Christopher Back (WA, Liberal Party) Share this | Hansard source

I too have watched with great interest as the debate on the Carbon Credits (Carbon Farming Initiative) Bill 2011 has moved from committee and now to third reading. I can assure you, Madam Acting President, there are no two countries watching this outcome more carefully or closely than China and India. They do so because they have absolutely vested interests—their vested interests being that both of them are running out of coal and both of them see Australia as a very, very successful and long-term supplier of the best quality coal in the world. From a carbon farming point of view, I think they would be looking at farming Australia for its product, and that is the coal. We saw only recently in India that one of its greatest concerns is its capacity to see its industries progress and to bring its populace from a lower socioeconomic to a middle-class level, and the way to do that is through the supply of power. I will come back to that from Australia's point of view, because we have been there.

What did we see just recently when the carbon tax was first announced? We saw the giant American company Peabody and none other than the largest steel manufacturer in the world, Mittal Steel, immediately leap in to purchase Macarthur Coal. This was parroted and trumpeted as being a great vindication of the carbon tax decision of this government. Of course, the truth lies elsewhere. The truth lies in the fact that Macarthur is already exporting the vast majority, if not all, of its coal. What might be the reason for Mittal and Peabody to want to jump in and buy Macarthur at a premium price?

Madam Acting Deputy President, time does not allow me to share with you my 10 years of experience of doing business in India and there would not be enough tissues or handkerchiefs in the chamber at the end of my presentation. So I will confine myself to the fact that, if Mr Mittal, the world's largest steel maker, wants to buy Macarthur Coal for a premium price, we had better believe that he has a very good reason to do so. His reason to do so is the statement by the current government that there will be a phasing out of coal powered electricity generation in this country. Therefore, where might be the opposition of the Foreign Investment Review Board or anybody else for that matter into the future for these companies to continue escalating the mining and exporting of our coal to those countries. There will be none.

One must then, of course, examine from a global perspective the morality of the question of why we would be making initiatives, with our little 1.5 per cent of the world's carbon, to reduce and cease the generation of power from coal whilst opening the floodgates so that the two giant countries of China and India can be unfettered in taking more and more of our coal to use in their coal fired generators to generate electricity for their communities. At the same time, this will be adding to the world's now demonised carbon dioxide. Where is the benefit of a little 1.5 per cent country stopping its generation of power from coal whilst accelerating the sale of its coal to other countries so that they can add to the world's carbon dioxide is absolutely and utterly beyond me.

To come back to my point about India: the Indians have always got a very good reason for doing anything. In fact, in my 10 years of doing business in India, I cannot recall anyone ever offering us a premium over and above what we actually undertook to do work for. I must put on record the fact that, as a small Western Australian IT company in the oil and gas industry, we are unique in our success in being able to deliver on the projects we did for Indian government companies. It did not, however, translate into us ever being paid in a timely fashion. So I am intrigued when I see Mittal Steel offering a premium for that particular activity.

But I go to a question that I have posed to young people when they have come into my office in recent times, remonstrating with me and asking me why we are not on board with this question, and I pose this question to anybody: how is it that our population of 23 million, in a landmass the size of the United States of America, is at the stage of per capita wealth that it is when compared with other countries, compared with high-popu­lation countries without a large landmass and compared with the United States of America, which is equal in landmass but with 10 times the number of people? Has anybody ever addressed themselves to that question in this debate? Has it been high iron ore prices? Of course it has not. It has been in only the last seven or eight years that we have seen an elevation in iron ore prices. Has it been gold? No; we are a reasonable producer of gold. What about grain? The United Kingdom produces more wheat than Australia does. We might be a large exporter of wheat in relation to what we produce but in terms of our production, one or two tonnes to the hectare for wheat production is a good figure in my state of Western Australia. If you did not get nine or 10 tonnes to the hectare in the United Kingdom and in Europe you would be regarded as a non-grower. Therefore, is it wool? Well, it once was wool. We grew on the sheep's back. But it is a long, long time since we grew on the sheep's back.

So I come back to the question in all seriousness and I ask: how is it that this small country in terms of population but with a massive landmass is so wealthy per capita? Two words: cheap energy. Cheap energy generated from coal is the one economic benefit that this little country down in the bottom right-hand corner of the world has. We have always had cheap energy from the generation of power from coal. But what are we trying to do? We are trying to diminish and stop the great economic benefit this country has always had. We are trying to pass that benefit on to countries that would dearly love our coal reserves and are willing to pay for them at a discounted price because they know that, should this tax be successful, should this government be successful in its drive, there will not be any imposition, unlike gas, for example, where our government says, 'You must keep some gas for domestic consumption but you can export the rest.' We now have a government that is saying: 'We don't want our coal. You are free to dig it out of the ground and put it on ships and sell it.' I ask the question again: why is it in this so-called smart country that we are digging up our iron ore and selling our coal so that other countries, particularly China but increasingly India, and one day Africa, will be able to turn our iron ore into steel, using our coal, and sell it back as a value-added product and we have no interest in that coal?

What are we doing to the economic benefit that for the last three or four generations has presented us in this country with the standard of living that we enjoy, with the capacity to help other nations and with the capacity to provide the sorts of social security underpinnings and umbrellas that we do for so many people in Australia? Why is it that we are such an attractive country? It is because we currently have cheap energy.

Look at the alternatives. Do we want to see alternative renewable sources? Of course we want to see alternative renewables. I say with some small degree of pride that I was running an island off the coast of Perth when wind generators were first introduced in Western Australia and someone said, 'There are four or five different products; let's put them all in the one place where the wind blows.' So all four of them were put there, and I had the undeniable pleasure of overseeing their management. The first two were eggbeaters, and they failed immediately. The third was the type of wind generator that we see now; its blades fell off and it never, ever generated power. The fourth one had exactly the same challenges we are seeing today—that is, when the wind blew we could actually collect some power from it, but at the times we needed it, lo and behold, the wind never blew. The other interesting thing, which has a similarity today—although this was in the early 1990s—was that, to be able to take this power on board from this renewable source from wind power, we had to turn our generators down to a level of inefficiency, where the efficiency lost exceeded the benefit of the actual wind turbine. It had its conclusion when a tourist bus with 35 overseas visitors was going past and one of the blades sheared off in a high wind and landed 200 metres in front of the bus. That was when I said to the renewable energy group within Western Power at the time, 'Just take it away.' So I do have some affinity with wind power.

Whilst that was a distraction, the point I want to make is that it will be a long time before renewables will ever replace the baseload demand for electricity generation. Having been a party to it, however small the island was—it is just a microcosm of the big one to the east of it—you still had to have your baseload generating capacity. You cannot say to the households and businesses: 'I'm sorry, all of the meat in the freezer has been spoiled because the wind didn't blow,' or the sun did not shine or we could not store the power.

I for one am very keen to see Australia continue particularly in the storage technology and long-distance transmission. Those are the two areas where Australia should make a contribution to global conditions. It is not digging coal out of the ground and sending it to China and to India, where they themselves will use our coal to take advantage and try to simulate what we did by way of cheap energy. Our contri­bution is to use our research and development skills to address those two issues: (1) the efficient long-distance transmission of generated power and, (2), storage. Until we get on top of those two, the contribution by renewables will not be great. What are we doing in this move that we are contemplating and debating in this chamber? It has been said before, and I am sure it will be said again before the debate is finished, that the first outcome will be to hamstring Australian industry and Australian business as they try to compete with overseas competitors upon whom no tax is placed. All of a sudden, if we are exporting, we are at a disadvantage with our competitors. If competitors are importing, they have an advantage because they do not have this particular impost. We threaten the jobs of Australian workers. I do not need to dwell on that because we see so much evidence of it here at the moment.

We place insurmountable hurdles on Australian farmers. Why Australian farmers? Because, as I alluded to a moment ago, we are such a big exporter of what we produce, especially in my state of WA. Here in the Eastern States you consume somewhere between 50 and 60 per cent of the grain that you produce. My colleague Senator Williams would have those figures immediately. We in WA export 95 per cent of the grain. We cannot pass those costs on. Fertiliser costs, insurance costs, transport costs: all of these go up but the farmer cannot pass them on. They are insurmountable challenges.

We place at risk the financial security of those depending on superannuation insurance—pensioners, self-funded retirees, indeed everybody who is in the super­annuation insurance industry, and that is all of us. Why? Because we have a preference in Australia to actually invest in our own companies and our own businesses. In that particular case where we see these businesses placed at a disadvantage, we must inevitably see their economic wellbeing disturbed.

The other problem is commodity prices for our own consumers. We know very well that we are going to see electricity prices driven up even higher. Every state Premier has said this. Labor's Premier Bligh has said it. Premier Barnett has been saying so. Premier Baillieu and the Premier of New South Wales have said the same thing in this area. We have a circumstance in which there are no winners yet. Industry does not win. Employees do not win. Business does not win. Pensioners do not win. Self-funded retirees do not win. I want to reflect particularly on the future generations. As I alluded to earlier, it has been cheap energy that has made this country great. The intention, as I see it, is to remove the legacy that we have enjoyed and that our parents enjoyed. We are going to fail to pass it on to the next generation.

Whilst I was in East Timor recently I was asked by a young military officer, 'What is the impact of all this carbon tax and carbon farming?' There was a beautiful spray of flowers in the airport lounge, so I said to her: 'Imagine you are a producer and an exporter of Australian wildflowers. You have a wonderful business going. You have plenty of employees and plenty of contractors. All of a sudden, for whatever reason, a govern­ment imposes a tax on you to make your flowers less competitive. You are an exporter of wildflowers; therefore your competitors overseas have a free kick. Those competitors bring their product into Australia. All of a sudden they are at a price advantage to you. What do you do as this flower producer? You take jobs offshore and lose jobs in Australia, you close your business or you go into bankruptcy.' None of those activities are of any value to this country.

Worse than that in the flower analogy is the fact that overseas competitors then come to see our product and they start to say, 'If Australia is not providing it anymore, what might be the case for me?' We have seen this in horticulture with Israel. Sometime in the past they found that their production of our wildflowers exceeded our own capacity to produce wildflowers, so they became a net exporter of our product in competition with us. There is absolutely and utterly no validity to this activity. This carbon tax initiative as it is being presented to us will not work and for that reason I am pleased to make this contribution to the debate.