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Tuesday, 20 September 2011
Page: 10856


Dr STONE (Murray) (17:51): Life has been very tough for thousands of hardworking families in my electorate of Murray in northern Victoria over the last few years, yet the Prime Minister, Julia Gillard, and Senator Brown, Leader of the Greens, want to legislate to bring in a carbon tax that will make the local food-manufacturing-dependent economy a lot less likely to survive. I find that extraordinarily cruel and difficult. Living as we do in an parliamentary democracy, we would not expect to see a government destroy an economy wantonly.

The tax will negatively impact on every aspect of our lives. It is a tax imposed without a mandate. It is a tax which will create a very sad chapter in Australia's economic history, written by the worst government since Federation. The coalition does have a better way, of course: the direct action plan, a practical approach to climate change, not one that will lower standards of living for very little environmental or global benefit. It will not even make us global heroes. Like-minded nations actually think our leadership is out of control. I have spoken to many recently who wonder what is going on in our great nation.

The coalition will continue to oppose a carbon tax in opposition and rescind it in government. That is our commitment to the Australian people. This is a bad tax. It is a tax that Australians do not deserve and certainly have not voted for. We all remember the now famous line of the Prime Minister on Channel 10 in August 2010. She said, 'There will be no carbon tax under a government I lead.' Of course, for the Prime Minister to take up residence in the Lodge, although she knew it was a damaging tax she needed the Greens' support and the support of some of the Independents in order to form a government, so she sold out Australia.

Even Treasurer Swan on the 7.30 Report four days earlier was keen to stress a carbon tax was not on the ALP's agenda when he said:

We have made our position very clear. We have ruled it out.

All these promises went out the window when Labor had to jump into bed with the Greens and a few disgruntled Independents.

The National Generators Forum have a great deal of interest in a clean energy future, like all of us. They highlighted serious concerns they have about the carbon tax:

The carbon price will impose a $40 billion cost on the generation sector, most of which will be passed on to electricity customers;

Wholesale electricity prices will almost double to $100/MWh by 2020, according to ACIL Tasman;

Despite the $40 billion cost, the carbon price will produce relatively little change in emissions from the generation sector. Modelling for Treasury forecasts that the carbon price may reduce emissions from this sector by as little as 10 million tonnes by 2020. Existing State schemes can deliver similar abatement at a much lower cost;

The starting price of $23/tonne is far higher than carbon prices elsewhere in the world. As high as it is, the carbon price is still less than half the $60 price required to prompt switching from coal to gas-fired generation, according to Treasury estimates;

Applying a high carbon price now puts Australia far ahead of other countries. The Productivity Commission has confirmed that, without a carbon price, Australia is already "in the middle of the pack" in terms of climate change action;

On Treasury figures, there will be a major wealth transfer from Australia with businesses buying 94 million international permits in 2020 at a cost up to $3.7 billion. This will call into question the capacity of governments to continue to compensate households and trade exposed industries;

The absence of clear emissions caps to 2020 denies investors the certainty they need to make the long-term investments needed for energy security;

The narrow scope of the plan (only 62 per cent of Australia's emissions are captured) imposes a heavy burden on covered sectors and risks seeing expensive abatement in covered sectors made meaningless by uncontrolled emissions growth elsewhere;

Restricting business' access to least cost abatement (e.g. restrictions on buying overseas permits) will force up costs for no environmental benefit;

Unlike the Carbon Pollution Reduction Scheme (CPRS), the Clean Energy Future plan will force up electricity prices by requiring generators to buy permits in advance, sometimes years in advance, for electricity covered by future contracts.

While brown-coal-fired generators receive $5.5 billion in compensation for asset value losses, other coal-fired businesses, including businesses owned by Australian taxpayers, will receive virtually nothing. Public enterprises in New South Wales, Queensland and West Australia will lose $4 to $5.5 billion in asset value;

The policy prevents an open, competitive auction for plant closures. Arbitrary eligibility conditions rule out the possibility of obtaining formal and cheaper abatement; and

The measures announced to support energy security offer no genuine assistance for most generators.

This is an appalling list of concerns from the National Generators Forum. This government quite clearly is not listening or, if it is, it regards its seats in the Lodge as more important than the future of this country's economy and the fact that—and I have to keep emphasising this—these moves will not save the globe or reduce emissions substantially, significantly or even by a little bit.

The carbon tax will cost Australia an extra $9 billion a year, taking more and more cash each year out of taxpayers' pockets. Marginal tax rates even for low- and middle-income earners will rise and $4.3 billion will be ripped away from the budget coffers. Initial estimates from Treasury in 2008 forecast the imposition of a carbon tax with a starting price of $23 per tonne that would see household power bills rise by around 20 per cent. The carbon price is expected to reach $37 per tonne by the end of the decade and over $350 per tonne by 2050. There will be no control over the price after 2015 when the price will be out of the government's hands and simply left to float on international trading markets. This is an extraordinary future that we have to contemplate if this carbon tax remains in place.

Families on average will be more than $515 a year poorer just paying for essentials. There are some families who will pay considerably more than that. I already have over 200 families in my electorate who have lost their jobs. These jobs were in the Heinz tomato sauce factory at Girgarre and Coca-Cola Amatil at Ardmona. These food manufacturers said, 'Sorry, we don't need you any more.' Heinz is going to New Zealand where there is a carbon tax of only $10 per tonne. Guess what? That is substantially less than the $23 a tonne that Heinz would have to absorb if it remained in Australia, even though the tomatoes needed for the product grow within a cooee of the factory at Girgarre and none of the tomatoes that they need are grown in New Zealand. How extraordinary: Heinz has been driven offshore by a policy. This is at a substantial cost to families who do not have too many job options in my part of rural Australia. I find this unconscionable.

Even the former Minister for Climate Change and Water, Penny Wong, has personal concerns over lack of certainty in this legislation. She is on record as stating 'a carbon tax isn't the most sensible thing for Australia'. She also admitted it fails 'to guarantee emissions reductions' and 'is a recipe for abrupt and unpredictable changes'. I do not often agree with Penny Wong, but on that occasion she was speaking closer to the truth. We have a tax that will give importers a tax-free ride because, for example, cheap foreign imports will not be subject to the carbon tax while our Australian companies will have to look at manufacturing offshore to survive, and I have already mentioned our food manufacturers. According to Treasury and their price modelling, the imposition of this tax will contract production across many industries, including wood products by 0.1 per cent, non-metal construction products by 0.7 per cent, cement by 0.8 per cent, alumina by 0.2 per cent, other metals by 0.3 per cent and metal products by 0.2 per cent. Why would any country deliberately set about having those sorts of contractions when the objectives are to reduce emissions in this country and to make a global difference, and those objectives cannot and will not be met? It is just extraordinary.

Heather Ridout from the Australian Industry Group believes that the manufacturing sector is already in enough trouble without the uncertainty and burden of this punitive tax on investment. Using Treasury's own forecasts, Ms Ridout on MTR Radio stated that more than 15 per cent or 170,000 jobs would be cut from onshore manufacturing jobs, and she vehemently states that the implementation of this carbon tax could not come at a worse time when you consider the ever-increasing prominence of cheap imports from countries like China and the current high value of our dollar. Ms Ridout believes that this taxation measure will push up energy prices and put a price on emissions, placing Australian manufacturing in a highly vulnerable situation. You just have to wonder what is going on on the government benches other than a crazed, desperate move to stay in the Lodge.

Then, of course, I mentioned at the beginning that my electorate depends on growing magnificent, clean, green food. Much of that food, which is often dairy or fruit products, meats, cereals and oil seeds, is manufactured locally and much of it is exported out of the country. In other words it is energy intensive and export exposed. They are the sorts of manufacturers who are most vulnerable to this disastrous tax. We have Murray-Goulburn, which is the largest dairy processor in Australia that is still Australian owned. They have stated that the carbon tax will cause extraordinarily adverse effects on their business to the tune of millions of dollars of extra energy and other costs per year.

According to Robert Poole of Murray-Goulburn, long-life and powdered milk uses considerable amounts of energy in its production. It will be financially crippling for Murray-Goulburn to absorb these costs. They will have to pass on these additional costs to their farmers, their suppliers, to ensure the Murray-Goulburn Cooperative remains viable. What do we know about farmers? Farmers are price takers. They cannot pass on a cent of these additional costs of production to Murray-Goulburn, their own cooperative, nor can Murray-Goulburn pass costs onto Coles and Woolworths, the big duopoly that has purchased most of Australia's manufactured food for customers.

We know that duopoly squeezes the prices of all of its suppliers so hard that there is no way that this industry can expect to get a higher price out of Coles and Woolworths, so its farmers will have to tighten the belt once again, and for many of them there are no belt notches left. They have already been squeezed by drought, by flood, by the higher value of the dollar and by the exchange rate. All of their costs are going through the roof. They must operate their milking machinery and their refrigeration, they have transport costs to pay and they have fertiliser costs. Everything that they touch will have an additional cost with this carbon tax and they cannot pass on a cent of that additional cost. It is an extraordinarily difficult situation that we are staring down. The Murray-Goulburn factory at Cobram has a briquette fire boiler that it uses for manufacturing. You can imagine what they are contemplating in terms of costs of replacing that boiler or the punitive additional costs they will incur if they cannot.

This is a very serious problem and it is about an economy that has served as the food bowl of Australia for nearly 100 years. Now it is staring down the barrel of economic contraction, not because of the floods or the droughts, the mouse plagues or the locust plagues. What is bringing about the contraction now is bad government policy. It is extraordinary that, in a parliamentary democracy in a country as developed as Australia, government policy can destroy an industry that has been benchmarked as amongst world's best practice. Government policy is going to take this industry down. I find that just so heartbreaking.

I have farmers, not at retirement age but in their 40s and 50s, who are saying, 'We can't keep pushing and pushing to make a viable living when our own government is against us. It is introducing policies which will simply make it impossible for us to survive and at the end of the day there will be no improvement in emissions, and global warming will not be affected by our sacrifice, the loss of our farm properties, the loss of our livelihoods or the loss of our futures for our children and grandchildren.' So I beg this government to rethink what they are trying to do. It is not worth the Lodge, quite frankly, to destroy the Australian economy. The Greens do not have an understanding of the way the economy works; they never did and it appears they never can. This government should look closely, instead, at the coalition's policies. We are very generous in the coalition and are saying, 'You may take them. Implement them.' At least we will have a country to be proud of in the future and will pull our own weight.