Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

It is a pleasure to contribute to this matter of public importance. We should be discussing this incredibly important topic rather than being diverted into political games and nuances. What we saw today in question time seems to be the new political strategy of this government—that is, name calling and carbon vilification of anybody who questions or even criticises anything the government may say about its planned tax on carbon dioxide. This matter of public importance is really about the government’s taxation measures that are disadvantaging our competitive advantage as a country and the standard of living of our citizens. It is interesting that—when the government has nothing else to say and no credible argument to present, to back its case for a tax that seeks to punish and harm and penalise every individual, every business, every activity, every step of production, every service, every area where wealth is sought to be created or every point of consumption or every stage of an input to any activity or business that anyone is engaged in, when it cannot come to address how on earth that is going to help—all it can do is revert to former Prime Minister John Howard. I can assure this parliament of one thing: Julia Gillard is no John Howard.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

The honourable member for Dunkley will observe the provisions of standing order 64 and refer to the Prime Minister in the appropriate way.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

The Prime Minister we have now is not John Howard. The Prime Minister we have now certainly has not put the nation in a relaxed and comfortable mode. The Prime Minister we have now certainly has not presided over what all in the nation recognise as the Howard government’s era of golden opportunity, where people were optimistic about their future, secure about the opportunities to improve their circumstances, confident about prospects; they understood that a competent government had plans for the future and policies that would make a difference. This Prime Minister is no John Howard.

I can point to another Winston, Winston Churchill, and give you an insight into that great leader’s appreciation of just how wrong-headed this government’s approach is—where every problem needs a tax and somehow our living standards will be boosted by another tax. It was around 1903 that Churchill had something to say that should resonate right across the economy and right across our community. He said, ‘A nation that tries to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.’ That was Winston Churchill’s account of it and that is exactly the logic that we are now accepting from the government as its rationale for this carbon tax. This carbon dioxide tax is supposed to lift our prosperity. This carbon dioxide tax is supposed to create jobs. This carbon dioxide tax is supposed to advantage our businesses. This carbon dioxide tax is supposed to be of benefit to families. How wrong could this government be? All the evidence says it is inflationary, it is punishing, it is punitive, it builds, it cascades and it snowballs at every stage of activity. It is going to cost jobs, particularly in areas where energy matters, not just at the point at which people work but at every input that led to the point where they tried to create some wealth for the country.

You have seen data rolled out time and time again that the government cannot counter. You have heard them talk about 16 coalmines. The opposition pointed out that, according to ACIL Tasman, that will lose 10,000 jobs. These are not extremists. Everyone who criticises the government is now an extremist. Everyone who questions some of its assertions is now an extremist. I did not think ACIL Tasman were extremists. I did not think Concept Economics were extremists when they pointed out that 24,000 jobs are at risk because of this tax. I did not think Frontier Economics were extremists when they pointed out that 45,000 jobs in energy-intensive industries will go, under this carbon dioxide tax. And I have not heard people make the argument that the ordinary men and women out there trying to contest, day in and day out, in manufacturing are extremists.

I want to pay tribute to the manufacturers. They need to be world-class every day. Consider them the Olympians of our economy, where they have to compete with the world every day. What are the manufacturers saying? They are saying to me, ‘If it wasn’t for our innovation, our ability to automate and our opportunity to improve our productivity, we’d have a real problem competing with the globe.’ So they compete vigorously through their innovation, through the use of technology and through improved productivity. Now, when they have to compete harder than ever, what does this government plan to do?—make it as hard as it possibly can, by imposing a carbon dioxide tax which will be absolutely punishing on those in the manufacturing sector. They are like the people who are exposed internationally, who are not part of the big crowd that can go to government and get some handout of permits—the big businesses that the government likes talking to. These are the men and women who work in our suburbs and our regional centres, that convert their energy and inputs, inputs that have consumed energy to be produced. They put their own energy—and more—into production processes for creating wealth in this country.

In Victoria we understand manufacturing because it is at the heart of our economy. Do you know what they are telling us in Victoria? I had the pleasure of speaking to Garry Rose from Kinetic Engineering Services. He is an industrial chemist and knows his way in the world. He has been in business for 32 years. He used to joke, ‘I thought my first 30 years were my hardest,’ but he thinks the time ahead will be his hardest. He described this tax as ‘idiotic’. Is he an extremist? I do not think so. Every day he is competing with Chinese imports. He is in the fabrication of things, like the star pickets you can buy from Bunnings and places like that. He makes those against the competition in China. He runs his business on a handful of guys, where there might be dozens of them in China offering the same product. He needs to be incredibly efficient. He consumes steel, and if the steel is too expensive he cannot compete. If the steel is not manufactured in Australia—as OneSteel is concerned about for its future—that steel has to come in from overseas. I reckon it will not come in as steel—it will come in as star pickets. And then what happens to his business?

He is urging the government to think carefully about what it is doing, to understand the impact on small and medium enterprises in Australia and particularly to appreciate that, in manufacturing, these imposts—these imposts that will build at every stage—could, as OneSteel has pointed out, make their business unviable. OneSteel and some of its competitors with electric arc furnaces watch the spot electricity market because, if the electricity spike goes up, they do not run the arc, they do not run the furnace. They wait till it comes down then they bind the market so close, so thin at the margins. It is so competitive that that is how they have to run their business.

What are they going to be faced with under this government? A tax that is going to push up all of the costs of their imports. Garry and his team down at kinetic will have to pick up that increased cost. They have increased costs of their own as they fabricate steel products in a diversified business, and they will have to somehow compete with imports from China. Our manufacturers need to be world-class every day, and this Labor Gillard government is doing nothing at all to help them.

Those people see their economic opportunities and futures going up in the air because of Labor. You know what else is going to go up in the air? Emissions, because they will not be saved here in Australia. Not only will the jobs go up in the air; the emissions will go offshore and more will go up in the air. So there is no upside for the environment. There is no upside for our atmosphere. There is no upside for our country. Fewer people will have jobs, and less wealth will be created in this country. We will export those manufacturing processes and businesses where energy inputs are crucial to economic survival. What is the logic of that?

What is worse about this policy is that it does not achieve anything that the government says it is going to achieve. You could call that a placebo policy, couldn’t you? They talk up a good game and achieve none of it. But placebos are not harmful. They are in the mind of the people. Labor think this makes a difference, and anyone who challenges them is vilified. A placebo causes no harm, but this policy causes plenty. It is long past the time Labor turned their mind to realising that, rather than punishing and penalising with a punitive tax that hits every person, every household and every business at every stage of activity.

Why don’t they open their minds to what the coalition is proposing, where there is actually an incentive, a reward for reducing emissions? We can be partners in that emissions reduction. We can put incentives in place that for those can produce verifiable abatement. We can deliver the five per cent target—exactly the same target Labor is talking about—without shirt-fronting business.

I heard today the Prime Minister talk about the virtue of constancy of purpose. Give me a break. (Time expired)

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

In 1989, when US President George HW Bush proposed the use of market based mechanisms to deal with acid rain, electricity generators warned him that their costs would skyrocket. Today, the program is universally regarded as a success, achieving its emissions targets at around one-third of the projected costs. Why are market based mechanisms so much cheaper at cutting pollution? In the case of acid rain, it turned out that firms used a variety of approaches to reduce emissions. Some retrofitted emissions control equipment. A number switched to cleaner fuel. Others retired their dirtiest generators. Because each firm took the lowest cost approach to abatement, the social cost was minimised.

For environmental economists, this result merely reaffirmed theoretical work of Arthur Pigou in the 1930s and Ronald Coase in the 1960s. By the time the member for Flinders won a prize for his 1990 university thesis A tax to make the polluter pay, the economic theory was widely recognised. The member for Flinders pointed out:

An attraction of a pollution tax regime is that it produces a strong incentive for firms to engage in research and development.

And that, for consumers:

… goods which do not generate—

pollution—

in their production will become relatively cheaper and therefore more attractive.

Discussing the politics surrounding pollution taxes, the member for Flinders argued that ‘a pollution tax is both desirable, and, in some form, inevitable’ but acknowledged that ‘even if some of the Liberals’ constituents do respond negatively, a pollution tax does need to be introduced to properly serve the public interest’.

Today, those opposite are the party of ‘no’. But not so long ago, only 16 short months ago, they were reformers. They were a party of markets. Senator Judith Troeth on 30 November 2009 said:

By having a price on carbon, people can decide whether they really want to use these carbon-intensive products. It is an effort to move people away from carbon towards other alternatives, and the most effective and efficient way to do this is through a price signal. The other consequence of the price signal is that it makes alternative sources of energy viable, and I am strongly of the belief that the nature of public opinion is changing as more people accept that carbon based energy is less desirable.

The member for Paterson, Mr Baldwin, told the House on 3 June 2009:

I would like to make it clear: the coalition will support an emissions trading scheme …

The member for Fadden said:

The opposition support an emissions trading scheme as one of the tools in a climate change toolbox. Other issues that should be considered include carbon sequestration—

and a ‘voluntary carbon market’. As the member for Wentworth said, though, ‘things changed’—things changed substantially. The member for Wentworth wrote on his blog:

Tony himself has, in just four or five months, publicly advocated the blocking of the ETS, the passing of the ETS, the amending of the ETS and, if the amendments were satisfactory, passing it, and now the blocking of it.

His only redeeming virtue in this remarkable lack of conviction is that every time he announced a new position to me he would preface it with “Mate, mate, I know I am a bit of a weather vane on this, but …”

The member for Wentworth told ABC radio:

My views on climate change—the need for a carbon price, the fact that market-based mechanisms are the most efficient ways of cutting emissions—my views are the same today as they were when I was part of John Howard’s cabinet, and those views were held by the Howard government.

By the time the member for Flinders wrote his thesis it presented the view that most small ‘l’ liberals around the globe have held for decades. Those opposite like to tell us that no-one else in the world is acting, but of course the US conservatives are proud champions of their nation’s emissions trading scheme.

Thirty-two countries and 10 US states have emissions trading schemes. Market based mechanisms are everywhere. Why is that?—because, just as the scientists tell us that climate change is happening and that humans are causing it, so the economists tell us that market based mechanisms are the most efficient approach.

As recently as 2007 the Liberal Party’s election platform promised:

To reduce domestic emissions at least economic cost, we will establish a world-class domestic emissions trading scheme in Australia (planned to commence in 2011).

The Gillard government proposes to start with a carbon price in which the market determines the quantity of pollution before transitioning to a fully flexible emissions trading scheme in which the market determines the carbon price. Both are market mechanisms. Both have the advantage that they allow millions of households and businesses to find the most cost-effective way to reduce dangerous carbon pollution. For the first time it will become profitable for entrepreneurs to find ways of reducing carbon emissions.

Because the arguments for harnessing markets to cut carbon pollution are essentially the arguments for free markets themselves, the opposition to emissions trading has traditionally come mostly from the left of the political spectrum. It was the left of the political spectrum that objected when, in 1989, President George HW Bush said that market based mechanism should be used to deal with acid rain. Yet today we have the odd spectacle of a supposedly market friendly party advocating a climate change policy that looks awfully like command and control.

If you think we can cut smoking rates more effectively by subsidising celery sticks than taxing cigarettes you will love Tony Abbott’s direct action plan. Of course you cannot, which is why the only way the coalition can meet its emission targets is by spending $20 billion buying permits from other countries.

While the coalition is running a million miles from market based reform, this government is getting on with the job of serious long-run economic reform—investing in the future. Today, the Treasurer and Minister for Resources and Energy announced that the government is accepting all 98 recommendations of the Policy Transition Group for the minerals resource rent tax. That will mean a boost to national savings, a cut to company tax rates and an investment in infrastructure. That infrastructure will go particularly to the mineral rich states of Western Australia and Queensland. Australians will get a fair share of the resources they own and will manage the mining boom in a way that supports the huge pipeline of investment.

But those opposite have become the party of ‘no’. They will reject the $7.4 billion the miners are willing to pay. They will reject the cut in the company tax rate which flows through to mums and dads who shop in Woolies and Coles. They will reject the tax cuts to small business; they will reject the boost to superannuation—a much-needed increase in retirement savings that will improve dignity in retirement for millions of Australians. And they will reject the investment in infrastructure.

They are indeed the party of ‘no’. They are even saying no to reforms which will ensure that Australians will not face exit fees of up to $7,000 on a mortgage. Last night we introduced regulations into this chamber that will ensure that that will happen from 1 July, but those opposite are standing up against that.

We know why this is the case. The Leader of the Opposition has always been a man of ‘no’. He brought his negative approach to public life in 1989, when his campaign against the republican referendum was: ‘Don’t know? Vote no.’ He came to the leadership with only one promise: that the Leader of the Opposition would say no to any sensible policy to tackle dangerous climate change. He continued being the man of ‘no’ on the issues of means testing the private healthcare rebate and the Building the Education Revolution program—a once-in-a-generation investment in our nation’s education infrastructure.

There are thoughtful people in the Liberal Party caucus. There are those who occasionally speak out in favour of ideas rather than carping criticism. There are people who could make a constructive contribution to the multiparty committee on climate change, if only their leader allowed them to do so. But, alas, the reformers are shouted down by the blockers.

This is a dangerous game that those opposite have got themselves into. It might feel good to be the party of ‘no’ but this kind of short-term populism is a risky strategy: you will quickly find there are people out there who are more simplistic and more negative than you. The organisers of yesterday’s rally said on their website:

CO2 is not pollution and does not need to be reduced in the first place.

What we are seeing here has its parallels in the US—the rise of carping negativity and Tea Party style politics. The re-entry of One Nation wrapped in a blue ribbon is what we are seeing here today. (Time expired)