Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Climate Change and Water, Senator Wong. How much will grocery prices rise under Labor’s flawed and rushed emissions trading scheme?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

As I have previously indicated in this place, the government has released quite substantial modelling—from recollection in October last year—on the likely impacts of the introduction of a carbon price on a whole range of matters. My recollection is that I have previously indicated in this place that over the first two years of the CPRS we would anticipate a CPI impact of about 1.2 per cent, of which 0.1 per cent would reflect increases in food prices. I would make the point that it is the case that there will be price impacts as a result of putting a cost on something where there has not been one previously—that is, carbon. The government has never shied away from that. In fact, the government has been up front about this, including in providing the largest proportion of assistance under the scheme to households. Senators may recall that last year, when the Prime Minister announced the white paper, the majority—I think some 50 per cent—of the income received by government from the auction of permits under the emissions trading scheme would be provided to Australian households targeting particularly low-income households and middle-income households.

Mr Randall:

What is the answer to the question?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

The answer to the question is that we have been up front about the CPI impact—1.2 per cent over the first two years, as I have said before in this place. Increases in food prices are estimated to contribute about 0.1 percentage points of the 1.2 per cent increase. This has been outlined previously. I would also make the point that Prime Minister Howard was up front on this issue. (Time expired)

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. It is reassuring to hear that prices might rise by only 0.1 per cent, but I also note that the Australian Food and Grocery Council has estimated that price rises will be in the order of up to five per cent. In fact, some major retailers are estimating price rises up to seven per cent. Did the government consult with the Food and Grocery Council in making their assessment of what the price rises under their flawed ETS would be?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I say again to the Senate that we conducted the largest modelling exercise in the nation’s history. That was released transparently in October last year and it formed the basis of the government’s decisions, including compensation for low- and middle-income earners. I remind those opposite that that is not a commitment which has yet been matched by you. My recollection of the Frontier Economics Report, which you released—which is sort of your policy, but not quite—is that it does not talk about any assistance to low- and middle-income workers. It is correct to say that there is an impact on prices because we are putting a price on something which previously was free, but you cannot tackle climate change unless you start to reflect the cost of carbon.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. I must have mumbled my question, which was: did the government consult with the Food and Grocery Council in determining the estimates that the minister has given to the Senate?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

Again I say that the Treasury document released last year represents a comprehensive report by the Treasury of modelling of the price increases. (Time expired)

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister tell the Senate in dollar terms how much extra money Australian families will have to find to pay their grocery bills as a result of Labor’s flawed and rushed emissions trading scheme?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

As I have said on a number of occasions, we have put in place a compensation package—focussed on low-and middle-income workers, not yet supported by those opposite—which reflects the likely increases in costs for Australian households. I would like the senator to be aware that Woolworths has today put out a press release saying that Woolworths supports the CPRS. The statement released says, ‘Woolworths wishes to clarify that it is fully supportive of the government’s CPRS, that it has not commissioned any economic modelling on the effect of the current scheme on food prices.’ It goes on to say that the CPRS is necessary to effectively address climate change. It also talks about the fact that there is a slight price rise.

The reality is that we have a number of months left in this debate, depending on when the opposition come up with their amendments. We are likely to see a continued campaign from those in the coalition who do not want action on this issue. We are being up front with the Australian people. (Time expired)