Andrew Robb (Goldstein, Liberal Party, Shadow Minister for Infrastructure and COAG and Shadow Minister Assisting the Leader on Emissions Trading Design) Share this | Hansard source

This is an issue of great consequence for all Australians, yet it requires judgement and great common sense, especially in the difficult times that the country is now experiencing. Sadly, however, on the question of climate change this government is legislating for certainty—the certainty of unemployment. The loss of tens of thousands of jobs will be directly attributable to the government’s flawed emissions trading scheme if it goes ahead. We all know that we best tackle climate change from a position of economic strength. It is no different for our nation than it is for a family. If a family or an individual wants to install a solar panel or a water tank to make a contribution to the climate, they cannot do it without a job or money in the bank. They cannot do it if they are not in a strong financial position. The same is true for Australia as a nation. Our ability to reduce the concentration of carbon dioxide in the atmosphere will be negligible if our economy is under severe financial pressure, if unemployment is high, if people do not have jobs, if debt levels are high and if investment is stalled. It requires people in jobs, it requires businesses to be performing strongly and it requires a cashed-up economy. If we get this emissions trading scheme wrong, not only will it do untold damage, it will also see the collapse of support for any future scheme designed to tackle carbon dioxide abatement.

Everyone agrees that as a country producing only 1.4 per cent of the world’s carbon dioxide emissions, there is no Australian solution to climate change. There is only a global solution. Everyone agrees that only coordinated global action will put a price on emitting or storing carbon dioxide. Only global action will have any impact on reducing the concentration of CO2 in the atmosphere. For this reason, the design of any Australian emissions trading scheme must be responsive to the existence, or the absence, of a global agreement. If an emissions trading scheme does not take account of what is happening, or not happening, in other countries then the design of the scheme is deeply flawed. Such a flawed design will seriously damage the competitive position of many of our industries and will see Australian jobs, investment and CO2 emissions being exported to countries where no price is being imposed on carbon. The government’s white paper on emissions trading is deeply flawed in this way. Our economy will be badly affected. I agree with Bob Brown that a badly designed scheme is worse than no scheme at all.

Before the election, the Prime Minister promised to introduce an emissions trading scheme which would lead to deep cuts in CO2 emissions in our economy but which would not disadvantage Australia’s export and import competing industries. This promise was repeated again and again by the Prime Minister in the lead-up to the election. He said that he would not disadvantage any of our export or import competing industries when he introduced a scheme, and the scheme would lead to significant and deep reductions in CO2 emissions. These were the expectations that were created and these were the promises that were given. This was the mandate that he had to tackle climate change in this country. Of course, that promise was repeated by many colleagues in the lead-up to the election, but since the election not one member of the government has dared to repeat that promise. They have not uttered the words that they will not disadvantage export and import competing industries.

As it has turned out, the government’s proposal is immensely complex. Of all the 50 or 60 industries that have come through my door, every one of them has a different scheme; every one of them has a different deal that is invariably unsatisfactory and invariably crippling. This is not a scheme to design one price of carbon; there are 50 or 60 or 70 or 100 prices of carbon because every scheme is different for every industry. This is a disaster. This government is in disarray on this program. This has been a mess from day one. This government scheme would seriously disadvantage our export and import competing industries and cost thousands of jobs. It will kill investment yet not produce any meaningful reductions in CO2 emissions. It fails on all counts.

Under the Rudd scheme, from year one Australian export and import competing industries will be effectively taxed an extra $2½ billion that they cannot pass on as they are price takers. This is in the face of a promise not to disadvantage export and import competing industries. Of the $12 billion that will come into the government coffers in year one, 44 per cent will come from trade exposed industries, but less than 25 per cent will go back to those industries as free allocations of permits. The difference is over 20 per cent, or around $2½ billion.

With our economy approaching recession—the Rudd recession—and much of it in recession already, jobs in many sectors will come under severe pressure with the introduction of this scheme. For many export and import competing industries in Australia, the design of the government’s emissions trading scheme will act like a reverse tariff. For these industries, we will be the only country in the world to effectively impose a carbon tax, a tax on industries that are price takers, a tax on industries that have no capacity to pass on costs not faced by their competitors, a punitive tax on industries that the Prime Minister promised not to disadvantage—$2½ billion in the first year. For example, Australia accounts for 0.6 per cent of the world’s steel production, but we will be the only country in the world to impose a carbon tax in the middle of the biggest world recession since World War II, according to the IMF. Even in Europe, all of the industries are covered until 2012 and there is serious talk of extensions for them all. Yet, we are talking about 2010 and a $2½ billion tax immediately on all of our export and import competing industries.

For many industries, a price of carbon of $25 per tonne of CO2 accounts for 50 per cent of their profits in good times and up to 100 per cent or more of profits in bad years. We could see a situation where companies will have to borrow to pay for their permits. Think about it: companies will have to borrow, in some cases, millions of dollars or tens of millions of dollars to pay for their permits. What banks in this current climate will lend tens of millions of dollars to pay for permits in the midst of the biggest credit crunch for 80 years? What is more, if we move too far ahead of the world, any cuts in Australia’s emissions will not necessarily have a global impact. Our aluminium and zinc industries produce 50 or 60 per cent less CO2 than similar industries in China and other countries. If we impose this tax and industries then move offshore, we could see a dramatic increase in global emissions. Not only will we cripple jobs in this economy, not only will we stymie our ability to rebound out of the recession that is coming, but we will in fact contribute to higher CO2 emissions around the world.

To rush the introduction of this scheme without knowing the outcome of the December 2009 global environment summit in Copenhagen, without knowing what President Obama will do and when—in fact the only budget allocation in the US system we have already seen for this is in 2012, some two years after we are supposed to be introducing it—and without knowing the impact of the global financial meltdown on our real economy is reckless in the extreme. We will meet the Kyoto target by 2012—one of only five countries in the world to do so. There is no need to rush into this if it is not ready. The government scheme is in disarray. Individuals who take action will make no contribution. Any families or any individuals who make contributions to reducing CO2 emissions will find that it only increases the capacity for industry to increase their emissions. The Treasury modelling was months overdue. It took no account of the financial crisis. It assumed that all other countries in the world were part of the global scheme. It was a useless piece of work. It is being used by the government purely as propaganda and as a prop to carry forward and not take any account of the discussions and negotiations that they have been having with industry. It is self-serving, it is misleading and it is irresponsible.

The government does not know if there are better approaches, because they forbid Treasury to look at other approaches. That is why we have had to set up a Senate select committee with the Greens to explore other approaches and complementary measures, and to see what else could be done in an effective way to reduce CO2 emissions without causing enormous damage to our economy. The Rudd scheme involves generating permit revenue of nearly $12 billion from year one—a massive increase in taxation. This will see a huge administration set up to churn billions of dollars back through the economy with the government picking winners as to who gets compensation and who does not. No wonder the Minister for Finance and Deregulation is here. He will have responsibility for another $12 billion of administration. We need to know how the government will effectively manage the churn that will take place of billions of dollars back through the economy. The government will be picking winners as to who gets compensation and who does not.

I predict that in the years ahead there will be no new resource projects in Australia that will get off the ground without companies coming cap in hand to the minister to get a quota of free permits from the government to make their investments competitive. It will foster a nanny state, a mendicant attitude. Already we are seeing investments being shelved by global companies which cannot believe that Australia would introduce a scheme with so much uncertainty, so much cost and so much disadvantage compared with our major competitors. Already we are seeing investment being killed.

When things in the world turn around, companies will look to invest heavily. However, they will not pour money into a jurisdiction where there is a cloud hanging over the long-term competitiveness of various projects and various industries. Australia will miss any upswing that is coming after what we are going through. We will lose a generation of investments. We are in the process of killing investments already with this proposed scheme that the government is putting before the parliament.

In many cases, also, the best placed companies to develop and fund the migration to cleaner energy processes, including renewables, are the big emitting companies themselves. Putting a big hole in the balance sheets of these companies will kill this opportunity. Stripping billions of dollars out of the balance sheets of companies to compensate households and to put money back into free allocations for some companies will strip the capacity of other companies and their balance sheets to do any meaningful migration to a more effective technology within their plants.

The government have little or no understanding of what is important in terms of investment in our resource sector and what has been important over many decades in the very strong position we have held as a country. On top of this, the government have made little or no attempt to consider the impact of the global financial meltdown on the capacity of companies to either administratively or competitively cope with the transition. If they had bothered to meet meaningfully with chief executives, they would have seen the great fear of companies as this financial meltdown has evolved, their great fear about their physical capacity to introduce what is going to be one of the biggest structural changes in Australia’s history into their operation in the middle of the worst financial meltdown in 80 years. You know it, Gary. You know it yourself. This is an impost which is going to cost Australia dearly in jobs, investments and finance.

The government’s scheme is in disarray. It is rushed and bungled. It is deeply flawed because it has been rushed to suit a purely political timetable. The design is not flexible enough to cope with the financial meltdown. The design of the Rudd scheme fails on all counts. It will cost jobs, tens of thousands of jobs. It will kill investment, which means future jobs, and it will do very little, if anything, to reduce CO2 emissions. No-one outside the government supports the scheme. Industry opposes it. The green groups oppose it. And there is substantial dissension within the government’s own ranks, within caucus and within cabinet, in opposition to this. With the design of the government’s emissions trading scheme, this government is legislating for unemployment. (Time expired)

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