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Wednesday, 10 October 2012
Page: 11877


Mr HARTSUYKER (Cowper) (17:51): I welcome the opportunity to speak on these bills, which relate to the government's introduction of a carbon tax on the people of Australia. From the moment the Prime Minister announced in July 2011 that she would break her election promise and introduce a carbon tax, Australians have rightly been concerned about its impact.

This government has a very poor track record of managing programs and delivering on its policies. We have seen the pink batts debacle, where billions of dollars were wasted and sadly lives were lost. We have seen the rollout of the BER program, where billions of dollars of taxpayers' money was thrown at schools for projects which school communities did not want and at prices which everyone except the government acknowledged were vastly more expensive than the going market rate. Then we have the $50 billion National Broadband Network, designed by the minister for communications on the back of an envelope when the government was unable to award a successful tender for its failed 2007 broadband election commitment. After just two years the NBN is behind schedule, over budget, and the take-up rates are abysmal.

Against this backdrop of waste and mismanagement, the Prime Minister's backflip on her pre-election promise that 'There will be no carbon tax under a government I lead' was always going to be another policy failure for the Gillard government. It was a policy which aimed to lock in the support of the Greens rather than deliver any meaningful difference for the environment. Even before its introduction on 1 July this year, the government was living in denial and relying on media spin to somehow justify imposing the biggest economy-wide carbon tax on the planet.

On the one hand they claimed it would only be the big polluters who would pay the tax, but on the other hand they started paying those big polluters compensation and then were forced into rushing out a household assistance package as the reality of increased electricity prices sparked a major consumer backlash. The government also claimed other countries were embracing a carbon tax, when the reality was the world's major emitters were walking away from such a scheme and clearly going down the path of direct action. The United States, Canada, China and India have distanced themselves from a carbon price. Europe's scheme amounts to a total cost of $500 million, or just $1 per person per year.

The Gillard government's carbon tax is a $9 billion a year tax which every Australian will pay through higher electricity and gas prices. By the government's own figures it will cost $400 each year for each and every Australian. Yet despite the huge cost the government is still forecasting that Australian emissions will increase under the carbon tax from 578 million tonnes in 2010 to 621 million tonnes in 2020. So the carbon tax is nothing more than a huge impost on Australian businesses and households and does nothing for the environment.

In the lead-up to the introduction of the carbon tax one of the government's flawed arguments was the need to provide certainty to the business community. The government claimed its carbon tax plan should not be altered because that would create uncertainty and instability within the business community. This is clearly laughable, given the whole aim of the carbon tax was to create uncertainty by driving up the cost of electricity and marginalising the profitability of many Australian based businesses. The carbon tax effectively made it very difficult for Australian exporters to compete in a global marketplace and it also meant that other domestic focused businesses suffered substantial increases in their operating costs. While many of the big emitters received government handouts to prevent them from cutting jobs or closing, there was no such assistance for the majority of small and medium businesses. So the increase in operating costs as a result of the carbon tax was enough in itself to create huge uncertainty for many businesses.

That has got a whole lot worse since 1 July 2012. Since then the government has made eight major changes to its carbon tax. With the economic realities hitting home, the government has been in a panic about how to fix the impact of this massive impost on Australia but still raise the revenue it is depending on. First, it bailed out major companies using taxpayers' funds on the eve of the carbon tax being introduced, including funding to Energy Brix and Alcoa. Second, it decreased the share of clean tech investment grant funding for small businesses so as to further increase funding for big businesses. Third, the Clean Energy Regulator added more businesses to the big polluters list, taking the total now to 315. Fourth, the government changed the regulations so as to increase real emissions from pipelines and landfill by one million tonnes.

Fifth, the government abandoned the Contract for Closure program to shut down power stations, which will mean the carbon tax will have to increase to achieve the same level of emissions. Sixth, they scrapped the floor price, which would have been $15, from 2015. The government had said a floor price was needed for business confidence. Seventh, they announced they would link the scheme to the European system, which does not allow two-way trade on carbon credits, putting Australian businesses at a disadvantage and resulting in Australia's carbon tax being set by the EU price. Eighth, the government halted the clean technology investment grants. This came weeks after the grants were announced, then changed.

All these changes have been surrounded by panic and chaos in the government and have left business wondering what carbon tax scheme will be in place once the government has finished with it. It shows the government has lost control of its carbon tax and is unable to implement its legislative program in a competent manner. The government is clearly panicking, and there is a good reason why the government is panicking. Australian families and Australian businesses now know what the impact of the carbon tax will be. The impact is increased costs for business, increased costs of living for households and a complete failure to reduce our CO2 emissions.

The main intention of these bills is to remove the legislated floor price of the carbon tax and link the Australian carbon tax with the European emissions trading scheme. This in itself is an indefensible position for the government, because it has been this government which has time after time reaffirmed its commitment to a floor price as a vital part of the carbon tax package. The floor price would provide stability, the government said. The floor price would reduce volatility in the carbon price, the government said. It was the solution to all uncertainty, the government said.

Despite the cracks beginning to appear in the carbon tax in the first two weeks following its introduction, the Minister for Climate Change and Energy Efficiency initially stood firm on the floor price. On 12 July he told ABC Radio National:

Well we've put in a floor price and a price cap to provide some confidence over the first few years about the potential variability of the price.

That was on 12 July this year. Just over one month later, and with the carbon tax continuing to place business and households under increasing pressure, the minister for climate change again stood by his commitment to a floor price. This is what he said during an interview with David Speers on Sky News Agenda on 21 August:

We have legislated the floor price; that's quite well known. I am discussing with the European Union the linkage of our schemes. It is an issue that's in those discussions, but we are committed to the arrangements we have legislated.

'At $15,' said David Speers. Greg Combet:

That's the floor price.

That was on 21 August of this year. Less than a week later the government dumped the floor price in a panic as the cold hard reality of the carbon tax hit home. The government announced that it would link the carbon tax to the much smaller European emissions trading scheme, effectively placing the future price of carbon into the hands of the European economy. Australia's electricity price will now be largely set by European bureaucrats in an area of the world which is currently experiencing tremendous instability and uncertainty.

The government has tried to claim that linking the carbon tax with Europe will lead to a lower carbon price. But the reality is that the government is playing a game of deception. Firstly, they claim a lower carbon price under the European link. But in the next breath they are standing by the Treasury modelling that the carbon tax will go up to $29 in 2015-16 and to $37 by 2020 while Greens leader Christine Milne claims it could hit $50 by 2016. They cannot have it both ways—either the price will be lower and they abandon the Treasury modelling or the government stand by their forecast increase in the price of carbon and Australians will suffer further increases in their power bills. In a budgetary sense, either the price will drop and so will government revenues, resulting in a massive budgetary shortfall, or the price forecasts will prevail and household budgets will be placed under huge pressure.

All this explains why respected former Reserve Bank Governor Warwick McKibbin wrote an article in the Australian Financial Review on 30 August in response to the government's decision to scrap the floor price. In the article he highlighted several issues about the government's decision, including: firstly, it raises the economic costs of the existing carbon pricing policy because it creates greater uncertainty about the price of carbon in future years and it also creates real concern about whether the government knows what it is doing—a big worry—which adds to sovereign risk; secondly, in the case of carbon pricing, the idea the Australian scheme should be linked to the European carbon trading scheme is equivalent to the idea the Australian dollar should join the eurozone; and, thirdly, at a time when Europe's economic judgement is widely questioned, the federal government gives up the right to determine its own carbon price and gives that right to Europe.

All these issues highlight why the government should not be rolling the dice with this carbon tax and placing at risk the living standards of Australians. It is a further reminder of how the government's handling of this issue has just been another policy disaster which all Australians will pay the price for.

I would like to take some time to look at a snapshot of the impact that the carbon tax is having on residents of the North Coast of New South Wales. We all know that the carbon tax is a tax which permeates all parts of our economy. It will hit hospitals, schools, aged-care facilities, swimming centres, councils and small businesses. No-one escapes the $9 billion carbon tax, which is something that has become very clear on the North Coast of New South Wales. For example the carbon tax cop continues to add more councils to the list which will be expected to pay the carbon tax. The councils have been told by the regulator that if their emissions exceed 25,000 tonnes of CO2 they will be liable to pay the carbon tax on their total emissions—not just those emissions over 25,000 tonnes. Based on a $23 a tonne price a council could face a bill of $575,000 if it breached that threshold. Councils affected on the North Coast include Clarence Valley Council, which covers part of my electorate, and Port Macquarie-Hastings Council, which is in the member for Lyne's electorate. The fear is that other councils are just under the threshold but once they cross it ratepayers will be slugged with a bill of $575,000. Councils will have no choice but to cut services or pass on the cost to ratepayers.

I take this opportunity to refer to two newspaper articles which have appeared in local papers in my electorate over the past week. The first is from last Saturday's edition of the Coffs Coast Advocate. Under the headline 'Power bills a shock for our hip pockets', it read:

It's been a tough few months for some locals.

According to the St Vincent de Paul St Augustine's Parish conference president Bob Gorman statistics for August came as a shock.

'We held over 120 interviews, helping over 250 people, 35 who were new users of our services', Mr Gorman said.

'The increases in electricity prices are hurting local hip pockets, especially old age pensioners.

In the past we rarely saw old age pensioners—they've traditionally been the ones who know how to budget and who've learned to get by.

But these costs, they can't budget for that.'

Out of the $10,000 that Mr Gorman and his St Vincent de Paul colleagues distributed for assistance, half was for helping paying electricity bills.

It doesn't get any clearer than that. For months we have heard the government and the Independents prattle on about how the carbon tax is going to cost you $9.90 more a week but that the government is going to give you $10.10 in compensation. Everyone—bar those on the opposite side of this House and some on the cross benches—knew that the government compensation was never going to come close to covering the increases in the cost of living. Here we are in October, just three months after the introduction of the carbon tax, and the pressure on household budgets as a result of power price increases is taking effect. We all know that the carbon tax has been the main reason for the huge increase in power prices.

The second article I would like to refer to was in today's Daily Examiner in Grafton. The member for Page often spruiks that she is committed to representing the community when in reality she is primarily focused on standing hand in hand with the Greens as they seek to destroy business and make households pay more for their basic utilities. In today's Grafton Examiner three people were asked 'Have you felt the carbon tax on your wallet?' This is what they had to say. Sharon Hayman from Grafton said:

Yes, of course. Everything is dearer and I do not like it. I have to work two jobs to pay the bills.

Des McLennan from Grafton said:

Yes mainly in retail stores. Things in shops are dearer.

Chantelle Riseley from Grafton said:

Yes, mainly household expenses are up. Especially power, it's unfair on the ordinary family.

I'll say it's unfair, Chantelle. 'Unfair on the ordinary Australian family'—truer words have never been spoken. But that is Labor's carbon tax in action.

This is an unfair tax based on a lie. This is a tax that is going to harm small business and large business and Australia's international competitiveness. This is a tax that has very little upside from an environmental point of view and massive downside from an economic point of view. It is a tax that the coalition has opposed at every turn. We will be opposing these bills. I certainly reject this carbon tax and the people of my electorate of Cowper reject this carbon tax. The government should be condemned for introducing such a tax based on a lie. (Time expired)