House debates

Thursday, 1 November 2012

Matters of Public Importance

Carbon Pricing

3:20 pm

Photo of Ms Anna BurkeMs Anna Burke (Chisholm, Deputy-Speaker) Share this | | Hansard source

I have received a letter from the honourable member for Flinders proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The adverse effect of the carbon tax on electricity and gas prices.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Photo of Greg HuntGreg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | | Hansard source

Today we learnt that Woolworths face a 14 per cent increase in their electricity prices as a consequence of the carbon tax. That is not their words and nothing that we present but their written statement. Last week we learnt something more significant even still. We learn that, across Australia, Australian families, Australian small businesses, Australian industrial premises and Australian retail premises are facing not a 14 per cent but an average 15 per cent price hike for their electricity for one quarter alone. So the first quarter of the carbon tax era brought with it the largest single increase in electricity prices in recorded Australian history—a 15.3 per cent price rise, of which two-thirds is the carbon tax. What does that mean? It means that no matter which state you are in, no matter which part of Australia, whether you are rural, regional or urban, no matter whether you are a small business, a senior, a farmer or a family, you cannot hide from the electricity impacts of the carbon tax.

That is not surprising, because, as the parliamentary secretary comes to the table, he will tell you that that is what the carbon tax is intended to do. It is intended to drive up electricity prices. It is first and foremost an electricity tax. It is also a gas tax, but it was designed and intended—it was constructed—to be a source of driving up prices in electricity.

There is a very simple test for members of the government. Do they want electricity prices to go up or down? Is their policy for electricity prices to go up or down? The reality is that, on their watch, electricity prices over five years have gone up 90 per cent. Of that, 15 per cent came in the last three months alone, the highest rise in Australia's history, precisely because of the carbon tax. The government says, 'Look, a lot of the price pressures were built in beforehand.' This is all about making a bad situation worse. Australian families who are sitting around the kitchen table get their electricity bills and look at their electricity bills. Honourable members will know that each and every person in this place will have had families, seniors or small businesses come to them and say, 'My electricity bill is a source of huge stress.' Low-income families and medium-income families right across this country are facing stress from electricity price rises, because that is what the carbon tax was intended to do.

Lest the government say, 'It's all okay; it's not really the source of the rises'—which it is: two-thirds of the highest price rise in Australian history in the last quarter alone—it is intended to go up each year, every year, for ever. Next year the carbon tax goes up to $24.15, then to $25.40, and then it goes up—according to the government's own modelling, released again last week as part of the midyear economic forecasts—to $29 in 2015-16. What does that $29 represent? It represents the carbon tax plus another 25 per cent increase in that carbon tax in its first three years. But then it goes to $37, and then by 2050 it goes to $350. In other words, the carbon tax that comes in now is set to continue to multiply each year, every year, forever, because it is designed to inflict electricity pain. It is intended to inflict electricity pain. And it is inflicting electricity pain. That is how it works. That is how it operates. That is what you can never walk away from.

I ask any member of the government to make a clear answer to this question: is your policy as a member of the government to increase or decrease electricity prices? It is as simple as that. Is their policy to increase or decrease electricity prices? When you go through the facts, when you look at their modelling, when you analyse the real world, the carbon tax is an electricity tax that is driving up electricity prices.

But it does not just stop there. Gas prices went up 14 per cent in the last quarter. Again, the carbon tax is responsible for approximately two-thirds of the gas price rises, and that is also what was intended to happen, what the government wanted to happen. In the real world, when a family gets an electricity bill and a gas bill and they see an increase of 15 per cent in electricity and 14 per cent in gas, and they are already struggling to meet higher costs of living because their health insurance costs have gone up by an astronomical amount under this government, they sit there, they look at the bills and they wonder how they are going to pay. That is the lived experience of the carbon tax for Australians, who in the last month have received the bill. It is the bill that they were told before the election that they would never have to pay. That is the truth and the reality about the carbon tax.

When you go around the states, in New South Wales, contrary to what the government would have you believe, it is the carbon tax which, according to the independent regulator, is responsible for 50 per cent, as a minimum, of price rises for this year coming. When you go to Victoria, the carbon tax is responsible for two-thirds; in Western Australia, 72 per cent; and, in the ACT, 75 per cent. In Western Sydney the carbon tax is responsible for 80 per cent of electricity price rises. And then, when you go to Queensland, where Campbell Newman has frozen the most fundamental of domestic retail tariffs, the carbon tax is responsible for between 80 and 100 per cent of electricity price rises. So it is not the states driving electricity prices in this last quarter; it is the carbon tax, fair, square, centre, undeniably, on the evidence of the ABS, on the evidence of the government's own modelling and on the evidence of the independent regulators, and it is the bills faced by ordinary Australians which are all the evidence that they need. The government likes to pretend that it does not hurt, it is not happening and it is not because of the carbon tax. It does hurt, it is happening and it is absolutely because of the carbon tax. But remember this: each day, every day, as you go forward between now and 2020, the tax is designed to go up and up and up.

The problem, beyond the enormous hurt to individual family budgets and small business budgets, is that it does not even work. It is designed to reduce emissions. As we saw from the ABS and as we saw in the government's own modelling in its latest Kyoto update, our emissions go up, not down. They go up from 578 to 621 million tonnes in Australia between now and 2020, up 43 million tonnes. Instead, we then have to go offshore and buy 94 million tonnes of foreign carbon credits by 2020 at an average of $37, or $3½ billion. Take the carbon tax, and then you add $3½ billion, which private business will have to pay on top of that. That $3½ billion is money which could and should have been invested in Australia, and that $3½ billion grows to $57 billion, again on the government's own modelling, by 2050.

You wonder: what is the context? What is $57 billion? In the context of 2050, it is 1½ per cent of GDP. It comes on top of a carbon tax which is 1½ per cent of GDP. That is the approximate value of our defence budget. So they are going to take a defence budget and spend it on domestic carbon credits, and then they are going to take a second defence budget and spend it on foreign carbon credits. Whether it is Kazakhstan or any other place from which we are going to buy our foreign carbon credits—

Mr Briggs interjecting

or Kenya, because of course we are, as the member for Mayo reminds me, sponsoring the Kenyan carbon accounting system, although it was not approved by former Minister Downer, as the Treasurer and the Leader of the House attempted to say; it was approved last year. What we see is this: $57 billion, 1½ per cent of GDP domestically on carbon credits and 1½ per cent of GDP, or the value of the defence budget, on foreign carbon credits. There is no way that any government in Australia will sustain that expenditure of public and private money over that period of time, so it is a system designed to fail, because it does not even achieve its job domestically.

Let us then look at the real world and see what we find. We saw from Woolworths not something that was hidden but a presentation given at a major conference. Woolworths' presentation to the Energy Users Association of Australia was absolutely clear. The carbon tax impact was 14 per cent for this year alone. The carbon tax works in this way. It is generally about 2c a kilowatt hour. That is then added to your bill. If you are on a lower tariff than 20c a kilowatt hour, you are going to be paying higher than 10 per cent of your bill. Woolworths obviously had some good purchasing arrangements. For them, their evidence, their statement, their presentation was of a 14 per cent increase in their electricity bill directly attributable to the carbon tax. That means either they absorb the cost and they have to reduce jobs or they pass it on to consumers. Let us assume for a moment that they absorb the cost. One thing that is absolutely happening is milk suppliers and others are not able to pass on their costs, up the tree, to Woolworths.

I want to give an example, supplied by the member for Paterson, of the Williams Dairy in Vacy—I am very happy to table their electricity bill. The carbon tax component of the Williams Dairy $17,066 bill was $1,749.17. Add $175 for GST and the impact of the carbon tax is $1,925. That represents, against what they would otherwise have paid, a 12.7 per cent increase. That is a small business which is on the edge, a small business which is struggling with already high costs. And what has been said by the proprietor of this business? The proprietor has made it absolutely clear that these additional costs are pushing them out of the dairy industry. These additional costs are the straw that broke the camel's back. These additional costs have to be worn by family small businesses. They cannot be passed through. It is small businesses that are wearing these costs. These carbon tax costs are real, significant and important.

Let me take it to another level. Perilya Mining have released a report noting that they will have a $3 million increase in electricity costs this year. As stated by the managing director of the company, Mr Paul Arndt, 'For Perilya, the carbon tax is the bulk of the increase in electricity charges. The overwhelming bulk of that is as a consequence of the carbon tax'—a mining operation being hit by the carbon tax on their electricity prices and that is exactly what it was meant to do.

I want to deal now with one particular argument which the government uses. The government says it is all network prices. Network prices have gone up—let us be absolutely clear about that. We have said that for a long time, but let me also tell you that there is somebody in this House who demanded, in a speech about network expenditure and investment, that network expenditure go up. Who is that person? Let me read you a quote from two years ago in reference to electricity price rises:

The current price rises in a number of states have been principally caused by a sustained period of under-investment. Significant investment is required to replace ageing network infrastructure and deliver energy security.

Any guess who that might have been?

Photo of Alan TudgeAlan Tudge (Aston, Liberal Party) Share this | | Hansard source

Who would have said that?

Photo of Greg HuntGreg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | | Hansard source

That was the Prime Minister two years and six days ago in a speech to the Australian Industry Group, when the Prime Minister was demanding increased network expenditure. Well there was increased network expenditure. Suddenly, as the carbon tax starts, the Prime Minister decides to throw in a diversion and to pretend that it is anything but the carbon tax driving up electricity prices. Here is the equation. Prior to the carbon tax, electricity was driven up by network prices. Since the carbon tax, a bad situation has been made dramatically worse. Two-thirds of a 15.3 per cent price rise is related to the electricity costs coming from the carbon tax. At the end of the day the carbon tax is an electricity tax. It is intended to be an electricity tax. It is operating as an electricity tax and Australian families are paying the price. (Time expired)

3:35 pm

Photo of Mark DreyfusMark Dreyfus (Isaacs, Australian Labor Party, Cabinet Secretary) Share this | | Hansard source

We have here today scrambled to salvage some credibility on the issue of climate change. It is a desperate attempt to maintain the relentless negativity, the schoolyard bully behaviour and the deceit which has been a motivating ideology for those on the other side. It is a pathetic move to prop up the sagging credibility of the Leader of the Opposition on this subject. It seems to me a particularly sad attempt by the member for Flinders to convince himself that he did not sell his soul when he joined the attempt to frighten the Australian people and mislead them about the effects of the carbon price. The member for Flinders seems to have entirely forgotten his previous decade's long commitment to pricing carbon, the purpose of which, as the member for Flinders well knows is to reduce carbon pollution. It is not an electricity tax; it is a price on carbon.

And the member for Flinders and those opposite know that the only reason why they like to use this phrase is because they are engaged in a scare campaign. They are engaged in a campaign of denying the way in which pricing carbon works. They do not want to read what the OECD says about this. They do not want to read what the IMF says about this. They do not want to accept what economists around the world say about this, which is that pricing carbon is the least-cost, most efficient way of reducing carbon pollution and, when put together with a comprehensive package of complementary measures, as our government has done, that is the way in which we should be going about reducing carbon pollution.

We have an opposition here that has spent years chipping away at the confidence of Australians—making them fear for their jobs; seeking to make Australians feel economically insecure; making knowingly false claims about the impact of the carbon price on jobs and on prices. And they should be ashamed of themselves. We should be hearing an apology from the Liberal Party, not this continued bluster and deceit about the carbon price.

Their scare campaign has, of course, had some impact on some people's confidence about the future. It has an impact on how comfortable Australians feel about their place in the world, and that is, of course, what the Liberal Party intends. But this scare campaign is based on untruths. It is a scare campaign that has no basis, and it is a scare campaign that has now been exposed.

We have had a carbon price in force in Australia since 1 July this year. It is now some four months since that happened. It has been long enough for the first quarter of results from the consumer price index and the Australian Bureau of Statistics to come through, and we can now see that this scare campaign is without basis. If the Liberal Party were a business, the ACCC would have hauled them off to court long since for false and misleading conduct.

But of course the Leader of the Opposition has a completely cavalier attitude to just about everything. He has certainly got a cavalier attitude to the truth, as have his colleagues. He has certainly got a cavalier attitude to economics. And we know, from what the member for New England has told us in this House, that the Leader of the Opposition, when he begged—begged!—for the vote of the member for New England, said he would do anything to become Prime Minister, and we can only assume from this that he will always put himself before the interests of working people, and always put himself before the interests of Australians, no matter what.

We have this opposition making more false claims about the impact of the carbon price on prices and jobs, but the only risk to the jobs of ordinary Australians are the Liberal Party, the opposition leader, the member for North Sydney, Senator Bernardi—the whole ratbag crew of them. Just ask Queenslanders about Campbell Newman—another part of the Liberal Party—and what he has done to jobs and services in that state, or the callous way in which he has gutted the Public Service, destroyed key services, and thrown people on the scrap heap. Or ask Victorians about the supposedly enlightened Liberal moderate Ted Baillieu and his gutting of the TAFE sector, costing jobs and robbing young people of a secure future.

It is extraordinary to see this opposition bring on a debate on the impact of the carbon price on electricity prices today, because only yesterday we had the welcome news, in the latest ABS bulletin, about the actual increase in prices across the board—and I include in that electricity prices—for the year to date. The year-to-date rise in prices for working families across Australia was just one per cent, and that is according to the selected living cost indexes. The most recent CPI figure that we have had was 1.4 per cent in the September quarter and two per cent over the year to September. Those opposite do not like to hear those figures, because they have been running this false campaign that said that prices were going to go up and up and up and up because of the carbon price coming in on 1 July. Well, we have seen that that has not happened.

As to the particular matters that have been raised by the member for Flinders today about electricity prices: of course, it is true, as predicted by the Treasury modelling, that there has been an increase in electricity prices, and that is included in those most recent figures. That is the most recent CPI figure of a 1.4 per cent rise in the September quarter. But when you get to unpick it, you see that higher electricity prices contributed 0.3 percentage points of that 1.4 per cent CPI increase—less than a quarter of the CPI rise. It is wrong—but we should not be surprised, given their conduct over the last couple of years—that the coalition attributes the entire electricity price impact reported in the September quarter CPI to the carbon price. That is not—

Mr Hunt interjecting

Well, I am very pleased to hear from the member for Flinders. One could have been forgiven for thinking, from the way he has been talking, that he was seeking to do that, but it is a welcome concession—a welcome and refreshing turn to a bit of accuracy from the member for Flinders—if he says that it is not all to do with the carbon price, because that is the fact. It is the fact that it is not all to do with the carbon price. And it was also refreshing—and here is another concession—to hear, in the speech of the member for Flinders that we have just heard, that network costs are in fact responsible for a large part of electricity prices, and not just over the 2½ year period that the member for Flinders was talking about. Over the last five years it has been the network costs: what the Prime Minister has described as gold plating—these excessive rises in electricity costs, all of them predating the introduction of the carbon price on 1 July. I am talking about the more than 50 per cent rises over the last five years in electricity costs. None of them could possibly have had anything to do with the carbon price, because it only came in on 1 July. This attempt by the opposition to roll into the carbon price an impression of rising prices in electricity needs to be unpicked and needs to be laid bare. Those price rises over the last five years have got nothing to do with the carbon price; they have everything to do with gold plating of our electricity networks by the states and expenditure on poles and wires, on network infrastructure.

The Prime Minister has remarked on electricity prices that have risen dramatically over the last years prior to the introduction of the carbon price. The Prime Minister said this:

At the heart of all this is a simple market design problem: a clear regulatory incentive to overinvest in infrastructure and pass on costs to consumers.

This is not the view just of the Prime Minister. It is not the view just of the government alone. Just last month, on 18 October, the Productivity Commission stated in its draft report on electricity regulatory frameworks:

Spiralling network costs are the main contributor to these increases, partly driven by inefficiencies in the industry and flaws in the regulatory environment.

The Chairman of the ACCC, Rod Sims, has made very similar remarks, and of course he has the experience and expertise to know, because he came into this job having been the chair of IPART, the New South Wales price regulator.

It is also worth noting—and I welcome them—the public statements made today in an opinion piece in the Daily Telegraph by the New South Wales Minister for Resources and Energy, Chris Hartcher, who clearly has not read the script the federal Liberal Party is working to. He wrote an opinion piece about electricity price rises. I read this and read it again and I have carefully checked it. Not once does he mention the carbon price in his article. Instead he talks about network costs, gold-plating and investment in poles and wires. He said:

With the cost of poles and wires making up a significant component of power bills, my aim is for power price rises to be limited at, or below, cost of living.

It is refreshing to hear a member of the Liberal Party talk about what the real pressures on electricity prices are rather than the imaginary carbon price scare campaign we have had now for years and years in this place. I will say again: Mr Hartcher, a Liberal who is actually prepared to engage in a real debate about why electricity prices might have risen, said this in his opinion piece today in the Daily Telegraph:

Everyone agrees that something has to be done about electricity prices and energy reform is something all levels of government must work together to deliver.

Hear, hear! It is a pity Mr Hartcher is not part of the party sitting opposite here, because then we might hope to have some real debate about why and how electricity prices have risen in the way that they have and how we can get to a situation where, in the interests of Australian consumers, those prices might at least be paused or reduced.

Surprisingly, there are some other Liberals who do not seem to be using the script provided by the Leader of the Opposition and to which the member for Flinders spoke here. In response to the Senate inquiry into electricity prices, released today, coalition senators have been very measured. The report focuses on the real drivers of and the solutions to electricity price rises. It runs for about 200 pages. The coalition senators have supported this analysis. They have not dissented from the view that electricity price increases are due to factors that include:

… electricity markets and market power, business and investment issues, technical and reliability requirements, and policy and regulatory settings.

One never hears of this from the Leader of the Opposition or from the member for Flinders, but the difference between the modest rises in prices from the carbon price, which of course are compensated for through our household assistance package, and the unsustainable and dramatic rises that have been caused by regulatory failure is absolutely clear. The difference is not only that we have provided household assistance to nine in 10 Australian households; it is that we need the carbon price to reduce our emissions. Before the member for Flinders signed up to the Leader of the Opposition's scare campaign, he too knew that and was prepared to say so.

A carbon price is the most efficient way to cut carbon pollution and it contrasts very dramatically with the fig leaf of a policy of the opposition that was advanced in the first week of February 2010 and has been rolled out intermittently and tokenistically since then. It is called 'direct action', I believe. Not one word of it has been changed since February 2010—not in response to any circumstances that have changed in the world and not in response to anything that might have happened in Australia. It is a plan that will cost households $1,300 per year. It gives taxpayers money to the largest polluters in the hope—not with any compulsion, but just in the hope—that they might perhaps reduce emissions. I say again: the carbon price is the most effective way to reduce emissions and it is the least costly. It is far more effective than the direct subsidy policies we see from the opposition.

What the opposition needs to realise is that this is the future. This is the way in which the world is headed. By next year, 850 million will be living in a country, state or city with an emissions trading scheme. It includes countries like the United Kingdom, Germany, France, Sweden, Norway, New Zealand, Switzerland, the United States, where it is operating at a subnational level, Canada and Brazil—

Mr Van Manen interjecting

We hear this nonsensical distinction being made by those opposite about 'economy wide'. California is the eighth biggest economy in the world. Those opposite do not want to acknowledge that. It has an emissions trading scheme that is going to commence on 1 January next year. It is an emissions trading scheme that is remarkably similar to the scheme that we are introducing here in Australia, complete with a carbon farming initiative offset scheme that is very like ours. Korea's will also commence in 2015, and the details of the Korean scheme are going to be published on the 15th of this month. Countries like Turkey, South Africa, Thailand and Chile are working on developing carbon pricing schemes. (Time expired)

3:51 pm

Photo of Darren ChesterDarren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | | Hansard source

It is with a deep sense of sorrow that I join this debate. I feel sorry for the Australian people, who have had this carbon tax imposed on them without any chance at all to vote on the merits of the policy. They have had enormous increases in their electricity and gas bills—nine and 10 per cent imposed on them in the first year alone by a government that gave them no chance whatsoever to decide whether they actually supported the policy. I feel sorry for Australian business owners and farmers, who have incurred the extra energy costs, making them less competitive with their international trading partners.

You might find this hard to believe, but I also feel sorry for those opposite—those who are the true believers in the Australian Labor Party, the ones who are still committed to standing up for the battlers, the ones who are interested in fiercely representing the interests of the blue-collar workers and are still interested in helping those in the community who are less fortunate.

I feel sorry for those opposite, because their grand old party has been led down a path to political oblivion by a leadership team that lacks judgement and lacks political conviction beyond its own survival. I get the opportunity, as other members on this side do, to move around my electorate a lot. I speak to a lot of blue-collar workers. Many of them have been union members. Many of them are involved in Latrobe Valley power stations. They tell me they feel absolutely abandoned by the Australian Labor Party. Latrobe Valley power station workers have been facing the uncertainty over the last two years of this government's Contract for Closure policy. What they asked me during that whole debate was why this Prime Minister doesn't fight for their jobs like she fights for her own job. That is what they say to me; they ask, 'Why doesn't she fight as hard for my job as she's fought for her own job within her own team?'

So it has been up to me and my colleagues, like the member for Flinders and others in the coalition, to fight to stop the Contract for Closure policy on their behalf. The reason we fought so hard in relation to that policy in particular is that it is about protecting jobs, about protecting blue-collar workers. It is also about reducing the cost of living for all Australian people.

I just have a message for the Prime Minister and her cabinet, and I mean this in all sincerity: I can tell you now that the blue-collar workers who used to support the Australian Labor Party in the Latrobe Valley have had an absolute gutful of being vilified and being called 'big polluters' by this government and the Greens. They have absolutely had a gutful of being told what jobs they can have and what jobs they cannot have, and they have had a gutful of listening to this Greens mantra, which is being preached by inner-city MPs who have absolutely no understanding of life in regional Australia. They are angry; they are still angry. Those opposite might want to console themselves with a Newspoll bounce this week, but let me assure them that they are still out there waiting for you; they are angry and they are waiting for you.

The Contract for Closure policy, as part of the carbon tax policy, was always going to force higher electricity prices and energy prices across the board, and that is what we are seeing. It was always going to force the switch to more expensive forms of power generation, making it tougher for Australian businesses, making it tougher for Australian families and also making it tougher for Australian pensioners and those on low incomes.

This matter of public importance debate today is a critical discussion for the House because it reveals the arrogance of the modern Labor Party. The previous speaker really typified my concerns with the modern Australian Labor Party. This party has become so out of touch. It has no interest in the issues that actually affect regional communities. But those on this side of the House are not surprised by that. We are not surprised that the ALP has no interest in regional issues, because there is not a single member of the Labor cabinet who actually lives in regional Australia. I believe that, to have a passion for regional Australia—to actually care about the future of regional Australia—you have to live amongst us; you have to live and breathe and work amongst the people of regional Australia. There is not a single cabinet minister who is completely committed to standing up for the interests of regional Australia. So we should not be surprised that we do not have anyone in the Labor cabinet advocating on behalf of regional communities.

One of the great myths of the carbon tax debate has been this claim by those opposite that only the so-called big polluters pay the carbon tax. But what we know now—the lived experience of the carbon tax—is that it has forced up energy prices on every household, on every business, on every factory, on every sporting club, on every hospital and on every aged-care and childcare facility. And every Australian knows it, except those opposite, who are still out here every day parroting the party lines fed to them by their party apparatchiks.

Those opposite also like to claim that somehow our opposition to the carbon tax—our anti-carbon-tax campaign—is running out of puff. I can tell you now that the winds of change are still blowing right across Australia, and every member on this side remains committed to fighting this battle all the way to the next election. Those opposite would like to believe that the community has moved on, that no-one is worried about it anymore. Well, if no-one is worried about it anymore, why not test the theory? If this government is so confident that no-one cares anymore about the carbon tax—

Photo of Nola MarinoNola Marino (Forrest, Liberal Party) Share this | | Hansard source

Go to an election.

Photo of Darren ChesterDarren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | | Hansard source

Go to an election! That is one way to test the theory. We could go to an election. If the Australian community has really moved on, what is stopping us from going to an election?

Photo of Janelle SaffinJanelle Saffin (Page, Australian Labor Party) Share this | | Hansard source

You're dreaming!

Photo of Darren ChesterDarren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | | Hansard source

The member for Page says I'm dreaming. I am dreaming—dreaming that anyone in this government would have the decency to actually let the Australian people in on their dirty little secret that they always planned to have a carbon tax. If this Prime Minister is so arrogant and out of touch—if she actually thinks the Australian people do not care anymore about her fundamental breach of trust—then let us test the theory. Let's have the election. It would give the Australian people a chance to finally have their say on whether or not they want to have a carbon tax, which this Prime Minister explicitly ruled out prior to the last election.

I can assure those opposite that no-one in the community has forgotten that fundamental breach of trust. It goes to the core of every bit of anger that is still there in the community, because they know they simply cannot trust this Prime Minister or anything she says. This is the Prime Minister who said boldly before the last election, 'I rule out a carbon tax,' and, 'There will be no carbon tax under the government I lead'. Of course, the Treasurer himself was complicit in this deceit, because he said that the claims about a carbon tax were 'hysterical'. They were perhaps not as hysterical as his claims about returning the budget to surplus this year—but I have digressed.

I said at the outset that I feel sorry for the true believers in the Australian Labor Party, and I do save my greatest sorrow for those who are offended by the deal the Prime Minister did with the Australian Greens. How they must hang their heads in shame in this place knowing that they are in power with the Australian Greens—getting into bed with the Australian Greens for a grubby political deal must tear at the heart and soul of the true believers in the Australian Labor Party.

Finally, and I suppose in the spirit of the Spring Racing Carnival, I was inspired to review the list of previous Melbourne Cup winners—and I can assure the House that the list of Melbourne Cup winners is a rich treasure trove of metaphors for the Labor cabinet. We had the minister himself—

Photo of George ChristensenGeorge Christensen (Dawson, Liberal Party) Share this | | Hansard source

The government that stops the nation!

Photo of Darren ChesterDarren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | | Hansard source

The government that stops the nation—I love it! The minister himself reminds us of Comedy King, who won in 1910. As he stood here joking about the carbon tax, he was hoping voters were thinking, 'It's just a carbon tax; What A Nuisance'—the winner in 1985. Then, of course, there is the member for Maribyrnong—or Rising Fast, as he is known; he was the winner in 1954. He displayed his might and power to destroy the member for Griffith. Ominously—

Photo of Greg HuntGreg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | | Hansard source

I am waiting for Light Fingers.

Photo of Darren ChesterDarren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | | Hansard source

Oh, we will get to Light Fingers, don't worry. Ominously, though, the member for Griffith is the Think Big of the Labor Party—ominous because he saluted twice. So perhaps the grey stayer from Griffith has another run in him yet. Of course—and the member for Flinders has been waiting for this—there is the Treasurer, old Light Fingers himself, a winner in 1965. But, with a little bit more research—and in light of his mining tax flop—perhaps he is Subzero. Only this Treasurer could deliver a tax that delivers zero—a winner in 1992 but not such a big success in 2012. I do like that—the government that stops a nation.

But the metaphors are everywhere to describe this dysfunctional government and its carbon tax. I will leave it to others to decide which of those opposite has the title Windbag—the winner in 1925.

Opposition members interjecting

Yes, there was Big Red and White Nose, but I am not going there! All I can say is that, when the minister stood in this place and tried to describe our approach to the carbon tax as something akin to the Fine Cotton affair, I was reminded that the Fine Cotton affair looked like a picnic race meeting compared with the carbon tax con, which really is the Melbourne Cup of all deceits. This carbon tax should be sent to the knackery. I thank the minister for his inspiration today.

This is a government that has made a lot of promises to the Australian people. The Prime Minister made a promise before the last election that there would be 'no carbon tax under a government I lead'. This Prime Minister has also made promises in relation to the National Disability Insurance Scheme and the Gonski review, yet we have not had one announcement from the Prime Minister on how she is actually going to pay for any of this. This is a government that is running out of excuses, running out of ideas, and I feel sorry for the Australian people that they will not get their chance, probably until the next Melbourne Cup, to finish their race.

I thank the House for the opportunity, and let me assure those opposite that no-one on this side has run out of puff when it comes to our campaign to destroy the carbon tax.

4:01 pm

Photo of Kelvin ThomsonKelvin Thomson (Wills, Australian Labor Party) Share this | | Hansard source

Since we have been on racing metaphors this afternoon: the Liberal Party and the Nationals are certainly late entrants when it comes to expressing concern about electricity price rises. This is an issue which I raised in the House two years ago. Let me quote from that speech:

Over the past 10 years, electricity prices have almost doubled across Australia’s eight capital cities. The most populated cities, Melbourne and Sydney, have seen the highest price rises, and prices have more than doubled in the past 10 years. In real terms, across Australia, electricity prices have increased by over 40 per cent over the 10 years. Melbourne prices have risen by over 50 per cent in real terms—52 per cent. So have Sydney’s—51 per cent. In Brisbane, real electricity prices have gone up by over 38 per cent, and in Adelaide real electricity prices have gone up by over 26 per cent.

All of those things happened over the course of the 10 years well prior to the introduction of the carbon price.

You might think that more people, a growing population, would lead to economies of scale and to lower electricity prices, but you would be wrong. Rising electricity prices do not just show up on the household bills; they show up in the rising cost of electricity per kilowatt hour. Across Australia the average cost of electricity per kilowatt hour rose, in the decade prior to 2010, from 12.69c in 2002-03 to 19.65c in 2009-10, which was a massive jump in just seven years; and Victoria, the most densely populated state, had the highest cost of electricity per kilowatt hour at 22.54c, a rise on 18.72c in 2010 prices back in 2002-03. So, instead of rising population causing lower prices, it leads to a need for extra infrastructure and therefore higher prices. And the more crowded a city becomes, the higher the cost of doing business, congestion costs kick in, and just maintaining electricity infrastructure becomes more expensive. In Victoria, electricity and water bills were up between 45 and 60 per cent from 2005, gas was 20 per cent higher; and from 2005 to 2010, prices in Sydney jumped over 60 per cent; and in Brisbane by over 50 per cent.

The significance of those remarks I gave in 2010 is that none of that had anything to do with the carbon price, and the Liberals and Nationals had nothing to say about the issue at the time; they are completely missing in action on the question of electricity prices, except when it might serve a political purpose—that is, to attack a Labor initiative.

Last year I pointed out that, in South-East Queensland, the then population of 2.9 million was projected to grow to 4.4 million in just 20 years, and that the electricity company Energex has a five-year funding proposal to meet this forecast growth, which includes $5.78 billion for capital investment and a further $1.63 billion to maintain and operate the network over the next five years. So the outlook for electricity prices with that growing population in South-East Queensland is clear: they are heading up. And the opposition seeks to use rising electricity prices for their own agenda, to blame the carbon price, but it is untrue—and mischievously untrue—to assert that rising electricity prices are a consequence of the carbon price. The recent CPI result reflects otherwise.

The modelling published by the government estimated that electricity price rises attributable to the carbon price would be 0.3 percentage points to headline inflation in 2012-13. In the September quarter results, the increase in electricity prices, both from the carbon price and from price increases from state regulators, that are unrelated to carbon pricing, contributed 0.3 percentage points to quarterly inflation, which indicates that the impact of the carbon price was well within the Treasury estimate.

So we conclude from this that the major driver of electricity price rises has been investment—and, let me say, sometimes over-investment—in electricity networks, the poles and wires, much of which benefit state governments through regulated rates of return on their assets. The Productivity Commission stated in its draft report on electricity regulatory frameworks on 18 October, just a few days ago, that 'spiralling network costs are the main contributor to these increases, partly driven by inefficiencies in the industry and flaws in the regulatory environment.' Those inefficiencies have meant that increases of around 50 per cent have occurred in the last four year—well before the carbon price was introduced on 1 July.

Given that, Mr Deputy Speaker, I welcome recent statements by the Prime Minister on the causes of rising electricity prices and the debate that we are now having about the gold-plating of electricity networks. An example of that occurred in my own electorate at the Brunswick terminal station, where the cost of the upgrade has blown out far beyond what was reasonable or initially possible.

The fact is that pensioners and household consumers foot the bill. The more that power companies spend, the more money the power companies receive. I want to urge the electricity pricing regulatory authorities to consider the hardship that the rises over the past decade have caused and to think about pensioners who are struggling to make ends meet when they consider applications for price rises.

The recent CPI September quarter figures showed a 1.4 per cent increase from the carbon price compared to a 3.8 per cent increase when the coalition's GST came into effect in the September quarter of 2000. That is a much reduced impact compared with the price effects of the GST. The CPI figures confirm Treasury modelling. The Commonwealth Bank economist Michael Blythe said that the CPI figure showed Treasury's modelling may in fact be an overestimate rather than underestimate. All along the government has been upfront about the carbon price and electricity prices. The Treasury modelling was that the carbon price would increase household electricity prices by 10 per cent, $3.30 a week on average. Electricity regulator determinations have confirmed this. In some cases, the carbon impact has been less than Treasury's estimate. To meet this impact, the government has provided $10.10 per week on average to households, so it is not just a question of the impact on electricity prices. We have been up front about that, but there is also the household assistance package, including the trebling the income-tax-free threshold and the like.

It is regrettable that earlier this month the opposition leader made misleading claims about the electricity bill of a Western Australian pensioner. He told the House that there was 'an $800 increase in just one bill, of which 70 per cent is due to the carbon tax'. But when we examined the bill it was clear that the proportion of the increase of the bill due to the carbon price was a fraction of the claimed 70 per cent. Frankly, this treats pensioners disrespectfully as nothing but fodder for a political scare campaign. The Chair of the ACCC has made it clear that the massive increase in electricity costs has been driven by electricity networks and not carbon pricing. He and the Productivity Commission have made it clear that the regulatory framework for controlling the prices on the electricity networks has increased prices by more than should have been the case.

In conclusion, the opposition holds out a series of pipedreams to the Australian people that if elected they will get rid of the carbon price and that they have alternative ways of cutting carbon emissions. They do not. What they really plan to do is to kick the carbon can the road and leave it for future generations to deal with. They want to wish climate change away. Yet just this week we have seen a stark and brutal reminder that we do not have the luxury of sitting on our hands. Hurricane Sandy has caused terrible devastation in the Caribbean and along the east coast of the United States and loss of life. There has been flooding of coastal communities. New York's subway is out of action. Manhattan and New Jersey have been devastated and brought to a standstill by the worst storm in memory in that part of the world.

Climate scientists are very clear in telling us that this is not a coincidence. They are clear in telling us that if global greenhouse gas emissions continue to rise we will bequeath to our children and our grandchildren a world of Hurricane Katrinas and Hurricane Sandys, of Cyclone Yasis, of Lockyer Valley floods and Black Saturdays. Those opposite are prepared to take that kind of risk rather than put a price on carbon—a price offset by a household assistance package that has tripled the tax-free threshold and fully compensates the majority of households. (Time expired)

4:11 pm

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

Before I start, I would like to acknowledge the members of Sikh community here in the gallery today. I thank you for your interest. I am sure that many of you up there are suffering from the carbon tax that this government has inflicted upon you. Thank you for coming this afternoon.

I would like to add my contribution to today's matter of public importance on the subject of the adverse effect of the carbon tax on electricity and gas prices. What has been the effect of this tax, a tax that our own Prime Minister promised before the last election not to introduce? We must never forget her exact words: 'There will no carbon tax under a government I lead.' And yet here we are debating that carbon tax. Let us not forget, either, what the Treasurer said before the last election. He said: 'No it's not possible that we're bringing in the carbon tax, that is a hysterically inaccurate claim being made by the Coalition.' Here we are debating the carbon tax, when it was hysterically inaccurate claim that they would bring it in, according to our Treasurer.

To start with, what has been the effect of this tax? The most recent release of inflation figures issued by the Australian Bureau of Statistics details the largest ever increase in electricity prices since modern records have been kept. That is what has happened in the last quarter. Everyone knows that the majority of that increase is because of the carbon tax; the carbon tax is largely responsible.

Photo of Mike KellyMike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence) Share this | | Hansard source


Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

The member for Eden-Monaro very well knows that the carbon tax is largely responsible for that. We would not have had these large electricity increases without it. It is very sad to see this complete and utter denial by members of the government. They come into this chamber and they refuse to acknowledge the harm that their carbon tax is doing to the Australian population.

The other thing that we need to remember is that this carbon tax is just getting started; it is just warming up. It started at $23 a tonne. But this poisonous and toxic tax goes up every year. It will go up to $37. And in fact by the year 2050 the carbon tax will not be $23 but will be $350 a tonne. That is what the tax does: it goes up; it escalates every year. If you want a vision of the future under this Labor government and under their carbon tax, picture a world where your electricity bill goes up every single time you open it up. That is what this carbon tax will do: it will make electricity prices go up forever.

Think about some of the things that previous generations have taken for granted, such as the ability to heat their homes in winter. Under this governments policy, things like that will become a luxury for future generations of Australians. They will not be able to heat their homes in winter because of this carbon tax.

We hear members of the government come in and say: 'It's all fine, the carbon tax is going well. Don’t worry about it. Everyone close your eyes and go back to sleep. Can you believe that? This is the same government that told us we would never have a carbon tax. Listening to this government you would think they are living in a parallel universe. They simply do not have a clue about the damage they are doing to households and families.

You should be listening to welfare groups, which are warning that some of the poorest people in our society can no longer afford to pay their electricity bill and they can no longer afford to turn their heater on in winter. That is the effect of this carbon tax. I know of aged pensioners who are going to bed in winter at 5 o'clock simply because they cannot afford to heat their house at night. That is what this carbon tax has done, and the problem is only going to get worse.

This government should listen to the words of former New South Wales Labor Premier Kristina Keneally, who said of the Carbon Tax:

Even ALP branch members ask me in dismay, 'Why did she do it when she said she wouldn't?'

"Reducing, lessening the impact, or possibly, revoking, the carbon tax: if she—

referring to the Prime Minister—

stays, it is the one Act of Contrition she needs to make.

…   …   …

"In doing so, she would tell the people of Australia "I am sorry, and I am listening to you."

But we are not hearing sorry from this government; they are just denying it. We are not even hearing that they are listening to the public about the harmful effects of this carbon tax.

There is also the issues of the effects this is having on business in our community. We know those on the other side, completely dominated by the trade unions, have absolutely no idea of the pressures that this tax is putting on business, especially small business. Our global competitors are laughing at us. We are the only nation that is putting on a tax of this extent. It is putting our nation at a competitive disadvantage. While we are in time for Melbourne Cup metaphors, it is putting weight in our saddlebag. It puts us backwards. It makes us less competitive. It reduces our productivity. It is bad for our nation.

But what we have seen is not only a complete denial but a dangerous commercial naivety from those running this government. We saw it only this week with the mining tax, a mining tax that was personally negotiated by none other than the Prime Minister and the Treasurer of this country. They sat down and they were played off a break by the mining companies. It looks like this great mining tax that was supposed to raise $9 billion, then it was $4 billion, and then it was $2 billion. We now know it might not even raise a brass razoo—not even one cent. You can just imagine our Prime Minister and Treasurer, with their commercial naivety, trying to negotiate that with business. It just shows that they do not have a clue.

The commercial naivety of this government was demonstrated by the comments of our Prime Minister about what small business should do when they face these price increases from the carbon tax. This is the message the Prime Minister gave to small business, and I hope they are listening so they see how little idea our Prime Minister has:

… you would be in a position to pass that onto the people who buy services from your business and we have expected that those costs would be passed on …

What dangerous and naive commercial incompetence. Small business cannot pass these costs on, and not only small business but also exporters. How are exporters in Australia meant to pass those costs on when the carbon tax is charged on the goods they produce but their overseas competitors do not pay that carbon tax? It simply puts our the people of our nation that we rely on—the producers, the people that underwrite our prosperity, the people that we need to fund everything in the future—at a competitive disadvantage and brings us all down. But this government simply does not understand.

At least around the world they are starting to wake up. Only this week in the UK John Hayes, the UK government's new minister for the Department of Energy and Climate Change said:

We can no longer have wind turbines imposed on communities. I can’t single-handedly build a new Jerusalem but I can protect our green and pleasant land.

And he stirringly declared:

I’m saying enough is enough.

And that is right—enough is enough.

The next election will be a referendum on the carbon tax, but it will not only be a referendum on the carbon tax. Everyone that is in the gallery and everyone that is listening today will have two choices at the next election. The first is Labor's carbon tax, which increases year after year, forever, and then morphs into an ETS. By 2050, under this government's plans, we will be sending $57 billion of the wealth of this nation overseas to foreign carbon traders. What will we get back for that $57 billion? A shiny piece of paper in a nice frame that says, 'We are permitted to emit carbon dioxide.' This government were talking today about funding the National Disability Insurance Scheme. They do not have a clue how they are going to fund it. How are we possibly going to fund it in the future if we have to send $57 billion, almost 1.5 per cent our GDP, overseas to foreign carbon traders? This election coming up is most important. It is very clear.

If the coalition wins this next election we will come into this parliament and, as our leader Tony Abbott has promised, on the very first sitting day we will introduce legislation to repeal this carbon tax in its entirety. (Time expired)

4:21 pm

Photo of Ed HusicEd Husic (Chifley, Australian Labor Party) Share this | | Hansard source

I see in the galleries, proudly, a number of representatives of Sikh Australians, drawn here from all over the country Waheguru ji ka Khalsa, Waheguru ji ki Fateh. It is very good to see you all here. We reached a milestone this week. for a while I have been grateful to receive bulletins from the Minister for Climate Change and Energy Efficiency helpfully correcting a number of inaccuracies that are being peddled in reference to the introduction of the carbon price.

Last Sunday, the 40th edition of this appropriately named bulletin, Abbott's absurdities exposed, was issues by the Minister for Climate Change and Energy Efficiency. It is not hard to see how we could reach 40 bulletins in such a short time. We have had all sorts of claims made about the impact of the carbon price: that it would lead to job losses; that it would lead to the absolute wiping out of towns; that assistance for small business would be impacted; that the strength of the economy would be crippled; and that the future cost of lamb roasts would skyrocket to $100. I love a lamb roast on a Sunday night but here we have those opposite suggesting that it is going to cost over $100 for a lamb roast. Unimaginable increases and impacts were being proposed by those opposite and more of the same have come from them during this debate.

The 40th bulletin was a special because the mover of this MPI occupied a special place in the Abbott's absurdities exposed bulletin. He had come up with a pearler. He had said, 'Every time you turn on the kettle, open the fridge, turn on the light, switch on the TV, you will be paying the carbon tax.' As usual he was going way over the top about what the impact would actually be. We have been upfront about the impact of the carbon price on electricity prices. Treasury modelling actually found that the carbon price would increase household electricity prices by 10 per cent. We have said that that would equate to about $3.30 a week, on average. The fact of the matter is that the determinations of the electricity regulators have exactly confirmed this. In some cases the carbon impact has been less than the Treasury forecast. So bear in mind that there has been an average increase of $3.30, and to meet the impact we provided $10.10 a week to average households.

Not content with that, the opposition claimed that the carbon price is driving up CPI—wrong again. In fact, higher electricity prices only contributed 0.3 percentage points of the 1.4 per cent CPI increase that was recently recorded: less than one quarter of the CPI rise. The fact of the matter is that rising network prices contributed to the increased electricity price rise so that not all of the 0.3 percentage points is due to the carbon price rise. There was a 1.4 per cent CPI increase in the September quarter figures and that compares to 3.8 per cent when the coalition's GST came into effect in the September quarter of 2000. The CPI figures basically confirm what Treasury said would happen. So we need to bear in mind that despite all the scaremongering it is always useful to go back to see what is happening in reality.

I have spoken broadly about what happened in relation to price impacts and inflationary impacts. What happened to larger and smaller business energy users? The Treasury said, as I have said, that electricity prices would go up by 10 per cent. That has been confirmed. Recent analysis by Big Switch Projects of larger business users demonstrated an average of 11 per cent due to the carbon price and they found that the impact of the carbon price for most businesses is at, or just over, 2c per kilowatt hour—again, smack in line with what Treasury was saying would happen.

What has also been happening with larger businesses is that many of the network companies have been increasing demand charges—by as much as 75 per cent—resulting in an overall bill increase of up to 53 per cent. Not one bit of these increases are caused by the carbon price. It is time those opposite recognise that the big thing that is driving price rises is the network prices. The network costs underneath—the way that has been structured—is what is driving those increases. We have been upfront about the impact. Those opposite have tried to turn a blind eye to the real driver of those increases.

People have talked a lot in this debate about the investment that is being made by transmission companies and distributors. This investment went way back into the last decade, where transmission agencies' distributors were saying that they had a 1960s and 1970s network that was trying to deal with modern power demand from households and businesses. If you compare most households now to households when the networks were rolled out, you would see that households now have air conditioners, plasma TVs, heat pumps for pools and hot water systems. Those things have transformed the way that energy is used in homes.

As much as they have had to update their network, the reality is that in greenfield sites those costs are instantly paid for by households and new homeowners when they move in. This is really about brownfields investment. That investment has occurred for ages, and the continued demand by distributors and transmission agencies to keep investing is rightly being called into question, because it is having a big impact on prices.

The other thing that has happened is that we have needed to address peak demand. There are a number of times in the year when electricity demand skyrockets because temperatures are over 40 degrees and households have air conditioners running for extending periods. That is driving demand through the roof. So we need to invest in alternative supply measures like gas fired power stations that can be brought on line quickly and then shut off, which costs money. Again, we need to find a way to change the nature of supply and find better ways to manage demand. And that is what our price on carbon is designed to encourage; it is not designed—as is the claim made by those opposite—just to drive down demand through increases in power prices. That is simply not the case.

To way to stop increases in power prices, if people opposite are concerned about it, is to turn to the state owned corporations managed by governments in New South Wales and Queensland and stop in their tracks any claims for increased power prices. If those opposite are concerned about power price increases they can do just that. Barry O'Farrell was elected in New South Wales off a promise to rein in cost of living rises. We have seen power price increases, water price increases and he has done nothing to stop those in their tracks.

To put all this into perspective, whereas network costs make up about $51 of every $100 you pay, the carbon price only equates to $9. I draw the House's attention to the Sydney Morning Herald back on 22 October. Saul Eslake, chief economist on Australia and New Zealand for Bank of America Merrill Lynch had cut his forecast for the headline CPI to 1.1 per cent for the September quarter with an annual rate of 1.6 per cent. He said:

I think the economy has absorbed the introduction of a carbon tax relatively easily, with less disruptive than the introduction of the GST.

The latter—the GST—truly was the great big new tax and he is absolutely right. If you compare the two, it is comparing apples with oranges. Stephen Walters, the chief economist with JP Morgan, expects the carbon price will exceed Treasury's percentage point increase but he reckons the worst has already passed. He points to the fact that electricity prices increased but the increase included network and other charges unrelated to the carbon tax. (Time expired)

Debate interrupted.