Nick Xenophon (SA, Independent) Share this | Hansard source

I concede that there is an increase, Minister, but not to the same extent. It is a fraction of the increase from the government scheme. The other factor is that, in Frontier’s model, real wages are $800 a year better off. It is almost like getting a stimulus payment cheque year in and year out. Households are unambiguously better off in net terms. That is a key factor that needs to be taken into account. I do not think you can ignore what the Independent Pricing and Regulatory Tribunal has said. The minister quite clearly said that a draft report was leaked to the media, but anyone who knows how IPART operates knows that it is an independent tribunal which does not put out a draft determination lightly. The fact is there had been a long process before IPART got to that stage. IPART has made it clear that it is predicting rises in the order of 60 per cent, half of that due to a CPRS. That goes way beyond what has been modelled so far. I think IPART has looked at how the marketplace has worked. In terms of compensation to households, it does not have the level of direct compensation to households because there is real wages growth, but there is certainly scope for this depending on the budget effects and other policies put in place if there is anyone left out. But I still think you can say that real wages are better off under the scheme.

There are still some unanswered questions. It is worth putting on the record that the government originally asserted when they lowered the projection for the future carbon price that it would make it harder to afford the proposed coalition amendments. It was the Frontier response to the Treasury critique, which I tabled, that pointed out that required household assistance should also be lower if the carbon price is lower, making it more affordable. Ironically, Treasury picked up on this point to rely on funding for their revised offer to the coalition. I think there is a real issue there.

Also—and I am not sure if this has been raised previously—if comment is made about the importance of a price signal for electricity then how can this be reconciled? I do not know whether Senator Brown or my other colleagues in the Greens take this point. How can the government reconcile this approach with their treatment of petrol, given that they proposed to use tax revenue to offset the fuel price rise? I think there is an argument here about the MMA modelling, which some would say is an outlier in terms of the relative price effects on the elasticity or relative inelasticity of demand.

The other factor in getting to targets is that this approach is all about having a white certificate scheme in place, but if you had comprehensive energy abatement programs in place, something that the Greens and others have advocated for a number of years, you would actually get a better result. It is all part of a comprehensive package to reduce emissions. They are some of the matters that I think need to be considered.

The government said this is not a model that has been put forward elsewhere. I think the only real precedent has been the European scheme, which has had significant teething problems. I acknowledge that the government says that it will learn from that. But, in relation to the government saying, ‘This model has not been put forward elsewhere,’ it has effectively put forward the same plan for fuel tax offsets—in other words, the use of permit revenues to offset price rises. Some would say that it is an intensity based model—you look at the level of emission intensity as a factor of compensation. So, Minister, we will have to agree to disagree. You can want to get to the same destination but choose to get there by a different path.