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Tuesday, 8 November 2011
Page: 8573


Senator EGGLESTON (Western Australia) (17:35): The Steel Transformation Plan Bill 2011 is one of the bandaids on the bullet wound inflicted by the carbon tax on the people of Australia. It will establish a legislative framework for a transformation plan for the steel industry which will provide an entitlement program of $300 million over four years. The rhetoric in the bill's outline says the legislation will:

… support the Australian steel manufacturing industry to ensure its long-term economic and environmental sustainability in a low carbon economy.

In truth, it is nothing but an attempt to limit the haemorrhaging that the steel industry will suffer at the hands of the carbon tax. It should not be lost on the parliament that the very definition of compensation, according to the Oxford dictionary, is an award:

… to someone in recognition of loss, suffering, or injury.

The steel industry will be subject to loss, suffering and injury from this carbon tax. The carbon tax will certainly have a very adverse effect on our domestic steel industry. If there were no carbon tax there would not be a need for this kind of compensation in the first place.

On 10 October this year the Minister for Climate Change and Energy Efficiency, Mr Greg Combet, admitted the establishment of the Steel Transformation Plan had been driven purely by the carbon tax when he said, 'The negotiation of the Steel Transform­ation Plan did come out of the discussions we've had with the steel companies for months now over the carbon price issue.' So he is admitting that the carbon price is really going to hit and hurt the Australian steel industry. Mr Combet did say 'companies', suggesting that he was talking about more than one. He was correct. Just two firms qualify for assistance under this particular legislation, so it is pretty limited support.

Only two Australian firms—BlueScope Steel Australia and OneSteel—will qualify for the assistance, due to the narrow definition the government has used for 'eligible corporation'. Under the Steel Transformation Plan, Labor has abandoned the majority of firms in Australia's steel industry, with all of the proposed carbon tax assistance set to go exclusively to the two largest domestic steel manufacturers. Too bad for the smaller companies! Too bad for their employees! Too bad for their owners!

An eligibility criterion for compensation under this bill requires an applicant to have produced at least 500,000 tonnes of crude carbon steel annually since 2009-10. As I said, in Australia only two companies meet that criterion: BlueScope Steel Australia and OneSteel. This means the remaining businesses, which employ about 80 per cent of Australia's steelworkers, will not benefit under this plan.

Every other steel business will not receive a single dollar of compensation. Hundreds of steel fabricators spread right across Australia—the single-operator firm, for example, probably built with the sweat and tears of the owner and his family, through to the two- or three-family companies—will not be compensated. They will get not a dollar, not a cent—nothing. I think that is some kind of reflection on the attitude of the Labor-Green government to smaller companies and their workforces. This is despite the fact that many such firms are currently facing an enormous range of costs and other pressures, which will only be exacerbated by the introduction of the carbon tax. It is estimated that a total of some 91,000 employees across the entire Australian steel industry chain will be left out in the cold. I hope the government, with their Green coalition supporters, feel proud of that!

The government's ludicrous legislative planning does not stop there, however. This entire assistance package for the two big miners could be exhausted within one year and one day of the carbon tax's introduction. While the legislation provides for $300 million of assistance in total over the four-year period from 2012-13 to 2015-16, the money could theoretically all vanish within just a year and a day. This is because, firstly, as much as $164 million can be paid out in advances before the carbon tax is even introduced; and, secondly, as much as $75 million can be paid out each financial year. That is to say, you could have the situation where at least $150 million could be paid in advances and then the balance could potentially be paid out at any time during the first two financial years.

Even if the package does eventually last for around four years, there is another fundamental question which remains—namely, what is the government going to do to compensate BlueScope Steel Australia and OneSteel for the carbon tax once the $300 million runs out? Fortunately, the coalition will come to the government's rescue here. The coalition have vowed to rescind the tax in government, and that is what we will do. When we are in office we will be able to assist these industries.

In the meantime we should not forget that even as BlueScope Steel Australia and OneSteel might be the only companies to receive government assistance, the multibillion dollar firms will still feel the devastating impact of the government's carbon tax on their bottom lines. The day after the government announced this $300 million compensation package for the steel industry, $300 million was stripped from the companies' share values. The reaction from the Australian public and investors around the world did not stop there. The next day another $100 million disappeared from the share value. People both in Australia and abroad were voting with their pockets.

So let's not fool ourselves. When the Labor-Greens government talks about a low-carbon economy or a carbon constrained future, they are talking about three things. Firstly, they are talking about an economy where households and businesses pay a lot more—more for groceries, more for fuel, more for electricity and water. More, more, more for everything else. Secondly, they are talking about a community where there is less use of private cars and increased strain on public transportation services. Thirdly, they are talking about an economy where industries in which electricity is a key input of production, like steel and aluminium—aluminium is, after all, described by some people as solid electricity—will become nearly extinct in Australia because those industries will move to more congenial countries where they do not have to carry the burden of a carbon tax. Beyond the costs to families there will be costs to jobs, businesses and the economy in general. The Labor-Greens carbon tax is going to devastate the Australian economy at every turn—households, businesses and jobs. This great big new tax will be imposed on Australian businesses and consumers when no similar tax is going to be imposed on the populations and businesses of our international competitors. This tax is supposed to morph into an emissions trading scheme in 2015. But, from what we hear, none of this country's major trading partners—China, South Korea, Japan, the United States and India—are going to have emissions trading schemes. That will mean the Australian consumer will bear the enor­mous cost of this emissions trading scheme.

I was at the CHOGM business forum last week or the week before in Perth and I went to the roundtable with Indian business. I mentioned the fact that I thought this carbon tax would be passed through the Senate in this two-week sitting and I asked the Indian business people whether it was proposed that India should have a carbon tax or an emissions trading scheme. They simply shook their heads in disbelief and said, 'Of course not.' In 2008, I attended a renewable energy forum in Beijing at which, in the last session, I asked the delegates from China, Japan and South Korea whether they would have an emissions trading scheme or a carbon tax. In saying they would not, they added that they saw no reason why they should handicap their economies and add to the cost of doing business in their countries. So when this carbon tax moves on to stage 2, if it does, in 2015, to an emissions trading scheme, it is going to exacerbate and compound the disadvantage felt by Australian business as a consequence of the imposition of these measures today.

BlueScope Steel's Chairman, Graham Kraehe, says Labor's proposed compensation deal for emissions intensive and trade exposed industries is like putting 'a bandaid on a bullet wound'. We do have many trade-exposed emissions-intensive industries, and I think all of us would remember dealing with the problems they faced when the CPRS legislation was before the Senate. That was one of the principal reasons why the Senate voted down that legislation.

I think this is a sad day for Australia. It is a black day for Australia. But, most importantly, this is a day the Labor Party and the Greens will live to rue, because a great burden is being imposed on the Australian people. They are going to increase the cost of consumer goods, they are going to decrease the competitiveness of Australian industries and, most importantly, they are going to cost a lot of people's jobs.