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Monday, 31 October 2011
Page: 7622

Senator EGGLESTON (Western Australia) (20:15): This legislation is based on a lie and is fraudulent in that rather than reducing carbon emissions published Treasury modelling shows that such emissions will actually increase if this scheme is introduced. Julia Gillard solemnly promised before the last election that there would never be a carbon tax under a government she led. There is no doubt that Ms Gillard was elected on the basis of that statement because it allayed public concern about the proposed tax and emissions trading scheme—which the Labor Party then proposed—and the amount that these measures would add to the cost of living for average people. However, as we all know, once elected Ms Gillard broke her solemn promise to the Australian people to never introduce a carbon tax, the promise on which she was elected, and introduced a carbon tax in what must be the biggest deception in Australian political history. John Howard, as I am sure everybody will recall, changed his mind about the goods and services tax. But he took the proposition that we should have a goods and services tax to the people to gain their endorsement before introducing that tax. That was the right thing to do and Ms Gillard should have done the same thing with the carbon tax.

As I said, not only is this legislation tainted by being the outcome of a lie but it is fraudulent. It is fraudulent because according to Treasury modelling this legislation will not result in a reduction of carbon emissions in Australia at all. In fact, on Treasury's published figures emissions are predicted to rise from 2015. Under this emissions trading scheme, rather than reducing emissions polluters will be able to trade them off with carbon credits from a rainforest in Indonesia or some such place. This is just nonsense and a further insult to the people of Australia. The losers from this legislation will be the Australian people and the only winners will be the merchant bankers who will make millions from trading carbon credits. Carbon emissions, by the Treasury's own figures, will increase from 578 megatonnes per annum in 2012 to 621 megatonnes per annum.

The last time that we debated this issue was in the CPRS debate in 2008. In 2009, the Minerals Council of Australia said that Rudd's failed CPRS would have cost thousands of jobs and billions of dollars of investment in regional and remote Australia while failing to materially reduce global greenhouse gas levels. In September of this year, the Minerals Council of Australia published an article outlining the extensive damage to jobs that would be caused by a Gillard government carbon tax. It stated that in Australia just 93,610 employees out of a total manufacturing force of over a million are employed in sectors designated to receive assistance under the Jobs and Competitiveness Program, which is the government's primary initiative to safeguard trade exposed industries. This represents just 8.95 per cent of manufacturing employment.

Further research undertaken by the Minerals Council of Australia compares the carbon tax of the Gillard government with the European Union's emissions trading scheme and illustrates the widespread negative outcomes that it would have for our economy. Under the European Union scheme, 48 per cent of manufacturing value-added is covered by industry assistance provisions. In Australia, only 22 per cent of manufacturing value-added will be eligible for assistance. Under the EU scheme, 78 per cent of manufactured exports will be eligible for safeguards to ensure that they remain competitive under carbon pricing. In Australia, only 41 per cent will be covered. The EU assistance provisions cover 52 per cent of employees in the mining sector. The coverage in Australia, where we have a huge mining industry, by contrast is minute.

Importantly, seven per cent of employees in the European Union work in industries that will receive assistance to prevent loss of competitiveness and resultant carbon leakage. In Australia, just one per cent of Australian jobs are covered by competitiveness safeguards. Families and households need to be a priority when considering this carbon tax. However, if the Gillard government continues to ignore the plight of industry, it has the option of moving overseas to places like China, the gulf or Indonesia, where—ironically—electricity generation is much dirtier. On the other hand, families and households will end up paying a carbon tax. They will pay, indeed, with a higher cost of living and potentially pay with their jobs. Under the government's own figures, three million Australian households will be worse off under the carbon tax. Analysis by the WA Treasury shows that over half of WA households will be worse off under a carbon tax, as the government's supposed assistance will not fully compensate households for increases in their costs of living. Australia's forgotten families are already struggling with soaring costs of living, and the carbon tax will make a bad situation much worse. Australians will pay $9 billion in carbon tax each year and see their electricity prices go up and up. If this legislation passes, with the support of the Greens, it will mean a 10 per cent increase in electricity bills in the first year alone and a nine per cent increase in gas bills in the first year alone. It will mean higher marginal tax rates for low- and middle-income earners and a $4.3 billion hit on the Australian budget bottom line.

Interestingly, a number of economists argue that carbon pricing is not likely to be as effective in reducing emissions as other methods, such as direct investment to accelerate the development of competitive renewable or non-carbon sources. It is argued that, while a carbon tax may initially influence some industries to increase energy efficiency, in the longer term it may not be enough to instigate investment in lower carbon technologies and processes. So, arguably, the institution of a carbon tax will discourage research into lower carbon technologies.

Western Australia and Queensland, as Australia's largest states, stand to lose more than most if this carbon tax is introduced. These states' decentralised economies and large geographical areas mean the impact of higher energy prices and transportation costs will be felt extra hard. This will mean a profound effect on Australia's international competitiveness. The Western Australian Chamber of Commerce and Industry echoed this concern, noting that the proposed carbon tax is not part of a global solution. As the WACCI noted, none of Australia's trading competitors have an economy-wide carbon tax or a price on carbon. The last speaker talked about the fact that there are some emissions trading schemes around the world, but our major trading partners are China, India, the United States, South Korea and Japan. In 2008 I went to a renewable energy forum in Beijing. At the end of the last session I asked the Chinese, Japanese and Korean delegates to tell the forum whether or not their countries planned to have a carbon tax or an emissions trading scheme. The answer I got was no.

Only last week, during the Commonwealth Business Forum of the CHOGM conference in Perth, I went to the session with India and I asked the same question. I said we would be debating a carbon tax this week in the Senate and asked them whether they were going to introduce a carbon tax or an emissions trading scheme in India. The response I was given was that this was not seen as a significant problem in India and no, they would not be having a carbon tax, much less an emissions trading scheme. The WA Chamber of Commerce and Industry, adding to the report I mentioned above, said that a carbon tax will add to the cost of doing business and has the potential to discourage new investment. So I ask: how then can the government claim that a carbon tax will be good for Australia? The proposition simply defies logic.

A vote for the carbon tax, in my view, is a vote to decimate Australia's standard of living, to rip the heart from our competitive trade landscape and to ravage jobs, all for no gain whatsoever to the environment. It cannot correctly be called economic reform when incomes, productivity and our gross domestic product will ultimately fall. Far from reform, it is a national disaster, in my view.

As the Australian Industry Group noted, the introduction of a carbon tax coincides with a period of intense global uncertainty and uneven economic performance across the world. The manufacturing industry has already seen a 10 per cent reduction in its workforce over the past three years and stands to be particularly affected by the imposition of a carbon tax. According to the Business Council of Australia and the Minerals Council of Australia, uncertainty is something business fears and they want certainty. There is no doubt, however, that this tax will do nothing but bring uncertainty and realise the worst fears of both the Business Council of Australia and the Minerals Council of Australia as business attempts to cope with ever-increasing but unpredictable costs and the loss of core markets.

Trade exposed industries will bear the burden of a high cost on their business, a cost which their competitors will not share. According to the Business Council of Australia the government's carbon tax legislation does not include adequate clauses or safeguards which would secure industry arrangements in the Jobs and Competitiveness package, address the risk of adverse economic impacts of the policy, manage the impact of external economics especially during the fixed price period, or address the risk of Australia being economically disadvantaged as a result of the limited progress in international negotiations to put demonstrable prices on greenhouse gas emissions. Finally, the legislation does not provide arrangements for trade exposed industries which mean they could maintain their competitiveness in the absence of international competitors having a price on their greenhouse gas emissions. However, I am pleased to say there is another way, a better way and a more effective way, and that is the coalition's direct action plan. It is a strong and effective policy that will reduce carbon emissions by five per cent by 2020 and will achieve that reduction without imposing a great big tax on everything in this country and making our industries uncompetitive. Our direct action plan is costed, capped and fully funded from savings to the budget. Direct action means no cost to households, no new taxes and no increase in electricity prices as a result of a misguided policy. There is an alternative to this carbon tax. Most importantly, there is no need for Australia, a country producing just over one per cent of world emissions, to risk introducing an emissions trading scheme, which will cripple the effectiveness of our industries, increase the cost of consumer goods and put Australia out on a limb with no-one to trade with once these expensive carbon credits are introduced—if in fact they are—in 2015.

In conclusion, I believe this is easily the most corrupt piece of legislation to have ever been brought before this parliament. I am sure the Gillard government will discover the public's feelings about this legislation when the next election is held and the people have an opportunity to have their voices heard on this matter.