Introduction

Thank you very much.

Acknowledgements:

• Hon Dr Nick Smith, New Zealand Minister for Climate Change Issues
• Hon John Thwaites, former Deputy Premier of Victoria
• Robert Hill, former Australian Minister for the Environment
• Rt Hon Simon Upton, former New Zealand Minister for the Environment
• Gary Taylor, Chair of the Australia-New Zealand Climate Change and Business Centre.

This conference comes at a critical time in the climate change debate, both in Australia, in New Zealand and around the world.

We are 104 days from the United Nations Framework Convention on Climate Change conference in Copenhagen.

And even sooner than that, the Australian Senate will once again debate Australia's own response to climate change.

These two events will each have significant consequences for the matters which are the focus of your conference, that is, climate change and business in Australia and New Zealand, and so I would like to talk with you about them both today.

Our goal in Copenhagen

Australia has a lot to lose from climate change.

It threatens our food production, agriculture, and water supplies, as well as icons like the Great Barrier Reef, the Kakadu wetlands and the multi-billion dollar tourism industries they support.

So we have a strong national interest in an effective global agreement to tackle climate change.

Our purpose in Copenhagen this December will be to help set up a post-2012 agreement that will help avoid the worst risks of climate change and aid the process of adapting to the climate change that it's already too late to avoid.

Australian action on climate change in the global context

Some politicians in Australia – typically the same politicians who argue that human activity is not contributing to climate change – claim that what we do at home does not matter in the international climate negotiations.

The assertion is that because Australia's emissions are less than those of other countries, such as the United States and China, what we do at home is irrelevant.

That is simply not the case. It is nothing more than another excuse not to act on climate change.

Of course we need a global agreement. But this won't happen unless countries like Australia play their part. Australia punches above its weight in international affairs. We have long been an honest broker – a facilitator – in bringing together disparate views.

In Bali, after ratifying the Kyoto Protocol, Australia was able to begin playing a facilitating role in climate change negotiations and was a key player in securing the Bali Roadmap to Copenhagen.

But if we are to have an influence in how international climate negotiations progress, Australia must be credible.

Australia will be credible at Copenhagen if we have serious targets and a serious plan to deliver our targets.

We will be credible if we have demonstrated our commitment to act on climate change by introducing the Carbon Pollution Reduction Scheme.

We won't be credible if we retreat.

We won't be credible if our position is to wait for everyone else to move first.

As New Zealand's Prime Minister, John Key has said of the benefit of enacting the CPRS before Copenhagen:

"It shows that you're serious."

What matters most as we try to secure a global deal is what we do at home, because the basis for any global agreement must be the actions taken by individual nations.

How far each of our nations is prepared to go domestically will shape the agreement and govern how it is implemented.

If we want an agreement that starts to reduce emissions across the globe, its provisions must be firmly rooted in domestic national action. This link is well understood in the United States.

President Obama's Assistant on Energy and Climate Change, Carol Browner, has said:

"The position we can take in Copenhagen will be driven by what we are prepared to do domestically."

Clearly, the US position will be fundamental to efforts to forge a global agreement.

But Australia's efforts to put in place domestic emissions trading legislation, through the CPRS, are also being keenly watched around the world.

In fact on the day before the Opposition failed to support the Carbon Pollution Reduction Scheme, an article in The Wall Street Journal described Australia's action on climate change as a "case study" for where the action is overseas.

Passage of the CPRS legislation would ensure that Australia has a plan in place to meet its international commitments.

Passage of the legislation would mean the Government could take a target to Copenhagen, knowing the country has the capacity to deliver that target in an economically responsible way.

To major developing countries, including China, it would send the signal that Australia is serious about delivering the emissions reductions to which we have committed – and therefore encourage these developing countries to act. For all nations, it will help build confidence that, even in one of the world's most resource-intensive economies, we can start to reduce emissions while continuing to grow our economy.

Failure to pass CPRS legislation will send exactly the wrong signal.

It will undermine confidence in the capacity of Australia, and other advanced economies, to implement the measures we say we are committed to.

It will strike a serious blow to efforts to build a global carbon market to help secure the lowest cost abatement around the world, and to help fund the transition of developing countries to lower-carbon economies.

The value of Australia going into Copenhagen with the CPRS in place is well understood by Malcolm Turnbull, who said before becoming Opposition Leader last year:

"Our first hand experience in implementing … an emissions trading system would be of considerable assistance in our international discussions and negotiation aimed at achieving an effective global agreement."

Australia's Carbon Pollution Reduction Scheme

Australia is, in fact, part of a large group of countries, implementing, or considering, emissions trading schemes. New Zealand has a scheme, which is currently being reviewed.

27 European Union (EU) countries have had emissions trading since 2005. Other countries and regions are also developing or considering schemes – including the US, Canada, South Korea and Japan.

At the recent G8 meeting in Italy, global leaders confirmed emissions trading as the most effective way to reduce emissions.

This is not surprising. It makes economic sense.

And here is the other reason – in addition to our international credibility – for why we need to act now.

We need to provide certainty for business investment.

As Greig Gailey, the president of the Business Council, has said:

"Climate change is a multi-decade investment challenge. Uncertainty is the great enemy of investment."

We need to start giving the signal to investors that they need to factor the price of carbon into their decisions. The longer we delay giving that signal, the greater the cost will ultimately be.

Treasury modelling suggests that economies that act early reduce their long-term costs. In contrast, economies that defer emission pricing become relatively more emission-intensive, so that when a global emission price is eventually introduced they face even higher costs.

So it is not surprising that the major economies of the world are moving now to position themselves for a competitive advantage.

The sooner we act, the better placed our companies will be to benefit from new emerging global markets, and to benefit from the economic gains from improved efficiency.

Cap and trade opens up opportunities for linking of carbon pollution reduction efforts.

The Government has designed the CPRS so that it can link with other international schemes, contributing to the development of a global carbon market.

The importance of Australia's efforts here have been noted widely. For example, Matthias Machnig, State Secretary for the German Environment Ministry and one the country's top climate negotiators, visited Australia in January and said:

"…To my mind the most important thing is to say that the Australian Government is going to go for emissions trading because it is a step towards the system that we need – a global carbon market."

An effective global carbon market will reduce global and Australian abatement costs by ensuring that the cheapest abatement opportunities are pursued first, regardless of where they occur in the world.

The Australian Government is also working closely with other leading governments to explore ways in which we can link markets.

It should come as no surprise that the country with which we are working on this first is New Zealand.

We share a common interest in reducing emissions at least cost and we are committed to supporting an effective global response to climate change.

Our economies and societies are highly integrated and there are a large number of firms operating in both countries. It is logical then that we explore opportunities to ensure the greatest level of compatibility between our emissions trading schemes.

In March this year, Nick Smith and I agreed to strengthen climate change cooperation and to investigate options to harmonise our schemes.

Australian and New Zealand industries compete in some of the same global markets, including in agriculture and processed food. It's important that our businesses compete as far as possible on a level playing field. That's why Australian ministers Simon Crean and Tony Burke met with New Zealand minister Tim Groser recently and reinforced the desirability of harmonising our approaches to greenhouse gas reductions with respect to agriculture, both on-farm and in processing.

No case for delay

For Australia, action on climate change is a no-brainer.

We will be hit hard and fast by climate change.

If we want the world to act, we have to act too.

And as our Treasury modelling has told us, we will be in the best possible economic position if we act now. Economies that act early will have the greatest advantages in the emerging low carbon future.

Yet despite the economic and environmental imperative for action, those who refused to act for their twelve years in government are reprising their roles as spoilers now that they are in Opposition.

Over the weekend, we saw the leader of Nationals in the Senate, Barnaby Joyce, making the dishonest and deliberately provocative claim that tackling climate change with the Carbon Pollution Reduction Scheme is bad for Australia's regions.

He makes that claim despite the fact that by the end of this century, climate change could see irrigated agricultural production in Australia's food bowl, the Murray Darling Basin, drop by more than 90 per cent.

Climate change is bad for Australia's regions.

Anyone who claims to represent the interests of regional Australia cannot stand in the way of action on climate change.

Not only has Senator Joyce said he will corral Mr Turnbull's backbenchers to revolt on climate change, but he has promised to roll back any progress the Rudd Government makes if the Coalition is re-elected.

Set aside the gross economic irresponsibility of Senator Joyce's proposal – which would only increase investment uncertainty at a time when we need it most.

Set aside all talk of amendments and details of climate change policy – because yesterday we learned what was really bothering Senator Joyce.

Yesterday Senator Joyce let the cat out of the bag. He revealed his real motivation was not a problem with the merits of the Carbon Pollution Reduction Scheme.

His motivation is that he doesn't believe climate change is real.

He told ABC's AM:

First of all I don't believe that carbon is pollution. If it was rainforests would be rubbish.

It is no wonder, if that is Senator Joyce's starting point, that he doesn't end up in favour of the Carbon Pollution Reduction Scheme. And it is no wonder that he is scrambling for any claim, credible or not, to discredit it.

He has made the extraordinarily dishonest and desperate claim that a roast will cost $100 under the CPRS, without any evidence whatsoever to back up his claim.

It is absolutely true – and the Government has always been up front about this – that under the CPRS, those goods and services that create a lot of carbon pollution will cost relatively more than those goods and services that create relatively little carbon pollution.

But it is a fact that the cost impact on household prices is modest – just a 1.2 per cent increase over the first two years, 0.1 per cent coming from increases in food prices.

And Senator Joyce declines to mention that around 90 per cent of low-income households, or 2.8 million households overall, will receive assistance equal to 120 per cent or more of their overall cost of living increase which would provide some level of buffer against higher than expected price increases over the first two years of the CPRS.

Furthermore, round 97 per cent of middle-income households will receive some direct cash assistance in 2011-12. And around 98 per cent of middle-income households will receive some direct cash assistance in 2012-13.

It is time for people like Senator Joyce to acknowledge the facts – and respect the views of the Australian people, who have made it clear time and time again they want and expect action on climate change.

This is a test of Mr Turnbull's leadership, and a test of the loyalty of the Liberal Party to its leader.

We have said that we will negotiate with the Opposition if they come forward with credible amendments that have the support of the Party room.

Last week's negotiations on the Renewable Energy Target demonstrate that we mean what we say.

The critical difference on the CPRS is that at this stage, we are yet to see a coherent position from the Liberal Party.

We look forward to Mr Turnbull coming to the table on the Carbon Pollution Reduction Scheme, but the Liberal Party has a long way to go before they have a credible negotiating position.

And they have a long way to go before the Australian people takes the Coalition seriously on climate change, when they are already threatening to unwind the Carbon Pollution Reduction Scheme before it has even passed the Senate.

Conclusion

Australia or New Zealand cannot do it alone.

No one country can do it alone.

Developed countries cannot do it alone.

The science is clear. If every developed country reduced its emissions to zero by 2050, but developing countries took no action, average temperatures would rise well above two degrees, with devastating consequences globally.

But if we think we can get the outcome we need by sitting back and waiting for everybody else, we're kidding ourselves.

That's just not how it works.

There is no avoiding the fact that Australia must act.

The environmental and economic imperatives for our nation are beyond any reasonable doubt.

And we can't expect the world to deliver our national interest for us.

If we are going to get the global action on climate change we need, Australia must be a player, not a spectator