George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance and Deregulation (Senator Wong) to questions without notice asked by the Leader of the Opposition in the Senate (Senator Abetz) and Senator Birmingham today relating to the carbon tax.

When President Obama left our shores last Thursday afternoon, not only did he leave behind him the legacy of an enhanced ANZUS relationship and the announcement of a military presence by American Marines in Darwin; he also left a legacy much more consequential to our immediate domestic politics. He blew the carbon tax out of the water. He did that by telling journalists at his press conference the previous afternoon that there was no way that the United States of America would have a carbon price or a carbon tax by 2016 or indeed in the foreseeable future. In making that announcement he destroyed the assumptions upon which the modelling for the Gillard government's carbon tax depends.

Both Senator Abetz and Senator Birmingham, in their questions to Senator Wong today, identified those aspects of the modelling which depend upon the assumption of there being a global carbon market in which the United States and other major Western economies—and, in the case of Senator Birmingham's question, the OPEC nations as well—will participate. That is a foundational assumption of the modelling upon which the carbon tax depends. It is therefore a foundational assumption for the projections of the cost to Australians of the carbon tax. It is a foundational assumption for the assessment of the compensation to households which the government says it is going to pay through the tax and transfer system.

We only have to look at the document which Senator Abetz read—that is, the incomplete, redacted but nevertheless extensive document which sets out part of the modelling upon which the carbon tax depends—to see that what Senator Abetz asserted in his question and what Senator Birmingham asserted in his question was absolutely true. If one reads from pages 31 and 32 of this lengthy Treasury document, one sees that the modelling is said to depend upon the assumption that, among other things, the signatories to the climate change framework convention at Cancun, now 89 of them, will reduce their emissions at the low end of their 2020 pledges. If you look at table 3.1, which underlies that text and sets out a summary of international global action scenario assumptions, the mechanism is described as follows:

… from 2013 to 2015 uncoordinated global action, no trade in permits, differentiated carbon prices. From 2016 onwards, countries trade, either bilaterally or through a central market.

So the existence of an international carbon market—which one also sees from the table that appears on that page of the document that the United States and China and India and Japan and Canada are participants in—is, as I said earlier, the foundational assumption of this analysis. But we know that it will not happen. President Obama has told us that it will not happen in the case of the United States. Mr Harper, the Prime Minister of Canada, has told us that it will not happen in Canada. There is no reason to believe that it will happen in China. In fact, the foreign minister, Mr Rudd, who at the time of the Copenhagen climate change convention was the Prime Minister, accused the Chinese of sabotaging that climate change convention.

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

He used some very colourful language.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

He used a very colourful word, Senator Cormann, which I will not embarrass you are repeating. There is no reason to believe that Japan will participate. There is no reason to believe that Russia will participate—in fact President Putin has made it clear that they will not. But this is the first time that, on Australian soil, Mr Obama has said the United States will not participate. This lengthy study depends upon assumptions which have been falsified. (Time expired)

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the motion to take note of the answer given by Minister Wong on the government's clean energy future package. During the debate in this place on the clean energy future package, which I am proud to say passed resoundingly a few weeks ago, we have heard from many government senators highlighting our plan to tackle climate change. Even today at lunch we heard from Crown Prince Frederik on how we need a framework to lower the world's dependence on fossil fuels.

Labor has a plan and one part of that plan is significant assistance to the food processing, metal forging and foundry industries to help with the impact of the carbon price. As the world moves to reduce carbon pollution, improving energy efficiency and reducing pollution will help Australian businesses gain a competitive advantage. Many businesses have already started reducing their carbon pollution, but many have been waiting for greater certainty about the competitive landscape before taking more ambitious steps. The government's plan for a clean energy future will create that certainty.

Under the government's Clean Energy Plan, the carbon pricing mechanism will establish a clear price path into the future for carbon pollution. Just as businesses currently take account of the likely future costs of labour, transport and materials when making their decisions, they will now factor in the cost of carbon pollution when weighing up alternative investment decisions. Greater certainty about carbon pricing will lower business and financial risk. This in turn will make it easier for the corporate sector to give the green light to key business decisions for a clean energy future such as whether to spend funds on cleaning up production facilities, improving energy efficiency or adopting new low-pollution technologies.

Through the Clean Technology Food and Foundries Investment Program, the government will provide grants worth up to $150 million over six years to the food processing industry and up to $50 million over six years to the metal forging and foundry industries. These grants will assist the industries to invest in energy efficient equipment and low-pollution technologies, processes and products.

I would like to highlight a grant to a potato processing plant in Tasmania which will assist that company to upgrade its coal-powered boilers to natural gas. This 2010 election commitment which the Gillard Labor government has delivered upon is an example of what is possible under this food and foundries investment program. The funding from the federal and state Labor governments of $3 million and $1 million respectively, together with the investment from that company of $17 million, will reduce carbon dioxide emissions by 39,000 tonnes a year—the equivalent of taking 8,000 cars off the road—and support hundreds of permanent and seasonal jobs across the north-west coast of Tasmania through cutting the energy bills of this large employer in my region. Farmers, farm contractors and service providers whose jobs and businesses depend on this company's operations will benefit from this upgrade at the plant through greater certainty and lower costs for the factory. The funding will assist this company to replace its high-energy-intensive coal boilers and install gas-fired co-generation capacity at the potato processing plant, thereby removing the need to burn coal in the production of potato chips. While this grant was announced in the 2010 election campaign and is therefore not part of the food and foundries investment program, it is an example of what is possible through the clean energy future package for all businesses in this area. It is a clear example of how the Gillard Labor government will work with the high-power-intensive businesses in the food, metal forging and foundry industries to assist them to remain competitive through switching to low-pollution options by providing grants for energy efficient improvements.

This government is committed to working with industry, committed to working with communities and committed to working with other countries to achieve a clean energy future for our world and future generations. We are committed to working through the challenges and providing support to Australians. Under our plan, the 500 biggest emitters will pay a price on carbon and the money raised will go to support households, to support jobs and to invest in renewable energy. Under the plan of those opposite, households will be slugged, investment certainty will be cast aside and subsidies will be provided to the big emitters. That is their plan until 2020. We all know that they have not the slightest idea what they will do after 2020. It is vital for Australia's prosperity that there is a clear plan for the transition to a clean energy future.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

We are asked this afternoon to take note of answers given by the Minister representing the Minister for Climate Change and Energy Efficiency. I find this highly ironic, given that those opposite refuse to take note of the advice of 90 per cent of credible economists in this country when it comes to this very important issue, that those opposite refuse to take note of the advice of the overwhelming majority of climate scientists in this country when it comes to the issue of climate change and that they refuse to take note of the 37-odd inquiries conducted in the parliament and by governments on this important issue, one of those being an inquiry conducted under the auspices of the Howard government by Professor Shergold under the impetus of the former Prime Minister John Howard. Indeed, those opposite refuse to take note of the advice of former Prime Minister John Howard, who, in the lead-up to the 2007 election, advocated a market based mechanism.

Well, we do take note of that advice and we understand that as an economy, as a society, we need to take action to reduce climate change and the human induced impacts of carbon emissions from a baseline scenario in our economy. Indeed, we take note of the advice of those experts that the best way to do that for our economy, for our circumstances and for our energy mix is through a market based mechanism because that is the cheapest option for our economy, the cheapest option for households and the cheapest option for businesses. It allows them to make their own decisions about the manner in which they reduce their individual carbon footprint. It comprehends quite well the unique energy mix that we have in this country and the way that we generate electricity, most notably through cheap coal. It recognises that over time there will be a cost put on carbon emissions and that other fuel sources, most notably gas, will act as transitional fuels until we get to a scenario where we are generating more of our electricity through renewable sources.

Those opposite seek to take issue with and take note of the minister's answers in respect of the assumptions that have been made by Treasury in determining and putting together the modelling associated with the carbon price. I do not know how many times we need to explain this in this place and in other places: those assumptions are sound and those assumptions result in robust modelling. That has been the advice and the recommendation of other economists who have looked at the modelling.

Those two assumptions are simple. The first is that the 90-odd countries which have made international pledges through those commitments made at Cancun and Copenhagen to reduce their carbon emissions within their economies compared to a baseline scenario by 2020 will achieve them. They will be achieved. That is not an unreasonable assumption for anyone to make. Indeed, the United States have indicated that they will reduce their carbon emissions by 17 per cent below 2005 levels by 2020. How they do that is up to them. It is up to them as a nation of people to make a decision in their congress about how they achieve that, but we here have taken the approach, based on the advice of experts, considering our energy mix, that a market based mechanism is the appropriate way for our economy to deal with this issue because it is the least-cost option. It is the one that bears the least on Australian businesses and Australian households.

The second assumption that has been made—another reasonable assumption—is that there will be an international carbon market in 2016, by the time our economy moves from a fixed price mechanism to a floating based mechanism. This is a market that is already in operation. Indeed, companies in the United States, in China, in India and in the European Union can, if they choose to, buy permits and buy these mechanisms on an international market. They are free to trade in these permits as we speak.

These are not unreasonable assumptions to make. They are sound, they are robust and they have been credited by independent economic experts. That is why our system will work and why it is the best mechanism. (Time expired)

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

The game is up for the Labor Party. Its polling today is 30 per cent, down about two or three per cent, despite the fact that the Prime Minister has been in every photo shoot with every leader of every country in the world. The question has to be asked: why are the polls moving backwards when she has had such a particularly good week? I will tell you why, Mr Deputy President. It is because the Labor Party has not convinced the Australian public that a carbon tax is a good thing. That is why its polls are moving backwards.

Let us get to the nitty-gritty of this. By 2050 there will be a $1 trillion loss to GDP. By 2020 it will be about $33 billion according to Treasury and $133 billion according to the Centre for International Economics. But where is the modelling? The modelling has not been released. Yes, thousands of pages have been released, but for the GTEM and the MMRF model, the assumptions, the variables and the underlying databases have not been released. The modelling has not been released. Warwick McKibbin, Henry Ergas, Brian Fisher—they have all asked to see the modelling and it has not been forthcoming, despite the fact that Treasury officials have said that it is okay and that the modelling is out there. It is not out there.

During Senate estimates on Monday, 17 October, Phillip Glyde, the straight-shooting Executive Director of ABARES, said: 'You can't run the modelling. There's not enough information out there.' Senator Cormann asked if a third party could do it and Mr Glyde said, 'No, third parties couldn't do it as there's not enough information out there.' That is from the horse's mouth; that is from Phillip Glyde. He said, 'You cannot model the carbon tax with the information that's out there.' Then Treasury official Ms Quinn let the cat out of the bag, too. She said the most recent public release of the model code by ABARES was the model documentation in 2007. That is the last time that model was out, well before the carbon tax.

I do not blame the Labor Party for trying to hide this, because once that modelling gets out there—and the assumptions are based on everyone being there in 2016—it will blow its argument to pieces. It will smash it to smithereens. The Centre for International Economics tried to make assumptions on a model they did not have, and this is what came up: the government estimates the carbon tax will reduce GDP by $32 billion by 2020, while the CIE model shows GDP will decrease by $180 billion. The government estimates the carbon tax will reduce real wages by one per cent; the CIE estimates that real wages will fall by 19 per cent. The government estimates that the carbon tax will increase electricity by 10 per cent; the CIE estimates that electricity prices will increase by 30 per cent. The CIE modelling predicts average household earnings will fall by $11,360 while the government's modelling is $5,110. If the government had nothing to be frightened of it would release that modelling, but it is terrified to release it because those are the figures that are going to come out.

Between us, Senator Cormann and I have asked Senator Wong 25 or 30 times, and she has said, 'Yes, I'll take it on notice,' or 'You aren't worried what the model is; you're not going to vote for it.' We have had obfuscation, we have had every wriggle, every dive and every backfoot movement but the modelling has not been released. The government has lied to the community. It has put this economic burden around the neck of the community and it has not been modelled. Ergas has not been able to get it, McKibbin has not been able to get it and Fisher has not been able to get it. What is the government trying to do? Why is it trying to mislead Australia? Why isn't it being honest? This is the greatest lie ever perpetrated on Australia. The government will not release the modelling because it knows all the other assumptions are going to be much higher than what it is telling the people. (Time expired)

Question agreed to.