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Tuesday, 1 November 2011
Page: 7827


Senator EDWARDS (South Australia) (20:28): Just over a month ago I attended the Paskeville field days on the Yorke Peninsula in my home state of South Australia. I attended the third and final day of this successful event. The field days have a major focus on agriculture and, by implication, its profitable future. The event features exten­sive displays of the latest agricultural machinery and equipment, technology, information and services. It is reputed to be the largest field days event in the Southern Hemisphere.

I surveyed as many participants as I could on the proposed carbon tax. Over nine hours I spoke to a plethora of farmers and manufacturers from all over Australia. I spoke with grain growers, dairy farmers, grape growers, fodder producers, trailer builders and animal husbandry supplement suppliers, and there is definitely renewed optimism in the sector. After nearly a decade of drought, poor crops and reduced water allocations, we have had good winter rains. A solid harvest last year looks like being backed up with an excellent cereal harvest, which has just commenced across the country. But there are serious economic storm clouds on the horizon for these people. This cruel carbon tax has now come to the Senate to be debated by those opposite, who promised not to implement it, and by those on this side, who promise to repeal it. On 12 October 2011 the House of Representatives passed this carbon tax legislation. Amid the high fives, back slaps, hugs and kisses, Labor delivered these 18 bills into this place in a desperate betrayal of Australians to appease their partners in government—the Greens—in an audacious attempt to socially re-engineer this country's economy.

Each South Australian Labor member of parliament—and now I am focusing on those who represent the agricultural electorates—has betrayed their constituents. They should have stood up for their electorates, honoured their 2010 election commitment and stopped this tax, which will place a huge additional burden on farmers and the entire agricultural sector. This comes at a time when the export farming sector faces significant pressures from the surging Australian dollar, high labour costs and labour shortages as a result of competition with the mining industry, as well as the rising cost of key farming inputs through global demand as we race to feed the seven billion people now living on this planet.

The problems facing agriculture have been compounded by poor government decisions. The live cattle export ban last June put enormous pressure on the Top End pastoralists, exporters and associated industries in Northern Australia. We know that the Gillard Labor government has recently terminated the exit grants for farmers wanting to leave the land along the Murray-Darling Basin. This has left hundreds of exiting farmers part way through the sale process but without the grant that was their motivation to leave. These policy decisions from this government go from bad to worse. These are bad decisions for the bush—indeed, for all Australians—from a government that said, now infamously, that it would not introduce a carbon tax. If this tax passes, it represents a betrayal by Labor of the Australian people.

On 12 October in the other place we witnessed Labor's South Australian representatives betraying the South Austra­lian people who elected them to parliament by voting to support the Labor-Greens job-destroying carbon tax. Those Labor MPs who represent the electorates of Wakefield and Kingston have forgotten their agricult­ural and farming constituencies. Whether they are croppers, grape growers, graziers or market gardeners from Mallala, Virginia or the Clare Valley, the Labor member for Wakefield has betrayed them. Grape growers, dairy farmers and horticulturalists in the McLaren Vale and Willunga Basin region in the electorate of Kingston have been betrayed by their Labor representative. Every single Labor member from South Australia was elected on a promise of no carbon tax. Today, country South Australians and their city cousins are quite rightly asking why it is that we are debating this carbon tax at all. Every time South Australian farmers, growers and producers are forced to pay more for electricity, fuel, fertilisers and other farming inputs, they can thank those members for Wakefield and Kingston.

Labor Senators from South Australia—Senator Wong, Senator Gallacher, Senator Farrell and Senator McEwen—will get their chance to show their true colours very soon: either stand up for the people who grow and breed the food and fibre that is so essential to our lives and send this legislation down, or roll over in a final gutless act of betrayal. Labor's complete and utter contempt for the people in rural and regional Australia is deeply disappointing. Labor has no idea about the bush.

It is unavoidable that all Australians will feel the impact of the carbon tax. But the agricultural industry, along with rural and regional areas, will be unfairly some of the hardest hit. A carbon tax on the agricultural sector will push up input costs and pit these producers against lower cost producers in other countries, potentially rendering farmers uncompetitive in the global market. This can only lead to a reduction in the overall profitability of farm businesses and will potentially crush an industry that is 65 per cent dependent on export—this at a time when every other country in the world is scrambling to secure the economical supply of food for its people domestically.

We already know from Labor's own modelling that three million Australian families will be worse off under Labor's carbon tax, with increased fuel, energy, electricity and food costs. Agriculture may be exempt from a carbon price, yet, insidiously, farm businesses will be slugged with an increase in indirect costs from the commencement of the carbon tax scheme—energy and energy related inputs, such as fertiliser and freight, to name a few. Hollowly, even though agriculture may currently be exempt from the scheme, a question mark remains over how long the exemption will last. Given the Gillard government's form on breaking promises, how can the agricultural sector trust the Gillard government?

ABARES, along with the Australian Farm Institute, projects that the economic value of farm production would decline by eight to 13 per cent just from the indirect impacts of a carbon price. Imagine what the economic destruction would be if the sector were directly included in the scheme. Independent research by the Australian Farm Institute has highlighted additional costs from electricity and other indirect energy related sources. These include the additional costs of Avgas, food and fibre processing and other embedded energy costs in the manufacture of farm inputs. This research shows that even with fuel excluded the average Australian farmer will still incur an additional cost of $1,500 a year under a carbon price of $23 a tonne, eroding their average net farm income by 2.4 per cent—and that is without fuel.

These costs will erode the competitiveness of the agricultural industry in the domestic and international markets on which we depend. As the recent Productivity Commi­ssion review highlighted, across the world countries are developing climate policies that recognise the importance of agriculture and deliberately preventing any additional cost being added into their farmers' businesses. Australian farmers are at the end of the food chain and, as a result, they will be footing the bill, again unable to avoid what this government has dished up to them.

As the carbon tax legislation is intro­duced, I urge those opposite to consider the cost to the nation's invaluable food and fibre producers. Let us look more specifically at the dairy industry. Dairy farmers—and there are a few in the electorate of Kingston—face an average hike in energy costs of $7,000 and the loss of up to 7.8 per cent of annual income because of the carbon tax, according to research by the Australian Farm Institute. Australia's third largest rural industry, the dairy sector, has stated that the carbon tax will 'impose significant costs' and 'likely trigger job losses'. Dairy farmers will be stung with higher electricity and gas costs, causing major concerns across an industry employing around 40,000 people. A significant part of the increased costs reflects the flow-on costs to dairy farmers of the carbon tax impact on food processing, which is not eligible for support. Dairy Australia is predicting the national average for dairy farms would be about $10,000 of additional costs for energy and fuel, but in South Australia, where herd sizes are almost double the national average, each would be likely to be paying between $15,000 and $20,000 a year extra for this new carbon tax. The South Australian Dairyfarmers Association says the region's farmers will also have to deal with the prospect of decreased farm gate prices because raw milk buyers are not exempt from the tax.

In the horticulture sector—an important industry in the Kingston and Wakefield electorates—growers are price takers. The industry have no ability to pass on the extra costs incurred from the carbon tax. They already operate under very tight margins, and further cost increases may make many producers unviable. Any increase in production costs results in a direct negative impact on farm profitability and viability. This kicks open the door for cheaper fruit and vegetables from overseas, a fact that is manifestly unpopular here in this country.

What is in the Carbon Farming Initiative for horticulturalists? The opportunities for them are limited. Most horticulturalists are reliant on the use of electricity to run irrigation and packing sheds which contain large refrigeration units to store produce—food essential for our survival. Power costs have risen sharply in recent years in order for the energy industry to comply with the ongoing commitment to 20 per cent renewables. This cost contributes a signifi­cant percentage of growers' input to get produce to market. The carbon tax will further increase electricity prices to further erode the profitability of growers without any form of assistance from the government.

According to Citrus Australia:

… the Federal Government’s new carbon tax will significantly raise freight costs, which the farming industry will have to bear. In addition, farmers won’t get carbon credits for their trees because they use fertilizer on them.

Growers have really had it stacked against them and it’s not getting any better unfortunately.

According to South Australian Horticultural Services:

The new Carbon Tax is a prime example of a new tax that is giving the current Australian Government a 'pool of funds' to give tax relief to the voters but actually achieving little or nothing in relation to carbon emission reduction. A bad tax based on a bad policy.

On top of this, from 2014, growers will also have to cope with the increased costs from heavy road freight being included in the scheme, all of which is unavoidable. The carbon tax is supposed to force change. I ask: how else can you get your produce to market? This is unchangeable.

Like the horticultural sector, the meat-processing industry is facing increased costs that it will not be able to pass on, nor will it receive any government assistance. Business does not want government assistance—and it does not want a new tax. Let us look at one meat processor, JBS Australia, which employs about 2,000 people and processes about 1,600 head of cattle a week at its Dinmore facility in Queensland. It will be slugged about $3.3 million a year extra from the combined costs of the carbon tax and higher electricity prices when the scheme comes into play next year. It has warned that the carbon tax will create a two-tiered meat-processing industry—of big abattoirs that are forced to pay the carbon tax without compensation and smaller ones that do not pay it—and will add costs to an industry that is one of the biggest employers around the country in rural and regional areas. But the industry, despite the bulk of its output being produced for export, is unlikely to receive trade-exposed industry assistance.

Similarly, South Australia's Eyre Penin­sula's aquaculture and fishing industries claim the new carbon tax will hit them hard. The Australian Southern Bluefin Tuna Aqua­culture Industry Association has concerns that the increases in energy charges, coupled with general transport costs, may make it impossible to compete with other major seafood-producing countries. The association stated:

It's based on the assumption that any business can pass on that extra cost to the consumer. Now, if you're competing with a country like Japan or China or whoever it may be who don't have a carbon tax then you can't pass on the cost to the consumer. It's going to be a major blow—there's no question about that.

What we can see here is that major agricultural industries—the industries that create wealth in the South Australian regions and employ thousands of people in South Australia—do not want this carbon tax. It will further undermine the industries based in the bush, which in some sectors are really struggling. This is why industry groups, including the National Farmers Federation and, in my state, the South Australian Farmers Federation, have already stated they oppose the introduction of the Labor-Greens carbon tax. Peak industry groups across Australia have sent a clear message to the Labor government: this tax is unwanted and will have a detrimental impact on agriculture and rural communities. The coalition opposes a carbon tax and will not support a tax that does not provide any benefit to the agricultural sector and that has the potential to completely destroy our nation's agricult­ural industry by causing it to lack global competitiveness. Families will be rightly angry about the impact that it will have on the cost of living, but they will have a lot more to gripe about when they are eating imported foods and the Australian economy suffers as a result of our farmers being taxed out of existence as they succumb to countries with more considered environmental tax regimes.

According to the National Farmers Federation, the Australian agricultural sector has led the way in reducing its carbon footprint for many years, with its emissions having been reduced by more than 40 per cent in the past 20 years—a fact well known to Senator Nash. Those in the sector have been making changes to their businesses in order to make the sector more productive and more efficient so that they can continue to meet the growing food and fibre needs of the global population. Clearly, you do not need a carbon tax to drive emissions down. Farmers are already onto it. Again the Gillard govern­ment lays the dead hand of bureaucracy over another important Australian industry.

Not only are there the impacts on farmers from the rising costs of their inputs—the flow-on effect from the carbon tax—but there is pressure on the food processors who buy farmers' produce. Food processors are facing millions of dollars in higher costs as a result of the carbon tax, particularly through increased electricity prices, and many have said that the only way they will be able to recoup this cost is not to pass it on to their customers but to reduce the money paid to their suppliers—yes, you guessed it: the farmers, who are always the ultimate price takers.

Perhaps these costs might be justified if this was the only way to tackle climate change, but there is another way, a better way: the coalition's direct action plan. The coalition's direct action plan is a strong and effective policy that will reduce carbon emissions by five per cent by 2020 without a new tax that will place undue burden on Australian households and, particularly, our farmers. Our direct action plan is costed, capped and fully funded from savings in the budget. We will use an emissions reduction fund to directly support CO2 emissions reduction activities by business and industry. We will drive emissions reductions through soil carbon, the electricity sector, forestry, energy efficiency, boosting renewable energy and planting 20 million trees.

Of particular importance to the agricultural sector are the opportunities that soil carbon presents. Increased soil carbon can help improve soil quality, farm product­ivity and water efficiency. Through the emissions reduction fund we would invest in a once-in-a-generation replenishment of our national soils and farmlands. The coalition's direct action plan will assist farmers, not further marginalise them like the sly big new tax from Labor and the Greens. Direct action means no costs to households, no new taxes and no increase in electricity prices as a result of the policy. The Abbott coalition will steadfastly oppose Labor's toxic carbon tax in opposition and will rescind it in government.