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Tuesday, 11 October 2011
Page: 11353


Mr RAMSEY (Grey) (11:27): I rise to address the Clean Energy Bill 2011 and related legislation. The government has no mandate for these bills—in fact, it has a mandate to oppose the bills. Of the 150 members in this place, 149 took the same policy to the last election—that is, not to implement a carbon tax.

Would we be having this debate if Prime Minister Gillard had said on August 16 last year, 'My government will introduce a carbon tax', instead of, 'There will be no carbon tax under a government that I lead'? If, on 20 August, she had said, 'I rule in a carbon tax', instead of, 'I rule out a carbon tax', would Australia now be facing a new tax of no less than $8.5 billion per annum on the biggest employers of the nation? If the Treasurer, Wayne Swan, had said on 15 August, 'We will move towards a carbon tax', instead of, 'Certainly, what we reject is this hysterical allegation somehow that we are moving towards a carbon tax; we certainly reject that', would Julia Gillard be here as Prime Minister of Australia? The answers are: no, no and no. No, we would not be having this debate; no, we would not be facing an $8.5 billion tax; and, no, Julia Gillard would not be the Prime Minister if she and her ministers had told the truth. They would simply not be the government of Australia.

The Prime Minister said she had no choice; the tax was the price of the deal with the Greens; the tax was part of the deal to deliver government, the cost of government. But no-one held a gun at her head—and could anyone seriously contemplate a parliament where the Greens supported the coalition? Is it really fair for the Prime Minister to blame the Greens? Surely now we are seeing the real Julia; or perhaps we are not. After all, this is the same person who as Deputy Prime Minister advised the then Prime Minister of Australia, Kevin Rudd—who, in all likelihood, will also be the next Prime Minister—to abandon the ETS. Who knows what she really thinks? Surely the ETS and migration, on which the government has gone through considerable contortions, are two of the issues on which Julia Gillard asked the Australian public to judge her. If she wants to be properly judged, she should lay the new deal—the government's completely reversed position—on the table and ask the Australian public for a mandate, because she certainly does not have a mandate for the course that she has chosen on either issue.

We are advised repeatedly that Australia is being left behind on the issue of climate change; that the rest of the world is moving on. But is it really? We could be forgiven for believing that Australia is an international pariah—the worst emitter per capita in the world—but that claim is simply not true. According to the US Department of Energy, Australia is number 11 in the world among polluters. In fact, Australia is about equivalent in this respect to similar resource rich economies and, importantly, to our direct competitors the US and Canada. There is no chance that either competitor nation will introduce an economy-wide carbon tax similar to ours anytime soon—and if the US and Canada do not do so then neither will anyone else.

The only economy in the world that has done anything significant in this space is the EU, and we should take a closer look at what the Europeans have done. While it is true that they have an ETS and have managed to cap emissions, all is not what it seems and bears closer examination. The European ETS is largely a tax on electricity, and 80 per cent of the manufacturers covered by the scheme are eligible for 100 percent compensation up to 2020. Certainly the French President is not having anything to do with a tax on his country's industries which industries in the rest of the world do not have to face. He says that a carbon tax:

… threatens our jobs, [and] it would be absurd to tax French companies while giving—

an edge—

to those in polluting countries.

The great promoters in this country of European action neglect to tell us that, at the same time as Europe has capped emissions, its importation of embedded emissions has risen by 30 percent. That means that the CO2 emitted for manufactured goods and raw materials consumed in Europe has occurred in other countries, mainly China, where there are no restrictions on emissions. Effectively, the Europeans have transported their emissions to nations where they will not be counted. To clarify this situation further, Australia, which is the 11th highest emitter per capita in the world, emits a full 18 percent of its total CO2 on behalf of other countries—the emissions are embedded in our exports. If we export our products to a country such as Britain, it makes their balance sheet look good and ours look bad. If these emissions were removed from Australia CO2 accounts, we would rank about No. 30 on the world's list of carbon sinners—not bad for a country which has the greatest tyranny of distance in the world.

I turn to some specific industries and the likely impacts on the communities they support—for example, my electorate of Grey. While much has been said about the cost-of-living implications of a carbon tax for Australians—and quite rightly so—my strongest concerns with the tax are to do with carbon leakage and the effects on exporting and importing businesses which are competing but which have no power within the marketplace to pass on their costs. In particular, I am concerned about the impact on two major employers in my electorate: OneSteel in Whyalla and Nyrstar in Port Pirie.

Let us look at the example of OneSteel. It is pertinent that the government has recognised that there is a serious problem in the steel industry and offered a $300 million steel transformation package over four years. One thing I often say about the carbon tax is that it is pointless unless it changes behaviour. But the government has shown with the parameters of this tax that it has no understanding of this idea. In the case of OneSteel, surely the object of the tax is to allow lower emission technologies to compete and, by making current high-emission technology more expensive, to place external costs on the business so that it switches to a process which emits less CO2. That only makes sense if there are alternative technologies; however, in the production of steel, 80 percent of the CO2 emissions are unavoidable. They come from using coke to convert iron to steel, and regardless of the cost they cannot be avoided. High taxes on steel cannot change CO2 efficiency. If we want to reduce Australia's emissions from steel, the only way of making a significant difference is to close industry down and send it offshore. That will not cut the world's emissions, but it will reduce Australia's emissions. Of course, this is less than pointless for the environment but will meet the government's aims.

The steel assistance package does nothing more than cushion the impact of the tax by compensating for the tax. However, for the reasons I have just outlined, the package will not facilitate industry's significantly altering its behaviour. There will be four years of assistance—and then what? There will be nothing but a rising carbon price: $29 a tonne by 2015 and $37 a tonne in 2020. This is a policy to get us past the next election, not a policy which will ensure that we have a steel industry in Australia or, most importantly, a policy which will reduce the amount of CO2 emitted in the world, as opposed to reducing it just in Australia.

Considering that the government assumes that $300 million will be enough compensation for the hundreds of millions of dollars that will be extracted from the steel industry and so allow OneSteel and BlueScope to keep making steel for the next four years, can we assume that, as the tax rises to 60 percent by the year 2020, the industry will need a $480 million package?

After refusing to debate the clean energy bills separately, the government is now opportunistically splitting off just one—the steel industry assistance package—presumably to try to embarrass me; it has already named me in the media. The great Muhammad Ali had an in-ring tactic called rope-a-dope. But I am not a dope, and I am not for roping. If the Greens-Labor Party bills are lethal for the steel industry then those parties are responsible for see their package is passed in full. If they cannot then they should abandon the bills. These are bills, I might add, that only 28 per cent of Australians support.

As the member for Whyalla I cannot support a bill in isolation, because it is only a stop gap. It will not achieve structural change; it will provide only a short-term benefit. Should I support just the steel assistance package, then I should be judged as the member who assisted in installing a tax which will continue to ramp up costs on the steel and lead-zinc industries until the pain is too great to bear.

Make no mistake, we are debating this tax because it was the price of a deal with the Greens. Well, in that case let them be responsible for the full effects of the tax or support the 'crumbs off the table' approach that may allow the steel industry to struggle along for a few years before being completely killed off.

That brings me to Nyrstar. Nyrstar has two plants in Australia: one in Port Pirie in my electorate and the other in Hobart in the electorate of Denison. The two plants are interdependent. In 1997, in order to comply with international anti dumping-at-sea conventions, Nyrstar's previous owners invested $70 million to stop sea-dumping of waste from the Hobart plant, instead electing to reprocess in Port Pirie. The waste has very low mineral concentrations and for all intents and purposes is nearly worthless. If the Port Pirie operation does not exist, then neither can Hobart. And there are no other practical alternatives to dealing with this waste. Now the Hobart plant is a zinc-processing plant and because it sits in the highest-intensity band of emissions it will be granted 95 per cent. In comparison, Port Pirie is a multi-metal smelter but predominately handles lead and zinc. The zinc component will attract the same 95 per cent credits under the government's tax; however, the lead part of the business will receive only 60 per cent credits. Inexplicably, the government chose to break a fully-integrated, multi-processing plant down into separate entities for taxing purposes.

The tax will cost Nyrstar in excess of $10 million in the first year, rising to $16 million per year by 2020, and more beyond that, should they still be in business. Similarly to steel production, there are virtually no means by which Nyrstar can alter the process to emit less CO2. They have no way of passing their cost increases on for they are price takers in a world market. The tax can only be described as a tax to raise money; it cannot be classed as a tax to alter behaviour—and surely that should be its purpose.

What is not widely known is that the Port Pirie plant is in need of major refurbishment. Within the next five years Nyrstar, the world's biggest zinc producer—it is a company based in Switzerland with another four smelters based around the world—must choose to reinvest in Port Pirie, or the plant will have to close. The cost of refurbishment will be in excess of $400 million. Under the laws proposed by the government, it is impossible to believe the company would choose to invest that amount of money in Australia. It simply will not happen. So, without a better compensation package it is almost certain Nyrstar will elect to remove itself from Port Pirie—and that means Hobart too. It will be a casualty of a carbon tax the Prime Minister promised us we would never have. Further than that, I recently I saw figures showing that a tonne of zinc refined in China, consumes almost double the energy used here in Australia.

I am concerned also that the Alinta power stations at Port Augusta will also be affected, even though it is unsure just what the tax will mean for them. Certainly, there is a chance that South Australia will develop an unstable electricity grid if these base-load generators are removed, and I think it highly likely that government—state or federal—will have to pay Alinta to stay on line, or subsidise gas replacements. I am concerned that we have not properly assessed the impact of the expanding renewable energy sector in the state. Courtesy of wind generation, South Australian consumers are likely to face some difficult circumstances in the medium future, but I will take an opportunity to inform the House on that issue at a later date.

In the wider sense the economic backbone of my electorate—agriculture, fishing, aquaculture, mining, and the overseas-competing tourism industry—faces the embedded costs of a carbon tax and has no ability to pass on the cost. While agriculture is directly exempt, that is only for the time being. By 2014 heavy transport will face the full cost. I wish government members would acquaint themselves with a map of Australia. A heavy transport tax is a tax on our weakness. Everything in regional Australia, which is the generator of the primary wealth of this nation, faces a freight barrier the rest of the world will never understand. Fishermen will pay more for fuel; they will pay more to refrigerate their catch. Farmers will pay more for freight, fertilizer and chemicals. Miners will pay more for fuel, electricity and transport. Tourism operators will face more for airfares and untaxed competition from overseas. None of them will get any compensation from the government; none of them can pass on the costs. All of them will pay for the government's lollies for the masses. All of them have been abandoned by this government, which has betrayed its electoral commitments and will not seek a mandate for the biggest reversal of policy this country has ever seen.

All sides of politics agree that we need to reduce our CO2 output; however, there is a better way than installing a tax that Australians were promised they would not have and, despite the government's best efforts, clearly do not want. (Time expired)