Government's stated
objectives of reducing emissions while protecting jobs.
As the Governments central policy to reduce Australia's
carbon pollution, the CPRS patently fails to:
-
reduce
carbon pollution at the lowest economic cost;
-
put
in place long-term incentives for investment in clean energy and low emission
technology, and
-
contribute
to a global solution to climate change.
With the recent unemployment statistics confirming an
increase in unemployment in Australia, the fact that there has been an increase
of nearly 200,000 Australians out of work since August 2008 and the Government's
continued predictions that unemployment will continue to rise, it is imperative
that every element of Government policy should be focussed on effective
measures which will ensure that employment in Australia remains consistently
high – not measures that will result in job losses.
The evidence given to this Inquiry confirms that the CPRS is
both a badly designed scheme and seriously flawed. It should not be supported.
I support Committee Recommendation 2 which states:
The Committee recommends that the CPRS legislation not be
passed in its current form.
1. Qualification—Chapter 2—Analysis
of scientific views
I reject the analysis of, and the conclusions drawn in
relation to, the climate science as set out in Chapter 2 of the Majority Report
paragraphs 2.1 to 2.32 and paragraph 2.36.
There was a considerably wide diversity of views on the
subject of climate science - in particular the cause and extent of climate
change and the extent, if any, to which climate change is a consequence of
anthropogenic behaviour.
This diversity of views was reflected in the evidence given
by witnesses both in submissions to the inquiry and in evidence at the
hearings.
In the analysis of evidence in Chapter 2 of the Majority
Report, significant analysis is given to scientists who provided evidence
endorsing the findings of the IPCC 2007 Report, that warming of the climate
system is unequivocal and that the increase in global average temperature since
the mid 20th century is due to anthropogenic greenhouse gas concentrations.
I do not believe that the same depth of analysis was given
to those scientists and other experts who do not agree with this view and gave
evidence that climate change was due to natural causes and was not the result
of anthropogenic behaviour.
In terms of the comment expressed at Chapter 2, paragraph
2.20 of the Report that:
The bulk of the thousands of submissions which the committee
received from the public accept that climate change is happening and urge
action.
What the report fails to mention is that the majority of
these submissions were in the nature of a 'pro forma' submission generated from
the websites of environmental groups and should be considered in that context.
I disagree with the conclusion expressed on behalf of the Committee
at paragraph 2.37 that:
The balance of the evidence discussed above suggests that
climate change is occurring, is driven by anthropogenic factors and is a grave
threat to accustomed ways of life and natural systems. If this view is right,
the calculations above make a virtually unarguable case for taking global
action.
I do not believe that this properly reflects the balance of
evidence in terms of the science of climate change.
I affirm my view that whilst the planet should be given the
benefit of the doubt, the only action that should be taken by a Government to
reduce carbon emissions is responsible action. Action taken at the expense or
detriment of the Australian people should not be supported.
2. Treasury Modelling
2.1 Failure to model effect of
current CPRS on jobs and the environment
Climate change is best tackled from a position of economic
strength. To effectively meet the huge cost of tackling greenhouse gas
abatement requires:
The Committee received extensive evidence raising serious
concerns about the modelling undertaken by the Treasury. This evidence also
identified significant flaws in Treasury's modelling as set out in Chapter 2 of
the Majority Report.
Despite the significant concerns expressed by witnesses,
Treasury failed to produce any economic modelling justifying its claims on the
likely effect of the CPRS upon jobs and the environment.
I have formed the view, based on evidence provided to the
Committee that the modelling undertaken by the Treasury is both deficient and
inadequate and Treasury must undertake further modelling as articulated in the
Majority Report.
2.2 Lack of peer review and
transparency
Accountability and openness in government require that those
who exercise power while performing the functions of government, demonstrate in
an open and practical sense that they are doing so with honesty, integrity,
appropriate skill and judgment, and have discharged their duty in a proper
manner for the common good and in the public interest.
Those who are entrusted with public power are required, when
called upon, to justify the use of that power.
The use of commercial-in-confidence claims as a shield to
avoid proper scrutiny of Government actions has the potential to seriously
threaten accountability and openness in government.
I refer to Recommendation 7 of the Senate Select Committee
on Fuel and Energy's Interim Report tabled in the Senate in May 2009 which
notes the failure of the Government to provide this information and its failure
to comply with the Order of the Senate of 11 March 2009 to release all of the
information currently being kept secret.
I am concerned at the Government's continued refusal to
provide access to all of the model codes and databases used in the Treasury
modelling.
3. Impact on Western Australia
3.1 Loss of jobs
Western Australia is a major contributor to the Australian
economy and in 2007–08 contributed approximately $8.2 billion to the
Commonwealth in net terms.
As a Senator for Western Australia I am concerned about the
potential disastrous impact of the CPRS on the Western Australian economy.
An Access Economics Report commissioned by the State
Premiers and published in June 2009, confirms that the Government's Emissions
Trading Scheme would cost 13,000 jobs in WA alone.
These 13,000 jobs will in the main come from the following
industries, black coal, oil and gas, petroleum and coal products, chemical
rubber and plastics, iron steel and metals, electricity and the gas
distribution sector.
3.2 Flaws in Treasury Modelling
I am concerned at claims that the Treasury modelling in
respect of the assessment of the need for Electricity Sector Adjustment Scheme
(ESAS) assistance uses the same competitive spot market assumptions made for
the Eastern States Electricity Market in its assessment of this need in Western
Australia.
In other words Treasury failed to recognise the differences
in the Western Australian electricity market. This failure to distinguish
between the respective models results in a detrimental impact on Western
Australia.
As noted in the Coalition Senators Dissenting Report of the
Senate Economic Committee Inquiry into the Exposure Drafts of the Legislation
to Implement the Carbon Pollution Reduction Scheme tabled in the Senate in
April 2009:
Griffin Energy, in their submission to the inquiry into the
exposure draft of the CPRS, made the point that the Western Australian
Electricity Market, in which gas power generation is dominant, suffers
discrimination because the Treasury modelling uses the same competitive spot
market assumptions made for the Eastern States Electricity Market in its
assessment of the need for ESAS assistance.
In fact however the WA Electricity Market is very different
to that of the Eastern States Electricity Market in that WA has a high
dependency for electricity generation on gas from the North West Shelf being
carried to the South West in the Dampier to Bunbury pipeline, and this will
continue to be the case even if renewable replace coal.
Griffin Energy point out that there is a historic price
competition between gas and black coal in the Western Electricity Market and
state that WA's long term security of supply will likely be compromised by the
current CPRS settings.
Griffin points out that the so call National (i.e. Eastern
States) Electricity Market is based on a competitive spot market into which all
generators supply electricity whereas the Western Electricity Market is based
on bilateral contracts.
In the selling model the price of electricity is locked in
for the length of contracts and there is no capacity in the Western Electricity
Market to pass through to consumers the increasing price of carbon which the
generators will bear over 15 years. By contrast in the National Electricity
Market Model, based on competitive spot prices, the additional cost of carbon
over 15 years will be passed through via the market clearing price.
Griffin states that the Western Australian Electricity Market
requires a separate ESAS formula with an emissions intensity cut off limit of
0.75tCO2e.
The flaws in the Treasury assessment of ESAS assistance was
further confirmed in evidence to this Inquiry as noted at paragraphs 4.157 of
the Majority Report as follows:
The CPRS is also fundamentally flawed in that it fails to
take into account the special circumstances of Western Australia. The rest of
the country is part of an integrated national electricity market (NEM) whereas
Western Australia is isolated and reliant on a small number of gas suppliers.
This means much of the Treasury analysis assuming pass-through of higher costs
is inapplicable to the WA market.
This failure of Treasury to distinguish between the
respective models needs to be rectified in any future modelling.
4. Renewable Energy Target
I note the announcement of the Government on Tuesday 9 June
2009, coupling the renewable energy target with the emissions trading scheme.
The vision of solar, geothermal, tidal, wind and wave power
is an exciting prospect for Australia and should be encouraged by government.
It is disappointing that the Government appears to be deliberately sabotaging
its own legislation at the expense of these emerging Australian industries and
the jobs that would go with them.
This is yet another example of how the Rudd Government is
intent on 'going it alone' on climate policy in this country, despite the
impact it will have on Australian jobs and the real economy.
5. Agriculture and Land
use
I note paragraphs 6.9 to 6.11 of the Majority Report.
A common theme from all submitters and witnesses who
discussed agriculture and land use issues was the historical adaptability of
Australian farmers, and many called for policies that will harness and foster
the independence and ingenuity of the agricultural sector. This confidence in
the capacity of the agricultural sector to embrace and drive change is shared
by all members of the committee.
A consistent view from agriculture-related organisations, as
well as environmental and other stakeholders, was that under the current and
proposed policy settings in Australia the agricultural sector could not access
the opportunities offered by climate change abatement and mitigation
activities, such as the new income streams that could be opened up by renewable
energy, soil carbon and avoiding deforestation.
The potentially negative impact of climate change policies on
agricultural sector production and incomes was also explored in some detail
throughout the hearings.
The Government should provide adequate incentives for the
adaptation and innovation needed for farmers to actively undertake and promote
changes to farming practices that encourage emission reduction. The failure of
the Government to provide such incentive may put unacceptable pressure on costs
of food production and jeopardise Australia’s global competitiveness.
6. Conclusion
The evidence indicates that it is apparent to all serious
policy makers that there is no unilateral Australian solution to climate
change, only a global solution.
The Institute of Public Affairs gave the following evidence
to the Senate Standing Committee on Economics during its Inquiry into the
Exposure Draft of the Legislation to implement the Carbon Pollution Reduction
Scheme:
...With only 1% of world GDP, we are neither prominent among
world nations nor particularly influential within world councils. And while
Australia has many well qualified scientists, few of these are considered to be
world authorities on climate change. Accordingly, it is pure hubris for
Australia to attempt to take the lead in abatement activity.
In light of the fact that the Copenhagen conference is only
six months away, and the Obama Administration and the US Congress are well
advanced in finalising US legislation for an emissions trading scheme, it would
be premature to lock Australia into an ETS that is out of step with the rest of
the world.
The CPRS is a flawed scheme. The scheme puts Australian
industries and the jobs that go with them, at great risk for little or no
environmental gain.
Senator Michaelia Cash
LP, Western Australia
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