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Tuesday, 9 February 2010
Page: 877

Mr BALDWIN (6:48 PM) —I rise today to speak against the Carbon Pollution Reduction Scheme Bill 2010 and related bills. It is now apparent, more than ever before, that this CPRS is an indirect tax, a tax that will affect hardworking Australians who are struggling to keep family budgets in check and who work hard to limit their impact on the environment. The Rudd Labor government’s great big new tax will impose massive cost burdens on working families and small businesses, yet the government will not say how much the price of a loaf of bread or a litre of milk will rise under this big new tax—because either they do not know or they are too frightened to say.

The Newcastle Herald reported in October 2009 that the typical Hunter household power bill has risen by more than 20 per cent and could rise by as much again, if not more, with the cost of carbon trading. Last year the New South Wales Labor government commissioned a report through Access Economics on the impact that the CPRS would have on state economies. It concluded that the CPRS would severely affect the Hunter economy. An article by Ian Kirkwood in the Newcastle Herald, published on 11 June 2009, said:

The Access Economics report into the scheme’s impact on disadvantaged regions says that by 2025, it could cost the Hunter 17,000 jobs and cut its commercial output by more than $1 billion a year.

Coal, predictably, would be hardest-hit with at least one in three Hunter coalminers likely to lose their jobs as industry output fell by 37 per cent “relative to the [no carbon scheme] baseline”.

It would also be felt at Tomago Aluminium and Hydro’s Kurri Kurri smelter, with national aluminium output predicted to be at least 50 per cent less than without the scheme.

The Hunter’s coal-fired electricity industry is also expected to suffer.

Overall, Access Economics says the proposed carbon scheme will cut the Hunter’s output by 3.7 per cent and take 2 per cent from employment.

Things become dramatically worse if Australia’s carbon permits are not part of an international trade.

In this case, employment is hit by 7.8 per cent and output by 10.2 per cent.

That is perhaps one of the most damning articles I have ever read about the impact of an emissions trading scheme on a region—an impact that would be hard, if not impossible, for many to recover from.

The question to ask now is: from whose electorate will these 17,000 jobs be lost? Will they come from the seat of Hunter? Last night, Joel Fitzgibbon, member for Hunter, declared to all that he is willing to vote to sacrifice those 17,000 jobs in the Hunter region. Given that he has Hydro’s Kurri Kurri smelter, most of the state’s coal-fired power stations and most of the state’s coalmines in his electorate, that is a very bold statement to those who have elected him to represent them in this parliament.

Will they come from the seat of Newcastle? Sharon Grierson, member for Newcastle, is the icon of hypocrisy. On the one hand she calls for and praises the investment in rail and port infrastructure in Newcastle to export more coal, yet on the other hand she condemns anything to do with coal power energy. With the Kooragang Island and Port Waratah coal loaders and Tomago Aluminium in her electorate, her hypocrisy knows no bounds. She is prepared to export our emissions overseas, but what she has not realised is that, by supporting Rudd’s massive big tax that will affect coalmining and aluminium, she will be exporting local jobs overseas.

Will they come from the seat of Charlton? The member for Charlton, Greg Combet, as assistant minister for climate change, who is one of the architects of the great big tax, also has coalmines and coal-fired power stations in his electorate. If the members from the Hunter, Newcastle and Charlton had listened to their constituents, they would have heard the concerns on the CPRS expressed with the following theme. Gerry said in an email:

As the Minister Assisting the Minister for Climate Change and as my local member I feel confident you can answer some concerns that I have about the climate change debate. I am not too interested in the argument as to whether the climate change is man made or a natural event because, in the short term, not a lot can be done by Australia to fix a global problem.

No Greg, my concern is how much your proposed ETS will cost me. In your response I don’t think it will be necessary to quote the ready available figures bandied about of $600+/-. I am concerned that the media’s figure of $1100+/- might be a possibility.

Where I have a major problem with all of this Greg, is that I have been told that big polluters will get a refund as well as low income earners. That leads me to wonder who will be buying carbon credits to provide the funds that are to be allocated. There has, as far as I can tell, been no mention of these people. Are they suppliers of goods that consumers usually buy? Will the price of these items rise? As electricity will rise 19% in the next 2 years, can you guarantee that businesses that use electricity (I can’t think of any that don’t) won’t pass on the increase in their overheads to us consumers?

I must say that I am disappointed with Mr Rudd who told us almost daily before being elected that his Government would be ‘open and transparent’. He now refuses to release the Treasury figures on the proposed ETS, figures that should allay our fears unless there is something to hide. What is even more disappointing is Mr Rudd’s childish excuse that he is doing the same as his predecessor.

I await your response and I trust you won’t ignore this email as you have with some of my past questions.

Page 3 of the Access Economics report names the Hunter Valley and the Latrobe Valley as the regions most disadvantaged by the Rudd Labor Government’s CPRS. The Hunter Valley has become a hub of growth and activity. In 1996, when I was first elected as the member for Paterson, the unemployment rate was 11.2 per cent in my region; it is now about four per cent. This is in no small way due to the boom in the mining and aluminium sectors and the industries that support them. Research prepared by Access Economics concluded that there will be 23,510 fewer jobs in the mining industry by 2020. Frontier Economics identified 45,000 jobs lost in high-energy-intensive industries. Australia’s 750,000 small businesses will receive no compensation for the massive jump in electricity prices from the ETS. This means that jobs will be lost and the price of consumer goods will go up.

Paterson families will also be hit hard by the latest increase in household costs foreshadowed recently by the Independent Pricing and Regulatory Tribunal, or IPART, on 15 December 2009. The determination recommends further increases to power prices ranging from 44 per cent to 62 per cent over three years starting in July 2010. This IPART recommendation has revealed the true cost of the Rudd Labor government’s proposed CPRS. Because there is little competition between our energy retailers, there is no incentive to reduce costs or emissions. So, if energy producers are forced to pay this great big tax for carbon under the Rudd Labor government, these costs will simply be passed on to the consumer, so where is the great environmental benefit Mr Rudd talks of from penalising electricity generators?

According to IPART the average Energy Australia consumer will pay an extra $727 by 2013, while those with Country Energy will pay $893 extra. IPART has also said that electricity prices will rise by up to 62 per cent over the next three years—a third of which will be as a result of Kevin Rudd’s great big new tax. A massive hike in power bills will hit all businesses hard as they battle through the financial downturn. If employers are forced to pay more, they may have to sack workers just to survive, meaning even more local job losses, or they will simply pass on costs to consumers as clarified by Minister Combet in an ABC interview today. This is simply unacceptable.

Kevin Rudd wants to tax Australian industry in the absence of global action—meaning both Australian jobs and emissions will go overseas. This would be harmful to our economy whilst doing absolutely nothing for the environment. The Prime Minister says he will make polluters pay—but what he will not tell you is that he plans to give Australia’s polluters up to $40 billion in handouts even if they do not reduce their emissions. According to the Access Economics report, on page 16, the annual impact of the CPRS on the New South Wales budget is estimated to reduce the net operating balance by $0.9 billion in 2013-14, increasing to $1.7 billion in 2020-21, with revenue losses from the downturn in mining royalties, reduction in profits from government owned enterprises and losses in payroll tax from job losses—just to name a few.

Prior to the 2007 election Mr Rudd promised to introduce an emissions trading scheme that would produce deep cuts in CO2 emissions but would not disadvantage Australia’s export and import industries. The current CPRS bill offers little to no protection to Australian businesses; they will actually be left out in the cold. Paterson’s businesses will be left out in the cold and Australia’s trade exposed businesses will be left disadvantaged against other competing countries in the market, as they will not be on a level playing field with their competitors. The current ETS proposal poses a significant threat to the continued competitiveness of Australian businesses operating in those trade exposed industries. Recently Access Economics stated that, without the trading of permits internationally, carbon prices in Australia will be much higher. Page 20 of that report states:

Without the trading of permits internationally, carbon prices in Australia will be much higher for the target of a 5% reduction in emissions by 2020 to be achieved. This would result in deterioration in State and Territory budgets by 2013/14 of $7.3 billion, increasing to $9.1 billion by 2020/21 …

Unfortunately for working families, the Prime Minister has no plan B to cut emissions by five per cent. He has a plan that he is too stubborn to drop and which he cannot deliver. In the space of 24 hours the Prime Minister, Julia Gillard and Penny Wong were all asked to explain the impact of Labor’s great big new tax on working families, and they all failed to do so. Only this past week, the junior climate change minister, Greg Combet, struggled to explain how a single person earning $80,000 a year will be $545 a year worse off under the Rudd Labor government’s planned ETS. Despite having a pile of tables detailing compensation arrangements, Mr Combet was unable to refute that some middle-income Australians will be out of pocket after the scheme’s start in July 2011. Mr Combet, to support this scheme, is to support 17,000 job losses in our Hunter region. How could you possibly be representing your constituents when so many thousands of these same people will lose their jobs, their livelihoods and their way of providing for their families under your big new tax? Clearly you are only representing your own interests, the interests of the Labor Party, rather than those people who put their faith in you when they voted for you in 2007.

Kevin Rudd talks about punishing the big emitters but the reality is that all of the penalties will flow down to the end consumer. Kevin Rudd said that 92 per cent of all households would be compensated or overcompensated, which then leaves eight per cent of the people to pick up the burden—and $140 billion to 2020 is a lot of burden. The reality of compensation packages is that they never amount to the full cost.

As the shadow minister for defence science and personnel and as a member who represents many ADF personnel in my electorate of Paterson, I would now like to briefly outline the impacts that the Rudd Labor government’s great big new tax will have on defence, and in particular defence personnel. It is disappointing that the Prime Minister has given so little thought to those who will be affected by his great big new tax, not least of all the men and women of Australia’s Defence Force who put their lives on the line every day to defend our nation. This great big new tax will cost the men and women of the ADF hundreds, if not thousands, of dollars a year. Let us take, for example, a RAAF flight lieutenant based at Williamtown who is single with no children: this person has three years experience at the rank of flight lieutenant and is paid at approximately the middle of the pay band. This flight lieutenant would be on a salary of about $69,100 per annum. When you include the $11,355 service allowance with the flight lieutenant’s total annual salary, not counting any additional allowances for overseas duties or dangerous duties, this flight lieutenant would receive approximately $80,500 per annum. Under the Rudd Labor government’s CPRS, this flight lieutenant would be slugged $545 per annum. So much for the Prime Minister’s claim of no-one being worse off!

Let us consider for a moment another situation, a family with two children and two working adults, one of whom is a sergeant based at Singleton Army base with five years experience at that rank. This sergeant would have an annual salary, including the service allowance, of approximately $74,000 per annum. This family, a family that has had to live with the constant deployments and relocations synonymous with serving in the ADF—a family that has sacrificed time together for the benefit of this nation—will now be slugged a whopping $668 per annum more because of the Rudd government’s big new tax. Again, how can the Prime Minister state that 92 per cent of households would be no worse off when two examples involving Defence Force members—and I might stress these two examples would be considered average circumstances within the ADF—will be slugged $545 and $668 per annum respectively? So I say to the Minister for Defence Personnel, Materiel and Science, who also just happens to be the Minister Assisting the Minister for Climate Change: how can you possibly explain to the men and women of Australia’s Defence Force, who put their lives on the line to defend this nation, that your great big new tax will be good for them?

There is, of course, another dimension to this great big new tax, and that is how the Rudd Labor government plans to pay for the Defence Force of the future. Let us not forget for one moment that the Rudd Labor government will strip $20 billion from defence over the next decade. Furthermore, the Pappas report, an independent audit of the defence budget, states on page 7 that defence will require a 4.2 per cent real cost increase to fund future defence acquisitions. Yet this government has only promised a three per cent, decreasing to 2.2 per cent, real cost increase to the defence budget. Here is a government that cannot even manage to pay its personnel on time or get the amount right, yet it wants to introduce a great big new tax on defence personnel. Given this government’s sloppy record of managing defence, this can only end in disaster—a disaster that will damage the morale of ADF personnel both now and into the future.

Mr Gray —Mr Deputy Speaker, I raise a point of order on relevance. The bill is on the Carbon Pollution Reduction Scheme, and I have been in the chamber and I have not heard it mentioned a single time.

The DEPUTY SPEAKER (Mr S Sidebottom)—The member for Paterson is aware of the legislation before us. He may continue and make it very relevant.

Mr BALDWIN —It is always relevant, Mr Deputy Speaker. The Rudd Labor government has no clue as to the costs its CPRS will have for the administration and operations of Defence. Furthermore, it has no idea how it will pay for the offsets that it will have to fund in order for Defence to continue with its operations and training. For every flight of an FA18, for every hour of sea time for an Anzac class frigate, for every kilometre a Bushmaster travels, there will be a new cost imposed to pay for their emissions—a cost that will be directly passed on to taxpayers. Let me reiterate: this government has no idea of the notional costs involved in running Defence equipment, let alone the increased costs associated with its great big new tax.

By stark comparison, the coalition’s direct action policy provides incentives for Australian families and businesses to reduce their carbon emissions and focuses on meaningful, effective and direct action to improve Australia’s environment. Our incentive-based approach will reduce emissions as well as address some of Australia’s serious environmental problems. The Prime Minister is not sure how to react to the recent admission by President Obama that he is considering an incentive-based approach. In the President’s own words:

… incentivising clean energy so that it’s the cheaper, more effective kind of energy, is one that’s been proven to work, and it’s a market-based approach.

This must be quite an embarrassment for the Prime Minister. No longer has he got the excuse that action in the form of an ETS is the only way forward. I congratulate President Obama for moving towards a direct action plan. Our intransigent Prime Minister has now become the emperor with no clothes. Everyone but the Prime Minister is beginning to see the nakedness of his argument, and it is not pretty.

The coalition’s proposed scheme seeks to reduce carbon emissions by five per cent. Labor’s emissions trading scheme, or emissions taxing scheme, seeks to reduce carbon emissions by five per cent. But that is where the similarity ends. The coalition will take direct action which will take advantage of Australia’s natural advantages, soil and sun, both of which we have in abundance. The coalition’s direct action plan is careful, costed and capped, reducing emissions without a tax on everything. Under the coalition’s plan there will be no job losses; there will only be job opportunities. Under the coalition’s plan, there will be no increases in energy prices—only incentives to reduce emissions. Under the coalition’s plan, we will match the five per cent reduction.

On behalf of my constituents, I have to ask: if you can get the same cuts to emissions as the Rudd Labor government scheme through direct and practical action, why would you proceed with a $140 billion money-go-round that will raise the cost of living for Australian families and cost jobs? At a time when we need to grow our economy to get out of the global financial crisis and pay off this Rudd Labor government’s massive debt, we do not need to penalise the economy further. The only thing that is clear is that, no matter what the cost of the Rudd Labor government CPRS, that cost will raise prices for virtually all consumer goods and services, it will hurt working families and small businesses by drastically increasing electricity costs and it will cost local jobs, all by ignoring real environmental concerns which should be passed on to the Australian— (Time expired)