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FOR – Bills — Safeguard Mechanism (Crediting) Amendment Bill 2023; in Committee

David Van

The committee is considering the Safeguard Mechanism (Crediting) Amendment Bill 2023 and amendments (1) to (14) on sheet SK147, moved by Senator McAllister. The question is that the amendments be agreed to.

Jonathon Duniam

I seek further information around some specific entities, noting that there are only 215 facilities caught under this mechanism. I do this in pursuit of clarity around what impact the safeguard mechanism and the dodgy deal that's been struck between the Australian Labor Party and the Australian Greens will have on the cost of living and the cost of doing business. I'm trying to understand what is characterised as being this unbelievably difficult task to get to the bottom of, to go and ask these 215 facilities exactly what impact their legislation and the dodgy deal will have on these facilities and the people who do business with them or rely on their services or pay a fee for that service.

I turn to the state of Western Australia now. In particular, I'm talking about the Red Hill Waste Management Facility, which provides waste disposal services to residents in Perth's eastern region. Under the government's changes to the mechanism, this entity—like V/Line and some of the other businesses or facilities we've talked about—will be forced to reduce its emissions by 4.9 per cent per year. I'm wondering whether there's been any interaction between the government and the East Metropolitan Regional Council about how this facility will work to meet Labor's targets and any other flow-on implications out of the dodgy deals struck between Labor and the Greens.

We've heard about the in-depth and extended consultation between the government and these entities affected. I'm wondering, based on this lengthy extended consultation, what the impact is, how it's quantified, whether there'll be, as a flow-on from that, an increase to the rates that are paid in this municipality as a result of this dodgy deal with the Greens. If you can't tell us, can you at least guarantee that there won't be a rate rise as a result of increased costs for the management of the Red Hill Waste Management Facility?

Jenny McAllister

We have talked at length about the consultation process, and thank you for acknowledging the work that went into offering stakeholders an opportunity to contribute. As I've explained to you already, the purpose of the consultation was to understand the design parameters for the government's scheme. It wasn't to elicit detailed information from businesses about their business intentions in running their businesses; it was to ask them how they believe such a scheme should be constructed.

As I have indicated previously, it was extensive. Stakeholders were invited to respond to a consultation paper that was released back in August 2022. That paper sought feedback, appropriately, from anyone who wished to provide it, including covered entities, on matters including the share of the national abatement task, the scale and rate of change in that sector, how the safeguard mechanism baselines are set, crediting and trading, the role of domestic offsets and international units, the treatment of emissions-intensive trade-exposed businesses, how to take account of available and emerging technologies, and indicative baseline decline rates.

A public online information session was held on 31 August, in that same year, to outline key elements of the consultation paper. A recording of that was made available on the department's website shortly after, and about 220 people registered for that webinar. There were five in-person round tables around the country.

Invites were sent to stakeholders in safeguard covered sectors, including transport, resources, aviation, minerals and cement, government agencies, consultancies, carbon market advisories, environmental non-government organisations, think tanks, academia, financial services, industry groups, unions and First Nations groups.

Round tables were attended by approximately 140 people. Submissions were open on that consultation until 20 September. The department granted extensions to all stakeholders who requested one and over 240 submissions were received, and all of the non-confidential submissions were published.

After that, in October, exposure draft legislation was released for public comment. Submissions were open on that until 28 October 2022. Again, the department granted extensions until November 2022. Fifty-five submissions were received, and again the non-confidential submissions were published. There was then a position paper in January on the proposed design and supporting exposure draft legislation. The position paper outlined the proposed design of the reforms, including the share of the national emissions target that safeguard facilities will deliver; the framework for setting baselines for existing and new facilities, including the rate of decline; arrangements for issuing credits; access to flexible compliance options, including access to credits, offsets, banking and borrowing arrangements; multiyear monitoring periods; a cost containment measure; and tailored treatment for emissions-intensive trade-exposed facilities.

The draft National Greenhouse and Energy Reporting (Safeguard Mechanism) Amendment (Reforms) Rule 2023 implements the mechanism as was set out in that paper. Key provisions include the baseline-setting arrangements for existing and new facilities; declining baselines over time so that safeguard facilities contribute a proportional share of the national emissions reduction task, flexible compliance options, including below-baseline crediting; interactions with ACCU projects; and tailored treatment for trade-exposed facilities. The draft Carbon Credits (Carbon Farming Initiative) Amendment (No. 2) Rules 2023 prevent new government contracts for purchase of ACCUs from projects that solely credit abatement of covered emissions from safeguard facilities. They also enable the proposed cost containment measure by allowing the regulator to sell ACCUs.

There was then a public information session on 19 January to outline the key elements of the consultation paper. Again, a recording was made of that and placed on the department's website. Around 790 people registered for the webinar, and approximately 640 joined. There were then further in-person roundtables to provide a forum for discussion. Again, invites were sent to stakeholders in the covered sectors, government agencies, consultancies, carbon market advisories, environment and non-government organisations, think tanks and academia, financial services, industry groups, unions and First Nations groups. These roundtables were attended by 140 people. Submissions were open on this round of consultation until 24 February 2023, and the department again granted extensions until 28 February to all stakeholders who requested one. Over 280 submissions were received, and all non-confidential submissions were published on the department's website.

I ran through that again, Senator, because the purpose of this was to gain feedback about the mechanisms. It was not to obtain a record of all the decisions expected to be undertaken by businesses, but, where businesses provided information, it was incorporated into the design of the reforms that are before us now. We've canvassed a number of examples of changes that have been made over the course of this consultation period as a response to the feedback that was provided to us by stakeholders. You're asking for something quite different, which is specific analysis about the specific impact on a specific business. It's not the case that government consultation goes down that path. Our role is to establish a framework, which incidentally has been called for for a long time by leading business organisations because of the certainty that is required for people to take investment decisions. That's our role, and the purpose of the consultation was to seek feedback about the approach we proposed. We're confident that the very detailed and extensive consultation that occurred, as I've just set out to you now, was effective in obtaining the information that we wanted but also giving stakeholders an opportunity to provide it.

Long debate text truncated.


Date and time: 1:04 PM on 2023-03-30
Senator Pocock's vote: Aye
Total number of "aye" votes: 32
Total number of "no" votes: 26
Total number of abstentions: 18
Related bill: Safeguard Mechanism (Crediting) Amendment Bill 2023

Adapted from information made available by