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Thursday, 15 September 2011
Page: 10272

Ms LEY (Farrer) (10:09): It is a delight to speak in parliament today on the government's Clean Energy Bill 2011 and the associated 18 individual pieces of legislation. As we know, carbon and global warming are global issues. I want to start with commentary from the global news agency Reuters that was released the day after the announcement here in this place. It states:

Coal miners, steel firms and airlines were sold off on Monday a day after Australia's unpopular government introduced a carbon tax scheme …

Australian stocks were heading for their biggest fall in nearly a month … dropping 1.5 percent, with coal miners, steel and transport firms such as Macarthur Coal, BlueScope Steel sharply down as investors digested the impact of the tax.

Australian airline shares also tumbled. Qantas said the carbon tax will cost it an estimated A$110 million to A$115 million, while Virgin Australia said it was likely to face a cost impact of A$45 million in fiscal year 2013.

Both airlines said they would pass on the cost to passengers.

I wanted to start with that reaction to underline an important point both for the country and for my local rural electorate of Farrer. In the industries of mining, transport and aviation we are going to be severely hit by the Prime Minister's unpopular carbon tax. It is going to make a difference to the lives of the people I represent. I am not sure it is going to be in the national interest either.

I am tired of the government accusing those on this side of the House in this debate of being climate change sceptics. I am happy to go on the record yet again to say that I am not a climate change sceptic. I believe the earth is warming and that humans are contributing to that warming and that we as citizens of the planet should be taking action. That is a statement I freely make here and in my electorate. Some people who correspond with me on a regular basis are climate change sceptics and they very vigorously oppose Australia taking any action at all. I say we should be doing something, but not this and not now.

We should cast our minds back to 2009 when Kevin Rudd led I think 114 people to Copenhagen. Expectation was high around the world that there was going to be global agreement at that meeting, and there was not. From that point on UN sponsored climate change talks have largely stalled. When the government continually talk about why we should be supporting their bad legislation they do not mention what they are doing about a global agreement on climate change. I often ask people: when is the next meeting to follow from Copenhagen on this subject, where is it going to be held and what are we doing? Many people do not know that is going to be in Durban in South Africa I think at the end of November, because the government never talk about it. They have quietly said that I think they are sending 40 people, a much more modest representation of bureaucrats. There is very little expectation, I understand, that any agreement will be reached at that meeting.

There was a delightful cameo by our Minister for Foreign Affairs in yesterday's Sydney Morning Herald. Along the lines of Where's Wally?, there was a 'Where's Kevin?' He has been popping up in all corners of the globe, but I do not know he has popped up anywhere encouraging the rest of the world to reach a global agreement on climate change. There was a meeting in New Zealand recently, and New Zealand's top climate negotiator said that a global deal on a pact is still within reach but certainly will not be struck this year. Some progress has been made, but a gulf still remains between developed and developing countries about who should shoulder the burden of reducing emissions et cetera. So things are proceeding, but barely. What the government wants to do is bring in this deeply unpopular tax that is going to add an impost and a cost to every household budget of my constituents, that is going to drive manufacturing offshore, that is going to permanently skew our competitive advantage in many of the things that we do and that is going to be an absolute kick in the guts to mining, aviation and, I should also add because I represent farmers, agriculture. The Prime Minister often says, 'Oh, but agriculture is not included and farmers are therefore outside the scope of the tax.' Of course, that is not true, because if you consider the main inputs into every farming operation, they are fuel, fertiliser and electricity. The cost of all of those is certainly going to increase, and nobody is denying that fact.

We have to consider, as local members in this place, what our constituents want us to take to this parliament, what their feelings are and what their responses are in this matter. I have heard from many of my constituents on this, as we all have, and I want to mention a few of those individual people and their businesses here in the parliament today. Peter Baxter runs a refrigeration business in Broken Hill, and he cannot understand why he is being charged more for a refrigerant that charges up air conditioners or fridges with a gas that is not even discharged into the atmosphere. A carbon tax, even at just $23 a tonne, will double his costs for refrigerant. That will then be passed on to the customer, adding about 10 per cent to the purchase price of refrigerators and air conditioners due to a gas that is not even discharged into the atmosphere. He can already see the effect on his small business.

I visited Craig Waldron, who is at the IGA supermarket in Corowa. He employs 60 full- and part-time staff. We should not underestimate the effect this has on supermarkets, and they are major employers in regional Australia. He said that he is going to need to upgrade the storage freezers, which is a capital expense of nearly $500,000. How can a small business just conjure that sort of money up out of the air? How can you just go to the bank for another $500,000 when your margins are very tight as it is, with the rising costs of living and the fact that people are watching their pennies much more carefully when they come into your shop? Not only has he got to invest $500,000; his power bill is going to go up by $1,500 a month. He is saying to me, 'I have got to find that money from somewhere.' He is also saying that he hears the Prime Minister prattle on about compensation in household budgets and how everyone is going to be looked after but there is actually nothing for him at all. He is a small business, he has a family and he employs 60 people, and he has to find $500,000 and $1,500 a month for the increase in electricity costs. The irony is that this carbon tax is not going to sell any more groceries for him. In fact, as he said to me, 'I am already selling less'.

I visited Watson Drilling in Deniliquin. They sell drilling rigs to the mining industry. They could not believe that this tax was going ahead. It is a small business in a small town which is actually not agricultural. We need that business to survive. It is not based on farming; it is not based on water. It makes and delivers drilling rigs to the mining industry across Australia. I am really uncertain what he will be facing in this new era.

I can mention Colin Glassborow of Albury Building Supplies. He corresponds with me regularly, and he says that he has worked out that under the carbon tax the cost of his building materials, products and assemblies will increase progressively as they pass through the various production phases, some faster than others.

I also know that the brick manufacturing industry is going to be hit extremely hard. The cost of buying a new home, already getting out of reach for many, will only rise further. Do we really want Australian homes to be built out of prefabricated materials that are imported into Australia? Do we really want an Australian economy where we cannot afford to make bricks for our own houses?

I started by talking about aviation. It is a subject that is very dear to my heart. Regional Express, an airline that exclusively services regional Australia, is on the record as saying that this carbon tax will add $2 million initially in the first year to their bottom line. That is $2 million that has to be added to the price of tickets because these costs are going to be passed on. They are not going to be able to be absorbed. The perplexing thing to Regional Express is that if the ultimate desire of the carbon tax should be that they modify their behaviour—in other words, that they emit less greenhouse gases—the only way they can do that is to actually not fly as much.

The other problem that I have with the Prime Minister's carbon tax is the way that the compensation message is being delivered to people. It is: don't worry; you will be compensated. There is not really a message in this to change your behaviour. There is no message to the airlines to fly less; there is no message to householders to use less electricity. Householders are continually being reassured that their payments will increase and that there will be tax benefits as well. They are all sort of dressed up and are a bit of a trojan horse, in my view. There is no instruction and there is no encouragement.

I say that the Australian people would take on the challenge of using less fossil fuels. They would say, 'Look, everybody turn out the lights, not just because our electricity bills are going up but because we as a nation need to use less fossil fuel.' But there is no message to do that in this carbon tax. It is just such a distorted mess of movement of tax, of benefits to households, of charges on emitters, of people who are and are not affected and of costs that are going to be passed on that you cannot actually untangle the economic messages or the messages that households should be taking on.

Mining is very important to the electorate of Farrer and iron ore mining is certainly picking up in the far-west of New South Wales. Carpentaria Exploration are looking at mining leases along the New South Wales-South Australian border, and there is not a week that goes past that we do not see some new mining initiative talked about in the Barrier Daily Truth. This is certainly a great thing for the region. It is going to support its economic activity for years to come. But if we are mining iron ore, particularly magnetite, we should if possible be doing the downstream processing of that iron ore in Australia. We should not be exporting the raw material to Asia for further processing there. I challenge anyone in this parliament to say that that would be a good thing to do, but Australia's largest magnetite producer is expecting to be out of pocket by $11 million by this government's carbon tax and diesel fuel rebate. They are on the record as saying that as magnetite producers that process the mineral in Australia rather than offshore they will, of course, be unfairly penalised and they will get canned in Australia because we do the value-add here, whereas if they export it overseas the same value-add process is not subject to a carbon tax. So why would they not do that? We cannot overlook the effect that this tax will have on the mining industry and on the resources sector in Australia.

Airlines are critical to our way of life here. I refer to remarks by Alan Joyce from Qantas. He said, in October last year:

… that regions or individual countries introducing carbon tax or emissions trading scheme would distort the aviation industry.

The International Civil Aviation Organisation has set a goal of capping emissions from international aviation beginning in 2020 while gradually improving fuel efficiency. That is the way to go, not this way. Mr Joyce said:

Having regions or individual countries imposing an emissions trading scheme or a carbon tax can cause distortions for the industry and will cause distortions to the industry and they have a negative impact.

It needs to be a global approach.

Of course it does. When asked if a carbon tax would have a negative effect, Mr Joyce said:

Of course it will—we’re one of the biggest users of fuel.

He also said:

Qantas alone spends $3 billion on aviation fuel, which could easily transfer over to sustainable fuels.

This is an area we need to encourage people to move on—not just putting in a tax, but helping people that have made a commitment to get there with the right investment. Australia has the land mass, technology and expertise to create an alternative to aviation fuel. Qantas has already positively tested algae based and ethanol based technology.

Why would we not apply our efforts to sustainable fuel and the direct action policy that we in the coalition are promoting? It is a policy we took to the last election and it is well known. It is straightforward, easy to understand and practical. It has created a lot of interest in my electorate, particularly around the area of soil carbon. The primary facet of our direct action policy is capturing carbon from the soil. The Garnaut review, the CSIRO and even my friends in the Wentworth group and various state governments have indicated the enormous CO2 emissions reduction benefits of soil carbon for Australia.

There is a way to go on this. Some of the work that is being done and I have been briefed on is very exciting. It will make a big difference. Submissions to the coalition from farm groups support the potential for a minimum of 150 million tonnes of CO2-equivalent per annum to be captured in soil carbon by 2020 and beyond with a payment to farmers of approximately $10 a tonne. There are some good news stories about taking action on climate change. Unfortunately the government's carbon tax is going to distort, destroy and negatively affect the Australian economy. (Time expired)