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Tuesday, 1 November 2011
Page: 7832


Senator CORMANN (Western Australia) (20:48): The Labor-Greens carbon tax will impose significant economic pain on millions of Australians without generating any environmental gain for the world. This Labor-Greens carbon tax is a con; it is a fraud. It is a bad tax based on a lie and the Senate should not pass it. There can be no more emphatic promise than the promise made by the Prime Minister before the last election: 'There will be no carbon tax under the government I lead.' Given that we are now debating this carbon tax legislation, there are really only two conclusions one can draw: either the Prime Minister deliberately lied to and misled the Australian people or she is too weak to do what she knows in her heart of hearts is the right thing to do by the Australian people.

This government has argued that we have had many parliamentary inquiries—35 parliamentary inquiries since 1990, we are told—into this. And, yes, there has been a lot of debate across Australia about the merits or otherwise of putting a price on carbon when significant trade competitors of ours are not prepared to go down this path. It is fair to say that after all those inquiries and reports over the last four years—after the Garnaut review, the green paper, the white paper and all those parliamentary inquiries—the argument was settled. People understand that this carbon tax will not work to reduce emissions. People understand that it will push up the cost of everything, make us less competitive internationally, cost jobs, lead to lower real wages and shift emissions into parts of the world where emissions will be higher than they would have been in Australia. People across Australia understand that. And people across Australia were entitled to believe that the Prime Minister of Australia understood this with them. After all of the inquiries and all of the debates that we have had, the question was settled before the last election. The Prime Minister went to the last election making the most emphatic promise that any Prime Minister could make: 'There will be no carbon tax under the government I lead.'

What she said was that she would work on building a community consensus before doing anything to impose a price on carbon. She was going to go to the community and build consensus. Now there is a community consensus, and the community consensus is against this tax. This government is either too arrogant to take note of the considered view of the Australian people or it is too weak to do what it knows is right because it remains a captive of the Greens in order to cling on to power. This is a government that is prepared to do anything, including hurting the Australian economy, including imposing increased costs of living on people across Australia, for something that is completely futile—for something that arguably might result in increased global greenhouse gas emissions, not reduced global greenhouse gas emissions. Various Labor speakers, and speakers on behalf of the Greens political party, have argued that the situation is dire—we have all these floods, all these droughts; the Great Barrier Reef is in terrible shape; and there are all these terrible things happening out there—and we have to have this tax to fix all of these problems. Well, let me make one prediction: if this tax passes the parliament, if this tax is implemented, there will still be droughts, there will still be floods and we will still face various other challenges that come with climate change. Yes, the climate is changing—of course it is; the climate has always changed—and yes, we should do things that will actually help to reduce global greenhouse gas emissions, effective things. This government is saying we need to have effective action on climate change; we have to do something. No, we don't have to do something; we have to do something that is actually going to make things better rather than make things worse. And the Labor-Greens carbon tax will not only impose significant economic pain on people across Australia; it will arguably make things worse when it comes to the objective of reducing global greenhouse gas emissions.

Of course, we have asked the government the question: what will be the net effect of this carbon tax on global emissions? In this chamber I have asked Minister Wong, who is working very hard not to be engaged in this debate and is talking to her colleagues, ignoring what is being said during the debate in this chamber, the question: what will be the net effect of this carbon tax on global emissions? She gave us her usual political rhetoric, and her attack on the opposition, but there was no answer. In fact, I thought I would try my luck with the head of the Department of Climate Change and Energy Efficiency. Do you think he was able to tell us what the net effect of this tax is going to be on global emissions? No, because they do not know. They know that Australia imposing this carbon tax when our trade competitors in other parts of the world are not going down this path is not going to be effective action on climate change. In their heart of hearts, Labor members and senators know that this is just a reckless act of economic self-harm. The only reason the Labor government are going ahead with it, having promised the Australian people that they would not, is that they are dependent on the support of the Greens in order to hold onto government.

Then the government do some economic modelling. They tell Treasury the assumpt­ions that they have to use; they give very clear directions, a very clear framework as to how Treasury is allowed to conduct this modelling—and of course the political objective of the government is to come up with some modelling where they can present a report to the Australian people that makes it look as if this tax is hardly going to have any impact at all on their standards of living. The name of the game was to come up with a report that was going to make it look as if this could be snuck in without much of an impact at all. People are going to better off, we are told. People are going to be better off because they are going to pay more tax! But, of course, when we started asking questions about the Treasury modelling, when we asked whether we could have a look at the way the model operated, whether we could have a look at the underlying information, whether we could have a look at the databases that had been used—the model codes that had been used—the answer was: 'Oh, no, you can't have that! That would enable you to scrutinise the reports that we have provided to the Australian people about the impact of this carbon tax on household budgets, on jobs, on real wages. That would enable people to scrutinise whether what we are saying to them is actually right! We can't have that—we can't have people scrutinising what we have put out there—because then people might realise that this carbon tax is actually going to have a much more significant impact on the economy than we have let on.'

I know for a fact that senior Treasury officials are embarrassed by the govern­ment's refusal to make that information available, because it is standard practice in economic circles that, when you publish reports that make assertions about certain conclusions, you release the models, you release the underlying information, you release the databases, you release the model codes and so on, so that independent third parties can scrutinise the work that was done and the reports that have been put forward. If you want to publish an article in any major economic journal that is based on modelling, you have to make the modelling and all the underlying information available so that people can properly scrutinise it. Not this government! Not this secretive government that has something to hide when it comes to the impact of the carbon tax on household budgets and on the economy.

This government used to talk about openness and transparency in government, but of course we are not getting this in relation to the carbon tax. Under the Howard government the Australian Bureau of Agricultural and Resource Economics and Sciences used to publish the models, and all the relevant underlying information, that the government is now trying to hide, as a matter of course. In fact, they were preparing for the full commercial release of the GTEM model back in 2007, before this secretive Labor government got into office. And, whenever the Productivity Commission do economic modelling to assess the impact of various policy changes or initiatives, they not only have peer review every step of the way; they make available all of the modelling informa­tion, all of the databases, all of the relevant information that is necessary to scrutinise the conclusions they have reached, to third parties for proper scrutiny. Not this secretive government, because clearly it has something to hide.

But let's have a look at what the government claims the economic impact is going to be of this carbon tax. We know that even the government's modelling, which clearly underestimates the impact of the carbon tax—because it is based on an assumption, for example, that the US will be part of a global trading scheme by 2016, which it will not, and on an assumption that there will be comprehensive global trading by 2016, which there will not be—says that electricity prices are going to go up by 10 per cent, on top of any other regular increase, which of course we know has been happen­ing in recent years. And it is completely self-inflicted. It is not as if it is necessary in order to guarantee the ongoing generation of electricity; it is self-inflicted. It is as a result of a tax imposed by the govern­ment. We also know that, even according to the govern­ment's own modelling, real wages will be nearly six per cent lower by 2050 as a result of the carbon tax. That is against a background of rising prices and lower real wages. Of course, we would like to be able to share with the Australian people what the impact is going to be on jobs but we cannot—why?—because this government never, ever assessed the impact of the carbon tax on jobs. Again, dishonestly, the Prime Minister and the Treasurer are trying to make people believe that the carbon tax will not have an impact on jobs, that the economy will continue to grow—so we are told—and that jobs will continue to grow. But the government dishonestly included in its modelling an assumption that full employ­ment would be maintained. If you impose an assumption that full employment will be maintained in the context of an economy that of course is going to continue to grow—by much less, but it will continue to grow—then it is a necessary outcome of such a model that jobs will continue to grow. Not that that is the most likely scenario to play out, mind you; it is not.

But here is the absolute cracker. Accord­ing to the government's own modelling—according to its own figures—the carbon tax will cost the Australian economy $1 trillion in today's dollars between now and 2050. One trillion dollars is nearly the whole GDP for the whole of Australia for a whole year. That is $40,000 for every single Australian. It means that every single Australian will have to work effectively for nothing between now and 2050 to pay the price for the Labor-Greens carbon tax.

I made that assertion after a very comprehensive Senate inquiry. Senator Williams was a very active contributor on that inquiry. We had evidence from Treasury and various other experts. I made the assertion that this carbon tax was going to cost the economy $1 trillion between now and 2050. 'Not true,' said the Minister for Climate Change and Energy Efficiency, Mr Combet. He said that the economy would continue to grow, that the size of the economy would double and that it would grow by $2.3 trillion.

These statements are not actually contra­dictory. The economy can still continue to grow and it can still cost us $1 trillion because the economy will grow by signific­antly less. If you look at the government's own modelling, by 2050 the government tells us that GDP will be $100 billion lower in 2050 that it would be without a carbon tax. If you calculate the cumulative effect between now and 2050 on a year-by-year basis, the cost between now and 2050—according to the government's own modelling—is $1 trillion to our economy. It is extraordinary. It is mind blowing. Will the economy continue to grow? Of course it will, but it will grow by $1 trillion less than it otherwise would.

Anyone with a superannuation fund and anyone with investment knows that if something grows more slowly over a 40-year period you are going to end up with less money. You are going to end up with less wealth. This carbon tax will mean that Australians will end up with $1 trillion less by 2050 than they otherwise would have, and that is in today's dollars. The reality is that if this was going to make a difference we might have an argument, but this is a $1 trillion cost to the economy just so we can make higher emitting businesses in other parts of the world more competitive than even the most environmentally efficient equivalent business in Australia. This is so we can help manufacturing businesses in China take market share away from manu­facturing businesses in Australia. Every common-sense Australian knows that, if you help a higher emitting business in China—which does not face this carbon tax—take market share away from a lower emitting business in Australia, all you are doing is increasing emissions in the world because you are shifting emissions from Australia to a part of the world where, for the same economic activity and the same economic output, you will end up with higher emissions.

This carbon tax, this emissions trading scheme—what Labor likes to call a market based system but I would call government intervention through a big bureaucracy and a big tax—might work in an economic theory where you work on the assumption that the whole world is going to do the same as Australia. But of course they will not. Let me draw senators' attention to the Senate Select Committee on the Scrutiny of New Taxes interim report The carbon tax: economic pain for no environmental gain, which pretty well sums up what the central issue is for the Senate as we are considering this legislation:

The central issue … is not whether a carbon tax is good or bad in economic theory. The question before this committee and before the Parliament is whether Australia should implement such a tax, followed by an Emissions Trading Scheme, at a time of great uncertainty both about the economic outlook and even more so about the nature and extent of the international abatement effort.

These questions are particularly acute for Australia because our prosperity is based on a resource endowment that is highly carbon-intensive. Moreover and importantly, much of that carbon-intensity is not amenable to simple or obvious technological solutions - for instance, there is little that can be done to reduce fugitive emissions in mining.

It is against that backdrop that we need to assess whether it is desirable for us to impose a carbon tax if many other countries, including the world’s largest emitters and our major resource competitors, do not.

That is really the crux of it. The government initially proposed to reduce emissions in Australia in a way that would lead to increases in emissions in other parts of the world. Now they are not even trying to reduce emissions in Australia anymore, because, if you look at the government's modelling, you will see that despite the carbon tax emissions in Australia will continue to grow.

Here is the next argument. The govern­ment says: 'We need to be early adopters. There are benefits from early action. We have to get in early because that's going to make it cheaper.' That does not seem to be the case because, if you compare the Treasury modelling that was done at the time of the CPRS and the Treasury modelling that is being done now, three years later, the cost has actually gone down, if we are to believe the government's own Treasury modelling. Given that the cost of the implementing a price on carbon to achieve a five per cent domestic emissions reduction by 2020 has gone down since 2008 according to the government's own modelling, maybe we should wait another three or four years—it might be cheaper again!

Of course, the way the Secretary to the Treasury has explained it is that you get technology improvements which mean that you might be able to do it cheaper. I asked the question: given that we are now starting later, is it going to be more expensive; will we have to have a higher price? 'No, not necessarily, because we've got better technology now.' There is no evidence for this argument by the government that the cost of acting is going to be lower by going early. Just look at the Treasury modelling. The Treasury modelling is there in black and white. It is actually cheaper, by the looks of it, to wait for a bit longer.

This is a bad tax. It is a tax that is based on a lie. It is a tax that is a fraud. It is a con. It is something that should not be supported by the Australian Senate. If we pass this tax, all we are doing is forcing up the cost of living, putting jobs at risk, causing lower real wages, and all of that without doing anything to help reduce global greenhouse gas emissions. It would be irresponsible and reckless and it is not something that the coalition will be a party to.