Climate Change Passes

(Cross-posted at the ALP blog - please leave any comments there.)

In December 2009, Christina Ora, a young person from the Solomon Islands stood up in front of the world at the United Nations Climate Change Conference in Copenhagen and said:

‘I am 17 years old. For my entire life, countries have been negotiating a climate agreement. My future is in front of me. In the year that I was born, amid an atmosphere of hope, the world formed the United Nations Framework Convention on Climate Change to solve the climate crisis.’

The Australian government has been debating acting on carbon pollution since Graham Richardson brought a submission to Bob Hawke’s cabinet in 1989 to reduce Australia’s greenhouse gas emissions. We have had 35 parliamentary reviews into climate change.

Today, Australia has finally put a price on carbon pollution. Because we emit more carbon pollution per person than any other nation in the world, we benefit from acting on climate change, and joining the many other countries that are using market-based mechanisms to tackle climate change.

By contrast, the Opposition reject market-based mechanisms. When you reject the market based mechanism you do not tap the ingenuity of the market. You lock yourself into an inflexible system. We should never forget that a price on carbon pollution is not just a disincentive to polluters but also an incentive to investors and entrepreneurs looking to invest in renewables.

A price on carbon pollution as an economic reform that sets our nation up for the challenges of the future. It is the stuff of which Labor governments are made. Labor governments brought down the tariff walls in Australia, Labor governments floated the dollar, Labor governments put in place Medicare and Labor governments implemented universal superannuation. For each of these reforms it has taken a Labor government to harness the prosperity of the future. None of these reforms were uncontroversial at the time of their enactment but all of them have increased our nation’s prosperity. So it will be with putting a price on carbon pollution.
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Polio Eradication

I spoke with Norman Swan on the ABC Radio National Health Report program this morning about polio, and the strange economics of disease eradication. Here's a podcast. Transcript over the fold.
Norman Swan: Let's stay with costs for the moment because former economist and now Federal Member for Fraser in the ACT Dr Andrew Leigh has some thoughts on the government's recent announcement for money for polio eradication and what it might mean for how we prioritise health spending.

Andrew Leigh: Well the Australian government announced in CHOGM that we'd be committing $50 million towards eradicating polio. Polio's still in four countries: Pakistan, Afghanistan, Nigeria and India.

Norman Swan: But you've got a view as an economist?

Andrew Leigh: That's right, I think polio is worth eradicating but it does really strike me as an economist when you look at the cost of eradicating those final few cases of polio. In terms of lives saved this turns out to be a pretty bad deal. We're spending hundreds of millions of dollars on a disease in which there are only hundreds of cases. The thing is it's still a good deal in the long run because the effect of wiping out polio is that one day we won't have to vaccinate the next tranche of kids for polio that will mean we can focus global health efforts on other things, AIDS, tuberculosis, malaria, some of those huge killers in the world. So in some way you should think of polio eradication as freeing up global health resources much as smallpox eradication did for us in the 1970s.

Norman Swan: I'm not sure what you are saying are you saying that you economists are a waste of time in here, that the normal metrics that you use for deciding whether a health intervention is worth doing should just be thrown out the window or what? What are you actually saying Professor Leigh?

Andrew Leigh: I am saying that this is the curious case of disease eradication, that as you get towards the end each case becomes extremely expensive and so you are now eradicating a disease not because each life saved is worth it on the standard calculus but because the whole disease is worth wiping out. And once you've wiped out a disease and you've held it at bay for a number of years you can stop vaccinating and free up masses of world resources.

Norman Swan: How do you allow for those future benefits? I mean we have very inadequate ways of measuring benefits, we use the quality adjusted life year which puts a notional value on an extra year of life adjusted for the quality of that life and I think that we have a number somewhere between $30,000 and $70,000 per qualies, so heart transplantation just squeezes in but there's a whole debate about patient experience, patient preference and future discounting of those benefits. Do you feel they are adequately taken into account when we're talking about health?

Andrew Leigh: I think that's certainly the right way of thinking about these health decisions. What you want to do is to be able to bring all the public health measures onto the same metric and dollars are the standard metric on which you're able to make comparisons across things as diverse as treatments, vaccinations, public health information campaigns. But it turns out to be the wrong way of thinking about something like disease eradication.

Norman Swan: But you haven't answered my question Andrew which is you're putting a value on a life and then of course here's the thing that people don't want to talk about is that if you were in the Pakistani government, they're probably using $100 per qualy, if they use any metric at all for their health interventions. So they value a life because of their economic strife if you like at a very different level than we are. Isn't it a rather crude and tragic way of measuring whether you would invest in a different area?

Andrew Leigh: Norman I certainly understand where you're coming from, I remember as an economics professor teaching students and the topic that was perhaps the most controversial of the whole semester was when we suggested that you could put a value on a statistical life. We have to be absolutely clear what we are doing here. We're putting a value on an average life. We are not saying that the rich and unique human experience can be reduced to dollars. We are saying with a scarce government health budget when you have to decide whether you are going to allocate that to more spending on road safety, more spending on cancer labs or more spending on children's vaccines, you need some way of comparing it across those health interventions.

Norman Swan: So why is it different for airlines from health that if you actually do a quality adjusted life year assessment for what we spend on air safety, it's hugely more, my understanding is that it's like millions of dollars per year of life saved and yet we quibble over $70,000 per year of life, a quality adjusted year of life saved for health interventions yet every day of the week we are spending squillions of dollars on interventions which far exceed the value that we give to a life in the health care system?

Andrew Leigh: It's a good question. Economists do sometimes argue that we've over invested in air safety. I think the answer is that if air safety were as dangerous as road travel people would be much less likely to get on planes. The experience of an air disaster is one that seems to sear the collective consciousness, that is somehow more traumatic for people than the daily road toll and so I think that's why not only Australian society -

Norman Swan: So this is about mass psychology, this is the thing that we respond more to the rare high impact event rather than the fact that X hundred thousand Australians die unnecessarily from preventable health care injury.

Andrew Leigh: Yes, I think that's probably most of what's going on here and you don't hear a clamour from voters saying you're spending too much on air safety if only you could spend a little less. But I take your point, that the investment per quality adjusted life year ends up being more expensive in air safety.

Norman Swan: Is there something in it for us for polio eradication do you think? Is that $50 million well spent for Australia apart from just being altruistic which is fine in its own right?

Andrew Leigh: The notion that we as Australians can cease at some point in the future vaccinating kids for polio frees up a share of our health budget to invest on other things whether that be air safety or, as I think you would probably argue, public health initiatives.

Norman Swan: Andrew Leigh is Federal Member for Fraser and before that an economist at the Australian National University.
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Sky News AM Agenda

I was on the Sky News AM Agenda this morning with Liberal Senator Simon Birmingham, hosted by Kieran Gilbert. We discussed the Government's economic agenda as well as the Prime Minister's visit to Afghanistan.

(And congratulations to my usual sparring partner, Mitch Fifield, who welcomed his son Harry into the world on Monday.)
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Mapping the Northside - in Parliament

I spoke in parliament today about 'Mapping the Northside'.
Mapping the Northside, 3 November 2011

There are many hidden and not so hidden gems in my electorate of Fraser. In partnership with the Belconnen Arts Centre, on 18 October I launched Mapping the Northside. Mapping the Northside is project where community members are invited to identify their favourite place on a two- by three- metre map of the Fraser electorate.

Community members can mark their spot with a drawing, photograph, collage, story or poem. This can be done online or at one of three creative sessions being facilitated by local artist Maryann Mussared on 29 October at the Belconnen Arts Centre, 5 November at Gorman House or 12 November at the Gungahlin Library.  At the end of the project, the map will be taken down and used as the basis for a people's map of the electorate of Fraser. These great spots in the north of the ACT deserve to be shared and celebrated within the community.

I would also I like to thank, for all their help and guidance: Hannah Semler, Director of the Belconnen Arts Centre; Philip Piggin; Evol McLeod; and Alyssa Hardy. A special mention also goes to Gus Little from my office for his hard work on this project.

Mapping the Northside runs until 17 November, and I cannot wait to see the precious gems that are unearthed.
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Disability and Carers

I spoke today about the hard work of carers and the campaign to create a National Disability Insurance Scheme.
Caring and Disability
3 November 2011

I rise to speak about the twin issues of caring and disability. It was my pleasure on 14 October to attend the launch of Carers Week, which was officially launched by the Minister for Mental Health and Ageing, Mark Butler. It was a moving event at Parliament House, where Carers Australia President, Tim Moore, spoke about his sister Amy. Amy has struggled with mental illness since she was 17 years old and Tim spoke about her in wonderfully moving terms, and about the fact that recently Amy had the great achievement of turning 30. With the care of her family and friends she has managed to keep her demons at bay.

Tania Hayes spoke about her husband Warren, who had an eight-centimetre brain tumour removed when they were in their early twenties. Tania spoke about sitting by his bedside in the hospital for more than 400 days. At the end of that time she was told that the option available to him would be an aged-care home. She was not willing to accept that and took him home to be cared for at home. She taught him to eat and to talk, and now the couple has a little boy, Josh.

The Parliamentary Secretary for Disabilities and Carers, Jan McLucas, also spoke, as did Carers Australia CEO, Ara Creswell. The event was one of the most poignant that I have attended in this building in my brief time in parliament. The issues of carers touch us all. I remember that when I was a whippersnapper at university tutoring a boy by the name of Jonathan Wilson-Fuller - best known as ‘the boy in the bubble’. Jonathan is now a man of 33. He lives in Baulkham Hills, in a house with a positive internal air purification system that purifies all the air in the room seven times every hour in order to keep his allergies at bay. His parents, Yvonne and Kevin Wilson-Fuller, have sacrificed their professional careers because of the love and dedication they have for Jonathan. I pay tribute to Jonathan and to his parents. I urge all members to have a look at Jonathan's terrific book Will you please listen: I have something to say.

Judy Woolstencroft came to my electorate office on 7 October. Judy is a carer for her partner, Chris, who suffers from early onset dementia. Judy and Chris came in with Ellen Skladzien, a tireless campaigner in this area, to speak with me about the challenges faced by those with early onset dementia.

I also held a National Disability Insurance Scheme roundtable in my electorate office on 7 October. I would like to thank Simon Rosenberg, Luke Jones, Bob Buckley, Kerry Bargas, Trish and Glenn Mowbray, Susan Healy, Mary Webb, Kerrie Langford, Robert Altamore, Fiona May, Eileen Jerga, Adrian Nicholls, Christina Ryan, Brooke McKail, Sally Richards and others for attending that event. It helped me better understand the issues around a National Disability Insurance Scheme and why Australian people with disabilities and their carers so much need this scheme. That was followed by a public forum at the Belconnen Community Service building on 25 October. Daniel Kyriacou from Every Australian Counts and members of the ACT Labor Party's Community Services and Social Justice committee joined a discussion about what a NDIS means and how people can work with the campaign to bring about a National Disability Insurance Scheme.

A NDIS will not be cheap and will not be straightforward but this government is committed to doing the preparatory work to see it happen. That is complicated work with the states and territories but it is vital to resolve some of these anomalies. If you become a paraplegic in a car accident, you are more likely to get looked after than if you fall off your roof while cleaning the gutters. If you are born with a disability you often receive insufficient care. These are things that many of us in this place feel uncomfortable about. We in the Gillard government are committed to bringing about a National Disability Insurance Scheme and helping those who care for their loved ones.
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ACT Self-Government (again)

Senator Kate Lundy, Gai Brodtmann and I put out a media release yesterday regarding the Territories laws passing through the House

A Good Day for Democracy

Federal Labor representatives for the ACT Senator Kate Lundy, Gai Brodtmann MP and Dr Andrew Leigh MP today welcomed the passage of the Territories Self-Government Legislation Amendment as good for democracy.

The passage of this bill removes the power of the Federal Executive to overturn ACT legislation behind closed doors.

Member for Canberra Gai Brodtmann said the passage through the House of Representatives today was a great leap forward for the equality of Canberrans.

“This legislation will mean that Canberrans will now have the rights that are granted to every other Australian. The right for the legislation of their duly elected parliament to be free of veto by executive government” said Ms Brodtmann.

Member for Fraser Andrew Leigh said the bill acknowledges that ACT self-government is well established and has proven successful.

“This is testament to the hard work of successive ACT Governments who established the ACT Legislative Assembly as a mature forum for debate and discussion; the equal of any state government,” said Mr Leigh
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Community Summit

I spoke in parliament yesterday about my November Community Summit.
Fraser Community Summit
1 November 2011

Early this morning, I convened a breakfast roundtable in Parliament House to discuss with 13 ACT community sector leaders the issues of poverty and disadvantage in Canberra. This is the second of these forums that I have arranged and the focus of today's discussion was on financial literacy, debt and savings. Attendees emphasised that financial problems can be caused by stress factors, such as family breakdown, mental illness, substance abuse and problem gambling. Conversely, financial problems can also cause disadvantage, with money problems leading to health problems, family stress and gambling in an attempt to 'win back' losses. Some attendees commented that crisis services are now seeing people who they call the 'working poor'—such as apprentices and community sector workers. They also pointed out the challenge of high housing costs in the ACT. For people caught in a debt cycle, community leaders pointed out that life is a constant juggling act. People often borrow from their friends and neighbours, and these personal debts can take priority over paying utility bills. One attendee quoted a person in crisis who said, 'Debt makes me feel like half of me is in the grave already.'

Solutions to debt traps include access to hardship funds operated by utility companies and schools. It is important that these funds are well publicised and that people are able to access them anonymously—particularly in small school communities. And while this government recognises that short-term, small-amount loans or payday loans can be useful for helping people through a crisis, they also create the risk that too much of people's money can be lost to interest and fees. In the ACT, payday lenders are subject to a 48 per cent interest cap, which includes all fees and charges. At a national level, this government is working through COAG to develop a national regulatory system for payday lenders. That would mean equal protection across states. And through Centrelink, income support recipients can apply for no-interest loans of up to $1,000. Other programs encourage savings, for example through matched savings schemes, to encourage people to build up a nest egg for when they need it most.

We also need to improve financial literacy. As one attendee pointed out, according to the Australian Bureau of Statistics' 2006 Adult Literacy and Life Skills Survey, 79,000 Canberrans lacked the literacy skills to meet the complex demands of everyday life and work in a knowledge based economy. There are also gaps in financial knowledge. Attendees talked about the challenge for some households in managing budgets, as well as money management skills like paying off high-interest debts first. The Australian government runs programs to boost financial literacy, including the MoneySmart program. Many community sector groups also operate their own financial information programs, as do some schools. It is important that these programs be rigorously evaluated. Overseas experience has shown that financial literacy programs which sound good conceptually do not always perform as well as expected. I would encourage governments at all levels, as well as community organisations, to evaluate financial literacy programs, using randomised trials wherever possible.

The discussion also raised ways of reducing costs for low-income earners. Some initiatives are already being pursued, such as the ACT government's energy outreach program and the federal government's record investment in affordable housing. In early October, the federal government announced that the National Rental Affordability Scheme will fund more than 1,500 dwellings in Bruce, Nicholls, Harrison, Bonner, Crace and Watson. Last Friday I opened a new social housing development in O'Connor which will add to the public housing stock, including for tenants with a disability. Attendees emphasised the need for solutions to be holistic. They pointed out the challenge for community sector organisations using multiple funding streams, and the problem for clients of having to meet with many different service agencies. Providing holistic services while ensuring effectiveness and accountability is a major challenge for policymakers in the future.

Finally, I would like to thank the attendees for participating in today's roundtable: Fiona MacGregor, YWCA ACT; Lynne Harwood, Communities @ Work; Shannon Pickles, St Vincent de Paul; Carmel Franklin, Care Financial Services; Jenny Kitchin, Anglicare ACT; Amy Kilpatrick, ACT Human Rights Office; Roslyn Dundas, ACTCOSS; Dira Home, Belconnen Community Services; Alicia Payne, ACT ALP Community Services Policy Committee; Gordon Ramsay, Uniting Care Kippax; Camilla Rowland, Karralika Programs; and Rhonda Daniell and Judith McDonnell, Gungahlin Regional Community Services. I appreciated the willingness of all attendees to work together to reduce poverty and disadvantage in the ACT.
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Renewable Energy

I spoke in parliament yesterday about the government's renewable energy legislation, and also used the chance to discuss some of the other alternatives, such as the Beyond Zero Emissions report and the Opposition's Direct Action plan.
Australian Renewable Energy Agency Bill 2011, Australian Renewable Energy Agency (Consequential Amendments and Transitional Provisions) Bill 2011
1 November 2011

Clean energy markets are the high-growth sectors of the future. By encouraging investment and innovation, they will transform our energy sector. In the process, Australia will become a market leader in clean energy innovation. Climate change is already shaping the world economy. The world, whether the opposition likes it or not, is shifting to a clean energy future. It might be slower in some countries, such as the United States, where Tea Party intransigence is standing in the way of good policy, and it might be politically fraught in other parts of the world too; but the emergence of clean energy markets is undeniable. In 2008 Europe spent nearly $50 billion in clean energy investments, China has announced a $400 billion clean energy technology investment program, and global investments in energy markets are predicted to reach up to $424 billion a year by 2030.

Australia has a great opportunity to take the competitive edge in two big renewables markets. The first market is the high-tech, high-skilled global market of technologies for renewable energy generators. We can be at the forefront of innovation. We have the scientists and the researchers. The second market is the energy market. As a major user of energy, Australia can implement renewable energy technologies. We have natural resources in abundance. To be a market leader, Australia must have the market conditions for clean energy industries to establish a foothold. Once an industry has an initial foothold in a region, that region is much more likely to become a hub for future growth. This effect has been called a cluster. It is a powerful way of organising firms to increase innovation, productivity and economic growth. The dominance of Stuttgart in the performance car market and Los Angeles in the entertainment industry demonstrates the growth benefits of clusters.

The Gillard government brought 18 bills to this House to establish the carbon price. I spoke on these bills on 14 September this year. This bill addresses renewable energy technology development. I am grateful to Angela Winkle, an intern in my office, for assistance in preparing these remarks. The government has already established a guaranteed market for renewable energy development through the renewable energy target. The Australian Renewable Energy Agency, ARENA, complements the renewable energy target. It encourages research and development of technologies. The Clean Energy Finance Corporation will then provide leverage for private investment in the commercialisation of clean energy technologies. These mechanisms complement the carbon price. They will encourage rapid investment in innovation in clean energy technologies. They will encourage the transformation of the energy sector on the scale required. They will enable the broadest range of inquiry into new technologies. These policies will mine the ingenuity of the market and encourage investment in renewables.

On 19 September Senator Kim Carr announced finalists in the Australian Clean Technologies Ideas Competition. The range of ideas proposed highlighted the inventiveness of Australian businesses and entrepreneurs just waiting to be tapped. Finalists proposed ideas ranging from silent wind turbines and improved wave energy systems through to centrifuge technology for cleaning oil and lime calcination for energy storage. Supporting the development and commercialisation of innovative ideas will transform the Australian economy. It will provide Australian businesses with the competitive edge in emerging global clean energy markets. By creating market incentives, the most innovative and cost-effective technologies will emerge. Those technologies will include those we have not even thought of yet—those with unexpected benefits, those that emerge from the ingenuity of the market and those that would remain undeveloped with a direct action plan.

The opposition proposes climate policy with tunnel vision. It picks technologies to support and excludes new ideas. Yet projections of renewable energy have been notoriously bad at projecting which technologies will succeed. Pre-2000 modelling projected that in 2010 wind energy would be nothing in Australia's renewable energy mix. But in 2010 wind actually accounted for 44 per cent of the renewable energy mix. Bagasse was projected to be two-thirds of the renewable energy mix by 2010 but in reality accounted for less than 10 per cent. The opposition's insistence on selecting technologies to support ignores the role of a market in identifying the most cost-effective solutions.

The opposition's insistence on a 'Moscow on the Molonglo' approach to climate change is clear in their focus on soil carbon. The direct action plan identifies soil carbon as the single largest opportunity for CO2 emissions reductions in Australia, but that is misleading. Soil carbon has potential for short-term carbon sequestration, but soil has a carbon saturation point which limits sequestration potential. There is a point at which soil cannot absorb more carbon. The CO2 will remain in the air, raising the concentration of CO2. CSIRO has found that carbon sequestration diminishes to almost zero after 40 years. Soil carbon can be used as a 'time buyer' while other technologies are developed, but the opposition provide no policy to ensure technology development. Their plan is short-sighted and designed—as the member for Wentworth has pointed out—to be withdrawn at the first possible moment.

In place of the coalition's command-and-control approach, the government's portfolio approach backs multiple technologies. It generates the broadest platform for innovation. It is a broad platform that enables cross-pollination of ideas and creates a foothold for clean energy industries in Australia. ARENA will be an independent statutory agency. ARENA's board will consist of industry leaders in technology, commercialisation and business generally. The board will direct investment in renewable energy and enabling technology projects. In supporting early-stage technology development, ARENA will fill a market gap. The public-good nature of clean energy technology innovation warrants government support. Successful technologies developed through ARENA funding can be commercialised through the Clean Energy Finance Corporation.

We have the opportunity to take a leading role in research and innovation and to develop a competitive advantage in high-tech, high-skill, clean energy industries. As market leaders, Australian businesses can partner with manufacturing countries. Earlier this year I was with the Minister for Resources and Energy, Martin Ferguson, at the Australian National University for a launch of a major project researching the efficiency of photovoltaic solar cells. China has the world's largest solar panel manufacturing industry. As a result, a Chinese company, Trina, has committed to investing in ANU's endeavour. ARENA and the CEFC will encourage more relationships like this one.

Transforming our energy sector will not be easy. For example, one report, the Beyond Zero Emissions Zero carbon Australia stationary energy plan, claims that we can get to zero emissions by 2020. This plan describes a complete phase-out of all fossil fuels by switching to electric systems. It envisages all Australian energy demand being supplied by wind power and concentrated solar thermal power with a minor contribution from biomass and hydroelectricity. The plan is a $370 billion investment program. It requires energy efficiency measures, the transfer of half the road transport to electric rail, the replacement of the current car fleet with electric vehicles and the transfer of all domestic air travel to rail—all by 2020. The zero emissions plan suffers from impractical time frames for investment, infeasible costs and an underestimation of Australia's energy requirements in 2020. I do admire the authors' optimism, but the task is hard.

More worrying is the so-called plan put forward by the opposition, so in writing this speech I decided I would do what no-one has yet done in this House: explain direct action. So I got their policy and their talking points and set to work. While the government's policy encourages innovation and positions Australia as a market leader, the coalition would have us in the back blocks of clean energy innovation. As well as stifling innovation, direct action is far more expensive than a market solution. The Grattan Institute said that a:

'… carbon price … can achieve the scale and speed of reductions required for Australia to meet its 2020 commitments without excessive cost to the economy or taxpayer.'

But in their direct action plan the coalition propose an emissions reduction fund that operates as a grant-tendering program. Analysing past policies, the Grattan Institute found that, for every dollar a government commits to grant-tendering programs, only 3c worth of operational projects result within five years, and only 18c worth result in 10 years That means that for a direct action plan to meet the 2020 emissions target it would need a fund of $100 billion. That is a big, whopping new tax.

Another component of the direct action plan is rebates for renewable energy projects. But the Grattan Institute also found that rebate programs produce little abatement for their cost. Using rebates to achieve the 2020 target would require $300 billion over the next 10 years. The coalition claim that they can reach the bipartisan 2020 emissions target largely through grant-tendering and rebates for only $3.2 billion is absurd. From my primary school days, I recall going to the tuckshop with 50c and asking for a meat pie, a chocolate Breaka, a Paddle Pop ice cream and some red frogs to top it off. I was surprised when I was told that my 50 cents would buy me only half the Breaka. As an eight-year-old I learned that my 50c would not buy me everything I wanted. The members opposite do not seem to have learned the same lesson on the value of money.

The coalition's plan also costs more because it does not deal with international action. It does not matter where the emissions occur; they all have an equally detrimental impact on the environment. Each tonne of abated CO2 reduces the chance of bleaching the Great Barrier Reef, whether abated from Australia or elsewhere. Abatement is available at lower cost overseas. By forcing all abatement to take place in Australia, the coalition is choosing to pay more for the same environmental benefit. The coalition is choosing to increase the burden on Australia and therefore on Australian taxpayers for the same environmental outcome.

On the topic of the coalition's direct action plan's price tag, I note that on page 17 of the coalition's talking points they claim that direct action has no cost to families, yet page 18 states that direct action will cost $3.2 billion over the first four years. The coalition seem to be confused as to where funds for government expenditure come from. In fact, Treasury modelling estimates the cost of direct action at $1,300 per household per year. The opposition's approach to renewable energy uptake is to provide minimal funding for limited projects such as solar roofs and just 25 geothermal or tidal towns. If we could predict the future and know that solar and tidal are the best technologies, this would be a credible approach; but, given that crystal balls are notoriously unreliable, the opposition's desire to micromanage industry is mind boggling. The approach picks winners, is inefficient and has been demonstrated to be cost ineffective when compared with market based mechanisms.

I also note the opposition's regular complaint that Australia should not act because the world is not acting—that we do not want to get ahead of the pack. This complaint is curious because page 8 of the direct action plan states, 'Most developed countries have undertaken action on climate change.' The opposition go on to state there that the action taken by most developed countries are national emissions trading schemes, taxes or a mix of the two. Also curious is the direct action plan's labelling of Nordic countries' electricity tax incentives as direct action. Page 8 of their plan states:

'Many of the Nordic countries have taken more direct action by introducing electricity tax incentives for most users to use less electricity and extensive subsidies for public transport.'

Should this be taken to mean that the opposition views taxes as direct action?

The confusion is illustrative of the direct action plan generally. As a Labor Party member I cannot believe I have to explain this to the coalition. Markets work well; but, rather than use the market, the coalition want to micromanage business. Rather than use the market, the opposition want to pick their favourite technologies. Rather than the market, the coalition want an ineffective and expensive grant-tendering fund. Rather than use the market, the coalition want an ineffective and expensive rebate program. Rather than use the market, the coalition want to pay for promised projects, not actual reduced emissions. Rather than use the market, the coalition want direct action—an expensive, ineffective and confused scheme. The coalition's direct action plan will result in either very high cost to taxpayers or the 2020 emissions target not being met. Direct action will not promote innovation and will leave Australia locked out of the world's clean energy markets.

The government's renewable energy policies encourage innovation, research and development, and commercialisation of technologies. ARENA and the Clean Energy Finance Corporation will position Australia as a market leader in high-growth, high-tech, and high-skills clean energy industries.
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ACT Self-Government

I spoke in parliament yesterday on the Territories Self-Government Legislation Amendment (Disallowance and Amendment of Laws) Bill 2011, which passed parliament today.
ACT Self-Government
31 October 2011

When Canberra turns on its charm and offers that perfect day when the sun shines, the water glistens and the temperature is not too cold or too hot, it is easy to see how this region charmed the federal parliamentarians who visited in 1906 and 1907 on their tour of potential sites for the new nation's capital. Federal politician King O'Malley once said of the decision about where to site the nation's capital:

'I want us to have a climate where men can hope. We cannot have hope in hot countries.'

The saying goes that success comes from a lot of hard work and a bit of luck. Reflecting on the cities which could have been the seat of government, Canberra had plenty of luck. At the outset, the city was not the preferred location of either the media or the politicians. But for a perfect Canberra day on 13 August 1906, and again on 23 August 1907, the parochial interests of a Premier and a change of heart and vote by a Victorian senator, our nation's capital could have been somewhere entirely different.

On the banks of the Snowy River, 50 kilometres south-west of Cooma, lies the town of Dalgety. With one pub and 75 residents, you would hardly know the town was named in the 1904 Seat of Government Act as the location of the new federal parliament. But state and local interests collided with the desires of national leaders. Dalgety was located in the electorate of the then Minister for Home Affairs, Sir William Lyne. Keeping with the traditions of Macquarie Street, New South Wales Premier Joseph Carruthers refused to cede the town to the federal government, believing Dalgety to be too close to Victoria. Carruthers valiantly declared Tumut, Yass or Lyndhurst as the only sites for the nation's capital. By coincidence, all three towns happen to be in the Premier's electorate.

Dalgety remained the favourite of the Victorian and Western Australian senators, who made numerous attempts to have it reinstated as the site for the capital, but Carruthers's determination to act in the interests of New South Wales was such that he threatened to take the federal government to the new High Court for trespass should any survey pegs be driven into the ground. Eventually, the Dalgety backers gave up and, by 1907, there was a growing consensus that the site of the capital should be somewhere in the triangle formed between the towns of Goulburn, Yass and Queanbeyan.

With the trout-fishing contingent now having shifted their support to Tumut, the decision came down to Canberra versus Tumut. In December 1907, the House of Representatives voted 39 to 33 in favour of Canberra, but in the Senate Canberra and Tumut were tied 18 votes apiece. Canberra owes its status to a Melburnian who believed the future lay in agriculture and mining. Anti-socialist Senator James McColl changed his vote and backed Canberra. Then, like now, the numbers in Australian politics were finely balanced, but Andrew Fisher showed us that a close vote does not stop you getting things done. A decision was finally made to select Canberra as the nation's capital.

Besides its unique history, Canberra is so much more than our nation's capital. It is home to over 350,000 Australians. It is a place of cultural icons and historic events. It is a place where Canberrans exercise their right to elect their own representatives to govern and legislate in their interests. But Canberrans do not enjoy the legislative freedoms of their state counterparts. In March of this year, I joined my parliamentary colleague Gai Brodtmann, the member for Canberra, in taking the unusual step of making a submission to the Senate's Legal and Constitutional Affairs Legislation Committee inquiry into the Australian Capital Territory (Self-Government) Amendment (Disallowance and Amendment Power of the Commonwealth) Bill 2010. We argued that section 35 of the Australian Capital Territory (Self-Government) Act affords the Governor-General the power to disallow an enactment of the ACT Legislative Assembly by legislative instrument within six months after it is made. We argued that negatively impacts on the independence of the ACT Legislative Assembly and that the ability of the Commonwealth executive with the stroke of a pen to overturn enactments of the Legislative Assembly is a liability state parliaments are not subject to. The repeal of section 35 of the ACT (Self-Government) Act will ensure this by removing the power of the executive to intervene without the agreement of this parliament.

Territorians are not asking for special treatment; they are just asking for a fair go. Of course, this bill does not affect the constitutional right of this parliament to make laws for the territories; it only seeks to ensure that any strike down is done by parliament, not by a minister alone. I agree with the majority report of the Senate Legal and Constitutional Affairs Legislation Committee: it is a matter of principle; the power of the federal executive to override legislation in the ACT is inappropriate and unwarranted. As the minister has noted, many experts and the Northern Territory and the ACT governments support the bill. It is strange that the member for Solomon and Senator Gary Humphries, a former ACT Chief Minister, do not.

As things currently stand, the Governor-General, acting on the advice of the Commonwealth, can disallow or recommend amendment to territory legislation to provide the executive government with the ability to protect its interests in the territories. This bill seeks to remove the Governor-General's power to disallow or recommend amendments to laws made by territories under their self-government acts. The effect of this would be to remove the Commonwealth executive's ability to override legislation passed by the territories' legislative assemblies.

Equally importantly, let us look at what this bill does not do. Under this bill the Commonwealth still retains the ability to override legislation passed by the legislative assemblies of self-governed territories through the plenary power of section 122 of the Constitution. That section commences: 'The parliament may make laws for the government of any territory'. Repealing section 35 and section 9 of the respective ACT and Northern Territory self-government acts does not affect the constitutional power of the Commonwealth. What it does do is raise the bar on any overriding of a territory law. It must be done by the parliament, with every parliamentarian having the opportunity to speak in that debate.

The ACT's path to self-government has a history of resistance. John Overall, the head of the National Capital Development Commission from 1957 to 1972, said:

'Canberra residents may have been demanding a greater say in their destiny, but they rejected attempts by the Federal Government to have them take control of their own affairs through self-government. They appeared reluctant to accept the responsibility of governing themselves, or perhaps, the increased costs which they feared would inevitably follow the handover of power from the Federal Government to a local body.'

Despite such views, many Canberrans still wanted self-government and under the Whitlam government a legislative assembly was formed in 1974. However, the Commonwealth tended to override or ignore its wishes. In 1975 a supporter of self-government for the ACT, Tony Staley, accepted the post of Minister for the Capital Territory. However, the model he proposed found opposition, in part because it failed to address territory funding arrangements.

With the Northern Territory achieving self-government in 1978, it was suggested that self-government must also be appropriate for the ACT. After all, the ACT had a larger population and was growing faster. The next person to run the ministry, Robert Ellicott, held a referendum on the issue of self-government in 1978. The referendum provided the residents of the territory with three options: (1) that self-government be granted to the territory by delegating functions to a locally elected legislative body; (2) that a locally elected legislative body be established in the territory with local government type legislative and executive functions; or (3) that the present arrangements for governing the territory should continue for the time being. The referendum failed but it did not end the debate.

There were pressures that still continued to push the ACT to self-government: the national consistency of government, the re-enfranchisement of the community, and financial pressures. It was argued that self-government would allow the ACT to be placed on the same financial footing as other states and as the Northern Territory. Just prior to self-government, Bill Harris, the head of the ACT administration, said this was the fundamental reason for the eventual realisation of self-government in the Territory.

In 1988, the minister for the ACT, Gary Punch, received a report recommending the abolition of the National Capital Development Commission and the formation of a locally elected government. He recommended the Hawke government accept the report's findings. Clyde Holding, Minister for Immigration, Local Government and Ethnic Affairs, introduced legislation to grant self-government to the territory in October 1988. On 6 December 1988, the ACT was granted full self-government with the passage of the ACT (Self-Government) Act. The first ACT election was held three months later, on 4 March 1989. Despite the initial resistance to self-government, despite the bumpy path travelled to get there, after 23 years ACT self-government is well established and has proven successful. As the minister has pointed out, the ACT parliament has shown itself to be a mature debating chamber, the equal of any state or territory legislature around the country. What was the baby of 1988 is now an adult, holding its place confidently in the world. It is a government that makes its own decisions responsibly and is held accountable for them.

I would like to pay tribute to Jon Stanhope, former Chief Minister of the ACT, and Katy Gallagher, who has stepped confidently into Jon's shoes, continuing practices such as Chief Minister Talkback, a forum that allows Canberrans to speak directly to their Chief Minister.

The majority report of the committee was correct in supporting the objectives of the bill: to remove the power of the executive to override legislation with the stroke of a ministerial pen and replace it with a parliamentary process, more in keeping with the democratic practices of today.

Back in 1988, when I was a 16-year-old work experience kid, I worked in the office of John Langmore, the then federal member for Fraser. I remember John Langmore telling me the story of serving as the member for Fraser in the early 1980s, in the days before self-government. One day a constituent phoned him at home at 5 am. The constituent said to him, 'Mate, the garbos have woken me up with the banging of my bins outside, and I figure that if I'm awake the member for Fraser should be awake as well.'

The ACT has come a long way since then. As the committee concluded, the benefits of the disallowance bill—enhancing democracy in the ACT and in the Northern Territory—outweigh any disadvantages. This is a step in the right direction towards giving the people of the ACT—and Fraser—the same legislative freedoms and rights as their state counterparts. Territorians deserve accountable, equitable and transparent government. They deserve to know that their laws will not be struck down with the stroke of a ministerial pen. I commend the bill to the House.
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Independent Hospital Pricing Authority

I spoke in parliament yesterday about the Independent Hospital Pricing Authority.
National Health Reform Amendment (Independent Hospital Pricing Authority) Bill 2011
31 October 2011

Public hospitals are the cornerstone of Australia's healthcare system. In Australia, if you are seriously sick or badly injured, you can go to your local public hospital and be sure you will be afforded a high standard of care from well-qualified professionals. Australians do not live in fear of medical bankruptcy.

Looking after the wellbeing of Australians is what the Labor Party does. We are, after all, the party that introduced Medibank, under the Whitlam government in 1975. Recreated as Medicare under the Hawke Labor government, it is an everyday reminder of the commitment Labor has to affordable, accessible and quality health care for all Australians. Recently the government reached agreement with all the states and territories for a national healthcare agreement. This followed a comprehensive process to make sure we got health reform right—a process that involved an independent inquiry, an extensive consultation with states, territories, healthcare providers and health experts—because this government cares for the issues that matter most to Australian families.

Australian families want to know that when a member of their family falls sick they can get the help they need from a public hospital irrespective of their circumstances or location. But in meeting that goal we have to continually improve health care. Labor is the party of reform in Australia and this includes making the healthcare system of tomorrow better than the one we have today. Australians need to have the confidence that if they are badly hurt the public hospital system will be there as their safety net.

I was stunned on 12 September this year by an incident in the United States. At a Republican presidential candidate debate, hosted by CNN and the Tea Party Express, debate moderator Wolf Blitzer asked a hypothetical question about a young man who had failed to buy health insurance. He asked congressman Ron Paul whether the young man should be provided government financed medical care in the event of a serious accident. Blitzer asked Paul: 'Are you saying that society should just let him die?' While Paul hesitated, a number of audience members shouted out, 'Yeah!'

We are fortunate to live in a country where this type of outburst is unthinkable, where there is no question about the role of government in the provision of health care. We know it is the right thing to do and we know it is something we need to get right. Labor's introduction of Medicare has now ensured, decades on, that it is part of the Australian social fabric.

Under the new health agreement, the Commonwealth government will commence by paying 45 per cent of the growth in hospital costs from 2014 to 2015. From 2017-18 that figure will be increased to 50 per cent. There will be a national funding pool so all hospitals will be paid in the same way, whether they be in Bourke or in Ballarat. This will deliver unprecedented transparency to hospital funding arrangements. This transparency will be furthered by the introduction of activity based funding. As one of the key recommendations of the National Health and Hospitals Reform Commission report, activity based funding will increase the efficiency of public hospital funding.

This will be a departure from current arrangements. The Commonwealth provides public hospitals with block grants through state and territory governments. These grants are not tied to service provision. Under the new arrangements, they will be overseen by the Independent Hospital Pricing Authority, a key institutional reform under the National Health Reform Agreement. It will operate alongside the Australian Commission on Safety and Quality in Health Care and the National Health Performance Authority to ensure that greater transparency drives reform. In practical terms this will mean more beds, more local control, more transparency, less bureaucracy, less waste and less waiting.

As the dad of two little boys who always seem to be falling and hitting their heads, I have spent many hours sitting in emergency departments dealing with everything from concussion to gastro problems. I know the stress that builds up while you are sitting in that emergency room waiting for service. It is imperative that we do what we can to cut hospital waiting times, to make sure that those who are in urgent need of attention get it. Equally important is ensuring that those people whose requirements are less pressing are provided with quality care outside the hospital system. We should get the people who need quick access to hospitals in as quickly as we can but also ensure that those who do not need a hospital are not using the hospital facilities and putting pressure on them.

The Independent Hospital Pricing Authority will operate as an umpire, setting a price for the growth in hospital services and providing the government with advice on their implementation. As agreed at COAG, the new national approach to activity based funding will commence from 1 July 2012. The record investment in public hospitals of an additional $19.8 billion over 10 years will see the Commonwealth paying 50 per cent of the efficient cost of growth in hospital costs.

The key here is that the Commonwealth funding will be based on the nationally efficient price, not a blank cheque to the states and territories. Finding efficiencies to healthcare delivery can have real results. In his book Super CrunchersIan Ayres tells the story of American paediatrician Don Berwick who set out to save 100,000 lives. He based his grand aim on the fact that about that many people died each year in the United States due to preventable medical errors. Berwick did not go looking for radical changes or surgical advances. He simply looked at common complications and procedures—procedures such as preventing lung infections from ventilators by elevating the head of a hospital bed, cleaning a patient's mouth to reduce the spread of infection and using rapid response teams to rush to a patient's bedside at the first sign of trouble. Surprisingly, his most effective suggestion was to introduce systematic hand washing. Systematic hand-washing campaigns in hospitals reduce the risk of certain infections by more than 90 per cent. This statistic guided Berwick's pathway to save these lives.

I commend the Minister for Health and Ageing for last week announcing that the MyHospitals website will now publish infection rates. That will be another way of ensuring that transparency drives local reform. In addition, a nationally efficient price means that those types of medical errors—errors that inevitably require patients to get additional care, to use precious hospital beds for longer—will become even more costly for hospitals. There will be a financial incentive for hospitals to reduce the rate of medical errors because they will become a real cost burden on hospitals that do not tackle medical errors.

By providing independent advice to the government on the efficient costs of such services as well as developing systems to support activity based funding for such services, the Independent Hospital Pricing Authority will significantly improve the monitoring of the performance of our healthcare system. Under this bill the authority will also calculate block funding amounts for hospitals not subject to activity based funding—something that is especially important for the delivery of health care in regional and rural areas. Small regional and rural hospitals will be protected under the new financing arrangements proposed in the bill.

This government is committed to funding health services so that all Australians, regardless of where they live, have access to great health care. Where activity based funding is not appropriate, the block funding system will continue. We will make sure that rural and regional hospitals are able to continue to meet their obligations and can deliver high quality patient care. These are the Labor values of equality and fairness in action.

While the Independent Hospital Pricing Authority will provide advice to state and territory governments on the efficient price for procedure and operation of public hospitals, it will not determine the payments made by those governments. The advice will not be binding, and the states and territories will maintain their discretion. The move to activity based funding is a vital reform because it helps ensure that hospital financing can adapt and adjust to changes in service demand. As the demographics of our population change, we have to equip public hospitals with the tools to deliver the appropriate services to the people who need them at the right time. The funding system has to reflect the needs of the community, to be targeted, flexible and responsive to technological advances in the detection and management of illness and injury.

The authority will enable activity based funding to have hospitals adjust to the needs of shifting populations, local demographic characteristics, changing costs of delivering medical services through innovation, and the complexity and location of delivering hospital services. To help public hospitals meet the challenge of shifting demands, the authority will play a role in determining what constitutes a public hospital service. It will provide assessments and recommendations in relation to the resolution of disputes between governments over cost-shifting and cross-border funding arrangements. Cross-border issues are a major challenge for the ACT, with Canberra Hospital serving a much wider region than the ACT.

In the interest of openness and transparency the Independent Hospital Pricing Authority will be required to publish its advice and other information. That will help inform decision makers in relation to the funding of public hospitals. In establishing national governance agencies and a performance and accountability framework, this government has shown that it is are serious about delivering an effective and efficient public hospital system—one that meets the demands of the future and gives Australian taxpayers value for money.

To support the work of the authority two advisory committees will be established: the clinical advisory committee and jurisdictional advisory committee. Those committees will provide advice to the authority on developing and specifying classification systems for healthcare and other services. The clinical advisory committee will consist of a chair and eight members, all of whom are clinicians. The jurisdictional advisory committee will also provide advice to the authority on a range of matters, including: adjustments to the nationally efficient price to account for variations in delivering health care, advice on the standards and requirements in relation to the provision of data by state and territory governments, and funding models for public hospitals. Under the guidance of the nine members of the authority and the support provided by the authority's advisory committees, it will be well advised by people with extensive clinical and professional expertise in the vital role it will fulfil.

The public hospital system is something we almost take for granted in Australia. We take it for granted that it is our right as Australians that if we are sick we can go to hospital and we will get that treatment. It is a right that Australians have come to expect and do expect, but it is something that does not come easy. Through the authority and other reforms under the National Healthcare Agreement, this government is taking an active role in ensuring healthcare providers deliver quality health care. The reforms have not been easy and we have had to make some tough decisions along the way, but we have taken the responsibility for bringing about a landmark agreement.

It is important to recognise healthcare reform in context. This is not just great healthcare reform, it is also great economic reform. Just as the Labor governments of the 1980s put in place macroeconomic reforms, such as floating the dollar and tariff cuts, and the Labor governments of the 1990s put in place vital microeconomic reforms, such as competition policy and enterprise bargaining, so too the Labor government of today is putting in place the next wave of reform—that is, reforms of public sector productivity, making sure that schools and hospitals work better. We are not only ensuring this is done transparently through the My School and My Hospital websites, but we are also ensuring that Australians get the best deal out of their public services. In the case of health we want to know that when we become sick, the dedicated staff from our local public hospital can do their job to provide the care our family and friends need at the time when it is needed most. I commend the bill to the House.
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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.