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Tuesday, 1 November 2011
Page: 7792


Senator CORMANN (Western Australia) (17:00): I present the final report of the Select Committee on the Scrutiny of New Taxes on its inquiry into the carbon tax entitled Secrecy and spin cannot hide carbon tax flaws, together with documents presented to the committee.

Ordered that the report be printed.

Senator CORMANN: by leave—I move:

That the Senate take note of the report.

This final report by the Senate Select Committee on the Scrutiny of New Taxes on the carbon tax follows the interim report tabled about a month ago, which was entitled The carbon tax: economic pain for no environmental gain. This final report draws on further information that has come into the public domain since that time and also on some of the reflections that came out of the Joint Select Committee on Australia's Clean Energy Future Legislation, which was of course dominated by government and Greens members of parliament.

We have to remember that this Labor-Green carbon tax is a bad tax based on a lie. It is a tax that will push up the cost of everything, although the government does not really want us to know by how much. It is a tax that will be bad for our economy, although the government does not really want us to know by how much. It is a tax that will reduce our international competitiveness and will cost jobs, although the government does not really want us to know that either. It is a tax that will result in lower real wages, although the government does not really want us to know how much lower real wages will be.

Despite all of that, under the carbon tax emissions will continue to go up, even according to the government's own modelling. There you have it: this carbon tax will have a massive effect on the economy. It will impose significant pain on the economy without actually doing anything to help reduce global greenhouse gas emissions and without doing anything to help reduce the temperature of the globe. But the govern­ment does not want people across Australia to know how bad the impact of this carbon tax will be on the economy. What did the government do? The government asked Treasury to do some modelling. In going through the modelling process Treasury of course acted at the direction of the govern­ment. In doing this modelling the govern­ment set the assumptions that Treasury had to follow, including some very contestable assumptions around what other countries are likely to do, which lack credibility.

At the basis of the Treasury carbon tax modelling there is an assumption by the government that countries like the US will be part of comprehensive global carbon trading, which is never, ever going to happen in any sort of relevant time frame. Why is that? Why has the government directed Treasury to use assumptions that are lacking in credibility? It is because the government does not want people across Australia to know the true impact of the carbon tax on the cost of living, on the economy, on jobs or on real wages. The government does not want people across Australia to have the full picture of how this tax will push up the cost of everything while real wages will go down over time and emissions will continue to increase. The government wants people to believe that this is a tax that will somehow solve all of the issues associated with climate change, will lead to massive reductions in domestic and global greenhouse gas emissions and will not cost anything. People will not feel anything. It will not hurt anyone. That is of course completely unbelievable.

What this final report has done is look at some of the information in relation to the modelling, which the government has refused to release. You might recall, Mr Acting Deputy President, that the Senate Scrutiny of New Taxes Committee severely criticised the government for its failure to model a scenario in which Australia imposes a carbon tax but its major resource competitors do not. That is a major failing in the government's modelling. We also criticised the fact that the government refused to release all of the modelling-related information. The government wants us to believe that, somehow, they have released more information than they have ever released before and that, somehow, this is the most comprehensive modelling ever done and that all the information is out there. Well all of the information is not out there. This government is keeping secret very important information that is necessary to scrutinise the credibility of the Treasury modelling. I point here to evidence by the Australian Bureau of Agricultural and Resource Economics and Sciences, which made that very clear during Senate estimates. I asked a direct question of Mr Glyde, who is the Executive Director of ABARES:

Is it your view that an independent third party would be able to obtain sufficient access to the GTEM model now to run the same modelling scenarios that Treasury ran to produce its carbon tax modelling report?

Mr Glyde, the Executive Director of ABARES, the government's own agency, said:

Probably not, in that the third party would need to obtain the GTAP database, which, as we have discussed, is done through a relatively straightforward licence arrangement. But to capture all of the modifications to the database that have been made over the years by ABARES and Treasury—the amplifications for different industry sectors—they would need information that has not yet been publicly released. Therefore, I do not think anyone could replicate the results at the moment.

So I asked the obvious question:

You are saying that, on the basis of the information that has been released so far, the Treasury carbon tax modelling cannot be properly scrutinised by third parties?

Mr Glyde's response was:

At the moment it is not possible to take the current version of GTEM, its data and the assumptions that are there inside it and run the model.

That is really the crux of the issue. The government do not want anyone to scrutinise the credibility of the modelling that they have asked Treasury to conduct. This runs completely counter to everything that has ever been done before. When the Productiv­ity Commission conduct modelling such as this, they make all of their modelling, all of their models, all of the assumptions, all of the databases and all of the underlying information available for proper scrutiny by independent third parties. In fact, before the last election, Minister Sherry, when he was minister with responsibility for the Product­ivity Commission, sent the Productivity Commission some terms of reference about some modelling they had to do in the context of assessing the impacts and benefits of the Council of Australian Governments' reforms. In his letter, of 18 June 2010, the minister said:

The frameworks should be transparent, and subject to independent assessment. As far as practicable, the frameworks should be made available for wider use.

The benchmark set by Minister Sherry is not the benchmark that is followed by Treasurer Swan and Minister Combet when it comes to carbon tax modelling. Why is that? Because the government has something to hide, because the impact of the carbon tax on the cost of living will be higher than what the government wants us to believe, because the impact of the carbon tax on jobs will be worse than what the government wants us to believe, because the impact of the carbon tax on real wages will be worse than what the government wants us to believe and because the slowing in the growth of domestic green­house gas emissions will be even weaker than the government wants us to believe.

It is important to note that there are no legal commercial barriers to the release of that information. Both the Productivity Commission and ABARES have released the same economic models and underlying information that the government has used for its carbon tax modelling for public scrutiny in the past. The government has not given us any valid reason why it refuses to follow that practice. We as a committee have consistently recommended that the government release all of its modelling before the Senate is asked to vote on the carbon tax and that there should be no legislation before proper investigation, particularly of the government's contested claims about the impact of the carbon tax on the cost of living and the economy.

If a car salesman refused you a test drive or did not let you look under the hood, you would walk off. But the Gillard government is not letting the Australian people look under the hood of its carbon tax modelling. What has the government got to hide? Australians are being denied a vote on the carbon tax and now the government is denying them their right to even look into the basis for the government's assertions underlying the cost of its carbon tax.

We have to remember that, even under the government's own contested global action assumptions, Labor's carbon tax is due to cost the Australian economy $1 trillion over the next 40 years—a figure, incidentally, that was confirmed in Senate estimates by Ms Meghan Quinn. She said 'about $900 billion', which is close enough to the $1 trillion cost to the economy that Professor Ergas talked about in our committee. These are the reasons why the government does not want anyone to be able to properly scrutinise this carbon tax modelling. Treasury is embarrassed by the government's action. Treasury and ABARES are now pointing to the government, saying that it is a decision for the government. But this secretive government wants the Senate to pass judgment on this carbon tax without all of the information, and that is an absolute disgrace.