Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | Hansard source

This Prime Minister and this government are in denial about electricity prices under their carbon tax—or emissions trading scheme—proposals. This government and this Prime Minister are engaged in a grand deception of the Australian people, with the pretence that the increase in electricity prices which is inevitable as a consequence of their policy will simply not occur. There will be electricity price rises. That is the design, structure and intent of their policy. That is what a carbon price is meant to do and that is what they are denying. It is time for the government to be held to account on the impact of electricity prices over and above that which would have occurred in any event. All of these prices have an impact on the cost of living, which is fundamental for mums and dads, pensioners, seniors, small business owners and farmers.

The starting point for today is, first, to set out the facts about the additional costs to electricity prices for consumers and small businesses as a consequence of the government’s intended and designed policy. The second thing is to deal with the fact that this comes about as a direct consequence of a fundamental breach of a core, bedrock promise made by the Prime Minister on 16 August, the Monday immediately before the election, and on election eve, Friday, 20 August. Then, the Prime Minister said to the Australian people: ‘I rule out a carbon tax.’ This is not a minor breach; this is a major and fundamental breach. The third thing is to deal with the fact that there is an alternative which can deal with emissions, without the impact on cost of living that is proposed by the government.

Let me deal with the facts. First, let us begin with what the Prime Minister of the day, the member for Griffith, said on 3 February this year in this place at the dispatch box. Mr Rudd was asked about the impact of the emissions trading scheme proposed by the government on electricity prices in addition to what would occur in any event. His answer was very simple. He told the House that Treasury modelling indicated that:

… in 2011-12 electricity prices would go up by seven per cent and that in 2012-13 they would go up by 12 per cent.

All up, he told the House that there would be a 19 per cent increase in the first two years of the government’s emissions trading scheme over and above all other electricity price changes.

The great myth being perpetuated by the Prime Minister and the government at this moment is that electricity prices would have gone up and therefore there is not going to be any impact. Let it be absolutely clear that there are two effects in place here. Firstly, there are underlying pressures on electricity as a result of network changes resulting from retail costs and margins and from other changes to wholesale electricity including tightening fuel costs. They exist, as the member for Groom has acknowledged elsewhere, as I have acknowledged, and as others have acknowledged. But over and above that—in addition to, on top of—there is a CPRS emissions trading scheme, or carbon tax, effect. Everyone in this House knows that. Everyone in this House knows that electricity prices for consumers will rise as a consequence of the government scheme in addition to what would have occurred in any event.

Let me move beyond what the member for Griffith has said about the government’s own Treasury modelling of a 19 per cent impact over and above every other electricity price effect in the first two years of the scheme. In March of this year the Independent Pricing and Regulatory Tribunal of New South Wales, in their review of retail tariffs and charges for electricity, made it clear that they would authorise a 35 per cent increase over three years for electricity if there was no CPRS and a 60 per cent price rise if there was. In other words, there would be an additional 25 per cent if there was an emissions trading scheme or a carbon tax. There can be no starker demonstration. They calculated the cost of the price rises in electricity to consumers without an emissions trading scheme or carbon tax, and then with one. The differential is an additional 25 per cent over the first three years. It is likely to rise, on the estimates of many, to the extent that there will be a doubling effect on the price of electricity over the coming eight to nine years.

The third of the sources is no less than Professor Garnaut, who at page 387 of his report made the position absolutely clear:

A major part, if not all, of the costs faced by electricity generators will be passed down the chain from electricity generators, distributors and retailers and finally to households through higher prices for electricity.

These higher prices will require households to spend a greater proportion of their incomes to obtain the same goods and services purchased before the introduction of an emissions price. This will reduce households’ real incomes and purchasing power.

Electricity prices will go up as a consequence of the emissions trading scheme or a carbon tax. Anything less than acknowledgement of that by the government is a pure distortion, a pure lie, a pure deception—and they know it. Fourthly, the same figures were given at page 122 of the BCA paper of 2009 prepared by Port Jackson Partners:

The ETS would have a 60 per cent increase on wholesale prices which would translate to a 24 per cent additional impact on consumer prices.

‘Just be honest’ is the message. The fifth of the elements of evidence is that Paul Howes himself made it absolutely clear on 9 November that it was ‘a rubbish argument to claim that a carbon tax won’t push up electricity prices’. He goes on:

… the whole point of putting a price on carbon is to make things more expensive so you don’t use them.

That is the theory; that is the purpose; that is the intent; that is the structure of what they are proposing. And that will be the effect. If they want to argue that, let us have a debate on mechanisms. At the moment we are engaged in a sheer case of undeniable distortion, deception and lying by the government which is simply not able to face the consequences and the costs of its action—and that will be a driving up of electricity prices for consumers over and above what would otherwise occur. This all leads to what we see from the Prime Minister, which is the deception. She said on 16 August, four days before an election:

There will be no carbon tax under the government I lead.

She said on 20 August, on election eve, as reported on the front page of the Australian:

I rule out a carbon tax.

I repeat: ‘I rule out a carbon tax’. This was not a minor deception; this was a fundamental, bedrock pledge on election eve as part of her pitch to Australia. The Prime Minister has broken that pledge. She knows that there will be an increase in electricity prices in the first three years of between 24 and 26 per cent, in addition to everything else, as a consequence of what she is proposing. If she believes in it, she should argue for it. If she believes in it, she should have the courage to accept the consequences. If she believes in it, she should tell the Australian people the truth. That is the test for this Prime Minister and she should release the full Treasury modelling of the impact of electricity prices on consumer prices under her scheme before parliament rises.

That leads me to the third element of my contribution. There is an alternative. We have set down a very clear approach, which is abatement purchasing; engaging in a carbon buy-back. We see elements of this scheme in place in Japan and in Switzerland. It is what Canada has proposed as their scheme, and it is how the New South Wales Greenhouse Gas Abatement Scheme works. Under that scheme each tonne of abatement procured at the moment costs about $7.15, as opposed to the government’s proposal of, in the first year, $4½ billion of revenue to purchase 13 million tonnes—an effective abatement price of $340 per tonne. It is an extraordinarily ineffective scheme. The reason it is ineffective is that there is a massive dead weight cost associated with it. It translates to massively higher electricity prices, whereas if you target the problem by specifically purchasing the carbon buybacks which are necessary then you can clean up the environment but at a massively lower cost because there is no dead weight overhang.

That is the simple alternative approach. We will match the targets, we will achieve the time frames, and we will do it without the massive increase in electricity prices. The test for the Prime Minister is absolutely clear—release the Treasury modelling on the effects of the emissions trading scheme on electricity prices by the end of next week; come clean and be open with the Australian people and tell them that electricity prices are going up. (Time expired).

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