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Tuesday, 11 October 2011
Page: 11333


Mrs PRENTICE (Ryan) (10:02): The coalition opposes the Clean Energy Bill 2011 and related legislation on numerous grounds. We do not support a carbon tax, because it is a bad policy for the Australian people. It is a bad policy for the economy and, more significantly, it does not help the environment. It is premised on a lie—a deception that reeks of arrogance. The Prime Minister knew that a carbon tax was deeply unpopular with the Australian population, so she quite deliberately lied her way to the election.

The DEPUTY SPEAKER ( Hon. Peter Slipper ): Order! The honourable member for Ryan will withdraw.

Mrs PRENTICE: She quite deliberately deceived her way to the election.

The DEPUTY SPEAKER: Order! The honourable member for Ryan is aware that under the standing orders she is not able to make that sort of reflection on the Prime Minister. The honourable member for Ryan will withdraw.

Mrs PRENTICE: I withdraw that, Mr Deputy Speaker. But who can forget the Prime Minister's adamant statement that 'there will be no carbon tax under the government I lead', in which she was aided and abetted by the equally indignant member for Lilley? Perhaps the Prime Minister's statement can be explained away by the fact that her coalition with the Greens is so influential over this government's policy agenda that it is arguable that the Prime Minister is only the virtual leader; however, on 20 August, the day before the election, the Prime Minister categorically stated, 'I rule out a carbon tax'. There is no room for doubt in that statement, yet here we are debating legislation to introduce a carbon tax. The government can dress the legislation up as a 'price on carbon' and call it the 'Clean Energy Bill', but when it is a fee levied per tonne of carbon emitted, it is a carbon tax which will drive up the cost of almost everything that is made or transported in Australia.

This is not only yet another tax but also a bad tax. It is as simple as that. Taxes affect prices, and prices change behaviour; but this tax is different from a consumption tax such as the GST, which, I remind the House, was taken to an election and won a true mandate before being introduced by the Howard government. This tax is different because it is a tax on producers which drives up their costs. As I said before, changes in price change behaviour, but with a tax on production rather than consumption the effects are multiplied. Costs rise for producers, so they change their behaviour by reducing their costs through cutting services or laying off staff—no-one wins. Alternatively, they could shut up shop, unable to afford these increased costs, which would mean no services and no jobs—and definitely no winners—or they could pass their increased costs on to the consumer and raise prices. Consumers react to a change in costs by changing their behaviour as well. But consumers must still buy food and must still buy power, so their cost of living would increase dramatically under this tax—and by much more than any so-called compensation package would cover.

The government's own modelling shows that under this tax there will be an immediate 10 per cent increase in electricity prices and a nine percent rise in gas bills. Food costs will increase due to the electricity price rise and increased transportation costs. Be in no doubt that basic necessities for life will cost more. If families cannot save through not buying necessities, they will buy less—less entertainment, less clothing and less generally in the already struggling retail sector.

The Prime Minister says that this carbon tax, when the so-called tax reform compensation package is taken into account, will cost Australians just a couple of dollars a week, if anything. But that couple of dollars a week will be on top of the 'just a couple of dollars a week' caused by the 18 other new taxes introduced since 2007, and the 'just a couple of dollars per week' not spent by every customer on just one cup of coffee or just one magazine is a big cost to small business. Across the road from my office is a coffee shop. Talk to them about the effects of 200 or more customers buying just one less cup of coffee a week. Ask the newsagency next door how his customers buying one less magazine a week will affect his margin.

The Prime Minister only has to open any newspaper to see how hard the retail sector is being hit at the moment. The IMF has downgraded Australia's economic forecast to below budget and Treasury predictions. Yet despite the glaring evidence the Labor-Greens coalition has decided that now is the time to bring in another tax—yet another cost rise for consumers, which means yet another blow for retailers.

Back in 2008, then Prime Minister Rudd used the justification that a slowdown in consumer spending would slash jobs to hand out $900 cheques to anyone and everyone—dead or alive. Yet while the retail sector is already slowing—it is already struggling—this Labor government wants to introduce yet another deterrent to spending that will affect the bottom line of all Australians, in the form of a tax, and make them adjust their spending accordingly. It is a bad tax being introduced by a bad government. There will be less money to save for investment, making it even more difficult for Australians to save to buy their first house. The multiplier effects of a tax on production give no certainty except that costs will increase, and that uncertainty is crippling business already. Everyone, be they small business or big business, is feeling the pinch.

So far I have discussed only the immediate domestic issues and impacts. Further, the genuine fears of the market as to the uncertainties of the European and US economies have an impact on Australia as well. This carbon tax also relies heavily on the establishment of an effective international market. There is no evidence of such a system in working order at present, yet this government believes that it is indeed time to introduce this scheme. The World Bank has reported that the international market for carbon credits has collapsed and, further, has expressed doubt about the ongoing viability of a global market.

In 2005, after the Kyoto protocol was adopted, this market generated about $25 billion in the lead up to 2009. However, last year that market collapsed to just $1.5 billion dollars. Keeping in mind that the Kyoto protocol expires next year, there is little reason to believe that we will see a re-generation of this market in the near future. Significantly, the US withdrew from the Kyoto protocol back in 2001 and has indicated that it will not commit to a replacement treaty. Russia, Canada, and Japan have all also recently stated that they will not recommit to the protocol after its expiration.

This is a clear indication that much doubt surrounds whether other countries will adopt emissions trading and, if they do, it is also unclear as to what sectors will be included. Australia is the only nation introducing an economy-wide carbon tax. We need to be very cautious about legislating a default forward emissions cap for the electricity sector, in particular, and creating new property rights. Without certainty of what will happen internationally in the future, the government should be more careful about what arrangements it is putting in place that will be difficult to unravel should Australia have to align itself with an international scheme.

The absence of a global market for carbon credits is enough to cast doubt on the viability of the government's scheme before any further research into the risks such a market runs. Carbon credit fraud has been described as 'the white collar crime of the future' by Deloitte Access Economics. And The Wall Street Journal, after the systemic corruption of the European Union emissions trading system was exposed, defined the situation as 'not a functioning scheme at all but a political smokescreen to enable European politicians to claim green credentials while avoiding difficult decisions on reducing emissions'.

I think there is little doubt that this is what is happening in Australia today. If the government was truly trying to save our environment, they would be more concerned about how much this carbon tax will actually reduce emissions. The fact is that it will not reduce them at all. To reduce emissions by five percent of the year 2000 figures, we should be reducing emissions to 530 million tonnes. However, according to the government's own document, we are actually increasing emissions from 578 million tonnes currently to 621 million tonnes by 2020. So this carbon tax is literally all economic pain for no environmental gain. And, make no mistake, it will bring significant economic pain.

The Bligh government recently commissioned a report from Deloitte Access Economics regarding the carbon tax impact on my home state of Queensland. Keep in mind that this was a report commissioned by a state Labor government—a Labor state premier who is also the Labor Party's immediate past national president. In addition to what I have discussed above, this report found that Queensland's gross state product would be 2.76 per cent lower by 2020 and 4.11 per cent lower in 2050 with a carbon tax compared to without one. This is substantial and significant. It is a five per cent reduction in Queensland's gross state product under a carbon tax and will result in a predicted 21,000 jobs lost in Queensland alone. On top of this, the Queensland Treasury has estimated a loss in economic value of the state's generation companies of $640 million, which undoubtedly will be passed on to consumers.

This $640 million in Queensland pales in comparison to the $40 billion cost the National Generators Forum estimates the generation sector will incur across the country. However, as in Queensland, it is likely that nearly all of this cost will be passed on to consumers. Part of this high cost is due to the starting price of $23 per tonne being far higher than carbon prices elsewhere in the world, and it has put Australia considerably ahead of other countries. Now the Prime Minister may think that this will cause other world leaders to make a change; however, most world leaders will take into account the standard of living of their residents and the strength of their economy, not what Australia legislates. Without a carbon tax, the Productivity Commission puts Australia in 'the middle of the pack' with regard to tackling climate change. So by waiting for international action, for the sake of our economy, and particularly our manufacturers, we would by no means be dragging our feet. It is a matter of plain common sense.

Furthermore, the system requires generators to buy carbon permits well in advance, sometimes for electricity that will be covered by future contracts years in advance. This does nothing but further increase the cost of electricity in this country—a cost that will simply be passed on to consumers, further driving up prices.

The Prime Minister may believe she is leading the world with this carbon tax, but real leadership on this issue can and should start at home. The Brisbane City Council is a prime example of government leading by example and taking real action. I was proud to be a member of Campbell Newman's cabinet, which delivered record spending on green outcomes. In one term alone it planted 2.2 million trees; purchased 500 new clean buses, offsetting the whole of the council's fleet; started the CityGlider bus service; purchased new CityCats, and spent more than $100 million on new bikeways. Brisbane City Council is the largest purchaser of green power in Australia, and half of its energy supply is from renewable sources. This Labor federal government, in contrast, uses just 5.8 per cent greenhouse-friendly electricity in its buildings, according to its own Energy Use report. Furthermore, non-defence Australian government energy consumption over 2008-09 was 6,237,496 gigajoules, which equates to 1,178,440 tonnes of carbon emissions and which is in fact a 1.91 per cent increase from 2007-08 and a 9.94 per cent long-term increase over the period beginning 1999-2000. Perhaps the government should be looking to its own backyard and bureaucracy before demonising the '500 big polluters' and trying to ignore the effects its tax has as those companies pass on the tax to consumers.

This is a bad tax, plain and simple. It is not going to solve any of the environmental challenges confronting us. It is a tax on producers, who will have to absorb increased costs, so it will result in decreased services, lost jobs and higher prices; there is just no way around that. The government knows this. There would be no need to provide compensation if it had not inflicted irreparable damage in the first place. The Australian people do not want this tax. The Prime Minister has no mandate to introduce this tax and, without taking it to an election, the Prime Minister and her Labor/Greens government is treating the Australian people with arrogant contempt.