CARBON TAX

The Hon. S.G. WADE (14:59): I seek leave to make a brief explanation before asking the Minister for State/Local Government Relations a question in relation to the carbon tax.

Leave granted.

The Hon. S.G. WADE: In a recent letter to local government mayors from the federal Parliamentary Secretary for Climate Change and Energy Efficiency, the Hon. Mark Dreyfus QC MP stated:

A letter sent to councils in the week of 21^st May...by the Leader of the Opposition claimed that the carbon tax would make it more expensive to run council trucks from 1 July 2012. This is not true.

Later, the letter goes on to state:

The facts are that from 1^st July 2012 on-road fuel costs will not increase as a result of the government's Clean Energy Legislative Package.

The government's Clean Energy Legislative Package is otherwise known as Labor's toxic carbon tax. On Monday, the Minister for State/Local Government Relations advised Estimates Committee B:

I expect that the carbon price will have an impact on councils through increased electricity and fuel costs and through the costs associated with waste management and the construction of buildings and infrastructure.

My questions to the minister are:

1. Can the minister explain to the council why he disagrees with his federal colleague?

2. Which government minister should councils rely on as they plan to deal with the toxic effects of Labor's carbon tax on their operations?

3. Has the minister had any contact with the federal Parliamentary Secretary for Climate Change and Energy Efficiency regarding the effect of the carbon tax on local government?

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (15:01): The federal government is establishing a carbon price mechanism to reduce the amount of carbon dioxide Australia emits into the atmosphere. This carbon price mechanism will commence on 1 July 2012. The introduction of a carbon price of $23 per tonne of carbon dioxide equivalent emissions will affect local governments directly through increased electricity, waste management and fuel costs and, indirectly, through costs associated with the generation of municipal wastes and costs related to construction of buildings and infrastructure.

I am aware that the Local Government Association has undertaken a number of initiatives to assist councils in understanding carbon price implications for local government by developing carbon price information papers and holding conferences and forums. I would expect councils to make budget and rating decisions regarding the implications of a carbon tax on the best available information at the time and not on the basis of speculation, especially the speculation that deliberately exaggerates the overall impact of the carbon tax on individuals and communities. Councils have indicated that they expect to respond to the introduction of the carbon price by:

offsetting their carbon price liability by creating credits through the capture of emissions from landfill;

raising their waste management charges to reflect the higher costs of landfill and related operations;

increasing energy efficiency and investing in renewable energy sources, possibly with the assistance of the federal government;

increasing user-pays charges for other selected services; and

absorbing higher costs through operational savings and service reviews.

In relation to commonwealth government assistance, the commonwealth government is committed to providing support to local governments to facilitate a smooth transition to a clean energy future.

I am advised that there is an opportunity for councils to reduce or, in some cases, remove their liabilities by taking action to reduce emissions. Activities that reduce emissions include: capturing landfill gas to generate electricity; flaring methane; waste diversion; recycling, and composting. Many of these activities can generate revenue and councils may be eligible for the commonwealth government incentives through schemes such as the Renewable Energy Target and the Carbon Farming Initiative.

The Carbon Farming Initiative is the commonwealth's legislated offset scheme, providing an opportunity for landfill facilities to generate credits by reducing emissions from waste deposited before 1 July 2012. CFI credits can be used to meet obligations under the carbon price. They could be sold to firms with a carbon price liability or used by a council landfill operator to offset its own carbon price obligations.

The implications of the Clean Energy Future package, Australia's principal climate change action plan, will be different for each council, as waste management practices and the profile of energy sources vary significantly. It should be noted that the CEF package provides many challenges for local government but also provides many opportunities. This package provides opportunities as the cost of the CEF can be offset by a number of funding programs aimed at renewable energy, efficiency and carbon capture, which will be available to local government.

The Low Carbon Communities program has been expanded from $80 million to $330 million under the CEF package and will be available for councils to introduce energy efficiency schemes such as energy efficient infrastructure and the transition to sustainable street lighting. There will be no carbon price liability for landfill facilities with emissions of less than 25,000 tonnes (CO₂e) of carbon pollution a year at least for the first three years of the carbon price. Additionally, councils and existing ratepayers will not be asked to pay for emissions from waste deposited over previous decades; this is known as legacy waste. For this reason, coverage of landfill emissions will be limited to emissions from new waste.