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Tuesday, 8 November 2011
Page: 8512


Senator COLBECK (Tasmania) (13:19): I rise to make a contribution on the government's Steel Transformation Plan Bill 2011. No sooner have we passed the carbon tax than we start cleaning up the mess. If there were no carbon tax there would be no reason to put in place the Steel Transform­ation Plan. This Steel Transformation Plan is effectively a $300 million proposal to sort out two companies. The really disappointing thing is that 80 per cent of the workers within the steel industry actually receive absolutely no benefit from this particular package. It is designed specifically to deal with the problems that the government has created for two companies, namely OneSteel and BlueScope.

We have heard in this chamber a number of times the Minister for Innovation, Industry, Science and Research talking about his transformation of business models—in fact, his attack on the people smugglers' business model. Today we see the effect that he has had on the steel industry's business model. He has completely and utterly destroyed the steel industry's business model. We heard, when the current minister was the opposition spokesman for industry, speech after speech and rant after rant about what he was going to do for industry in this country. Yet what we have seen since Senator Carr became minister for industry is the loss of 136,000 jobs in the manufacturing sector and the absolute decimation of the steel industry.

We know that economic conditions are not all that flash and there are a number of factors that are impacting on the steel industry, but the fact that he has had to come to the chamber with this $300 million package to assist the steel industry gives a clear demonstration of what he has done to this industry and how he has completely and utterly failed as the industry minister since he was appointed. In fact, there is not much question now that he would have to be one of the worst industry ministers in living memory. When we reflect on visionary ministers such as John Button and others who served in this sector under the leader­ship of John Howard over 11 years, we have not seen anything like what this minister has done to the steel industry. As I said, 136,000 jobs have gone under his watch.

When you look at what has happened to the two businesses that are the subject of this steel package, BlueScope and OneSteel, you get a pretty clear demonstration of the negative impact that Minister Carr has had on the manufacturing sector, and on the steel industry in particular. When the carbon tax was announced on 23 February this year, the share price of OneSteel was $2.86. It valued the company at about $3.8 billion. By the time this package was announced, on 11 July, the share price had dropped to $1.93 and the value of the company to $2.57 billion. They had wiped $1.23 billion off the value of OneSteel. By the time the next day was over after the steel package was announ­ced they had wiped off the value of the steel package. If you look at the share price at the start of trade today, the shares went from $2.86 on 23 February 2011 to 96c. So they have turned a company that in February this year had a value of $3.8 billion into a company that now has a value of just under $1.3 billion. They have wiped 66.4 per cent of the value of OneSteel off its share price since February this year. That is, $2.53 billion has been wiped off the value of OneSteel.

Let's have a look at BlueScope. On 23 February its share price was $2.20. By the time of the announcement of the Steel Transformation Plan, on 11 July, it had dropped to $1.26. On the next day it was $1.22 and today at the beginning of trade it was 74c. So BlueScope had a value of over $4 billion on 23 February this year and now has a value of $1.35 billion, according to the share price of 74c, down from $2.20. So $2.6 billion has been wiped off the value of BlueScope Steel. Both of these companies have lost about 66 per cent—well in excess of anything else on the All Ordinaries. So 66 per cent has been wiped off the value of both of these businesses. A total of over $5 billion has been wiped off the value of these two iconic Australian steel businesses since 23 February 2011.

We call this the Steel Transformation Plan Bill—I think that says it all. These two businesses had a combined value of almost $8 billion on 23 February this year and this government, through its policies, has certainly transformed them. It has wiped in excess of $5 billion off the value of these two businesses. Businesses that were worth over $8 billion are now worth just under $3 billion. I call that a fair transformation!

What do they get in return for that? They get $300 million over four, five or six years. Government ministers have not been able to decide how long this package is going to last. Clause 12 of the Steel Transformation Plan Bill clearly states that the plan covers the four-year period between 2012-13 and 2015-16. But on 12 July a media release by Greg Combet, Sharon Bird and Stephen Jones said it would deliver assistance worth up to $300 million over five years. Mr Dreyfus also said it was to provide $300 million over five years. The official websites of the Department of Innovation, Industry, Science and Research and the Department of Climate Change and Energy Efficiency, however, both say the plan will operate over six years.

The reality is, though, that the assistance under this bill could actually be extingui­shed, completely used up, in one year and one day. The bill provides for advances to be made. According to the figures that I have, as much as $164 million can be paid out in advances before the carbon tax is even introduced, which demonstrates how much trouble the government has caused for this industry and the need for them to start cleaning up the mess, even on the day that we have passed the carbon tax. As much as $75 million can be paid out each financial year. In other words, you could have a situation where at least $150 million could be paid in advances and the balance could potentially be paid out at any time during the first two financial years. So on the first day of the second financial year we could have spent the whole lot.

Then what does the government do to support the steel industry beyond the first year of the carbon tax? I think that is a fairly reasonable question for the opposition to ask. What is the government going to do post the first year of the carbon tax? We know that the carbon price is going to rise every year. It will be indexed over and above inflation. So this impost that has been applied to Australian industry that does not apply anywhere else in the world will continue to rise. There is no question that this is one of the reasons that when I sit down with major investors from the mining sector or from the financial sector they have now started talking about this government in terms of sovereign risk. It was surprising to me the first time that I heard that. I was sitting with a group of global investors and miners. As we went around the table, they consistently spoke about this government in terms of sovereign risk. They told me that money and invest­ment is portable. Here is the proof: OneSteel shares going from $2.86 on 23 February this year down to 96c, wiping $2.5 billion off the value of the company, and BlueScope Steel shares going from $2.20 on 23 February this year to this morning's opening price of 74c, wiping $2.6 billion off the value of the company. If you wanted a demonstration of the portability of finance and funding and its potential flight, there is your demonstration; there is your proof. That is exactly what has happened to these two great iconic Austra­lian companies. Investment, funding, finance and share price have just flown from them. It is further evidence of the complete and utter failure of this government and the complete and utter failure of this minister to support his portfolio.

We know that the union leadership in this country made statements that there should not be any job losses as a result of the carbon tax or they would not support it. This bill is one of the mechanisms that the Prime Minister and the government came up with to try to mitigate against the concern that its own members, union members, had in relation to the management of the carbon tax and the impacts that it will have. How the Prime Minister could make a promise to the union movement that there would not be any job losses in certain industries I do not know, because we have already seen that impact in a number of industries. We have seen Rio Tinto putting their smelters on the market. They want to get out. As they see it, they need to move out of the industry because of the sovereign risk generated by this completely hopeless minister and his failure to stand up for industry. Although they have been very careful in what they have said, the steel industry knows that the carbon tax is going to have a negative impact on their businesses and potentially on employment.

When you impose on business a cost that does not exist in other jurisdictions—as we have seen with the passing of the carbon tax legislation today—companies will go where the costs are lower. Companies told us that that is what they would do. They told us about the portability of money and investment. Now the pigeons are starting to come home to roost. We have seen the absolute devastation of the share prices of these two companies. How could you as industry minister sit back and watch the share prices of these two companies fall by 66 per cent? There has been $5 billion wiped off the value of these two companies, and the offering in return is $300 million. And that amount was wiped off the value of those two businesses on the day that the announcement was made. It is absolutely absurd that industry should have to deal with this.

We know that the rest of the steel industry—the industry apart from OneSteel and BlueScope—do not qualify under this piece of legislation. There are thousands of steel fabricators all over the country. There is a whole range of other steel based businesses around the country, and 80 per cent of the employment in the steel industry is not covered by this legislation. That is the failure of this minister. He has no understanding about how he has let the industry down.

You can understand why Senator Carr's colleagues are looking at him and questioning his performance as minister, why he is no longer trusted with information within cabinet and why members of the Labor Party sit there with embarrassed looks on their faces during question time. It is because they know that this minister has failed in the industry portfolio, particularly given the boasts and the promises that he made and the rants that he delivered against the Liberal Party and the coalition when we were in government. He was going to be the saviour. He was going to provide vision. He was going to strengthen industry. And so he brings in the steel transformation plan. Well, he has certainly transformed the industry. We have seen 136,000 jobs go under his watch and $5 billion wiped of the share price of two businesses in less than 12 months.

I find the suggestion that this government believes that it is doing the right thing by the industry portfolio completely and utterly ridiculous. This minister has continuously failed to put up any cogent case for his policies. We have seen $1.8 billion ripped out of promises that the government made to the motor vehicle sector. That sector provides business to the steel industry. When you have a continuous reduction in activity right through his portfolio, causing a significant negative impact on the steel industry, you can have no confidence in the capacity of the minister to come forward with some sort of decent policy to support this industry into the future. Because the Prime Minister was under pressure from the union movement not to allow the carbon tax to cause any job losses, this is what they came up with: the steel transformation plan, $300 million over four, five or six years—depending on which Labor Party member you listen to—but potentially spent in one year and one day from the commencement of the legislation.

The real proof of the pudding is in the performance of the share price of the two companies that this package purports to support. On the day that the announcement of this package was made the share price of those two companies combined dropped by the value of the package. In total, since 23 February, we have seen the value of OneSteel drop from $3.808 billion by $2.53 billion, a fall of 66.43 per cent, and we have seen the value of BlueScope steel go down from over $4 billion by $2.6 billion, a fall of 66.37 per cent. I think that is the clearest demonstration of the complete and utter failure of this minister to carry out his duty as minister for industry. It is the clearest demonstration of the broader impacts that the package of legislation that we passed this morning is going to have. I have said, and industry and investors have told my colleagues and me, finance is portable—it will go where it will get the best return. It will not happen today, it will not happen tomorrow, it will not happen next week, but the passing of this legislation will have an impact on the Australian economy—we know that—and the impact will be the loss of jobs. Those jobs will go, most likely, to lower cost producing countries that have worse environmental outcomes with respect to their carbon emissions, and the efficient businesses, the efficient industries—those that have invested heavily in the efficiency of their businesses and the reduction of their CO2 emissions—are going to be penalised because they will not be competitive anymore, because we are imposing costs on them that will not be imposed by other countries. We oppose this plan, as we opposed the carbon tax, because if you do not have a carbon tax you do not need to provide compensation. We have said that a number of times throughout this process. But when a minister presides over the loss of over 60 per cent of the value of companies, and transforms an $8 billion business— (Time expired)