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Dick Warburton's inaccurate claims

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THE HON GREG COMBET AM MP Minister for Climate Change and Energy Efficiency Minister for Industry and Innovation MEDIA STATEMENT GC 292/12 25 October 2012


The executive chairman of Manufacturing Australia Dick Warburton has made a series of factually incorrect statements about the Federal Government and its policies, including carbon pricing.

In comments reported in The Australian Financial Review today, Mr Warburton has made so many factual errors and deliberate misrepresentations of the Government’s policies and processes that the record needs to be corrected.

It should also be noted that Mr Warburton’s comments breach the usual courtesy of confidentiality at private meetings and are a discredit and disservice to the companies he claims to represent.

Along with my other Ministerial colleagues, I have implemented numerous measures to support manufacturing and the interests of manufacturing firms are best represented through relationships of integrity and mutual respect between industry and Government.

Warburton Claim 1: “We had a meeting with Combet last week and every question we asked about these areas we’ve discussed he said, ‘You have to go and see minister so and so,’ etc. That was one frustration.”

Fact: This is inaccurate. This meeting occurred three weeks ago and I answered each question asked at the meeting.

Warburton Claim 2: “Within the Government you have the minister for industry but you also have a minister for innovation.”

Fact: There is one Minister for Industry and Innovation in the Government.

Warburton Claim 3: “We don't believe it [the carbon price] should have been brought in and at the rate of $23 per tonne of carbon two to three times what the ‘going rate’ is in Europe and then supposedly moving to an ETS in 2015.”

Fact: The headline carbon price starts at $23 a tonne but for Australia’s most emissions-intensive, trade-exposed industries the effective carbon price after government assistance in the form of free carbon permits is $1.30 a tonne. The carbon pricing mechanism is legislated to become a fully flexible ETS in 2015. There is no supposition, it is legislated.

Warburton Claim 4: “Minister Combet made statements that 20 other countries either have introduced or will be introducing a carbon tax or an ETS by 2015 - that is absolute codswallop. It is completely misleading.”

Fact: From 2013, emissions trading schemes are expected to be operating in over 50 jurisdictions and this number will continue to grow over the decade. The Climate Commission found that these emissions trading schemes will cover 850 million people. Already, emissions trading schemes are operating at the national level in 33 countries, including New Zealand, the UK, Germany and France. Regional schemes are operating in another four countries including the US, Japan and Canada. Legislation has been passed for emissions trading to commence in Korea and China. On top of that, another 15 countries are introducing market based mechanisms to reduce emissions, and most of them are looking at a cap and trade schemes to do so. This includes a range of countries in South America, the Middle East and Asia. From 2015, the Australian ETS will be linked with the European ETS, which will result in a common carbon price between Australia and 30 other countries.

Warburton Claim 5: "It does not take into account that China, for example, may have something like seven to nine provinces that may impose a tax, and even then it would be around $1.50 a tonne.”

Fact: Advice to the Commonwealth Government is that the Chinese Government at the National and Provincial levels are still working through price controls and price determinants. There is no basis for a statement that their carbon price will be $1.50 a tonne.

Warburton Claim 6: “And they [China] have stated, along with India, that they may introduce a carbon tax or ETS, but if they do it will not take effect until 2020. It's a long way off before they do it.”

Fact: Three Chinese pilot Emissions Trading Schemes have already been officially launched in Beijing, Shanghai and Guangdong. The regional emissions trading schemes will begin next year across seven cities and provinces. These schemes will cover over 200 million people and more than 2000 businesses. China has committed to a national scheme from 2015.

Warburton Claim 7: “The United States has also backed right away from a carbon tax or an ETS. Canada’s backed right away, as have Japan and Russia.”

Fact: In the United States, nine states already have an emissions trading scheme. California is set to be the tenth with an Emissions Trading Scheme that will cover up to 85 per cent of emissions in a state of 40 million people. In fact, it will be bigger than Australia’s national scheme by 2015.

In Canada, carbon price schemes either operate or are being developed in four provinces which cover more than two thirds of Canada's population.

And Japan just introduced a nation-wide carbon tax called “The Tax for Measures against Global Warming”. It started on 1 October 2012. There is also a regional Emissions Trading Scheme in place in Tokyo and Saitama, covering more than 20 million people.

Warburton Claim 8: “I have no doubt it [the carbon price] will be repealed. Abbott definitely cannot go back on that promise; he is going to have to repeal it. He can't be as adamant as he has been and not.”

Fact: Mr Abbott's threat to repeal the carbon price should be of concern to the business community. It would be the epitome of sovereign risk. Since carbon pricing has been

legislated, electricity markets and liable entities have been pricing carbon into investment decisions, operational decisions and forward prices. Repealing the carbon price would be damaging to investment confidence and undermine the business decisions which have already been taken.

Warburton Claim 9: “There is no difficulty in repealing the tax; the difficulty is that the returns from the tax have already started to be distributed. So if you do repeal it, how are we going to compensate that in the budget allowance?”

Fact: Mr Warburton has here inadvertently exposed a major flaw in the Coalition’s policy- it would mean the Coalition would also reverse the Gillard Government’s household assistance, increasing taxes on working Australians and cutting pensions and family payments. What he doesn’t point out is that repealing the carbon price would also mean scrapping Government support for manufacturers he claims to represent, through the $1.2 billion Clean Technology Program and the $300 million Steel Transformation Plan, and support for clean energy.

Media contact: Mark Davis; Gia Hayne 02 6277 7920