Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

With the arrival of the carbon tax on 1 July, we will see cascading price increases throughout much of the economy, including in particular a sharp increase in electricity prices continuing and being exacerbated as a result of the introduction of the carbon tax. In my own electorate of Bradfield, sporting clubs wishing to hire sports grounds for the purpose of practice on winter evenings, who are required to play a floodlighting fee to Ku-ring-gai council, are facing sharp increases in the charges that they are required to pay, as a consequence of steeply rising electricity prices, which are of course associated with the introduction of the carbon tax. The floodlighting fee charges that are faced by sporting bodies in Ku-ring-gai are going to increase by up to 22 to 25 per cent.

That is just one instance of the kind of impact throughout the economy of the introduction of the carbon tax, because the carbon tax is going to contribute to an increase in electricity prices, coming on top of substantial price increases that have already come through in recent years. The regulated retail electricity prices in New South Wales will increase in July 2012 by up to 19.2 per cent. It is hardly surprising that Ku-ring-gai council needs to pass on increases of that magnitude, and it is local sporting bodies which are bearing the impact of that by being required to pay substantial increases in the charges for the floodlit sports grounds they require for practice on dark winter evenings. This is but one instance of many of the way that the increase in prices due to the carbon tax is going to cascade through the economy. What do we hear from the government in response to this? The government says, 'Don't worry because the ACCC is on the case and they are going to come down hard on any business which increases prices.' For example, the member for Isaacs recently in the parliament said, 'If businesses make false claims they run the risk of breaching the competition law and could expose themselves to a $1.1 million fine.' Recently in the parliament the Treasurer said:

I make the point that those sorts of claims and pricing decisions will be subject to scrutiny from the ACCC.

So do not worry about price increases because the ACCC is apparently there to protect against that! This is a deeply misleading claim from the government and it is a claim which deliberately obfuscates the key point about how the carbon tax is designed to work. It deliberately obfuscates the key point about the very nature of the policy design.

The design and purpose of the carbon tax is to reduce carbon-intensive economic activities by increasing the price of goods and services which draw on a carbon-intensive production process. That is the very purpose and intent of this regulatory scheme. It is designed to use the price signal to make goods and services which are based upon a carbon-intensive production process more expensive in relative terms. Of course that means that in the energy sector in the area of electricity generation or transport, or in a whole range of other sectors which use a carbon-intensive production process, prices are going to increase. Then we hear repeatedly the economically illiterate claim from senior members of the government that the tax falls on the big polluters so everybody else need not worry.

Mr Deputy Speaker Leigh, you would have on many occasions drummed into first-year economics students the difference between the legal incidence and the economic incidence of a tax. The economic incidence of the carbon tax will cascade throughout the entire economy. It will drive prices up across a whole range of activities and the reason is that that is what it is designed to do. The carbon tax is designed to increase the price of a whole range of activities so as to produce a consumption effect to reduce consumption. So for the government to argue that the ACCC is going to prevent price increases, to argue that only a small number of companies will pay the tax, is misleading and wrong.

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