Senator RYAN (Victoria) (9.48 am)—An issue that I am particularly concerned with is relevant to this amendment but it also covers some other issues. I would like to flag those with the minister, as I understand either she may have the answer or she may have to obtain it. The major bill here creates a personal property right in the Australian emissions unit and in the registered Kyoto unit. I was interested in particular in the creation of a personal property right as it is termed in the bill and its implications for future amendment to this bill with respect to section 51(xxxi) of the Constitution and the requirement for compensation on just terms for the acquisition of property. I am interested in that with respect to the general provisions of the bill and the ability to amend it, but it is raised in relation to this amendment because, as I understand the bill, these units and permits can be banked. I was wondering if the minister had an answer to a query about that as well as the fact that a future change in the target may increase or decrease the value of those permits, and whether or not the government had sought any advice on its implications for the constitutional test for the acquisition of property on just terms.
Senator WONG (South Australia— Minister for Climate Change and Water) (9.49 am)—There has been some media reporting regarding some legal propositions in relation to whether or not the fact that permits are property rights has any effect in terms of providing a basis for compensation claims. I want to be clear that the government does not believe that the structure and framework of this legislation would give a basis for compensation claims. The government believes that the argument that stricter targets would give a basis for compensation claims is not correct. In our view this advice is based on a misconception that the CPRS creates rights to pollute which would have to be withdrawn if stricter targets are adopted in the future. In fact, tightening of the targets does not involve any buyback or withdrawal of existing rights. There is no acquisition of property which would provide a basis for just terms compensation under the Constitution. In actuality, the likelihood, if you apply reasonably basic market principles, is that a deeper target would reduce the supply of permits in a finite domestic market which would, in effect, be more likely to have the opposite effect, which is to increase the value of the permit.
Senator RYAN (Victoria) (9.50 am)— That answers one half, and I appreciate the minister’s answer. What I would also be particularly interested in is the creation of a personal property right and whether or not a repeal of the bill and a repeal of the CPRS at some future point would trigger such a compensation claim. I understand the point the minister made that an increase in the target would likely increase the value of the permit, so an increase in its value would not necessarily trigger an acquisition of property issue. But I was wondering if the minister had an answer to the question as to whether this bill effectively binds a future parliament to the extent that the parliament can only acquire property on just terms and whether, if the bill was repealed, such a repeal would require compensation or buyback or other similar mechanism to bring about the end of the scheme or the end of such permits.
Senator WONG (South Australia— Minister for Climate Change and Water) (9.52 am)—I am surprised at the question, I have to say. Is the Liberal Party seriously considering a position where the bill got through that they would repeal it? That is an interesting proposition, that someone would believe that if the parliament does support this legislation they should consider repealing it after an election or subsequently. I was not aware that was something that even the Liberal Party at the moment would be contemplating, Senator.
Our view, and we have been clear about this, is that this is lasting structural reform. That is why we have worked very hard to get agreement with your leadership team, because our view is that these sorts of wideranging changes to the Australian economy do require leadership and agreement from more than simply the government. We have worked very hard to get bipartisan support for this legislation. We are not minded to look at this as only a one- or two-year proposition. The very nature of the mechanism that is before the parliament is that it is a longterm scheme to substantially change the way the Australian economy works so that we reduce our contribution to climate change. And the responsible way of thinking about it is to understand this is not a short-term reform, it is a long term reform. That is why the government has worked so hard not only to get agreement from the opposition but also to work through the design of what is, I acknowledge, a complex scheme. It is why we have worked so hard to consult with business groups and individual firms as well as NGOs and the community on the design of the scheme.
Senator RYAN (Victoria) (9.54 am)—I asked my first question and appreciated the answer. I am particularly disappointed with the second answer because you have resorted to playing the man rather than the ball. It is a different question and I think it is inappropriate, upon being asked a question like this, to commence your answer by assigning a false motive to the question. I am making no such proposition, as you asserted in the first part of your answer, about future actions; however, I do believe it is irresponsible not to ask the question. There are many actions of this parliament over the last century and a bit where a government or the parliament of the day thought things were particularly wise that did not subsequently stand the test of time. We had a pattern of industrial protection for 80 years. That was quite consensus based across this parliament, but after about 70 years we realised as a country that it was holding us back.
So I ask again, not necessarily to assign a motive to the question: does the government have any advice or are you aware of any advice? Do you have a view on whether or not the passage of this bill this week or next week is going to mean that a future repeal of this bill, whether it be in 100 years or 200 years—I know the minister has ambitions with the longevity of this particular scheme—is going to trigger compensation claims for the acquisition of property on just terms because various contracts will be signed after the entering of this bill? These bills can be banked. They can be traded. I imagine there will be future traders set up very quickly with respect to them. They are all, effectively, a personal property right as outlined in the bill. So what would be the consequences for a future parliament seeking to repeal this bill and this scheme? Would it mean that the Commonwealth of Australia is liable for compensation claims as per section 51(xxxi) of the Constitution?
Senator WONG (South Australia— Minister for Climate Change and Water) (9.56 am)—First, I do not know that you can accuse me of playing the man—but anyway. Second, I think you suggested that I have ambitions about this legislation lasting for a long time. I was simply asserting a matter of fact: the nature of this reform is a longlasting reform if it is going to work. The answer to the question of the consequences if a future parliament chose to repeal it is that that would depend on how that parliament chose to deal with it. I do not think it would be possible—and I think you are a lawyer as well, though maybe not—to be prescriptive at this point about what might flow from a hypothetical action of a future parliament without us knowing what the nature of that action was. That is not obfuscating; that is a pretty accurate assessment of what the situation is.
You also asked if we are attempting to bind a future parliament. The future parliament can never be bound. The parliament is always the master of its own destiny and a future parliament can, if it chooses to, pass laws on a range of issues that differ from the laws which are before us today. I think all of us know that. There is nothing that makes this legislation so out of the ordinary that you could say it would somehow transgress the principle that we cannot bind a future parliament. In relation to the compensation argument, if a future parliament were to determine to repeal or to do something different about this legislation, what would flow from that would depend on the circumstances of how it chose to do that.
I make the point—and I think it is a reasonable point—about what will happen if we think that in some years down the track we need to look at aspects of the scheme. We have built in a range of appropriate review mechanisms, with agreement with your shadow minister, that enable the practical operation of the scheme to be monitored to ensure it has sufficient certainty and also the capacity to respond or to look at any issues which may arise that may not be considered today. We have built those mechanisms in, and I have to pay tribute to your shadow minister. I think that that aspect of the legislation in particular is probably the better for the negotiations which were engaged in over the review processes.
Senator RYAN (Victoria) (9.59 am)—I will be brief. Minister, I hasten to add that I actually referred to effectively binding a future parliament through the requirement for compensation. I am aware of the fact that the parliament cannot bind the future, but is the government in possession of advice with respect to the impact of the repeal of this scheme? If this bill were to be passed today, Monday or Tuesday and then if in five years time the bill were to be repealed—because some agreement, technological achievement or otherwise made the bill not required or maybe even not effective—is the government in possession of advice, or have you taken advice, with respect to the implications of a straight-out repeal of this scheme and whether that may trigger just terms compensation for the acquisition of property, which this bill creates in Australian emission units and registered Kyoto units?
Senator WONG (South Australia— Minister for Climate Change and Water) (10.01 am)—I do not propose to traverse legal advice. We have taken advice on a range of matters and I have put on the record the government’s views on the issues that you have raised.