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

For the first time in living memory an Australian government is introducing what it claims is an economic reform that will have the effect of reducing our nation's productivity and competitiveness. By introducing a price on the most essential component of an economy—energy—the government's $9 billion a year carbon tax, by its very design, will increase input costs and will have the effect of either reducing outputs or reducing consumption, or both. Given that the Treasurer has said in the past that productivity is essential to the nation's prosperity, it is mind-boggling that he would be implementing an economic change that, in his words, is the 'next frontier' in economic reform by lowering, not increasing, productivity. And all this at a time that the Treasurer acknowledges as the most turbulent since the Great Depression. It is disingenuous and dishonest for the Prime Minister and Treasurer to claim to be undertaking a productivity agenda while they introduce the world's largest carbon tax, well ahead of the rest of the world. They should heed the warnings of the Productivity Commission in their report, where they stated:

… no country currently imposes an economy-wide tax on greenhouse gas emissions or has in place an economy-wide ETS.

It was evident only last week at the latest in a long list of failed UN and other conferences that the Rio summit brought the world no closer to a global agreement on carbon pricing. If anything, it was made clear that many of our trading partners are headed in the other direction, of abandoning plans to introduce economy-wide carbon taxes and emissions trading schemes—if indeed they ever had plans in the first instance. The United States, Canada, Japan and Russia have all moved away from a carbon price. Similarly, the emissions trading scheme that exists in Europe is a $500 million a year tax and is not economy wide. The European carbon price has dropped to around $10 a tonne and is progressively going down.

The government has dismissed the effects of introducing a productivity-crippling carbon tax on trade-exposed industries, and this reeks of arrogance and ignorance. The government claims that only the top 500 polluters will pay. This is plain wrong. If a business finds itself in a position where input costs have increased with no productivity offset, they have two options: pass it on through higher prices and inflation, or absorb the costs. In the latter, in order to protect the most crucial factor—profit margins—the company must reduce expenditure, and the first casualty is always jobs.

I hear so many examples from business and the not-for-profit sector about the impact of the carbon tax. Most recently at one of my mobile office meetings one of my constituents, who runs a business in carton packaging, has calculated that his business faces an increased electricity bill of around $500,000 this year alone. This does not include indirect costs such as increased prices of freight, stock, materials and auxiliary services such as lawyers and accountants. This company is already trying to manage a high Australian dollar while fighting off competition from cheaper alternatives out of South-East Asia and China. This company can either shed jobs to recoup losses, increase prices and risk losing more business to its international competitors, or take its manufacturing offshore. There is no compensation for this business.

This example exposes the great green delusion of the government's carbon tax policy. The dangerous carbon pollution that they say the carbon tax will reduce will simply be produced offshore, in countries that do not have the stringent environmental policies that Australia does. Far from reducing emissions, emissions will increase because the demand for these products will not disappear. Products will simply be sourced from other countries. For a policy that has been promoted as both economic and environmental, the real effects are, in fact, significantly damaging to both.

What is rarely and not clearly explained is the compounding nature of the carbon tax. Unlike the GST, the carbon tax does not replace any other taxes; it is simply an additional one. It cannot be credited against any carbon tax collected, like the GST. If one is to apply Michael Porter's value chain model to the carbon tax, the incredibly detrimental effects the tax will have on inflation become abundantly clear. But do not just take my word for it. Listen to the words of business leaders in Australia like Graham Kraehe AO, chairman of Brambles and BlueScope Steel, who said that the inflationary impact is 'almost certainly understated'. We know that the carbon tax will have a detrimental impact on our economy and on the Australian people. The government still refuses to listen. The coalition will restore hope, reward and opportunity for all Australians by abolishing the carbon tax. (Time expired)