Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (16:55): Obviously I will have a number of questions. I think if there is one thing you can say about me, Minister, it is that I have not supported this from the start.

Senator Wong: You have been consistent.

Senator JOYCE: I have been consistently—

Senator Wong: I have no quotes for you saying, 'I'm going to support a carbon price'.

Senator JOYCE: You will have none from me. What I can say is that this is a very sad time for our nation; it really is. It is something that has frustrated so many people out there. They feel that they are disconnected from this parliament. They feel the parliament has gone off on its own form of frolic. There is a belief, I think, in the Labor Party that somehow people will forget about this. They will not.

We will start with a couple of fallacies. No. 1, it is of course not going to do anything to the climate. It is a question you have said I have asked you 600 times and, Minister, you have never answered me once: by how much is it going to change the temperature of the globe? It is not. That is the primary fallacy and, once they recognise it, people say, 'Then why are we participating in it?'

The other one is that you believe carbon is currently free; that apparently people are getting their power, their fuel, for free. They do not. The reality is that there are people out there—and they might be a long way from this chamber and out of sight—who cannot afford it as it is. That is the issue and the crux of why this thing is so selfish and so self-indulgent. There are people for whom one of the greatest issues in life is to try to pay the power bill. Where I grew up, in the New England, there are people—and you will laugh, you will giggle, and that absolutely antagonises them—

Senator Wong: A point of order, Mr Temporary Chairman: none of us were laughing and none of us were giggling, so please do not say that—as a matter of courtesy, Senator Joyce.

Senator JOYCE: who stay in bed, especially when they are older and pensioners, not because they are infirm but because they are cold, and this is the most bizarre thing that we could ever be doing to them. Looking after people is the crux of what a good government does. We should be making their power cheaper, not dearer. We should be making their food more affordable, not less affordable. That is why there is this mounting frustration. You see decent people trying to do the decent thing. You go to a humble house—it might be a weatherboard in Ingham—where they prune their roses, they sweep their front veranda, they try to be decent citizens and they ask of us just one thing: for an environment to be created for them where the fundamentals of life are affordable. When we intrude on that for no real constructive purpose—there is no purpose to this—except to throw gold coins at the new Praetorian Guard of the Labor Party, the Greens, then people become furious. The only way that they will be able to quell their fury is at an election, and they are not going to forget. They cannot. It is an absurdity for our nation to be going down this path. To develop the metaphor, the whole reason that any organisation starts to fall apart is that an extenuated group starts to have excessive power in their deliberations. For you, that is the Greens. You have been driven into this corner by the Greens. You are deserting your core constituency. The other issue, of course, is the frolic. In any economy, at any time in history, one of the things that brings about a sense of economic disconnect is when you lose a sense of the fundamentals of economics. We are bringing into the economy something that is obviously a pricing mechanism. By your own words, it is a pricing mechanism. Therefore it works by putting the prices of things up so that people cannot afford them. The people who cannot afford them will not be the upper middle class or the wealthy; the people who cannot afford them will be the poor, the working class, the pensioners, the people in the regional towns. Why are you doing this to them? What is the purpose of this madness? You say: 'We must make a stand. We've got to do our bit.' What a load of rubbish! Do you think for one moment that we are not already doing our bit? There has been a quantitative increase in the efficiency of everything from internal combustion engines to coal fired power plants to everything we do—and we have done it without a carbon tax. We have done it because people, by their nature, have a form of ingenuity which allows them to become more effective.

When you think of the essence of this, who will be the greatest beneficiary of this? At the end of the day, I believe it will be the banking sector, from the commissions they make in trading paper permits around a marketplace. Were they doing it that tough that we needed to help them? Is that what this was about? Of course, they will lobby you. This is a frustrating day, a sad day. We know what we are going to do. We will fight this battle right to the end, because it is incumbent upon us as decent people to do it. We know that in the end we will lose, not because we have lost the argument, not because we got lower numbers than you in the election, not because you made a warrant at the election and you are sticking by your warrant; we will lose this because of the peculiarities of the Greens and the Labor Party and, in the other place, a couple of Independents who basically sold their souls and are now paying the price in their own polling.

This legislation is something that I think Franz Kafka would find a delight. I just want to go to one classic section. In part 8, division 2, we see:

On 1 September in the eligible financial year beginning on 1 July 2014, the Regulator must issue a number of free carbon units equal to the number worked out using the following formula:

Annual assistance factor
specified in the certificate	x 83,410,000	- A - B
Total annual assistance factors
For that eligible financial year

where:

   …   …   …

A means the total number of free carbon units issued in accordance with this Part before 1 September 2014 in respect of the generation complex.

B means the Regulator’s reasonable estimate—

'Reasonable estimate'! In accountancy, we are always fascinated when people have this wondrous equation and everything is so perfect, until we get to the part where we have got to have a 'reasonable estimate'. When in doubt, just pluck a figure out of the air or out of some orifice! It goes on:

B means the Regulator’s reasonable estimate of the number of free carbon units with a vintage year beginning on 1 July 2013 that were not issued in accordance with this Part in respect of the generation complex because of:

   (a)   section 169 (power system reliability); or

   (b)   section 177 (Clean Energy Investment Plan); or

   (c)   section 181 (closure contracts).

And on it goes—clear as mud! How many days have we got to go through this rubbish? We have got until Tuesday next week to go through this rubbish. This is you running the country. The same people who had the planes grounded when we came down here, the same people who could not get fluffy stuff into the ceilings without setting fire to 194 houses, the same people who have got us $215 billion in gross debt, the same people who were responsible for Building the Education Revolution, the same people who shut down the live cattle trade, are the people who are going to cool the planet. When you get back, Senator Wong, I want you to tell me what your 'reasonable estimate' is, since you have so clearly been following my question! I want to know what it is. I want people out there to realise that you have heard the question. Of course, we are not going to get an answer—because this is not about getting answers.

There is a time when every country gets to a point of frolic where they start to lose control, where the Praetorian Guard starts to take over from the emperor and run the show, where the finances of the empire start to be invested in frolics and extravagances and we lose sight of the fundamentals. In a world where, as we speak, there are so many incredible uncertainties out there, the only thing a good government, a prudent government, would do would be to look across the horizon, to look across the waters that bound our nation, and say: 'The world is getting very tenuous. A smart, prudent government would start to do whatever we can to get our people into a strong economic position that takes into account the realities of where we are.'

One of the greatest ways to sequestrate carbon is to pray for rain. When it rains, the grass and the trees grow and carbon is sequestrated. One of the greatest ways to reduce human induced carbon emissions is to take a nation into recession or depression. Then you have an immense carbon reduction. There is no doubt about that. If that is what you want, you can lose sight of the economic fundamentals, you can take your nation over the precipice, you can be so naive as to say, 'It's all right; it's happening everywhere else but it won't happen to us.' Then we will have carbon reductions. We will have massive carbon reductions, because our debt will get to a point where, like everywhere else, people will start to question whether they want to lend us money.

Senator Wong, you are the Minister for Finance and Deregulation. You are the one who oversees our $215 billion in gross debt. You are the one who last week borrowed $1.7 billion extra. The week before that, you borrowed $2.4 billion. The week before that, you borrowed $2.1 billion. The week before that, you borrowed $2 billion. The week before that, you did not borrow any and, the week before that, you borrowed $3.5 billion, which you do not seem to care about anymore. It seems to be not an issue. You have this blase statement that it is small compared with somebody else. It is like saying the melanoma on your arm is smaller than the one on mine and therefore you do not have a problem. I never quite worked out how that theory works.

This will show the virtue of your competency in this area. In part A, division 2, in the discussion about what the regulators reasonable estimate is, can you now please give a definitive explanation of how the regulator comes to that reasonable estimate? What exactly is it, how does it work into the equation nominated in part 3, what is the purpose of that and what drove that decision?

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:08): You have a number of issues there, some of which were germane. There were certainly a lot of references to Praetorian guards and empires. I am not an imperialist; I am a republican.

First, in relation to the section the senator was reading out, from listening to it I think he was reading out a part of the legislation that deals with the allocation of permits under the Energy Security Fund—I am looking to the advisers' box to confirm I am right. You might recall that there is a capped number of permits available to the electricity sector to ensure smooth transition and in recognition that there is a significant carbon liability for parts of that sector. So, a significant amount of funds is made available, via the provision of free permits, to assist with that transition. It is an economically responsible thing to do. I believe the section the senator is reading out is part of those provisions that talk about how you allocate those permits. That policy has been in place for some time. I am not saying it is without controversy. Obviously different generators have different views about how the permits should be allocated, but I think that is the section to which the senator refers.

The senator also spent a lot of time talking about working people. I am very happy to talk about Labor's record when it comes to working people and pensioners. This government has put jobs first. Under this government we have seen over 700,000 jobs created. That is 700,000 people who get to engage in paid work and understand the dignity of work. It is 700,000 people and their families who have the capacity for economic security. It is 700,000-plus people who are able to ensure that they can provide for themselves and for their dependents. When it came to the global financial crisis, something those opposite sought to dismiss with a wave of hand, we put jobs first. Some 200,000 Australians would have been on the dole queues but for the actions of the government and the response from business and the economy more broadly. So I think this government has a very proud record when it comes to ensuring that we do what it takes to support jobs—now, through the global financial crisis, today and beyond. In regard to the economic stimulus, which supported 200,000 jobs, I would also say that it was opposed by Senator Joyce and those opposite.

A comment was made about pensioners. What has this government done for pensioners? We have delivered an unprecedented increase in the age pension. It was delivered by a Labor government, not by a coalition. They had 11½ years to deliver it and they never did. Who delivered it? A Labor government. Since 2009 we have delivered extra payments worth about $148 per fortnight for single pensioners and $146 per fortnight for pensioner couples combined—this is full pension rates. This was never delivered by those opposite. We have put in place an annual $600 carers supplement; we have increased the pension supplement; we have delivered increases to Family Tax Benefit Part A for families raising teenagers; we have increased the Child Care Rebate; and we have delivered Australia's first paid parental leave scheme. In addition, we have delivered the Education Tax Refund to contribute to the cost of getting children to school, and all that comes with that. So, I do not think I can allow the rhetoric from Senator Joyce, who supported Work Choices, to go unanswered, because this government has supported jobs, has delivered for pensioners and continues to support the social safety net, which the opposition would have to tear apart to meet their $70 billion black hole.

I think the senator also talked about rewarding work. If you look at the tax package that is part of the household package in the Clean Energy Future package you will see there is a very strong focus on rewarding work and a very strong focus on lower-income Australians. Part of the logic behind an increase in the tax-free threshold is that it is good for participation. It means people keep more of every dollar they earn. It is a good reform in its own right and it is significant in the context of the Clean Energy Future package. So, we are combining an important economic reform—that is, to increase participation through tax reform—with the need to provide assistance to lower-income Australians. Increasing the tax-free threshold will also particularly help the second income earner. We are increasing pensions as a result of the clean energy assistance package. We are also increasing family tax benefits for pensioners—an additional $338 per year. There are increases to the Family Tax Benefit and provision of a low-income supplement. These are all benefits that the government is putting in place because we understand the point that Senator Joyce made, with which I agree: there are many Australians doing it tough. The package has been put together with a very clear understanding of Labor values and the importance of supporting those in need as well as the importance of putting in place economic reforms to encourage more people into the workforce.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:14): As you noted in that last piece, I asked a specific question. It is extremely important that the Australian people understand whether a person is competent in an area or not. If they are not competent in an area they will generally give you a long palaver on all sorts of issues to try and cover up the fact that they do not know what they are talking about. If they do not know what they are talking about, you know that you are in for real strife when they bring the policy in. I will repeat the question—and I see they are desperately talking to one another because they do not have a clue. When I asked about the regulator's reasonable estimate, I wanted to know how they calculate that reasonable estimate. You will find it, Minister, in part 8, division 2, page 215, between lines 4 and 30 but specifically on line 24.

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:16): I am not sure which part of the question you want me to answer. The question was originally in relation to 161(3).

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:16): I will clarify. I want you to answer the question that I asked you, which is: how does the regulator determine reasonable estimates?

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:16): I will provide a reference to the EM and we will see if that is of assistance. It is paragraph 6.78 of the EM reads:

To determine the amount of free carbon units that should be allocated for each generation complex on 1 September 2014, the Regulator then must consider how many free carbon units have already been issued for that generation complex (term `A'), and how many units would have been issued for that generation complex but were not due to the operation of various other provisions of the bill (term `B'). [Part 8, clause 161(3)]

It goes on. There is an explanation in the EM on page 186. I could read that out, but I am sure that the senator has it.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:17): I am quite happy for you to read it out if you can find the area where it says how we calculate the estimate. What is the process of coming to a reasonable estimate? What is the purpose of having some fantastic equation and then subjecting that equation to a reasonable estimate? What on earth do you mean by 'reasonable estimate'?

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:17): I am advised that the regulator will make an assessment in accordance with the quite lengthy provisions from page 183 onwards of the explanatory memorandum.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:18): Australia, we have not got a hope. This is an absolute joke. This is where it is going to go; this is who is running the show. This is why they have guillotined it. We have to finish this by Tuesday next week because they do not have the answers. They cannot answer the first question. This nation is heading towards an absolute fiasco. That stunned silence, Australia, is you looking for an answer. It is absurd, it is a travesty, it is a fiasco and it is disgusting. I do not know why we are doing to our country. There is absolutely zero competency on the other side. They do not have a clue what they are doing. They are dragging us down this path. You can pick anywhere in this legislation and they will not have a clue what is going on with it.

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:19): Perhaps the senator could settle down. This is the Senate, a chamber of the federal parliament. To be shouting in that way and engaging in personal abuse of me is hardly going to assist the debate. I respect one thing about you, Senator: you have consistently opposed a carbon price, unlike most of your colleagues. I understand that you do not like the legislation that is being voted on. But we could undertake this debate with some measure of civility around content.

Clean Energy Bill debate November 3 2011

Debate resumed.

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:36): I want to respond to an earlier question from Senator Ludlam. I am advised that the scenarios to be modelled by AEMO to explore the energy market and transmission implications in moving towards 100 per cent renewable energy are being considered. Currently, AEMO's scenarios undertaken for its existing role in providing information for transmission planning are focused on the NEM. Given that the NEM represents by far the bulk of existing generation and emissions, the NEM will clearly be the key focus of new scenarios. Nevertheless, the treatment of smaller groups, which I think is an issue the senator raised, is an issue still to be worked through. I am advised that Minister Ferguson's department and the Department of Climate Change and Energy Efficiency, Minister Combet's department, are in active discussions with AEMO to finalise the scope of the scenarios to be modelled.

Senator LUDLAM (Western Australia) (17:37): I will put a couple of questions on notice. If that is all the information, I thank the minister for providing that response. I am interested to know whether any Western Australian officials in the Office of Energy, for example, or any senior departmental officials or indeed the Minister for Energy in WA have been involved in those discussions. If so, can you provide us with some detail?

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:37): I will get some advice and come back to the Senate in the course of the debate. I did have a response to Senator Joyce on a couple of the issues he raised but I do not know whether he wanted to put more things to me before I responded.

Senator Joyce: No, I would like to hear that response.

Senator WONG: I accept that there are a number of aspects of the legislation before the Senate which do involve some complexity because they obviously deal with what is a significant economic reform. I am advised that, consistent with what I said earlier, in relation to the provision of units under the energy security package, the regulator will obviously allocate a portion of the pool of units available to eligible entities. To ensure it does not underallocate, there is a true-up subsequent to that, I think in the second year, which takes into account the actual free units and the estimates of what would have been provided to that identity under the legislation. The policy point here is that the provision of these units is linked to the government's policy objective of energy security. If you read the explanatory memorandum and the act, you will see there is discussion of the power system reliability test. I will just quote that:

To ensure energy security at the beginning of the mechanism, the Government has imposed conditions on assistance. This is designed to reduce the risk of unexpected behaviour from owners, controllers or operators of generation assets (or their creditors) affecting the supply reliability in Australia’s electricity markets. …

Generation complexes must comply with the ‘power system reliability test’ in order to receive assistance. The power system reliability test uses the value of free carbon units to influence the decisions of owners, operators or controllers of some generation complexes about when to withdraw generating capacity, to promote the secure supply of electricity.

So these provisions are about ensuring the continued security of Australia's electricity supply in the context of a significant transition.

I was not sure if the senator has asked this, but I have asked the question of whether the concept of reasonable estimate was reviewable in any way. I am advised it would be the subject only of judicial review. I am also advised that the concept of reasonable estimate is quite a common concept, not only in the bills before the Senate but in a range of federal and other legislation.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:40): I will have to go home and Google 'true-up'. I have never heard that term before. This is a new world we are living in; we are truing up things. It sounds like 'chewing up'. The question that was clearly asked was, how do they calculate the regulator's reasonable estimate—what is the reasonable estimate? We have a very long procession of words without any semblance of an answer inside them. What we do know is that it is up for judicial review, because who needs a parliament anymore? We will just forget all about it.

I have another question. You can spend all night and all day going through these one after the other after the other. I grant that under this lunatic scheme the climate change authority makes its recommendation and then the minister, in his war against climate, accepts the recommendation. But it never goes through the parliament. This completely new tax does not have to go through both houses of parliament. It is just a regulatory instrument. There is no other tax in this nation that you can increase without having to go through the parliament, but this one you can. Things change. The only hope we have is the disallowance of a regulatory instrument. Then it goes to the default carbon pollution cap. The default carbon pollution cap is the carbon pollution cap of the previous flexible charge year minus 12 million. Why 12 million? I do not know. It is another number plucked out of the orifices of banality.

The problem with this default year—and this is the question, Minister—is that, if we disallow it, it goes to the default year minus 12 million. If it is disallowed again, it goes to the default year minus 12 million. There is no phase-out year. It will just keep going to the default year and there is nothing in the legislation about a phase-out year. It will go to the default year continuously until we have to turn out the lights in this place, until we are not allowed to breathe out anymore, until there is no carbon left in the economy. It is another one of these lunatic provisions in an extremely badly written bill. I will direct you explicitly to it. Go to part 2, section 18, page 31. What is the phase-out year? Where in this magnum opus is it actually explained to us what happens if we have a succession of default years, one after the other, because the Senate keeps on disallowing it? We will not have an economy; there will be nobody left here.

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:43): I thank the senator for his question. I am advised that the default reduction is consistent with the five per cent reduction to 2020, which I remind the senator is his own policy.

Senator Joyce: I am going to tear you apart on that one.

Senator WONG: I will take that interjection. Apparently I am going to be torn apart. Please proceed.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:44): With a five per cent reduction, you must then concur that it is quite consistent to have a 12-million unit reduction year after year, seriatim, in perpetuity. You will go beyond five per cent; you will shut down the whole show. You have no phase-out clause in your section. It is incompetent, like everything else in this legislation is. If there is a phase-out clause, then here is the question: show it to me.

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:44): As I was saying, the default is a cap reduction, consistent with Senator Joyce's own policy. It only comes into effect if this parliament disallows the caps which are being put forward by the government. Obviously, one would hope that the parliament would make a more sensible decision than simply relying on default caps in the legislation.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:45): Minister, what are you saying then? You just have to be upfront and honest with the Australian people. Just say it: 'I don't have a phase-out clause. We forgot to put one in.'

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:45): I do not think that is a serious question. I have explained it. The default reduction—have you finished?

Senator Joyce: I haven't even started.

Senator WONG: The default reduction is consistent with your policy and it only comes into effect if the parliament disallows the caps.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:46): We have had two questions and two absolute fiascos. Minister, you have said that it is in line with our policy. Our policy does not say that you can just keep on taking 12 million units out year after year, year after year without completely shutting down the show. You have failed to put in a safety clause mechanism in this legislation; you have left it out. As it reads, if it goes to default, which is quite probable if there is a change in the mechanism of the Senate, and if it goes on and on and on, we shut down the show by your own legislation. You might say that is unlikely. But the point is that, right at the start of this, we were looking at the competency of your drafting, the competency of your government. There is a bit of a concern when the answer to the first question involved a non-explanation because you did not have a clue and the answer to the second question was 'It's been left out,' because you made a mistake.

Senator WONG (South Australia—Minister for Finance and Deregulation) (17:47): There is no mistake. What Senator Joyce is suggesting is that this chamber would be so incompetent as to disallow something this important permanently. That is what you are suggesting. I think there is a little more responsibility in the chamber, perhaps not demonstrated in his performance tonight, than he gives it credit for. He is suggesting that this chamber will disallow, every year, this important economic policy and allow the default cap to apply. The default cap only comes into play if the caps are disallowed, and it is consistent with the policy for which you, Senator, have signed up for.

Senator JOYCE (Queensland—Leader of The Nationals in the Senate) (17:48): Do you not think you would have the competency somewhere in those large vessels of academic acumen, which preside on the other side, a person who when drafting this legislation would have a default position and say, 'Of course, when we reach our five per cent we won't be going on into the default clause there'? It does not say that. There is nothing in here, except what is written and what is written is this: 'If this is disallowed, we keep on taking out 12 million units each year until we do not have an economy.' There is nothing that you have written in the legislation on this. All you are saying is that, in the future, you will have to presume that the chamber will be more competent than it is currently. And on that one, you are probably right, because anything could be more competent than what is written here.