Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 14 September 2011
Page: 10041

Mr ROBB (Goldstein) (12:16): I rise to speak on the Clean Energy Bill 2011. In the absence of a global emissions trading scheme, imposing a carbon tax in Australia is an act of economic self harm and totally futile from an environmental perspective. I think that both sides of the House share the view that we should protect our land and our country, but this bad policy does nothing. There is no obligation to support bad and futile policy in the pursuit of supposedly protecting our land.

To better understand why going it alone on a carbon tax will harm the Australian economy, think for a second about the question solely in an Australian context. What would happen if a great big new tax on carbon was levelled at businesses only in my home state of Victoria and in no other state? In no time at all, in order to remain competitive, Victorian businesses and jobs would start to relocate—to the great detriment of the Victorian economy—to New South Wales, to Queensland and to other states where no tax was applied, and the emissions that relocating businesses generated would go with them. If you go back and think about the proposed carbon tax, you will realise that the same thing will happen, except that in this case it will happen on a global basis, because our businesses, becoming increasingly uncompetitive, will simply relocate to other parts of the world, and the emissions created by those businesses will go with them. Australian businesses, jobs and emissions will relocate where no tax applies.

Key Republican congressman on climate change Jim Sensenbrenner, who led the US congressional delegation to Kyoto, described what the Gillard government is doing as 'unilateral economic disarmament'. We know that the prospects of either a cap-and-trade system or a carbon tax are dead in the US. We know from key Democrats that President Obama will not be campaigning on either in the lead-up to next year's election. After the failure of the Copenhagen conference, the world is further away from a global agreement than it has ever been. The government lectured us for three years about the importance of a global scheme in the lead-up to the last election, but now we are being lectured about the importance of bringing in a scheme unilaterally. The world is further away from a global arrangement than ever before, yet there is urgency here, in the face of very difficult economic circumstances for many sectors of manufacturing, to bring in a great big new tax. It makes no sense unless you look at the politics behind the introduction of this bill.

While the Gillard government likes to highlight the European emissions trading scheme as a reason that we need to undermine our great strengths, even in Europe there is a high degree of pessimism about the prospect of a global scheme. In fact, the UK parliament's Energy and Climate Change Committee recently launched a new inquiry into the EU emissions trading system. The committee said that, in the absence of binding emissions reduction commitments under the UN reduction framework, the scheme 'is looking increasingly isolated'. It went on to say:

The lack of an international framework for emissions reductions and carbon trading poses some serious difficulties for the future viability of the EU ETS …

Regardless, though you would not know it from the rhetoric, the European scheme—which has been the subject of huge rorts—is really nothing more than a pilot scheme, is a mere pilot compared to the carbon tax proposed here. The European scheme does not apply at all, in many cases, to electricity generators, much less many other trade exposed industries. The Gillard-Brown scheme will raise more in revenue in its first four months than the European trading system has raised in total over the last five years.

If you were to put a price on carbon, this scheme would be just about the most inefficient and most complex way you could go about it. It is the most bureaucratic, the most interventionist and the most socialistic scheme that you could contrive. There are many other schemes that you could use if you were to put a price on carbon. There are even cap-and-trade schemes which you could design to put a price on carbon and which would give you exactly the same price but not strip the balance sheets of companies, which is what will happen with this government scheme—they will tax every tonne of CO2, and the cost of abatement is only one-sixth of the total tax take. This is a scheme designed to maximise the tax return—as we are seeing in Ireland, where they have just doubled the price of carbon because they have a fiscal problem. The same thing will happen in Australia, and it will not be one scheme but 500 schemes.

The so-called '500 big polluters' that Labor has raged about for 12 months no longer matter, but we still do not even know which companies will be taxed. When we do, however, there will be bureaucrats crawling all over them. Under the government's scheme, different activity definitions apply, different levels of assistance apply and the enormous tax churn not only underscores the scheme's inefficiency but also suggests that, first and foremost, the scheme is a vehicle for wealth redistribution. Herein lies the fundamental difference between the carbon tax and the coalition's far more efficient direct action policy. The carbon tax approach requires many tens of billions of dollars in compensation because of the huge increases in electricity prices, and the direct action approach requires no compensation because it does not drive up electricity costs. Frontier Economics exposed this fact with an analysis it did based on Treasury's 2008 modelling of a carbon price. Looking at electricity generators alone, it found that the cost of technology to reduce CO2 emissions from 2012 to 2020 was $6.6 billion—that is, the cost of abatement for electricity generators over the next eight years would be $6.6 billion. During that period the government would reap not $6.6 billion but $37.5 billion in tax from the generators, and consumers would pay an additional $45 billion for electricity—the price would be passed on to electricity consumers. This shows that those who are creating the CO2—the so-called 'big polluters', the derogatory term used by this government—are not paying. It will be consumers who pay, and everyone knows this. The government is doing itself a great disservice by trying to imply that the tax falls on the so-called 'big polluters' and not on individual Australians and small business.

This shows, too, that the government's tax take is almost six times the actual abatement cost, and the increased cost of electricity is nearly eight times the actual abatement cost. As Frontier's Danny Price prophetically said earlier this year 'the excess tax will be churned via the political process which will bring its own distortions'. Bureaucrats will be making decisions about technology and innovation, not companies themselves. This town will be crawling with lobbyists seeking some investment crumbs from the government's table. It is a giant money-go-round, but the money will end up in the hands of politically well-chosen beneficiaries. Danny Price said that political control of so much tax revenue explains why the Greens have been such enthusiastic supporters of the carbon tax. He said, 'They will be in the box seat in deciding how these funds will be distributed,' and he was spot on.

These bills will provide for the creation of the $10 billion Clean Energy Finance Corporation—or the Bob Brown bank. The slush fund—

The DEPUTY SPEAKER ( Ms AE Burke ): Order! The member knows he must refer to people by their appropriate titles.

Mr ROBB: will be all borrowed money. It will be used to fund high-risk pet projects of the Greens and Labor, projects the private sector would not touch with a barge pole. The lessons of the failed Tricontinental bank, the failed State Bank of South Australia and WA Inc. are so easily forgotten. It is criminal; it is pure politics; it is not policy inspired. No less than Don Argus said he was bemused that such vast sums of money were being staked on risky and expensive renewable energy and not carbon capture and storage—it was explicitly excluded from those $10 billion funds. He said:

This example highlights just how politically expedient this government's tax reform agenda has been. … The government has rushed ahead with proposals that are … not in the best interests of our country—

despite the endless mantra about what is the in the interest of the country being pursued.

While Senator Brown rages against foreign ownership in mining, he remains silent about wind farms. About 30 per cent of Australian wind farms are foreign owned and their manufactures are all foreign owned. Doesn't he have a problem with this—their proliferation and the way they are shattering communities?

We know from the lessons learned in Europe that all the talk about green jobs, which will replace jobs in traditional industries, is pure nonsense. In fact, it is quite disingenuous the way in which this government comes into this House every day to talk about green jobs. The US study by Verso Economics recently found that for every green job created 3.7 jobs in other parts of the economy were destroyed. This supports similar findings from Spain, Germany and other parts of Europe. This is what we can expect in Australia in manufacturing, mining and resources. Thousands of jobs will be lost—and the cost of green jobs is extraordinarily high, compared with traditional jobs.

Look at the billions this government has wasted on green rip-offs: $2.4 billion on pink batts, $850 million on solar homes, $300 million on green loans and, despite the enormous tax take under this scheme, $9 billion a year that cannot even make the numbers add up. Incredibly, this scheme will cost the budget $4.3 billion over the forward estimates. That is a real black hole, yet, according to the Treasurer and the Minister for Finance and Deregulation, this adds up to broadly budget neutral—and they wonder why people are so sceptical about their management skills of this economy. No wonder they are a laughing stock. Senator Wong wants nothing to do with this carbon tax. Here is a snapshot of her past comments:

The carbon tax does not guarantee emissions reductions.

…   …   …

A carbon tax … is a recipe for abrupt and unpredictable changes.

She goes on to say that the introduction of a carbon price ahead of effective international action can lead to perverse incentives for such industries to relocate or source production offshore. That is the current finance minister, the former Minister for Climate Change and Energy Efficiency. These are all contradictory in terms of the carbon tax policy that has been laid down and which we are debating here today. I could not have said it better myself.

They are also creating six new bureaucracies to administer this dog's breakfast of a scheme. This will cost a staggering $382 million. I went to Tasmania recently, where they built a beautiful dam for $34 with hydro. It changed the economics of that small region. You could build 11 of those around the country for the cost of the carbon tax bureaucrats each year. By contrast, the coalition's direct action policy will cost $3.2 billion over four years and it will be transparently funded from savings within budget—and capped. Virtually all this money will be spent on purchasing least-cost abatement through competitive tender.

Competitive tendering is a market based system but one which does not come with tens of billions of dollars of new tax and tens of billions of dollars of higher electricity charges. Direct action is a no-regrets policy. If there is still no global agreement by 2020, Australia will have remained competitive while reducing emissions by five per cent, avoiding tens of billions of dollars of tax, yet still in a good position to assess the way forward from there. The direct incentives to invest in lower energy and emissions technology in our business sector, greater carbon levels in our soils and tree planting in appropriate areas will see major productivity gains regardless of action taken by the rest of the world.

On the other hand, going it alone with a carbon tax and then an emissions trading scheme is highly irresponsible. This politically inspired going-it-alone policy approach guarantees that Australia will be far worse off than if a global agreement applied. In fact, under a global scheme, closures of inefficient power generation and value-adding resource plants, such as zinc and aluminium smelters, would occur elsewhere in the world first. This carbon tax will deliver around 40 million tonnes, or just 25 per cent, of overall abatements. The world economy is facing the likelihood of a further major slump over the next 12 months, yet this government wants to introduce an economy-wide tax. I urge any government members opposite who want to do the right thing by our nation and our communities to reject these bills. (Time expired)