Summary
We have certainty (for now) that there is an ALP minority government, but there is still great uncertainty on climate change policy.
Any major reforms such as a carbon price (emissions trading or carbon tax) face significant hurdles. They would need to be passed by both:
- the House of Representatives, and
- the Senate.
The parliament numbers are such that a strong approach needed to get the support of the Greens in the post-1 July 2011 Senate may be unlikely to pass the finely balanced House of Representatives. This suggests that such major carbon price reforms are unlikely before the next election. However, while being very difficult, it would not be impossible. The final form of any such regulation also remains very unclear.
In the meantime a ‘Climate Change Committee’ will be convened. This committee will be slanted towards a carbon price outcome, but may simply continue the ‘talk fest’.
There will most likely be continued and increasing renewable energy support, quite possibly with a regional area infrastructure focus. There may also be support for expanded voluntary programs, especially with an agriculture focus.
Realistically the government may need to decide between seeking carbon price reforms or a mining tax, with both being highly controversial. If that was the choice then the indications are a Julia Gillard-led government would focus on the mining tax. The National Broadband Network will also likely be a higher government priority.
This uncertainty means it is prudent for business to continue to monitor progress and be involved with lobbying and consultation (potentially most effectively through industry groups).
We can assist you with understanding these issues and the implications for your business, especially in consultation, your contractual arrangements, transactional issues and project approvals.
Parliament numbers
The bulk of the government’s policies only require supply funding, with its previously made commitments already budgeted and approved. Its new election policies would need supply approved by both houses, which seems likely.
Any new legislative changes (for example, an emissions trading scheme or other carbon pricing measure, or mining tax) would need the support of both houses.
House of Representatives / lower house makeup
The government has a notional majority of 76 to 74:
|
Seats |
|
Seats |
| ALP |
72 |
Coalition |
72 |
| Greens (Adam Bandt) |
1 |
Tony Crook (WA Nat.) |
1 |
| Andrew Wilkie (Ind.) |
1 |
Bob Katter (Ind.) |
1 |
| Rob Oakeshott (Ind.) |
1 |
|
74 |
| Tony Windsor (Ind.) |
1 |
|
|
|
76 |
|
|
Under the parliamentary reforms proposed by Rob Oakeshott, Tony Windsor and Bob Katter and agreed by the ALP and Coalition, the Speaker and Deputy Speaker would be independent and ‘paired’ for all votes with their vote not counting.1 This effectively puts the ALP and Coalition on 71 votes each.
For the government to pass any legislation through the lower house they will effectively need either the support of:
- four non-ALP members, to give it a 75:73 majority, or
- only three non-ALP members and one abstaining, to give a 74:73 majority.
The support of only three non-ALP members with the fourth siding with the Coalition against legislation would result in a deadlocked 74:74 which would not pass legislation.
The situation may be slightly easier for the government if one of their supporting independents is Speaker or Deputy Speaker, which seems unlikely on current comments.
Green Adam Bandt2 and independents Andrew Wilkie,3 Rob Oakeshott and Tony Windsor4 will give the ALP minority government supply and confidence (ie oppose any no-confidence motions). Independent Bob Katter has indicated he would give the ALP minority government confidence, but his comments are not clear and may not extend to supply.5 They have not guaranteed support for ALP legislation, and are likely to consider legislation on its merits.
WA National Tony Crook will sit on the cross-benches, not guaranteeing he would support the Coalition against ALP government legislation.6 He has not committed to whether he would give the ALP minority government supply and confidence.
Senate / Upper House makeup
The government will face the same Senate as in the previous term until 1 July 2011. To pass legislation it needs either the support of the Coalition, or the Greens and both Independent Nick Xenophon and Family First’s Steve Fielding.
From 1 July 2011 (when the new Senators take their seats) the government will effectively need the support of the Coalition or the Greens to pass any legislation.
|
Now until 1 July 2011 |
Likely from 1 July 2011 |
| ALP |
33 |
31 |
| Coalition |
36 |
34* |
| Greens |
5 |
9 |
| Nick Xenephon (Ind.) |
1 |
1 |
| Family First |
1 |
0* |
| Democratic Labor Party |
0 |
1* |
| Total |
76 |
76 |
*It appears likely that the DLP will take the final Victorian seat over the Coalition and Family First; and the Coalition will take the final SA seat over Family First. The final result may not be know for 2–3 weeks.7
The ALP Government’s stated policies
| Issue |
Policy |
| Key climate change program |
Carbon Pollution Reduction Scheme (CPRS) cap-and-trade emissions trading scheme still favoured by ALP, but postponed until at least 2013. For further detail see our article ‘Recent Climate Change Developments’.8 |
| Preparation |
Will first be a Climate Change Committee (as agreed with the Greens and Wilkie), made up of experts, representative ALP, Greens, independent and Coalition parliamentarians. Membership is limited to people committed to tackling climate change and who acknowledge that reducing carbon pollution by 2020 will require a carbon price.
This committee is in place of the ALP’s previously proposed:
- Climate Change Commission of independent experts, to explain the science and report on international progress, and
- Citizen’s Assembly of 150 Australians chosen from the electoral roll to examine over 12 months the evidence on climate change, the case for action and the possible consequences of a market-based approach (using CPRS as the basis).
|
| Additional voluntary carbon schemes |
National Carbon Offset Standard scheme, for further detail see our article ‘National Carbon Offset Standard released’.9
Carbon Farming Initiative will legislate rules for the recognition of carbon credits that could be sold on the domestic or international market. Limited detail available, stated that could include reforestation (eligible from 1 July 2010), soil carbon and biochar, avoided deforestation, legacy waste emissions from landfill sites, manure management in intensive livestock production and savannah fire management.10 |
| Renewable Energy Target Scheme |
Retain existing scheme and 20% renewable by 2020 target. Recent amendments made to split scheme into separate large-scale and small-scale schemes, to commence 1 January 2011. For further detail see our article ‘Renewable Energy Target Split’.11 |
| Other commitments and funding |
A number of new election and previously made commitments. For further details of the government’s policies see our article ‘Election climate change, renewables and energy efficiency promises’.12 The policies include:
- new coal-fired power stations having best practice emissions standards and being Carbon Capture and Storage (CCS) ready
- supporting renewables, including connecting renewable energy sources to the electricity grid
- ‘One off’ bonus tax deduction for business energy efficiency investments
- mandatory CO2 emission standards for all new light vehicles, from 2015, and
- CCS and solar project ‘flagship’ funding
|
| Environmental Protection and Biodiversity Conservation Act (EPBC) greenhouse trigger |
Remains a live and uncertain issue, particularly if no carbon price progress is made. The government has committed to consider the Hawke Report EPBC Act review findings,13 which recommended an interim greenhouse trigger prior to a carbon price. Environment Minister Peter Garrett has previously ruled any trigger out,14 but the ALP’s position could change including to possibly support other greenhouse focused EPBC Act measures.
The ALP’s response to the Hawke Report generally may now be more expansive with support from the Greens. We will update you further on any disclosed major EPBC Act amendments or Commonwealth environmental developments. Passage of such amendments may face similar issues to passage of climate change legislation. |
Support for the government’s policies
| Party / person |
Position |
| Greens |
Have the most expansive approach to climate change, renewables and energy efficiency policies. Have focused debate through the Climate Change Committee on climate change being human induced and a carbon price the appropriate approach.
Unlikely to support any carbon pricing mechanism which has:
- a low target, the Greens previously sought 25–40% emission reduction by 2020, or
- significant industry compensation.
Support a mining tax. |
| Andrew Wilkie (Tasmanian Independent) |
A former Green, has called for urgent action on climate change, including a price on carbon.15 May have a similar position to the Greens. |
| Rob Oakeshott (NSW Independent) |
Has indicated that climate change is a top priority issue. Has stated there should be a return to the Garnaut review (also supported by Tony Windsor). The Garnaut review was a more far reaching process than the ALP’s CPRS consultation. It concluded that an emissions trading scheme was the appropriate course.16
Mr Oakeshott voted with the government in support of the CPRS legislation twice in 2009.17 He then voted against the CPRS legislation in 2010,18 after some minor amendments he proposed were not successful (to make the proposed Australian Climate Change Regulatory Authority more independent).19
May support voluntary schemes, and in particular with an agricultural focus. |
| Tony Windsor (NSW Independent) |
Cited climate change as a major reason (behind the National Broadband Network) for his decision to back the ALP. Believes climate change issues need to be revisited and has emphasised the value of the Garnaut review.20
Mr Windsor first voted against21 and then for22 the CPRS legislation in 2009 and against it in 2010.23 Does believe in doing something about carbon emissions. Thinks a carbon price may be inevitable in the long term, especially globally, but doesn’t think it is the only mechanism. Focus appears to be on renewables, especially for regional areas. Expressed a desire to be part of the Climate Change Committee.24
May support voluntary schemes, and in particular with an agricultural focus. |
| Coalition |
Likely to oppose any carbon price mechanism under Tony Abbott’s leadership, which currently looks very safe.
May support an expansion of voluntary schemes, similar to the former Greenhouse Friendly program, and in particular with an agricultural focus.
For further details of the Coalition’s preferred policies see our article ‘Election climate change, renewables and energy efficiency promises‘.25
Oppose a mining tax. |
| Tony Crook (WA National) |
Position on climate change, renewables and energy efficiency issues is not known. Expected to be in line with the Federal Nationals and oppose a carbon price.
Opposes a mining tax, and has stated his concern about the ALP and Greens’ alliance.26
May support voluntary schemes, and in particular with an agricultural focus. |
| Bob Katter (Queensland Independent) |
Opposes a carbon price (as a carbon tax or emissions trading scheme).
Focus is on renewables in regional areas, particularly through a National Energy Grid. Has emphasised solar, bio-fuels, wind and geothermal power sources.
Opposes a mining tax.
May support voluntary schemes, and in particular with an agricultural focus. However, appears opposed to carbon sequestration rights, which are likely to be a key prerequisite for forestry sequestration and possibly other agricultural offsets.27 |
International moves
Uncertainty remains regarding international climate change responses and carbon pricing. In particular, it appears unlikely that the US will move to an emissions trading scheme in the near future. This likely weakens the case for a domestic Australian carbon price.
Likely outcomes
Any major reforms such as a carbon price (emissions trading or carbon tax) face significant hurdles and are therefore uncertain. They would need to be passed by both the:
- House of Representatives – In effect the support of four non-ALP members is required. Only three have stated general support for a carbon price: Green Adam Bandt, and independents Andrew Wilkie and Rob Oakeshott. It is possible that independent Tony Windsor could be persuaded, but it appears unlikely that any others would support. The specific details of any regime would be crucial, and
- Senate – The government could not pass its CPRS emissions trading scheme through the previous Senate so any legislation is unlikely before 1 July 2011. From then, the Greens will have the balance of power in the Senate, and likely demand a stronger approach than the CPRS. That may not be palatable to the government, or to the independents Rob Oakeshott and Tony Windsor, whose House of Representatives’ support would be required.
This very fine balance suggests that such major carbon price legislative reform is unlikely before the next election. However, while being very difficult it would not be impossible. The final form of any such regulation also remains very unclear. The CPRS may present a starting framework which could be subject to amendments, but even that is unclear.
In the meantime, the ‘Climate Change Committee’ will be convened. While this committee is slanted towards a carbon price outcome, it may simply continue the ‘talk fest’, especially given the realities of the parliament numbers.
There will most likely be continued and increasing renewable energy support, quite possibly with a regional area infrastructure focus. There may also be support for expanded voluntary programs, especially with an agriculture focus.
Realistically the government may need to decide between seeking carbon price reforms or a mining tax, with both being highly controversial. The government has stated its intention to present mining tax legislation during this term, following work by a committee led by former BHP Billiton chairman Don Argus. The government has said the mining tax would not be the subject of the 2011 Tax Summit required by the regional independents, which has already raised an issue at least with Tony Windsor. If that was the choice, then the indications are a Julia Gillard-led government would focus on the mining tax, which is needed to fund existing government policy commitments. The National Broadband Network will also likely be a higher government priority, especially given the key importance placed on it by Rob Oakeshott and Tony Windsor. The focus on the mining tax and National Broadband Network may push back major climate change reforms.
This article written by Michael Voros (michael.voros@freehills.com), Senior Associate, with the assistance of Tony van Merwyk, Partner, Vince Paparo, Solicitor and Emily Stanton, Solicitor, Perth.
Endnotes
- ABC website, ‘Agreement For A Better Parliament: Parliamentary Reform, Preamble’; ABC news article, ‘Independents strike reform deal’
- The Australian Greens & The Australian Labor Party (‘The Parties’) – Agreement
- The Hon Julia Gillard & Mr Andrew Wilkie (‘the Parties’) – Agreement
- SMH article, ‘Labor over the line: Windsor and Oakeshott hand power to Gillard’
- The 7.30 Report, ‘Katter and Windsor join the program’
- SMH article, ‘Crook sticks to cross benches’
- Antony Green’s Election Blog, ‘Close Senate Races in Victoria and South Australia’
- Freehills article, ‘Recent climate change developments’
- Freehills article, ‘National Carbon Offset Standard released’
- ALP website, Carbon Farming Initiative
- Freehills article, ‘National Carbon Offset Standard released’
- Freehills article, ‘Election climate change, renewables and energy efficiency promises’
- Independent review of the Environment Protection and Biodiversity Conservation Act 1999
- ALP website, ‘Transcript: Doorstop Interview’
- Letter from Andrew Wilkie to Gillard and Abbott, dated 28 August 2010
- SMH article, ‘ETS is my priority, Oakeshott says’
- Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 2, 2010, Thursday, 11 February 2010; Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 17, 2009, Monday, 16 November 2009
- Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 2, 2010, Thursday, 11 February 2010
- Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 2, 2010, Thursday, 11 February 2010
- Tony Windsor speech 7/9/10.
- Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 2, 2010, Thursday, 11 February 2010
- Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 17, 2009, Monday, 16 November 2009
- Commonwealth of Australia, Parliamentary Debates, House of Representatives Official Hansard, No. 2, 2010, Thursday, 11 February 2010
- The 7.30 Report, ‘Katter and Windsor join the program’
- Freehills article, ‘Election climate change, renewables and energy efficiency promises’
- The Age article, ‘Crook sticks to cross benches’
- ABC website, ‘Key Policy Points’
More information
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