Julian McGauran (Victoria, National Party) Share this | Hansard source

I can make my comments relevant. I could raise my particular issue in relation to the Victorian aluminium industry at any point, but the minister has provoked me to get up at this particular point because she was very high-handed towards a question asked by Senator Joyce about whether China is a developed or a developing country. It is classified as a developing country—a very developing country, I should add. The minister put that information out with a certain undertone in her comments.

Senator Joyce asked how many billions we are going to give to China. We have a right to ask what the effect of this scheme will be on Australian jobs and industry. There is such a thing as carbon leakage. The minister would know all about that. If this scheme is badly designed, these industries will head off to China while we are paying China whatever is agreed—and we have no idea what that might be from the upcoming Copenhagen agreement—to lower its emissions. For example, if not the case in point, the aluminium industry in Victoria will go to China to set up under the existing structure.

Two Senate reports have touched on the question of carbon leakage to developing countries. The interim report of the Senate Select Committee on Fuel and Energy—a government majority report, I should add—raises deep concern about carbon leakage. This is where the developing country aspect is important. In evidence to that committee, the Australian Aluminium Council outlined its view of the impact of the CPRS on the aluminium industry. It said:

The CPRS will impose an extra cost on alumina refining and aluminium smelting industries—thus helping to move our very competitive operations up the cost curve, whilst competitors in non carbon constrained economies remain unaffected … Capital will instead be most likely directed to operations in countries such as China …

That industry is Victoria’s biggest export industry, the greatest revenue earner for Victoria. Under the framework of this scheme, Alcoa in Portland and Geelong will pack up and possibly go to the developing country that we will be supporting. That is the relevance of all this. That is why Senator Macdonald raised the question of Australian jobs because that will be the effect.

All the industries that Senator Macdonald, Senator Boswell and I have been talking about involve rural and regional jobs. And there will be a double effect. They are part of the community, the essence of the economy. Those industries are the foundation of those rural economies. In the city, they would be missed, of course, but when they pack up and leave a country town the effect is devastating on families and jobs. Where are the unions in speaking out for the aluminium industry or the nickel industry?

The minister knows that the aluminium industry, which I will raise later in more specifics, has a real problem in Victoria, and at the moment it is unsolved. Under the structure of this scheme, the effect on their bottom line in Victoria alone will be $40 million. They cannot sustain that. China will look like a very attractive proposition. They will certainly look at China if the scheme goes through as it is. The minister knows the aluminium industry has a problem, but does she know the real effect on rural and regional economies? Does she know that of all the industries this is one that can pack up pretty quickly? The aluminium industry around the world have proven how quickly they can pack up and move to the most cost-effective country. China looks very cost effective at the moment under this scheme.

It is not a matter of us trying to stop it. Of course we are trying to stop it. That is well known. We may yet stop it, by the way, Minister. Wouldn’t that be a turn-up? We may yet stop this. In fact, I am a little bit confident about that. I know something you do not know. It ought to be stopped because under the existing structure it will be devastating on industry. We are unaware of how many billions are going to go over to developing countries. My question is this: will you factor in carbon leakage if the aluminium industry leaves Victoria in the next five years and goes to China? Will you factor that in to how much you will be handing over to China? Why should Australia give up its economic security? Why should Victoria give up its biggest export industry when there is little likelihood that any of those countries are going to reduce their emissions, and certainly not have an ETS like Australia?

Question put:

That the amendment (Senator Milne’s) be agreed to.