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Tuesday, 26 June 2012
Page: 4471

Carbon Pricing

Senator JOYCE (QueenslandLeader of The Nationals in the Senate) (14:00): My question is to the Minister representing the Minister for Climate Change and Energy Efficiency, Senator Wong. I refer the minister to the fact that each tonne of aluminium produces around 16 tonnes of carbon dioxide and that under a $23 a tonne carbon tax our aluminium sector will face a $368 per tonne additional marginal cost. With aluminium prices around $1,800 per tonne, the carbon tax will in effect make Australian aluminium smelters 20 per cent less efficient than smelters overseas. Given that the government claims that a cost impact of this severity did not cause the 244 job losses at Kurri Kurri or the difficulties currently being experienced at Alcoa's Point Henry plant, what other industries does the government believe can suffer a 20 per cent deterioration in their international competitiveness and not lose jobs overseas and still thrive?

Senator WONG (South AustraliaMinister for Finance and Deregulation) (14:01): I thank Senator Joyce for his question. First, in relation to aluminium, as I said yesterday, notwithstanding the attempt by those opposite to make political capital out of the difficulties in the aluminium sector, we on this side understand the pressures on the aluminium sector. As I referred to in the context of Alcoa yesterday, these pressures relate to the current global market and the price of aluminium on that market and the high dollar, which is having an impact on this sector and on a number of others.

Rather than go into a detailed discussion of aluminium, I will address the question at the heart of it, which goes to the longer term issue of jobs across Australia. I will make the point in relation to aluminium that, because we are concerned to ensure that we manage the transition to a clean energy economy, the aluminium sector is entitled under the government's clean energy package—as I outlined yesterday—to a very substantial provision of free permits for the core smelting activity. That means that the effective carbon price on those activities is not the amount that Senator Joyce raised but is in fact $1.30 per tonne, which is obviously substantially less than $23 per tonne.

On the broader proposition about jobs, I again make the point that this government intervened to support jobs. While we have been in government, over 800,000 jobs have been created in this country. At a time when we have seen most advanced economies going backwards, Australia has created jobs—no thanks to the opposition, who not only opposed stimulus but are also intent on a scare campaign. I remind the senator that the modelling shows that we can increase jobs with a carbon tax. (Time expired)

Senator JOYCE (QueenslandLeader of The Nationals in the Senate) (14:03): Mr President, I ask a supplementary question. I acknowledge that the government accepts that they have put pressure on the aluminium industry.

The PRESIDENT: Senator Joyce, you should come to a question. Statements are not permitted.

Senator JOYCE: My question is again to the Minister representing the Minister for Climate Change and Energy Efficiency. I acknowledge that the government accepts that they have put pressure on the aluminium industry. Given that Australia has around one-third of the world's bauxite and abundant reserves of coal and gas, all important inputs in aluminium production, and given that only eight per cent of the costs come from wages, under this modelling will the government accept that the sector will shrink by 50 per cent, putting out of work 16,700 people?

Senator WONG (South AustraliaMinister for Finance and Deregulation) (14:04): As I said yesterday and again in the answer to the primary question, when designing this clean energy package the government was very conscious not only of the aluminium industry but of other energy intensive trade exposed industries. That is why there is a substantial provision of free permits contained in the clean energy package. That is why the liability of aluminium smelters for a carbon price is reduced to around $1.30 a tonne and not the figure that Senator Joyce was bandying around in the primary question. The senator referred to modelling. I again remind him that the Treasurer modelling shows that you can put in place a carbon price and jobs will grow by 1.6 million, we can increase our incomes and we can increase the size of our economy. This evidence stands in stark contrast to some of the claims that are being made by those opposite, which are simply part of a scare campaign.

Senator JOYCE (QueenslandLeader of The Nationals in the Senate) (14:05): Mr President, I ask a further supplementary question. Given that the government continues to blame the woes of the aluminium industry on the fact that the aluminium price is $1,800 a tonne and that the industry needs government assistance at that price, why didn't the Australian aluminium industry need government assistance in 2009 and 2005, when the aluminium price was also at that level?

Senator WONG (South AustraliaMinister for Finance and Deregulation) (14:05): I do not have a history of what the dollar was doing in 2005 and 2009 but I can hazard a guess that, given the post-float average, it was probably lower over the period than it has been recently. Instead of trying to make political capital about the structural changes in our economy occurring as a result of the high dollar, if Senator Joyce really cares about jobs he should be constructive, and I invite him to be so. However, those opposite are not interested in doing anything except try to gain political capital out of people who work in industries that are struggling in the face of a high dollar. I for one find it extraordinary that people could claim to represent the community but simply come in here and try to make political mileage out of the fact that our economy is changing—and it would change regardless of which party was in government—because of what is occurring globally and therefore here in Australia. It is not a case that this should be answered by a scare campaign.