Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026

Ms PENFOLD (Lyne) (19:15): I rise to oppose the Carbon Credits and Other Legislation Amendment (Integrity and Transparency) Bill 2026. The title promises integrity and transparency, but, after what this parliament witnessed last week, those words ring particularly hollow, because we've now seen in real time what the Albanese Labor government is prepared to do with the Australian Carbon Credit Unit Scheme.

We've seen in the improved native forestry methodology a carbon credit methodology that enables Labor governments to commercialise the consequences of shutting down productive regional industries. We've seen jobs lost, we've seen mills close and we've seen families put through months of uncertainty. Then we saw the Commonwealth carbon methodology capable of attaching a financial value to the very economic activity governments have stopped.

That is not integrity. It is the bastardisation of the Australian Carbon Credit Unit Scheme for political purposes, and this bill risks taking us further down that road. I've been warning about the integrity of Australia's carbon credit scheme for some time.

In June I introduced my own private member's bill, the Carbon Credits (Carbon Farming Initiative) Amendment Bill 2026. I did that because the Australian Carbon Credit Unit Scheme only works if Australians have confidence that every ACCU represents genuine and additional carbon abatement. Farmers participate in this market, landholders participate in it and businesses invest on the basis of it.

Confidence in the integrity of those units matters. As I told this House when I introduced my bill, without additionality the scheme ceases to encourage genuine new abatement and instead risks becoming a funding mechanism for decisions already made. That is exactly what concerns me about the direction Labor is taking us.

Look at what has happened with the Great Koala National Park. New South Wales Labor promised the park. It was an election commitment.

The political decision came first. Then came the search for the money and then came the carbon methodology. As I said when I introduced my bill, the policy decision came first; the carbon methodology came later.

That sequence matters. Additionality means the carbon benefit should be something that would not otherwise have occurred. So, if the New South Wales Labor government had already decided to create the Great Koala National Park and stop harvesting, what exactly are the ACCUs paying for?

Either Labor made one of the biggest conservation promises in New South Wales history without knowing how it would pay for it, or it is seeking to use Australia's carbon market to finance a political decision it had already made. Neither proposition inspires confidence, and both undermine Australia's carbon credit scheme. But, while governments work out their carbon accounting, real people are paying the price.

On Father's Day last year, the Minns Labor government announced an immediate harvesting moratorium across around 176,000 hectares of state forest. Men celebrating Father's Day with their children suddenly wondered whether they would still have a job. Families wondered how they would pay the mortgage.

Contractors wondered whether they would have work. Truck drivers wondered whether there would be logs to haul. Mills wondered where their timber supply would come from.

I warned this parliament that Labor was shutting down an industry before the park was even funded. Since then, the consequences have become very real. At Pentarch's Herons Creek operation in Wauchope, the green mill has closed.

People who did absolutely nothing wrong have lost their livelihoods because of a political decision made by government. Now the cessation of the economic activity that supported those jobs can potentially be given commercial value through the carbon market. Think about how perverse that is.

Labor has created a system capable of commercialising the misery created by its own decisions to shut down productive industries. That brings me to the bigger question. Why are we shutting down Australia's sustainable native forestry industry in the first place?

The more you examine it, the less logical it becomes. New South Wales has an enormous native forest resource. From that resource, we sustainably harvest a tiny area to produce something Australians need: timber.

That's hardwood for homes. That's flooring and decking. That's power poles.

That's wharfs and bridges. That's fencing and sleepers. That's furniture and joinery.

These aren't products Australians suddenly stop consuming because a Labor government closes an Australian sawmill. We still need the timber. Plantations are enormously important, and I strongly support Australia's plantation industry, but plantations are not a substitute for every product supplied by our native hardwood industry.

The Australian Forest Products Association says around 84 per cent of Australia's hardwood sawn timber is supplied from native forests. So when government closes sustainable native forestry, demand doesn't magically disappear. The timber has to come from somewhere.

Increasingly, that means overseas. Explain the environmental logic to me, please. We shut down forestry in Australia, where harvesting is highly regulated.

We shut Australian mills, we put Australian workers out of work, we reduce our sovereign capacity to supply an essential building material, and then we import timber from somewhere else where environmental standards are inferior. How is that a win for the environment? How is it a win for manufacturing?

How does it help housing affordability? How does it help the climate if we simply transfer production somewhere else? Only a tiny fraction of Australia's native forest is harvested for timber in any given year.

That's around 0.05 per cent. Harvested public native forests regenerate. We are using a renewable biological resource under a regulated system.

Trees grow and absorb carbon—in younger trees, in particular. Timber is harvested, but carbon remains stored in long-lived timber products. Yet Labor's policy architecture increasingly says that the most valuable thing we can do with a productive native forest is to stop producing timber from it and potentially create carbon credits from that cessation.

That just defies logic. There is another question Labor needs to answer. Where is the evidence that shutting down sustainable native forestry across the north coast is actually necessary to protect koalas—the whole purpose for which this sorry saga began?

I support protecting koalas, but good conservation policy must be based on evidence, not simply emotion and political symbolism. Native forestry in New South Wales operates under strict environmental rules enforced by the New South Wales EPA. Before harvesting, habitat features are identified and protected.

Important koala feed and habitat trees must be retained, and protections apply when koalas are detected. Forestry Corporation says significant areas within the native forest estate are permanently protected from harvesting, while harvesting itself is selective and forests are regenerated. The industry has operated alongside koalas for generations.

The answer is better forest management and strong environmental safeguards, not locking up productive forests, starving our mills of logs and destroying the livelihoods of hard-working, honest and decent families and workers. The New South Wales government's own extensive surveys estimated there were between 10,300 and 14½ thousand koalas across the Great Koala National Park Assessment area.

Research undertaken by CSIRO's National Koala Monitoring Program estimates that populations range between 287,000 and 630,000—10 times more than the most recent Australia Koala Foundation estimate. Research overseen by the New South Wales Natural Resources Commission has also found—and this is really important—no significant effect of selective timber harvesting on male koala density at the state forest site study three years after harvesting.

Dr Brad Law, principal research scientist at the New South Wales department of primary industries, has said that empirical data shows no significant difference in koala population densities between harvested state forests and unharvested reserves. Dr John Raison, former chief research scientist at the CSIRO, has publicly stated that long-term surveys and data show abundant koala numbers in north-eastern New South Wales, regardless of whether forests are selectively harvested or conserved.

So where is the evidence that changing the sign at the front of the gate, from 'state forest' to 'national park', and ending sustainable timber production will deliver the conservation outcome Labor claims? Where is the evidence that destroying these jobs is necessary? Where is the evidence that closing mills is necessary?

And where is the evidence that importing more of the hardwood we simply require produces a better environmental outcome—and at what cost? If government is going to destroy productive jobs, close mills and reduce Australia's sovereign timber capability, the evidentiary threshold should be extraordinarily high. Show us the measurable improvement in koala populations.

Show us why existing regulated forest management cannot deliver conservation outcomes. Show us the alternatives considered. And show us that the environmental benefit justifies the economic and social cost, because the evidence tells us something deeply inconvenient: koalas and sustainable forestry can co-exist.

If Australians are going to continue using hardwood, if we need more homes, if timber is renewable, if forests regenerate and if koalas can co-exist with regulated forestry, then shutting down sustainable Australian native forests defies logic. There are three major areas where the coalition says no on this bill. First, Labor is removing the least-cost discipline from Commonwealth purchasing of carbon credits.

Under the existing act, the carbon abatement purchasing process is required to facilitate least-cost abatement and maximise the amount of abatement the Commonwealth can purchase. Labor wants to replace least cost with a much broader concept of value for money. And that is not just a change of words.

Under the government's own explanatory material, 'value for money' could take into account whole-of-government net zero strategies, environmental and social outcomes, economic outcomes, Indigenous cultural benefits, ACCU supply and interactions with the safeguard mechanism. The bill also transfers responsibility for purchasing ACCUs from the Clean Energy Regulator to the secretary of the department, with a broad delegation power intended to allow carbon purchasing to support decarbonisation policy across government.

That is precisely what worries me. We've just watched Labor use carbon policy to support a pre-existing political commitment in New South Wales. Now Labor wants greater flexibility to use Commonwealth carbon purchasing to advance broader government policy.

This means carbon abatement risks becoming another pot of money through which Labor pursues its political priorities, which could mean shutting down more good regional industries. Second, this bill gives the minister a second new method transition declaration power. Under the bill, the minister could make a declaration where a methodology no longer complies with the offsets integrity standards and the continued issue of ACCUs would pose a material risk to the integrity of the scheme.

Protecting integrity is important, but Labor ripped up any pretence of the scheme having integrity when it approved the INFM methodology. Third, the bill makes substantial changes to native title consent arrangements. The coalition recognises the importance of properly protecting the rights of native title holders.

Under the existing ACCU regime, native title holders already have substantial legal protections, including consent requirements, but this bill goes significantly further. It introduces a new two-stage consent process and expands eligible interests to include registered native title claimants. That means an unresolved claim can become relevant to whether a carbon project proceeds.

The government says this implements the recommendation of the Chubb Review, but the Chubb Review's recommendation was narrower. It recommended ending conditional registration before eligible interest holder consent had been obtained. It did not recommend expanding eligible interest to native title claimants in the manner this bill proposes.

The practical consequences matter enormously for farmers and landholders. The National Farmers' Federation has proposed a right-to-negotiate model instead and has warned against turning a prospective claim that has not been determined into an indefinite consent right. AgForce warns of increased project costs, complexity and delays.

Woodside has raised investment uncertainty. AGL has asked how overlapping or competing claims will be resolved. The Business Council has called for clearer evidence requirements, standard forms and service level timeframes to reduce uncertainty and delay.

Those aren't objections to native title; they are legitimate questions about how a complicated new regulatory regime will work. That is why it deserves the scrutiny it is now receiving through the Senate committee process. Let me finish where I began.

I support integrity in Australia's carbon credit system. I support transparency. I support genuine additional abatement.

That is precisely why I introduced my own legislation. I will not support the politicisation of the carbon market, and I certainly will not support a system where governments can close productive industries, destroy regional jobs and potentially create valuable carbon assets from the economic activity they stopped—and on the misery of regional people.