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

Our concern with the European Union ETS's application of a tax on international flights is about fairness and about effectiveness. Let me begin with the issue of fairness. If a new entrant were to enter the market to fly from Australia to the European Union, it would be hit with a massive tax because it would not be given the concessions that existing participants already have. Let us say, for example, that we were to have Jetstar or Virgin Australia fly directly to Europe. There is a prohibitive entrance fee on their ability to participate, and that is a completely uneven and inequitably levied tax. Secondly, what we also see is this same situation where existing Australian carriers—most notably Qantas, of course, as well as Virgin's international service—are also prejudiced. Let me give an example here. If Qantas flies from Australia to London, the tax is levied on the entire journey. Other flights, however, which are only from Australia to Abu Dhabi and then from Abu Dhabi to London and which have a different origination to or from Europe as the flight code, will only be taxed on the Europe to Abu Dhabi or Abu Dhabi to Europe leg. In other words, Australian carriers are specifically prejudiced under this legislation and under this particular tax regime. So it is an approach which is uneven and unfair, both for new entrants—which will effectively be cost-prohibited through non-tariff barriers from participating in international aviation involving Australia and Europe—and through a clearly unequal regime in relation to existing competitors and existing participants. Again, Australian competitors are treated badly.

But let it not be thought that it is only Australian competitors who feel that this is unfair and inappropriate. The government have made much of the fact that they think that China is about to embrace a heavy emissions trading scheme for itself. Clearly that is false. In the best-case scenario, in 2016 there might be a very thin system of $1.55, which is one-eighteenth or thereabouts of the system applying in Australia under the government's ETS, with what is projected to be $29 a tonne. In other words, there is a massive difference between the two rates, let alone the breadth across the economy. But the Chinese themselves have said that they believe that the European approach is unfair and unreasonable and that they will protect the 'rights of our nationals and our companies'. In particular, the Civil Aviation Administration of China notified all Chinese airlines that they cannot join the EU Emissions Trading Scheme or charge it to customers without government approval. In other words, the Chinese government has gone far further than anything proposed in Australia or applying to Australia and has put in place a ban on its airlines participating in or paying towards the European ETS in relation to international aviation.

In the United States, the US Air Transport Association, in addition to American Airlines, Continental and United Airlines, has initiated a legal challenge to the EU ETS on aviation, stating that it contravened the Chicago convention, the Kyoto protocol and the US-EU Open Skies Agreement and was contrary to principles of international of law. The US Secretary of State has written to the EU declaring that their actions are unilateral and saying:

… we strongly object on legal and policy grounds to the EU's plan to subject our operators to the EU's ETS. The EU is increasingly isolated on this issue.

So we have the two biggest players in the world, China and the United States, flatly and clearly rejecting this particular application of the EU Emissions Trading Scheme to extraterritorial activity. What we are saying to the Australian government is that we should take the same steps in a modest way by making it clear to the EU that we do not think their system is legal and, if they do not accept that, participating in any international challenge. (Time expired)

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