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Monday, 26 November 2012
Page: 9771

Senator McKENZIE (Victoria) (19:56): I rise to speak to the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related bills. I cannot agree more with Senator Xenophon that it is bad policy—something of an epidemic with this current government. These seven bills seek to make further significant changes to the government's carbon tax. Primarily, the bill package removes the legislative floor price—something that was assertively backed by the current government on numerous occasions, like a punter throwing good money after bad on Ethiopia, who ran 63 lengths behind the winner at this year's Melbourne Cup; that is good advice, Senator Xenophon, not to gamble—from the carbon tax and ties that carbon tax to the European emissions trading scheme. Indeed, Hansard records Senator Wong espousing the value of a floor price in this very chamber on 28 February 2012. The senator said:

It is the case that our policy does include a price floor which acts as a safety valve for investors in low-emissions technology by establishing a minimum price for the first few years of a flexible price period.

It would seem the senator should have gone with months rather than years. In addition, the bills will more than double the carbon unit auction limit to $40 million in 2015-16, make changes around natural gas liabilities and the measurements of potential greenhouse emissions and alter the arrangements, applying an equivalent carbon price for liquid fuels and synthetic greenhouse gases.

The suite of bills before us is yet another example of this government making policy changes on the run. We saw it with asylum seekers, Fuelwatch, the home insulation scheme and cash for clunkers, and 2.1 million Australians, the majority in regional Australia, are now seeing it with the Murray-Darling Basin Plan, as amendments are rushed through chambers and communities struggling with uncertainty, wanting a healthy basin going forward, are having to deal with the government flipping and flopping on how to make it happen. Quite clearly, this government cannot be trusted to deliver major policies.

People and communities need certainty in planning. Organisations and businesses need certainty. The Gillard government has made eight major changes to the carbon tax since its inception, creating serious uncertainty for businesses, industry and households and begging the question: does this government have any idea what it is doing?

It is one thing to recognise that you make mistakes—we all make mistakes outside of this place; when we are in positions of power we make mistakes—leadership is about recognising that mistakes are made, adjusting and moving on; it is another thing entirely to pursue a policy development agenda which involves a five-step process like the government's. Step 1: brainwave, which could be kick-started by a poll, a conversation or the needs of its coalition partners, the Greens. Step 2: a press release. You have to get out fast on the front foot; you have to get your brainwave into the media. It is only then, with step 3, that this government starts to think: 'How are we actually going to implement this brainwave? How are we actually going to make this happen on the ground? What's it going to look like in real life outside of the imaginings of a minister or department head?' You would think step 4 would be government saying: 'We will go out and consult. We might consult with industry, community. How do you think this should happen?' Unfortunately, time and time again this government fails to consult. We see it with the NBN, with the siting of mobile phone towers, with the Murray-Darling Basin—we see time and time again that this government fails to consult community and fails to consult industry. Its mining tax? It consulted with a handful of industry players and it got a really interesting policy response that favoured the guys in the room—surprise.

Step 5: you might want to evaluate your policy or have a mechanism for evaluation; understand the implications, the unintended consequences. Conservatives like to think about hypothesising the unintended consequences of pieces of legislation before us. We do not presuppose that we know how this is going to play out in the vagaries of real life. You would think they might do a bit of cost-benefit analysis. Again, I think of the NBN as an example of a policy development process that is not about the fundamental steps in getting it right. The kicker of the five-step plan is where is the money, and time and time again this government, with its policy implementation, does not think through the financial implications of what it does.

The introduction of the legislation to scrap the floor price just 80 days after the carbon tax was introduced confirms the scheme is in complete chaos. Removing the floor price and linking the carbon tax to Europe's scheme puts our economy in someone else's hands. And while we all recognise the Gillard government's economic track record is abysmal, let us face it: Europe's economic judgement is also being widely questioned at this time. I do not think it is quite the change of government regional Australia is calling for.

By changing the carbon unit auction limit from 15 million to 40 million, the government potentially creates an extra $725 million worth of revenue from forward permits. Do you believe this change is environmentally motivated? Or is it more likely an attempt to prop up the budget and deliver the promised surplus? The Energy Supply Association has stated that forward selling permits will lead to higher electricity prices. As a Nationals senator, I understand that this will hit regional Australia the hardest. People living in regional Victoria typically spend 30 per cent more on electricity than those in Melbourne, so it is far from welcome news for those thousands of families and businesses already struggling with power price hikes.

Allow me to quickly put on the record a couple of examples of carbon tax costs in my home state of Victoria. Victoria Police have confirmed that they have had to budget $3 million extra to cover the cost of the carbon tax next year. That money should be going into police resources to help keep our communities safe. Victorian health services and hospitals will have to pay $143 million in carbon tax by 2020, amounting to $13 million or $1,044 per hospital bed in the first year alone. In my patron seat of Bendigo, Bendigo Health, which provide exemplary care to central Victorians, will need to find an extra $600,000 this financial year just to cover the tax.

And as we head into the warmer months, we have now discovered that swimming centres are yet another casualty of the carbon tax, which has driven up the costs of pool heating, running pool pumps, floodlighting and hot showers. Local pools have reported dramatic increases in their day-to-day running costs, a recent power bill in the Peter Krenz Leisure Centre at Eaglehawk has gone up by more than $2,000. Obviously, these costs have to be passed on, so the young mum with three kids going off to swimming lessons will see an increase in access prices to her local swimming pool because local businesses cannot continue to absorb the ongoing costs of the carbon tax.

The Lakes Entrance Fishermen's Co-op sure did not escape. Despite fishermen being price-takers, they are facing a $24,000 increase in their power bills. The Prime Minister's assertion that the Lakes Entrance Fishermen's Co-operative is in a position to pass through costs because the government put more money in the hands of consumers shows how out of touch Labor are with small business. The fact that you hand out compensation and think that will make it okay shows that this government do not understand how business works.

A Goulburn Valley based fruit-packing business has had a $10,500 carbon tax whack out of a $70,000 bill. This business is in a section of our community in regional Victoria, the Goulburn Valley, that is hardest hit under the Murray-Darling Basin Plan with our horticultural plantings. Shops have closed in the regional centre of Shepparton—a regional base that centres on fruit picking. Cool stores are significantly affected by the carbon tax. That $10,500 was just one month's worth of carbon tax, and the managing director of the 400-employee strong business says he will need to consider cutting staff as it cannot put up the price of supplying apples and pears to supermarkets because the supermarkets will not pay it. The grower, the processor and the producer are bearing the cost. It just does not make sense how this is all going to flow out so that it is not the producer and the businessman who have to absorb and bear the brunt of this Labor government's poorly thought out policy decision.

The western Victorian dairy farmer who contacted me to say he had received a $360 carbon tax bill for one month of electricity supply is worried about how much that will increase when the bills roll in at irrigation time. The dairy industry estimates that the average Victorian dairy-farming family will be hit between $5,000 and $7,000 a year. They cannot pass that on because the supermarkets will not pay it.

Primary producers were dealt a losing hand in the first carbon tax iteration. For example, $150 million was earmarked for the nation's food industry under the Food and Foundries Investment Program designed to support them in maintaining their competitiveness in a carbon constrained economy. In Victoria we have a $25.4 billion food industry. It exports to over 100 countries worldwide and directly employs over 130,000 people. When you look at the size of our industry alone and then think about the other states, you can see the compensation available works out to an absolute pittance—just a handful of dollars, in real terms, per worker. Farmers also get a dud deal with these latest carbon tax amendments. Australian farmers have been excluded from selling carbon credits to Europe via the Carbon Farming Initiative until 2018. The one-way deal negotiated by the Gillard government essentially allows Europe a monopoly until this time because, while Australia is locked out of Europe, Europe can sell its credits to Australia.

For months and months, the hardworking people of the Latrobe Valley in the south-east of my home state were trapped in a state of uncertainty as the government attempted to negotiate the Contracts for Closure. The government failed. Again, failure seems to be the hallmark of this Labor government when it comes to seeking to adequately address the needs of regional Australia. The Minister for Resources and Energy, Martin Ferguson, announced in September that the government had not been able to reach an agreement on the flawed plan to use taxpayers' money to shut down the Latrobe Valley power generators; but there is no cause for celebration because jobs have already been lost as a direct result of this policy. The backflip was a small reprieve for local power industry workers and their families, who are very proud of the work they do, but the region still needs critical government assistance to deal with the impact of the carbon tax. For every one job in the Latrobe Valley's electricity sector another four jobs are supported in the local retail and services sector. This community is undoubtedly more exposed than most.

The crisis of confidence throughout the Latrobe Valley community has had a direct impact on industries that support the power sector, along with construction, agriculture and retailing. I take this opportunity to state that the Gillard government must not use the scrapping of the Contract for Closure program as an excuse not to assist industries and communities that have been harmed by the carbon tax like the Goulburn Valley and the Latrobe Valley. It is regrettable that we appear no closer to seeing guidelines for the Regional Structural Adjustment Assistance program. Every time a National Party senator stands up in this place and asks a question about the Regional Structural Adjustment Assistance program, the paragraph in the documentation that has been sitting on everyone's desks for a long time is trotted out. The impacts are happening now; the fallout is happening now in our communities. We would like some more detail around that.

The only way to fix the carbon tax is not to amend it eight times with things that are going to make it worse—it is to scrap it. I refer again to dear old Ethiopia who struggled home in the Melbourne Cup this year. As they say—if the horse is dead, just get off it. The coalition opposes these bills.