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Monday, 22 June 2009
Page: 3946


Senator BOSWELL (9:23 PM) —The Senate is debating the government’s controversial and economically extreme Carbon Pollution Reduction Scheme Bill 2009 and related package of bills. About the only thing accurate about the name given to this legislation is that it is a scheme. It is a scheme to send tens of thousands of jobs offshore; devalue our greatest mining and energy assets; raise costs to every business, every farm and every household that uses energy; help our international competitors steal our markets; increase global carbon emissions by penalising Australian carbon-efficient industries; churn billions of dollars from the private to the public sector to be redistributed according to the public sector; and make winners out of rent seekers.

The CPRS is a scheme that totally fragments Australia’s operating system but does not put it back into a coherent, workable shape. It demobilises our export army and does all this without having global cooperation. It does this without having modelling of what will happen to all our industries over the next decade. The blue-collar workers, the foot soldiers—particularly those in regional Queensland and regional New South Wales—will pay the price of Labor’s scheme to win the green vote.

The CPRS is Rudd’s cunning plan to put on a green camouflage to win votes and preferences in key metropolitan seats. But it is just a suit of cover—the camouflage is not real. If Rudd were serious about being green, he would have made sure that we do not send emissions offshore. This will happen as surely as night follows day, because costs in Australia will increase while those of our competitors will not. We will lose business, companies will be relocated to countries where there are no restrictions and manufacturers here will become merely distributors. If this were really true green legislation, do you not think that the Greens would support it? They do not—they know it is a con. We know it is a con and farmers and miners know it is a con. When food, fuel and power prices go up, the Australian people will know it is a con too. The CPRS is the greatest burden ever invented to put on a trade-dependent nation with natural competitive advantages in mining, in agriculture and in low energy costs.

The political calamity of having so many Labor states as well as a federal Labor government is that the states are not exercising their usual role of holding the Commonwealth to account. The most outstanding example of this is the absolute silence from Queensland, the state most affected by CPRS. Despite chairing the Council for the Australian Federation and commissioning research on the impact of CPRS, Premier Bligh has said nothing about the results. She has been silent on all the jobs to be lost and the communities to be disadvantaged; at no time has she stood up to the Prime Minister and demanded that Queensland be treated better or, at the very least, fairly, with proper compensation.

These are some of the findings of Premier Bligh’s own commissioned research. She commissioned it; it was not the mining industry and not the coal industry. It is the Premier of Queensland’s own research. This is what it says:

Queensland is expected to experience the greatest impacts from the CPRS by 2030 due to its heavy reliance on coal fired electricity, aluminium smelting and strong concentration of exported coal mining production.

I continue to quote from her research:

Queensland is projected to experience the largest percentage decline in GSP by 2050 of around 6-8% relative to the reference scenario.

Relevant to the reference case, by 2020 thermal coal output would fall by 37.5 per cent, coking coal by 11.9 per cent, aluminium by 31.9 per cent and alumina by 12.5 per cent, and electricity generated output would collapse by 45.7 per cent.

Interestingly enough, those figures, while not exactly the same as the coal industry and mining industry research, are relatively close. The price for domestic fuel and power in Queensland is expected to increase by 24 per cent by 2025 and the transport prices are expected to increase by nine per cent by 2025. The impact on employment growth to 2020 shows the CPRS will cost Queensland 28,000 full-time positions. Again, this is her research.

The north-west is expected to experience a seven per cent drop in employment and a nine per cent drop in output due to dependency on oil and gas. The Fitzroy region would see a loss of 3.4 per cent in employment and 5.5 per cent in output, and the Mackay region would experience falls of 3.3 per cent in employment and 4.7 per cent in output. Wages in 2025 would fall by 5.15 per cent. And where is the Labor Party, defenders of the blue-collar workers? They are sitting there like stunned mullets.

These conclusions lead to grave questions which Premier Bligh and fellow Queenslander Kevin Rudd should answer. Is there an agreement between unions and government on this significant fall in wages at a time when fuel and power prices will be soaring and 28,000 jobs will disappear from the state economy? The unions have a lot to answer for in this debate. Union leaders are spruiking green jobs when they know that there are no green jobs for sacked coalminers in Central Queensland—certainly none that pay as well as mining does. Labor has dudded the blue-collar workers in this ETS. Neither the state government on the east coast nor the union leaders are standing up for their jobs. What actions has the Queensland government taken to make up for the substantial loss of revenue as a result of the job-destroying ETS? What programs will be cut or taxes raised? Two billion dollars will be lost in coal royalties. By 2020, where will Queensland get its power from, at what price and how many jobs will be lost in the process? What actions are both governments going to take to prevent the substantial damage to industry and employment in these regions?

The international situation is also highly relevant to this debate. In fact, it lies at the centre of the dilemma of the treatment of the trade exposed industries. From our very first beginnings, wool pioneer John Macarthur saw that Australia’s survival depended on selling our goods across the globe. He was the nation’s first globalist and trader. Australia must not do anything to undermine the competitiveness of our industry. Everything depends on it. Yet what do we have before us? A scheme to do just that—to put the cost on our exporters and domestic producers so that overseas competitors will take their markets from them. In a strange twist the CPRS is modelled on overseas countries coming in very early with emissions restrictions. We are then told by the same Treasury officials that Australian industry will not be hurt so badly because our competitors’ markets will not have emissions restrictions and so will keep the demand up for our products like coal. You cannot have it both ways. What I learnt from Treasury modelling is that you can model black as white and white as black; you can model anything you want.

The whole international problem is that large emitters like China, India and Russia will not act without substantial cuts in emissions from developed countries that are also expected to fund poorer nations. Efforts on climate change will have to be funded by wealthier nations. Tom Switzer wrote in the Australian Financial Review last week that the United States bill faces a roadblock in the senate, which means the climate bill will probably crash to defeat as a similar bill did last year. Switzer, who works at the United States Study Centre, comments that:

… anything short of a genuine global accord on sweeping, mandatory and enforceable cutbacks on emissions is self-evidently futile. That is why the prospects for a post-Kyoto climate deal in Copenhagen are not looking too hot.

Meanwhile, the Rudd government assumed the US would begin an equivalent scheme by 2010, China by 2015 and, finally, India by 2020. I do not know when they put Russia in, but none of this is remotely possible. Meanwhile, AgForce Cattle warned in their statement on 3 June:

We need changes to international rules which allow farmers to include soil carbon sequestration and the carbon sequestration of pasture plants. Food security policies would also rely on accounting systems which make a differentiation between biological emissions which are part of farming—

I wish they were right, but I do not think they are going to get it—

grazing and food production (including biological sequestration), and the emissions from fossil fuel use.

With more than 65 percent of Queensland beef production destined to feed people outside Australia, the impact of the current CPRS on reducing our production becomes a very real threat to world food supplies.

The ABARE modelling shows production declines in 2011 and 2015, which highlights why households both in Australia and overseas should be worried about where their protein and nutrients will be coming from in future.

                …            …            …

AgForce Cattle board has reviewed in detail the reports by the Australian Farm Institute … and Professor John Rolfe which all point to even more serious financial and economic drops if CPRS comes into effect.

Beef producers are alarmed by the forecasts. These reports generally point to a meat production reduction by 2030 of 25 percent. For beef producers across Queensland this is a terrifying prospect.

ABARE found that sheep farmers would also fare badly, losing 17 per cent of income, with broadacre industries and dairy farmers losing between 11 and 15 per cent of their income. The government claims support from business groups but, as with so many aspects of the Rudd government, you have to look behind the spin. The Business Council of Australia wrote to the opposition on 4 June, saying:

The legislation released last week does not include the critical details related to the defining and treatment of individual emissions-intensive, trade-exposed industries. It has been suggested much of this detail will not be available until later this year, but it is this very detail that will be critical to businesses. Firms must know what aspect of their business will be included in the scheme and the level of permits they will receive—

and whether their competitiveness will be maintained. They also said:

There remain major concerns relating to the treatment of the coal industry under the CPRS where coal has been excluded from the emissions-intensive trade-exposed industry arrangements, although it meets the threshold test.

                …            …            …

The CPRS plans to include fugitive emissions from coal mines, yet no other coal producing country has included, or is contemplating including, fugitive emissions. What remains essential is establishing arrangements that ensure the competitiveness of this vitally important industry is sustained and jobs are not lost in the absence of a global approach to reducing greenhouse gas emissions.

Those statements do not in any way say, ‘Go ahead, Mr Rudd, we’re right behind you.’

As the Australian Food and Grocery Council told the Senate Select Committee on Climate Policy, if a policy of this magnitude is going to be implemented then it must be done right. But it is not being done right. If the flawed policy is implemented, it will mean exporting jobs and emissions offshore while doing very little to reduce the environmental impact.

Under this ETS, from 2012, Australia’s energy intensive export and import competing industries will be paying billions of dollars of tax, increasing each year, while the same industries in the United States will have 100 per cent protection through to 2025 and potentially well beyond if other major competing countries have not come on board. Yet even the US scheme recognises the need for a climate change worker adjustment assistance scheme in their legislation. There is no such thing in the ETS before us today in Australia, and that is an indictment on the Labor Party.

The US is establishing a program to entitle any worker displaced as a result of their Clean Air Act to 156 weeks of income supplement, 80 per cent of their monthly health care, up to $1,500 for job search assistance, up to $1,500 for moving assistance and additional employment services for skills assessment, job counselling, training and other services. Where is Australia’s ETS worker assistance scheme? Federal Labor MPs and union leaders in the coalfields are not standing up for their constituents. They are not fighting to keep local jobs or help workers displaced by the ETS.

The Climate Institute has released a list of green jobs, but there are virtually no jobs for miners in Central Queensland and no green investment dollars going there either. What is the government going to do for these people and their communities? Why hasn’t the government included specific assistance for working families that would lose their jobs in the emissions trading scheme? Labor’s ETS is about closing down coal and running the economy on renewable power. It costs $40 per kilowatt hour to power a factory with coal, but it costs $100 per hour to power a factory with wind and $200 per hour to power a factory with photovoltaic cells. How on earth does Australia compete with these cost disadvantages? Consider also that the Treasury modelling assumption of no net loss of employment across the nation worked only because of a predicted decline in real wages of 10.3 per cent. This will come at a time when there are significant price hikes in fuel, food and power under the ETS.

The Energy Supply Association of Australia says that electricity prices will rise between 40 per cent and 50 per cent by 2020. As a direct result of the ETS and the renewable energy target, these price hikes will be on top of already-increasing electricity prices. On 1 July this year, retail electricity prices in Queensland will increase by 11.63 per cent and will skyrocket by more than 20 per cent in New South Wales. Wait until you get the ETS! Once again, union leaders have failed to tell their members what the Treasury model means for them.

I asked at Senate estimates whether it is possible that real wages could decline in the short term and that unemployment will go up. The reply from Treasury was:

Relative to a world without emissions pricing, yes, it is possible that employment will be lower than it otherwise would have been and real wages might be lower than they otherwise would have been ...

Then I said:

Firstly, you are assuming that everyone is coming in and, secondly, you are putting in your models that there is going to be no unemployment. Of course you are going to get the answer there is not going to be unemployment.

The answer from Treasury was:

In the long run, yes, that is true.

Make no mistake: the ETS is a lobotomy on the Australian economy; the price is enormous in terms of jobs, exports and regional communities. Why the unions are falling for this and betraying their members is beyond me. I can understand where the Greens are coming from, but I cannot for the life of me understand how the Labor Party can sit there and watch unions, who take $800 from each member in union fees, just go out of existence. You ought to be totally ashamed of yourselves.