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Wednesday, 28 October 2009
Page: 11293

Mr BALDWIN (5:57 PM) —I rise today to address the Carbon Pollution Reduction Scheme Bill 2009 [No. 2] and associated bills. As I have previously said, reducing the global level of CO2 and other emissions in the atmosphere is an issue of great concern and consequence to all of us. Personally, these are unchartered waters for me; on climate change, I am neither a sceptic nor a denier. I have read widely and talked to scientists, but I am not a scientist. Maybe climate change is cyclic? I do not know, because there are too many subjective opinions in this argument, each proffering a different expert perspective.

Perhaps Michael Smith’s editorial on 4BC on 13 August demonstrates a way to understand the magnitude of the Prime Minister’s Carbon Pollution Reduction Scheme and climate change:

Imagine one kilometre of atmosphere that you want to clean up. For the sake of the discussion, imagine you could walk along it.

The first 770 metres are Nitrogen.

The next 210 metres are Oxygen.

That’s 980 metres of the 1 kilometre. Just 20 metres to go.

The next 10 metres are water vapour. Just 10 metres left …

9 metres are argon. 1 metre left out of 1 kilometre.

A few gases make up the first bit of that last metre.

The last 38 centimetres of the kilometre—that’s carbon dioxide. …

97% is produced by Mother Nature. It’s natural.

Out of our journey of one kilometre, there are just 12 millimetres left. … Just over a centimetre.

That’s the amount of carbon dioxide that global human activity puts into the atmosphere.

And of those 12 millimetres Australia puts in .18 of a millimetre.

Less than the thickness of a hair. Out of a kilometre.

As a hair is to a kilometre—so is Australia’s contribution to what Mr Rudd calls Carbon Pollution.

Imagine Brisbane’s new Gateway Bridge, ready to be officially opened by Mr Rudd. It’s been polished, painted and scrubbed by an army of workers till its 1 kilometre length is surgically clean. Except that Mr Rudd says we have a huge problem, the bridge is polluted—by a human hair. We would all laugh ourselves silly.

It continues:

There are plenty of real pollution problems to worry about. It’s hard to imagine that Australia’s contribution to carbon dioxide in the world’s atmosphere is one of the more pressing ones. And I can’t believe that a new tax on everything is the only way to blow that pesky hair away.

Perhaps we all need to just take a few deep breaths.

They were words well said. All scientists have agreed that humans have an impact on the climate. The issue is: what is the magnitude of this effect at a global level? Why pay more in tax when there is little, or next to no, environmental benefit? Instead, it is the individuals, the small business owners, the coal industry, the aluminium industry and the farmers—to name a few—that will be adversely affected.

I am the elected member for Paterson. Keeping in touch with local issues is very important to me, as I campaign for the rights of those individuals who elected me to represent them in this federal parliament. I accept that there are differing views about climate change, particularly amongst my constituents, who, if this legislation is passed in its entirety, will be adversely affected. I understand that Australians, including my constituents, want their elected leaders to protect their jobs while acting on climate change.

Over the past month or so I have received hundreds of emails and letters from concerned constituents worried about the impact a flawed ETS will have on their business, their home and their life. I would like to indulge you with some of the comments from constituents of Paterson. One states:

Dear Mr Baldwin, Please don’t allow the PM to push his own agenda to only get recognition for himself with other leaders so he can be the first to say that he has done it and stuff Australians, anything we can save in a year will be undone by other pollutants in a day or so …

Another one reads:

Dear Mr Baldwin, I encourage you to exercise extreme caution regarding this very sensitive subject, and to act in the interest of the people in your local area, that includes families and communities alike. Similar to many others, I personally would be very much affected as I am an employee of the local coal mine & know many other people & families who also work for local coal mines, or whom rely on the service industry that support the coal mines in our local area. I agree, emissions need to be cut—not jobs, I think the Government’s proposed tax is unfair.

It is certainly clear that the constituents of Paterson are very concerned about the impact this legislation will have on their livelihood. When I travel throughout the electorate I ask quite openly for their opinions on the CPRS and the impact on their business and livelihood. Many are well informed; however, most still do not understand and have been clearly hoodwinked by the Rudd Labor government’s spin and dishonesty in the presentation of the government’s case. I am extremely concerned that the Australian people are still in the dark about what the Rudd Labor government claims is the most important economic reform in a generation.

I truly believe that the proposed CPRS fails in the basic task of protecting jobs. This scheme is so flawed and badly designed that it will only transfer emissions and jobs overseas, destroying Australian businesses, with absolutely no benefit to the environment. As a nation which emits less than 1.3 per cent of the world’s greenhouse gases, nothing Australia does in advance of the rest of the world will make any difference to changing the climate of the world.

I truly believe that this legislation is not about climate change. This legislation is purely a new source of taxation revenue for the Rudd Labor government and a leg-up for an ambitious and opportunistic Prime Minister onto the world stage. The Rudd Labor government plans to impose potentially crushing costs on businesses and consumers, disguised as environmental responsibility.

The CPRS is a tax. It is a tax that our Prime Minister hopes no-one will notice. The emissions trading scheme is being misused to buy off some vocal sections of a more widely concerned Australian community. The tax effect of the CPRS as it stands is, according to commentators, the equivalent of increasing the GST from 10 per cent to 12.5 per cent. The difference is that it will be added all the way down the line, unlike the GST which is rebated to be export free of GST or until the end user if consumed in Australia.

The design of the Rudd Labor government’s CPRS assumes that our major international competitors will promptly move to put into place a major new tax on carbon across their economies, including their export and import competing industries in the early years, yet we know that our major trading partners are not ready to do this. Again I ask the Rudd Labor government: what is the goal of this legislation? Is it to genuinely reduce greenhouse gas emissions or, as I believe it is, is it another tax grab from Australian families and businesses, who are already having to pay for Labor’s reckless spending? I would also like to ask again: how much of the $13 billion that will be collected from affected businesses under this scheme in the first year will be spent by the Rudd Labor government in reducing greenhouse gas emissions?

I will now address the coalition’s amendments. The coalition has unveiled a plan to mitigate Australian job losses and limit increases in electricity prices for small businesses through common-sense amendments to the Rudd Labor government’s flawed and rushed emissions trading scheme. The coalition has undertaken a considered evaluation of the government’s legislation and measured the legislation against its impact on jobs and emissions.

I will now address the trade-exposed industries. The Rudd Labor government’s flawed CPRS as it currently stands will have dire consequences in the electorate of Paterson and the Hunter region. In 2008-09 the Hunter Valley Research Foundation, in conjunction with the Hunter Business Chamber, undertook an initial assessment of the potential impact that the CPRS would have on some of the key industries found in the Hunter region, including in the electorate of Paterson. The analysis found that industries potentially most affected by a CPRS included aluminium, iron and steel, coalmining, electricity generation and supply, beef and dairy cattle, meat products and road transport.

The silence on this CPRS legislation from the member for Hunter, Joel Fitzgibbon, is absolutely deafening. His website boasts that the main industries and products of the area include aluminium smelting and coalmining as well as having both Liddell and Bayswater power stations in the electorate of Hunter. I am amazed that the member for Hunter has not made one speech for or against this legislation. Why is Mr Fitzgibbon not supporting this legislation? Why is he not out there fighting for the industries of his electorate? Because this legislation is ultimately flawed and because, with a 15.8 per cent Labor safe seat, he does not need to fight for his constituents’ votes—he can take them for granted.

The Rudd Labor government’s current emissions trading scheme poses a significant threat to the continued competitiveness of Australian businesses operating in those trade-exposed industries. The aluminium sector is the most emission-intensive exposed sector in the region. Australia has seven alumina refineries and six aluminium smelters, employing over 12,000 full-time workers and a further 3,000 contractors. Australia’s second largest smelter, Tomago Aluminium, is just outside Paterson in the electorate of Newcastle. It currently employs almost 1,400 workers, most of whom reside in the Paterson electorate. Hydro Aluminium’s Kurri Kurri smelter is also just outside my electorate in the seat of Hunter. It currently employs 500 workers and a larger number of contractors, who also reside in the electorate of Paterson.

The coalition recognises the impact that the CPRS will have on this industry. The coalition, therefore, are amending the CPRS to provide a single level of assistance for emissions-intensive trade-exposed industries at 94.5 per cent until 2015 and 90 per cent thereafter. We are also seeking to lower the threshold for assistance under the CPRS from 1,000 tonnes of CO2 per $1 million of revenue to 850 tonnes of CO2 per $1 million. The coalition will also provide assistance to Australian EITE industries at 90 per cent until 80 per cent of their international competitors have also implemented carbon abatement measures.

As the member for Paterson, I am honoured to represent such a vast electorate including rich and diverse farming land. Historically, the Hunter region is known as an important agricultural region. We know that our farming communities have had it tough for far too long. As recently as 2007 the Hunter and Lower Hunter regions were declared areas of exceptional circumstances for drought assistance. The flawed CPRS could be the final blow for many farmers that have barely survived the financial impact of drought. Cutting emissions is not new to the agricultural industry. The sector has reduced its emissions by 40 per cent since 1990 through various measures—some voluntary; some involuntary.

Two-thirds of Australian farm produce is exported. If agriculture is covered by a CPRS—which the Rudd Labor government is proposing—Australian farmers would be left out in the cold while other developed countries, including the USA, Canada, European nations and Japan, will not cover agriculture under an emissions trading cap. Australian cattle farmers are already battling against the billions of dollars of subsidy paid to the USA and Europe, and would be further disadvantaged under a CPRS. Dairy farmers have also been hit hard by the recent global financial crisis. The price that they will get for their milk this year has fallen to the lowest level in a decade, after a commodity collapse on the global markets in late 2008.

Therefore the coalition aims to protect farmers from the scheme by exempting agriculture altogether. By allowing agricultural offsets, which include carbon sequestration in soils and vegetables, there is an opportunity for financial and land management benefits in the rural sector. This is, and will be, a long-term benefit for farmers and for the environment.

We all know that coal plays a pivotal role in the success of the Australian economy. Coal is Australia’s No. 1 export earner, responsible for approximately $55 billion worth of export revenue in financial year 2008-09 alone. The coal industry employs 30,000 Australians directly and another 100,000 indirectly, most of them in regional areas such as the electorate of Paterson and the surrounding Hunter region.

It is interesting that only recently Greg Combet, the junior Minister Assisting the Minister for Climate Change, mentioned that Australia’s coalmining industry can afford the cost of carbon reduction proposed by the government’s climate change legislation. That is interesting, considering that the Rudd Labor government is planning to reap more than $14 billion in additional taxes from the coal industry over the next 10 years under the scheme—as well as not offering any rebates. If the coal tax is to proceed as proposed, it would likely see 16 mines close prematurely, with annual coal production of 22 million tonnes below business as usual. It is projected that 3,300 direct jobs will be lost in the first 10 years as well. Therefore the coalition would amend the legislation to exclude coalmine fugitive emissions as well as to provide the minister with the authority to use regulation to control fugitive emissions, with the objective of achieving a 30 per cent reduction by 2025 as technology and international best practice allows.

The impact the Rudd Labor government’s CPRS will have on the purse strings of Australian households and small businesses is a major concern to those in the coalition. I have received many letters and emails from concerned constituents that this increase in electricity prices will finally put them over the edge. There has been little or no acknowledgement by the Rudd Labor government that individuals, households or small to medium businesses will face unprecedented rises in energy costs associated with the introduction of this scheme.

I was speaking to a small business owner at Salamander on the weekend who indicated to me that this proposed legislation comes hot on the heels of the New South Wales state Labor government’s 20 per cent electricity price rise. This rise has increased the bill at their business from $1,300 for two months electricity to $1,700—all that before an ETS is introduced. If you add the proposed ETS you are looking at an alarming rise in power costs, not just for small business but also for the punters at large. Under the CPRS, retail electricity prices will rise by an additional 20 per cent in the first two years. For small businesses—they are looking at shrinking margins in such a volatile retail environment—these rising costs will impact everyone and hurt the poorest people in our community. Across the board a tax of $20 per tonne of CO2 will produce approximately $2,000 a year in extra costs for the average family of four, with what benefit to the environment? Next to nothing. But it will drive grocery prices up by 5 per cent, costing some households hundreds of dollars per month.

The coalition will continue to advocate an intensity-based cap and trade model for generators. This delivers the same emissions cuts as the CPRS but with much smaller increases in electricity prices. This will greatly reduce the burden on small- and medium-sized businesses, which will receive no compensation for higher power bills under the Rudd Labor government’s proposal. Under the coalition’s intensity approach, retail electricity prices would rise by less than five per cent in the first two years. The coalition’s amendments will cushion the impact of power price increases on small businesses and households, cutting them by at least half.

The impact one individual can have on the planet, and collectively, is important when dealing with the environment. Actions by individual Australians or families to reduce emissions can have an impact; however, currently the design of the scheme means that any action will do nothing to reduce Australia’s contribution to climate change. The coalition will negotiate for a national ‘white certificate’ energy efficiency scheme, so households and businesses can earn credits for efficiency measures and contribute to reducing national emissions. By including voluntary measures, the environment will also benefit from initiatives that are developed by individuals, businesses and community groups.

Coal-fired generators must be better compensated for loss of value they experience from the CPRS, to ensure security of electricity supply and enable them to transition to lower emission energy sources. The CPRS offers coal-fired generators 130 million permits over five years worth $3.6 billion. Yet analysis has been conducted estimating their losses at $9 billion to $11 billion. Assistance should be increased to 390 million permits over 15 years—or about $10 billion. Assistance should also be allocated to all generators in proportion to the losses they suffer.

In conclusion, the coalition have consistently argued that it is reckless for the Rudd Labor government to rush ahead with legislation that is ultimately flawed before the Copenhagen summit in December and before we know what the rest of the world is committed to. It is reckless for the Rudd Labor government to insist that Australia locks in its emissions trading scheme ahead of the rest of the world, in particular the biggest emitters, such as China, India, the US and the European Union. It is reckless to ignore that this legislation is being rushed through to meet the Prime Minister’s politically motivated deadline, which was highlighted in reports in the media today, that he would be anointed as the ‘Friend of the Chair’ in Copenhagen, proving that rushing this bill through the parliament is all about the Prime Minister’s personal interests and not those of our nation. He is reckless to ignore the widespread and substantial impacts that this legislation will have on the Australian economy, on business, consumers and jobs. It is reckless to ignore that the CPRS legislation is purely another tax grab whereby it can destroy industries, sacrifice jobs and increase power prices for small business and households with no benefit to the reduction of greenhouse gases.

It is now up to the Rudd Labor government to make the correct choices for the Australian community and for the Paterson community. I would like to conclude by quoting from two emails that I received yesterday from concerned constituents:

Dear Mr Baldwin,

Thank you and your party for taking the Rudd Government to task regarding this emissions trading scheme. Don’t let up on it. I am one of the millions of Australians who the government keeps saying is in favour of the emissions trading scheme. I am not in favour of what they are doing.

Kindest regards, Harry


Dear Mr Baldwin,

This new tax is ridiculous. It is just not the answer for this ever growing and high profile problem. There has to be another way so that people, jobs, the local communities and the economy of this fair and great country of ours are not so adversely affected.

This government needs to sit down and look at the amendments being proposed by the coalition. If those amendments proposed by the coalition are endorsed then I am sure they will get the support of the coalition. To fail to do so does not penalise the coalition; it actually penalises our nation.