Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise today to discuss the Rudd government’s climate change legislation and, in particular, its plan for an emissions trading scheme in Australia and the effect it will have on my constituents in the Swan electorate. With reference to two of the many constituents who have approached me on this issue, I would argue that this scheme has the potential to severely disrupt business in Western Australia and I urge the government to consider a more effective way of dealing with this issue.

I was recently contacted by two constituents who raised some extremely important points that I would like to take up with the House. The managing director of a locally based resource company contacted me, having read about the Labor government’s Carbon Pollution Reduction Scheme. The company in question has just completed a pre-feasibility study for a major resource subsidiary project to take place in the goldfields region of WA. This constituent’s assessment of the impact of the proposed legislation on his business is horrendous. It would not only stop his company from spending $1 billion in WA that would benefit all the people who live there with downstream benefits but also decimate the whole sector of his industry. It would make them less competitive by 16 per cent against their international competitors. This would see the shutdown of the industry in Australia and the massive export dollars that it earns. As there is so much uncertainty in the legislation, business investors worldwide are looking at Australia and thinking that we are taking a huge risk without global participation. This company has been trying to raise capital but overseas investors are not prepared to take the risk, because of the uncertainty, and this will probably kill the $1 billion capital investment in Western Australia.

If the current Rudd climate proposals become law, my constituent’s company will not qualify for assistance as an emissions-intensive trade-exposed industry. Without this assistance, the industry would risk being out-competed globally by nations that are not burdened by a carbon tax—in this case, the Philippines, Russia and Indonesia. The uncertainty surrounding the Carbon Pollution Reduction Scheme will make it difficult to attract investors. Ultimately the project may not go ahead, and that would cost WA jobs and it would be disastrous for the Australian economy.

I have also been contacted by the director of a public company based in WA—again in my electorate and again regarding the Carbon Pollution Reduction Scheme. The company is looking at investing $2 billion into a resource extraction plant in a high unemployment region of Australia. Under the Rudd government’s climate change proposals, this project would be liable for an estimated $40 million in tax per year. Again it seems likely that this company would not qualify for assistance as an emissions-intensive trade-exposed industry. If there is no temporary protection against this tax it is likely that the project will be discontinued and relocated to a more favourable business climate, probably in Asia. Australia would lose an opportunity for $300 million to $500 million in foreign currency.

These pleas for help from local businesses demonstrate several points. First, the uncertainty surrounding the CPRS caused by the Rudd government’s confusion is crippling Australian industry. The Rudd government is very happy to announce these grand policies—the Prime Minister’s ‘grand designs’ for the country—but they seem never to be properly costed and thought through. Is it any wonder business confidence is at such an unprecedented low? Second, the Rudd government is rushing through these proposals without any appreciation of the damage they are doing to the competitiveness of businesses in Australia. Third, the Rudd government clearly underestimates or just does not care about the number of jobs that will potentially be lost by such a scheme. I do not believe that the examples I have just raised are isolated and I do not believe I am overstating the threat to Australian businesses. I would like to read to the House an extract from the Australian newspaper of Friday, 22 August 2008 titled ‘Carbon plan a company killer’. It says:

A “real world” analysis of the impact of the Government’s plans based on 14 companies that opened their books for the Business Council of Australia revealed that even with the Government’s proposed compensation, three firms would face a carbon cost so high they would close. The future of another two of the 14 companies drawn from hard-hit sectors such as aluminium refining, cement manufacture, petroleum refining, steel making, sugar milling and zinc and nickel refining would be extremely bleak. The companies, with annual revenues ranging from $90 million to more than $3 billion, revealed their confidential financial data to BCA consultants Port Jackson Partners on the basis that their identity would remain secret. But the research shows that on average, the companies’ pre-tax earnings would be cut by 22 per cent. The worst affected would suffer a 136 per cent reduction in earnings.

I am not a climate sceptic; I am a climate realist. I understand the need for action to cut the world’s carbon pollution, but I feel duty-bound to ensure that this happens in a responsible manner. That is why the coalition supports, in principle, an ETS as part of a three pillars approach to climate change. (Time expired)