Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Hansard source

I rise to speak in favour of this motion that calls on the Australian government to follow the United States in calling for aircraft registered by Australia or the operators of those aircraft to be excluded from the European Union's Emissions Trading Scheme. The coalition wants the government to pursue all avenues under World Trade Organisation agreements to test the legality of the scheme and join any other proposed international action to prevent the application of the EU ETS to non-European airspace.

The aviation industry has always been a challenging one. Sir Adam Thomson, the former boss of British Caledonian, once said:

A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you've lost your trousers—you're in the airline business.

In the past eight months we have seen the demise of Air Australia, while our national carrier grounded its entire fleet, announced further rationalisation after revealing its international division was losing over $200 million a year, and planned cuts in capital expenditure of $700 million. With IATA claiming the European system will cost airlines up to $1.23 billion this year, rising to $3.6 billion in 2020, global carriers such as Qantas need the EU's ETS like a rudderless aircraft.

As the shadow minister for tourism and regional development, I can understand that the tyranny of distance leads to the airline industry playing a vital role in bringing international visitors to our shores. Tourism expenditure, though, is mostly a discretionary spend. Making air travel more expensive will therefore have the effect of reducing the number of international visitors or cutting their expenditure in our country.

However, it is not just the potential effects that the EU's carbon tax will have on tourism that concern me. As Paul Kelly sang, 'From little things, big things grow.' When the global economy is growing, there is an impetus to grow the economic cake through the further liberalisation of trade. At times of economic uncertainty, as now, the tide flows in the other direction and the spectre of protectionism rears its ugly head. What might seem a little thing now has the potential to grow into a big thing by means of major trade conflict.

The introduction of the European Union's ETS system this year—in which 4,000 airlines will pay for the pollution they produce over the entire distance of each flight into and out of the EU—has already sparked negative reactions. Ten Chinese and Indian airlines have already refused to provide the EU with the necessary carbon emissions data. India has already threatened to ban European airlines from its airspace if Brussels sanctions Indian carriers for this refusal, with their environment minister calling the scheme a '"disguised" unilateral trade measure introduced under the name of climate change'. In March, there were claims that China was blocking Airbus aircraft orders for Chinese airlines worth $12.29 billion. Airbus said it was also seeing retaliation threats from 25 other countries. Russia has threatened to limit airlines from EU countries' use of air routes over Siberia and preference non-EU carriers instead. The US government has urged the EU to reconsider its current course or it will be compelled to take appropriate action.

Like the ill-conceived carbon tax here, the EU's ETS is not a way to reduce carbon emissions. It simply reduces the capital available to airlines, which Boeing's CEO said would 'prevent airlines from buying modern equipment that will reduce their environmental footprint'. The European Union has the right to make laws for flights within Europe. However, as the Director General of IATA stated, it does not have the right to pocket 'taxes for emissions by non-European carriers over the sovereign territory of non-European states.'

Any move to impose taxes without an agreement reached through the multilateral mechanisms of the International Civil Aviation Organisation needs to be opposed. Australia needs to stand with those nations in urging the EU to reconsider and avoid a trade war that Europe in its present economic situation can ill afford. I appreciate the government's embarrassment over proposing the world's biggest carbon tax, which Qantas has said will cost them $115 million and which will cost Virgin Australia $45 million in the first 12 months on their domestic operations. However, it should not be an excuse for continued inaction. They should vote for this motion to support our airlines and demonstrate this House's bipartisan opposition to the EU ETS.

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