Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Hansard source

Senator Boswell is correct: if they are left there long enough they certainly will. That is the one thing we can be very certain of, especially with the carbon tax managing to run at a deficit. Senator Boswell, you remind me of the point—again highlighted by Senator Cormann and also highlighted in the dissenting report of the Joint Select Committee on Australia's Clean Energy Future Legislation—that the carbon tax is like a miracle of the government. They implement a new tax worth about $9 billion a year and—guess what?—they manage to run it at a deficit. It is like the Magic Pudding in reverse for this government that they manage to apply a new tax to the Australian economy and the end result is the budget deficit increases by $4 billion over the forward estimates.

It is not just the forward estimates where we see the budget deficit likely to take a whack. It will stretch way beyond that—it will stretch way into the future. The government claims that the carbon tax will become budget positive in the future, but the reality is that, if they live up to their promise, the compensation will keep up with the cost of the tax and the deficit will continue to grow as a result of the carbon tax. Why is that? That is so because of the sale of international permits. The evidence received by both committees made it clear that Australian companies will go into the market and buy international permits. In 2020, they will be worth about $3 billion a year. By 2050, they will be worth about $60 billion a year. Between $3 billion and $60 billion a year will be going offshore to purchase international permits. What will the Australian companies purchasing these permits do? They will pass the costs on to consumers. That is accepted. Even Mr Comley, the Secretary of the Department of Climate Change and Energy Efficiency, provided that information and advice to the committee that I served on, and no doubt Senator Cormann's committee heard that as well.

So the costs will be passed on to consumers, but the money is going overseas. The question is: how does the compensation keep up without increasing the budget deficit even further? If, in 2020, $3 billion is going overseas yet the government claims the compensation to Australian households and industries will keep up, how is that going to stack up? How will you make it work without stripping elsewhere from the budget or without the carbon tax becoming a generator of even bigger deficits—deficits that continue to increase because the price and value and expenditure of those international permits continues to increase? From 2020 through to 2050, the $3 billion morphs into $60 billion. The money is still going overseas—it is not going into the government's pocket—but consumers are having to pay because companies have passed the cost on to them. Yet what happens? Where is the government going to fund it? There are only two things that can happen: either it breaks its promise about compensation—just like it broke its promise about there being no carbon tax—or it increases the deficit even further and we get even closer to that trillion dollar deficit that Senator Boswell remarked upon before. One or the other is most likely to occur under this regime.

Unfortunately, of course, Labor and the Greens are not willing to have proper scrutiny applied to their carbon tax by the normal processes of this parliament. It took Senator Cormann and his select committee to be able to do so. I praise the work that they have done. It is an outstanding report and I commend it to the Senate.