Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister, and I refer her to her statement before the election that there will be:

… no carbon tax under the government I lead,

and her statement after the election that a carbon tax is:

… the most economically efficient way of dealing with carbon pollution.

Yet this week the Secretary of the Department of Climate Change and Energy Efficiency told the Senate that since 2008:

We have not conducted full economy-wide modelling of the carbon price.

I ask the Prime Minister: how can she responsibly claim that a carbon price is economically efficient if there has not been any new economic modelling for the past three years?

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I am not sure what it is that has come upon the opposition in recent days and is particularly on evidence today, but they seem to be in denial of all of the fundamentals of economics, particularly market economics. Maybe since they started using One Nation to generate their budget figures they have lost any understanding of what makes a competitive, modern economy. It follows from basic economic principles—and the economic commentary about this is wide in Australia; it is worldwide—that the most efficient way of dealing with carbon pollution is to put a price on carbon. Why? It is because it causes people to innovate, to reduce their exposure to that price and to reduce the amount of carbon pollution that they are generating. This is simply not capable of being denied. It is the same as trying to deny that demand and supply have an impact on prices. It is a basic economic rule.

Consequently, I have said in this parliament that we will work with people of goodwill through the Multi-Party Climate Change Committee to put a price on carbon. I know that sitting amongst the coalition are people who would prefer to be part of that process—who accept the science, who accept that pricing carbon is the most economically efficient way to do it and who were prepared to work with the government in pricing carbon under the Carbon Pollution Reduction Scheme.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. Reluctant as I am to interrupt the Prime Minister’s monologue, I did ask her: how can there be any responsibility in what the government is doing when there has been no economic modelling done since 2008? And that is the question she should be answering.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The Leader of the Opposition will resume his seat. In putting the question in a different way, the Leader of the Opposition may have had a point of order, but his question went to ‘how can the Prime Minister claim’. The Prime Minister is responding.

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Thank you very much, Mr Speaker. As I said, we will use the opportunities of this parliament, and I know there are many coalition members who want to join us to work on pricing carbon. To the Leader of the Opposition, what I can say is this: the Leader of the Opposition completely misunderstands the purpose of economic modelling. You do not throw into economic modelling a general proposition that pricing carbon discourages carbon pollution and is an economically efficient strategy and ask it to spit something back out. Economic modelling is for the purpose of diagnosing and looking at a particular price. You would not go to an economic model and say, ‘If I constrict supply of a commodity, will the price go up?’ An economic model will tell you that if you constrict supply by 10 per cent then you can anticipate the following price effect. That is what economic modelling is for.

So I would say to the Leader of the Opposition: I know that he is grossly embarrassed by his weathervane approach to climate change.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

Mr Pyne interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Sturt!

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I know that his colleagues are grossly embarrassed at sitting behind a man who believed in the climate science and then said it was absolute crap, who believed in pricing carbon and then was opposed to pricing carbon, and who then believed again in pricing carbon and then was opposed again to pricing carbon. I know that that is grossly embarrassing for the opposition.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

Mr Pyne interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Sturt is warned!

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

What I would say to the Leader of the Opposition is: do not come to this parliament with these economic absurdities. All you are doing is trashing the brand of the Liberal Party. It is actually pathetic to watch.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Mr Speaker, I seek leave to table the statement of the Secretary of the Department of Climate Change and Energy Efficiency:

We have not conducted full economy-wide modelling of the carbon price.

Leave not granted.

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

Following on from the Prime Minister’s paralysing and excellent response to the Leader of the Opposition’s question—

Opposition Members:

Opposition members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Reid will resume his seat. I remind the House that they are eating into their time for question time.

Honourable Members:

Honourable members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The Speaker through another misspeak having eaten up the time again, the member for Reid has the call and he will come directly to his question.

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

I am now prompted to ask the Minister for Climate Change and Energy Efficiency: will the minister outline to the House the need for a carbon price, including any recent research on this issue?

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

I thank the member for Reid for his question. Of course to tackle climate change we need to cut carbon pollution. As our economy grows—

Opposition Members:

Opposition members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The minister will resume his seat. The House will come to order. The Minister for Climate Change and Energy Efficiency has the call. He will be heard in silence.

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

To tackle climate change, the simple fact of the matter is that we need to cut carbon pollution in our economy. As our economy grows we have to ensure that pollution does not grow with it. The fact of the matter is that a carbon price through a market mechanism is the most cost-effective way of cutting pollution in our economy. A carbon price will cut pollution, it will drive investment in clean energy and it will provide business certainty for investment, especially in the energy sector.

This week the Australian Industry Group released an important report about energy prices. The report echoes the government’s view that a carbon price is needed in our economy. The AIG report is in fact clear that energy prices have already risen significantly and that they are set to rise further with or without a carbon price; but, importantly, the report emphasises that a carbon price could, in fact, help reduce the impact of future electricity price rises. The report makes clear that electricity price rises are occurring because of the tens of billions of dollars of investment that are necessary in our electricity distribution infrastructure. In fact, on that point the Australian Energy Market Operator has estimated that we will need up to $120 billion of investment over the next 20 years in our electricity network.

The AIG report makes clear that without the certainty delivered by a carbon price we are going to see higher electricity prices due to poor investments being made. To answer some of the interjections from the other side, I will quote from the report. It says in the section attributed to the CEO of the Australian Industry Group:

… while much concern has focussed on carbon pricing, energy prices are going up significantly with or without it. Some of those cost drivers could be reduced by a well-designed carbon price. This could eliminate the policy uncertainty that is damaging investment in new electricity generation …

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

Ms Vamvakinou interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The member for Calwell is now warned.

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

The message which echoes the position that the government has been articulating for some period of time is that not only is a carbon price needed to resolve the uncertainty for investors in the energy sector but it will, in fact, mitigate price pressures in the electricity market for some time to come. This is something that it would be useful for the opposition to understand. We have before us a Liberal Party that does not understand markets and a Liberal Party leader who does not understand the allocative efficiency of markets.

Honourable Members:

Honourable members interjecting—

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Those on my left will come to order.

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

You do not need modelling to tell you that markets allocate resources efficiently and that a market mechanism is going to be the most effective way of pricing carbon in our economy. It is a message you should take on and understand.

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

I seek leave to table the report to which the minister was referring.

Leave not granted.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Flinders will resume his seat. Is the member approaching me to ask a question?

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

Yes.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Boothby was unlucky yesterday. The member for Flinders should have learned from that.

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Hockey interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for North Sydney did not lose the vote because of that one vote. The member for Flinders with a question.

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

My question is to the Treasurer. I refer the Treasurer to precisely the same report just discussed on energy prices released by the Australian Industry Group, which predicts that a carbon price of $26 a tonne will push up household electricity bills by an additional $300 a year in the first year alone. Will the Treasurer acknowledge, as government officials did this week, that this $300 per family will be additional to any other increase in electricity prices? Why is a tax that he ruled out in August as ‘hysterical’ policy now?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I am delighted to receive that question because, as the Prime Minister and the Minister for Climate Change and Energy Efficiency have said, a carbon price is the cheapest and most efficient way of dealing with carbon pollution. That is economics 101, which is not understood by anybody across the chamber. It is understood by the member for Wentworth, who nods his head at the irresponsible behaviour of all of those people over there. The member for Wentworth understood this when he agreed with the government on that fundamental proposition in this House just over one year ago. Just over one year ago the Liberal Party were in this House and they believed in the proposition that I just put to the parliament. That was suspended and all economic rationality went out the door when this Leader of the Opposition took the job. He has now suspended the fundamental rules of economics. We have seen it in here, whether in the debate on the carbon price, their lack of understanding of the need to get rid of unfair mortgage exit fees or their failure to understand debt and deficit in the economy. We see it time and time again. Not only are they economically irresponsible but they have become economically irrational.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer will come back to the question.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

That is what is on display in this House question time after question time. They make a lot of modelling. There has been a lot of modelling done about putting a price on carbon. Let us start with the Stern report and go through model after model all based on that fundamental proposition.

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

Mr Speaker, a point of order on relevance: the question was in relation to whether there would be an additional $300 electricity price hit to families.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer will respond directly to the question. He has come back to the question after wandering a little wide.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

They were making a lot of modelling and they have quoted some modelling which is contained in one report. The answer is it depends on the design of the scheme.