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

I have received a letter from the honourable member for Flinders proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The impact of the Government’s proposed carbon tax on the cost of living

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

As of today we know two things about the impact of the government’s carbon tax on the cost of living. First, in the first year alone it will be an additional $300 hit per family. That figure will rise. Within three years it will rise to a 25 or 26 per cent increase over and above everything else that would otherwise have occurred. Second, we have discovered something of great importance to the Australian public. Prior to today, the government had argued that petrol should not be included in any carbon tax. As of today, petrol is back in the carbon tax. The Treasurer was given two opportunities to rule out petrol from a carbon tax. The Prime Minister could have dealt with petrol within the carbon tax. The Minister for Climate Change and Energy Efficiency could have dealt with petrol in a carbon tax. They had multiple opportunities to rule out petrol from a carbon tax, so what Australians know from today is that electricity prices are going up because of this government’s decision, and petrol prices, contrary to everything else the government have said over the last two years, will also be going up.

All of this comes against the background of a gross breach of faith. What was it that the Prime Minister said on the day before the election, 20 August 2010, on the front page of the Australian newspaper? ‘I rule out a carbon tax’. What did she say four days before that, in the now infamous television interview on Channel 10 on 16 August? ‘There will be no carbon tax under the government I lead.’ What did the Treasurer say on 12 August, right in the middle of the election campaign, when asked whether or not there would be a carbon tax? ‘We have made our position very clear. We have ruled it out.’ Most magnificently, what did the Treasurer say on 15 August on Meet the Press? ‘What we rejected is this hysterical allegation that somehow we are moving towards a carbon tax.’ That is precisely what is happening. That is a breach of faith, and this government went to the election on a grand, systemic, oft-repeated lie by the two people who sought office as Prime Minister and Deputy Prime Minister of this country. The most fundamental pledge of the election campaign was shattered within days of the campaign. And the cost will be borne by Australian consumers.

I want to add one more element on breach of faith, from somebody who is not normally involved with this. Today the minister for climate change sought to use this week’s Australian Industry Group report to say that prices of electricity would go down. He read a quote from Heather Ridout to imply that the impact of a carbon price would be to reduce any increase in electricity costs. What he left out was the last sentence of that quote: ‘This would soften the blow of a carbon price but it would remain a big hit.’ And the report goes on to show that that big hit is $300 additional cost in the first year alone to an average family. It was deceptive, it was dishonest, it was dishonourable, it was out of character, and he should apologise to this House for what he did. It was completely out of character.

Let me deal with three elements of this debate. The first is about the truth in relation to the cost of living and electricity prices. The government is seeking to peddle the myth that a carbon price would somehow control and decrease the cost which consumers would otherwise face. It is not only false but also completely contrary to the idea, the proposition, the purpose, the intent, the reason for imposing a carbon tax or an emissions trading scheme. Each is designed to do one thing: drive up electricity prices to decrease demand. Do not come into this House and pretend that this is about controlling electricity prices. The intent, the scope, the meaning, the purpose of everything you are doing is to drive up electricity prices precisely so that a pensioner in Bundaberg, a senior in Parramatta, a family in Maribyrnong—people all around Australia—would decrease the amount of electricity they use in order to cool themselves in summer or decrease the amount of electricity they use in order to heat themselves in the depths of winter. That is the truth, that is the intent, that is the policy and that is the denial.

Let us deal with the facts behind this. Firstly, what we see is that the former Prime Minister, the member for Griffith, made it clear at that dispatch box on 3 February this year that, under their old system, which would have been $10 per year in the first year and then increasing, they would have an increase in electricity prices of 19 per cent over the first two years. That was what the former Prime Minister said about the additional impact on electricity costs. And who pays it? Mums and dads, pensioners and seniors. I say to the members of the parliament: if you want to bring in this policy, be honest about the impact. Do not run away, because the Australian people will not believe you, and it is clear that this policy will translate into one thing: electricity prices, electricity prices, electricity prices. You know it, we know it, the public knows it, and this policy comes on top of everything else.

The second element, which is about going to the truth in electricity pricing, is the report of New South Wales IPART. The Independent Pricing and Regulatory Tribunal made it absolutely clear that there would be price rises of up to 26 per cent over three years—not just two. When you go over three years, there would be price rises of up to 26 per cent for households and up to 26 per cent for the tens of thousands of small businesses right across New South Wales, and that would be replicated across Australia. The report was the final report of March 2010, and the impact on prices will be up to 26 per cent over three years.

The third element is that Professor Garnaut made it absolutely clear in his report, and in every other thing that he has said, that price rises will follow any carbon tax. At page 387 of the Garnaut review, he said:

A major part, if not all, of the costs faced by electricity generators will be passed down the chain from electricity generators, distributors and retailers and finally to households through higher prices for electricity.

He went on to say:

These higher prices will require households to spend a greater proportion of their income to obtain the same goods and services purchased before the introduction of an emissions price. This will reduce households’ real incomes and purchasing power.

The goal, the intent, the purpose, the structure and the nature of the tax that the government is proposing is to hurt families so that they can afford less and cannot maintain the same standard of living. If that is not the case, why would you bother with a compensation package? What are you compensating if there is not going to be a change in electricity prices? Everybody in this building knows it is a fiction and a fraud for the government to pretend that there will not be a change in electricity prices. What we did not know was that petrol was to be added to the list as well to deal with some of the compensation issues that the government is facing.

The Business Council of Australia made it absolutely clear in its report prepared by the Port Jackson Partners last year that there would be a 25 per cent to 26 per cent increase in household costs over three years. In addition, this week, in the report that was so grossly misused by the Minister for Climate Change and Energy Efficiency, the Australian Industry Group makes it clear, across pages 17, 18 and 19, that in the first year alone of their carbon tax, there would be a $300 increase in the price of electricity for an average household. An increase of $300 in the price of electricity, though, is not just something that occurs; it follows on top of a 60 per cent increase in price that has occurred to date.

The Prime Minister asks about markets. What she does not know is that electricity is an essential service and that in a market, if you drive up the price of an essential service, people do not opt out of electricity; they opt out of other things. That is precisely what Professor Garnaut was saying when he talked about the theory behind the electricity tax. Those are the facts.

Let us deal with the efficiency argument around what the government are proposing. Their efficiency argument is this pretence where they say that, if you drive up the price, our costs will be $20 per tonne and that somehow that is quite cheap. In reality we know from Treasury’s own modelling that, in the first year of their previous proposition, $4½ billion would have been raised, 13 million tonnes would have been abated and that would mean an effective price of abatement of $340 per tonne. That makes cash for clunkers look like good value!

Let me say this to the Minister for Climate Change: let’s talk apples and apples. Even on your best case scenario of 160 million tonnes, at $16 billion per annum—which will come straight from the pockets of the constituents of every member in this House—that is $100 per tonne for abatement. That is the reason that the United States, Canada and Japan have all rejected precisely the mechanism you have chosen. This is not about whether we act or about whether we agree on the target; it is about whether we choose a system which has been rejected in much of the rest of the world.

Let us look at the other myth here, and that is what is occurring in the rest of the world. This government has systemically misused information from around the world. Let us look at the United States, with 19.7 per cent of global CO2 emissions. We know that they will not adopt a cap-and-trade system at any time in the near future. The most likely combination to have done that—the House of Representatives, Senate and the President—has passed. One of the Democrats’ own Senate candidates, Governor Joe Manchin from West Virginia, stood up with a gun, nailed the cap-and-trade bill to a tree and shot the cap-and-trade bill. That is what the friends of the bill do—they shot the bill on national television. There will be no change in the United States.

The government has attempted to say that there are regional systems that are effective. The greenhouse gas system in the north of America—the Regional Greenhouse Gas Initiative—has a floor price of about $1.89. The reason for that is that they have set the cap so high that they are not making any difference to emissions. The system is not operating as a real system. These guys on the government side have said, ‘What about California; there is a western climate initiative?’ It was meant to include 11 states, but there are only four in there. The others have all bailed on this system because they have realised that it is going to drive up electricity prices. Those that have remained have almost signed away from doing anything that is real or meaningful.

In Canada they have walked away from the system that this government is proposing. In Japan they have walked away from the system that this government is proposing. And then we look at Europe. In Europe what is fascinating is that we find that 164 industries that will compete directly with Australian industries have up to 100 per cent of their permits for free. What does that mean? It means that those guys are notionally in a system but they will not be paying the additional electricity prices. That is what is happening in Europe and that is the reality as far as what the rest of the world is doing. And all of this is against the position that there is a far better way—as was shown by research last week, in that you can purchase abatement in this country for $7 a tonne rather than driving up a $16 billion tax across the whole economy.

Let us go back to what all this means. The government’s system will not work, because electricity is an essential service. So, in order to drive down the use of electricity—in order to crush pensioners, crush middle-income families, crush small business and crush farmers—you have to drive the price right through the roof so that they can no longer afford the price of electricity. The IPA, the Institute for Public Affairs, is predicting that the additional cost and impact on electricity over eight years will be a doubling over and above everything else. The policy that this government is proposing is to intentionally, purposefully, drive up the price of electricity $300 a year—and that is from the report that the government quoted today to say that there would be no change. That was wrong. It was false. It was an abuse of this House. It was an abuse of a report. To do something as shoddy as leaving off the last sentence, which says that there will be a big hit no matter what as a result of a carbon price, was something that was beneath the scope of a minister who has hitherto shown good grace in his position.

Let me make this clear on behalf of the opposition: we will fight this impact on the lives and livelihoods of middle Australia and on the lives and livelihoods of the lowest income earners, who will be most regressively affected because electricity is a much bigger part of their budget. If you do not think that there is an enormous impact on electricity prices, why will you be compensating these people in the first place? The answer is simple: electricity prices are set to rise and, as of today, so is the price of petrol. (Time expired)

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

Firstly, I start with the issue of the integrity of some of the positions that have been taken in recent times by various actors in this debate, since the member for Flinders certainly brings them into question. In particular, let’s have a look at the positions that have been adopted by the Leader of the Opposition on the issue of climate change and responses to it over the last two years or so. The member for Warringah has in fact, on our count, had least eight different positions during that period on the issue of a carbon price. Firstly, he supported the former Prime Minister John Howard’s decision to take an emissions trading scheme to the 2007 election. Secondly, he supported, at various times, the passing of the Rudd government’s Carbon Pollution Reduction Scheme. Thirdly, he adopted a position to oppose an emissions trading scheme. Fourthly, he went on the record at one point, on 29 July 2009, and supported a carbon tax. Fifthly, the member for Warringah, the Leader of the Opposition, at one point, in order to usurp the leadership of the member for Wentworth, decided that this was all about politics and that climate change was absolute crap. Sixthly, he then decided that an emissions trading scheme was sensible policy and said so on 4 October 2009. His seventh position was to challenge the former Leader of the Opposition, the member for Wentworth, in November 2009, for the reasons that I described earlier—that is, to use the issue to usurp the member for Wentworth’s leadership of the Liberal Party. We are on the current position where the member for Warringah is again opposed to a carbon price and, in partnership with his shadow minister, the member for Flinders, is trying to beat up a scare campaign. All we have heard is the recitation of various attempts to scare people—a doubling in electricity prices, and the like—that is completely unprincipled.

There is a very important basis for climate change policy, and that is the climate science. We must never lose sight of it in the context of these debates. The fact of the matter is that climate scientists internationally are telling us that carbon pollution is contributing to climate change. Professor Will Steffen, who was advising the government’s multiparty committee considering a carbon price mechanism, has made a presentation, for example, to the committee on the basis of his broad review of the climate science—that there is 100 per cent certainty that temperatures are increasing and 95 per cent certainty that human activity, through the emission of carbon pollution, is contributing to that warming. In fact, 2010 was the warmest year on record, equal with 2005 and 1998, and the period 2001 to 2010 was the warmest decade on record. In fact, 2010 was the 34th consecutive year with average global temperatures above the 20th century average.

This country stands exposed to the impact of climate change, as we have heard on many occasions. There is a public policy responsibility on the part of any government to respond appropriately to the findings of the overwhelming majority of scientists. The 2010 Intergenerational report highlighted the fact that, without action to combat climate change, Australia’s GDP will fall by eight per cent by 2100. We all know from the economic analysis that has been conducted by many players, including Professor Garnaut—who is updating his review at the request of the government—that the cost of not dealing with this issue is going to be far greater than any immediate cost that we confront. There is a mammoth amount of evidence to support that contention. The member for Flinders valiantly puts this rather irrational but completely irresponsible position on behalf of the coalition and the Liberal Party but in circumstances where—and I certainly suggest no derogation of his integrity in relation to this—in his past, having worked at university, he had written a thesis on the importance of market mechanisms in response to climate change. This is the appropriate form of response that we need to consider.

The Australian economy is an emissions intensive economy. In fact, over 80 per cent of our electricity supply is generated through coal fired electricity sources, and any attempt to deal with climate change and reduce pollution in our economy has to attend to the reality of our energy generation sector. That is an issue that I will come back to shortly. In our country we are the highest per capita emitters of carbon pollution in the world. We emit about 27 tonnes of carbon pollution for each person in our country, whereas two-thirds of the world’s population emits less than seven tonnes per person. To deal with this issue requires a significant economic transformation. When one looks at such a requirement, such an obligation, such a public policy responsibility on the part of any government, one must go about it in a way that provides for the least cost to our economy and to our community. A carbon price that is based upon a market mechanism is unquestionably the cheapest and fairest way to cut carbon pollution and drive investment in clean energy. It is also important from the standpoint of providing certainty for investors in important sectors of the economy, including the energy generation sector, so that they know, with long-lived assets, what the rates of return are likely to be. They need the certainty in the energy sector in particular of a carbon price to unlock the investment that is going to be necessary in the long term.

During question time I referred to an important report that was released by the Australian Industry Group and, no matter what observations are made about how I presented it, the simple fact of the matter is that the report indicates very clearly that, with or without a carbon price, electricity prices are going to go up. They have gone up over the last few years by approximately 40 per cent. Projections are that they will go up significantly in coming years and it is fundamentally because of the fact that significant amounts of investment are going to be needed—they are needed now—in order to upgrade our electricity distribution network and ultimately to contribute to new generation capacity, particularly of a low-emissions nature. The estimates from the Australian energy market operator are that around $120 billion is going to be needed over the next 20 years to meet that investment demand. In long-lived assets there must be certainty for investors to invest and for bankers to provide finance. It is a universally held position in the energy sector, and a very widely held position across the Australian business community, that a carbon price will be needed to provide the certainty for that investment. The point that is made in the Australian Industry Group report, and that the government has been making for some time, is not as was misrepresented by the member for Flinders a short while ago—that electricity prices are going to go down; they are not—but that a carbon price will mitigate the extent of the electricity prices that will occur in the future because of these investment pressures in the energy sector.

The alternative policy position from the coalition is quite an absurd one. We have a Liberal Party that is divorced from markets. The Leader of the Opposition’s question during question time demonstrates that he does not understand how markets operate. The so-called direct action policy that the coalition has been advocating will be more costly. It is not a market mechanism and it will be more costly to taxpayers. It has to be funded directly off the budget and it will not be environmentally effective. It will not achieve the reductions in greenhouse gas emissions that are going to be necessary for Australia to make the economic transformation that is necessary in the longer term to ensure our long-term competitiveness and it will not make the emissions reductions that are necessary for Australia to play its responsible part in the international community to try to deal with this diabolically difficult problem of climate change. They do not have a credible policy on the other side of this House.

I would like to refer to some of the views that the member for Wentworth has indicated on a number of occasions about the various policy approaches, specifically in relation to market mechanisms. When you are talking about cost, as this MPI is endeavouring to do, it is critical that the least cost, most efficient method for pricing carbon in the economy is adopted. This is what the member for Wentworth had to say on 22 July last year about the coalition’s policy:

The Coalition’s policy is not the ideal from my point of view I grant you that—I’d like to see a market-based solution.

The Treasury in the incoming brief for the government said the following about the coalition’s policy:

Direct Action measures alone cannot do the job without imposing significant economic and budget costs.

We have done some analytical work on what the coalition’s policy may cost taxpayers in direct fiscal impact on the budget—and we are talking tens of billions of dollars—in an effort to try to reach the bipartisan targeted reduction of five per cent in greenhouse gas emissions by 2020. That is a completely irresponsible position. It is inefficient, it is high cost and it involves government picking winners to try and choose projects. Just imagine the National Party getting into that business. It is a completely irresponsible policy stance and one which completely undermines any credibility to an attempt to attack the government over the cost of carbon pricing.

On that front, the government has established a process which it is engaged in with representatives of the Greens and independent members of the House of Representatives. We have invited representatives from the coalition. The Leader of the Opposition has refused to participate in the process, but obviously it would be preferable if there were a bipartisan approach to the issue of carbon pricing, and we would continue to welcome it if that were achievable. However, we are in a process where we are discussing a carbon price mechanism that would have the capacity to pass both houses of this parliament so that we can start to make this economic transformation and reduce our greenhouse gas emissions—our carbon pollution.

As a government when we have prosecuted this case previously, including in discussions with the member for Groom, who is sitting opposite me—and I have high regard for the efforts that he made in discussing with the government on that occasion the Carbon Pollution Reduction Scheme—the evidence has been very clear: any Labor government is certainly going to do what it can to ensure that those who are most vulnerable, pensioners and low-income households in particular, are able to deal with any cost pressures that emanate from carbon pricing. The government has a very strong record in this regard. We have made a number of changes that are extremely important for the working people of this country. We have had three successive years of reduced tax burden on families. We have increased the childcare rebate. We have significantly increased the pension. We have introduced the education tax refund. We are delivering an increase of $4,000 in family tax benefit part A. We are extending the education tax refund to uniforms. We are exploring a whole pile of other options. We have introduced paid parental leave for parents. These are all extremely important ways of supporting Australian working families.

Our record, in relation to the Carbon Pollution Reduction Scheme arrangements, is that significant assistance measures were put in place to assist those who needed the most help. In the process of considering the design of a future carbon price mechanism, we are going to be motivated by the same values—and that is what it gets down to. There is a public policy response here to deal with climate change. The scientific evidence is very clear that we have that responsibility, and we will act upon it. We are endeavouring to prosecute the case through this parliament to achieve a market mechanism to price carbon in our economy, because it is the least cost, most efficient way of achieving reductions in carbon pollution in our economy. And, because of the values that a Labor government has, we will be providing all the support that we can to those who need it the most in the process of any change.

Finally, in relation to the electricity sector, it is vital that we price carbon to unlock the investment that is necessary in the future. The simple fact of the matter is that, until we are able to do that, investment will remain stalled in the energy sector and prices will rise due to that lack of investment. Under the coalition’s approach to this issue, all of that will take place and they will provide no assistance to households whatsoever. The contrast with the government’s approach is stark. The government has the appropriate policy response. We are working through and are committed to it, and I once again invite the coalition to wake up to the issues. (Time expired)

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I have just listened with great interest to the contribution of the Minister for Climate Change and Energy Efficiency on the matter of public importance proposed by the member for Flinders. My electorate has a number of lower socioeconomic areas, and I admit I am a fairly simple country fellow, but I picked up on some of the minister’s comments there. Why would you need to compensate people if electricity and petrol prices are not going to go through the roof? Simply by its very design, isn’t the carbon tax’s intention to drive up the cost of living and to try to change people’s behaviour? I can understand that the minister is a bit embarrassed about his government’s position, in particular when it comes to lower income earners.

It gives me no pleasure whatsoever to report to the House today that it is only 127 days until the lunatics take charge of the asylum. That is right—in 127 days, the Greens will have the balance of power in the Senate, and all of their watermelon policies will come rolling through the corridors of this place. Every one of their red-on-the-inside-and-green-on-the-outside policies will be rolled out as the Greens strut their stuff on the national stage. It will not just be this carbon tax: if the Greens have their way, in 127 days we will start paying more for electricity, more for petrol and more for food, and businesses will be hit with extra taxes just to make sure they do not make too much money and actually employ Australians in meaningful jobs.

I raise that point in the context of today’s debate because we are already seeing the impact of the Greens on this Labor government. From the moment the Prime Minister signed her agreement with the Greens leader, Bob Brown, it has been hard to tell who is in charge. Is it Julia Brown or is it Bob Gillard? At first it was a bit hard to tell. How the Prime Minister must regret that photo opportunity in her office. In amongst that nest of grinning Greens, her cover was blown to pieces. The Labor Party is in government, but the Greens are in charge. How else do we explain the backflip on the carbon tax? The Labor Party was saying ‘Absolutely not, no way’ before the election, but now just a few months later it is the only way to go.

People listening at home and in the gallery may be saying: ‘So what? Those Greens seem like a nice bunch—all warm and fuzzy, cuddling up to koalas, strapping themselves to a few gum trees every now and then and maybe saving a few whales. What’s this bloke from Gippsland whingeing about? Why is he so worried about these Greens?’ All I can say is: don’t be fooled—I have seen the Greens at work in my electorate. Don’t be fooled by their empty rhetoric about saving the planet. Don’t be fooled by the happy snaps with koalas and the watermelon style policies of the Greens. Between them, the Greens and Labor are the greatest threat that regional Australia has ever experienced.

The Greens want higher taxes on the mining industry. They want a big new electricity tax, to ban live exports of animals, to ban rodeos, to shut down commercial fishing and to shut down the timber industry. They hate recreational anglers, and they are already talking about a private member’s bill to kick the cattlemen out of the high country. I noticed that the minister agrees with the Greens on that point. You have to ask yourself what is next for the Greens. Will it be pony clubs? Zoos? Horse racing? Where does it stop for the Greens, and where does it stop for the Labor Party? When are they going to cut their ties with the Greens?

I have a suggestion: let the member for Melbourne trial the Greens policies in the next 127 days and see how the people in his electorate go. Let us make a little trial project out of his electorate. If you do not want those nasty coal fired power stations providing energy, good luck with your solar panels in Melbourne in the middle of winter. I am happy for the Greens to eat their mung beans and sit around wearing their hemp underpants, but they should stop telling the rest of Australia how to live their lives. As I have told the House before and have said in my electorate on many occasions, there is a boiling resentment in my community. People have had an absolute gutful of city based Greens and Labor MPs telling them how to live their lives. The Greens have never helped to create a single job in regional Australia, and they are a direct threat to jobs in many of our traditional industries.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Adam Bandt got a job.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I take up the member for Moreton’s interjection. I said that the Greens have never helped to create a job in regional Australia and they are a direct threat to every person’s job in many of our traditional industries. Has anyone in this place ever taken a close look at the Greens elected representatives and taken notice of where they draw their vote? Let us start with Victoria—in Melbourne, where the new member for Melbourne recorded a healthy 36 per cent of the primary vote. Let us next move a few kilometres out of the city to the seat of La Trobe, where the Greens picked up 12 per cent and handed the seat to the Labor Party. There is a pattern of that right around Australia. There are 44 Labor MPs who owe their seats to the Greens, but we will talk about that topic on another day.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Sustainability, Environment, Water, Population and Communities) Share this | Link to this | Hansard source

Mr Burke interjecting

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

It is no wonder that Labor MPs will never speak out against the Greens. The minister at the table will never speak out against the Greens in his new role as Minister for Sustainability, Environment, Water, Population and Communities. They will never speak out against the Greens because they cannot win their seats without them—44 Labor MPs in this place relying on preferences from the Greens to get them across the line. The Greens own the Labor Party, lock, stock and barrel.

Let us move out to some semiregional seats. In McEwen and Corangamite, the Greens’ vote is down to 11 per cent, and—surprise, surprise!—their preferences got the Labor candidate across the line again. Let us now move out to the true regional seats in Victoria. In the seat of Mallee, the Greens vote is just 7.8 per cent. In Gippsland, my own seat, they get 6.5 per cent of the vote and in Murray they get six per cent. Isn’t it funny that the further you move away from the city and the closer you get to the natural environment the fewer people believe the Greens and all their bulldust. There is a very good reason for that. It is that country people are practical people. They understand that to make an omelette you have to break an egg. They know that if you want to have a high-grade feature red gum dining table in your kitchen you need to use some timber from a tree. They know that if we want to feed our nation we have to balance the needs of the rivers and the soil with the crops we are growing and the animals we are feeding. That is the grand hypocrisy of the Greens and the people who vote for them. Go around to the houses of some of the Greens and their supporters and check what they are made from. Is it Australian timber or illegally grown Indonesian rainforest timber? Check in their fridges. No, they would not have fridges, would they, because of all that nasty pollution from burning coal? But, if they did have fridges, they would be full of fresh products from Australian farmers—probably those same horrible irrigators they want to shut down in the Murray-Darling irrigation district.

Then check their power supply—if they are they on the grid. Are they getting some of that cheap and reliable baseload energy from the Latrobe Valley in my electorate? I am sick to death of people in my community being vilified for working in power stations while the same people attacking them are running air conditioners on hot summer days and benefiting from the cheap and reliable energy we provide.

And while I am on the power industry I want to mention the Greens’ plan to shut down the Hazelwood power station. The Greens say they can shut it down and replace it with renewable energy. Give us all a break! Hazelwood generates about 1,600 megawatts of power each year. The average wind turbine can do 1.5 megawatts of installed capacity, so you would need to build 1,000 of them in Victoria just to replace Hazelwood. But—hang on a second—they only work for about 30 per cent of the time, so you would have to build three times as many wind turbines to achieve that same level of installed capacity. So we are talking about 3,000 wind turbines in Victoria to replace Hazelwood power station.

The Greens are conning Australians and it is about time that the Labor Party called their bluff. Our economy has been built on access to cheap, reliable baseload power—and I stress the word ‘baseload’. When we talk about energy security policies, we need to talk about the baseload power that powers our factories, hospitals, small businesses and households. They rely on it. Under the Greens’ and Labor’s plans for an electricity tax—let us call it what it is—power prices will go through the roof, small businesses will suffer and households will suffer, and it will not make a single bit of difference to the environment.

I know that the other side will not change their minds, because they owe everything to the Greens. They know they need the Greens’ preferences. But I have a bit of electoral advice for them—just for free—and the minister for the environment might want to listen to this very closely as well. Yesterday in the House, it was like The Sound of Music as the minister held hands with the member for Melbourne and danced through the fields in his tirade against the mountain cattlemen. You could almost hear the von Trapps singing in the background as he raced across the chamber in this embrace with the member for Melbourne in his opposition to the mountain cattlemen. It was beautiful to watch: the Greens and Labor, hand in hand, attacking a great and iconic tradition of Australian regional life.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Sustainability, Environment, Water, Population and Communities) Share this | Link to this | Hansard source

Mr Burke interjecting

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

Minister, you may laugh; and the members may laugh. Funnily enough, it was good enough for Sydney to have the cattlemen on horseback parading in the Olympics opening ceremony. The men were in their Driza-Bones, and you all cheered madly. But it is not good enough to let them do their job for regional Australia. The sheer impracticality of Labor and the Greens is on show again: ‘We don’t mind a bit of theatre when it is in Sydney, but we really don’t want those nasty cows eating any grass.’ Heaven forbid that they reduce the fuel load in the forest and actually help to reduce the severity of future fires. We would not want that to happen, would we? No. They were happy to cheer the mountain cattlemen at the Sydney Olympics but they do not actually want them doing their job out in regional Australia.

Make no mistake: Labor will pay a heavy electoral price for its dalliance and unquestioning service to the Greens. In Victoria we remember the member for Narracan, Ian Maxfield. This was the man who chaired the committee which did the hatchet job on the mountain cattlemen for Steve Bracks; he has gone, defeated by a Liberal candidate. Remember Brendan Jenkins, the member for Morwell—the man who sat back and failed to stand up to Melbourne Labor and the Greens on anything? He has gone too, defeated by the Nationals.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

Nice bloke.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

Nice bloke. Labor has been wiped out in eastern Victoria because they refused to listen to the people who live and work in those communities. They just took their orders from their Melbourne and Canberra bosses. It is time for the members opposite to show some courage. It is time for them to start putting the Greens last on their how-to-vote cards and to start protecting jobs in regional Australia. I can tell you now, Minister, that when you put the Greens last on your how-to-vote cards it is a very satisfying feeling, and I invite you to do so. (Time expired)

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

To correct the record, it is important to point out to the member for Gippsland that of course the only Green representative in this chamber was indeed elected on Liberal Party preferences.

The globe is warming. Those opposite may not like to admit it, though they did vote for a private member’s bill to this effect last year, but climate change is real, it is happening and it is caused by humans. When I say this I normally pause, because sometimes you get chuckles or shouts from the other side. They like to flirt with the denialists and they like to suggest that perhaps climate change is not happening, or to take the ostrich approach: ‘If we just put our heads in the sand for long enough, maybe climate change will go away’.

But the evidence accrues year after year. Since the 1940s, every decade has been warmer than the one that preceded it. Following this pattern, the past decade was indeed the warmest on record. And you can just look in your own backyard to see this effect. Only a few weeks ago, Sydney experienced a record-breaking seven days in a row of temperatures over 30 degrees. Never in 150 years of record keeping had Sydney experienced seven days of temperatures where the maximum went over 30 degrees, but it has now happened—evidence of climate change in one of our own cities.

Higher temperatures and climate change mean more extreme weather events—stronger and more frequent droughts, floods and bushfires. Dealing with climate change is a big challenge for Australia. That is why we need to start early, and we need to use the most efficient mechanisms available. Over 80 per cent of Australian energy is generated through coal fired electricity sources. Two-thirds of the world’s population emit less than 7 tonnes of carbon pollution per person. Australians emit 27 tonnes of carbon pollution per person. The challenge is real. Putting it off, or pretending it is not there, is not an option.

Dealing with climate change will require a substantial transformation of our economy, and the longer we leave it the more difficult it will be and the more costly it will be. Scientists tell us that climate change is happening and economists tell us to deal with it now—and they tell us that we need to use market mechanisms.

Climate change is going to fundamentally affect Australia. It will affect our energy supply, our water security, our agriculture and our health. It will affect our coastal communities and it will affect Australian infrastructure. That means we have an obligation to future generations to act on climate change now, and to do so in the most cost-effective manner.

In support of this I would cite the words of Rupert Murdoch—not normally a man who is cited in favour of propositions on this side of the House, I have to say. But Rupert Murdoch put it as follows:

Climate change poses clear, catastrophic threats. We may not agree on the extent, but we certainly can’t afford the risk of inaction.

Think of it, if you are sceptical of the science, as an insurance policy. Even if you are not 100 per cent sure that climate change is happening, surely you would want to begin to think about the most cost-effective strategies to deal with it. Thirty-two countries and 10 US states already have in place emissions trading schemes, so it is a fallacy that Australia would be leading the world and going first. That is not the case at all. We would be moving in lockstep with international experts and with many other developed countries.

Whenever I speak at schools, universities and the Canberra Institute of Technology in my electorate, always comes up. Young people in Australia want us to act quickly on climate change, and they want us to use market mechanisms. Frankly, they are astounded that we in this parliament have not yet begun to act. They are astounded that the wreckers opposite have managed to trash an emissions trading scheme. They want us to move on climate change.

Market mechanisms are the most efficient way of dealing with climate change, and that means that they are the cheapest way and the fairest way. If we put in place a carbon price, we will cut pollution and we will drive investment in clean energy. We will let the market decide which clean energies are the most effective, rather than taking the coalition’s approach, which is picking winners—McEwenism back from the grave.

As a Labor government, we will always support those who need help to meet an increase in their cost of living, especially pensioners and the most vulnerable. That is in our DNA. The coalition sometimes use the ostrich solution to climate change but, when they take their head out of the sand and admit that something is happening, they have a direct action policy, an anti-market policy, which is very ironic given that those opposite claim to be the defenders of the free market.

As the Australian Treasury has said of it:

Direct action measures alone cannot do the job without imposing significant economic and budget costs.

To take a tonne of carbon out of the atmosphere via direct action costs more than to take a tonne of carbon out of the atmosphere via a carbon price. So how do you do it if you want the same level of abatement with direct action? You have to raise additional revenue. You have to raise income taxes. In the end, to get the same level of abatement via direct action, you will need a huge new tax.

Over the decade, the Department of Climate Change and Energy Efficiency estimates that the purchase of international permits to make up for the coalition’s flawed policy would cost $20.4 billion, and that is in order to meet the bipartisan five per cent reduction target. So on top of the $12 billion cost of the coalition’s policy we would need another $20 billion to meet that bipartisan target.

In support of market mechanisms, you can quote a raft of experts. Pretty much any economist you turn to will say, ‘Market mechanisms are the most effective way to go.’ Let me, for example, quote Treasury executive director David Gruen:

Well-designed economy-wide market-based mechanisms for reducing Australia’s greenhouse gas emissions are projected to reduce annual labour productivity growth by around 0.1 percent, even for quite deep cuts in emissions (Australian Government, 2008). Of course, were alternative regulatory, or other non-market-based, mechanisms for reducing greenhouse gas emissions implemented, that would be expected to have much more adverse effects on the economy’s aggregate labour productivity growth.

Insurance Australia Group have made similar points. They have noted:

Early action can be achieved at modest cost—

but—

Delayed action would be expensive.

The Australian Business Roundtable on Climate Change have said that, in comparison to early action, delaying action to 2022 would result in lower real GDP growth by an average of 0.2 per cent per annum through to 2050 and concentrate any disruptive shocks over a shorter period.

The Australian Business Roundtable on Climate Change have also discussed jobs. They say that an additional 3½ million jobs will still be created in the economy under the early action scenario over the period 2013 to 2050, equating to 250,000 more jobs than under the delayed action scenario. The coalition’s delayed action scenario will cost jobs.

Of course, this is what we would expect from the party of ‘no’. The member for Warringah has always brought a negative approach to public life. We remember that in 1999 his campaign against the republic referendum was: ‘Don’t know? Vote no’. In 2009 he came to the leadership, beating the member for Wentworth, who seems to be curiously absent in this debate. The member for Warringah won the leadership with one promise: he would say no to any sensible policy to tackle dangerous climate change.

The opposition have consistently taken the same ‘Don’t know? Vote no’ policy in this chamber. They have become the party of ‘no’ when it comes to sensible reforms, such as means testing the private health insurance rebate and introducing a Minerals Resource Rent Tax, giving Australians a fair share of their minerals. I know that there are thoughtful people in the Liberal Party caucus. There are probably people who could make a constructive contribution to the Multi-Party Committee on Climate Change—if their leader allowed them to participate. But, alas, the party of ‘no’ consistently says, ‘Do not get involved.’

The current Liberal Party is a Liberal Party which I fear would probably have said no to some of the great Hawke-Keating reforms. They probably would have said no to the tariff cuts, to floating the dollar, to Medicare and to expanding universities. They would have said it would cost too much and was too risky. They would have said no to compulsory superannuation. I shudder to think what Australia would be like if the party of ‘no’ had been in power in the past. (Time expired)

John Alexander (Bennelong, Liberal Party) Share this | Link to this | Hansard source

The electorate of Bennelong, which I serve, is a diverse electorate in many ways. We enjoy diversity in culture, with the Chinese and Korean communities making up almost one-quarter of the population. We boast diversity in business, with blue-collar factories, plazas of small enterprises and the Macquarie business park, the third largest CBD in Sydney, housing major corporations. We incorporate diversity in socioeconomic position, with wealthy riverside houses to large commission buildings. Despite all the variation of this constituency, the one common thread is that the residents and businesses are struggling to make ends meet.

These are not complaints about the prices of luxury items but concerns about the cost of items that are absolutely essential for survival: food, electricity, gas, water and petrol—not to mention increasing rents and mortgage interest rates. These struggling Australians talk to me about their problems because it is the obligation of government to implement policy agendas to minimise the impact of rising prices and work to prevent a further decline in the quality of life of those who elect us as their representatives. And yet time and again we see this government acting wilfully and disrespectfully to our electorate, whether it is through the mining tax, the flood tax or, the topic of this debate, a carbon tax.

I use the word ‘disrespectfully’ because this government went to the voters last year with a policy of no carbon tax. Just two days before the election Prime Minister Gillard was quoted as saying:

I rule out a carbon tax.

Three days earlier Prime Minister Gillard said:

There will be no carbon tax under the government I lead.

So who is really leading this government?

Sure enough, here we are today debating the government’s proposed carbon tax. In fact, it took Prime Minister Gillard just 27 days to go from ‘I rule out a carbon tax’ to:

I think the rule in, rule out games are a little bit silly.

This was a backflip to be admired. We Australians love sports. We love the Olympic Games every four years. Our previous Prime Minister, Mr Rudd, had captured the imagination of the sporting public with his gymnastic abilities to backflip. He had practised in minor events but, at the Olympic event in Copenhagen, when the gold was up for grabs and the ‘greatest moral challenge of our time’ was the stake, he scored a 10 with a perfectly executed backflip and capitulation on the subject of climate change.

His co-author, understudy and loyal supporter—the Tonto to his Lone Ranger—not only was able to learn the art of the backflip from very close quarters directly from the master but inevitably was able to add to his acrobatic style. When her chance came to enter the main arena around midnight, there were reassuring promises to ‘her’ Australia that there would be no carbon tax. Her backflip performed—with a twist. The twist came on the perfect landing with the announcement that there now would be a carbon tax. The twist came for her Australians that lay on her torture rack of living costs with just another little twist to add to their pain—the pain of the cost of living in Australia under a Labor government. Previously the Prime Minister had shown her interest in sports by claiming that there was more chance of her playing full forward for the Western Bulldogs than seizing the top job from Kevin Rudd. Another perfectly executed backflip was required and performed with distinction.

The other great thing about the Olympics is swimming. Our swimmers are the greatest the world has ever seen. We now have our top performer seeking another personal best for her country in the swimming pool of red ink. During her previous Olympic performances they were able to accumulate a $96 billion debt, but our new queen of the pool, valiantly assisted by her training partner, the evergreen Senator Brown, is seeking to exceed this amount in record time. Of course, all of these masterful displays of sporting prowess and achievement are best viewed on your flat-screen television brought to you by that most wise and effective government policy: the $900 stimulus payment. Well, the good lord giveth and the good lord taketh away.

When the backflip landings are complete and the races are finished, what are we left with? In a country that once had the highest rate of homeownership, our next generation and those who come to our shores for a better life are deprived of the opportunity of homeownership—a stake in Australia. The predicament that our young families and newest Australians face is the escalating cost of housing prohibiting them from establishing what used to be our national right of homeownership. Just for insurance that this will never happen, with insufficient rental properties and subsequent market forces applying upward pressures to rents the cost of living becomes the final roadblock. As if their path is not hard enough, it will be this generation of new Australians, when this government is through with their reckless spending and their unprecedented ability to generate debt, who will be given the task of paying it all back.

This tax will not only hit your home; it will hit every single item you purchase, every business that you deal with and every price you pay. This will be the tax that keeps on taxing. This tax is designed to curb our use of electricity through some very rudimentary economic logic. Several months ago the Prime Minister stated in a speech:

Over the past three years residential electricity bills have risen by more than 40 per cent across Australia—

and followed this with the comment:

I understand how much pressure this is putting on families.

This is pressure that will be stretched and heated with a carbon tax.

Former Prime Minister Rudd admitted that a carbon tax would push up power prices by almost 20 per cent in just two years. The New South Wales Independent Pricing and Regulatory Tribunal approved electricity price rises of 35 per cent over three years but pushed this to 60 per cent if a carbon price were introduced. Even the government’s own climate change committee are in agreement, with one of their key advisers, Rod Sims, stating that carbon price plans were:

… estimated to increase wholesale electricity costs by 60% by 2015.

The United States, Japan and Canada have all recently rejected a policy of electricity price rises like those proposed by this government. Isn’t this enough already? Are we not getting the message? Do we really need a carbon tax to add to these increases? Will that be the metaphorical straw that stops people using the services that are essential to their survival?

There is a clear distinction here between different points of view. New to this place, I am seeking to learn from our leader, who believes in small government, lower taxes and the right to make your own decisions. What better summation could be made than our leader’s comments in this chamber this morning: ‘As each day passes it is clearer and clearer that we have a Prime Minister who has never seen a tax she did not like and never had a tax she would not hike.’ I plead with the government on behalf of the diverse electorate of Bennelong and all those struggling to make ends meet to stop this stupidity, to ease the pain, to let us get up off the rack and to abandon this new tax.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Flinders for bringing this matter of public importance to the attention of the House. I know him to be a man who is passionately interested in the issue of climate change. He does believe in the science, unlike many of those who surround him on that side of the House, and he has in the past had a very credible position on the issue. I also know him to be a man who is usually above some of the lower forms of politics that often accompany those on the other side of the House, which is why I was very disappointed to hear him draw some humour out of the fact that some involved in US politics have used guns to shoot down a policy. It might be an analogy which gets laughs from the cheap seats, but it really is below him.

He spoke for 15 minutes on the issue of climate change and our public policy responses to it, but very little if any of that time dealt with his own party’s policy on this. Perhaps this is because his own party’s policy is so confused. Perhaps before the member for Flinders leaves the chamber I can put a question to him—that is, whether he and his party are still committed to the bipartisan renewable energy targets and whether they believe the target of five per cent can still be met by their policies—

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

Yes.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

the policies that have been priced at about $2 billion for the policy alone.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! I remind the member for Flinders that whilst he is out of his seat he is out of order.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

It has been assessed by the Department of Climate Change and Energy Efficiency that those policies, if put into action, will fall well short of achieving the five per cent renewable energy targets in and of themselves—a point that the member for Flinders knows.

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

It’s five per cent emissions; 20 per cent renewable energy targets.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

It is 20 per cent renewable energy targets, a point the member for Flinders knows full well. He is also aware that the cost of making up the shortfall is in the order of $20.4 billion to purchase the carbon pollution permits on the world market. This is the lie in the opposition’s policy. They have not been willing to come clean in this debate or anywhere else on what the cost of their direct action policy is to the budget and what the cost is to Australian households. We estimate that the cost to households is in the order of $600 per annum. If we want to have an honest debate about realistic policies and the comparison of realistic policies in dealing with this important issue, let us have an honest debate about comparing the costs of their inefficient policy with our proposed market mechanisms.

The second issue that arises from the contribution of the member for Flinders is that somehow if we act on this we will be one out in the international community. The member for Flinders knows there are scores of countries that have already started the transformation to a low-pollution economy—32 countries and 10 US states already have emissions trading schemes in operation. The member for Flinders knows this full well. Far from our leading the pack, we will be joining those countries and those states that know that we have to act and we have to act soon and decisively.

It was very entertaining and at times enjoyable listening to the member for Gippsland teeing off in this chamber against the Greens, but frankly it missed the point. The point is that at the last election a majority of Australians voted for action on climate change because they expect us to do something about it, and they expect us to do something about it in this term of government. The Labor Party, this government, is determined to act and is determined to act in a Labor way. That means following the science, that means following the best economic advice available and that means ensuring that we bring our people along with us and do not leave behind the working people who live in regions such as my own as we make this important economic transformation.

What distinguishes us from those opposite is that we actually believe in the science of climate change. I know the member for Flinders does, but he is not surrounded by a team of true believers. His leader describes it as ‘absolute crap’. The brains trust in the Senate, Senators Boswell, Bernardi and Barnaby Joyce, have made interesting contributions to the debate over the last six months, one of them suggesting that because he cannot sense climate change from his yacht it is not happening.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

Climate change atheists.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

Yes. Australia is in the front line of climate change and it is important that we act. This is a point that has been agreed by all scientists and the majority of Australian business leaders. They understand that, in an economy which is the highest emitter of carbon pollution per capita and has 80 per cent of its electricity generated by coal, we have an imperative to act and make the transformation.

My electorate of Throsby is also in the front line of a country that is in the front line, having traditionally relied heavily on manufacturing and coal as a significant contributor to gross regional product and for employment. We know that structural change hits working-class communities hard and it hits us harder the longer we delay. We saw that as we moved our community through the structural adjustments associated with the steel industry and manufacturing, and removing tariff protection. We know that if you do not act and act decisively there is some pain upfront but there is a lot more pain down the track. We contrast the steel industry, which is a very productive and efficient industry in our region, with those around the country in other regions which did not go through those transformations and act decisively and soon.

We believe in a market solution because it is the most effective way of reducing carbon pollution. We could, as the opposition suggest, adopt a market atheism on this issue alone—not in relation to other issues—and pick winners, providing grants and subsidies to some of their favoured industries, but we know that this is not as efficient as putting a price on carbon and introducing a market solution. It is something that is supported by every economist and every major industry group. It is something that many businesses are already factoring into their business plans. I quote from a statement by the Westpac Group dated September 2010:

… we factor carbon risk into our decision making processes and in consultation with impacted customers may require them to demonstrate risk reduction programs.

Our position has been to support flexible market-based mechanisms as part of a wider policy response to climate change.

That is a sensible position given domestic and international trends, a position that should be adopted by those opposite.

We know that the market mechanism is the most effective means of changing behaviour in households and business and, most importantly, as the minister has pointed out, changing investment decisions so that we can start getting investment into that critical area—the main game in this debate—electricity generation. Unless we send a signal to the market, there will continue to be a stall in investment in more efficient and effective means of electricity generation and, as has been pointed out, the cost of electricity will continue to rise because there is a shortage of supply and uncertainty in the market. Electricity generation is the main game.

In conclusion, I appeal to those on the opposition benches and crossbenches to put the interests of the country ahead of a position that they themselves know to be wrong and ineffective, to move beyond the silly ‘gotcha’ politics that we have seen in their contributions to this matter of public importance and get behind the only serious, rational and effective means for dealing with this important global problem.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The discussion is concluded.