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

I would like to make some remarks in opening about the departmental budget for 2012-13 for the Department of Climate Change and Energy Efficiency. The department will receive an appropriation totalling $218.5 million. Of this, the department will receive administered funding of $114.1 million, down quite significantly on last year as a result of the termination of various programs. It will receive departmental funding of $97 million and capital funding of $7.4 million. In addition, the Clean Energy Regulator associated with the department has been established and it will receive an appropriation totalling $763.1 million, comprising administered funding of $670.8 million and departmental funding of $92.3 million.

The major components of the department's administered funding include the Low Carbon Communities program, energy efficiency measures, land measures and climate change science applications. Measures for the portfolio announced in the 2012-13 budget included $37.1 million for the Greenhouse and Energy Minimum Standards program, $2.8 million for the building energy efficiency program and $3 million for climate change adaptation. Additionally, in the budget the government decided not to proceed with the tax breaks for the green buildings program. That will provide a saving of $405.2 million over the forward estimates.

The budget for the Department of Climate Change and Energy Efficiency is fiscally responsible. It reflects the fact that much of the government's climate change policy is now contained in the clean energy legislation, the policy for which was announced in July last year. The clean energy legislation and its implementation from 1 July in the form of the carbon price mechanism in particular will decouple economic growth from growth in pollution. Our economy will grow but greenhouse gas emissions will fall, reducing the emissions intensity of the economy over time. It will improve Australia's economic competitiveness in the coming decades when clean energy and low-pollution technologies will be a key to competitive advantage. That is particularly going to be the case in the Asia-Pacific region, where our major trading partners are located. The economies that are able to reduce their emissions intensity—the greenhouse gas emissions per unit of economic output—will have a competitive advantage. That is why it is perfectly valid to assert that the introduction of the carbon price mechanism will drive not only emissions intensity reductions in our economy but productivity improvements as well. Those opposite contend quite differently. No doubt that will be part of the debate that we will have in the upcoming period of time.

The Clean Energy Act become law nearly eight months ago. Since that time, the fact of the matter is that there has been record investment in our economy and exceptional economic growth. We are currently growing faster than every single major advanced economy, as illustrated by the figures released two weeks ago. GDP growth is currently running at 4.3 per cent. Unemployment is at five per cent. We have very high levels of business investment, with more than $173 billion in capital expenditure expected in the year 2012-13 and half a trillion dollars in the resource investment pipeline. This is an essential economic reform at a time when the economy is in a strong position. It is in the long-term interests of the country. As 1 July comes closer—it is now less than two weeks away—I think people will have the opportunity to experience the real world rather than baseless fear campaigning in relation to this issue. The economy is strong. This is a reform that needs to be made and the policy measures associated with the clean energy future package are included in the 2012 budget position for the department.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I thank the minister. To assist the chamber I note that the proposed expenditure now before the Federation Chamber is for the Climate Change and Energy Efficiency portfolio and is for $296,757,000. The question is that the proposed expenditure be agreed to.

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

I take my beginning from where the minister left off with his reference to the real world, lived experience of the carbon tax. I note in particular the decision of the New South Wales Independent Pricing and Regulatory Tribunal to authorise electricity price rises of 18 per cent from 1 July. I note that, as part of that, in the average case across the state at least 50 per cent of that increase will be as a consequence of the carbon tax and that, in the case of Integral Energy, up to 85 per cent of the price rise will result directly and solely from the carbon tax.

The rise in prices is going to occupy almost the entire amount of the 10 per cent allocated by the government in its modelling. I refer specifically to Strong growth, low pollution:modelling a carbon price: update,from late 2011, and, in particular, to page 12, where it says, 'Over the first five years of the carbon tax'—not just the first day—'the price rise as a consequence of the carbon tax on electricity will be 10 per cent.' Is the minister really saying that there will be no further price rises as a consequence of the carbon tax in the electricity space? I refer to the fact that the government's own modelling shows a more than 25 per cent increase in the carbon tax on electricity between now and 2017. In particular, the most recent budget showed that the rise would be from $23 to $29 on the carbon price by 2015-16.

Will the minister deny that that 25 per cent plus increase in the carbon price will have any impact on future electricity prices? Will the minister deny that the auctioning of forward permits in April 2014 and beyond for the electricity sector will have any impact on electricity prices? This is particularly so given that the Electricity Supply Association of Australia warned last year that this additional forward auctioning of permits would add another 10 per cent to the price of electricity immediately. So I refer to the fact that five years worth of electricity price rises will have occurred on day one. Does the minister believe that there will be no impact from the additional 25 per cent increase in the carbon tax and does the minister believe that there will be no impact from the auctioning of forward permits, which the Electricity Supply Association of Australia has predicted as of April 2014 will have a further 10 per cent impact on prices?

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

The government has a great degree of confidence in the modelling that has been undertaken. It was independent modelling of a very comprehensive nature by the federal Treasury, supported in the case of the energy market by two private organisations that did extensive modelling of the electricity price impact. We stand by what that modelling says, which is a 10 per cent increase in household electricity prices averaged across the country. Different scenarios were contained in that modelling and the government has a lot of confidence in them.

It is interesting and—from a standpoint where the Leader of the Opposition has been saying there would be an unimaginable price impact and at various times has asserted that electricity prices will rise by 25 per cent and then 30 per cent and even more—it is important to note now that in various jurisdictions regulators are examining this issue and what the real-world price impact will be, and they are confirming that the Treasury modelling is accurate. Just last week, the South Australian regulator issued the estimated price impact in South Australia, and it is $1.50 averaged across households in South Australia. In Western Australia, it is averaging $2.50. In New South Wales, IPART has confirmed that it is $3.30. It is important that we keep these things in some perspective. We certainly have a lot of confidence in the modelling. The regulators are now resolving that the electricity price impacts are consistent with what the Treasury said; in fact, in some jurisdictions it is less than what the Treasury had estimated.

The other important point to make is that the attribution of carbon pricing to everything that is happening with electricity prices has been misrepresented in this debate. In various jurisdictions, electricity prices have risen by over 50 per cent over the last several years. I was in Western Australia last week. Electricity prices have risen by 50 per cent, I think, in two years in Western Australia. None of these things have anything to do with carbon pricing, which commences just from 1 July. My colleague the member for Chifley and I, as New South Wales politicians, are acutely aware that there was, I think, an 18 per cent increase in electricity prices in New South Wales last year This had nothing to do with carbon pricing, and it came off the back of previous significant increases. This has all been driven by the investment in poles and wires in our transmission and distribution system in a host of jurisdictions throughout the country. An urgent investment has been recognised as necessary in those areas. If there is excessive investment—and I note that some commentators are indicating that gold-plating is going on—then that is an issue that needs to be tackled by the relevant jurisdictions and the relevant electricity market regulators.

It is very important to make that point about what is really driving electricity prices in this country. There has been an underinvestment in the network for quite a significant period. It is important that it be addressed. It is important that it not be gold-plated. We have to do all that we can to help people at a household level deal with the impact of these price rises. Only $9 in every $100 that a household consumer pays in their electricity bill is going to be attributable to the carbon price, averaged across the country. To assist, the government have announced—and it is the only government acting in this way—a significant number of measures to assist households with these cost pressures. Specifically, with the introduction of the carbon price, there is $3.30 a week averaged electricity price impact and $10.10 assistance provided by the Commonwealth through tax cuts, increases to pensions, increases to family tax benefits, payments to many self-funded retirees, payments to many veterans and increases in a host of other Commonwealth entitlements. This is what is important to bear in mind. Clearly the coalition, having failed in its fear campaigning up to this in time and confronted now with some facts about actual increases, are now moving to try to scare people about impacts over the next five years. They cannot have it every way. The facts will out with the fear.

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

I thank the minister for his attendance today and for the opportunity to ask him some questions, particularly given the Gippsland-Latrobe Valley region is recognised, I think even by the government, as one of the regions that will be most adversely affected by the carbon price—or the 'carbon tax', as we like to call it in the Latrobe Valley, even though apparently no-one on the other side of the House likes to call it a 'tax' anymore. I will refer specifically to the regional structural adjustment package, which is supposedly being developed as part of the government's carbon tax package. It has been confirmed by the minister for regional development that there are no guidelines in place for the distribution of this $200 million package. Even when you consider that this $200 million package is grossly inadequate to assist the affected regions, it strikes me as staggering that we are only days away from the implementation of the carbon tax and this $200 million structural adjustment package is without guidelines.

Given that there are no guidelines now and that the tax will come into effect in just a couple of weeks time, can the minister explain how regions which are going to be adversely affected by the carbon tax will be compensated for those adverse impacts?

The Minister for Regional Australia, Regional Development and Local Government was in my electorate quite recently—I think it was last Wednesday or Thursday—and he gave the impression that the vast bulk of the money that was allocated under the package would be contingent upon regions demonstrating that they had been adversely affected by the policy through such things as contracts for closure. Given that the government so far has refused to fund even a socioeconomic analysis of the Latrobe Valley to assess what the impacts of the carbon tax or a contract for closure would be, I am interested to know how the government proposes to demonstrate which regions have been adversely affected and how these funds will be allocated. On that specific issue of the contract for closure, given that we are just days away from the implementation of the carbon tax and given that the government was going to make some announcements on 1 July in relation to the contract-for-closure tender process, will the minister deny that the government is going to announce an extension of time for contract for closure?

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 Flinders for his questions. I appreciate that he has a number of apprehensions, and I hope that I can dispel them to the extent appropriate this afternoon. Sometimes the coalition believe their own propaganda, and I think that is part of the problem we are dealing with here. They have gone around the country—and in particular the Leader of the Opposition—to regions like the Latrobe Valley and terrified the living daylights out of people and created enormous apprehension. I have experienced the same in my own region, which is a coalmining region, where, because the Leader of the Opposition has done the most unconscionable thing and stood before people and said to them, 'You are going to lose your job,' it has created enormous apprehension—

Mr Chester interjecting—

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! The minister is responding.

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

One of the first things I learned as a trade union official is that you never, ever, ever mislead people, and the Leader of the Opposition will pay for what he has done. He has created this apprehension in the Latrobe Valley and in many other regions with statements to the effect that Whyalla will be wiped off the map. Just imagine what that means to families in Whyalla—what a disgrace. You have to stand before people and deal with them with some integrity, and that has been lacking in the coalition's approach. As the carbon price comes into effect, this will become clearer and clearer to members of the community, including the Latrobe Valley.

I do not suggest the question was put in any inappropriate way. I know that the member is genuine in his concerns, but I think that we have to keep things in perspective here. We are acutely conscious of the circumstances that the Latrobe Valley and, in particular, the brown coal generation sector find themselves in. A very significant amount of funding of course was allocated in the form of energy security payments in the package to ensure that there was confidence on the part of the investors, the equity holders and the debt providers, for the brown coal generators in the Latrobe Valley, and I think there is evidence that those payments have been successful by their continuing confidence in the assets that are there. That is very important for people's jobs as well. The government committed significant funds to ensure that there was ongoing confidence in those assets and in the region.

I have visited the Latrobe Valley a couple of times over the last 12 or 18 months to talk to people about this issue, and I can assure the member that I am as concerned as anyone else to ensure the wellbeing of that community. A number of the electricity generators in the Latrobe Valley region did indicate that they would like to discuss, in the appropriate process, the contract-for-closure issue, and those discussions have been continuing in an appropriate way through the department of my colleague the Minister for Resources and Energy. They are commercial-in-confidence discussions. Our public policy announced in July last year, to which we continue to adhere, is that that process would be brought to a conclusion by 30 June, which of course is imminent. That remains our policy position.

It is not appropriate for me to speculate on the outcome at this point in time, but the process that we initiated should appropriately be continued and a conclusion reached. I can say to people in the Latrobe Valley that we are very mindful of the circumstances there. We have put a lot of resources into supporting them. We are working very closely with the business community and, I might add, with the Victorian government in relation to these issues.

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

I want to refer to the impact of the carbon tax on the aluminium sector. In doing so, I remind the chamber that of course answers given in this chamber have the same weight and bearing as answers given in the primary chamber of the House, with all the consequences for statements made that may or may not be true. Very briefly, my question to the minister is: is the government considering, involved in or negotiating any form of bailout package for sections of the aluminium sector, given the imminence of the carbon tax?

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

I appreciate the question because it gives me the opportunity to put on the record once again a number of the difficulties that are confronting the aluminium-smelting sector in particular. Essentially, there has been a very significant fall in aluminium prices on the London Metal Exchange—in fact, a 40 per cent depreciation in prices over the last few years—and that is impacting on the profitability of much of the aluminium industry within our domestic economy. Added to that, given the strength of the economy and the investment in the resources sector in particular, we have been experiencing a high dollar, above parity with the US dollar, for some months, and for an extended period of time the value of the dollar has been well above its historical average. It could be that that situation will be sustained for a significant period of time, given the strength of the economy and the drivers of the high valuation of the Australian dollar in the marketplace. Those two factors alone—low prices, associated with oversupply in the international market, and the high value of the Australia dollar—are impacting significantly.

Added to that, of course, are pressures arising from the fact that long-term electricity contracts that had been negotiated between various state governments or state instrumentalities with the aluminium smelters, as is the case particularly in New South Wales and Victoria, in recent times and in the coming years are expiring. They are contracts that have had perhaps a 25- to 30-year term. Many of those contracts have involved a discounted electricity price for supply for the aluminium smelters involved, and the repricing of those electricity contracts by the relevant generators or state instrumentalities is a very material factor in the viability of these businesses. There has been extensive discussion between the aluminium industry, and the smelters in particular, and the various state governments and state instrumentalities in relation to that issue, including in Victoria. It was one of the key issues behind the decision by Norsk Hydro a month or so ago to close the aluminium smelter at Kurri Kurri in my own region, the Hunter. To put that into a fair historical perspective, it was a decision of the New South Wales government, followed by a decision of the O'Farrell government, that they would not renew the electricity contract on terms sufficiently favourable to Norsk Hydro to allow the continued operation of that smelter.

All of that—low prices, the high dollar and electricity contracts—is yet again being completely misrepresented by the coalition in a misleading way. They are trying to attribute these problems to carbon pricing, which is completely fallacious. To put that in context, aluminium smelting is an industry that in 2012-13 will attract for free an average of 94.5 per cent of the permits it will require under the carbon price, reducing the effective average carbon price in aluminium smelting to $1.30 a tonne. It is a trade-exposed industry, and that is why the government has taken a significant step. That is the assistance that has been provided. Aluminium companies are in constant discussion with the government about these issues and, particularly with my other portfolio hat on, it is not surprising that I would be having discussions pretty regularly with the aluminium sector and others who are feeling some of these pressures—for example, the steel industry—and continuing to monitor the situation.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I want to pick up on a number of things. The member for Flinders referred to Western Sydney and my home state of New South Wales and what is going to be happening there with power prices. He referred to the fact that power prices will increase by 18 per cent. I think it is important to state that more than half of that is not due to the carbon tax or carbon price but, rather, has a lot to do with the decisions that have been made as a result of approval given by IPART to the pricing movements requested by state owned corporations, which are the responsibility of state governments. I do not recall that there has been any move to provide any sort of household assistance to cover for the increases to power prices that the state owned corporations have had approved through state based regulators.

I understand that there is a household assistance package that will cover households as a result of any move to introduce a carbon price from 1 July, as opposed to what is happening due to the state owned corporations. On top of that, there has been a very active scare campaign about the impact on councils in New South Wales as a result of the introduction of the carbon price which I would like to get some clarity on. So the first thing is to get clarity on the impact, particularly in Western Sydney, of the carbon price on power prices for households. The second thing is the impact on rates and council operations in Western Sydney.

The third thing I want to get clarity on follows from an opportunity I had to visit De Bortoli Wines, which has a distribution centre based in Western Sydney. They have been the beneficiary of assistance to help them shift their operations to a more sustainable footing. I was very impressed when I went out to Glendenning on Friday and met the New South Wales manager of De Bortoli Wines who outlined the types of measures that have been taken to move to a more sustainable footing and use their energy more efficiently. While there has been a lot of focus on the carbon price itself, there has not been enough focus on what measures are being taken by businesses and industry to make themselves much more sustainable, to use energy more efficiently in the way they conduct their affairs. I would like to know, particularly from a Western Sydney focus, what other businesses are able to do and what assistance they are able to tap into to find more energy efficient ways to operate and thereby reduce their own costs.

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 Chifley for the question because there are some important issues traversed there. I will take them sequentially. It is very important to note that 8.9 per cent, as I recall, of the electricity price rise approved by IPART in New South Wales is attributable to the introduction of a carbon price. That equates to an average household cost of $3.30 a week—exactly what the government said it would be. And of course, with respect to that, the federal government is providing an average of $10.10 per week to households in New South Wales in assistance in the form of tax cuts, family tax benefit improvements and pension increases. In Western Sydney, where I had the privilege to grow up—in fact, in the electorate of the member for Chifley, an excellent representative for that area—this is very important for people. There are many people in New South Wales, in Western Sydney, doing it tough. The tax cuts, the pension increases, the family tax benefits, the help for self-funded retirees, for many veterans and many others are very, very important to them. The federal government is the only government that is helping in these circumstances.

As to the rest of the electricity price rise approved by IPART, there are very significant factors that are within the New South Wales government jurisdiction to deal with. They are providing no assistance. The federal coalition have banged on for the last 12 or 18 months about all the doom and gloom, the fear and the terror that is created by carbon pricing. Do you know, the investment in poles and wires in New South Wales equates to the price impact of carbon pricing coming in, as it does in other jurisdictions—and, not only that, it has been more in previous years. Yet they have been claiming doom and gloom for everything with respect to that, when in fact the federal government is providing $10.10 a week, on average, in assistance. The New South Wales government is not helping people. It is not even actively looking at how it can ensure that there is no gold-plating of these investments, which are going on within its jurisdiction, so that New South Wales Electricity consumers are not placed under even greater pressure. That is a very material factor. It is total hypocrisy for the O'Farrell government to try to attribute the totality of the price rise to the carbon price as the member for Flinders was trying to do in his first question. It is completely fallacious and factually untrue. The New South Wales government is not providing assistance to help people in the way the federal government is.

The other thing that IPART did in recent weeks was to examine in a thorough way the potential price impact of carbon pricing on councils and their costs. There is a very thorough breakdown published on IPART's website which demonstrates very clearly that we are talking about an increase in the range of 0.4 per cent to 0.6 per cent in local government costs in New South Wales—I do not have the material before me, but it certainly was not more than 0.6 per cent. Fortunately, in that jurisdiction IPART keeps a pretty close eye on what the councils can do, along with the state government. Those are the facts of the matter.

I was in Brisbane last week. The Brisbane City Council, which is, of course, under Liberal National Party control, has come up with a completely fallacious claim. Given the same circumstances, they will be putting rates up by 1.9 per cent and ripping people off and having no transparency and accountability about it. These are all material factors.

The member for Chifley is right to point to the importance of programs generally that will assist organisations such as manufacturing businesses and local governments to reduce their energy consumption. Of course, some of the revenue from the carbon price mechanism is dedicated to programs which will assist in this. Last week the government announced a number of recipients among local governments and not-for-profit organisations of energy efficiency grants which will see energy consumption and electricity bills reduced. Last week I visited a food manufacturing facility at Emu Plains called Crafty Chef. A co-contribution by the government is expected to reduce the carbon emissions intensity of Crafty Chef by 54 per cent, deliver CO2 savings, boost its turnover from $20 million to $50 million and increase jobs.

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

I have two sets of questions for the minister. The first is in on the solar hot water rebate program. This program was axed in February, with $45 million lost. Although at the time the government claimed there was no reduction against budget expenditure, on budget night it was shown that the net loss as a consequence for the sector was $45 million, and the budget papers were reduced accordingly. The government has now reinstated that funding, although in a different format. My first question to the minister is very simple: where does that $45 million come from? Within which programs was it contained in the current budget? If it was not contained in any of the programs, will the minister confirm that the government's so-called surplus will be reduced by $45 million?

The second set of questions relates to landfill and the number of liable entities on the government's register of liable entities. Is the minister aware of plans by some landfill operators, and indeed potentially by some councils, to divert waste from consolidated high-quality landfills to smaller regional landfills so as to legitimately avoid the 25,000 tonne limit but in so doing potentially to lead to an increase in overall emissions and a decrease in environmental standards? Is the minister aware of any case where this is occurring, and can he rule out that landfill is being diverted from larger landfills to smaller landfills so as to avoid the liability but in so doing also losing the potential for methane strip and diverting waste to landfills which may not have the same lining and environmental standards?

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

In relation to the solar hot-water rebate, which was introduced in 2007, it is material to point out that the government has now provided over $320 million to help more than 258,000 Australian households replace older, higher emissions related hot-water systems with renewable, lower emissions alternatives. As at 31 May this year, an additional $68 million had been spent on rebates above the budget for the program announced in 2007, and an additional 33,000 systems have been installed above the target announced in 2007. It has been a program with a significant degree of funding expended on it over five years and with a significant number of systems installed—over a quarter of a million. The program has not been closed early; it was always designed to be closed in 2012, and that is what the government has done. We have obviously consulted widely in the industry and with associated stakeholder groups about this issue, but I emphasise that it was always scheduled to end on 30 June this year.

Mr Hunt interjecting—

On 6 June, just a couple of weeks ago, the government announced through Parliamentary Secretary Dreyfus that the $44.7 million that I think the member for Flinders is referring to, which remained from the Renewable Energy Bonus Scheme, will be used to support two national programs assisting local communities and low-income families to become more energy efficient. This will involve a new $24 million Local Government Energy Efficiency Program, established to help councils install solar or heat-pump hot-water systems in community facilities, and an extra $20.7 million under the Home Energy Saver Scheme, to support low-income households to invest in a bigger range of energy-efficient whitegoods and heating and cooling systems. This does not add to the budget in the way that was implied by the member for Flinders; this is an underspend from the program.

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

That is untrue. The budget was corrected and the money was taken out.

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

I am afraid that that is the position. I am reminded that it was factored into the budget surplus in a contingency reserve, and perhaps that is why the member for Flinders had not picked that up.

In relation to landfill, only 34 councils—as of Friday, according to the list based on current data published by the Clean Energy Regulator—have been identified as liable entities on the Liable Entities Public Information Database. That is 34 councils of 559 nationally. The coalition, in yet another example of fearmongering and campaigning and misrepresentation and misleading statements, has been running around trying to terrify local governments about this issue. The fact of the matter is that the government has worked very closely with the Australian Local Government Association for several years—since the previous parliament—about how to structure landfill emissions to minimise methane liability under the carbon-pricing mechanism. Many local governments that operate landfill sites have already invested in methane capture technology, which is what triggers landfill liability. Many local governments, including in my own region, have already invested in methane capture technology in order to either flare the methane, which under a carbon-pricing arrangement will potentially reduce their liability below the emissions threshold that triggers liability, or use it to generate electricity. We have consulted very closely with the landfill sector and local governments about the issue that the member for Flinders pointed to—the potential diversion of waste. It might be recalled that, under the CPRS, mechanisms had been mooted to deal with the potential of that issue. We satisfied ourselves in consultations that that is an issue that it was not necessary to address under the clean energy future package at this point in time.

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

I must admit that I was struck by the member for Chifley's question before. It seemed like the 'don't mention the war' episode out of Fawlty Towers, only heslipped up and mentioned the carbon tax. 'I did it once but I think I got away with it'. I am sorry to say, Member for Chifley, that the people of my electorate and right throughout Australia do not feel that you are getting away with it. They know what this tax is going to do to their lives. This is a tax, and all the bribes and the slick advertising will not hide the fact that this tax is going to cascade through the economy and have a big impact on regional communities. It is also a tax that your Prime Minister specifically ruled out ever introducing. But I do thank the minister for his answer previously, and I also acknowledge, Minister, that 1 July is the government's policy in relation to contract foreclosure. But the practical reality of the situation is that contract foreclosure negotiations are going nowhere fast, and I think the minister knows that. My community in the Latrobe Valley is suffering right now because of the uncertainty being created by your government's policy. Your government has no plans in place in relation to structural adjustment. Your Minister for Regional Development, Regional Australia and Local Government has acknowledged that as well. There are no guidelines in place for that particular policy, and there is a crisis of confidence going on right now in the Gippsland and Latrobe Valley region which is directly related to the carbon tax policy which the Prime Minister explicitly ruled out in the lead-up to the last election.

I repeat my question from before, Minister. Will the minister deny that government is going to announce an extension of time for its contract foreclosure negotiations?

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

Our policy, just to restate it, is that it will be resolved by 30 June.

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

I want to refer the government to the revenue measures contained within the carbon tax, and in particular the gross figures of approximately $36 billion to be raised. Will the minister confirm that if the price of the government's carbon tax falls below the $29 predicted for the first year of a floating price—and I will remind the House that that price is predicted to be $29, multiple times more than the current European price of approximately €6.9 as of today—that there will be a significant budget black hole?

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 his question. This is where the coalition tries to have it every way, of course. On the one hand it is doom and gloom and terrible. I think the Leader of the Opposition today was forecasting the price to go up, and so on, but on the other hand, when it is politically suitable for them, they try to point to the price falling and therefore holes in budgets and all the rest.

We have confidence in the Treasury modelling, and that is reflected in the budget. I was reminded today in question time in relation to this issue, when the member for Flinders was googling the European Union allowance prices, that in fact in July 2008 the European unit price was, I think, A$56 a tonne just prior to the global financial crisis. It is an emissions trading scheme, it is a market price that is set. Of course, the carbon price mechanism that we have implemented will migrate to a floating price, a market price, from 1 July 2015, and the market will set the price. The Treasury has modelled that, in one of the most comprehensive modelling exercises undertaken for a public policy change, at $29 a tonne in 2015-16. We have confidence in the modelling. If the member for Flinders is a derivatives expert on carbon markets, that is great. However, to be suggesting at this point in time that, in three years, we will still have low prices in Europe is a pretty big call, for a number of reasons. One of them is that we would all share the hope that the current debt crisis that is being experienced throughout the European zone is resolved as expeditiously as possible. That debt crisis has affected many markets, including the carbon market in the EU. I know, through consultations that I have with the EU in relation to this issue, that there is a great degree of concern about that and the need to resolve the debt crisis and restore confidence and stability to markets in Europe, including in relation to the trading of European Union allowances.

The government has already announced that we are in consultation with the European Union about the potential for ultimately linking the two schemes, which would be an important policy initiative—it is the largest carbon market in the world. The European Union scheme goes into a third phase in the not-too-distant future. There is a lot of discussion in Europe about the application of that phase and whether there would be contemplation of measures to support the price in the EU ETS as part of those changes. That is a matter for the European Union to deal with. The point that I am endeavouring to make is that 1 July 2015 is some period away, and we certainly anticipate that carbon prices and international markets will recover. By the time that we migrate to a floating price, from 1 July 2015, I think the Treasury modelling is going to prove to be as sound as the confidence we have in it.

Proposed expenditure agreed to.

Treasury Portfolio

Proposed expenditure, $4,441,842,000.

David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

It gives me great pride to be able to speak in support of the measures contained within the appropriation bills. The 2012-13 budget delivers on the government's commitment to return the budget to surplus. The surplus is growing over the forward estimates. As well as returning to surplus, the budget spreads the benefits of the resources boom to help families and low- and middle-income earners with increases in the cost of living. The return to surplus is the right decision for the Australian economy because it will sustain confidence in the strength of Australia's public finances, it will strengthen the government's balance sheet, to support Australia's capacity to respond to future adverse economic shocks, and it is appropriate for an economy expected to grow around trend and allows monetary policy to respond to economic conditions.

Australia's budget will return to surplus ahead of any other advanced major economy. Many other advanced economies are still grappling with the task of rebuilding their economies as well as setting their public finances on a sustainable footing. The current European sovereign debt crisis makes maintaining strong fiscal discipline and credibility more important than ever. Australia's strong public finances, very low public debt, solid economic growth, low unemployment and contained inflation make it one of the strongest economies in the world.

The government will return to surplus despite tax receipts being revised down by $28 billion over four years from 2011-12, relative to the 2011-12 MYEFO, due to parameter and other variations. Relative to the forecast made in the 2008-09 budget, total tax receipts have been written down by around $150 billion over the five years to 2012-13. The government has taken a disciplined approach to both return the budget to surplus and create room for new investments. This has required the government to identify $33.6 billion over five years in savings, with those savings split roughly equally between expenditure and receipt measures. These savings have been designed to be targeted and responsible, ensuring that the most vulnerable Australians and front-line services are protected. In addition to delivering the surplus and spreading the benefits of the boom, the 2012-13 budget contains a number of important initiatives, including establishing the first stage of a national disability insurance scheme; reforming Australia's aged-care system to make the system fairer, more transparent and responsive; delivering additional dental health services; and investing in a number of high-quality infrastructure projects, including funding for duplicating the Pacific Highway, additional funding for Roads to Recovery and Black Spot programs, committing to develop the Moorebank Intermodal Terminal and the Torrens and Goodwood rail project.

Average real growth in payments over the forward estimates is 1.8 per cent. This is within the commitment to maintain a two per cent annual cap on real spending growth on average, until surpluses are at least one per cent of GDP and while the economy is at or above trend. The budget also sees a fall in nominal payments in 2012-13 compared to 2011-12—the first fall in 42 years for which data is available. This highlights the key role disciplined spending is playing in the fiscal consolidation. The discipline imposed on real spending growth has reduced payments as a proportion of GDP to 23.5 per cent in 2012-13—that is a fall of 1.6 percentage points from 2011-12. In 2012-13 and each subsequent year in the forward estimates, payments as a percentage of GDP are expected to be at their lowest level since the onset of the global financial crisis. Across the forward estimates from 2012-13, payments are expected to be below 24 per cent of GDP. This is the longest sustained period below 24 per cent since the 1980s.

The budget includes measures to support the integrity, fairness and sustainability of the tax system, such as the removal of tax concessions for golden handshakes and living-away-from-home allowances. Nonetheless, over the forward estimates the tax to GDP ratio is projected to remain below what it was in 2007-08. In 2012-13, the tax to GDP ratio is expected to be 1.6 percentage points lower than the 2007-08 level, which equates to around $24.1 billion worth of tax in 2012-13. Tax receipts are projected to reach 22.9 per cent of GDP in 2015-16, around one percentage point below the levels reached in the mid-2000s. Tax receipts as a proportion of GDP in 2011-12 and the previous two years were the lowest since 1993-94. (Time expired)

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

I thank the Assistant Treasurer for his opening remarks. I want to touch on a few things before moving to his specific responsibilities. I would like to focus on the general issues around the budget. There is some confusion surrounding the budget papers and why in a number of cases they were delivered late to coalition people in the opposition budget lock-up. Assistant Treasurer, was it Treasury's responsibility to deliver the budget books to the opposition in the budget lock-up? Were any copies of the budget or related papers, including the portfolio budget statements, shredded at any stage during the printing process in the lead-up to the 2012-13 budget? Copies of portfolio budget statements were not available at 1:30 pm when the opposition budget lock-up started. I wonder whether the Assistant Treasurer could shed any light on that; whether there was any delay in the loading dock. I am curious as to why those papers were not available when they would ordinarily have been available.

I also want to talk about the clarity within the budget papers and their transparency in accurately reflecting the Commonwealth's budget position. You would be aware of criticisms from Ross Gittins, who was quite vivid in his criticisms of the actual budget position and how that was communicated—the transparency in a range of transactions that have been shifted off budget and the accounting rationale there; a table that aggregates all those transactions under a range of different headings; and their headline and underlying impacts. You would be aware that he was pointing to a budget surplus when, in his words, 'it actually hides an $8.7 billion budget deficit.' He goes on to say:

The hiding of the headline deficit is just one example of the way the budget papers are becoming less informative rather than more, and the way the spin doctors are turning them into an exercise in media management rather than transparency and accountability.

He provides a number of specific examples. I invite the Assistant Treasurer to address himself to those criticisms that Mr Gittins outlined in relation to payments to NBN Co. as an example, and also on the Clean Energy Development Bank and why that is presented in the way it is in the budget papers.

AAP also had a complaint, which Mr Gittins has alluded to:

This year AAP has accused the government of leaking budget information to selected media for broadcast during the budget lock-up. How's that for duplicity.

Has the Assistant Treasurer had those complaints by the AAP investigated, either by the Treasury or the government? What are the outcomes of those arrangements? Does he agree that this in part undermines the whole point of the lock-up, where there is selective release of information? The Assistant Treasurer and I share a spot on a particular television program, where he is fond of saying, 'I won't be drawn on budget speculation,' and then proceeds to talk about the selective speculation he would love to be drawn on and was actively involved in propagating.

I would invite the Assistant Treasurer to comment on those two very concerning issues about the integrity and transparency of the process and the papers themselves, and on the bewildering reason why key documents were not available to the opposition as they would ordinarily be in the regular course of events.

David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

The first point that the member for Dunkley raised—which goes to the question of documents and materials that were provided or were intended or meant to be provided to the opposition and the timeliness of their provision—is not a matter that has been raised with me previously. Certainly, that is something that I will endeavour to look into and provide the member for Dunkley with further information on. It is my understanding that it is up to the respective individual departments themselves to make available information to the opposition. I am not aware of any instance in which the way in which departments conducted themselves in the most recent budget departed in any way from the way in which matters would ordinarily occur. I have no knowledge of anything untoward in that regard, but I will certainly have a look at the matters that the member for Dunkley has raised.

I welcome the member for Dunkley's interest in transparency, because with a $70 billion black hole the Australian people are going to be very interested in the transparent in way in which the opposition presents its proposals to the Australian people ahead of the next election. The budget papers, in all regards, comply with the usual accounting practice in terms of how budgets are recorded and matters are disclosed. There is no suggestion that that is not the case. It is good to see the member for Dunkley imbibing his daily or weekly element of Mr Gittins's commentary, because I think the opposition could learn a lot from much of what Mr Gittins has said. He has been a very strong critic of the lack commitment to fiscal discipline on the part of the coalition.

On the question of transparency, the government is very pleased to stand behind a budget that is being returned to surplus. We have stated the reasons why it is so important that we return the budget to surplus. We have done so using all of the accounting mechanisms that would ordinarily apply to the way in which these matters are reported. That will show that we are delivering in 2012-13 a $1.5 billion surplus. The surpluses that will be achieved into the out years grow over time. Of course, this is a remarkable result when we consider what is occurring all around the world at the moment. Indeed, these projections are based upon strong growth, growth that is strong by international standards. There is good reason to believe that those projections will be realised. In recent national accounts data released we see that the Australian economy continued to grow more strongly than any other major advanced economy. The Australian economy today is somewhere in the order of nine per cent larger than the economy that existed before the GFC. We are experiencing growth at rates that no other major advanced economy can even come close to, and we are returning our budget to surplus faster than any other major advanced economy. Indeed, as we return the budget to surplus others are still grappling with very large deficits, and we all operate in the current global economic settings with the inherent challenges they bring.

The government are very pleased that in this budget we have been able to spread the benefits of the mining boom, and that is so important. The national accounts data really did show that the growth in this country is occurring much more strongly in some parts than in others and in some sectors more than in others. As we extract mineral resources in this country today to meet the demands of the global economy and the global marketplace, it is absolutely important that we extract a sufficient and appropriate return for the Australian people from those resources. Through the mining tax and the minerals resource rent tax we are doing that, and we are determined to make sure that the benefits of the boom are being spread. I think that is the responsible thing for the government to do, particularly in a climate where the resources boom, which has meant so much bounty for so many, has also provided structural challenges and changes that have impacted on so many others throughout the economy. This is a very good budget, one that has returned to surplus and one that helps spread the benefits of the mining boom.

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

I want to ask the Assistant Treasurer about the government's decision to return the budget to surplus, but I also want to make a couple of observations in that context about the state of the Australian economy, which is today nine per cent larger than it was before the global financial crisis. Like the Assistant Treasurer, I am a subscriber to the Treasurer's Economic Note, which reminds me that, compared with pre-GFC levels, the Italian economy is now five per cent smaller, the British economy is three per cent smaller and the Japanese economy is one per cent smaller. Other economies have grown, but not by much. The United States economy is up by one per cent and it is the same with Germany; the Canadian economy is up by four per cent. So the Australian economy, having grown by nine per cent from pre-GFC levels, really is in a class of its own.

I also want to raise the recent national accounts figures. As the Assistant Treasurer has noted, the release of those figures really did give the lie to those who argue that Australia's best days are behind us. As the Treasurer put it, the release of those figures was a week when the optimists won over the pessimists. It is important to put in place productivity-boosting reforms and they are reforms that Labor is currently undertaking. The National Broadband Network, the historic investment in schools and boosting the quality of Australian schools are reforms that will pay dividends, but they will not necessarily pay off in the year in which they are implemented. We know this from looking back at past reforms. We can see, for example, that the deregulation of the financial sector and the cutting of tariffs in the 1980s paid off in productivity in the 1990s.

In terms of Australia's debt level, which naturally goes to the question of the return to surplus, it is worth drawing on a number of observations made in the press recently. The Executive Director of the Australia Institute, Richard Denniss, has noted that Australia's level of public debt is among the lowest in the world. In fact, he noted:

At less than 10 per cent of GDP, the Commonwealth’s Net Debt is so low that the financial sector has urged the Gillard Government to issue more government bonds than is actually necessary to ensure the ‘liquidity’ of the government bond market.

Stephen Koukoulas, in the Australian Financial Review on the morning after the budget, noted, 'Not once did the Howard or Fraser governments in about 20 years in office achieve a single year where government spending was cut in real terms, while Labor governments have been able to cut real spending in five years since the mid-1980s.' Mr Koukoulas further notes that in the 2012-13 budget the ratio of government spending to gross domestic product will fall to 23.5 per cent, which is 0.7 per cent of GDP lower than the average of the 12 Howard government budgets. 'In today's dollars, that is around $10 billion less spending.' George Megalogenis, writing last year in the Australian, had this headline: 'ALP best manager of money, history shows'. Mr Megalogenis goes through the average annual real spending increase when the economy was growing at better than two per cent a year. Those figures show that under John Howard as Treasurer growth was 2.3 per cent. Under Peter Costello mark 1, it was 1.9 per cent. Under Peter Costello mark 2, in the salad days, it was 3.3 per cent. Under Wayne Swan, it was 1.0 per cent.

There is a fear campaign being run by those opposite against the debt that we took on in order to save 200,000 jobs and tens of thousands of small businesses, which I am sure that the member for Dunkley is deeply concerned about. Yet we still see those opposite running scare campaigns on things like the debt cap, which we have been advised to increase in order to take account of the fact that there are fluctuations in government revenues through the course of the year. We are raising the debt cap prudently. But those opposite seem keener on taking a leaf out of the playbook of the US Republicans.

My question to the Assistant Treasurer is: why is the government returning the budget to surplus and why is this important for maintaining Australia's economic prosperity?

David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

I thank the member for his very informed and insightful contribution. I welcome the opportunity to respond to his question. He asked why it is important to return the budget to surplus. There are many reasons why it is important to return the budget to surplus. We as a government should be attempting to live within our means. When the economic circumstances are as strong as they are—and the economic circumstances in this country stand in stark contrast to the challenges that so many other economies are facing around the globe—these are precisely the times in which governments should be attempting to return their budgets to surplus.

What are the indicators to which I refer? When it comes to solid growth, the recent national accounts figures are a testament to the strength of growth in the Australian economy. I often hear those on the other side allege that the government has a preference for redistribution over wealth creation. The strongest endorsement of this government's commitment to wealth creation is the fact that this economy has grown faster in the period since the global financial crisis than any other major advanced economy. As a Labor government, we are committed to ensuring that there is fairness in the way in which taxation and transfer systems operate. But we also believe first and foremost that an economy must grow. Through growth and enlarging the pie, we are able to give more and more Australians the opportunity, with government support and assistance, to realise their potential so that they can make the contribution that our country requires and deserves from them. Our growth is very strong.

We also operate in a context in which unemployment is relatively low. An unemployment rate of 5.1 per cent is relatively low compared to those economies with which we would normally compare ourselves. If we have a look at those economies in Europe and economies such as the US and the UK, what we see is that our unemployment levels are considerably lower. All of those countries to which I have referred would give their right arms—they would give a limb—to have an unemployment rate with a five in front of it. And that is what we have in Australia. In fact, much of the discourse in this country at the moment is positioned around the challenges of confronting labour and skills shortages. And this is a government that has a plan to address those matters as well. We have strong growth and low unemployment, and we have contained inflation. Containing inflation is the best way that any government can attempt to fight the rising cost of living. Containing inflation is, by definition, a government's efforts to contain rising costs of living. With contained inflation, we see strong growth and low unemployment. At the same time, as the member for Fraser rightly pointed out, our net government debt is amongst the lowest of major advanced economies, peaking at 9.6 per cent this year. In fact, if you look at comparable nations and put them all in a basket and work out their average, our net debt peaks at about one-tenth of the average for those countries. We have low net debt, despite the carry-on and the protestations of the opposition. Whenever they have this discussion they firstly do not wish to acknowledge the international realities and the comparisons with other countries.

The other point that those opposite seem to forget is that we have been through the global financial crisis. They want to forget that because they are ashamed of their record of having voted against so many of those important measures that we as a government implemented to support jobs. I have mentioned all of these indicators, but the 800,000-plus jobs that we have created in our time in office are perhaps the strongest indication of this government's agenda. It is about growth. It is about jobs. We have delivered those jobs. Often we have had to do it without the support of those opposite, because they come into the parliament and vote against these measures. Then they want to pretend that there was not a significant international economic incident and a period of challenge that we have been through. We tackled it. As a result of having tackled it, hundreds of thousands of Australians had a job who would not have otherwise had a job.

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

The Assistant Treasurer talks about the stimulus measures—I think that is what he is alluding to—which in broad figures saw the budget position expand expenditure by $40 billion in that year. Is it not true that the so-called targeted and temporary measures involving the GFC response were neither temporary nor targeted but that they elevated the floor for Commonwealth expenditure by some $40 billion? It has never turned back. On your analysis, Sir, that would mean that every day that Labor has been in office, we have been in a GFC mode, because there has been no reduction in expenditure or no removal of that GFC stimulus for any of the years that followed. It just represented an elevated floor against which further increases were added. You now claim that those increases were not as substantial as they might have otherwise been, conveniently ignoring the $40 billion uplift in one year under the name of the GFC. Is it not true that those stimulus uplift factors created a new floor for the Commonwealth outlays, that we are now spending $370 billion a year compared to $270 billion a year four years ago, that there has been no restoration of the budget base nor the trajectory that was in place before the GFC, and that all of your comments about modesty in expenditure are completely fallacious because there has been no restoration of the expenditure trajectory prior to the GFC?

On the issue of those outlays and the budget position, may I remind you that you have not delivered a surplus; you have forecasted one. None of your economic forecasts have come within a bull's roar of the end-of-year position. How confident are you that this budget will have some sort of accuracy that belies the track record up to date? What analysis have you done on the sensitivities that you have factored into the budget parameters? I refer to what was a remarkable inclusion under the contingency reserve for budget year 2012-13, which is a sizeable negative number. After some flapping around in Finance estimates, the explanation that was provided for this unusual occurrence was there was a lower than expected March quarter CPI outcome that needed to be factored into the papers and that this was 'received too late in the process to be allocated to individual agencies or functions'. Is this answer accurate and reliable? How is it that this reduced CPI outcome is not reflected anywhere else in the budget or, if it is, can you please point to where it is? Could you give some indication of the size of the downward forecast revision and what this downward forecast revision has meant for revenue? And, to pursue this matter further, in terms of that late revision and the economic parameters that it is supposedly influencing, what are the revenue and growth projections that are now in the budget if you have got that downcast in there covered by a negative contingency reserve amount but it does not appear anywhere else in the budget papers?

I will move on to the budget issue. You touched on debt. If you are claiming it is a surplus, how is it that there is a growth in the debt profile and why are you seeking an increase in the debt ceiling? How is it that the explanation you provided relating to the fluctuations in revenue throughout the year cannot be accommodated by an existing mechanism available to you through the Loan (Temporary Revenue Deficits) Act 1953? How can you credibly say there will be a surplus when you are forecasting a need to increase the debt position? On the issue of the sensitivities regarding the downward revision in GDP, what is the sensitivity to net debt for each year across the forward estimates of a one per cent increase or a one per cent decrease in GDP and where does that leave the final budget position?

On the issue of taxation, you talk about the taxation measures that are included. When was the decision made to abandon Labor's company tax promise? Less than 24 hours before the Treasurer delivered the budget speech, the Minister for Small Business claimed that that was still part of the budget and, when asked why 92 per cent of small businesses feel that no government policy is helping them, reached for that measure. Being on the Expenditure Review Committee, he must have known that that was not the case, so why was he not being straight with people? That is probably why the member for Deakin has circulated that information. What is the status of the company tax cuts?

Finally, doesn't your budget confirm the abolition of the entrepreneurs tax offset, which will put up the level of taxation on the income of about 400,000 of Australia's smallest businesses? How is that assisting small business, in the manner you claim, in distributing the proceeds of the mining boom?

David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

I welcome the member for Dunkley's intervention on this occasion. In particular, I welcome his willingness to bring small business front and centre into the debate about what this government is doing. Once again, I am surprised that he would come into this place and seek to draw attention to his own abysmal failure. The member for Dunkley is the shadow small business minister, and he would have to be the only shadow small business minister, certainly from the coalition side, in the history of this parliament who has voted against tax relief for small business. He came into this parliament and voted against tax relief for small business, and then he has the audacity, the hide, to come in here.

But it gets much better than that. He glossed over the fact that he voted against tax relief for small business—the instant asset write-off measure, which will ensure that small businesses all around this country will be able to share in the benefits of the mining boom by getting an upfront deduction, an instant asset write-off for every asset they purchase under $6,500. This will be a massive boost to small business and will give them the capacity to invest in their own capabilities and in their own capital and equipment, making sure that they are able to take advantage of the opportunities that arise in the markets they serve. Not only did he gloss over that point, he had the audacity to come in here and challenge the government when it comes to the question of company tax cuts. Day after day we came into this parliament and those opposite jumped up and down and said, 'We will vote against company tax cuts.' The rationale for that was, they said: 'We don't support the income-generating source. We don't support the minerals resource rent tax. So, because we don't support the minerals resource rent tax, we won't be supporting any of the expenditure measures that are attached to it.' They made that point. They would have an ounce of credibility if they would at least maintain some consistency on that point. But what have they now done? We have handed down a budget where we have made it clear that, despite their determination to block our company tax cuts, we will make sure we spread the benefits of the boom. But we are going to do it by providing some other forms of assistance—in the form of increases to family payments and increases to allowances—to ensure that those individuals and families who are doing it tough share in the benefits of the mining boom. And what did they say?

All of a sudden they discovered that they were in a position where they could support expenditure measures that were linked to the MRRT. I think the real issue here is that the shadow small business minister does not have the clout in shadow cabinet. When it comes to small business issues, he was not able to get them over the line when it came to supporting a tax cut for business. What a shameful position to be in! He has been the only shadow Liberal small business minister to vote against tax relief for business, but then he got rolled. He got rolled in shadow cabinet on trying to give a company tax cut. For the member for Dunkley to come in here and try to challenge the government when it comes to tax reform, particularly in relation to company tax cuts, not only is really gilding the lily but is beyond the pale.

The member for Dunkley also made a few points in relation to the global financial crisis. He wants to block it from his memory. We all remember the shameful position that they took when they voted against the stimulus measures that supported this economy—or at least those that managed to turn up to parliament to vote against them. The member for Dunkley voted against them. Hundreds of thousands of jobs have been protected and supported as a result of that. One challenge I hand down for those opposite is that they should come forward and tell us which economy, which country, out of all those economies out there in the world handled the global financial crisis better than Australia.

Ken O'Dowd (Flynn, National Party) Share this | Link to this | Hansard source

China.

David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

China! All I can say is that I am pleased the member for Dunkley— (Time expired)

Mr Billson interjecting—

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

A bit of coverage on superannuation is important, member for Dunkley.

Mr Billson interjecting—

He does not need protection; he could take all three of you on. The 2012-13 budget delivers on the government's commitment to return the budget to surplus from surpluses growing over the forward estimates. But, as well as returning to surplus, this budget spreads the benefits of the resources boom to help families on low and middle incomes with the cost of living. The return to surplus is the right decision for the Australian economy because it sustains confidence in Australia's public finances and it strengthens the government's balance sheets to support Australia's capacity to respond to future adverse economic shocks. Return to surplus is appropriate for an economy expected to grow above trend, and it allows monetary policy to return to surplus ahead of any major advanced economy.

Many other advanced economies are dealing with the very difficult issue of an ageing population and how to make sure that there is enough money for all people who reach 65 to retire. That is why we had some measures in our budget which improve the superannuation prospects of Australians. Unlike the coalition, who consistently vote against increases to superannuation, we on the Labor side believe in boosting Australian's superannuation. We also believe super should be concessionally taxed, and we are making the system fairer for millions of low-income earners by removing the compulsory tax on compulsory superannuation contributions from 1 July 2012. It was also clear to us that a small number of people on very high incomes are getting a better tax deal out of superannuation than millions of Australians on average incomes, because most compulsory superannuation contributions are taxed at a flat rate of 15 per cent, regardless of the person's income. This is why we are making the system fairer by reducing the higher tax concession that the very high-income earners receive on their concessional contributions. Indeed, in this budget we announced that we would take steps to more closely align the tax concession for very high-income earners with the concession received by average-income earners. The government took this step because it is not fair, nor is it good economic policy, to give 128,000 Australians a 30 per cent tax break, excluding the Medicare levy, on their superannuation contributions. We are better targeting the tax concessions for superannuation by reducing the significant concession which very high-income earners receive on their contributions. This reform will affect only people whose income is more than $300,000, which is approximately 1.2 per cent of people contributing to superannuation in 2012-13. We are reducing the tax concession which wealthy taxpayers receive on their contributions from 30 to 15 per cent, so it is more in line with the concession received by people with average earnings. This reform builds on our low-income superannuation contribution, which will make concessions on contributions fairer for about 3.6 million low-paid workers in 2012-13. The low income superannuation tax abolition—that is, getting rid of the 15 per cent tax paid on superannuation by people who earn less than $37,000 a year—will also support, in particular, women. Of the 3.6 million Australians who earn less than $37,000 a year, approximately 2.1 million are women, thus ensuring that they have more money for their retirement, when it is well known that women find it more difficult to save money for their retirement when they have to step in and out of the workforce.

In addition, in 2012-13 and 2013-14, all individuals will be subject to the general concessional cap and will be able to make concessional superannuation contributions of up to $25,000 per year. We are deferring the start date of the higher cap by two years, from 1 July 2012 to 1 July 2014, in light of comments made by industry about the difficulty in administering the higher cap before the new start date. During consultation, the superannuation industry raised concerns in relation to the cost and complexity involved in administering the balance limit and the difficulty some individuals may face in determining whether they are eligible for the higher cap. Deferring the start date will significantly help resolve these issues. It will allow implementation to occur at the same time super funds are making more changes to their systems to report more information to the ATO as part of the SuperStream reforms. In addition, individuals will be able to more easily determine whether they are eligible for the higher cap when the ATO provides access to comprehensive account balance information from early 2014. The Labor government is the only party in federal politics that is interested in improving superannuation for all Australians. (Time expired)

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

Could the minister confirm that the superannuation contributions paid by employers that are legislated to increase from nine to 12 per cent are indeed paid for by employers and have been legislated? There has been some suggestion from Labor members that this is subject to some kind of negotiation and wiggle room. That came as news to most people. Could he confirm that that is the case. Could he also turn his mind to a question that has been put to the coalition which relates to the number of small businesses that are suffering at the moment through a 48 per cent increase in small business insolvencies. A number of them point to their business being their retirement nest egg and thank the coalition for the capital gains tax rollover relief and other measures that they had planned to rely upon for their retirement. They point to the lack of appetite for purchasing new businesses or instances where a business has hit the wall and there may be a limited window within which to accumulate a retirement nest egg. Has the minister any plans to examine the contribution cap for mature age people, particularly in light of the reduction that the government has introduced where there might be a limited period of time—say, for the people over the age of 50—to accumulate a retirement nest egg and whether that is on his radar screen?

I move to a related area about the accountants exemption that the minister would be aware of and FOFA changes first announced by then minister Bowen. It was proposed by the government that this exemption would be changed. This has created some uncertainty and concerns for accountants across Australia. Can he update us on progress of the proposed changes to the accountants exemption allowing them to provide advice on setting up or closing SMSF funds? I believe that was to come within weeks back in February. I think the minister was reported as saying that that was forthcoming within the next two weeks. So there is a bit of date slippage, but we are just wondering where that has got to and whether any changes to this measure are being contemplated that deviate from what Mr Bowen had to say. What action is being taken and when will this next two weeks arise as the minister promised?

I will just more onto another related area, mindful that I suspect the clock will be run down by Labor colleagues. In the investment manager space, can he explain the delay in finalising the investment manager regime legislation? Is one of the issues resourcing of Treasury? I note there was a report of about some four dozen—

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

Do you like Treasury? You normally hate them.

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

I am always fond of Treasury. It is Treasurers we have to keep an eye on. We look out for the pre-election budget outcome, because we know your mysterious hand has not gone over those figures and so they have a degree of tidiness about them. Is this an issue of the resourcing of Treasury? Has Treasury received any stakeholder feedback on the delay and is there some reason that that seems not to be 'moving forward', to coin a phrase?

On payday lending, could the minister update us on progress with the proposed payday lending changes contained in the Consumer Credit and Corporation Legislation Amendment (Enhancements) Bill 2011? I acknowledge that the minister has appreciated that payday lending is different to microfinance, and there has been some change there.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

Madam Deputy Speaker, I have a point of order.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

There are no points of order.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

I just want some clarification. Several of the questions asked by the member for Dunkley have nothing to do with the appropriations bill which we are discussing. I am more than happy to answer them but ask that he refer to the part of the budget he is addressing.

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

It is quite simple: Treasury officials are funded by appropriation. You have a football team of them here, Minister. They certainly are related to the budget. I am confident you would be able to cope with them.

Ms O'Dwyer interjecting—

I have never seen anything like it before! I hope you appreciate us seeking clarification about how your portfolio is financed, Minister. What is the status of the review of the definition of retail and wholesale clients? The options paper was released in January 2011 and submissions closed over a year ago, on 25 February 2011. It is unclear why it has taken so long. Have any decisions been made to abandon this process or to change the process? When can we expect an announcement relating to that?

Finally, regarding APRA regulated funds, were all of them compensated for losses in Trio? Has the process for providing compensation been finalised? I would be grateful for an answer to a couple of those questions. (Time expired)

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

Following on from the Chief Opposition Whip's interest in fishing, the member for Dunkley has decided to do his own form of fishing which cannot be regulated by protection of the Barrier Reef. Fair enough. The most substantial question which the member for Dunkley led off with was about superannuation and who pays it. Let me be very clear on this matter. It is not appropriate for the opposition to spend their time scaring business and misleading people about who pays for superannuation. Superannuation increases are paid for out of the creation of value and wealth in enterprises going forward. For this, I submit the real-world evidence of what happened between 1992 and 2002. Over that time period, where compulsory superannuation was increased from three per cent to nine per cent, we saw at the same time a decrease in the unit labour costs of business, an increase in business profit as a share of GDP, an fall in unemployment from 11 per cent to something around six per cent and a rise in real wages in a continual pattern. It is not good enough that those opposite, who are the shipwreck survivors of the Howard-Costello era, without necessarily the capacity of some of those former members, have forgotten their own party's record on superannuation. What they always do is initially oppose and then they try to own the changes.

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

Why don't you talk about your record?

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

The member for Higgins, who has had a very bad weekend in preselections, is now interjecting. What I recall is that her former boss, the former member for Higgins and the then Treasurer, Peter Costello, acknowledged the benefits of superannuation. I touched a raw nerve there with the member for Higgins. As for who pays, it is paid for out of the creation of productive value in enterprises. The only way you could argue that it is some sort of a cost on business would be to suggest that there will never be real wage increases in the whole period going forward and that the wages in 2013 would, without superannuation, be the same remuneration received by employees in 2019, which is patently false. The question of who pays is clearly and succinctly dealt with. To paraphrase former Prime Minister Keating, 'When conservatives tell you that this is some sort of tax on employers, they are either misinformed or they are lying, and they are wrong.'

Some of the other questions raised by the member for Dunkley include the proposition that superannuation is another impost on small business. Having first established that it is not actually what it has been described as by the shadow minister for small business, I would also remind him of the measures which this government has put in the actual appropriation bill to help small businesses. Of course, that includes not least the loss carry-back provisions. I also remind him of the deduction for motor vehicles which are purchased. I remind him of the tax deduction for purchase of capital equipment. These are real measures which help small business.

Of course, in politics it does not do anyone any credit to practise political amnesia. The reason why small business did not get a tax cut is that those opposite were against it. To quote the Assistant Treasurer in the chamber, the first spokesperson for small business ever in the history—

Ms O'Dwyer interjecting—

The louder you shout, Member for Higgins, your logic does not improve. Does anyone remember a coalition small business spokesperson ever voting against a tax cut for small business? You look through the history. You look through Hansard from 1901. There is only one person who wins that prize, and that is the current member for Dunkley.

He also asked questions about contribution caps. Talk about the pot calling the kettle black! There is only one party in this parliament that believes in increasing the contribution caps. That is the Labor Party; that is the government. We believe in increasing the contribution caps for people over 50. The opposition, as on many things in terms of policy for the nation, have their policy on contribution caps in a witness protection program. We know they cannot afford to be positive and match Labor's policy of lifting it to $50,000 in 2014 for people over 50 with account balances up to half a million dollars. We know that those opposite cannot afford to be positive because they cannot afford to pay the bills. They have done no work in opposition and they do not know how they are going to fund it.

In terms of the other questions asked by the member for Dunkley, the IMR regime legislation will come forward soon, as will legislation on payday lending. We are most interested to see if those opposite will actually support reform of payday lending. In terms of the accountants' exemption, that will be resolved fairly soon after continued discussions with all the relevant bodies. In terms of the APRA-regulated funds within Trio, people who had money which has been lost through malfeasance in APRA-regulated funds have in fact been compensated. (Time expired)

Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

Obviously this is an opportunity for us to talk about the things that actually matter for real people in real places like the seat of Robertson. If it were not for Labor, with a vision for the future and a capacity to articulate with hope for an Australia where there is an opportunity for people to share in the wealth, there would never have been a superannuation scheme. Right now, at this point of time, in the budget that is before the House at this stage, we see another articulation of what it means to be Labor and to believe in ordinary Australians.

In my seat, there are a number of groups of people who I have particular concerns about, Minister. I would really be very keen to hear how the government's reforms that are being revealed through Appropriation Bill (No. 1) 2012-2013, which is before us today, will assist these particular groups of people. First of all, I am thinking of people who are roughly at the age of 30. Thankfully, having grown up in a period after Labor brought in superannuation, these young 30-year-olds know the term 'superannuation', and in their lives they will have some experience of the benefits that that has given to people who are older. But, for our 30-year-olds, what does what we are about to implement with the appropriation bill coming to pass actually mean?

Another question I would really like a response on, Minister, is about the commitment that we have to people who manage on a very low income. What is it that Labor is doing in this appropriation bill to make sure that low-income earners in the seat of Robertson are going to get the advantage of having voted in a Labor government, knowing that we are going to honour our word and honour our ideological commitment to making sure all Australians move forward together? What is there for the low-income earners of Robertson?

One of the features of the seat in which I live is that we have a large number of people—over 18 per cent of the population in my seat—over 60. I note that many of them have given great service to this country and have an incredible level of experience that they still want to contribute to the community. Being over 70 does not mean that you are unemployable; it means that you are much more employable in many, many ways than others. What are we doing to help people who are over 70 in my electorate to get their fair share of what is going on in this country?

It would be unsuitable for me not to ask a question about women. Being a working mother myself and having faced all of the wonderful opportunities and challenges that come with being a working mother, I know that Labor has a legislative commitment to advance women's rights and issues, to advance the economic potential for women to provide for their own futures and to have a secure retirement. We know that, currently, women are terribly underfunded in terms of their retirement savings. What is there in this budget that helps and supports women in getting better equity in life outcomes?

I know there has been considerable argy-bargy here this afternoon with regard to small business, but the reality is this is a government that absolutely understands that small business is a major employer. In seats like my seat of Robertson, where there is a large service and retail sector, small business employers really need the advantages of what we can offer them as a federal government at this point in time. I am very interested, Minister, to hear what is in the appropriations bill that we can give to the small businesses in the seat of Robertson.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I thank the member for Robertson and I will call on the Minister for Financial Services and Superannuation to respond. It is by agreement that we go through to 6.30 pm. I am conscious that we will chew in to people's time if there are further questions for the Minister for Financial Services. I will therefore let the Minister for Financial Services and Superannuation respond, but then I am keen, as chair, to get over to the new minister.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

I will try to be brief in answering that question. In terms of the propositions made about superannuation, there have been a range of measures made in this appropriations bill and there has been work done by the Treasury officials funded in this appropriations bill previously and going forward. So, adopting the standard of the member for Dunkley, I will range widely in terms of giving a comprehensive but brief answer to the member for Robertson.

First of all, Labor is the party of superannuation. Without the successive Labor governments, the superannuation system as we know it now—universal and providing retirement nest eggs as part of people's retirement strategies—simply would not exist. It is also fair to advise the electors of Robertson that, whenever the coalition has had an opportunity to increase superannuation, they have never missed an opportunity to miss an opportunity. Again, the latest budget just represents more of the same of their DNA—to make superannuation the preserve of just some, not all.

In particular, the member for Robertson asked me about what is being done to in support for women and their superannuation. I would obviously refer not only to this budget but also to earlier legislation which has seen the abolition of the 15 per cent contributions tax paid by people who earn less than $37,000. As the member for Robertson well knows, a high proportion of the very large number of Australians who earn less than $37,000 are women. What we have done is, basically, provided in the course of this year an almost billion-dollar tax concession to the low paid. That is good news for the people of Robertson, in particular to the women electors who earn less than $37,000.

But that is part of the broader superannuation strategy in which we have been assisted by Treasury. We have increased the rate from nine to 12 per cent—that is good. We have abolished the tax for the low paid—that is equitable. We have put on a slightly higher charge for people who earn over $300,000—that is equitable and it is making sure that tax concessions are falling to those who most need them. We have also been improving the back office. I do acknowledge that the coalition today has voted to support some of our efforts in the back office operation of the SuperStream levy. We have also managed—although we were opposed by the opposition—to abolish the discrimination against people over 70 who are employees. Courtesy of this government, if the member for Robertson has people over 70 who are still employees, they will, from next year, be able to get superannuation on what they earn.

In addition we have propositions in the parliament about better governance of superannuation. We had to take the difficult decision to defer the concession caps—that is the amount of money you put into superannuation above which you do not get the tax concession advantage. We had hoped to make it $50,000 per annum for people over 50. This year, clearly, the need to get back into surplus and the wise economic stewardship of the nation required a deferral of a quite attractive proposition to July 2014. I note also, for the member for Robertson to advise her electors, that we are the only political party interested in having an increase in the concessional caps. Unfortunately, we have heard nothing from the opposition—they are very good on the negative but not so good on the positive—in terms of superannuation.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

We have three ministers here at the moment. On the agreement I have in front of me there is only a need for one to be before us, but I will leave it up to those on the jump to test their luck. The member for Higgins.

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I simply want to place on notice that the minister arrived half an hour late and we did not have the time required to question him fully. He has 16 officials sitting behind him. I think it has been an enormous waste of an opportunity. It is, again, a demonstration that the government is trying to avoid scrutiny.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I have only just taken the chair so I do not know what happened previously. The Federation Chamber is dealing with proposed appropriation for the Treasury portfolio of $4,441,842,000. The question is that the proposed expenditure for the Treasury portfolio be agreed to.

Proposed expenditure agreed to.

Resources, Energy and Tourism Portfolio

Proposed expenditure, $648,549,000.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

Tonight I have serious concerns about the management of the tourism portfolio. This is an industry, when you combine tourism and hospitality, that employs about one million people or 8.8 per cent of the Australian workforce. The issue I want to start with is the funding for Tourism Australia. When this government came to power the budget for Tourism Australia was $136,269,000. This year the proposed budget is $130,178,000 and in the forward estimates it is $134,556,000. This is the lowest funding level ever for Tourism Australia—the lowest funding ever for an industry that employs a million people. In fact, in real terms, the dollar loss between 2007 and 2012 is $18,949,000 or 16 per cent, and projected through to the forward estimates it is $22,943,000 or 19 per cent less. So, Minister, given that last year Australians spent 132 million bed nights on holidays overseas and that in 2008 Australia dropped from fourth to 13th place in the World Economic Forum's travel and tourism competitiveness index rankings, how do you justify reducing the budget for Tourism Australia when the numbers have dropped off so massively?

The second thing I want to raise with you, Minister, is about your announcement on 2 May, the week before the budget, when you launched the Australian Tourism Investment Guide with great fanfare, yet in the budget—and you must have been aware of this—the MIT withholding rate was increased from 7½ to 15 per cent. Minister, surely you would have understood that that was going to have a massive effect. You got people wound up, geed up and excited about investing in Australia and then, after barely a week had gone by, that confidence for overseas investment particularly in our hotel industry was absolutely destroyed. It is no secret that there is a bed shortage in Australia, particularly of quality hotel accommodation. We both agree on that. So how do you address the fact that you launched the policy knowing what was going to be in the budget? You are a cabinet minister and I can only assume that things affecting your portfolio would have been discussed with you.

The third thing I wish to raise with you, Minister, in the limited time we have here is the passenger movement charge. When you came to government in 2007 the passenger movement charge was $38. It was increased to $47. It is now proposed to increase it to $55. Minister, how do you justify a 45 per cent increase in a tax when this, projected through on the forward estimates, will raise $1.04 billion but the operational cost for Customs in delivering the services is around $239 million? On top of that, how do you justify putting a CPI on the PMC tax going forward from next year? Minister, given that you turned up at the National Tourism Alliance on 2 March, the final line under item 2 of their communique says:

The Minister stated there would be no increase in the passenger movement charge.

And then later on, in discussion on 'passenger facilitation', it said:

The Minister informed the meeting he had heard of no proposal to raise the PMC in the upcoming budget.

Minister, how can an industry have confidence if you are telling them one thing before a budget and doing something different afterwards, or does this equate to the promise that 'there will be no carbon tax under a government I lead' and then you introduce one? You have gone to the tourism industry and told them that there will be no increases in the PMC, and then after the budget they find that they are getting whacked.

I know you are going to say that you are offsetting with the Asia Marketing Fund of $61 million. Minister, your CPI increase alone will collect $156 million just on the CPI increase, and you are giving $61 million back to the industry. How do you justify that when our tourism industry is doing it so tough?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Firstly, I note that I was here ahead of time. There was half an hour set aside and I will be leaving at 6.30 because it is in accordance with the scheduled timing of this portfolio.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

You can rest assured that the chamber will be moving onto other business at 6.30 pm—

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I take it from the honourable member's intervention that, based on his reference to the passenger movement charge, the media release that attacked the New South Wales government over its dramatic change last week with respect to the movement of passengers in the cruise ship industry—

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

This is about your government, Minister, and your accountability.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Let us have a little bit of consistency when it comes to the question of the movement of Australians in and out of Australia. It is all right when out of the blue the New South Wales government introduces a new cruise ship tax of $20 per person, whereas previously it was an amount levied on each vessel by the appropriate port authorities.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

Minister, this is about your tax!

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

If it is good enough for the coalition in New South Wales to do this, then why can't the Australian government similarly adjust taxes as required?

Perhaps the member for Paterson should also give the House an explanation as to why it was all right for the coalition when in government to increase the passenger movement charge on a regular basis, but it is not all right for the current Australian Labor government to do so. Let us go through a little bit of history in terms of when he was a member of the Howard government over 13 long years.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

You are not answering the question.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Order! Is the honourable member seeking to ask a question?

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

No, I am seeking to answer a question, as the minister has actually asked me a question.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

No, sit down please.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Let us go to the passenger movement charge. Yes, there was an increase in the budget—

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

A rip-off.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

just as there was an increase in the passenger movement charge in 1999 by the Howard government, from $27 to $30. Then they sought to create the impression that this would just be to cover short-term costs related to the Olympic Games, but all of a sudden we found that increase was to continue—it was set in concrete.

Then we go to 2001. It increased in 1999 and then in 2001we had a further increase from $30 to $38, an increase of 27 per cent. So it is good for the coalition, it is okay to increase the passenger movement charge, but when it comes to a government of an alternative political persuasion it is not appropriate.

Let us also go to what we did as against the opposition. The increase in the passenger movement charge will have a minimal impact on the Australian tourism industry, because it is actually going better than the member for Paterson would like it to go both internationally and domestically. The average international visitor during the 2010-11 financial year spent $4,096 when visiting Australia. The proposed increase in the passenger movement charge of $8, or 17 per cent—a lower increase than the 27 per cent increase in 2001—represents only a small cost in the context of total visitor spend: 0.2 per cent.

I also inform the House that work undertaken in 2011 by the Centre of Economic Policy at the University of New South Wales on behalf of the state and territory governments—overseen by Tourism Research Australia—modelled a 20 per cent increase in the passenger movement charge, higher than what the government proposes. It found that it would have minimal impact on international visitation and potentially a positive impact in terms of Australians not going overseas, which is one of the desires of the Australian tourism industry. At the moment, we have 5.5 million visitors per year from overseas with 7.5 million Australians going overseas per year because of the strength of the Australian dollar—and the strength of the Australian economy.

On the question relating to how the Australian tourism industry is going, the truth is that in relative terms, given the challenges in North America and Europe—and I suppose the opposition spokesman has not noticed that there are major economic challenges in North America and Europe at the moment—international tourism is doing well from an Australian perspective. In 2011, there were 5.9 million international arrivals, a similar result to 2010, which is not bad given the challenges in Europe and North America. Growth in Chinese arrivals was particularly strong, with an increase of 19.4 per cent in one year. Indonesian arrivals were up 13.2 per cent—and people forget the importance of Indonesia. And there was an increase in Indian arrivals of 6.8 per cent. (Time expired)

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

I ask the minister if he would not mind switching hats for me—switching from his beach hat to his mining and resources hard hat. I have a great deal of sympathy for you, because you strike me as quite a practical man. I do not know how you manage to sit through some of your cabinet meetings listening to the bulldust about the carbon tax. I know that in your heart of hearts, Minister, you do not actually believe in what you are being forced to implement.

I want the minister to try to explain to me the seemingly contradictory position that he has. He has openly spoken about his support for efforts to clean up brown coal, possibly for export purposes. I think that it was the minister who coined the phrase, 'The Latrobe Valley could be the Pilbara of Victoria.' I believe that that position contradicts and is in stark contrast with your government's contract-for-closure policy, under which you are seeking to force the closure of 2,000 megawatts of brown coal power production and force the owners of those power stations out of business. Perhaps the minister can explain to me the miracle that occurs on the ships as they cross the seas in which this brown coal is somehow cleaned of its carbon content. Minister, I do not believe that you have any love for the contract-for-closure policy. Previously, you have left yourself a fair bit of wriggle room in your comments. You are saying that it is not contract for closure at any price. You are probably the only minister who has left himself a bit of wriggle room in that regard.

On the contract-for-closure policy, given that we are just days away from the 1 July deadline the government has set, will the minister deny that the government is going to announce an extension of time for this process? Isn't it a fact, Minister, that the whole process is completely off the rails and there is no prospect of an agreement within the next couple of weeks and that you need an extension of time to try and salvage something from this policy wreckage? Rather than announce an extension of time, Minister, why won't you do what you really want to do, which is abandon this dud of a policy, a policy that will cost jobs and do nothing to change the temperature of the planet? Minister, we both know that closing coal-fired power stations in the Latrobe Valley will not deliver a single direct environmental benefit anywhere in the world. We both know that contract for closure is a dud policy. Minister, will you deny that the government is going to announce an extension of time on its contract-for-closure policy?

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

The Minister for Resources, Energy and Tourism. But before I do call him, I would remind the member for Gippsland about parliamentary language. There was one particular word used in that speech with the blank look. I will remind him the word 'bulldust' is certainly in context. It is a word where better words can be found to describe the same concerns. The minister.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Let us, firstly, deal with the nature of the Latrobe Valley. The Latrobe Valley is rich in brown coal reserves. Let us also be frank, historically it is not able to be exported because it of its high moisture content and its combustible nature. The government is therefore absolutely involved with the Victorian government in exploring potential technology opportunities. The opportunities are basically driven by the private sector to which both parties are prepared to make a financial contribution and to assess potential technology, which would reduce the moisture content, and hence make it exportable. Also from an export potential it would represent a further energy opportunity for countries not as rich in resources as Australia in reducing emissions. For example, one of the projects involves Australian proponents in association with a company out of India. The lignite in the Latrobe Valley is akin to the lignite in India—high in moisture content—and if we break through on the technology front we create a new export opportunity.

I am pleased to say that there are a whole variety of potential technology solutions in the Latrobe Valley including carbon caption storage which we also committed money to in trying to guarantee the future of the Latrobe Valley. In terms of the contract-for-closure process, obviously there are a range of issues of a commercial-in-confidence nature. I can also say that a number of the applicants—as has the government—have negotiated in good faith. They are interested in assessing whether or not it is possible within the envelope provided by government to enter into an agreement over time to reduce the emissions in the Latrobe Valley in terms of the high-emitting nature of the Latrobe Valley. No-one can deny that in relative terms the emissions out of a coal fired power station in Victoria are significantly higher than most other coal fired power stations in Australia.

Hence, we also have the approach to technology of how to reduce the moisture content and, in doing so, reduce the emissions. With respect to the contract-for-closure process, if we make the breakthrough in technology, who will know what we will get out of the contract-for-closure process? There is an envelope and I will not go beyond the envelope because our assessment of what is value for money in terms of those existing power stations. Should one power station, for example, close, a change on technology can guarantee the future life and even potentially extend the life of other coal fired power stations because of the potential capacity to reduce emissions.

These processes and negotiations are continuing, including with HRL and Energy Brix. I had further discussions today including, I might say, with the Victorian government to assess all available options. The real issue is: how do we assist the Latrobe Valley in creating a new future. I remind the honourable member that, under a direct action of his own coalition party room's policy at the last election, their intent to close power stations in the Latrobe Valley was absolutely reflected in direct action. I am reminding him of the policy at the last election—he was a candidate at the last election—

Mr Chester interjecting—

It would be done by using consolidated revenue, which would close the Latrobe Valley because the coalition at the time also appreciated—

Mr Chester interjecting—

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Order!

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

If possible, we had to work on a technological front to reduce the emissions and to guarantee the Latrobe Valley a future. That is what I am consumed with and that is why I have a close working relationship with my Victorian counterpart, the minister for regional development, and with Mr Ryan the Deputy Premier of Victoria.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Have you concluded your answer, Minister?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Yes. If he gets his time, he could ask another question.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Does the member for Gippsland seek to ask a question?

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

Yes, if that is okay, Mr Deputy Speaker.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Minister, will you allow a question?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Of course.

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

Very briefly, Minister, in your comments you referred to the fact that Latrobe Valley coal could not be exported and perhaps used in China, India, Korea and Japan. If it is okay for the Latrobe Valley coal to be used in those contexts, why is it not okay for Latrobe Valley power station workers to keep their jobs?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Consider my answer. I refer to the technology which reduces the moisture content therefore, potentially, makes it exportable because it is no longer combustible. It also means the end use has low emissions, be it in Australia or overseas. My answer also referred to the fact that, if you get the necessary break from technology for whatever power stations that may continue operation in the valley, it makes them lower emitting; therefore, more viable under a carbon tax regime.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

I ask the minister a few questions about the Global Carbon Capture and Storage Institute. Does he agree with the new CEO of that institute, Brad Page, who said in the press on the weekend in regard to the seed capital of $100 million a year being given to the institute that it 'was more than it knew how to spend' and said further:

It's actually impossible to spend that amount of money responsibly.

Does the minister agree with that statement? If he does not agree with that statement, can he explain to the House exactly what control he and his department have over the expenditure of the institute, which according to an article written by Lenore Taylor—who I am sure the minister has respect for because Lenore gets things right—describes a lavish lifestyle of that committee as it travelled first-class around the world having meetings at exorbitantly expensive venues. The questions are: does he agree with Brad Page that it is actually impossible to spend that amount of money responsibly, and can he explain what control he has over the institute to stop it wasting money?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I have not seen the comments of the CEO, in whom I have confidence.

Mr Ian Macfarlane interjecting—

I might have had other issues to attend to over the weekend. The total Australian government funding for the institute is $315 million to 2016-17. You will find that, since the institute was first established through normal budget processes, I as the minister have been part of the process of winding back, in my opinion, the institute's allocation of funding to what we believed was appropriate. I was part of that process. The initial figure raised is no longer the figure, as the honourable member appreciates.

The current funding allocation enables us to pull our weight internationally as the major coal-exporting nation in the world, to participate in other countries in terms of the research and learning processes potentially related to how we reduce the cost of carbon capture and storage. The technology is not proven; the issue is how to reduce the cost to commercialisation. In the same way we have to work out how we reduce the cost of every other form of clean energy, be it nuclear, wind, solar, geothermal or whatever. Our responsibility as a nation is to invest in R&D in these alternative forms of clean energy with one exception. We are not investing in nuclear because, frankly, we do not have to. If Australia at some point decides to go nuclear, there are further technological advances being made by other countries, who are responsible for this technology, which we will buy off the shelf at a point in the future if the community so decides. For other forms of clean energy such as carbon capture and storage, we have to pull our weight.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order, I appreciate the minister's explanation but the questions were: does he agree with the comment that this is more money than they can spend, and if he has not seen the comment—I apologise and appreciate why he may not have—can he tell me what control he has over the institute?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I have control through the budget, my friend.

Mr Ian Macfarlane interjecting—

No. I have made it clear in terms of where we think the institute is at, what is appropriate and how it is being managed. I have confidence in the new CEO, Mr Page, to attend to the requirements of the Global Carbon Capture and Storage Institute in terms of current government funding and accountability, and, I might say, moving it to a model which requires industry to commence part funding of this organisation. We either front up and invest in technology or we walk away from reducing emissions, because fossil fuels, whether some people like it or not, are part of our future.

Proposed expenditure agreed to.

Debate adjourned.