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Wednesday, 2 March 2011
Page: 939

Senator BOSWELL (1:41 PM) —I wish to raise the destructive impact of a carbon tax on Australian jobs. The Prime Minister has promised that a tax on carbon will lead to a clean energy economy and jobs. It will do neither, and she is selling a lie. Much closer to the truth is the Prime Minister’s statement to ABC Radio on 28 February that when you price carbon you raise money and, having raised that money, you then go out and use it. A price on carbon is not an economic reform but an economic deform. Raising business costs does not deliver jobs; it takes them away.

The argument for a carbon price is that it is supposed to change behaviour in the market such that we move to cleaner energy and reduce emissions in a process that becomes cheaper over time. This theory has been disproved by experiences in other countries such as Spain and Germany. The price of deforming their economies has been astronomical. Many jobs have been lost and the populations made poorer because of billions of dollars of subsidies poured down the throat of the green energy tiger with little to show for it in terms of reduced emissions. The cost-benefit results are in and they show that no-one has yet found a way to efficiently direct a green revolution.

The Australian Prime Minister glibly tells the nation a carbon tax will bring jobs and a clean energy economy. Australian workers and businesses should take what she says with a lake of salt. The Climate Institute promises 34,000 jobs if there is a carbon price of $36 on top of the 20 per cent renewable energy mandate. That is a pittance when spread throughout the nation. Their gimmicky interactive map shows where the scattering of jobs could be found and there are vast tracts of Australia, including mining areas, where there are no green jobs to be found. The Climate Institute does not say how many jobs will be lost as a result of making energy too expensive, but the number will be far greater than a paltry 34,000.

The Prime Minister proposes a new tax on everything that uses energy—from toasters, to conveyer belts, to fridges, to forklifts. A carbon tax is as pervasive in the economy as the GST. But there has been no modelling, no confirmation of the price or any official breakdown of the revenue. There is no detail on compensation or exemption or how the government will achieve this mighty churn of massive amounts of money being taken from business and consumers. Perhaps, if there had been some trust built up between the Prime Minister and the Australian people, there could be some faith in the glib assurances that there will be jobs and green welfare for the poor. But the Prime Minister has broken what little trust there may have been between her and the electorate.

We are talking about a comprehensive rearrangement, reorientation, retooling of the nation’s economy. This is not about pink batts anymore, it is not about putting laptops in schools, it is not even comparable to rewiring health or broad-banding the country. This is a mammoth undertaking and, as far as meat on the bones go, the nation is frozen out of the detail. The government pushes on regardless of detail and regardless of caucus concerns. And the reason? We have to listen to our Prime Minister telling absolute porkies about jobs and a carbon tax is for one reason only: the Greens. How jubilant they have been claiming the carbon tax crown. They cannot wait for July to come and so that they can flog the living daylights out of the economy, literally turning the lights out.

The Department of Climate Change and Energy Efficiency data shows that Australia’s top 292 emitters pumped out 341 million tonnes of direct carbon emissions, leading to potential revenue of $8.2 billion if there was a carbon tax of $25 per tonne. Then there is the financial impact on electricity generators themselves. Energy Supply Association of Australia chief executive, Brad Page, said:

Twenty five dollars never sounds like a lot of money until you turn it into what does it mean for individual businesses compared with today’s costs they face. You are talking about an increase on their total cost of anywhere between 75 and 100 per cent. That is really the issue And that is what everybody is failing to appreciate. What they think is a low cost of $25 per tonne could very easily be doubling their costs today.

A carbon price will turn lights out rather than keep them on with green energy.

Even former close allies like the Australian Industry Group’s Heather Ridout are now distancing themselves from the Labor-Greens recipe for economic disaster. She said:

While certainty is important for decision-making around major long-term investments, this certainty should not come at the cost of a loss of competitiveness that sends jobs and emissions offshore or risks the continuity of energy supply.

The Australian Chamber of Commerce and Industry economics director, Greg Evans, said:

We don’t think there should be any action from Australia until there is international movement, as it is conferring a major competitive disadvantage on competitive industry.

                …            …            …

We can assure the government that none of our 350,000 members are actually queuing up to pay higher energy prices, especially where the environmental again associated with carbon pricing is negligible and also that there will be significant economic pain.

No carbon price was acceptable in Australia ahead of any international action by countries such as the US, China and Japan. He said:

By doing that, we are acting irresponsibly. We are actually putting our head above the trenches and waiting for our competitors to shoot us.

Once you have a carbon tax in place then the levers are there for any future deal between Labor and the Greens to tweak up the rate.

Their strategy may well be to bring in a lower price to start with and then raise it later on. A low price will not be enough to make the switch to alternative energy. Ziggy Switkowski warned that to drive the take-up of alternative energy the price would have to rise substantially from the $20 to $30 a tonne being speculated about to more than $51 a tonne. The Climate Institute is using models that show cutting greenhouse gas emissions by 15 per cent by 2020 would need a price on carbon of $36 a tonne. Cutting emissions by 25 per cent would need a higher price again. Mr Connor said, ‘You’d have to have a starting price in 2012 of around $50 a tonne.’ It is too easy to imagine a future in which the Prime Minister tells the nation ‘I know I promised a carbon price of $10 a tonne, but the great moral challenge of our time means I’m raising it to $50.’

No doubt she will also promise more jobs. More jobs: that is the greatest mistake in this whole debate. Other countries have tried this path and it has failed. There is evidence to learn from but the government is not heeding it, because of their desperation to do deals with the Greens. A Madrid university study shows that, for every job created in alternative energy in Spain, 2.2 jobs were lost. That is not clean energy; that is poverty-making energy. The money could have been put to far greater use for both the environment and workers.

The premiums paid for solar, biomass, wave and wind power—which are charged to consumers in their bills—translated into a $774,000 cost for each Spanish Green job created since 2000. The author of the study told Bloomberg News: ‘The loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices.’ As the Australian’s editorial of 1 March noted, ‘by not taxing and not subsidising, the government could create twice as many jobs.’ BlueScope Steel chief executive, Paul O’Malley, told the ABC’s Inside Business that his company would face a $300 million annual bill from the carbon tax. This came on the top of a first-half net loss of $55 million from soaring raw materials prices. O’Malley has warned that the tax could spell the end of manufacturing in Australia. The prime minister and her deputy, Senator Bob Brown are turning their backs on the workers at companies like BlueScope.

What is the point in giving these workers’ families rebates for higher electricity prices when in the process you have taken away their income earner? A carbon tax does far more damage than can be redeemed by household power bill compensation. It is impossible to take billions and billions out of the working economy and still expect it to work. A carbon price or tax is a trauma inflicted on an economy. It is not benign. It will not work to make us more green and clean, because it destroys our capacity to deliver and afford emission-reducing behaviour and distorts the market in favour of highly costly and inefficient and ultimately unsustainable energy alternatives. As the Australian editorial of 1 March went on to say:

Importantly, most studies into potential green jobs fail to take into account the jobs that are lost. So the tradesmen employed constructing a wind farm are added but the lost jobs for the scrapped coal generation plant are not subtracted.

Then there is the market distortion that green job studies often ignore. Subsidies, mandatory targets and tax breaks push energy production to renewable but more expensive technologies, thereby increasing power prices. These increased costs are imposed on the entire economy, reducing investment and employment.

Stimulus spending in renewable energy and green jobs has been promoted on the basis that, to varying degrees, it could produce multiple wins: rebooting the economy, reducing carbon emissions, increasing energy security and encouraging innovation. But such unambiguous success is seldom, if ever, the case.

I will provide more detail about the case of Germany, a country that has been lauded for its renewable energy efforts and jobs. Australia must look carefully and learn from Germany’s experience. In the case of photovoltaics, Germany’s subsidisation regime has reached a level that by far exceeds average wages, with per worker subsidies as high as €175,000, or US$240,000. The amount of electricity produced through solar photovoltaics was a negligible 0.6 per cent despite its being the most subsidised renewable energy source, with a net cost of about €8.4 billion, or US$12.4 billion, in 2008. Using the same assumptions and a net cost for wind of 3.10c per kilowatt hour, the abatement cost is approximately €54, or US$80, a tonne. A report released in 2009 called A critical review of Germany’s Renewable Energy Sources Act found that, contrary to the view that Germany’s commitment to renewables is ‘a shining example to the rest of the world’, this is a cautionary tale—‘a massively expensive environmental and energy policy that is devoid of economic and environmental benefits’.

There is no substance to the argument that by acting early Australia can become a supplier of PV cells and wind turbines. We have seen here already how China undercut Australian manufacturers in PV cells. Germany thought it was being clever with all its subsidies on renewable energy, but the same thing happened there. According to the report, in 2006 and 2007 almost half of Germany’s PV demand was covered by imports. Here is proof that if Australia imposes a carbon impost when China does not then Australian jobs will disappear and China’s renewable energy supply jobs will increase. How does that help our economy, our workers or the world environment? It does not. We have not helped them at all. We have instead provided coal to China so they can power the manufacture of solar equipment to sell to the US.

I finish with this quote, which again highlights the cautionary tale of the German experience:

Empirical studies consistently show the net employment balance to be zero or even negative in the long run.

I will not continue with that quote, because time does not allow. We cannot be conned into thinking that renewables lead to greater numbers of green jobs, or any jobs for that matter. The experience overseas just does not support this claim, and we would be foolish to go down that path.

Sitting suspended from 1.57 pm to 2.00 pm