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Monday, 8 February 2010
Page: 657

Ms MARINO (6:14 PM) —I rise to oppose the Carbon Pollution Reduction Scheme Bill 2010 and cognate bills. As I said the first time I spoke on these bills, this is seriously flawed legislation that will cost Australian jobs. It will cost investment and will compromise our historic, internationally competitive marketing advantage underpinned by cheap energy. However, as a result of the coalition’s direct action plan, Australians now have a clear choice of, as the Leader of the Opposition says, ‘a big new tax on everything’ or practical direct action. One example of somebody who will be affected is David, a constituent from my electorate, a young man who is single, works as a trades assistant and, under the Labor government’s ETS, will be at least $140 worse off every year.

All sectors of the economy and every Australian family, every individual, every small, medium and large business, every contractor and industry—everyone in my regional and rural electorate—will be affected by this flawed tax policy. This legislation will raise prices for all consumer goods and services, add to the cost of living for every Australian and have a major impact, particularly on small businesses, by increasing electricity and input costs, without providing those same small businesses with any form of compensation to mitigate the 20 per cent increase in electricity costs. Some small businesses will pass on the increased cost to consumers, but the Labor government expects small businesses in the agricultural sector, which are, by majority, price takers, to simply absorb the additional costs.

The Labor government’s ETS will cost Australian jobs. As I said, there is no mention of compensation—only extra cost—for the 750,000 small businesses in Australia, and certainly there is no mention of compensation for the 13,400 small businesses in my electorate. The drycleaners, the retailers, the hairdressers and those in the service sector—particularly those who cannot pass on additional costs, like farmers and horticulturalists—will all see increased costs. We know, however, that electricity for households will be cheaper under the coalition’s direct action plan. The total cost of the coalition’s direct action plan is $3.2 billion over the first four years, while the government’s ETS will cost $40 billion over those first four years and $120 billion by 2020.

Another issue which appears to have been deliberately ignored by the government is the fact that the cost of the ETS tax will be compounded repeatedly on goods and services. Every part of the supply and value chain will add to the ETS cost. In regional and rural areas, as you know, Mr Deputy Speaker Schultz, costs are already higher than in city centres. The ETS will compound this further with additional costs for electricity, food, groceries, fuel and other essentials like heating and cooling, which are often a necessity in regional and more remote areas, particularly for pensioners and those with health and mobility problems.

The Prime Minister has guaranteed ‘absolutely’ that no pensioners would be worse off under the scheme, but does this include pensioners in regional and remote communities, like those in my electorate, who will face comparatively higher costs under the ETS on everything they use and consume? There is no assistance, again only extra costs, for self-funded retirees. All of the people in my electorate who have worked all their lives, contributed to the economy and their communities, taken responsibility for providing for their retirement and health care—and who take a huge burden from the government—will absorb and bear higher costs to live.

In contrast, the coalition’s climate action policy provides incentives for Australian families and businesses to reduce their carbon emissions and focuses on effective and direct action to improve Australia’s environment, sustainability and food security. Our policy is about investing in a future that delivers job opportunities as well as providing incentives to reduce emissions. Our direct action plan does not impose additional costs on families and households and it includes the introduction of a range of measures to encourage and support the increased uptake and use of renewable energy in homes and communities. The coalition’s strategy also commits to solar towns and solar schools, geothermal, tidal, high-voltage underground cabling, support for renewable fuels, retention of the Greenhouse Friendly program and green corridors and urban forests.

In my electorate of Forrest, there is a genuine interest in energy efficiency, renewable energy sources and options for the future. We need further innovation and investment in improved storage, transmission and delivery of energy. We have heard consistently from the member for O’Connor about HVDC transmission. Late last year, West Perth based Green Rock Energy announced that it had been granted three geothermal exploration permits within the town of Collie in my electorate, where a substantial proportion of Perth’s electricity supply is generated from power stations.

The Prime Minister, in question time, has been forced to admit that electricity prices will increase by seven per cent and 12 per cent in the first two years of the ETS. The government talks of compensation, but how long will this be offered and when will the full cost actually hit families given that, as we know, the New South Wales pricing regulator recommended a 62 per cent increase in electricity charges, one-third of which will come from the proposed emissions trading scheme?

I note that the Minister for Climate Change and Water, Senator Wong, is at this moment pre-empting a decision by this parliament, potentially wasting further taxpayer funds by seeking tenders for a carbon emissions auction system through a 123-page tender document. I look forward to the Senate estimates revealing the cost of this for taxpayers. We have heard from the Auditor-General of the waste of $17 million of taxpayers’ funds on the first, fatally flawed, costly NBN tender process. Clearly, wasting taxpayers’ money seems to be business as usual for the Rudd government. I look forward to the government telling my constituents exactly what the actual bureaucratic and massive administrative costs of the CPRS churn will be for this complex scheme. You only have to look at the schedules for household compensation to get some idea of what they will be.

I note that, under international accounting rules, emissions are counted against the country in which the goods are produced, not the country in which they are consumed. So, for Australia, as a net exporter of food, over one-third of our emissions are generated from goods produced in Australia but consumed overseas. What we have in the government’s ETS for exporters is a direct tax on production. Australian farmers and exporters will pay the cost of emissions for products consumed overseas, and that is if they are competitive in the market under the ETS.

Just imagine that you are fortunate enough to be travelling overseas—maybe you are in Brazil, Korea, Thailand or even Copenhagen—and you decide to have a meal. Of course, you are going to have some meat with your meal, and I hope that the meat is either Harvey beef, Dardanup butchers tender ridge or V&V Walsh’s Amelia Park lamb or beef. You might also have some Harvey Fresh or Challenge dairy products, and I hope you will have a Donnybrook apple-and-pear pie and some wine from the Margaret River region—all from my electorate in the south-west of WA. But that consumption will not be reflected in the carbon footprint of South America, Asia or Denmark; it will be reflected in the carbon footprint of Australia.

Locally grown and produced products will also be competing with imported produce that does not have the cost of an ETS included in the cost of production. The Sunday Times of 27 December had an article entitled ‘ETS bungle on food bill’. It noted the government’s estimate of a $68 annual increase in the weekly supermarket trolley, and the Food and Grocery Council’s chief, Kate Carnell, is quoted as saying the council believes the increase would be $520 per annum. But, from my point of view, this is the interesting quote. Kate Carnell said:

“It seems the only way the Government could have got $68 would be to base their modelling on significant reductions in Australian manufactured goods and a significant increase in supplies from cheaper priced countries, such as China.”

“The 300,000 Australian workers whose jobs are involved could have significant problems with that.”

As a farmer, I have serious problems with that. And we have the return of the melamine issue in China, and I have very serious issues with that.

The Labor government’s ETS will see major Australian supermarket chains importing even greater amounts of Chinese, Asian, South African and South American food at the expense of Australian farmers. That is something farmers in my electorate are very well aware of. The majority of them, as we know, are already price takers. How will Australian farmers, including in the south-west of Western Australia, compete with countries that maintain subsidies and do not have the added production cost of an ETS? The clear majority of farmers I know and have worked with for many years have an innate and direct respect for the environment. Often they are intergenerational farming families. They know from experience that they need to pass on their constantly evolving and improving land, water and pasture management practices. They do not stand still. Every day, they are environmental managers on their properties. They directly contribute to biosequestration through pastures, managing vegetation and tree planting. Many of them are members of land care and sustainability groups. They are constantly proactive. They very clearly and directly understand the need for the triple bottom line in their businesses: economic, social and environmental sustainability. Our businesses, our families, our farms and our communities depend on it. This is our livelihood today and the future of Australia’s food security and agricultural exports—the very exports which kept Australia out of technical recession during the global financial crisis.

I also note that a University of California study estimated that livestock contribute about three per cent of global emissions, not the estimated 18 per cent—and we see no credit for sequestration in the estimate of 18 per cent. As I have mentioned in the past, farmers and small businesses will pay more for virtually every input from day one of the government’s flawed ETS. The cost of fertiliser, fuel, chemicals, dairy and horticultural supplies—all farming supplies—will increase. The cost of production will increase. Under the proposed legislation, Australia’s approximately 150,000 farming businesses and family farms will be hit with a tax across their input costs.

There is no doubt that the ETS will reduce farm profitability. This will come as a major blow, because Australian farmers have been at the forefront of environmental management through zero- and low-till crop sowing, through water-use efficiencies, through weed control and through changes in fertiliser management. We see it on farms every day. Modelling has shown that the Rudd government’s emissions trading tax will impose costs of between $6,000 and $9,000 on the average dairy farm each year—and I believe that is a conservative estimate. My electorate is the home of approximately 170 dairy farmers in Western Australia. The majority of those farmers are price takers. They have virtually no capacity to pass on any additional cost of the Labor government’s ETS. The government must be honest with the Australian people and explain exactly how much the ETS will cost, and what costs will be added to the permit exchange process through profiteering by agents, traders and bankers. Price volatility in trading pollution permits under the ETS will not necessarily provide additional certainty to business. What it may do, however, is make it very difficult for business to have the financial capacity to invest in low-emissions technology.

The US government is now working on direct action. One example is the announcement of an agreement with dairy producers to adopt innovative anaerobic digester technology for manure-to-energy projects on American dairy farms. That is just one example. It was stated in a recent article that dairy producers and the innovation centre of the US Department of Agriculture are working together to reach a 25 per cent reduction in greenhouse gas emissions by 2020 and that anaerobic digesters routinely generate enough electricity to power 200 homes.

In my electorate recently, Griffin Coal was placed in involuntary administration, placing the jobs of over 500 workers and contractors at serious risk, as well as impacting on local and regional businesses, community service organisations, sporting organisations and, of course, our families. I know that, over many months, representatives of the company met with Minister Wong to explain how much the Labor government’s ETS would cost Western Australia’s coal fired power generators. But none of their issues—including an adjustment to the Electricity Sector Adjustment Scheme and the different characteristics of the WA energy market compared to the national energy market—have been included in the Labor government’s ETS legislation.

The company also queried what the Labor government will do for the many emissions intensive industries included under the ETS that are funded by project financing arrangements containing clauses which are triggered by significant market events, enabling financiers to exit projects completely. There is no doubt the ETS tax would be rated as a significant market event by financiers. The government has not explained how it would prevent this and has not provided economic analysis on the impact this will have on WA families and businesses. I just wonder whether the government will simply watch private investment being withdrawn from power generation as a result of the ETS tax. I have no doubt that, with the Labor government’s determination to force its emissions trading scheme through the parliament, financial institutions have been and will be factoring in a high-risk cost to finance or refinance coal fired power generators. The ETS will have further impacts on major employers in my electorate through the aluminium and mineral processing sectors and industries, not to mention the agriculture, fisheries and forestry sectors.

I will repeat what I have said each time I have spoken on the ETS. This legislation is seriously flawed and the Australian people now have a choice: this seriously flawed Labor ETS tax on everything or the coalition’s direct action. I opposed this flawed legislation.