Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

by leave—I move:

That the Senate take note of the Select Committee on Scrutiny of New Taxes report The carbon tax: economic pain for no environmental gain.

I thank the Senate. Madam Acting Deputy President, tomorrow the government intends to force 19 carbon tax bills to a vote in the House of Representatives. Save for an unlikely—though not unprecedented—last minute upset, the government unfortunately will have the numbers to secure passage of its carbon tax legislation through the House of Representatives. This will be despite an emphatic pre-election promise that there would be no carbon tax under a Gillard led government, despite strong public opposition to the tax and despite overwhelming evidence that a carbon tax is not in our national interest.

It is in that context that I encourage all members and senators to carefully consider the findings of the Senate carbon tax inquiry, which is the most comprehensive parliamentary inquiry into the tax, which was tabled last Friday. Its findings are based on evidence from a wide cross-section of experts and, unlike the government-sponsored shotgun inquiry, held hearings across metropolitan, regional, eastern and western Australia.

The findings of the Senate committee's 12-month inquiry are clear: the carbon tax will impose economic pain on Australia for no environmental gain. It will not reduce emissions but will reduce our international competitiveness and cost jobs. According to the government's own modelling, domestic and global emissions will continue to grow while the cost of living will go up and up, and real wages will be lower than they would be without a carbon tax. Electricity prices alone, based on the government's own modelling, will go up by 10 per cent in the first year of the carbon tax—with lower real wages, again according to the Treasury, to the tune of 5.5 to 5.6 per cent by 2050.

Lower emitting Australian businesses forced to pay the carbon tax will become less competitive than their higher emitting international competitors not facing a carbon tax. Higher emitting business overseas taking market share from even the most environmentally efficient business in Australia means jobs and emissions will shift overseas. That is not effective action on climate change. It is, as a US congressman perceptively observed about Australia's proposed carbon tax, an act of unilateral economic disarmament. According to the Treasury's own modelling, and evidence before our inquiry by Professor Henry Ergas, the carbon tax will cost the Australian economy more than $1 trillion between now and 2050. This is in today's dollars. It is just about the GDP for the whole of Australia for a whole year. It means Australians will effectively have to work for nothing for a whole year to pay for the impact of Labor's carbon tax between now and 2050. Given that the government's modelling is based on some highly contestable assumptions, in particular around carbon pricing by our major trade competitors, it is highly likely that the impact of the carbon tax on both the cost of living and the broader economy will be even more severe than the modelling suggests.

The Minister for Climate Change and Energy Efficiency, Greg Combet, sought to dismiss those findings by the Senate carbon tax inquiry. Australia's GDP, he argued in the media on the weekend, would more than double between now and 2050, increasing by $2.3 trillion. The minister's statement does nothing to disprove the claim that the carbon tax will cost the Australian economy $1 trillion to 2050, or about $40,000 for every Australian. Slower growth has a cost. Yes, there is still growth, but it is less, much less, than it would have been without a carbon tax. Any Australian with superannuation knows that lower, slower growth in the value of their investments over a 40-year period means less money available for their retirement. Similarly lower growth of the economy as a result of the self-inflicted carbon tax means less money going around—$1 trillion less between now and 2050.

The Treasury modelling is clear. It states in black and white that with a carbon tax our GDP is expected to be 2.8 per cent lower by 2050 than it would be without a carbon tax. GDP in 2050, according to the Treasury's own modelling, will be $100 billion lower than it would be without a carbon tax. These are Treasury figures. According to Treasury, the Australian GDP in 2050 would be $3.56 trillion with a carbon tax and $3.66 trillion without a carbon tax. So that is a GDP that is $100 billion lower with a carbon tax in the single year of 2050. It stands to reason that between now and 2050 there will be a cumulative effect which, based on the discount rate recommended by the government's own climate change adviser, Professor Garnaut, will be a loss in national wealth in today's dollars of about $1 trillion. Under the carbon tax legislation the government wants to push through the parliament tomorrow, that $1 trillion loss in national wealth comes on top of about $792 billion Australians will be required to send overseas to buy international carbon permits. That is a lot of money to take out of the Australian economy for something that will not actually make a difference to the environment.

Claims by the Prime Minister and the Treasurer that the carbon tax will not result in fewer jobs cannot be believed. Again this is a finding that came out of our Senate carbon tax inquiry. Treasury never modelled the impact of the carbon tax on jobs. Rather than actually assess the impact of the carbon tax on jobs, Treasury simply assumed that in the long run it would have no impact on employment levels.

To sum up, Labor's carbon tax will impose a lot of economic pain on Australia for no environmental gain. It will cost our economy about $1 trillion between now and 2050, which means that Australians will effectively have to work for nothing for a whole year to pay for the impact of Labor's carbon tax between now and 2050. Labor's carbon tax will not reduce emissions but will push up the cost of everything by shifting jobs and emissions overseas. Under Labor's carbon tax, real wages will be lower, prices will go up and up and both domestic and global emissions will continue to grow. Lower emitting Australian businesses which will be forced to pay the carbon tax will become less competitive than higher emitting international competitors, which is not effective action on climate change; it is an irresponsible act of economic self-harm. If the Prime Minister, Ms Gillard, were serious about achieving more local content, she would scrap the carbon tax, which will make locally manufactured goods more expensive and less competitive.

It is important to note here that every single Labor member of parliament was elected on a no carbon tax promise, so they should join us in voting against the carbon tax. It is the Senate committee's recommendation that the carbon tax be opposed and the legislation defeated in the parliament as there is no electoral mandate for the carbon tax, the modelling that supports it is based on a number of highly contestable assumptions, it is likely to undermine Australian businesses' ability to compete in the global economy and it will have significant adverse effects on particular sectors and regions with a particularly disproportionate impact on regional Australia. The effect of the carbon tax on the cost of living and on jobs is likely to be much higher than the government's current estimates indicate, based on the flaws in the Treasury modelling. There is considerable evidence that the carbon tax will not result in any environmental gain despite imposing a significant cost on the economy over the next 40 years.

As a final observation, our committee recommends that, if the parliament does believe that it should proceed with a carbon tax, any provisions that have been included in the legislation by this government that are designed to bind future governments, seeking to prevent future governments from rescinding the scheme, be removed. I commend the report to the Senate.