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Tuesday, 8 November 2011
Page: 8588


Senator EDWARDS (South Australia) (19:50): I rise to join with my colleague Senator Barnaby Joyce to speak against the adoption of the Steel Transformation Plan Bill. Of all the unnecessary pieces of legislation that have ever been introduced into the Senate, the Steel Transformation Plan Bill is one of the worst. Why? It is because of what begets it. If the government had not misled the Australian people this legislative proposal would not have been before the chamber. The voters of Australia should have had their chance to give their opinion on whether they should pay this tax to fund, arguably, one of the grubbiest deals that we have seen in the Australian parliament—the one between the Prime Minister and the Greens so that she could hold office.

Now that Labor and the Greens have birthed this insidious tax, we are now talking about compensation. Without this tax there would have been no need for the Steel Transformation Plan Bill. Because of the impact of the tax on a vital Australian industry, the government now plans to compensate the steel industry with a $300 million package. We are told that the bill establishes a framework for the payment of financial assistance to steel corporations under the two payment schemes established by the bill—the Competitive Assistance Advances Scheme and the Steel Transform­ation Plan. Now, doesn't that sound and look like previous schemes advanced by the government, one of them under the direct control of the then Deputy Prime Minister before she and some of her cronies put 'the steel' into the back of the then Prime Minister Rudd? It was a knife job then, but what Labor and the Greens want to do now is put a steamroller over everybody else who has to pay. This is shades of pink batts and the excesses of the Building the Education Revolution and the Gillard Labor govern­ment memorial halls at schools right across the nation. And what were they most noted for? Rorting, mismanagement and waste on a scale unprecedented in Australia.

The only reason we are debating this bill is because the Prime Minister went back on her word and introduced a carbon tax. This bill is an admission by the government that the carbon tax will make Australian industry, particularly the steel industry, more uncomp­etitive. The outline of the Steel Transform­ation Plan Bill states that the object of the bill is to encourage investment, innovation and competitiveness in the Australian steel manufacturing industry as it transforms into an efficient and economically sustainable industry in a low-carbon economy.

Let us talk about what the government has done to encourage investment, innovation and competitiveness in the steel industry. Taxes do not encourage investment, innova­tion or competitiveness. In fact, they do the opposite. So lumping one of the world's highest carbon taxes on the Australian steel industry is certainly not going to encourage investment, innovation, or competitiveness. How will increasing the cost pressure and burden on steel manufacturers in Australia help the industry to be more competitive? It will not. In fact, it will do the opposite. It will just be another pressure on an industry which is already facing a high Australian dollar and high input costs. This is not an industry that needs a new tax, and it certainly would not need a government handout if the government was not unnecessarily increasing its costs. The object of the bill is to transform the industry into an efficient and eco­nomically sustainable industry. But if steel manufacturers have to move offshore in order to remain viable there will not be an industry to transform.

The carbon tax is just another pressure the government is burdening industry with, another pressure manufacturers in other countries do not have to contend with, another layer of bureaucracy for industry to answer to. This bill will only help two steel manufacturers—BlueScope Steel and OneSteel. Coincidentally, upon the announcement of the carbon tax the value of those companies was diminished by over $300 million collectively. What a quirky coincidence that the compensation package is $300 million. And the day after there was another $100 million to boot—and they have not recovered. What we have with this bill is an eligibility criterion for compensation under the bill which requires an applicant to have produced at least 500,000 tonnes of crude carbon steel annually from 2009-10. In Australia only two companies meet that criterion—BlueScope Steel and OneSteel. Therefore, the remaining businesses, which employ about 80 per cent of Australia's steelworkers, will not benefit under this plan.

I note that the bill also establishes mechanisms to monitor the application by eligible corporations of payments made under the two proposed schemes. Talk about locking the stable door after the horse has bolted! Not only will you have to engage the new bureaucracy, you will now have them looking in. It is all very Orwellian now. Normally people learn from their mistakes, but with this Gillard-Brown alliance govern­ment I have grave doubts. We all know about the propensity of Labor and the Greens to have a mantra of 'tax, churn and spend', but this latest example is 'take with one hand, churn it through a new bureaucracy, and give it with the other hand'.

Of course, this compensation will run out after four years, while the carbon tax will continue to go up and up and up. What are the long-term impacts of the carbon tax on the steel industry? The carbon tax is not just a four-year impost; it is ongoing and it will rise. After the compensation runs out, the industry will again have to compete with steel imports from countries that do not have a carbon tax. And what about the smaller players in this industry who will have to adjust without any government assistance? They will have to compete against the biggest manufacturers in Australia, who will receive support, and against imports from countries without a carbon tax.

The government is playing favourites with steel manufacturing. Where is the recog­nition of the rest of rural Australia as well?

Senator McKenzie interjecting

Senator Nash: Hear, hear!

Senator EDWARDS: I hear my colleagues over there, Senator Nash and Senator McKenzie, in furious agreement. Where is the rest of rural Australia? Notwithstanding the importance of the Australian steel industry and the important contribution it makes to employment and GDP, one questions why this is the only industry receiving special attention from the government. The steel industry is not the only industry that is facing severe undue strain from the Brown-Gillard government's carbon tax. Only this afternoon the National Farmers Federation President, Jock Laurie, came out and said:

Ultimately, the carbon tax risks compromising the competitiveness of our agricultural industry.

He went on to say:

Our domestic agricultural industry competes on an international playing field—one that is no longer even when it comes to carbon. Overwhelmingly countries across the world are developing climate policies that recognise the importance of agriculture and prevent additional costs being added into their farmers’ businesses.

Mr Laurie also argued that today's decision means that in Australia the indirect costs of the carbon tax will be borne by our farmers—farmers who have spent decades becoming as efficient as possible in order to stay competitive globally. The figures speak for themselves. We know farmers are going to shoulder the burden of additional input costs, in some cases of up to $10,000 per annum, and we still have real concerns about the processing sector costs being passed back to farmers. Every farmer in this country wonders tonight what the future holds for their operational costs.

The parallels with the steel industry are uncanny, which begs the question: why is the government not providing the same kind of support to agriculture as it is to the steel industry? The Australian red meat sector, for example, is our No. 1 agricultural enterprise and is estimated to contribute $15 billion to the economy. We are the world's largest meat exporter, but the industry faces fierce competition in a highly competitive, price sensitive, world commodity market. The meat industry globally has traditionally been in a high-volume, low-margin business environment. To survive, it is required to employ a cost-plus business model running on a very tight one to three per cent profit margin and requiring very tight control over costs in order to be competitive. This sector, like the steel industry, is highly export dependent—80 per cent export dependent.

Under the government's carbon tax package, the food industry will receive $150 million over six years to assist the industry to become more energy efficient as part of the Clean Technology Food and Foundries Investment Program. But this program is on the basis of a $3 industry contribution for a matching Commonwealth contribution of $1, so you have to find that capital to get a 25 per cent contribution from the government. This pales in comparison to the $300 million being provided over four years to how many companies, Senator Nash, Senator McKenzie and Senator Madigan?

The ACTING DEPUTY PRESIDENT ( Senator Cameron ): Senator Edwards, could you please address your comments through the chair.

Senator EDWARDS: Sorry, I was getting a bit social. Two companies. It is $150 million over six years to hundreds of companies or $300 million to two companies over four years. I know which industry I would like to be in. That is nothing against those two companies; it is not their fault.

Participation in such assistance would involve considerable upfront capital contri­bution from the industry as a prerequisite at a time when the industry would already be experiencing declining profitability and deadweight costs of the proposed carbon tax regime. Clearly any assistance provided by the Commonwealth should be genuine, unconditional and in the form of untied government assistance. Notwithstanding this, the red meat processing industry is potent­ially facing substantial cost imposts under the proposed legislation, with no specific assistance for direct obligations like other identified emissions-intensive trade-exposed industries and no opportunity to pass the scheme costs forward to our export customers. Why is it that this Labor government has only considered the steel industry? Why is the government playing favourites? Some of Australia's most important industries will now be in need of assistance, just like the steel industry will be. The carbon tax will place additional pressure on a range of important industries, particu­larly those in rural Australia like the red meat sector, the wine supply industry and in time, I suspect, grain exporters.

Australian steel manufacturers already comply with a number of environmental laws and regulations that their foreign counterparts do not have to contend with. If the goal is environmental gain then why add further pressure to an industry, which by global standards is quite clean and efficient, that may result in it moving offshore? This $300 million in compensation from the government is a token gesture to industry, but it does highlight just how serious the carbon tax is for Australian industry. It shows us how uncompetitive the carbon tax will make industry. The compensation for just one industry is a snub to other important industries like the red meat industry, which also faces highly competitive export environments and will face huge costs in order to adapt and cope with the looming carbon tax.

The impact of this toxic tax on companies such as T&R Pastoral in my home state of South Australia—where Senator Penny Wong, Senator Farrell, Senator Gallacher and Senator McEwen live—will be significant. The increase in the costs of energy such as electricity and gas will lead to an increased cost of $2.36 per beast and 21c per sheep or lamb processed. These figures on their own do not sound like a lot, but when you consider how many head are processed by this important South Australian employer the impact is significant. They process 200,000 cattle and 2.25 million sheep each year. This will result in an increase in cost of $944,000 per year from higher energy costs. Why is the government not doing more to help this and other processors adjust?

This is compensation for a carbon tax, pure and simple; that is all it is. It is not about structural adjustment for the steel industry. It is about carbon tax compen­sation. How many times have we heard those opposite loudly proclaim that only the biggest polluters will pay, ignoring the fact that those so-called polluters are some of the major industries in Australia?

And when it finally dawned on the government that the steel industry was going to be hugely disadvantaged by a carbon tax, it realised it had to do something, otherwise 91,000 steelworkers and a $29 billion industry were destined for the scrapheap.

The government wants us to support this bill, yet much of the important detail of the Steel Transformation Plan will be included in a legislative instrument rather than in primary legislation, as the bill itself does not detail the plan. It is not good enough to state that a draft of the plan should be released between now and the end of the year. This is not good enough. We are expected to trust the word of this government. How can we, when the Australian electorate has been told deliberate untruths about what caused this bill to be formulated in the first place?

Clause 9(2) provides that the Steel Transformation Plan is a self-assessment plan. In other words, it is up to the eligible steel company to determine whether its application of payments is consistent with the overall objective of the plan. Again, this lack of supervision and accountability raises once more the track record—yes, we will tick them off as we go; tick, tick, tick—of this Gillard Labor government. It is a record of pink batts, school halls, cash for clunkers, GroceryWatch and Fuelwatch—the list goes on. We all love school halls, but we do not like those school halls that cost three times what they should.

Sacrificed on the altar of carbon dioxide rectitude, the steel industry was belatedly made the beneficiary of this, the Steel Transformation Plan Bill 2011, by the Gillard government. I repeat: if there had been no carbon tax, this bill would not be necessary. I suspect that those words of Wayne Goss in 1996 when he talked about the election that year will come true when the Australian people front up to the next election: they are likely to take to this government with baseball bats.