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Wednesday, 23 February 2011
Page: 1189


Mr HUNT (3:37 PM) —As of today we know two things about the impact of the government’s carbon tax on the cost of living. First, in the first year alone it will be an additional $300 hit per family. That figure will rise. Within three years it will rise to a 25 or 26 per cent increase over and above everything else that would otherwise have occurred. Second, we have discovered something of great importance to the Australian public. Prior to today, the government had argued that petrol should not be included in any carbon tax. As of today, petrol is back in the carbon tax. The Treasurer was given two opportunities to rule out petrol from a carbon tax. The Prime Minister could have dealt with petrol within the carbon tax. The Minister for Climate Change and Energy Efficiency could have dealt with petrol in a carbon tax. They had multiple opportunities to rule out petrol from a carbon tax, so what Australians know from today is that electricity prices are going up because of this government’s decision, and petrol prices, contrary to everything else the government have said over the last two years, will also be going up.

All of this comes against the background of a gross breach of faith. What was it that the Prime Minister said on the day before the election, 20 August 2010, on the front page of the Australian newspaper? ‘I rule out a carbon tax’. What did she say four days before that, in the now infamous television interview on Channel 10 on 16 August? ‘There will be no carbon tax under the government I lead.’ What did the Treasurer say on 12 August, right in the middle of the election campaign, when asked whether or not there would be a carbon tax? ‘We have made our position very clear. We have ruled it out.’ Most magnificently, what did the Treasurer say on 15 August on Meet the Press? ‘What we rejected is this hysterical allegation that somehow we are moving towards a carbon tax.’ That is precisely what is happening. That is a breach of faith, and this government went to the election on a grand, systemic, oft-repeated lie by the two people who sought office as Prime Minister and Deputy Prime Minister of this country. The most fundamental pledge of the election campaign was shattered within days of the campaign. And the cost will be borne by Australian consumers.

I want to add one more element on breach of faith, from somebody who is not normally involved with this. Today the minister for climate change sought to use this week’s Australian Industry Group report to say that prices of electricity would go down. He read a quote from Heather Ridout to imply that the impact of a carbon price would be to reduce any increase in electricity costs. What he left out was the last sentence of that quote: ‘This would soften the blow of a carbon price but it would remain a big hit.’ And the report goes on to show that that big hit is $300 additional cost in the first year alone to an average family. It was deceptive, it was dishonest, it was dishonourable, it was out of character, and he should apologise to this House for what he did. It was completely out of character.

Let me deal with three elements of this debate. The first is about the truth in relation to the cost of living and electricity prices. The government is seeking to peddle the myth that a carbon price would somehow control and decrease the cost which consumers would otherwise face. It is not only false but also completely contrary to the idea, the proposition, the purpose, the intent, the reason for imposing a carbon tax or an emissions trading scheme. Each is designed to do one thing: drive up electricity prices to decrease demand. Do not come into this House and pretend that this is about controlling electricity prices. The intent, the scope, the meaning, the purpose of everything you are doing is to drive up electricity prices precisely so that a pensioner in Bundaberg, a senior in Parramatta, a family in Maribyrnong—people all around Australia—would decrease the amount of electricity they use in order to cool themselves in summer or decrease the amount of electricity they use in order to heat themselves in the depths of winter. That is the truth, that is the intent, that is the policy and that is the denial.

Let us deal with the facts behind this. Firstly, what we see is that the former Prime Minister, the member for Griffith, made it clear at that dispatch box on 3 February this year that, under their old system, which would have been $10 per year in the first year and then increasing, they would have an increase in electricity prices of 19 per cent over the first two years. That was what the former Prime Minister said about the additional impact on electricity costs. And who pays it? Mums and dads, pensioners and seniors. I say to the members of the parliament: if you want to bring in this policy, be honest about the impact. Do not run away, because the Australian people will not believe you, and it is clear that this policy will translate into one thing: electricity prices, electricity prices, electricity prices. You know it, we know it, the public knows it, and this policy comes on top of everything else.

The second element, which is about going to the truth in electricity pricing, is the report of New South Wales IPART. The Independent Pricing and Regulatory Tribunal made it absolutely clear that there would be price rises of up to 26 per cent over three years—not just two. When you go over three years, there would be price rises of up to 26 per cent for households and up to 26 per cent for the tens of thousands of small businesses right across New South Wales, and that would be replicated across Australia. The report was the final report of March 2010, and the impact on prices will be up to 26 per cent over three years.

The third element is that Professor Garnaut made it absolutely clear in his report, and in every other thing that he has said, that price rises will follow any carbon tax. At page 387 of the Garnaut review, he said:

A major part, if not all, of the costs faced by electricity generators will be passed down the chain from electricity generators, distributors and retailers and finally to households through higher prices for electricity.

He went on to say:

These higher prices will require households to spend a greater proportion of their income to obtain the same goods and services purchased before the introduction of an emissions price. This will reduce households’ real incomes and purchasing power.

The goal, the intent, the purpose, the structure and the nature of the tax that the government is proposing is to hurt families so that they can afford less and cannot maintain the same standard of living. If that is not the case, why would you bother with a compensation package? What are you compensating if there is not going to be a change in electricity prices? Everybody in this building knows it is a fiction and a fraud for the government to pretend that there will not be a change in electricity prices. What we did not know was that petrol was to be added to the list as well to deal with some of the compensation issues that the government is facing.

The Business Council of Australia made it absolutely clear in its report prepared by the Port Jackson Partners last year that there would be a 25 per cent to 26 per cent increase in household costs over three years. In addition, this week, in the report that was so grossly misused by the Minister for Climate Change and Energy Efficiency, the Australian Industry Group makes it clear, across pages 17, 18 and 19, that in the first year alone of their carbon tax, there would be a $300 increase in the price of electricity for an average household. An increase of $300 in the price of electricity, though, is not just something that occurs; it follows on top of a 60 per cent increase in price that has occurred to date.

The Prime Minister asks about markets. What she does not know is that electricity is an essential service and that in a market, if you drive up the price of an essential service, people do not opt out of electricity; they opt out of other things. That is precisely what Professor Garnaut was saying when he talked about the theory behind the electricity tax. Those are the facts.

Let us deal with the efficiency argument around what the government are proposing. Their efficiency argument is this pretence where they say that, if you drive up the price, our costs will be $20 per tonne and that somehow that is quite cheap. In reality we know from Treasury’s own modelling that, in the first year of their previous proposition, $4½ billion would have been raised, 13 million tonnes would have been abated and that would mean an effective price of abatement of $340 per tonne. That makes cash for clunkers look like good value!

Let me say this to the Minister for Climate Change: let’s talk apples and apples. Even on your best case scenario of 160 million tonnes, at $16 billion per annum—which will come straight from the pockets of the constituents of every member in this House—that is $100 per tonne for abatement. That is the reason that the United States, Canada and Japan have all rejected precisely the mechanism you have chosen. This is not about whether we act or about whether we agree on the target; it is about whether we choose a system which has been rejected in much of the rest of the world.

Let us look at the other myth here, and that is what is occurring in the rest of the world. This government has systemically misused information from around the world. Let us look at the United States, with 19.7 per cent of global CO2 emissions. We know that they will not adopt a cap-and-trade system at any time in the near future. The most likely combination to have done that—the House of Representatives, Senate and the President—has passed. One of the Democrats’ own Senate candidates, Governor Joe Manchin from West Virginia, stood up with a gun, nailed the cap-and-trade bill to a tree and shot the cap-and-trade bill. That is what the friends of the bill do—they shot the bill on national television. There will be no change in the United States.

The government has attempted to say that there are regional systems that are effective. The greenhouse gas system in the north of America—the Regional Greenhouse Gas Initiative—has a floor price of about $1.89. The reason for that is that they have set the cap so high that they are not making any difference to emissions. The system is not operating as a real system. These guys on the government side have said, ‘What about California; there is a western climate initiative?’ It was meant to include 11 states, but there are only four in there. The others have all bailed on this system because they have realised that it is going to drive up electricity prices. Those that have remained have almost signed away from doing anything that is real or meaningful.

In Canada they have walked away from the system that this government is proposing. In Japan they have walked away from the system that this government is proposing. And then we look at Europe. In Europe what is fascinating is that we find that 164 industries that will compete directly with Australian industries have up to 100 per cent of their permits for free. What does that mean? It means that those guys are notionally in a system but they will not be paying the additional electricity prices. That is what is happening in Europe and that is the reality as far as what the rest of the world is doing. And all of this is against the position that there is a far better way—as was shown by research last week, in that you can purchase abatement in this country for $7 a tonne rather than driving up a $16 billion tax across the whole economy.

Let us go back to what all this means. The government’s system will not work, because electricity is an essential service. So, in order to drive down the use of electricity—in order to crush pensioners, crush middle-income families, crush small business and crush farmers—you have to drive the price right through the roof so that they can no longer afford the price of electricity. The IPA, the Institute for Public Affairs, is predicting that the additional cost and impact on electricity over eight years will be a doubling over and above everything else. The policy that this government is proposing is to intentionally, purposefully, drive up the price of electricity $300 a year—and that is from the report that the government quoted today to say that there would be no change. That was wrong. It was false. It was an abuse of this House. It was an abuse of a report. To do something as shoddy as leaving off the last sentence, which says that there will be a big hit no matter what as a result of a carbon price, was something that was beneath the scope of a minister who has hitherto shown good grace in his position.

Let me make this clear on behalf of the opposition: we will fight this impact on the lives and livelihoods of middle Australia and on the lives and livelihoods of the lowest income earners, who will be most regressively affected because electricity is a much bigger part of their budget. If you do not think that there is an enormous impact on electricity prices, why will you be compensating these people in the first place? The answer is simple: electricity prices are set to rise and, as of today, so is the price of petrol. (Time expired)