Clean Energy Future: The Combet speech

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The federal climate minister explains why a carbon price, what will – and won’t – happen after July 1… and that the science is in.

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Three weeks ago, Parliament marked the 20th anniversary of the High Court’s Mabo decision on native title.

Mabo and the Keating Government’s response, the Native Title Act, were subjected to a vitriolic scare campaign by conservative politicians, vested interest groups and hard Right commentators.

Native title would wreck the economy, they said.

It would deter investment.

It would even put ordinary Australians’ own backyards at risk.

Of course, none of those predictions materialised.

And, two decades later, both sides of politics were happy to stand up in Parliament and acknowledge Mabo as a watershed in the recognition of Australia’s indigenous people.

On July 1, another historic reform will come into effect.

It too has had a long and difficult history.

Action on climate change through a carbon price has been the subject of a deceitful scare campaign by Tony Abbott, vested interests and a phalanx of tabloid editors and shock jocks.

The clamour of this campaign bears an inverse relationship to the scientific evidence and rational policy-making.

The debate over the carbon price has again exposed the divide in Australian politics between the reformers and the wreckers.

The debate over whether climate change is real was decided long ago.

The debate over the most economically-responsible way of tackling climate change was also decided long ago.

The cheapest and most efficient way of reducing carbon pollution is to harness the power of the market, to put a price tag on greenhouse gas emissions that creates an incentive to cut them.

That is why this Labor Government has adopted a comprehensive and balanced Clean Energy Future plan with a market based mechanism – carbon pricing – at its centre.

Our plan will reduce emissions while supporting economic growth.

Our plan assists households and supports jobs and competiveness.

It creates incentives for renewable energy and energy efficiency.

It rewards farmers and land managers for storing carbon on the land.

This plan is a milestone public policy reform.

It will address one of the most pressing environmental problems, set the economy up for continued prosperity, and look after working people and those who need help the most.

Those seeking to sabotage this policy are acting against the national interest.

Their scare campaign is fraudulent, deceitful and cynical.

It is not motivated by values – it is motivated by political opportunism.

But the scare campaign is unravelling.

With 11 days to go, I want to use this address to tell Australians what will happen – and what will not happen – after the carbon price starts on July 1.

But first, it is important to remember why we are introducing a carbon price.

WHY WE ARE INTRODUCING A CARBON PRICE

Australia faces particular risks from climate change – risks from higher temperatures, changing rainfall patterns, more frequent extreme weather and rising sea levels.

The risks are not just environmental; they are also economic, social and human.

These risks have been identified by our best scientific institutions like the CSIRO and the Bureau of Meteorology, supported by internationally recognised work by scientists in our leading universities.

The public expects leadership on national problems. And climate change is a particularly diabolical problem, to use Professor Ross Garnaut’s description.

Carbon pricing must be part of any serious attempt to reduce carbon emissions.

The Productivity Commission examined more than 1000 carbon policies in nine key economies, including Australia.

It found that carbon pricing through emissions trading schemes was the most cost effective way of reducing greenhouse gas emissions.

Other approaches, like widespread deployment of solar panels, were found to cost as much as $400 for each tonne of pollution reduced.

A carbon price is the cheapest approach. And it provides a powerful incentive for innovation, efficiency and cleaner technology.

It will drive a transformation that will allow our economy to keep growing while we reduce our pollution.

This transformation has already begun.

Plastics manufacturer Qenos is building Australia’s largest cogeneration plant in a decade at its Altona plant.

This will save energy costs by generating electricity and steam using natural gas.

This project will reduce Qenos’s carbon pollution by 100,000 tonnes a year – equivalent to taking 24,000 cars off the road.

Food producer Crafty Chef is installing a new freezer at its Emu Plains factory in western Sydney.

This new spiral freezer, which uses ammonia as the refrigerant and an evaporative condenser, will replace an inefficient blast freezer.

There will be significant savings on energy costs; the emissions per unit of product will be reduced by almost 55 per cent; and the new refrigerant gases will not contribute to global warming if released into the atmosphere.

Abattoirs and landfills are also now looking at ways of reducing their emissions of methane.

Methane is one of the most harmful of the greenhouse gases – it has more than 20 times the global warming impact of carbon dioxide.

Yet with simple technology – by covering a landfill or a settlement pond at a meatworks – the methane can be captured and flared, potentially removing their carbon price liability.

And if the methane is used to generate electricity, the operator can reduce energy costs and even earn income from selling this clean energy back to the grid.

Across the globe, more money is now invested in new renewable power than in high-pollution energy generation.

Global investment in renewable power and fuels grew by 17 per cent in 2011 to reach a new record of $US257 billion.

These are investments Australia does not want to miss out on.

The economies which can reduce their emissions intensity – the amount of greenhouse gases produced per unit of economic output – will secure a competitive and technological edge.

INTERNATIONAL DEVELOPMENTS 

Climate change is a global problem and the world’s countries are taking action.

This is another reason why, after years of debate and delay under the former Coalition Government, Australia can’t afford yet more delay.

From 2020, we expect all nations will face binding obligations to curb emissions – including the United States, China, Japan, South Korea and India.

If Australia delays starting the economic adjustment, we will only face much higher costs when these new obligations come into force in 2020.

By the beginning of next year, 27 European Union countries, along with Norway, Iceland, Switzerland, New Zealand, the US state of California and the Canadian province of Quebec will be pricing carbon through emissions trading.

South Korea, our fourth largest trading partner, has legislated for emissions trading from 2015.

China, our number one trading partner, is developing pilot emissions trading schemes across major cities and provinces.

Recently I met the most senior Chinese official in Guangdong Province, which, if it were a country, would be our sixth largest trading partner.

We spent a good deal of our time discussing carbon pricing and emissions trading. Australia is working with Guangdong Province in developing its emissions trading scheme.

Anyone who thinks that Australia will be afforded the luxury of not having to cut greenhouse gas emissions, while still building our trading relationships in Asia, is making a big mistake.

As the 15th biggest greenhouse gas emitter in the world, and the largest per capita polluter amongst the advanced economies, China and our other major trading partners expect Australia to play its part.

And if we don’t, it will damage our relationships and potentially provoke carbon tarrifs on our goods and services – just as Qantas faces on flights into Europe right now.

WHAT WILL HAPPEN AFTER JULY 1?

What will happen after July 1 when the carbon price is implemented?

For the overwhelming majority of businesses, it will be business as usual.

Well under 500 companies will pay for each tonne of carbon pollution they put into the atmosphere.

In fact, now that the Clean Energy Regulator has completed much of the work with liable entities, the list of major emitters is closer to 300.

Small businesses will not be covered. They will not have to fill out a single new form due to the carbon price.

They will, however, benefit from tax relief – an increase in the small business instant asset write-off threshold to $6500 and personal income tax cuts for those who are unincorporated.

The price impacts on the economy will be modest.

Treasury estimates the increase in the CPI will be 0.7 per cent, or less than a cent in the dollar.

Contrast this with Tony Abbott’s claims that the price impacts after July 1 will be “unimaginable.”

The Treasury modelling showed household electricity prices will rise by up to 10 per cent or an average of $3.30 a week per household; and the Government is providing assistance worth $10.10 a week per household on average.

Actual household electricity price increases are now being determined by regulators, and they are either bang on or less than the Treasury figure.

Contrast this with Tony Abbott’s claim that electricity prices would be ratcheted up by 20, 25 and 30 per cent after July 1 due to the carbon price.

Mr Abbott has repeatedly intentionally deceived and misrepresented the facts about carbon pricing.

In a truly gutless performance, he has travelled the country terrifying people, standing before pensioners and frightening them, and standing before workers and telling them they will lose their jobs.

I have represented working people nearly all my working life.

I have addressed countless meetings in workplaces, community halls, RSL clubs, and anywhere it has been possible to assemble, in every corner of the country.

I learnt very early that you have to be straight with people and tell them how it is.

If you don’t, you lose their respect and trust, and undermine your own credibility.

And that’s what faces Tony Abbott.

He’s had a lot to say about the impact of carbon pricing on the cost of living and jobs.

But only Labor is ensuring households are looked after.

We are implementing a package of measures to help people make ends meet – measures the Coalition tried to vote down.

Our household assistance package delivers tax cuts, higher family payments, and increases in pensions and other government allowances.

Households who choose to take action to improve their energy efficiency will find that the assistance goes further.

Our Clean Energy Future plan also supports workers and industries.

As a former union leader and lifetime labour movement activist, my commitment to working people has been at the forefront of my mind in developing the carbon price.

That is why our Jobs and Competitiveness Program is assisting industries like steel and aluminium.

This assistance reduces the effective carbon price for the most emissions-intensive, trade-exposed industries to $1.30 per tonne, supporting their competitiveness while maintaining an incentive to reduce pollution.

It makes a mockery of claims that Australia will have the world’s highest carbon price.

In addition, the Government’s $1.2 billion Clean Technology Program is providing grants for manufacturers to install new equipment to save energy costs and reduce pollution.

This will lead to billions of dollars of investment to help manufacturers reduce energy consumption, use cleaner and more efficient technologies and become more competitive.

The Government is also establishing the Clean Energy Finance Corporation which will invest $10 billion in renewable energy, energy efficiency and low emissions technology.

The Clean Energy Future package is one of the most important industry and innovation policies this nation has seen.

It will drive economic modernisation, setting Australia up to be competitive in a 21st century where the world will be reducing carbon pollution.

Over $15 billion will be invested in creating new jobs – most notably, in manufacturing.

Consider for a moment Tony Abbott’s alternative approach of ploughing taxpayer funds into high cost greenhouse gas abatement.

Here is how he describes it: “Well, you go to the market and you say look, we are looking to buy cost effective emissions reductions. What market can you offer us? And I think what they’ll offer us is tree planting, which is a good thing …”

This is not a policy. It’s a joke.

It means Tony Abbott would do nothing about climate change – and nothing to transform our economy.

And it means slugging taxpayers to pay for a policy that will not work.

WHAT WILL NOT HAPPEN AFTER JULY 1

The Opposition Leader has made a great many alarming predictions about the carbon price.

Now the moment of truth is coming.

After July 1 the public will be able to test Mr Abbott’s claims against reality.

  • Will there be “unimaginable” increases in the cost of living, as Mr Abbott said?
  • Will the carbon price ratchet up household electricity prices by 30 per cent?
  • Will entire industries be destroyed? Mr Abbott said the carbon price spelt “death” for coal, steel, motor vehicle manufacturing, zinc, nickel, and the food and grocery industries.
  • Will there be large-scale job losses? He said the carbon price would “wipe out jobs big time.”
  • And, finally, will Mr Abbott turn out to be right when he said that whole towns like Whyalla and Wollongong would be wiped off the map when the carbon price came in?

After July 1 the extent of Mr Abbott’s deceit will become clear.

Yet, I predict that in the face of the truth, his scare campaign will only become more desperate.

He will deceitfully claim that electricity prices driven by investment in poles and wires are caused by carbon pricing.

If a manufacturer, or an aluminium smelter, lays off staff because of competitive pressures from the high Australian dollar, or global oversupply, he will blame carbon.

If petrol prices go up because of global oil prices, he will blame carbon – even though there is no carbon price on household petrol.

If natural disasters force up the price of bananas, he will blame carbon.

But the carbon debate is now moving from fiction to fact, from rhetoric to real world experience.

And gradually Mr Abbott will be exposed.

He has devoted the last sixteen months to fear, negativity and destruction.

Mr Abbott’s sole aim has been political power at any cost, and he has undermined confidence in the economy at a time of global uncertainty.

This is the opposite of leadership. This is gutless opportunism.

His strategy appears to have been to destroy the Government’s support in the Parliament before he could be called to account for his deceit. It hasn’t worked.

That means July 1 will not only be a test of the carbon price – it will also be the beginning of a test of Tony Abbott’s leadership.

Tony Abbott would have you believe that people are so self-focussed that for a $3.30 a week increase in electricity cost, offset by $10.10 a week in cash assistance, they would not take out some insurance against the impact of climate change for future generations.

I don’t think Australians are like that, and I think that lived experience will make a difference to community attitudes to this issue.

CONCLUSION

The easiest thing to do in politics is to whip up fear and anxiety.

The hardest is to lead and make reforms in the national interest.

This Government, like all Labor Governments, has introduced a raft of progressive policies.

In the last 18 months we’ve started implementing a National Disability Insurance Scheme.

We have introduced aged care and hospital reforms; delivered income tax cuts; and invested in infrastructure including the National Broadband Network.

We have improved superannuation entitlements; made historic increases in pensions and benefits; and invested heavily in education.

Our policies for tackling climate change will serve the nation well. And we will argue them right up to election day.

Our society will be better off in the longer term – compared to the consequences of doing nothing to tackle climate change.

The Government has chosen the path of reform because we put Australia’s national interest first – ahead of short term political interests and ahead of sectional economic interests.

The carbon price will start a transformation which will make us more competitive and help future generations avoid dangerous climate change.

Price impacts will be modest; households will be looked after; workers and industries will be supported.

And in the future we will look back on carbon pricing as a policy which tackled an important environmental problem and set the economy up for continued prosperity.

It will stand with Medicare, superannuation, floating the dollar, opening our economy to the world – and the native title legislation prompted by that Mabo decision 20 years ago.

These policies were all just as controversial in their time as the carbon price.

Now they are part of our social and economic fabric, universally recognised as having made us better as a nation.

Just as those earlier policies underpin today’s social equity and economic prosperity, so carbon pricing will make Australia a stronger and better place in the future.

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7 Comments
  1. Beat Odermatt 7 years ago

    I am not sure how stupid Combe thinks people actually are? I hope you noticed how he blamed the feed-in tariff of solar PV for high abatement costs. Did anybody actually explain him that solar PV systems may last over 20 years and never need gas or coal to operate?
    How is taking about $3.00 from people and giving them $10.00 back an incentive to conserve energy?

    • Phil Alford 7 years ago

      Beat, you just don’t get the price on carbon do you? Its main purpose is to, for the first time in hundreds of years, ask polluters to pay for the pollution that they produce by burning ancient carbon!! It’s mainly trying to get the polluters to change their behaviour. Yes, it will compensate members of the public, but if they change their behaviour as well, their compensation is enhanced.

      Speaking of compensation, would you prefer that the population not be compensated for any flow-on price rises? Of course, then the shock jocks would absolutely go ballistic, and the price on carbon would be even less popular. It can’t be over-emphasised that its main purpose is to impact on the polluters.

      Congratulations to the Government for introducing this scheme. Nobody has come up with a better solution for reducing this pollution, which is threatening the thousands of years of relatively stable climate (and sea level) during which humanity has thrived. The Coal-ition’s scheme, by comparison, is absolutely laughable, because it plans to use taxpayers money to pay polluters to reduce air pollution – and the media have allowed them to get away with it.

      Attacks on climate – no! A tax on carbon – yes!

      • Beat Odermatt 7 years ago

        To Phil Alford. It looks to me that the massive advertisement campaign undertaken by the Government to help Bob Brown and his followers has managed to convince a few naive minds. It would be sad for the Government to have wasted all the Millions on propaganda and not having been able brainwash a few more people. I am well aware of the issue of global warming and other environmental challenges, after all I worked well over 30 years as an Environmental Scientist. The issue is the inability of the carbon tax scheme in creating any environmental benefits. The carbon tax is an extremely badly designed scam which will achieve nothing beside creating some new superficial “social justice” poverty traps. The Government has the ability and mandate to legislate to achieve a low carbon economy. If you drive on the road, the Government tells you at what speed you may drive. If you drive too fast, you will be punished and if you obey the law you will not be punished. The carbon tax scam allows some to speed with consequences. In fact the Government gives some $7.00 for each $3.00 fine. The carbon tax scam is also a massive wasteful and expensive tax. The huge administrative bureaucracy necessary to administrate such a complicated scam (or scheme as Bob Brown would call it) and the even more massive “compensation” paid to polluters will leave very little if any for real pro-active environmental works. The carbon tax is a bad scam which will hurt many, divides a country, destroys true environmentalism and will achieve nothing. It would be hard to find a more complicated, ineffective and more expensive way to achieve nothing then the current carbon tax!

  2. Wayne Cameron 7 years ago

    Beat Odermatt is not sure how stupid people are? I can hazzard a guess – almost as stupid as you Beat. The problem is not the Carbon Tax or the Gillard leadership – its the weight of whinging negative commentators in the right-wing media, radio and now flooding the internet with amateur attempts to brainwash the rest of us. The tragedy is reflected in The polls which are telling us we are swallowing it!

    • Beat Odermatt 7 years ago

      It is interesting how Wayne Cameron calls me and the majority of Australians. It seems he has swallowed Bob Browns message about right- wing media and “brainwashing” of Australians. He may not be aware that the worst environmental management has been in countries by left wing Governments. If he thinks that being left-wing helps to improve the environment, then he should go and visit Haiti or some of the countries which were under the “protection” of the former USSR.
      The environment is to important as an issue to be degraded by small minded politicians. Most of the good and sustainable environmental improvements in Australia and across the world were usually bipartisan. All the good environmental improvements were done without more taxes and without “social justice experimentations”.
      I believe that we do not need a carbon tax, but challenging goals and legislations to meet these goals. A low carbon economy can only be achieved if ALL Australians support it and if set goals are met, say 2.5% reduction in CO2 emission per year. The carbon tax is merely the creation of a new poverty trap leading to the waste of over 85% of the carbon tax. The carbon tax is maybe the most stupid idea ever being implemented by a Government in Australia. We know poor Combe has no choice then to support Bob Browns idea to stay in his current job.

  3. Michael 7 years ago

    Combet will say anything to justify the introduction of a carbon tax then ETS. Many of us are believers in climate change but aren’t yet convinced an ETS is the most effective mechanism of reducing emissions. We are then branded as sceptics, rather than as people that want to understand more before coming to that conclusion. If an ETS was so effective then we would see more countries introduce it, and more widely across theIr economies. Is it just possible that a more direct action through regulation change – e.g. transport & power station emissions and migration over to gas – would in fact provide a less disruptive path to lower emissions. We need some more balanced discussion on the approach before I am convinced.

  4. David Rossiter 7 years ago

    I thought it was a good speech as it explained ‘why’ the Government was doing something – because of climate change – and to act now is the most economic way to reduce carbon in the economy.

    The speech also went on to explain ‘what’ was being done – moving to an emissions trading scheme.

    The ‘how’ part of the speech was also clear – big industry players would be required to pay for their emissions encouraging them to reduce emissions.

    And people in need of support would get compensation for increased costs of services and could also move towards improved energy efficiency if they chose during the transition period. But you don’t have to be paid to improve energy efficiency – you can do it because of the benefits.

    In terms of feed in tariffs for solar PV I think Combet was quoting a Productivity Commission report.

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