Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Hansard source

I may just respond to a couple of the things that the member for Wannon has raised. Firstly, shortly after the government announced the clean energy future package on 10 July I was at Point Henry smelter in Victoria with representatives of Alcoa who, in fact, welcomed the government's policy announcement and the fact that the government had taken into account issues that they had raised. Specifically, of course, in the aluminium industry an average of 94.5 per cent of their carbon price liability will be offset in the first year of the scheme by the issuing of free carbon units, or free permits. Along with some other important changes that the government made to policy prior to it being announced on 10 July, Alcoa, certainly in their public commentary and in their observations to their own workforce—in fact, I spoke in the canteen with representatives of Alcoa and with a number of members of the workforce—indicated that their concerns have been met. That is an important thing to place on the record given the absurd hysteria that has just been recited by the member for Wannon.

Similarly in relation to the manufacturing sector—and the member for Wannon raised issues concerning the cost impost for small manufacturers—you have to bear in mind that the cost impact is, in fact, very modest in many businesses. The Treasury modelling, of course, indicates that the overall CPI impact is 0.7 per cent upon the introduction of the carbon price. Within that, electricity is modelled to rise around 10 per cent for households in particular. If we take that number and apply it to the current proportion of costs attributable to electricity for many businesses—and working with the Small Business Council and speaking to some other businesses, including an iron foundry—it is around two or three per cent of their total costs. Taking that figure and applying the Treasury modelling of a price increase for electricity, you are looking at a potential increase in the order of 0.2 per cent to 0.3 per cent in costs for many businesses. That is a manageable cost impost. Businesses which are not in the trade-exposed sector of the economy can pass through these costs, and it is the passing through of these modest cost increases that leads to the overall CPI increase. That is why the government has formulated a policy to deliver assistance to households. We are delivering assistance in the form of increases to benefits to meet those cost increases. For example, there will be a 1.7 per cent increase in the pension, with $250 to be paid in advance to single pensioners in May/June next year and, similarly, there will be a 1.7 per cent upfront payment to families in receipt of family tax benefits. These are the ways that the government is dealing with these cost increases and the overall CPI increase.

In addition, for the manufacturing sector as described by the member for Wannon, there is an $800 million Clean Technology Program which is a co-contribution grants scheme to assist businesses to improve their energy efficiency. All these issues are pertinent too to the dairy industry, which has been raised by the member for Wannon. ABARES analysis indicates that electricity costs are about 2.3 per cent of total farm cash costs. With the increase in electricity prices, that will translate to an increase in costs of around 0.23 per cent in total farm cash costs. The government has been through these matters with dairy industry representatives a number of times. We do not agree with all of their calculations of the cost impost, and these are some data that are important to inject into the debate.

We are very mindful that in dairy processing in particular there is a high level of electricity consumption. As a consequence of that, the government has formulated a $150 million program specifically for the food processing sector which will operate in the form of a co-contribution grant for dairy processors and others in the food industry to assist them to find efficient ways of reducing their electricity consumption—that is, to improve their energy efficiency. The government is committed to that program. It will help the industry. In discussions I have had with the industry, it has acknowledged that it will be an important contribution.

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