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

These bills—the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill and related bills—are about costs, they are about chaos and they are about the loss of control of Australia's electricity pricing system. The carbon tax is an electricity tax, the carbon tax was designed to be an electricity tax and the carbon tax is, sure as heck, operating as an electricity tax. As we speak, around the country, Australian families, Australian pensioners, Australian seniors, Australian farmers and Australian small business owners are receiving their electricity bills. Those bills are going up and up.

I want to address this latest set of amendments in three stages. Firstly, I will look at electricity costs—because that is the single biggest issue in Australia. When you go to kitchen tables, when you talk to families, when you visit the shops or when you speak to people in your electorate, at the surf club perhaps of an evening, the single thing—and this is the experience not just of myself but of all MPs on our side—which is raised most frequently and with greatest concern is electricity pricing. Shortly after people raise that, they will raise gas pricing.

The second thing I want to address is the chaos these seven bills represent. There have now been eight major changes in the 100 days since the carbon tax came into force. That chaos includes massive bailouts of some of the biggest companies in Australia. It includes changes to the lists of who actually has to pay the tax directly and who does not. It also includes the dropping of a solemn pledge to stick by the floor price—the Prime Minister had previously said that the floor price was critical to certainty. But what was critical three weeks ago is no longer critical.

The third thing I will address is the fact that we are giving control of our electricity pricing to Europe, to another country—and not to just one country but to an unelected set of officials in Brussels. This is not a situation we are making up; that is what these bills are doing. They are giving control of our electricity pricing to Europe.

So I will deal with costs, with chaos and with control—all the while remembering a very simple thing, the thing that causes Australians to shake their heads. They know that what is starting as a $23 price rises to a $29 price in three years; rises again, on the government's own modelling, to a $37 price by 2020; and multiplies 15 times to a $350 price by 2050. So what starts today at $23 increases at a massive rate. Eventually, we will have to pay an extraordinary amount offshore—$2½ billion in the year 2020 alone, rising to $57 billion by 2050—to buy foreign carbon credits. That represents 1½ per cent of GDP, or the amount of our defence budget at the moment. So we will be paying the carbon tax, which will be the equivalent of the defence budget and then, on top of that, we will have to buy another defence budget equivalent in foreign carbon credits.

So this system that is being put in place is massively and categorically unsustainable. No future government will abide by a system where the costs equate to a defence budget in domestic carbon credits and another defence budget in foreign carbon credits.

Then there is the real kicker: for all of this expenditure, it does not work. The carbon tax does not do the job. It does not reduce emissions. Australia's domestic emissions under the government's own modelling, under the Treasury's own modelling, will go up from 578 million tonnes per year in 2010 to 621 million tonnes in 2020. Emissions per person will rise by almost two tonnes each year, every year, between now and 2020. In other words, we have a tax that will be $36 billion over its first four years, a tax which will rise to the equivalent of a defence budget by 2050, matched by the equivalent of a second defence budget being spent on foreign carbon credits—and it does not do the job. It does not reduce our emissions, according to the government's own modelling. How can it be that we put in place the world's broadest and highest carbon tax, noting that the Productivity Commission said that no other country has an economy-wide carbon tax and it does not work? It does not do the job. It does not reduce domestic emissions. They go up, not down. That surely is the definition of a massive, national own goal, because, even if you accepted that it was a price that we should pay, you would want it do the job. But it does not.

This is a significant issue, and I will give you an example from my own electorate. I have a letter here from John Watson, who owns the Copper Motel Rosebud. He has given me permission to read out his letter to the parliament. Mr Watson wrote to me, saying:

I would like to bring to your attention my latest electricity bill from Momentum energy and its current carbon charge.

…   …   …

… none were able to give me a carbon price for my bill as it is a variable between states and also its not a regulated price in Victoria.

I am astonished to find that my current charge on my $1380 monthly usage bill has a $320 (a %23) increase/charge.

That is because of the carbon tax. So this average, small business—and this is the case for small businesses around the country—is seeing a 23 per cent increase in its electricity bill. Mr Watson goes on to say:

I am a small self run motel in rosebud and electricity is now my 2nd biggest overhead after my rent. So any increase is a direct removal of funds from my pocket and also now has resulted in decreasing hours I can offer my casual cleaner.

I will repeat that:

… has resulted in decreasing hours I can offer my casual cleaner.

This is the carbon tax in operation. The electricity bill for the Copper Motel Rosebud increased by 23 per cent. Mr Watson has encouraged and, indeed, entitled me to table both his letter and his bill in the House so they can be available to all. As he was saying, this 23 per cent increase has a huge impact on his revenue. As a result, he is in the unenviable position of having to reduce the number of hours he can give his casual cleaner. Around the country, we are going to see that there is a real-world impact from the carbon tax.

The carbon tax is not about big business; it not about some mythical group of 500 companies, or 315 at the last count. It is about electricity prices, and this is an electricity tax—an electricity tax. It also happens to be a gas tax and a refrigeration tax, but at its core, at its heart, in essence, it is an electricity tax.

Beyond the costs faced by this one particular business, what are the consequences of the carbon tax on electricity prices right around Australia? In New South Wales, the public is facing an 18.1 per cent average price rise in their electricity bill. Whether you are in Coffs Harbour, Campbelltown or Camperdown, you are facing on average an 18.1 per cent price rise in your electricity bill. Of that, 8.9 per cent is carbon tax, plus GST of course—although the government was at great pains to imply, in the first two weeks of the carbon tax, that GST was not paid on the carbon tax. It is. It is paid on the retail phase, and that means that it is in fact illegal for a retailer to not pass on the carbon tax. Far from companies engaging in price-gouging if they add GST to the carbon tax, it is their legal duty and obligation to do so. So in New South Wales there is an 8.9 per cent increase because of the carbon tax, or roughly 50 per cent of the bill increase.

We then go to Western Australia—and this was discussed in the House today—where there is a 12.6 per cent increase in electricity prices on average, of which 9.1 per cent, or 70 per cent, is because of the carbon tax. This is what the government sought to deny at the dispatch box today. The minister for climate change and the Prime Minister tried to belittle the impact of the power price rises faced by mums and dads, pensioners and seniors, small business owners and farmers across the country. The truth about power price rises in Western Australia is very simple: on average, 70 per cent of the rise in electricity costs this year will come from the carbon tax. And that is no surprise. That is what it was designed to do, that is what it was intended to do and that is, surely as night follows day, what it will do.

We then go to Victoria, where approximately two-thirds of the increase in electricity costs this year will be because of the carbon tax.

We then go to the ACT where we find that 14.2 per cent of a 0.7 per cent price rise or 75 per cent of the total price rise in electricity comes from the carbon tax. Then we go to Queensland. In Queensland the carbon tax will be between 80 and 100 per cent of the power price rise because, for the vast majority of retail tariffs, the Campbell Newman government froze power price rises. The only thing they could not control was the carbon tax. That had to be added to the bill.

So, when the Prime Minister talks about gold plating being the reason behind power price rises as a consequence of Liberal or LNP governments around the country, she might perhaps look at Queensland because in that state the LNP froze the vast majority of retail tariffs. As a consequence of that, 80 to 100 per cent of the electricity price rise for Queenslanders this year is a direct result of the Prime Minister's breach of faith. The Prime Minister said no carbon tax. Unfortunately for Queenslanders there is a carbon tax. The difference is this: Campbell Newman said he would freeze retail tariffs and he did; the Prime Minister said she would not impose a carbon tax but she did. That is a fundamental difference to the lives of people in Queensland and it is a fundamental difference to the cost of living for people around Australia. Let us be clear: these prices rises are real, they are significant, they are landing now and, for a government that is in denial, they might perhaps want to listen to talkback radio around the country to discover what people are discussing because Australians are discussing their electricity bills and Australians know that those electricity bills have been overwhelmingly driven in the current year by the Prime Minister's carbon tax.

We are also very keen to do something in relation to taking the pressure off network charges, but let me also say that it was only two years ago, in October 2010, in a speech to the Australian Industry Group, when the Prime Minister did not call for network spending to be reduced; she attacked underinvestment in network spending. The Prime Minister of Australia attacked underinvestment in network spending and called for more expenditure. That is what has happened: there has been more expenditure but the person in this parliament who demanded more expenditure was the Prime Minister of Australia. So two years ago the problem was underinvestment, according to the Prime Minister; today the Prime Minister says there is overinvestment in network expenditure. The problem is that everyday is year zero for this government. Every day they forget what they said or expunge what they said the previous day. 'No carbon tax: we didn't really mean that. Underinvestment in network expenditure: we didn't really mean that. Electricity prices: we didn't really mean that we would take the pressure off them.' That is the problem—everything is year zero.

That then brings me to the fundamental flaw in legislative process and here we have the chaos of the carbon tax in action. We already know that it is causing costs to Australian families but the chaos is set out in eight major changes in 100 days. Firstly, we had the bailout of Energy Brix and Alcoa on the eve of the carbon tax. Two days before the carbon tax came in there was $40 million to Alcoa and $50 million to Energy Brix. How could it be that with two days to go before the carbon tax the Prime Minister suddenly had to bail out two significant Victorian companies? The answer is very simple: these companies were in trouble and unless they got the money, serious consequences were going to flow. They also had to bail out One Steel, which is now Atrium, to the tune of $64 million. The government likes to talk about Whyalla. The $64 million question for the government is: why did the ALP spend $64 million bailing out One Steel which has, as its centrepiece, the Whyalla Steelworks? The answer is very simple: we know, they know and the Australian people know that that steelworks would have been in dramatic trouble had there not been a special $64 million bailout. What they are doing is turning good businesses into bad businesses and then they bail them out.

This then leads to the second of the major changes: they cut out a significant proportion of funding which would have been available to small businesses under the clean technology investment grant scheme, so as to give extra money to big businesses which, in the first couple of weeks of the carbon tax, were facing a dramatic problem. So the small business owners suffered and the big business owners were apparently given a windfall by having greater access to the clean technology investment grant. But I will come to that in a minute.

That then leads to the third of the major changes. Six weeks after announcing that they would give greater access to big business to clean tech investment grants—and by the way, small business begins to miss out—they halted the clean tech investment grant scheme entirely. So they trumpeted the changes and then froze the scheme. The minister for climate change—and I would remind him and the House of this fact—had previously said that, if you dismantle one piece of the carbon tax package, you dismantle all. We did not dismantle it. He did, the government did, the Treasury did, the Prime Minister did. They announced and trumpeted their own grants scheme. They then took a significant proportion of that away from small business to give to big business, which was struggling with the impact of the carbon tax, and then six weeks later they took it away from everybody. Major change No. 4: the clean energy regulator added more businesses and councils to the so-called big polluters risk, taking the total amount to 315. The only problem is that was after the carbon tax started. So the carbon tax starts and new names are being added. Some names drop off, some names are put on and there is complete uncertainty.

In the Prime Minister's own electorate, the draft price facing the Wyndham City Council for the first year of the carbon tax was $14 million. That one council faces a provisional bill of $14 million for the carbon tax for the first year because it has a significant landfill.

Major change No. 5: the government changed the regulations for landfill and for pipelines. But that has a consequence: where savings would otherwise have been made, emissions are now being transferred from larger landfills to smaller landfills. That story was widely reported earlier in the week. The landfill association of Australia expects that this will mean there is an extra million tonnes of real emissions generated through landfill being taken out of high-quality, highly developed, sophisticated landfills and put into low-quality landfills which are not involved in the same level of methane draining. Because the smaller landfills do not pay the carbon tax, there is a shifting of emissions between large landfills and smaller landfills, and emissions go up. It is an act of genius: emissions go up as a consequence of those changes!

Major change No. 6 is close to my favourite. After having trumpeted for aeons and aeons the Contract for Closure program, the government abandoned it. This program was designed to act in contradistinction to the Energy Security Fund. On the one hand, the government had a $2 billion Contract for Closure fund, which was meant to close down brown-coal power stations. On the other hand, it had a $5½ billion Energy Security Fund, which was meant to prop up brown-coal power stations. It is not surprising that the $5½ billion fund trumped the $2 billion fund. I defy any member of this House to name a similar policy anywhere in the world—where there is a fund for closure and a fund to prop up. It is an act of policy confusion which remains to be challenged by a similar example anywhere else in the world. The Contract for Closure program collapsed.

Beyond that, we see the essence of this legislation: the government scrapping the floor price for the carbon tax. They have taken away the floor price, having said on multiple occasions how vital it was. What did the Prime Minister say in this House on 13 September last year? The Prime Minister said:

The bill also provides for a price cap and a price floor to apply for the first three years of the floating price period.

This will limit market volatility and reduce risk for businesses as they gain experience in having the market set the carbon price.

The Prime Minister also said, on 9 November 2011, in a doorstop:

… we have set a floor and cap so that there can be stability in pricing …

It went on, with Mr Combet. It went on, with Senator Wong. It went on, with Mark Dreyfus. All these people, on at least 11 occasions, declared how vital, how fundamental, how critical, the floor price was to certainty. And then one day they woke up and it was gone. So what was said yesterday means nothing today.

This leads me to the last of the eight major changes, and that is the linking to the European system. I want to deal with the fact that we lose control of our electricity pricing as a consequence of this. In linking to the European system, we see a dud deal for farmers. Australian farmers were going to be able to sell credits to Europe, under any reasonable expectation. What the government have done, in their desperation to strike a deal, is give Europe a virtual monopoly over the sale of foreign carbon credits to Australia. In return, you would imagine that Australia got a virtual monopoly. No. You would think that Australian farmers would at least be able to sell their credits beginning at exactly the same time as Europe will be selling to Australia. You would, but, no, that did not happen. Perhaps by 2015 Australian farmers will be able to sell to Europe? No. What actually happened was that, in order to get a deal with Europe, which had the whip hand, the Australian Labor Party struck an agreement which locked Australian farmers out of selling to Europe till 2018. They did not strike a deal which was in the national interest. They struck a deal which locked Australian farmers out of selling to Europe till 2018, six years from now. It was a bad deal, a dud deal, a bad outcome, and it is not good for Australia.

As part of that, we also see the loss of control over electricity pricing. The carbon tax, as I have said, is at its core, at its heart, an electricity tax. The consequence of this is that we set carbon tax prices in Europe, according to the government—although the price of the carbon tax and therefore the revenue is apparently not going to change. In so doing, we give away control over our electricity prices. On every front, we oppose these bills. On every front, we think that this system does not work. It is not the way to do it. It does not achieve the desired outcome. First and foremost, it is about massive electricity costs. Second, it is about chaos. Third, these bills are about giving away control over electricity prices to Europe. For those reasons, we oppose these bills absolutely, fundamentally, categorically. I seek leave to table the letter from the Copper Motel and the electricity bills pertaining to the motel.

Leave granted.

Gai Brodtmann (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

It is a real pleasure to speak on this suite of clean energy amendment bills tonight, because I go way back in my interest and involvement with clean energy initiatives. I actually worked on the CPRS in the very early days of the climate change department, just before I came into this new world of being a politician. It was a great pleasure working on that initiative and engaging with industry and other sectors of the community in explaining what the CPRS would look like as well as engaging with the people in that wonderful department on the shape and form of the legislation and the regulations.

It was one of the highlights of my career in my former life with my microbusiness, so it is a great pleasure to use every opportunity to speak on this suite of clean energy initiatives that the Labor government has introduced. It is also a great pleasure to be speaking on these amendment bills tonight.

It was interesting listening to the member for Flinders discussing these amendment bills. I will just go back to a speech that he made in April 2008, in which he said:

Perhaps the most important domestic policy was the decision of the Howard Government that Australia will implement a national carbon trading system.

…   …   …

Importantly, the Coalition pledged to establish a Climate Change Fund—

and I will come back to that later—

to re-invest a substantial proportion of emissions trading revenues in:

clean energy technology, and

support for households most affected by the impact of a price on carbon, in particular low income families and pensioners.

We hope that the new Government will take up this proposal.

It is interesting in that there are remnants of all of that and more in what we have in these initiatives.

I want to recap briefly the main intent of these amendment bills before talking about how they will benefit my electorate of Canberra. My electorate of Canberra has actively engaged on the carbon price issue and also the clean energy future for Australia. Canberrans are acutely mindful of the need to protect the environment for future generations and also protect the economy for future generations. By embracing clean energy and clean energy futures and initiatives, we are doing exactly that.

We have heard from others that these amendment bills will facilitate the linking of Australia's emissions trading schemes with other countries' emissions trading schemes. These schemes include the European Union Emissions Trading System. The basic aim of these amendment bills is to remove the price floor that was to operate in the first three years of the flexible price period. Furthermore, these amendment bills will establish flexible registry arrangements that facilitate linking with other emissions trading schemes, even in circumstances where direct links between registries cannot be put in place. They will also increase the carbon unit auction limits that apply before a pollution cap is set. They apply a three-year limit on advanced auctioning of units. They also provide for an auction reserve price to be set, and they simplify the treatment of relinquished units.

We know that many in the coalition, many of those opposite, deny the science of climate change—I have had a number of emails from my colleague the member for Tangney on this issue—and that many oppose measures designed to reduce the impact of carbon pollution, but it is in the interests of every Australian that we link our emissions trading scheme to international markets. The ministers and others have outlined the myriad benefits that are accrued by linking with the international markets, but, aside from the technical components that will benefit liable Australian entities, the most critical outcome here is that Australia will be supporting global cooperation on climate change. No country can address climate change in isolation, and that is why the government is engaging internationally.

From 1 July 2015, Australia's carbon price will reflect the carbon price paid by at least 30 other countries, including the United Kingdom, France and Germany. This means that from 2015 Australia will transition into an internationally linked ETS where the global market sets the price on pollution. I have been asked by some in my electorate why this is needed, and the answer is that an internationally linked ETS can reduce carbon pollution at the lowest cost. There are emissions trading schemes being developed in many other countries, including China, Korea, Canada and South American nations, and the giant state of California, and this is likely to be the first of many international links that will form a global carbon market.

Before I go on to discuss what is happening in my electorate of Canberra—because not only is Labor acting nationally and internationally on this issue but also the ACT Labor government is acting locally, and I will come to some of the measures that it has introduced in a minute—I want to discuss what is happening internationally. Ninety countries covering more than 80 per cent of global emissions have made pledges in the United Nations to limit their carbon pollution by 2020. At Durban, for the first time, all of the world's major emitters, including Australia's biggest trading partners, the US and China, committed to taking on legal obligations from 2020 to reduce emissions. Countries agreed to negotiate a new legal treaty by 2015 to be implemented by 2020, and under the agreement all countries will be bound to cut emissions. As I have mentioned before, a price on carbon has operated for years in 33 countries and several North American states, and Australia's top five trading partners and another six of our top 20 trading partners have implemented or are piloting emissions trading schemes and carbon taxes at the national or regional level.

I now turn to what is happening in my electorate, because, as I said, Canberrans are acutely mindful of the need to act on climate change, the need to act for the environment and also, importantly, the need to act for the economy and to ensure that we are well positioned for a future clean energy world. Every time I have a community forum, people comment on it, and the majority of people in the audience are supportive of it. I would say that probably 90 per cent of the people who attend my community forums and who I meet in the streets of Canberra support a price on carbon.

The member for Flinders mentioned those constituents who come in and talk about electricity bills. There are some people who have come into my electorate office to discuss electricity bills and gas bills, and I had a number of them last week. We sit down and go through the bill and talk through the process, and the price increase is in keeping with the modelling. We just need to sit down. For those who are a bit concerned or confused about the issue, it is just a case of sitting down and talking them through the issue. In one instance, there was a woman who was particularly concerned about a range of cost-of-living expenses and initiated action on a particular issue that I will be pursuing with the ACT government.

So you sit down with people and go through the bill, and, once you have had a chat about it and explained what is going on, any concerns are alleviated.

There is in my electorate a high level of interest in and support for Australia's being part of an internationally linked ETS, because Canberrans are usually eager and early adopters and supporters of energy efficiencies. The ACT Labor government has one of the most ambitious greenhouse gas emissions reduction targets in the country. Federal Labor is acting nationally and internationally, and the ACT Labor government is acting locally. The ACT government has formalised targets of zero net emissions, or carbon neutrality, by 2060 and a 40 per cent reduction in greenhouse gas emissions from 1990 levels by 2020. The ACT government has developed a sustainable energy policy, which was released last year and which is described as:

… an integrated policy framework for managing the social, economic and environment challenges faced by the Territory in relation to energy production and use.

It would probably surprise many people listening to know that Canberrans have a very high carbon footprint. As a result of the way that Canberra—a planned city—has been designed on the basis of the satellite city concept and the Y-Plan, we are heavily dependent on cars. In a way, Canberra grew and matured around the car and around roads, so we have quite a high carbon footprint. From the work I was doing with the property council in my former life has a microbusiness owner, I know that many developers and academics around town are very keen to ensure that we improve the carbon footprint of the building and transport industries, and I know that the ACT government is keen to do this as well.

The ACT Labor government has initiated a long-term and visionary plan that sees an ongoing commitment to maintaining an affordable and reliable electricity and gas supply to the people of Canberra. Those members of parliament who spend half the year in my wonderful home turn should feel proud that they are residing in a jurisdiction which has the objectives of achieving both a more sustainable energy supply and carbon neutrality by 2060. The ACT is approaching these objectives in a number of ways: through reliable and affordable energy, through smarter use of energy, through cleaner energy and through the growth of the clean economy. In support of its objectives, the ACT government is conducting further studies of the rollout of smart meter technology to help households better manage their energy use. In addition, the ACT Labor government is looking to develop an energy savings initiative in order to support households to save energy and reduce their energy costs and usage and to seek renewable energy power. The aim is that two per cent of Canberra's electricity needs be met through the use of renewable energy power. This would mean a saving of nearly a million tonnes of greenhouse gas emissions in the course of the initiative.

The ACT government is also supporting the use of green vehicles. A number of Canberrans are already using electric cars. I went to an expo that was held out the front of Old Parliament House last year, and there I had the chance to test-drive some of these electric cars. It was great to see so much interest from the community. There were not only electric cars but also electric tractors and motorbikes and a range of other electric vehicles for work and general transport. A hundred per cent green power is used to power these vehicles, and that means that there is no carbon footprint when people use them. Also, the ACT Labor government shares our commitment to stabilise greenhouse gas concentrations in the atmosphere because we know that it is a shared responsibility and that all countries and communities must incorporate measures like the ones contained in the bills before us.

In my electorate, more and more people are saying to me that carbon pricing has had little or no effect on them or their lives. They see an Australian economy that is the envy of the world and understand that Australia must be part of the global solution arresting the growth of carbon pollution. They understand that modest price increases are being offset with assistance and can be explained and that where they are not explained we encourage people to go to the ACCC.

There are many inconvenient truths about these bills and the government's responsible and long-term vision to address climate change. One myth that my local Liberal counterparts like to sprout in their pursuit of fear campaigning is that we are somehow going it alone on climate change; the Liberals' also fear that Australia will become a world leader in fighting climate change. The truth is that many other countries in jurisdictions have or will have carbon taxes and carbon prices and emissions trading schemes. There are other facts that my Liberal counterparts bury their heads in the sand about. There is the fact that, by linking with the EU, Australia will have the same carbon price as 30 other countries with a combined population of 530 million people. There is the fact that by 2013 more than 150 million people will be living in a jurisdiction with a carbon price. Then there is the fact that the Australian economy did not collapse on 1 July this year.

I conclude with some remarks which were made by former Prime Minister Howard in 2007 on the coalition's climate change policy. He said:

The Government recognises that the most efficient and effective way to manage emissions reductions is through market mechanisms. Emissions trading will ensure that the market rather than governments decide which abatement opportunities should be adopted to reduce emissions at least cost including those accessed through the application of existing and new technologies.

I hope that the coalition put their ideology aside and recognise the importance of Australia's linking its ETS with those of other countries in line with their thinking— (Time expired)

Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Link to this | Hansard source

I rise to speak on the clean energy amendment bills, which are designed primarily to remove the price floor of $15 per tonne on carbon and to link Australia's carbon tax to the European emissions trading scheme. In coming to a response to these bills, I read the minister's second reading speech. Essentially, in amongst all the fantasy, the minister outlined the government's so-called underpinning principles of its carbon tax policy: (1) to be environmentally effective, (2) to be economically efficient and (3) to be socially fair. So it is not unreasonable to put those principles and the attempt to abide by those principles to the test, which is what I would like to do—to look at how environmentally effective, how economically efficient and how socially fair this might be.

Senator Penny Wong, in her capacity as climate change minister in the previous parliament, said on 6 February 2008 at an AiG luncheon:

The introduction of a carbon price ahead of effective international action can lead to perverse incentives for such industries to relocate or source production offshore. There is no point in imposing a carbon price domestically which results in emissions and production transferring internationally for no environmental gain.

I was the shadow minister for climate change for 12 months in the lead-up to the collapse of the CPRS. We were lectured and we were hectored in this chamber and all around the country for three years over the notion that you cannot go it alone, that you have to be part of a global scheme. This principle was at the heart of everything that the Rudd government sought to do with the introduction of an emissions trading scheme. They said endlessly: 'We have to be part of a global scheme and a global scheme is coming. That's why you've got to vote for this. We can't be left behind. We've got to be part of it.' We all know now what happened at Copenhagen, and it cost the member for Griffith his job. He preached this so vehemently with all of his colleagues. After Copenhagen there was no global scheme; in fact, the world fractured in the face of the global financial crisis and saw that what was proposed was a monumental waste of money that was not going to deliver environmental outcomes. But we got lectured on this endlessly for three years. And now they dare come into this chamber and say they are acting on the principle of being environmentally effective. Let us have a look at it.

The EU, which we are now irrevocably linking ourselves to on carbon pricing, is dictated to by the bureaucrats in Europe. No-one has disagreed with that. No-one has contradicted the fact that now and into the future the design of the carbon tax, the price level—all of these things—will be factors determined by bureaucrats and politicians in Brussels, over which we will have zero impact. Talk about handing over our sovereignty to another nation—in this case, to 30 other nations. It is inconceivable.

Nevertheless, the EU accounts for less than five per cent of world emissions. So it is not that we are linking ourselves to carbon markets that are particularly representative. It is not a deep market, it is not a robust market and it is not a reliable market. It is almost a pilot scheme when you compare it with what has been introduced in Australia. The most striking feature of the market in the European community is its persistent instability, so much so that the price has collapsed to around $7 a tonne. There is absolutely zero incentive for investment in lower emissions technology. The price to produce a megawatt hour of coal is $35, for gas it is $55, for wind it is $90 and for solar it is $330. So can you tell me that $7 a tonne is going to have any impact on investment? It will have zero impact. What will a market that goes up to $50 and back to $7 do to potential investors? What are they going to think? The market in Europe is not working to encourage low-emissions technology.

The price will ultimately be set by countries without any base in natural resources. The European community is not exactly a resource powerhouse. They might make glass and a few high-technology products, all sorts of things, but they are not a resource powerhouse. Our competitors, the countries that we compete with on resources and energy, are not European countries. They might be trading partners in other respects of some consequence, but they are not competitors. So we are putting a price on our product and looking to compete with countries which have no carbon price. Yet the minister stands in this chamber and tries to make out that we are now part of a world movement. I am afraid nothing happened at Copenhagen—in fact, it fell apart—and nothing has happened ever since, which gives no prospect of anything taking place in a global sense. There is no need for the Europeans to worry about what carbon prices, if any, are charged by Australian resource competitors. They will not worry about that. They are not going to sit there in Brussels and agonise over the terms and conditions they apply and the assistance they provide to industries because of the effect those things will have on us. We will have to compete against countries such as China, Brazil, Uruguay—South American and African countries—and Canada, none of which have a carbon price in place. The Europeans are not going to worry one whit about that. Yet we should. The EU exempts virtually all its export industries from emissions trading schemes. We do not exempt ours.

Let us take dairy processing—no exemptions, no assistance. It is one of our strengths. It is one thing that we do better than just about anyone in the world, apart from the New Zealanders. A lot of our prosperity has been built on these sorts of industries. There is not one whit of assistance here for the dairy industry. What about in Europe? Ninety-three per cent free permits. We are linking ourselves to Europe and their industry will have that sort of advantage. I could give you endless examples. We hear from the minister that these sorts of facts are a baseless fear campaign and that the rest of the world is in lockstep on all of this. In fact, he said in the most disingenuous component of his whole speech that, from 2013, 850 million people will live in a place where polluters pay for their pollution. That is rubbish.

You cannot say that the European emissions-trading scheme bears any resemblance in terms of size or impact. The amount that will have been paid by Australians through this carbon tax, since July, by October and November this year will be equivalent to all the tax raised through all of Europe, with a population of 200 million people, over the last five years. Is that comparing apples with apples? This is madness.

The UK have predicted that over the next five years, through until 2015-16, the European emissions-trading scheme will cost the UK population £5½ billion—that is, A$8.6 billion. In that same period, through until 2015-16, the Treasury has estimated that Australians will pay $25 billion. Our friends in the United Kingdom will pay the equivalent of $8.6 billion and our taxpayers will pay $25 billion. The trouble is that there are 66 million people in the UK and only 22 million people here in Australia. So when you compare apples with apples on a per capita basis, or per 22 million people, the UK will pay $2.8 billion compared to Australia, which will pay $25 billion. In other words, the European scheme will have an impact nine times less on the community than the emissions-trading scheme/carbon tax brought in by the Australian government. Yet the government seek to pretend that we are comparing apples with apples.

I fear that we are in fact linking up to a scheme which is costing us nine times more than what it is costing our counterparts in the United Kingdom. Yet we are told that we are all part of a global collegiate—that everyone is in it. That is a nonsense. It was a very disingenuous contribution to this debate, to try to give Australians the impression that we are following the world. We are ahead of the world, we are acting alone and we have a price which far exceeds the price of any other country. We are the only country that has a global price—a price across our nation—which is much greater than anywhere else in the world.

What is economically efficient about a carbon scheme whose entire purpose, as the Minister for Climate Change and Energy Efficiency repeatedly stressed, was to provide a predictable long-term signal which investors in renewables and other emissions technologies could rely on? That was the whole purpose. That is what he said. Of the carbon scheme that the government introduced, he said:

Moreover, the floor price was essential to achieving that goal, as it ensures "stability and predictability" and avoids "the risk of sharp downward movements in the carbon price, which could undermine long-term investment in clean technologies".

Where is the predictability now, just two months after the introduction of the carbon tax? This is the eighth major change in two months of their scheme. The government are all over the place, just making it up on the run. The minister for climate change, just two months ago, said that this was irrevocable, immutable and that you had to have a carbon floor if you wanted predictability. Now we are linked to Europe and now we have decisions made by 30 countries—politicians and bureaucrats in Brussels—where we will have no influence. Our sovereignty has been totally removed on this matter and yet Europe does not compete in the markets that we compete in. Yet our prices will be set by them. This is just incompetence on a large scale.

Let us call this what it is. The carbon tax is nothing more and nothing less than a grubby political decision to keep this Prime Minister and this government in office. That is all it is. That was the inspiration for the decision. It was the reason that this Prime Minister said one thing one week and three weeks later said the absolute opposite. She deceived the Australian people, only because of a grubby political deal to stay in office. It is environmentally ineffective. In fact, it is already pushing business offshore, it is closing down businesses in Australia, investments are not being made and it is not encouraging investment in low-emissions technology. It is environmentally ineffective, it is grossly economically inefficient and we are paying six times the tax over and above what is needed to fund that sort of emissions abatement. And it is socially unfair because it is costing jobs, it is increasing taxes and it is increasing electricity prices, yet it is doing nothing for the environment. (Time expired)

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to support the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and cognate bills. One of the most important aspects of these bills facilitates the linking of Australia's emissions-trading scheme with other countries, including those that operate across the European Union, which, since 2005, has operated a strong emissions-trading system.

We on this side of the House consider that linking Australia's emissions trading to international markets is in our best interests. It will foster good cooperation on climate change, provide access to a broader range of abatement opportunities for entities and increase the carbon market's liquidity. This follows the government's success in securing an agreement to link Australia's carbon price with the international European Union emissions-trading scheme.

It is of particular significance for Australia's emissions trading that the scheme we intend to link with, as a result of this, is one that is operated within all European nations. The European emissions-trading scheme is a mandatory scheme. It applies across all 27 EU countries as well as in Norway, Iceland and Luxembourg. The scheme has often been discussed in this place and acknowledged in the past as the world's largest trading scheme, covering over 11,000 facilities. I understand that it applies to over 500 million people. The government had previously made a commitment to link our scheme internationally.

Our success in negotiations means that we will link to the European Union's ETS from 1 July 2015. To allow this to occur, and to allow for any further ETS linkages, the floor-price provision of the clean energy legislation must be removed. The floor price was initially intended to operate for a fixed period but, as all members of this place are aware, from 2015 the floor price for carbon price, as defined in Australia, will be removed. Removing the floor price will allow us to trade as an emissions-trading scheme from 2015.

Linking our emissions-trading scheme to the European Union means that Australian business, with the carbon-price liability under this scheme, will be able to purchase carbon-emission units or permits to emit a tonne of greenhouse gas either in Australia or in one of the European countries linked with the ETS. The price will be the same. Last year this government introduced the Clean Energy Act 2011 and 17 related acts. These established the price on carbon, which certainly came with a lot of fanfare and was opposed every step of the way by those opposite.

This is a scheme that was introduced with a fixed price for the first three years, to transition to a cap-and-trade emissions-trading scheme. Very importantly, a cap-and-trade emissions-trading scheme is what we thought would be the ultimate emissions-trading mechanism that would take this country forward and be most beneficial to Australian based industry. It would also help us live up to our commitment to abatement and encourage the development of renewal-energy technology in this country.

This bill will ensure that, from 2015, Australia's carbon price will be equivalent to the carbon price paid by at least 30 other countries. These are countries that are not insignificant, despite what was said in earlier contributions to this debate. The United Kingdom, France and Germany, which is now the mainstream economic powerhouse of Europe, are also covered by it. It is a scheme that applies to over 500 million people. We will transition into an internally linked ETS, where the international market will set the price on pollution. The funny thing about that is I seem to recall that, not all that long ago, those opposite were arguing up hill and down dale that the problem with Australia's price on carbon was that it did not reflect, in any material way, the price on carbon set by any ETS scheme around the world. Here we are linking our scheme directly with the biggest scheme that operates internationally.

The previous speaker in this debate, the member for Goldstein, could not find anything of benefit to say about it. This is a bit strange, as the previous speaker had a very significant role in the lead-up to the 2007 policy statement by former Prime Minister John Howard.

Mr Neumann interjecting—

As my friend indicates, he was no less than the former campaign director of the Liberal Party. Former Prime Minister of this country and leader of the Liberal Party John Howard strongly agreed with the system of a cap-and-trade emissions-trading scheme, because that was reflected in the 2007 policy. He said:

As one of the first Asia-Pacific economies to embrace emissions trading, Australia will be well positioned to establish itself as a regional hub for the carbon market.

…   …   …

The Australian scheme will be designed to maximise the prospect of linkages with other schemes, and with policy-based arrangements such as offsets …

This is not a bad concession.

Those opposite are often quoted as being the bastion of liberalism in this country. They had a very clear view when it came to emissions trading at that time. The Leader of the Opposition and his colleagues also once had a view—not too long ago—about putting a price on carbon. They said it was not only efficient but also inevitable.

The Leader of the Opposition in his book Battlelines says:

The Howard Government proposed an emissions trading scheme because this seemed the best way to obtain the highest emission reduction at the lowest cost.

That is not a bad concession. The member for Wentworth is certainly a person not unfamiliar with emission trading schemes because, after all, in 2007, as I understand it, he was the man who designed the Liberals emissions trading scheme to go to the 2007 election. He said:

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

Indeed, not to let the shadow Treasurer off the hook—and he is a little bit more succinct than his colleagues—he told the Sydney Morning Herald:

Inevitably we will have a price on carbon, we will have to.

They come out and put on these crocodile tears and day in and day out what we see in question time is that they cannot actually field a question to the Prime Minister other than on a carbon price.

Mr Hartsuyker interjecting—

The member for Cowper makes a very good point. His point really goes to the fact that they were the first to design an emissions trading scheme. We have been a bit slow in acknowledging their contribution in that regard. But I am a person of a magnanimous nature. I do not mind coming out and saying there was a contest of ideas leading up to the 2007 election. I do not mind coming out and saying that the member for Cowper, together with the member for Wentworth and the rest of the frontbench over there, fully supported an ETS.

By the way, whilst there was a contest of ideas, I think the only thing really between us in those days was when the ETS would kick in by. I seem to remember the Labor Party went to the election on the basis they wanted it to kick in by 2010. You know what? The Liberal Party wanted it to kick in by 2012. What year is it now? Yet they changed their position so radically. They did not extend it. They changed so radically on what we need to have happen to reduce emissions. I cannot write the script for them. We can do many things on this side, but I cannot rewrite the quotes of their glorious leader John Howard. He was certainly persuaded by very persuasive arguments from those opposite that the most efficient way to cut emissions at the least cost was through an emissions trading scheme.

I have heard much from those opposite who have had this view about Australia's scheme as being the highest priced in the world. Sure, there is a start-up price for this. Day in and day out we are seeing the contributions of those opposite wanting to talk about the impact of a carbon tax. To date, in all the documents I have seen tabled, the impact of the carbon tax is pretty close to what was predicted. Sure, there is a cost to it. Sure, it acts as a disincentive to pollute. That was the whole basis of the scheme. It does operate to encourage those industries that are involved in the renewable energy sector to develop.

I know the member for Blair is familiar with companies such as Energy Developments and others which I had a long association with prior to coming to this place. One of the things that they do is develop renewable and sustainable energy technologies. It is very hard to be competitive against the production of black coal for power generation; we are inundated with black coal. Fortunately, we have about an 800-year supply of it. But, regrettably, it is the most polluting form of energy production there is in the known world.

We thought what we were doing had very much a bipartisan approach. We thought we had a scheme that we were only a part of when it was being implemented. We had a very clear view from what those opposite had said for some time that they would like to see this—not Australia operating in isolation but working in conjunction with a broader player. We have now secured an agreement to enter into arrangements with the world's largest emissions trading scheme, reducing the uncertainty of a carbon price by reducing the floor price that will apply to that scheme. The price of carbon will be determined by the market. All those various things that those opposite chanted for so long are coming to fruition.

I would not mind if they wanted to take part ownership of this, but it does seem that they really want to decry the whole concept of emissions trading. They certainly do not want to refer back to Peter Shergold's report, which was commissioned by John Howard. They very rarely refer to the recommendations of Professor Ross Garnaut. But all that we have seen is a constant negative campaign not only on a price on carbon but on the reality of climate change itself. These guys must not look at the news of a night. They must lead very sheltered lives when all around the globe what is dominating world discussion at the moment is the impact of climate change. We are, happily, an advanced country. As a consequence, we have now taken very real steps to do something about climate change, but we are going to do it in conjunction with the world's largest emissions trading scheme. I commend the bills.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I welcome the opportunity to speak on these bills, which relate to the government's introduction of a carbon tax on the people of Australia. From the moment the Prime Minister announced in July 2011 that she would break her election promise and introduce a carbon tax, Australians have rightly been concerned about its impact.

This government has a very poor track record of managing programs and delivering on its policies. We have seen the pink batts debacle, where billions of dollars were wasted and sadly lives were lost. We have seen the rollout of the BER program, where billions of dollars of taxpayers' money was thrown at schools for projects which school communities did not want and at prices which everyone except the government acknowledged were vastly more expensive than the going market rate. Then we have the $50 billion National Broadband Network, designed by the minister for communications on the back of an envelope when the government was unable to award a successful tender for its failed 2007 broadband election commitment. After just two years the NBN is behind schedule, over budget, and the take-up rates are abysmal.

Against this backdrop of waste and mismanagement, the Prime Minister's backflip on her pre-election promise that 'There will be no carbon tax under a government I lead' was always going to be another policy failure for the Gillard government. It was a policy which aimed to lock in the support of the Greens rather than deliver any meaningful difference for the environment. Even before its introduction on 1 July this year, the government was living in denial and relying on media spin to somehow justify imposing the biggest economy-wide carbon tax on the planet.

On the one hand they claimed it would only be the big polluters who would pay the tax, but on the other hand they started paying those big polluters compensation and then were forced into rushing out a household assistance package as the reality of increased electricity prices sparked a major consumer backlash. The government also claimed other countries were embracing a carbon tax, when the reality was the world's major emitters were walking away from such a scheme and clearly going down the path of direct action. The United States, Canada, China and India have distanced themselves from a carbon price. Europe's scheme amounts to a total cost of $500 million, or just $1 per person per year.

The Gillard government's carbon tax is a $9 billion a year tax which every Australian will pay through higher electricity and gas prices. By the government's own figures it will cost $400 each year for each and every Australian. Yet despite the huge cost the government is still forecasting that Australian emissions will increase under the carbon tax from 578 million tonnes in 2010 to 621 million tonnes in 2020. So the carbon tax is nothing more than a huge impost on Australian businesses and households and does nothing for the environment.

In the lead-up to the introduction of the carbon tax one of the government's flawed arguments was the need to provide certainty to the business community. The government claimed its carbon tax plan should not be altered because that would create uncertainty and instability within the business community. This is clearly laughable, given the whole aim of the carbon tax was to create uncertainty by driving up the cost of electricity and marginalising the profitability of many Australian based businesses. The carbon tax effectively made it very difficult for Australian exporters to compete in a global marketplace and it also meant that other domestic focused businesses suffered substantial increases in their operating costs. While many of the big emitters received government handouts to prevent them from cutting jobs or closing, there was no such assistance for the majority of small and medium businesses. So the increase in operating costs as a result of the carbon tax was enough in itself to create huge uncertainty for many businesses.

That has got a whole lot worse since 1 July 2012. Since then the government has made eight major changes to its carbon tax. With the economic realities hitting home, the government has been in a panic about how to fix the impact of this massive impost on Australia but still raise the revenue it is depending on. First, it bailed out major companies using taxpayers' funds on the eve of the carbon tax being introduced, including funding to Energy Brix and Alcoa. Second, it decreased the share of clean tech investment grant funding for small businesses so as to further increase funding for big businesses. Third, the Clean Energy Regulator added more businesses to the big polluters list, taking the total now to 315. Fourth, the government changed the regulations so as to increase real emissions from pipelines and landfill by one million tonnes.

Fifth, the government abandoned the Contract for Closure program to shut down power stations, which will mean the carbon tax will have to increase to achieve the same level of emissions. Sixth, they scrapped the floor price, which would have been $15, from 2015. The government had said a floor price was needed for business confidence. Seventh, they announced they would link the scheme to the European system, which does not allow two-way trade on carbon credits, putting Australian businesses at a disadvantage and resulting in Australia's carbon tax being set by the EU price. Eighth, the government halted the clean technology investment grants. This came weeks after the grants were announced, then changed.

All these changes have been surrounded by panic and chaos in the government and have left business wondering what carbon tax scheme will be in place once the government has finished with it. It shows the government has lost control of its carbon tax and is unable to implement its legislative program in a competent manner. The government is clearly panicking, and there is a good reason why the government is panicking. Australian families and Australian businesses now know what the impact of the carbon tax will be. The impact is increased costs for business, increased costs of living for households and a complete failure to reduce our CO2 emissions.

The main intention of these bills is to remove the legislated floor price of the carbon tax and link the Australian carbon tax with the European emissions trading scheme. This in itself is an indefensible position for the government, because it has been this government which has time after time reaffirmed its commitment to a floor price as a vital part of the carbon tax package. The floor price would provide stability, the government said. The floor price would reduce volatility in the carbon price, the government said. It was the solution to all uncertainty, the government said.

Despite the cracks beginning to appear in the carbon tax in the first two weeks following its introduction, the Minister for Climate Change and Energy Efficiency initially stood firm on the floor price. On 12 July he told ABC Radio National:

Well we've put in a floor price and a price cap to provide some confidence over the first few years about the potential variability of the price.

That was on 12 July this year. Just over one month later, and with the carbon tax continuing to place business and households under increasing pressure, the minister for climate change again stood by his commitment to a floor price. This is what he said during an interview with David Speers on Sky News Agenda on 21 August:

We have legislated the floor price; that's quite well known. I am discussing with the European Union the linkage of our schemes. It is an issue that's in those discussions, but we are committed to the arrangements we have legislated.

'At $15,' said David Speers. Greg Combet:

That's the floor price.

That was on 21 August of this year. Less than a week later the government dumped the floor price in a panic as the cold hard reality of the carbon tax hit home. The government announced that it would link the carbon tax to the much smaller European emissions trading scheme, effectively placing the future price of carbon into the hands of the European economy. Australia's electricity price will now be largely set by European bureaucrats in an area of the world which is currently experiencing tremendous instability and uncertainty.

The government has tried to claim that linking the carbon tax with Europe will lead to a lower carbon price. But the reality is that the government is playing a game of deception. Firstly, they claim a lower carbon price under the European link. But in the next breath they are standing by the Treasury modelling that the carbon tax will go up to $29 in 2015-16 and to $37 by 2020 while Greens leader Christine Milne claims it could hit $50 by 2016. They cannot have it both ways—either the price will be lower and they abandon the Treasury modelling or the government stand by their forecast increase in the price of carbon and Australians will suffer further increases in their power bills. In a budgetary sense, either the price will drop and so will government revenues, resulting in a massive budgetary shortfall, or the price forecasts will prevail and household budgets will be placed under huge pressure.

All this explains why respected former Reserve Bank Governor Warwick McKibbin wrote an article in the Australian Financial Review on 30 August in response to the government's decision to scrap the floor price. In the article he highlighted several issues about the government's decision, including: firstly, it raises the economic costs of the existing carbon pricing policy because it creates greater uncertainty about the price of carbon in future years and it also creates real concern about whether the government knows what it is doing—a big worry—which adds to sovereign risk; secondly, in the case of carbon pricing, the idea the Australian scheme should be linked to the European carbon trading scheme is equivalent to the idea the Australian dollar should join the eurozone; and, thirdly, at a time when Europe's economic judgement is widely questioned, the federal government gives up the right to determine its own carbon price and gives that right to Europe.

All these issues highlight why the government should not be rolling the dice with this carbon tax and placing at risk the living standards of Australians. It is a further reminder of how the government's handling of this issue has just been another policy disaster which all Australians will pay the price for.

I would like to take some time to look at a snapshot of the impact that the carbon tax is having on residents of the North Coast of New South Wales. We all know that the carbon tax is a tax which permeates all parts of our economy. It will hit hospitals, schools, aged-care facilities, swimming centres, councils and small businesses. No-one escapes the $9 billion carbon tax, which is something that has become very clear on the North Coast of New South Wales. For example the carbon tax cop continues to add more councils to the list which will be expected to pay the carbon tax. The councils have been told by the regulator that if their emissions exceed 25,000 tonnes of CO2 they will be liable to pay the carbon tax on their total emissions—not just those emissions over 25,000 tonnes. Based on a $23 a tonne price a council could face a bill of $575,000 if it breached that threshold. Councils affected on the North Coast include Clarence Valley Council, which covers part of my electorate, and Port Macquarie-Hastings Council, which is in the member for Lyne's electorate. The fear is that other councils are just under the threshold but once they cross it ratepayers will be slugged with a bill of $575,000. Councils will have no choice but to cut services or pass on the cost to ratepayers.

I take this opportunity to refer to two newspaper articles which have appeared in local papers in my electorate over the past week. The first is from last Saturday's edition of the Coffs Coast Advocate. Under the headline 'Power bills a shock for our hip pockets', it read:

It's been a tough few months for some locals.

According to the St Vincent de Paul St Augustine's Parish conference president Bob Gorman statistics for August came as a shock.

'We held over 120 interviews, helping over 250 people, 35 who were new users of our services', Mr Gorman said.

'The increases in electricity prices are hurting local hip pockets, especially old age pensioners.

In the past we rarely saw old age pensioners—they've traditionally been the ones who know how to budget and who've learned to get by.

But these costs, they can't budget for that.'

Out of the $10,000 that Mr Gorman and his St Vincent de Paul colleagues distributed for assistance, half was for helping paying electricity bills.

It doesn't get any clearer than that. For months we have heard the government and the Independents prattle on about how the carbon tax is going to cost you $9.90 more a week but that the government is going to give you $10.10 in compensation. Everyone—bar those on the opposite side of this House and some on the cross benches—knew that the government compensation was never going to come close to covering the increases in the cost of living. Here we are in October, just three months after the introduction of the carbon tax, and the pressure on household budgets as a result of power price increases is taking effect. We all know that the carbon tax has been the main reason for the huge increase in power prices.

The second article I would like to refer to was in today's Daily Examiner in Grafton. The member for Page often spruiks that she is committed to representing the community when in reality she is primarily focused on standing hand in hand with the Greens as they seek to destroy business and make households pay more for their basic utilities. In today's Grafton Examiner three people were asked 'Have you felt the carbon tax on your wallet?' This is what they had to say. Sharon Hayman from Grafton said:

Yes, of course. Everything is dearer and I do not like it. I have to work two jobs to pay the bills.

Des McLennan from Grafton said:

Yes mainly in retail stores. Things in shops are dearer.

Chantelle Riseley from Grafton said:

Yes, mainly household expenses are up. Especially power, it's unfair on the ordinary family.

I'll say it's unfair, Chantelle. 'Unfair on the ordinary Australian family'—truer words have never been spoken. But that is Labor's carbon tax in action.

This is an unfair tax based on a lie. This is a tax that is going to harm small business and large business and Australia's international competitiveness. This is a tax that has very little upside from an environmental point of view and massive downside from an economic point of view. It is a tax that the coalition has opposed at every turn. We will be opposing these bills. I certainly reject this carbon tax and the people of my electorate of Cowper reject this carbon tax. The government should be condemned for introducing such a tax based on a lie. (Time expired)

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

It my pleasure to be contributing to the debate on this important package of bills. The Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related bills will help modernise our economy and drive us towards a clean energy future. As with every contribution, I will start with a reminder about why we are doing it. We are not doing it out of some folly, as you might have been led to believe if you had listened to the member for Cowper's contribution. He spent a good 15 or 20 minutes, like some modern-day Don Quixote, in search of windmills to tilt at—and he has been doing that for about 2½ years now. Nothing is so sad as a man whose predictions of devastation have not been realised.

We are doing this because we on this side of the House believe that climate change is real. We believe that we are facing the risk, within a generation or two, of serious and dangerous climate change. If we do not act, we will be condemned by our children for having let go of an opportunity to alter our path towards climate change, dangerous climate change which will affect their futures and their children's futures.

Australia has a special obligation to act because Australia is one of the highest per capita emitters of carbon in the world. We know that the rest of the world is acting. If we do not act, not only will it affect our diplomatic relations with our neighbours, it will affect our trading relations with our neighbours. As we see neighbours in our near region acting to put a price on carbon, to change their markets and to restructure their economies, it is inconceivable, if they look south and see Australia—one of the wealthiest countries in the region and one of the highest per capita emitters of carbon in the world—not acting, that they would not seek to level the playing field somehow. That would not be in our interests.

We know we are not acting alone. We know that, by next year, over 850 million people will be living in a jurisdiction covered by a carbon price. We know that Korea, California, some of the largest states within China, Japan, New Zealand, Thailand, Indonesia and Vietnam have developed emissions trading schemes and either have them operating right now or are in the process of implementing them. The Leader of the Opposition last month claimed that there are no developing carbon markets within the Asia-Pacific region. The truth is far different. You just need to look across the ditch to New Zealand to see an operational carbon trading market. If you look to our neighbours in the near region, you see other emerging carbon markets. So we are not acting alone. If we do not act, we will give up the chance to be innovators and early adapters and we will swap that for the opportunity to be laggers and losers when it comes to developing a modern economy.

On this side of the House, we believe in adopting a market based mechanism. Put simply, if you put a price on something, people start to value it and it starts to change their behaviour. It is like running water—if it were free, people would leave their taps running. They would use it wastefully. When you put a price on water, people start to think about the way they use it and they turn their taps off.

So it is with carbon. If you put a price on it, it changes behaviour. Producers start to look at it. It becomes a commodity and producers start to look at it as an input cost and to do what any good business would do—try to reduce that cost. In particular, if you are a producer of electricity, you are going to put in place every mechanism possible to reduce that input cost. If you are a user, you are going to do everything within your power to reduce the impact on your hip pocket.

We on this side of the House know that it is not that simple, which is why we have put in place mechanisms to provide assistance to households and to provide either exclusions or assistance to certain industries. For example, industries in my electorate which are emissions intensive and export exposed are effectively excluded—or near excluded—from the impact of the carbon price.

Earlier, we heard the member for Cowper deriding the actions of bureaucrats in far-flung places. That is misguided. Quite simply, if you put in place a market mechanism, it is day-to-day users and businesses who control the price of carbon. When you link that market mechanism to markets around the world, it will not be just 20 million consumers making the input decisions which control that price, it will be over 850 million users. Far from it being a few public servants in Canberra, Geneva, Munich or somewhere else who will control the price of carbon, it will be everyday users through their actions.

So we link the markets—and that market linking is incredible important. It has been government policy since at least 2007 that Australia should link its price on carbon, its emissions trading scheme mechanisms, to schemes around the world. Through this legislation and through negotiations with the European Union, we are linking our scheme to the EU's emissions trading scheme. That scheme is a mandatory trading scheme, the largest in the world. It covers over 30 countries and it has operated since 2005. By the time it had been operating for six years—that is, by 2011—it had been so successful that the EU had managed to reduce carbon emissions from the countries covered by the scheme to 17½ per cent below 1990 levels. From that we can see that the operation of a market based mechanism can be effective.

There are great potential benefits to Australians—Australian manufacturers and Australian businesses—from linking to the European scheme. The House of Representatives Standing Committee on Economics, of which I am a member, conducted a public inquiry into these bills and a number of businesses and business organisations welcomed the legislation. They pointed out that they could see enormous benefits from linking to the EU scheme.

The Australian Financial Markets Association, for example, had this to say in their submission to the committee:

Linking of the Clean Energy Scheme with sound international schemes has been consistently requested by AFMA as a mechanism to increase market depth, achieve least cost abatement and reduce overall risks for participants.

It was a message repeated by the Clean Energy Council in their submission, where they said that they supported the linking of the Australian carbon pricing scheme with international emissions trading schemes for the following reason:

With international linking, the carbon price in Australia will essentially be set by international supply and demand for abatement.

They go on to say that this will guarantee that, on an international basis, they have access to the lowest cost of abatement, and that is what it will be all about for business.

I do not know if this has been raised in this debate to date, but there is a second benefit of linking our scheme to the scheme covering those 30 countries in Europe. It goes to the heart of the opposition to the scheme—raised by the opposition—on the basis that we are acting alone. Well, we know we are not acting alone. But by Australia linking its scheme to an international scheme we create international momentum which will encourage other countries around the world to link their schemes to the international schemes in operation. That, after all, is what we are on about. That is the long-term objective of Australian government policy and the stated policy of many other nations around the world. So there are great benefits, as recognised by business and by other countries in our region and around the world, in linking our scheme to the European scheme.

The second part of the legislation that I will comment on is the removal of the floor price. It is true that, when the carbon price was originally introduced, the floor price was placed in the legislation with the objective of creating certainty not only around the costs for businesses and users but also to assist in driving long-term investment in low-carbon-emitting technologies, particularly when it comes to energy generation. These are long-term investments, sometimes 20-, 30- or 40-year investments, and it is in the interests of businesses and financial markets to have some certainty around prices. So we do not resile from the need to have some certainty and putting in place a mechanism which will drive long-term investment.

But there are other ways that can be achieved—for example, by linking our scheme to the largest market scheme in the world, which has a well-established futures market. As people who operate in the markets, particularly the financial markets, will understand, the existence of a futures market provides not only hedging arrangements but also some capacity for businesses to make long-term investments and manage their risk over that time with some certainty.

The removal of the floor price is also supported by business, as shown by the comments that businesses made to both the Department of Climate Change and Energy Efficiency and the committee that inquired into the legislation. The Business Council of Australia, for example, in a submission to the department, had this to say:

The BCA supports the removal of the floor price and a surrender charge. Both these elements of the legislation distorted the market that is intended by the legislation and would have brought additional costs to the economy and consumers at a time when all efforts should be directed at maintaining a strong and growing economy.

There were several other submitters to the committee and to the department who echoed those comments. So the removal of the floor price as proposed by this legislation is well and truly supported by business.

There are some limitations on the capacity of domestic producers to link with other schemes and access international markets for the purpose of low-cost abatement. The first is that an Australian business may offset no more than 50 per cent of their liability through accessing international permits. The second is a limitation on accessing what are known as Kyoto units for the purposes of abatement, and there is a very good reason for that limitation: we are not purchasing carbon for the sake of purchasing carbon; we are pricing carbon as a means to change behaviour, particularly production behaviours; and the problem with the Kyoto units is that they are uncapped as units and as a commodity. That is to say that there is no cap on the number of them that may be issued, which has led many within the economy to say that perhaps the price is artificially too low for these units and we are not actually purchasing real abatement. At $2.50—that is the current price of Kyoto units—we certainly know that that is not going to be enough to drive the sort of change that is required both in business and in behaviour. For that reason, quite wisely, there is a 12 per cent cap on the number of Kyoto units that can be accessed for the purposes of abatement by Australians who have a carbon price liability.

The package of bills before the House today are appropriate adjustments to be made to this major reform, and I dare say they will not be the last because we will need to make adjustments to the scheme as dictated by practice in the marketplace. However, what this legislation shows is the willingness of the Labor government and the minister responsible to ensure that we take on board concerns and that we are continually attempting to do what we can to link our scheme to international schemes and to make the necessary adjustments to ensure that we are putting in place arrangements which will change behaviour and enable people with carbon price liabilities in this country to access the lowest-cost abatement. I commend the legislation to the House.

Stuart Robert (Fadden, Liberal Party, Shadow Minister for Defence Science, Technology and Personnel) Share this | Link to this | Hansard source

I rise to join my coalition colleagues in unilaterally condemning and opposing the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and cognate bills, noting the second reading amendments we will be moving to call on the government to scrap this invidious, dreadful, electricity-rising, job-destroying, nation-unbuilding carbon tax. If there was ever proof that this government is in complete and utter chaos, this bill legislation stands alone as testimony to that.

Since implementing the carbon tax, the government has made eight major changes. It has bailed out major companies using taxpayer funds on the eve of the carbon tax being introduced, including funding to Energy Brix and Alcoa. It has decreased the share of clean tech investment grant funding for small businesses so as to further increase funding for big businesses. The    Clean Energy Regulator has added more businesses to the ever-growing big-polluters list, taking the total now to 315, and it would not surprise me if that changes on a daily basis. It has changed the regulations to increase real emissions from pipelines and landfill by one million tonnes. It has abandoned the Contract for Closure program to shut down power stations which will mean the carbon tax will have to increase to achieve the same emissions reductions and the Lord only knows how much money was spent on this program prior to the shutdown. It has scrapped the floor price, which was to have been $15 from 2015. The government had said a floor price was needed for business confidence; apparently not now. It has linked the scheme to the European system, which does not allow a two-way trade on carbon credits, putting Australian businesses at a distinct disadvantage and resulting in Australia's carbon tax being set by the EU price. And it has halted the clean technology investment grants. This came just weeks after the grants were announced and then changed. There have been eight substantial changes in just three months, after this government had years to get it right in their own minds.

The government has lost control of the carbon tax. It frankly does not know what it is doing, evidenced by its policy on the run. It is making ad hoc changes at will—more policy on the run from a government that is incompetent and divided and, as yesterday shows clearly with, not only the collapse in polling numbers but also the resignation of its caucus chair, and then a spirited and hyperbole based defence of the indefensible disgusting behaviour of former Speaker Slipper, only for him to resign hours later. This government is incompetent; it is divided; it is directionless.

You only have to ask why the floor price was dropped now and linked to the EU. Why now? Why at this time was that decision made? The answer lies not in good public policy but, as it so often does with this divided government, in the haunting spectre of Kevin, the member for Griffith, because as part of his bid to build numbers to challenge the Prime Minister he said he would drop the floor price and link it through to the EU. Short of any other compelling notion as to why now this would be done, the only logical conclusion is to sweep the floor away from Kevin, so that the member for Griffith is denied one more point of differentiation away from the Prime Minister—public policy on the run because of a potential challenge to the Prime Minister. This government walked into this House and said that this is about business confidence, about confidence to tackle climate change and the so-called extreme nature of it. And now we are seeing policy on the run not for business confidence, not to deal with the so-called extremes of climate change but to deal with the threat the member for Griffith may have on the Lodge—puerile at the very best.

What is the impact of all this?    In my home state of Queensland, the electricity price regulator, the Queensland Competition Authority, has announced massive increases in power prices from 1 July, which will add $120 to the average household power bill.    Power prices have now soared by 60 per cent since the former Labor state government promised that deregulation of the industry would put downward pressure on prices. Perversely, the cost increase was pushed higher because Queenslanders used less power over the summer. The generator did not maximise their return on investment and so sought permission, and was granted, to increase the price. Because less power was used over Christmas—that is, Queenslanders saved power, they did not use as much—the generator did not meet its profit targets and the price went up. I thought the intent was to stop using power. I thought the intent was to wean us away from using power, but it turns out that the less power we use the higher the price. The level of perversity within the government's legislation, its basis and its rationale has reached new and startling heights. All Queenslanders are paying more because of this government's carbon tax. The South Australian regulator made it exceptionally and explicitly clear that more is being paid because of the carbon tax—a tax the Prime Minister categorically promised she would not introduce just days before the last election. That promise was broken. It is a tax based on a lie. Be under no doubt at all about that.

The main purpose of the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 is to remove the legislated floor price out of the carbon tax and link us with the European ETS, where the price for permits is around $8, give or take. What is our price? Twenty three dollars. The level exceptions within the European scheme means that the average Australian is paying something like 400 times more than the average European because of the way our scheme is constructed. The legislation will increase the carbon unit auction limit from 15 million to 40 million for 2015-16; alter the arrangements applying an equivalent carbon price for liquid fuels and synthetic greenhouse gasses; make amendments concerning the measurement of potential greenhouse gas emissions; and make amendments concerning natural gas liabilities. Just three months into the carbon tax, these are major structural changes.

Context is important, as we debate the high farce of this tax and its multiple amendments. On no fewer than 11 occasions the government affirmed categorically its commitment to the floor price as a crucial piece of the carbon tax legislation—11 times. That of course was before the member for Griffith started getting momentum to challenge for the Lodge.

On 13 September 2011, the Prime Minister said in this place:

The bill also provides for a price cap and a price floor to apply for the first three years of the floating price period.

This will limit market volatility and reduce risk for businesses as they gain experience in having the market set the carbon price.

So the rationale for setting it for three years was to limit market volatility. Apparently that rationale has disappeared, has it? Now we have swept the floor away, does that mean there will be less or more market volatility? Or does it mean the government does not care as long as Kevin does not have the keys to the Lodge?

On 9 November 2011, a mere three weeks later, the Prime Minister said during an interview:

Well we have set a floor and cap so that there can be stability in pricing but by internationally linking the scheme we will see the Australian price linked to the global price when we move to the emissions trading scheme in three years time, but we did think it was appropriate, because people are making very long term investments, to have a band in which the price will move so that we’ve got the benefits of linking with the international price but also the benefits of stability.

So, within three weeks, the Prime Minister said, 'Keeping a floor price will limit market volatility; it will establish stability.' How can the government now walk in and sweep away the floor price, when they have nailed their colours to the mast, saying the floor price is needed for stability and to limit market volatility? What they are saying is: 'We don't care about market volatility. We don't care about stability. All we care about is that the member for Griffith promised to do this as part of his bid for numbers to challenge the Prime Minister, and, to sweep that away, we're going to do it as well, regardless of the instability, regardless of the market volatility.' They are the two issues the Prime Minister said needed to be addressed. They apparently are not important anymore a mere nine to 10 months later.

Similarly, on 12 July this year the Minister for Climate Change and Energy Efficiency, Greg Combet, said:

Well we've put in a floor price and a price cap to provide some confidence over the first few years about the potential variability of the price.

So we now have: 'It's about stability. It's about limiting market volatility. It's about confidence.' Or it was about those things. Mr Combet then said, on 21 August 2012:

We have legislated the floor price; that's quite well known. I am discussing with the European Union the linkage of our schemes. It is an issue that's in those discussions, but we are committed to the arrangements we have legislated.

Apparently, Minister Combet, you are not that committed to stability, to confidence, to limiting market volatility, as long as the member for Griffith is knocking at the Lodge. On 28 September 2011, Minister Combet said of the floor price:

This will reduce risks for businesses as they gain experience in having the market set the carbon price.

Despite eight changes since 1 July 2012, Minister Combet claimed that the carbon tax was 'bang on track'.

The government does not know what it is doing. It talks of stability. It talks of confidence. It talks of limiting market volatility. And then it changes it all, as if those words meant nothing. The government cannot be trusted on major policies. Its track record is clear on this. It cannot be trusted in terms of the words it uses. It was committed to all these issues of stability and confidence, and apparently now it is not. If it had articulated an argument that said, 'We can deal with the issues of stability, of confidence, of limiting market volatility—those things that required a floor for three years—through these other mechanisms, by linking the schemes,' perhaps there would be a shred of credibility. But there is nothing—no engagement, no rationale, no discussion, no explanation to the Australian people as to why, six to 12 months ago, the floor price was fundamental for stability, confidence and limiting market volatility, but now it is not important at all. In the last 12 months, Europe has gone backwards, China's growth has slipped to just above 7.1 per cent, Brazil's economy is slipping and we are now apparently the 12 largest economy in the world because the growth of three economies above us has stifled. But apparently issues of stability, confidence and market volatility are no longer important.

There is a human face to this discussion. Ernest and Marjorie Clark, who are retirees in my electorate, at Runaway Bay retirement village, where hundreds of others are, came in with their first power bill since the introduction of the carbon tax. It showed their off-peak power had gone up by 25.5 per cent and their peak power by 14 per cent. They asked a simple question: 'Stu, how do we afford this? The other 150 houses and residences in our retirement village face the same thing.' They said:

As pensioners we find it very hard to cover increased costs to everyday living, then be hit hard with increases in utility charges over and above the 10% stated by the PM.

This is the core problem with the carbon tax and the way this government has legislated for it. In the government's own modelling, emissions go up. The carbon tax does not reduce emissions. It does not take them backwards to meet the emissions target of a 25 per cent reduction on 2000 levels. It does not do that. Emissions go up. It causes maximum pain to people like Ernest and Marjorie Clark, retirees with a fixed income, including the pension, whose investments are struggling against a domestic and international financial regime that at present is going from bad to worse. It is punishing good people like Ernest and Marjorie Clark, and for what? For emissions to go up.

We have called time and time again for the carbon tax to be scrapped. The Leader of the Opposition has made the point patently clear that in government we will rescind it. We oppose it now and we will rescind it in government, as the first order on day one of an Abbott led government. We will restore fairness back to those people that were deceived at the last election by a carbon tax based on a lie.

Debate adjourned.