Off the back of a truck, I have, on the hush hush and deeply off the record, come into possession of the first draft of Julia Gillard’s speech on climate change that she was gave at the University of Queensland. She chose not to give it when she realised we don’t live in the world of make believe. But oh well it’s nice to dream. (It’s also 800 words shorter than the final version she gave, and we all know less is more!)
CHECK AGAINST DELIVERY
I speak here today on the final of the three important policy areas I first mentioned on the day I became Prime Minister – that of climate change. I know that many in the community have been waiting for this day; waiting to know how I propose we move forward on this most important of issues. I thank them for their patience.
Before outlining my policy I need to explain why we are here in 2010 still talking about what to do about climate change.
We are here because the Labor Government failed to explain fully to the Australian people the necessity for a price on carbon, failed to explain fully the working of an Emissions Trading Scheme, failed to negotiate fully with all sides of politics, and failed to acknowledge the changes in community sentiment on climate change.
We all know that the Labor and Liberal parties went to the 2007 election with a policy for an Emissions Trading Scheme. We won the election and then in 2009 after many months of hard work we presented the Parliament of Australia with legislation to introduce an Emissions Trading System. The Liberal Party and the Greens voted against it.
Later in that year after more negotiations with the Liberal Party we reached an agreement. The legislation was due to be passed, when Tony Abbott, backed by those within the Liberal Party who view climate change as a fairy story, who view climate change as a left wing conspiracy, defeated Malcolm Turnbull by one vote in a leadership challenge.
That same day the Liberal and National Parties in the Senate voted with the Greens to defeat the legislation again.
It would be easy to blame the Liberal Party. It would be easy to blame the Greens. It would be easy to blame senators Fielding and Xenaphon. But Government means taking responsibility. It was our legislation and so it was our failure.
There will be many in the media who will lick their lips and be ready to quote me criticising the performance of the past three years, as though I am admitting defeat. To them I say they are mistaken. The race is not yet run; the final bell is not yet rung. Our performance of the past three years resulted in us taking a number of body blows, but we are not down. And we shall not lose the fight.
It has been said in the past that climate change is the single greatest moral issue of our time. I do not disagree, but I believe we need to put the problem of climate change in its proper context.
The single most successful law in the economic world is the law of supply and demand. The profit motive has driven economic prosperity since the beginning of time. The law that in a free market the right price for a good or service will be achieved through supply and demand has driven our economy in a way that those who pursued Communism in the 20th Century could only look on in awe and disbelief.
But markets are not without failure. And when they fail the Government must step in and correct the failure, or it stands condemned for pandering to special interest groups and big business.
We have seen this happen in the recent Global Financial Crisis. Investors were denied the full information about the risks of what they were buying in the convoluted and pernicious financial derivatives market. This was a market failure that when uncorrected by Governments – governments all too eager to let big business have its way.
The result is the United States of America having 10 percent unemployment, countries in Europe teetering on the edge of financial ruin and Australia avoiding recession only by the skin of its teeth. We here in this country were fortunate that Labor and Liberal Governments in the past had ensured the rules that govern financial markets were solid and prudent.
But when we come to climate change we do not find such prudency or assuredness.
Because climate change is the single largest market failure in the history of the world.
It is a failure because when we drive our car, switch on our lights, read our newspapers, eat our food we do not pay for the carbon burned to produce them. We have never paid for it.
When the industrial revolution began in the 18th and 19th Century and coal fired steam engines churned out the wealth of nations, the peoples of Europe, America and Australia did not think that by doing so they would be changing the climate of the planet. How could they know? They did not know of the electron, of electricity, of nuclear power. We cannot blame them – they truly knew not what they did.
But we do.
We know that 2009 has been ranked the fifth warmest year on record globally and finished off the hottest decade in recorded history.
We know that each decade since the 1940s has been warmer than the last.
We know that due to climate change, the number of droughts could increase by up to 40 per cent in eastern Australia, and up to 80 per cent in south-western Australia within the next six decades.
We know that without action irrigated agricultural production in the Murray-Darling Basin is projected to fall by over 90 per cent by 2100.
And we know, without any reasonable doubt that the temperatures are largely driven by pollution created by carbon emissions.
There will always be those who doubt everything. No issue ever receives unanimous support. There are still those who believe that cigarettes do not cause cancer – interestingly many of those who believe thus also are those loudest in denying climate change is manmade.
But climate change is not a scientific issue; it will not be solved by science like it is some infection that merely requires some penicillin. Yes there are steps that can be done, but without treating climate change as an economic issue we are still acting as though we are in the eighteenth and nineteenth centuries. And to do so would be as impossible to contemplate as would you taking your sick child to the doctor, only to be told there were no antibiotics, no medicine, and no surgery.
We do not allow our doctors to be ignorant of the twentieth and twenty first century medicine and we should not allow our economy to operate ignorant of the impact of climate change.
The failure in the climate change market is due to time and size.
We do not see the impact on the climate of driving our car to work. We do not notice an increase in temperature every time we switch on a light. We do not even feel any change when we drive past a coal fired power station. And because we do not, and because we will not physically feel any real change from the entire world’s use of carbon based energy until sometime in the future, we do not pay for those consequences now.
Perhaps the best example of a similar market failure is the market for tobacco. For many years in the twentieth century tobacco was extraordinarily cheap. Even up until the late 1980s the price of cigarettes was such that there was little financial impact from buying a single pack. Yes if you added all the packs you bought over the course of a year it would be a large amount, but a single pack in itself was almost a throwaway purchase.
The reason for the market failure of tobacco was again size and time. While it is true that every cigarette is doing you harm, you do not die from having one cigarette. Nobody has ever smoked their first cigarette and then died from cancer the next day as a consequence.
And while lung cancer can strike those who are young, for a large number of the smoking population it will strike when they are in their 50s or 60s. It is still far too young, but when you start smoking at the age of 18, 60 years old seems so far away that it doesn’t even count. No one buys a packet of cigarettes when they are 18 and worries about what may happen in 40 years time.
The price of tobacco did not take into account that buying them and consuming them will eventually kill you. The price of tobacco only took into account the fact that having one cigarette in itself will not kill you today.
The government has raised the price of cigarettes through tobacco levies not to raise money – though I know many will think it so. No, it has been raised because the Government wants people to stop smoking.
By forcing the market to set a higher price for tobacco we are forcing the market to in effect take into account that you personally will pay a high price for smoking throughout your life. The Government levy attempts to put a price on the carcinogenic nature of cigarettes. Many will argue the price is still too low, some will argue it is too high. But only the foolhardy will argue such a price should not be set.
The Government levy corrects the market, because the market will never recognise the costs of something that is not seen for many years and which cannot be attributed to a single purchase.
And the laws of supply and demand have worked spectacularly well. Through increasing the price of tobacco and other anti-smoking measures, smoking in this country has been reduced to levels once thought impossible.
When many of these measures were introduced the thought that the price of cigarettes would be so high, and that it would be banned in so many areas would have been almost impossible to contemplate. There certainly would have been no consensus.
But for those of you who are old enough and who can remember when you could smoke in cinemas or restaurants or aeroplanes or your work office you would now all agree that we could never return to such a world.
The market and the Government working together have reduced the level of smoking.
Market failure was corrected but the laws of supply and demand were not ignored.
And so too must be the case with climate change.
Because we do not see the effect of one single carbon emission on the climate, the market will never set a price for that consequence. But our use of carbon emitting energy will destroy the planet as sure as smoking cigarettes will destroy an individual’s lungs.
So what should the Government do?
There are those who say that with carbon emissions as with cigarettes, the economy needs to go cold turkey. We need to quit immediately.
This is not and never will be an option.
An economy going cold turkey on carbon would be a horrible thing to contemplate. Massive jobs would be lost, productivity would be slashed and lives would be ruined.
The economy needs to borrow from the anti-smoking brigade and in effect acquire a carbon emissions-patch.
This can be done through incentives and regulation to produce more efficient carbon based energy. We can invest into research on carbon capture and storage, clean coal technology. And we can massively increase our investment into renewable energy supply.
Today I can announce that if re-elected my Government will introduce new regulations which will ensure that all new power stations will have to meet best practice standards for their carbon emissions.
New coal fired power stations would also have to be carbon capture and storage ready, capable of being retrofitted to capture and store the pollution caused by burning coal.
The new standards will be determined by Government following a process of consultation open to all the key stakeholders, including technical experts, energy market institutions, industry and environmental groups.
This means that we would never allow a highly inefficient and dirty power station to be built again in Australia.
These new standards will also apply to existing projects. If you want to produce carbon emissions you will be free to do so, but we cannot exist in a world that uses technology of the twentieth century technology to burn a nineteenth century fuel.
The Government will negotiate with energy companies to ensure such changes can be made with the least impact on jobs, however just as we would not allow a building riddled with asbestos to remain, we cannot allow the dirtiest types of power stations to remain indefinitely.
I can also announce that we will continue our efforts to promote the use of renewable energy.
The Government has already made significant commitments to this agenda.
Martin Ferguson is delivering a range of policies that will genuinely accelerate the development of renewable energy options for Australia. We have invested $5.1 billion through the Clean Energy Initiative. Investments in clean coal, wind, geothermal and biofuels, to name a few.
The $1.5 billion Solar Flagships Program is supporting the development of very large scale solar generation plants, right here in Australia. Interest in the program has been strong, with 52 projects applying for Stage One. We have already announced a shortlist of eight projects with sites across Australia. If re-elected we will announce the two successful applicants for Round One funding in the first half of next year.
Together with our investment in the Australian Solar Institute, the Solar Flagships program will develop Australia’s potential to become a world leader in powering our homes and businesses through solar energy.
We have also delivered on our promise to increase the Renewable Energy Target, increasing it by at least four times so that 20 per cent of Australia’s electricity comes from renewable sources by 2020.
This will help drive nearly $19 billion of investment in clean renewable energy. And it will reduce carbon pollution by around 39 million tons by 2020. That’s the equivalent of taking almost 10 million cars off the road.
But I will go further.
We need more steps to accelerate the development of renewable energy and its availability for businesses and consumers.
Today I announce that, if elected, the Australian Government will contribute up to $1 billion over 10 years to the investment needed to connect our electricity grid to new sources of renewable energy.
From solar power in north Queensland to geothermal in South Australia and wind and wave technologies in Western Australia.
I want the whole country, from the north-east coast to the south-west, involved in creating these renewable solutions for our future.
If elected I will also meet with all state premiers to develop a national gross feed-in tariff for large-scale solar plants and urgent and necessary step to encourage renewable energy supply.
I also acknowledge that many people feel overwhelmed by all the information on climate change. They don’t know who or what to believe. They want to trust the United Nations reports but they are inundated by news reports and opinion pieces which do everything in their power to cause people to doubt the science.
Because of the need to restore the trust in the science, my Government will create an independent, properly credentialed source of information and expert advice – a Climate Change Commission – to explain the science of climate change and to report on progress in international action.
The work of the Climate Change Commission will inform all Government action on climate change and provide a trustworthy resource for the public and for business.
These are all worthy and necessary policies.
But alone they are meaningless.
Without one important step they are as likely to succeed as were the economies of the Soviet Union or North Korea.
We must use the laws of supply and demand.
We must have a price on carbon.
I say again: we must have a price on carbon.
There are those who will try to use such a statement to arouse fear of you losing your job, or fear of your ability to pay for basic services. They will use fear to try and win an election.
But if there is one truth about governing, it is that a party which attempts to win government through fear will be too fearful to govern.
It will be a party too afraid to make the tough decision, too afraid to do what is right.
That will not be my Government.
There are also those who say they are straight talkers. But we know from long experience that those who generally say such things are not talking straight, but are actually doing all they can to make sure you don’t notice how crooked they truly are.
But let me today give you an example of some real straight talking. Let me say something which any number of focus groups and advisors would tell me not to say. Let me say something of which there are those who believe it will lose me the election. Let me say something which those who would seek to scare their way into Government will want to use against me again and again.
I say this to you knowing that what I am to tell you is the most obvious thing in the world, but which has for too long been avoided by all in Government: avoided out of fear.
Ladies and gentlemen, I say to you that if we put a price on carbon the cost of electricity, the cost of energy, in short the daily cost of life will increase.
The prices of all things will rise. This is unavoidable.
Why do I tell you this? I tell you it because the Australian people are not fools and I will not treat you as such.
It is supply and demand – the same economic laws which have brought the western world prosperity unparalleled throughout human history.
By setting a price on carbon we will be finally allowing the market to work as it should – one that will use the profit motive to find more efficient ways of producing energy that involved carbon such as coal and to find more efficient way of producing energy from renewable resources.
Now I know all of you will be still hearing the sound in your ears of mentioning higher costs of living.
I say to you that you will not be left behind. I said before that we need a carbon-emissions patch; that we cannot go cold turkey. This applies to consumers as well as to producers.
I guarantee to the Australian people that every single dollar of revenue raised through placing a price on carbon will be directed back to the Australian people to compensate the impacts of the increases in costs of living. Every single dollar raised.
The compensation provided will allow consumers to cope while the producers catch up. It will take time for more efficient coal fired power stations to come into full operation, it will take time for renewable energy power to be fully connected to the electricity grid. And I do not expect the consumers to pay. The increase in price will encourage consumers to seek less costly energy sources, and also to be more mindful of energy use, but through compensation the price on carbon will not reduce your standard of living.
But how do we set a price on carbon. Should we use a carbon tax, an emissions trading system or a combination of the two – first a tax and then a trading system?
A consensus on the most effective way forward, and also the most effective way to compensate consumers, remains to be found. It is a difficult path ahead. And I do not propose to have all the answers.
In the 1980s when confronted with the worst recession in 50 years, Bob Hawke upon taking office called for an Economic Summit to seek a way forward. It changed the way economic problems were managed in this country. The fruits of that summit eventually led to the end of pattern bargaining, rolling strikes, more flexible enterprise level industrial relations laws, and a massive increase in productivity and participation.
That Economic Summit planted the seeds that would produce the most amazing thirty years of economic growth this nation has ever seen. It helped transform the nation’s economy, and thus the nation itself.
The issue of climate change needs a similar response.
And so today I announce that if re-elected within three months I would convene a Carbon Price Summit involving representatives from all major companies and state governments.
The purpose of the conference will not be to discuss if climate change is real. It will not be a scientific summit; it will be an economic one informed by the science.
The issue to be discussed will be how best to set a price on carbon that will lead to the necessary reduction in carbon emissions but which also ensures our economy remains vibrant, strong and dynamic.
The timeframe I am setting for the introduction of legislation for a carbon price will be the beginning of 2013. The legislation will be introduced in the next term of Government.
Businesses need certainty; they need and have been calling for a carbon price to allow them to make the investment decisions now that will drive their profits for the next thirty years.
I will ask the summit to reach a consensus – and we shall all have to give ground. I will not allow the perfect to be the enemy of the good, but I will ensure that the result is good – good for jobs, good for the economy and good for the environment.
There will be those who will complain that we should not move ahead of the rest of the world. To them I say we are not. The rest of the world is already moving forward. Already Europe and many states within America and Canada are working within carbon price mechanisms. India and China are investing heavily in renewable energy and moving toward putting prices on carbon emissions. If we fail to act now, we and our economy will be left behind.
I will not allow that to happen.
I will ask those who come to the climate change summit to come with open but sharp minds. The challenge ahead is not for the indolent or feeble minded. The future of our nation does not allow for those who would have callous disregard for the future either economically or environmentally.
It will not be easy.
Forty years ago President John F Kennedy using words to inspire a generation said of the effort to go to the moon that we do it not because it is easy but because it is hard.
We will do this not because it is hard, but because it is right.
We must do this. And we must do this together.
There are those who would wish to put off the task till a later date. There are those who would wish to pass it on to someone else. To those people, I say we cannot; we must not.
We must seize the moment, or the moment will seize us.
We can still act to prevent irreparable damage to our climate and to our way of life. But the time is fast approaching when no amount of incentives, good will, hopes and prayers will do anything to turn back the effects of global warming.
Many a wife or child has sat crying next to the bed of a loved husband or father dying of lung cancer after hearing the doctor use the words “inoperable”. And in between the cries of anguish and heartbreak are those thoughts of why didn’t we do something when we had a chance?
We still have a small chance to act on climate change. Let us not allow it to pass us by – let us take the opportunity to act together.
If we do, future generations will look back with awe that we were able to do these things. And we who were here will feel rightly proud that when asked to choose between easy inaction and difficult but necessary action, we chose the difficult path.
We chose it because we knew in our hearts and in our heads that it was the right way. It was truly the way forward.