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Wednesday, 10 October 2012
Page: 11942

Dr JENSEN (Tangney) (22:31): Thank you, Madam—I was going to say 'Deputy Speaker', but thank you, Madam Speaker, and congratulations.

It is just 100 days since the inception of the carbon tax, and there have been eight major changes already—and counting. On the eve of the carbon tax inception, the government bailed out major companies, including Energy Brix and Alcoa, using taxpayers' funds. The Clean Energy Regulator added more business to the big polluters list, taking the total to 315. The government changed the regulations to increase real emissions from pipelines and landfill by one million tonnes; abandoned the contract for closure program to shut down power stations, which will mean the carbon tax will have to increase even further to achieve the same emissions reductions; and scrapped the $15 floor price from 2015, having trumpeted a floor price as a necessity for business confidence.

Labor has linked the scheme to the European system, which does not allow a two-way trade in carbon credits and disadvantages Australian businesses with a carbon price now being set by the European Union. And it halted the Clean Technology Investment Grants. This came just weeks after grants were announced as being changed. This government has lost control of the carbon tax. It is grasping at straws with drastic changes to force attacks on all Australians, a tax they would never have voted for if Labor had been honest at the last election. After so emphatically stating time and again that we needed a floor price, the government has backflipped again, abolishing the minimum carbon price altogether.

When the carbon tax was first introduced into the parliament the Prime Minister said the floor price was good, that it would limit market volatility, that it would reduce risk for business. On no fewer than 11 occasions, in fact, the government affirmed its commitment to the floor price as a crucial element of the carbon tax bills. Minister Greg Combet, on Sky Newson 21 August this year, said, 'We've legislated the floor price; that's quite well known. I'm discussing with the European Union the linkage of our schemes; it's an issue that's in those discussions. But we are committed to the arrangements we have legislated'—referring to the carbon floor price of $15. On ABC Radio Nationalon 12 July he said, 'Well, we've put in the floor price, and a price cap, to provide some confidence over the first few years about potential variability of the price.' 'We're committed to the whole package', he said on 5 July. On 13 September this year the Prime Minister said in this place on the floor price that it would 'limit market volatility and reduce risk for businesses as they gain experience in having the market set the carbon price.'

It seems Labor is unable to commit to commitment. The Prime Minister and her senior ministers are now telling the people of Australia that 'removal of the carbon floor price will give everyone a fair deal'. I don't, the coalition don't and Australians don't know where they stand with the policy flip-flops of the government. This commitment-free zone is hitting the bottom line of Australian business. Europe has been dancing around rock bottom, economically speaking, for the past few years, and both sides know this. It is plain to see that the European economy has really struggled of late. The Australian carbon price will therefore be held not only to the volatility of the European market but also to the vagaries of the exchange rate. Australians do not take it for granted that our economy is profoundly stronger. The Treasurer has been heralded as one of the world's greatest treasurers and this government is always eager to take any credit for our fortunate position in the global economic climate. In the current cycle, the catchcry is 'We have a AAA credit rating'—an achievement of which the Australian people should be most proud and an achievement for which our Prime Minister and Treasurer take full credit. Why then does the Labor government think it is smart to form an alliance with Europe at a time when our economies are so disparate? Removing the floor price of the carbon tax and linking it to the European carbon price leaves the Australian economy in the hands of Europe.

That is just another instance of Labor's poor management of our economy. We cannot trust them to act in the best interests of this country. A Labor government just cannot be trusted. Australia's electricity price will largely be set by European bureaucrats. The price will be set by a completely different economy on the other side of the planet. Further, the regulation impact statement published by the government says that for some small businesses the potential change in treatment of international units may create additional administrative costs. Europe, the world's carbon-pricing guinea pig, is finding that a low carbon price is dumb economics, to its own cost.

The carbon tax is not even an appropriate means to the end. In an ideal rational economic model, a low carbon price should not be a problem. The signals should be there. Investors should realise it is a temporary low because of a recession and when the recession is over the price will rationalise. But, in the real world, uncertainty does scare investors and investors do have short-term investment horizons. If they can see that the price in 2020 will still be relatively low because of a lag from the recession, they are not going to be using this price signal to invest in low-carbon technologies. The rationale for removing the floor price then becomes the very reason why this tax is ineffective at achieving what it set out to achieve.

Treasury modelling was originally conducted factoring in a price of $29 a tonne. Anything below that will affect the budget bottom line. If the Australian price is to mirror Europe's, there is no accurate model as to what the floating price may be in several years time. As the price in Europe stands today at less than $10 per tonne, we would fall very short on current economic forecasts. This will cost the government billions, adding to the $120 billion budget black hole that is already growing. The counterpoint: if the carbon price is too high then compensation will be inadequate. This will further exacerbate the iniquitous position that small business and self-funded retirees, to name two groups, find themselves in—a position where there is no compensation for them at all. Despite making eight changes before the carbon tax had its three-month anniversary, this government says it still stands by the Treasury modelling. Some forecasters doubt the European price will reach Treasury's forecast, meaning a further squeeze on the budget for Labor. Treasury modelling relies on all forecasts falling 100 per cent into place.

Australian businesses deserve certainty. The Australian people deserve reliability. We deserve better. This is a government that has lost control of the Australian economy. It is a government that has lost control of spending and it is a government that is out of touch with the Australian people. Without a floor price, companies will be forced to make more risk-averse decisions, which tend to be more expensive, so overall costs will be higher. Companies need to recoup these costs and they invariably do this by passing them on to customers. This is why all Australians are seeing the hit of the carbon tax. It is very real, it is happening now and it will only get worse. There are businesses which have no compensation which are price takers and do not have the option of increasing prices to reflect the increased costs of doing business.

The mind boggles as to why Labor would further tarnish their credibility in the eyes of the public to undermine the very legislation they spent so many man, media and advertising hours selling to the electorate, when they already had a decision to legislate a carbon tax without a mandate and against the wishes of the people they claim to represent. One step further down this moral morass, they now stand before us in a legislative mess with amendments left, right and centre in an attempt to resurrect the scheme that lies before them maimed by public opinion. I echo the sentiments of the Leader of the Opposition. If you cannot fix it you just have to scrap it. But of course to scrap the carbon tax at this point would be far too pragmatic and effective an act for this Labor government.

Nobody is fooled by Labor's agenda here. Planning to finalise technical details on the interim link by mid-2013 is suspiciously convenient and the public will see right through it. Linking Australia's carbon scheme with Europe's and doing away with a carbon floor will make it all the more complex and difficult for the coalition government to repeal the carbon price. Labor are playing a very dangerous game with the electors that may well be the end of this government. An election will be as late as possible next year. Certainly after such a date the Australian carbon scheme is well and truly hitched to the European wagon.

If a carbon tax is the best thing for Australia, surely Labor would be returned to government for taking the initiative to enact it now without a mandate on the promise of a lie, all of this built on uncertain science. Minister Combet talks about our side of politics overstating the threat to the economy. What about your side, Minister, where you effectively say, 'If you don't pay the tax, the Great Barrier Reef will get it, or Kakadu will get it, or the Murray-Darling Basin will get it.' Or you put the fear of God into our senior citizens on the Central Coast, telling them their properties will be flooded by rising seas. The problem is that the rate of sea level rise has decreased of late, Antarctic sea ice extent is at record extent, ocean temperatures have not increased since 2003 and global average temperature has refused to rise for over a decade, in stark contrast to the global circulation model predictions and using the IPCC's own data. This tax has obviously been mightily effective. It has not only stopped global warming in its tracks, it has done so retrospectively over the past decade. I know Labor believes in retrospective taxes but this is ridiculous.