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Wednesday, 14 September 2011
Page: 10007


Mr HUNT (Flinders) (09:46): Let me begin in Hastings, in my electorate of Flinders. Mick Carroll is the proprietor of Carroll's Injection Moulding. It is a firm which, when you include him and his wife, employs six people as of my last discussion with him. Carroll's Injection Moulding is a proud Australian firm—Mick and a number of members of the firm are part of the Mount Martha Fire Brigade—but it has to compete against international imports into Australia. What Mick has told me is a story that has been repeated around Australia. He said: 'I'm proud of the environmental savings we have made within our firms, but the increase in electricity and gas prices under the proposed carbon tax is likely to be the final straw and I will have to export much of my manufacturing offshore and some of these six workers will lose their jobs.' That is what Mick Carroll has said. That has been the story around Australia in so many places, from so many people, and what it means is that global emissions will not go down but that Australian jobs, investment in Australia and Australian emissions will be exported to China, India, Indonesia and other countries with different regimes. In many cases, the emissions for the projects in question will go up if they are occurring in a less developed environment.

So let us begin with the heart of the matter, and that is that this scheme at this time in this form will not reduce Australia's emissions and it will not reduce global emissions, but it will hurt real people with real jobs and it will hurt every Australian who has to pay electricity bills, gas bills and grocery bills. But there is a choice. There is fundamentally a better way than a massive tax on electricity, gas and groceries, and it is an exemplar of the two philosophies in contest in this chamber. One is a philosophy of tax and punishment. The other one is a philosophy of incentive, hope and optimism. That is what we bring to this chamber, that is what we bring to the Australian people—and, strangely enough, that is what the Prime Minister purported to bring to the last election when she ruled out a carbon tax.

In speaking on the Clean Energy Bill 2011 and related bills, I want to proceed in four clear themes: firstly, democratic respect; secondly, the truth about international action and where Australia fits in that; thirdly, the flaws in the tax itself and, in particular, the inelasticity on a relative basis of electricity, the impact on families, the impact on the economy and the true cost in economic terms of what is being proposed here; and, fourthly, the fact that there is an alternative, a better way, which is effective, costed, capped and fully funded from offset savings.

Let me turn first to the notion of democratic respect. The nature of democracy is that parties take to the people a platform on which they seek election. Their fundamental duty is to outline that platform, to seek a mandate and to implement that platform.

Mr Oakeshott: Rubbish.

Mr HUNT: There will be moments when it may have to change, but not the fundamental nature—

Mr Oakeshott: Rubbish.

Mr HUNT: I have had enough of you, mate. I have had enough of you, with your performance, coming into this chamber and lecturing people on democracy, when you did not seek information about the mining tax, you did not seek information about water trading, you turned a blind eye to your constituents. So no more cant or hypocrisy. Your electors will no doubt make their own judgment in due course.

The nature of democracy is this: we have a duty, we have a responsibility, we have a task, to set out what we seek, to ask for the people's mandate and to implement it. This Prime Minister, not just once or twice but on multiple occasions, made it clear, firstly, that there would be no carbon tax and, secondly, that there would be no pricing mechanism until there was 'a deep and lasting community consensus'. On the carbon tax, the Prime Minister said clearly and absolutely prior to the last election:

There will be no carbon tax under the government I lead.

We all know about 16 August. We all know about 20 August, the day before the election, when the Prime Minister said:

I rule out a carbon tax.

That was the Prime Minister's final pledge and pitch to the Australian people to seek a mandate not to do precisely what she is doing today. I seek leave to table the Prime Minister's 13 statements during the course of the election campaign.

Leave not granted.

Mr HUNT: Leave is not granted to table the Prime Minister's 13 statements to the Australian people that she would not introduce any form of carbon pricing until there was a 'deep and lasting community consensus'. That was a statement of principle, that was a statement of belief and that was a statement of commitment. All of this was broken and none of it had to be. The reason it was broken was it was always intended to be broken. It was an act of deliberate deception from the outset.

On the night of the election, the incoming member for Melbourne told the Australian people that he would support the ALP. That was before any deal, before any agreement. Every member of this House knows that the Greens were going to support the ALP. That was set out in public on election night. So the Prime Minister's claim that circumstances changed is false. Circumstances did not change. She was always going to have the agreement of the Greens. With that we saw that the democratic respect owed to the Australian people was fractured. The Prime Minister should take this to an election to seek a mandate for a tax, which she ruled out repeatedly prior to the last election.

Let us turn to why it matters beyond sheer democratic principle, which itself should be enough to seek an election in order to enact these proposals if the Prime Minister has changed her mind. The international reality sets out the environment in which this policy will operate. It makes it all the more likely that this policy will fail. Let us look firstly at China. Contrary to what the Prime Minister would have us believe, China is going through the fastest growth in human emissions in history. We will see a 496 per cent increase in Chinese emissions between 1990 and 2020. We will see coal consumption grow from 1.4 billion tonnes to four billion tonnes between 2002 and 2015. We will see Chinese emissions grow from 5 billion tonnes to 12 billion tonnes, or seven billion tonnes of growth alone, which is approximately 100 times what this entire bill is seeking to achieve in reductions over the same period from 2005 to 2020 in Australia's net emissions. That is the reality and there will not be a carbon tax with an effective increase in electricity prices on a systemic basis across China. There is no chance of that. I believe all members of this House know that.

Secondly, in India, similarly, there will be no systemic carbon tax. We will see a 350 per cent increase in Indian emissions between 1990 and 2020. In the United States a cap-and-trade system, which is their equivalent of a carbon tax, is absolutely dead and buried. The modelling upon which the Prime Minister relies includes an assumption that the United States will have a system which will be a full part of an international trading system by 2016. That is a completely false and unsustainable assumption and no member of the government has been able to point to any evidence in the United States from a legislator, from a member of the cabinet or from White House officials which justifies that assumption. It is an utterly unsustainable assumption.

Europe does have an emissions trading scheme but it is a radically different system to what is proposed here. The European system, on a per capita basis, is just more than $1 per person per annum across the economy. The Australian system will be approximately $400 per person per annum. Just over $1 per person per annum in Europe and approximately $400 per person per annum in Australia is radically different. It is the difference between a bowling ball and a feather. All of that affects how this tax will operate in Australia. It means that we will simply be sending our emissions, our investment and our jobs offshore.

The flaws in the tax itself are these: firstly, it relies upon an assumption that somehow people will either change the demand for or supply of electricity. But electricity, on a demand basis, is inelastic—not absolutely but significantly. New South Wales IPART showed us a 50 per cent rise in the cost of electricity across multiple millions of people over five years—so a massive economic test case—saw a six per cent decrease in per capita consumption. We see it as an incredibly blunt and ineffective mechanism backed by economic history, backed by economic reality, backed by economic fact as found by New South Wales IPART under the previous Labor government in New South Wales.

Secondly, there will be no significant change in supply under this proposal, as the government has recognised, because the only way they will try to change supply is by turning to the coalition's approach of direct incentives on a competitive basis to clean up power stations, although they would go further and close them, which we reject. They will adopt the coalition's own mechanism because their approach of trying to tax them will not be effective, because the power stations simply push through the prices.

At the heart of their mechanism is an acknowledgement that neither supply nor demand will be changed, which is why they will have to go offshore to purchase their emissions. Their tax will see emissions in Australia increase by 43 million tonnes from 578 million tonnes to 621 million tonnes by 2020. How will they do this? They will go offshore to buy almost 100 million tonnes of credits from China, from India, from Indonesia at a cost of $3½ billion by 2020. That is money that will go straight from Australia to countries overseas. There has been some debate about whether this will come from taxpayers. Of course it will come from taxpayers in the form of higher electricity, gas and groceries. It will then go to companies that purchase from overseas. It will be Australian taxpayers who will bear the costs of these purchases of foreign carbon credits. The Australian Crime Commission found this year that there was a $5 billion fraud in Norway, a mature country, under the very type of system that this government is proposing and that was in a radically smaller market than the one it is proposing here. So if you think pink batts and green loans were bad, you ain't seen nothing yet.

That leads me to the true economic cost of what is proposed here. The true economic cost is very simple. The cost of domestic abatement under this system is more than $160 per tonne of abatement. How does that come about? It is because it is a $9 billion a year tax. We are reducing only 58 million tonnes in Australia—the rest comes from offshore. The effective cost of abatement in Australia is over $160 a tonne. If you take out the 20 million tonnes that they are proposing to save per year by cleaning up power stations using our direct action method of purchasing then you find that the actual cost per tonne of abatement from the tax alone in its economic form is more than $200 per tonne. That is why Nobel economic laureates from the last decade, such as Thomas Schelling, Vernon Smith and Finn Kydland, have declared that a carbon tax is the least effective way of reducing emissions on a cost-effective basis if you want to use an economic instrument.

That is the heart of the matter. That is why we have proposed direct action in the form of a market based reverse tender to buy emissions at the lowest cost wherever they can be found. That is within the Australian context. Every dollar will be spent in Australia. It is costed and it is capped; therefore, that is the amount we will spend—not a dollar more than we have budgeted. This is the difference ultimately between a mentality of tax and spend and a mentality of incentives and creation. That is what we stand for and that is who we are.