Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Hansard source

I rise to speak on the Clean Energy Bill 2011. In the absence of a global emissions trading scheme, imposing a carbon tax in Australia is an act of economic self harm and totally futile from an environmental perspective. I think that both sides of the House share the view that we should protect our land and our country, but this bad policy does nothing. There is no obligation to support bad and futile policy in the pursuit of supposedly protecting our land.

To better understand why going it alone on a carbon tax will harm the Australian economy, think for a second about the question solely in an Australian context. What would happen if a great big new tax on carbon was levelled at businesses only in my home state of Victoria and in no other state? In no time at all, in order to remain competitive, Victorian businesses and jobs would start to relocate—to the great detriment of the Victorian economy—to New South Wales, to Queensland and to other states where no tax was applied, and the emissions that relocating businesses generated would go with them. If you go back and think about the proposed carbon tax, you will realise that the same thing will happen, except that in this case it will happen on a global basis, because our businesses, becoming increasingly uncompetitive, will simply relocate to other parts of the world, and the emissions created by those businesses will go with them. Australian businesses, jobs and emissions will relocate where no tax applies.

Key Republican congressman on climate change Jim Sensenbrenner, who led the US congressional delegation to Kyoto, described what the Gillard government is doing as 'unilateral economic disarmament'. We know that the prospects of either a cap-and-trade system or a carbon tax are dead in the US. We know from key Democrats that President Obama will not be campaigning on either in the lead-up to next year's election. After the failure of the Copenhagen conference, the world is further away from a global agreement than it has ever been. The government lectured us for three years about the importance of a global scheme in the lead-up to the last election, but now we are being lectured about the importance of bringing in a scheme unilaterally. The world is further away from a global arrangement than ever before, yet there is urgency here, in the face of very difficult economic circumstances for many sectors of manufacturing, to bring in a great big new tax. It makes no sense unless you look at the politics behind the introduction of this bill.

While the Gillard government likes to highlight the European emissions trading scheme as a reason that we need to undermine our great strengths, even in Europe there is a high degree of pessimism about the prospect of a global scheme. In fact, the UK parliament's Energy and Climate Change Committee recently launched a new inquiry into the EU emissions trading system. The committee said that, in the absence of binding emissions reduction commitments under the UN reduction framework, the scheme 'is looking increasingly isolated'. It went on to say:

The lack of an international framework for emissions reductions and carbon trading poses some serious difficulties for the future viability of the EU ETS …

Regardless, though you would not know it from the rhetoric, the European scheme—which has been the subject of huge rorts—is really nothing more than a pilot scheme, is a mere pilot compared to the carbon tax proposed here. The European scheme does not apply at all, in many cases, to electricity generators, much less many other trade exposed industries. The Gillard-Brown scheme will raise more in revenue in its first four months than the European trading system has raised in total over the last five years.

If you were to put a price on carbon, this scheme would be just about the most inefficient and most complex way you could go about it. It is the most bureaucratic, the most interventionist and the most socialistic scheme that you could contrive. There are many other schemes that you could use if you were to put a price on carbon. There are even cap-and-trade schemes which you could design to put a price on carbon and which would give you exactly the same price but not strip the balance sheets of companies, which is what will happen with this government scheme—they will tax every tonne of CO2, and the cost of abatement is only one-sixth of the total tax take. This is a scheme designed to maximise the tax return—as we are seeing in Ireland, where they have just doubled the price of carbon because they have a fiscal problem. The same thing will happen in Australia, and it will not be one scheme but 500 schemes.

The so-called '500 big polluters' that Labor has raged about for 12 months no longer matter, but we still do not even know which companies will be taxed. When we do, however, there will be bureaucrats crawling all over them. Under the government's scheme, different activity definitions apply, different levels of assistance apply and the enormous tax churn not only underscores the scheme's inefficiency but also suggests that, first and foremost, the scheme is a vehicle for wealth redistribution. Herein lies the fundamental difference between the carbon tax and the coalition's far more efficient direct action policy. The carbon tax approach requires many tens of billions of dollars in compensation because of the huge increases in electricity prices, and the direct action approach requires no compensation because it does not drive up electricity costs. Frontier Economics exposed this fact with an analysis it did based on Treasury's 2008 modelling of a carbon price. Looking at electricity generators alone, it found that the cost of technology to reduce CO2 emissions from 2012 to 2020 was $6.6 billion—that is, the cost of abatement for electricity generators over the next eight years would be $6.6 billion. During that period the government would reap not $6.6 billion but $37.5 billion in tax from the generators, and consumers would pay an additional $45 billion for electricity—the price would be passed on to electricity consumers. This shows that those who are creating the CO2—the so-called 'big polluters', the derogatory term used by this government—are not paying. It will be consumers who pay, and everyone knows this. The government is doing itself a great disservice by trying to imply that the tax falls on the so-called 'big polluters' and not on individual Australians and small business.

This shows, too, that the government's tax take is almost six times the actual abatement cost, and the increased cost of electricity is nearly eight times the actual abatement cost. As Frontier's Danny Price prophetically said earlier this year 'the excess tax will be churned via the political process which will bring its own distortions'. Bureaucrats will be making decisions about technology and innovation, not companies themselves. This town will be crawling with lobbyists seeking some investment crumbs from the government's table. It is a giant money-go-round, but the money will end up in the hands of politically well-chosen beneficiaries. Danny Price said that political control of so much tax revenue explains why the Greens have been such enthusiastic supporters of the carbon tax. He said, 'They will be in the box seat in deciding how these funds will be distributed,' and he was spot on.

These bills will provide for the creation of the $10 billion Clean Energy Finance Corporation—or the Bob Brown bank. The slush fund—

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