STANDING COMMITTEE ON ECONOMICS

INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Monday, 2 June 2008

Senator «MILNE» -I would like to ask about subsidies, in particular. Do you have a comprehensive list of industry subsidies that are paid in Australia, and to which sectors?

Senator Carr-I do not have a comprehensive list. In terms of industry policy, it would be fair to say that there are programs which would be administered across a range of portfolios from agriculture, environment and education. There is defence and various categories there. It would be wrong to say that all industry programs are administered by this department. The majority of them, I believe, would be.

Mr Paterson -Your question is very broad and a lot of it is a definitional issue. What do you mean by subsidy?

Senator «MILNE» -How do you define a subsidy?

Mr Paterson-You are asking the question, with respect. What are you asking of us? We run competitive grants programs. Do you regard that as a subsidy? We do not, but do you regard a competitive grants program as a subsidy? I do not know what it is that you are looking for.

Senator «MILNE» -I am going to ask you: what do you regard as a subsidy and can you give me a list of those?

Senator Carr-What I was referring to were industry policy programs. Co-investment arrangements are grants, programs. There is a whole range of questions that fit within that category. Are you using ‘subsidy' in the pejorative sense?

Senator «MILNE»-No, I am not. I was about to ask how many were for the renewable energy sector as well. I want to make a comparison between fossil fuel subsidies and renewable energy subsidies. I was then going to ask if you will test for CO2 emissions when you are looking at prioritising who gets which subsidies?

Mr Paterson-We do not run subsidy programs. A comprehensive answer to your question for the whole of government can be found in a report of the Productivity Commission on industry assistance arrangements, which would have been published within the last two months and which does a review, I think biannually, of all programs of industry assistance. I do not suggest that industry assistance equates with your definition of subsidy, but there is a comprehensive overview of industry assistance programs run by government produced by the Productivity Commission, within the Treasury portfolio.

Senator «MILNE»-Within your own portfolio, with your grants or industry assistance program, do you have a CO2 emission, a greenhouse gas emissions, checklist beside it? When you are looking at the grants is that one of the things you take into account?

Mr Paterson-Across the board, do we have a checklist in relation to all of the programs that we are responsible for? No, we do not. The programs have a variety of objectives and we seek to meet the objectives provided to us by the government of the day in relation to each of those programs, but we do not have a separate CO2 emission checklist in relation to every program we administer.

Senator «MILNE»-The Department of the Prime Minister and Cabinet's Climate Change, which is overseeing interdepartmental discussions, has not asked you to put in, and you have not done of your own volition, a CO2emissions checklist?

Mr Paterson-In relation to program guidelines, we do not do things of our own volition. We administer the programs of the government of the day under the guidelines provided by the minister of the Crown who has responsibility for that. We do not dream up guidelines of our own volition. We administer programs on behalf of the government of the day-this government and the former government.

Senator «MILNE»-I understand that. It is just that the Prime Minister said that there is a whole-of-government approach, that the objective of government is to reduce greenhouse gas emissions and that there is interdepartmental work going on. I am trying to establish whether you have been given any riding instructions at all in relation to testing your grants program or your industry assistance program against greenhouse gas emission targets?

Mr Paterson -I have indicated to you that we do not have a checklist that tests CO2 emissions for all of the programs we administer.

Senator «MILNE» -For any of the programs you administer?

Senator Carr-We have new programs in regard to clean technology and renewables in relation to implementation of the Clean Business Program and of course we are in the process of establishing as part of the Enterprise Connect Scheme an Innovation Centre for Clean Technology.

Mr Paterson -There is the Green Car Innovation Fund.

Senator Carr-That is right. There is the Green Car fund. There is a range of other programs that are operating within the department. As I have indicated, we are in constant discussions as a regular part of the ongoing work of the department and, politically, the ongoing work of this government is to talk to industry about the ways in which there can be a transformation of Australian industry to more effectively deal with the pressures and the challenges of climate change.

Senator «MILNE»-Talking to industry is one thing. Government grants and implementation of government assistance are done by some criteria. I am trying to establish whether you have criteria in place for all of your programs, and the answer is no in relation to climate change. What I am now asking is about some of the programs. In which programs do you have a CO2 assessment criterion in giving industry assistance at this time? Is it any or none?

Mr Peel-Currently we do not deliver any such programs through AusIndustry. We did deliver a program called the Renewable Energy Development Initiative which had a CO2 reduction target, but that program is not continuing. As the minister mentioned, there are a number of new programs that the government has announced in the budget process and we have not finalised the design of those programs. Whether or not an energy reduction target should be part of them will be part of the process we go through in establishing the design of those programs. There is also a comprehensive review of all climate change programs currently delivered within government being undertaken through the department of finance, and that will also establish the way forward.

Senator «MILNE» -Can you tell me why that program was ended?

Mr Peel -That was a budget decision of the government.

Senator «MILNE»-If a CO2 criterion was put in place, as was the case with that program, who would instruct the department to do that? Is that the Prime Minister and Cabinet or how would that come about?

Mr Peel-It was part of the program designed at the time. In designing the program we need to take into account the broad policy objectives of the government. In relation to that particular program there was a target to assist in the reduction of CO2 emissions, so a formula was put into the assessment process and we engaged an expert committee to give us advice on each grant application, amongst other things, to make sure that they met that target.

Senator «MILNE»-Given that a priority of the government, as stated by the Prime Minister through the election campaign, was to reduce emissions to address climate change and to be a global leader in climate initiatives, at what point will such a criterion be built into all industry assistance programs?

Mr Peel-I can only speak about the ones that were announced in the budget. As I mentioned, we are currently going through the process of designing those programs and, in undertaking the design, we will take into account the government's policy initiatives.

Senator «MILNE» -Does that mean it will be in there?

Mr Peel -I cannot say for sure.