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Tuesday, 8 November 2011
Page: 8596


Senator BOSWELL (Queensland) (20:29): I suppose it is fitting that after the carbon tax we have to pick up the dustpan, mop and broom, and start cleaning up. I think we ought to go back to the genesis of this carbon tax. It was brought about by the—

The ACTING DEPUTY PRESIDENT: Senator Boswell, can I draw your attention to the issue before the chair.

Senator BOSWELL: I am well aware of the issue before the chair—it is the Steel Transformation Plan Bill. The reason we are going to need this $300 million package to support the steel industry is that the carbon tax is going to put huge costs on the steel industry. Mr Howes, one of your union partners, Mr Acting Deputy President, could see this coming. He could see what was going to happen to the steel industry. He made the statement that we are all aware of: 'If one job is lost, the unions will pull out.' This flowed through and we now have this $300 million steel industry package, because a lot of Mr Howes's members work in the steel industry. So, today, we have this package to assist the steel industry. Without the carbon tax, this steel package may not have been necessary—although I will acknowledge that with the high cost of the dollar and a number of other issues this support may have been needed.

I listened to Senator Milne and it really was like listening to something like Alice in Wonderland. Senator Milne wants to—

Senator Birmingham: I always thought Alice in Wonderland was quite nice.

Senator BOSWELL: Alice in Wonderland is a dream and Senator Milne is in a dream, saying that you can actually run a steel mill on renewable energy. You cannot. It is impossible, because your costs will keep going up. To run a steel mill on renewable energy will require millions and millions of RECs, renewable energy certificates, at around $60 or $70 each, depending on the time. That will add to the cost. When costs are added, people will buy their steel and other steel products from China.

The more you add to the costs in Australia, the more people flee the local product and go and buy an imported product. That should be perfectly obvious, even to the Greens. They just sit there and dream that we are going to go to a magical land of renewable energy. I hate to disillusion Senator Milne and her Greens friends. We had a small photovoltaic cell factory in this country and it had to close down, and 30 jobs were lost. That is the level of employment for a photovoltaic cell factory in Australia. Thirty jobs were lost, because 59 to 60 per cent of the photovoltaic cells are made in China—and so are the windmills. Where is this magnificent dream of renewable energy going to come from? We are going to have education and we are going to do all sorts of things, but it is not going to produce one more job.

Today, we are locking in behind a package of $300 million to support the steel industry because Mr Howes had to be bought off. He had to be shut up. Remember when he was parading in front of every television, saying, 'If just one job is lost then we are out of here'? In fact, he got $300 million, and has anyone heard of him since? It is the Paul Howes steel package, and that is why this has the support of the unions at the moment. I wish it was as easy as just buying off an industry. It is not. Australia has to face the fact that we are a high-cost country with high wages and pretty good conditions for the average working guy, and it is all because we have cheap power, not because we have some renewable energy thing that is going to put up the cost of manufacturing in Australia. We cannot do it that way.

Never mind, because Peter Beattie is going to come to the rescue on this! Peter Beattie has been employed for $1,000 a day on a part-time basis to look after the resources sector, including the steel industry. I think Peter Beattie was not a bad politician, but I do not know that he will be able to miraculously change the steel industry, the aluminium industry and the cement industry. They are all suffering because of the carbon tax. I do not think that he will be able to wave his magic wand and produce a panacea for all these industries.

After we have the steel industry package, we are going to try to beef up an antidumping package. I do not necessarily not support what the government is doing here. But it cannot go in and heavily penalise the steel industry with a carbon tax at $23 a tonne—going up to $29 a tonne—and then impose a renewable energy charge that will go to seven, eight or even 10 per cent next year, bundling that all up, and expect these industries to remain viable.

We are an international trading country. The first time we traded was when we sent a bale of wool to England and we have been an export country since that day—the day that Macarthur bundled up a bale of wool and sent it over there. We live to trade and we trade to live, and that is how the economy works in Australia. We have niche markets. We have areas we are good at and areas we cannot compete in. But one of the areas we have always competed in is manufacturing. We have always had a manufacturing industry. Unfortunately, today I think we are going to see the demise of that.

I have heard about magical new jobs. I have heard about a new economy. But we could not even sustain 30 people in a photovoltaic cell factory. How are we ever going to compete? This is an absolute dream! Senator Carr, you should understand that. Most people think you are a practical person—a little to the Left, but a practical person. You go out and talk to industry leaders, you go out and talk to people on the shop floor; they must tell you. You want to put a Walter Mitty world out there where everything works. I am terribly sorry, but as industry spokesman you have to understand these things.

We are going to spend something like $300 million. OneSteel made a loss of $185 million for the 2011-12 financial year. The company also had to cut 400 jobs across the country, and half of those came from the steelmaking industry. The announcement was followed on 22 August by the announcement by BlueScope that it had lost a billion dollars. It said it was exiting the steel export market to focus on its profit-making domestic steel market. Ninety per cent of domestic steel is imported from China. This is difficult to understand. It will probably be more after the carbon tax comes in. Those two steel industry companies employ 20,000 people. They made big losses last year and the year before. Their stock value has been decimated, from $12 to $2. The carbon tax of $23 per tonne is going to cost something like $120 million. They are already making a loss. Put a carbon tax and then a renewable energy tax on top of that and it is very obvious that the industry will continue to make losses.

Senator Milne called the people in. They probably said: 'Oh well, they're the Greens; we've got to be nice to them. Yeah, we'll listen to them.' Senator Milne, I say to you: yes, you have to be innovative—of course Australian industry has to be innovative—but you also have to be competitive. People will just take a sample of what we can manufacture in Australia over to China and have it made there. There is no reason for windmills to be made here. There is no reason for photovoltaic cells to be made here. They will be made in China. That is where they are made. Fifty-nine per cent of all photovoltaic cells for the world are made in China. You may be able to talk to Mr O'Malley, the BlueScope manager, and the OneSteel manager and they will be nice to you. Of course they are going to be nice to you; they are going to get $300 million. They are not going to come in and abuse you. They will want to be nice to you. But I talk to these people too, and they tell me that putting on a carbon tax has just about killed their industry. If their industry had some support out there, the shares would not be $2. People know. Once you do this to an industry, you push it further and further out.

It is not only happening with the steel industry. It is happening with the aluminium industry. We have seen Rio Tinto in the last couple of days put their refineries on the market. We have seen that happen because of the carbon tax. Where is their $300 million? The cement industry is suffering too. Where is its package? Where are the packages for the cement industry and the aluminium industry? You cannot just pick up one industry. Many industries—in fact, the whole of Australia's manufacturing industry—are suffering because of a high dollar. Now they are going to have a carbon tax inflicted on them. After that they will have a renewable energy tax inflicted on them. When you keep adding to the burden, adding to the cost, people just flee overseas where the conditions that people work in are not as good as in Australia and where the environmental conditions are not as good. We will see an exodus of Australian industry to Third World countries, which will create more and more carbon pollution.

From 30 June next year it is going to be a catastrophe. You may not think so, Senator Carr, but I talk to people too. One of the people I talked to only last week was someone who owns generators. He said: 'Ron, you're talking about a 10 per cent increase in power. For households, that's about right. But this is going to be a 30 per cent increase in the cost of power to industry. Add another seven per cent this year for renewable energy, pushing it up to 10 per cent next year, and it is going up 40 per cent.'

Today I had a look at a submission from Bindaree Beef. They are going to be paying $4 million in electricity charges. That is an industry that has to be able to compete with other abattoirs around the world. They have worked out that the only way they can survive is to pay the grazier $10.72 less. So Bindaree Beef said: 'We cannot hold these costs. The only way we can survive'—and this was in the submission—'is to pay the graziers and farmers about $11 less to make up for the carbon tax and the increased costs of freight and coal and all the other inputs.' That is going to happen right around Australia. It is already happening around Australia.

I support looking after industry. We have got a $300 million package here, but our argument is: if you do not put a carbon tax on, you do not need a package. If you do not have a carbon tax, you do not penalise the industry and you do not have to incentivise the industry. But you do not listen to this. It goes on. Senator Carr, go out and talk to the Business Council of Australia or to the Chamber of Commerce and Industry, who are more involved in small business. It is a killing field out there at the moment, where governments, state and federal, are putting up prices, increasing costs, by about 30 per cent every two or three years. There is a limit, and the limit is just about reached. You are going to have a capital strike in this country, where businesspeople will not invest money because they have not got the faith that they can make a profit. It is happening now, but it is really going to happen from 30 June next year. The first bills that come in with the carbon tax are going to be horrific. People have genuinely thought, 'It's 10 per cent; it's going to hurt; it's going to kill us,' particularly if they have got a cold room or some big process that uses a lot of power; but, when they get that bill, it is going to be up at anywhere between 30 and 35 per cent. That is when you are going to find out you are in deep trouble.

It is no good paying people some sort of bribe by saying, 'We're paying for the cost of your power.' That does not matter if you have not got a job or your kids or your grandkids cannot get a job. That does not matter. This is what you are going to see. You know, Senator Carr, that your modelling was done on the assumption that everyone would be in this. You know that there was other economic modelling produced yesterday that said that the costs were way out of line. The Treasury modelling said the costs would be $33 billion by 2016. This modelling said the costs would be $180 billion. We have never been able to get the modelling.

I wish that we could have an industry. I wish that people could have jobs. I wish that people could be reliably employed. Tonight I was talking to someone who employs 69 people, and he said that, every day, the state governments and the federal government come up with some scheme that is going to put more costs on him. Today the government is putting $300 million into the steel industry. I hope it works. I hope it sustains them; I really do. But, unfortunately, $300 million is going to be a drop in the bucket when you are putting a $29 a tonne carbon tax on them. It is not going to work. As for trying to make a steel mill run on a windmill, that is just fantasy land, Senator, and you know it. If you were honest, you would get up in the Senate and say it cannot be done. If you tell people the truth, they are more likely to follow you. But you feed this fantasy to them. What you and the Labor Party are saying, following the Greens, is that we can have this new magic world where everyone is happy! It is like the yellow brick road. All we have got to do is follow the yellow brick road and we will come to the Emerald City, and the Emerald City will be made of renewable energy! Well, renewable energy is a huge, costly sinkhole that you pour money into, and it does not sustain industry. (Time expired)