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Wednesday, 21 September 2011
Page: 11005


Mr FRYDENBERG (Kooyong) (13:17): This parliament has seen many significant contests over recent years—the GST, the Iraq War and Telstra's privatisation all spring to mind—but in my brief parliamentary career the debate over the carbon tax is certainly the most contentious, both because of what it is and because of how it came about. First, it is the most significant economic change we have seen in decades. It is a new tax on everything. Energy powers our way of life. Increase its price and the cost of everything we do and use will go up. Second, the Prime Minister five days before the last election emphatically declared in her own words, 'There will be no carbon tax under the government I lead.' This was a fundamental undertaking to the Australian people: not an off-the-cuff comment made during some laborious parliamentary debate but a solemn promise made to 23 million Australians, who now bear the ultimate burden of her prime ministerial backflip.

Without the Prime Minister's promise, millions of Australians would in all likelihood have cast their vote differently, changing the outcome of the election and rewriting the pages of history. In the days leading up to the election the Prime Minister was acutely aware of how reticent the electorate was to embrace a carbon tax. The Prime Minister was at pains to emphasise that she would first seek community consensus on the issue via a citizens assembly before making any pre-emptive move. But everything was to change once the Prime Minister reached the Lodge and a new government was formed. Wanting to pander to the Greens and secure her minority government, this fundamental pre-election promise was unceremoniously dumped without contrition or atonement. What now follows with this legislation put before us represents a dereliction of prime ministerial duty and a fundamental breach of faith between the parliament and its representatives.

The fact that these 19 bills, which are more than 1,100 pages long, are being rushed through the parliament, with members being given speaking times equivalent to less than one minute per bill, only compounds the problem. If the Prime Minister were so bold as to say she would wear out her shoe leather selling her tax, why is she not prepared to let her fellow members wear out their voices?

For me the issue of a carbon tax is not one of belief or of ideology. It is a test, however, of what is the most effective way of simultaneously enhancing our environment and our economy—twin objectives that are not mutually exclusive. I am not here to debate the science; I am here to hold the government to account. I am here to hold the government to account for its misguided decision to pursue a carbon tax in the absence of an international agreement. I am here to hold the government to account for its damaging decision to pursue a carbon tax at a time when our industry and households are feeling the pain of a challenging domestic economy. I am here to hold the government to account for a fatally flawed policy that will simply redistribute wealth in society without any commensurate pay-off for the environment.

This is not just bad policy; it is bad faith. First and foremost a carbon tax will have a punishing impact on the cost of living. In the first year alone a $23 a tonne carbon tax will represent a $515 hit to the average household. With electricity bills to increase 10 per cent and gas bills to increase nine per cent, it is not just the household bills for heating, lighting and cooking that will be impacted; the flow-on effect to the weekly grocery bill will also be significant. What is more the carbon price has a built-in escalator; it will not be fixed. It starts at $23 a tonne but on the government's own forecast will jump to $29 in 2016, $37 in 2020 and over $350 in 2050. It is more than a coincidence that the Greens took to the last election a carbon price of $23 a tonne—now that their figure has become the government's figure, Green senators like Sarah Hanson-Young have started to call for a higher price—namely, $100 a tonne.

I say to those opposite, caveat emptor—let the buyer beware. Your support today for a carbon price is locking you into a cycle of an ever-rising tax on every Australian family. It is a heavy responsibility to bear. What is more the government's entire strategy is flawed. It cannot readily change consumer behaviour. Some goods like energy are relatively inelastic. It does not necessarily follow that the more you charge the less you proportionately use. People will simply be forced to pay more, leaving them with significantly less to spend.

It too is insufficient for the government to claim they are compensating the householder. Originally the Prime Minister and her ministers claimed they would return all of the $9 billion raised in the first year to households. Now we are told it is around 50 per cent. When it comes to the government's proposed tax cuts, the exact opposite is true. Some of the marginal rates will in fact increase, including from 15 to 19 per cent and 30 to 33 per cent.

No wonder the Treasurer in an interview on Sky News is on the record as saying, 'We can't guarantee that no-one will be worse off …' Indeed, in my own electorate of Kooyong, I was contacted by a constituent Gabrielle Whiting who as a single, self-funded retiree under the age of 65 with an income of $35,000 has been told after repeated calls to the government's clean energy hotline that she will receive no compensation. In fact, using the household assistance estimator on the website she is $251 worse off. When I asked the Prime Minister in question time about Ms Whiting, who will pay higher electricity and gas prices under the carbon tax but will receive no compensation, the Prime Minister had no answer. Unfortunately, Gabrielle Whiting is no one-off. There are hundreds of thousands like her, left behind by an incompetent Gillard government.

Like the average household, small business will also feel the pain of this carbon tax. Do not take my word for it. This is the view of Peter Anderson, CEO of the Australian Chamber of Commerce and Industry. Employing more than four million people, our two million small businesses, more than 10,000 of which are in Kooyong, are the backbone of the Australian economy. But who will compensate them?

My local drycleaner in Kew told me his electricity and gas bill has risen in just over a year from $23,000 to $28,000 and with the introduction of a carbon tax it will rise another 10 per cent. He works six days a week, employs four others and is in a daily struggle to meet the higher costs of keeping the doors open. He wants a carbon tax like a hole in the head. So why are we giving him one?

It is a sentiment shared by many. Deloitte Access Economics have modelled the regional impacts of a carbon tax in Victoria. They found that by 2015 there would be 23,000 fewer jobs across the state and the economy would be $2.8 billion worse off if the tax goes ahead. According to the Deloitte's document, the Boroondara area, which closely resembles the boundaries of my electorate, would be among the worst hit.

What is particularly pernicious about the proposed carbon tax, is that the government is going against the international tide. In the United States, a cap-and-trade system is no longer on the agenda. Earlier this year in Canada, Prime Minister Stephen Harper won the most comprehensive electoral victory for the Conservative Party in over 100 years campaigning against a carbon tax. It too is simply false to suggest that rising powers China and India are rapidly weening themselves off their dependence on fossil fuels. In the period between 1990 and 2020, China will increase its emissions by a remarkable 496 per cent and India by 350 per cent. Professor Garnaut in his report details the projected increase in Chinese emissions between 2005 and 2020 from five to 12 billion tonnes of CO2 per annum. With China's growth in emissions 100 times greater than the cuts Australia seeks to make over the same period, it is easy to see that China is where the real game is.

In fact the Productivity Commission has found that Australia is alone among the nations of the world in proposing an economy-wide carbon tax. Little wonder then that so many of our business leaders who are exposed to the global market are deeply concerned about the impact the carbon tax will have on the nation's competitiveness. BHP's CEO, Marius Kloppers, called the tax a 'dead-weight cost' on the coal industry, noting that other competitor countries in the market, including South Africa and Indonesia, did not apply a carbon tax.

The Gillard government simply fails to appreciate the extent to which Australia is a net importer of capital, relying on foreign investment to fund the development of our lucrative resources sector. Global capital is fungible; it is up for grabs. There is no sentiment involved. Investors go where money is to be made and sovereign risk is limited. If we pursue a punitive carbon and mining tax, it is simply inevitable that investors will take their money elsewhere. This will cost jobs across the economy. The fact that the government has not even had the courage to name those companies it is promising to tax—first numbering 1,000 then 500 and now 400—means there is even greater uncertainty among many of our economy's largest employers.

The government makes the mistake of telling us that lost jobs will be replaced by new jobs in the renewable energy sector. International experience does not bear this out. In a UK study earlier this year it was found that 3.7 jobs were lost for every green job created and similar findings were reached in a 2009 Spanish study.

Not only does the government's carbon tax raise the spectre of sending Australian jobs offshore but it also sends billions of dollars of taxpayer funds offshore to buy emission permits. Because the government acknowledge that, even with a carbon tax, emissions in Australia are projected to increase by 43 million tonnes from 578 million tonnes to 621 million tonnes by 2020, they have been forced to allocate $3.5 billion in 2020 to purchase carbon credits. It is hard to believe but by 2050, funding for these foreign carbon credits is estimated to reach $57 billion per year or 1.5 per cent of GDP. It is of great concern that Australia will have limited transparency and control over these foreign trading schemes where corruption and fraud is legion. Significantly the Australian Crime Commission details in its 2011 report the state of international investigations into carbon tax evasion, including in Norway where Europol is investigating allegations that up to €5 billion of revenue has been lost and in Italy where organised crime groups are reportedly tapping into the European wind energy sector.

Since coming to power in 2007 this government has had an extremely poor record in management and implementation. There is no reason to think that their ability to implement a complex, economy-wide carbon tax will be any different from their monumental failures, which we have seen with the school halls, pink batts, Green Loans and NBN programs. In contrast, the coalition has put forward a fully funded, costed, incentive focussed and technologically focussed alternative with our Direct Action policy. We will clean up the dirtiest power stations, invest in renewable energy and carbon sequestration, plant more trees and establish an emissions reduction fund that will source the lowest cost abatement, helping us achieve the bipartisan commitment to a five per cent reduction in CO2 levels by 2020. At $3.2 billion over four years, it is a far cry from the Prime Minister's big government, big spending carbon tax which will hurt the economy without delivering any real environmental benefit.

I finish where I started. In my brief career, the parliamentary debate over the government's proposed carbon tax is the most contentious issue with which I have been involved. But, given its implications for our economy and our future, it is a debate that must be had. Our policy, based on incentives and initiative, will always trump that of a punishing new tax based on a broken promise. In the end, the pages of history and their judgment will be on our side.