Mr COMBET (Charlton—Minister for Climate Change and Energy Efficiency) (15:35): I appreciate the opportunity to explain the government's policy, but at the outset can I completely repudiate the assertion that was just made by the shadow minister that I had made a false statement to the House. That is completely incorrect and I repudiate it entirely. It was completely unsubstantiated. On 10 July the government announced a Clean Energy Future package. What we announced was accompanied by a very detailed set of materials outlining a host of the policy issues in detail including Treasury modelling and a number of other materials. At its core were a number of elements. One of them was a carbon pricing mechanism. The carbon price mechanism is an emissions trading scheme that commences with a three-year fixed price period, commencing from 1 July 2012, and from 1 July 2015 it is an internationally linked, fully flexible, emissions trading scheme—that is, it links with international carbon markets. I will return to that issue in time to address some of the comments made by the shadow minister. There were other important elements of the announcement by the government on 10 July. Within that announcement was very strong support for renewable energy and a number of measures to improve energy efficiency in households and in businesses. A very significant element of the package relates to the land sector, carbon farming and the storage of carbon in the landscape. It is a very comprehensive policy package and I do not think anyone could seriously assert that a considerable amount of detail was not provided to the community. I make that point to repudiate the general statement that the shadow minister was endeavouring to make. The policy material is principally contained in the document Securing a clean energy future. Behind it sits a very comprehensive and credible set of Treasury modelling based upon the scenarios that would appropriately underpin a major policy initiative of this nature, representing, as it does, significant economic and environmental reform. All of that material is available to the community and has been published. It is worth recalling for the moment that this is an emissions trading scheme and it has some features in common with the policy that Labor endeavoured to prosecute in the previous term of parliament. That previous proposal was at one point in time the subject of agreement with the coalition. It included important features such as the international linking of the emissions trading scheme with the international carbon markets. It is embarrassing, in fact, to hear the shadow minister repudiate so much that he stood for in the past from a policy standpoint, having completed a thesis on market mechanisms, including, I think, a set of policy propositions that he has completely walked away from. It is a pretty pathetic thing to see. The entire policy position that the government announced is underpinned by the climate science. Of course, this is another matter of contention across both sides of politics. The shadow minister professes to accept and respect the climate science, but his party is led by someone who has had 100 different positions on the science and who sends the signal to those in the community who do not respect the science that he is with them. It is the same way that he walks both sides of the street on many different issues. In a formal forum he will say he accepts and respects the science, but when it is appropriate—particularly when he is on radio in Sydney with Alan Jones, his close colleague—he will send a very clear signal that he has no respect for the science, no respect for scientists and indeed no respect for economists, who support dealing with carbon pollution by a market mechanism. It is always important to come back to the foundation of the science because the opposition has no credible policy to address what scientists are telling us. We always have to bear in mind that the empirical evidence is clear. Last year, 2010, was the warmest year on record, equal with some others. It was the 34th consecutive year with temperatures higher than the 20th century average. The warmest decade on record was 2001 to 2010, and each decade since the 1940s has been warmer than the last. This country, and many others, has a lot to lose from climate change and the warming that we are experiencing. The science is telling us that carbon pollution is contributing to the change that we are experiencing. It is an international problem. The atmosphere is global; it is not confined to any national boundaries. Australia needs to participate in discussions with other countries about how we will address this problem, because, in particular, Australia is one of the top 20 polluters internationally and the highest polluter per person of all of the developed economies. No responsible government receiving this scientific advice and recognising these statistics has any alternative but to address this issue, in partnership with the international community, by reducing its levels of carbon pollution and driving investment in clean energy sources in its own economy in order to play a responsible part internationally in dealing with this issue. It is incumbent on any government receiving this advice to act upon it. The government must take these steps to cut pollution, to contribute to international efforts to address climate change and to drive change in our own economy, but to do so at least cost to our economy, at least cost to businesses and at least cost to households. This is precisely what has driven the development of the policy that the government announced on 10 July. A carbon price mechanism, in partnership with the other elements that I described earlier, will drive cuts in pollution in our economy at least cost to the economy, to businesses and to households. It is a simple proposition, to provide the incentive to cut pollution to the largest emitters of pollution in our economy. Those polluters can reduce their liability under the carbon price mechanism by reducing their pollution. They can do so in particular by improving energy efficiency and investing in lower emissions technologies. It will be particularly important in the years to come to improve the performance of our electricity generating sector with respect to the pollution that is attendant upon electricity generation. The advantage of a cap-and-trade emissions trading scheme is that the government can set emissions reduction targets. In fact, there is supposed to be bipartisan support for a set of emissions reduction targets in this parliament, in this House. The unconditional bipartisan emissions reduction targets that both sides have indicated their acceptance of is a five per cent reduction in pollution by 2020 from year 2000 levels. The carbon pollution mechanism that the government announced on 10 July will deliver at least that outcome, and that represents a reduction by the year 2020 of 160 million tonnes of carbon pollution. That is a very important commitment. The government has also indicated its intention to establish the Climate Change Authority. It will be chaired by former Reserve Bank Governor and Treasury secretary Mr Bernie Fraser. The Climate Change Authority will have the responsibility of providing advice and recommendations to government on the pollution caps that will operate under the emissions trading scheme so that from 2015, when we commence emissions trading with international linking, pollution caps will be set by regulation by government. The emissions trading scheme will achieve at least the 160 million tonnes of pollution reduction by 2020, but the Climate Change Authority may recommend further emissions reduction targets by that time. Government has the discretion, of course, to act on those recommendations. The other thing that is important in the development of an approach to tackle climate change and is represented in the policy that the government has announced is, as I mentioned, that we address change within the electricity-generating sector. One of the elements of that that is contained in the policy is the commitment by the government to seek to negotiate the closure of up to 2,000 megawatts of high-emissions, older, pollution-generating capacity in our system. The shadow minister falsely indicates that there has been no provision made for that negotiation in the material that was released; in fact, there is provision. A contingency has been made in the contingency reserve in the budget for that negotiation for the closure of up to 2,000 megawatts of high-emissions capacity. I do not think any responsible government is about to indicate what that quantum that has been provisioned may be. There will be a negotiation should some participants in the energy market wish to discuss that issue with the government, but we are not about to indicate to those players what the government may have provisioned. However, a provision has been made. A number of other important elements of the policy have also been included. The government has indicated a commitment to establish a clean energy finance corporation and make an equity investment of $10 billion. That corporation could provide loans, loan guarantees or make equity investments in an effort to assist participants in the private sector and bring some technologies to the market. Mrs Mirabella: Not a front for your mates? Mr COMBET: The member for Indi suggests it may have some inappropriate use. It will not. It will be a finance corporation with an independent board. It will have an investment mandate and it will be established in a manner that will ensure that it operates in an appropriate fashion to assist and commercialise low-emissions technologies and renewable technology—notwithstanding all the slur, slander and rubbish that comes from the other side. Importantly, having established all of these mechanisms to cut pollution and drive investment in our economy, naturally the government has also placed a lot of attention on assistance to households and businesses, in particular to households to deal with any price consequences of the establishment of a carbon price in the economy. The Treasury modelling on this is clear. There is projected to be a 0.7 per cent increase in the CPI as a consequence of introducing the carbon price mechanism. The average potential price impact on households averaged across the economy is around $9.90 according to the Treasury modelling. The government, of course, will institute tax cuts, increases in the pension, increases in family tax benefits and a host of other Commonwealth payments to offset for many households that price impact, modest as it may be. In fact, the average level of assistance provided to households across the economy is $10.10. The tax cuts will be delivered by a very important tax reform. The proposition contained in the policy material that the government will implement provides for an increase in the tax-free threshold from $6,000 to $18,200 from 1 July next year and, from 1 July 2015, an increase in the tax-free threshold to $19,400. This will mean that more than one million people will not have to submit an income tax return. It will deliver tax cuts to many households. Coupled with that, pensions and other Commonwealth payments will rise by 1.7 per cent, meaning that, contrary to the assertions falsely made by the shadow minister, nine out of 10 households will receive some assistance to meet the modest price impacts. Six million households will receive assistance to meet their expected average price impact. Four million households will receive assistance of 120 per cent of their expected price impact. Single pensioners will be better off. Coupled pensioners will be better off. Many others in that category of four million households will be better off. On top of this, the government is providing significant assistance to industry to support jobs, in particular in relation to industries that are in the emissions-intensive trade-exposed part of the economy. There is also assistance for small business. There are other measures contained in the policy announcement that are very important that interested members of the community have access to. Up against all of this is a farce of a policy from the coalition. It does not stack up. When the policy was first enunciated by the shadow minister in February 2010, it asserted that about 70 per cent of the emissions reductions it proposed could to achieve an emissions reduction target of a five per cent cut in year-2000 levels of emissions in our economy by 2020 could be achieved from soil carbons. The science is not there, and it does not comply with the international rules. It simply cannot work. (Time expired)