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

These bills—the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill and related bills—are about costs, they are about chaos and they are about the loss of control of Australia's electricity pricing system. The carbon tax is an electricity tax, the carbon tax was designed to be an electricity tax and the carbon tax is, sure as heck, operating as an electricity tax. As we speak, around the country, Australian families, Australian pensioners, Australian seniors, Australian farmers and Australian small business owners are receiving their electricity bills. Those bills are going up and up.

I want to address this latest set of amendments in three stages. Firstly, I will look at electricity costs—because that is the single biggest issue in Australia. When you go to kitchen tables, when you talk to families, when you visit the shops or when you speak to people in your electorate, at the surf club perhaps of an evening, the single thing—and this is the experience not just of myself but of all MPs on our side—which is raised most frequently and with greatest concern is electricity pricing. Shortly after people raise that, they will raise gas pricing.

The second thing I want to address is the chaos these seven bills represent. There have now been eight major changes in the 100 days since the carbon tax came into force. That chaos includes massive bailouts of some of the biggest companies in Australia. It includes changes to the lists of who actually has to pay the tax directly and who does not. It also includes the dropping of a solemn pledge to stick by the floor price—the Prime Minister had previously said that the floor price was critical to certainty. But what was critical three weeks ago is no longer critical.

The third thing I will address is the fact that we are giving control of our electricity pricing to Europe, to another country—and not to just one country but to an unelected set of officials in Brussels. This is not a situation we are making up; that is what these bills are doing. They are giving control of our electricity pricing to Europe.

So I will deal with costs, with chaos and with control—all the while remembering a very simple thing, the thing that causes Australians to shake their heads. They know that what is starting as a $23 price rises to a $29 price in three years; rises again, on the government's own modelling, to a $37 price by 2020; and multiplies 15 times to a $350 price by 2050. So what starts today at $23 increases at a massive rate. Eventually, we will have to pay an extraordinary amount offshore—$2½ billion in the year 2020 alone, rising to $57 billion by 2050—to buy foreign carbon credits. That represents 1½ per cent of GDP, or the amount of our defence budget at the moment. So we will be paying the carbon tax, which will be the equivalent of the defence budget and then, on top of that, we will have to buy another defence budget equivalent in foreign carbon credits.

So this system that is being put in place is massively and categorically unsustainable. No future government will abide by a system where the costs equate to a defence budget in domestic carbon credits and another defence budget in foreign carbon credits.

Then there is the real kicker: for all of this expenditure, it does not work. The carbon tax does not do the job. It does not reduce emissions. Australia's domestic emissions under the government's own modelling, under the Treasury's own modelling, will go up from 578 million tonnes per year in 2010 to 621 million tonnes in 2020. Emissions per person will rise by almost two tonnes each year, every year, between now and 2020. In other words, we have a tax that will be $36 billion over its first four years, a tax which will rise to the equivalent of a defence budget by 2050, matched by the equivalent of a second defence budget being spent on foreign carbon credits—and it does not do the job. It does not reduce our emissions, according to the government's own modelling. How can it be that we put in place the world's broadest and highest carbon tax, noting that the Productivity Commission said that no other country has an economy-wide carbon tax and it does not work? It does not do the job. It does not reduce domestic emissions. They go up, not down. That surely is the definition of a massive, national own goal, because, even if you accepted that it was a price that we should pay, you would want it do the job. But it does not.

This is a significant issue, and I will give you an example from my own electorate. I have a letter here from John Watson, who owns the Copper Motel Rosebud. He has given me permission to read out his letter to the parliament. Mr Watson wrote to me, saying:

I would like to bring to your attention my latest electricity bill from Momentum energy and its current carbon charge.

…   …   …

… none were able to give me a carbon price for my bill as it is a variable between states and also its not a regulated price in Victoria.

I am astonished to find that my current charge on my $1380 monthly usage bill has a $320 (a %23) increase/charge.

That is because of the carbon tax. So this average, small business—and this is the case for small businesses around the country—is seeing a 23 per cent increase in its electricity bill. Mr Watson goes on to say:

I am a small self run motel in rosebud and electricity is now my 2nd biggest overhead after my rent. So any increase is a direct removal of funds from my pocket and also now has resulted in decreasing hours I can offer my casual cleaner.

I will repeat that:

… has resulted in decreasing hours I can offer my casual cleaner.

This is the carbon tax in operation. The electricity bill for the Copper Motel Rosebud increased by 23 per cent. Mr Watson has encouraged and, indeed, entitled me to table both his letter and his bill in the House so they can be available to all. As he was saying, this 23 per cent increase has a huge impact on his revenue. As a result, he is in the unenviable position of having to reduce the number of hours he can give his casual cleaner. Around the country, we are going to see that there is a real-world impact from the carbon tax.

The carbon tax is not about big business; it not about some mythical group of 500 companies, or 315 at the last count. It is about electricity prices, and this is an electricity tax—an electricity tax. It also happens to be a gas tax and a refrigeration tax, but at its core, at its heart, in essence, it is an electricity tax.

Beyond the costs faced by this one particular business, what are the consequences of the carbon tax on electricity prices right around Australia? In New South Wales, the public is facing an 18.1 per cent average price rise in their electricity bill. Whether you are in Coffs Harbour, Campbelltown or Camperdown, you are facing on average an 18.1 per cent price rise in your electricity bill. Of that, 8.9 per cent is carbon tax, plus GST of course—although the government was at great pains to imply, in the first two weeks of the carbon tax, that GST was not paid on the carbon tax. It is. It is paid on the retail phase, and that means that it is in fact illegal for a retailer to not pass on the carbon tax. Far from companies engaging in price-gouging if they add GST to the carbon tax, it is their legal duty and obligation to do so. So in New South Wales there is an 8.9 per cent increase because of the carbon tax, or roughly 50 per cent of the bill increase.

We then go to Western Australia—and this was discussed in the House today—where there is a 12.6 per cent increase in electricity prices on average, of which 9.1 per cent, or 70 per cent, is because of the carbon tax. This is what the government sought to deny at the dispatch box today. The minister for climate change and the Prime Minister tried to belittle the impact of the power price rises faced by mums and dads, pensioners and seniors, small business owners and farmers across the country. The truth about power price rises in Western Australia is very simple: on average, 70 per cent of the rise in electricity costs this year will come from the carbon tax. And that is no surprise. That is what it was designed to do, that is what it was intended to do and that is, surely as night follows day, what it will do.

We then go to Victoria, where approximately two-thirds of the increase in electricity costs this year will be because of the carbon tax.

We then go to the ACT where we find that 14.2 per cent of a 0.7 per cent price rise or 75 per cent of the total price rise in electricity comes from the carbon tax. Then we go to Queensland. In Queensland the carbon tax will be between 80 and 100 per cent of the power price rise because, for the vast majority of retail tariffs, the Campbell Newman government froze power price rises. The only thing they could not control was the carbon tax. That had to be added to the bill.

So, when the Prime Minister talks about gold plating being the reason behind power price rises as a consequence of Liberal or LNP governments around the country, she might perhaps look at Queensland because in that state the LNP froze the vast majority of retail tariffs. As a consequence of that, 80 to 100 per cent of the electricity price rise for Queenslanders this year is a direct result of the Prime Minister's breach of faith. The Prime Minister said no carbon tax. Unfortunately for Queenslanders there is a carbon tax. The difference is this: Campbell Newman said he would freeze retail tariffs and he did; the Prime Minister said she would not impose a carbon tax but she did. That is a fundamental difference to the lives of people in Queensland and it is a fundamental difference to the cost of living for people around Australia. Let us be clear: these prices rises are real, they are significant, they are landing now and, for a government that is in denial, they might perhaps want to listen to talkback radio around the country to discover what people are discussing because Australians are discussing their electricity bills and Australians know that those electricity bills have been overwhelmingly driven in the current year by the Prime Minister's carbon tax.

We are also very keen to do something in relation to taking the pressure off network charges, but let me also say that it was only two years ago, in October 2010, in a speech to the Australian Industry Group, when the Prime Minister did not call for network spending to be reduced; she attacked underinvestment in network spending. The Prime Minister of Australia attacked underinvestment in network spending and called for more expenditure. That is what has happened: there has been more expenditure but the person in this parliament who demanded more expenditure was the Prime Minister of Australia. So two years ago the problem was underinvestment, according to the Prime Minister; today the Prime Minister says there is overinvestment in network expenditure. The problem is that everyday is year zero for this government. Every day they forget what they said or expunge what they said the previous day. 'No carbon tax: we didn't really mean that. Underinvestment in network expenditure: we didn't really mean that. Electricity prices: we didn't really mean that we would take the pressure off them.' That is the problem—everything is year zero.

That then brings me to the fundamental flaw in legislative process and here we have the chaos of the carbon tax in action. We already know that it is causing costs to Australian families but the chaos is set out in eight major changes in 100 days. Firstly, we had the bailout of Energy Brix and Alcoa on the eve of the carbon tax. Two days before the carbon tax came in there was $40 million to Alcoa and $50 million to Energy Brix. How could it be that with two days to go before the carbon tax the Prime Minister suddenly had to bail out two significant Victorian companies? The answer is very simple: these companies were in trouble and unless they got the money, serious consequences were going to flow. They also had to bail out One Steel, which is now Atrium, to the tune of $64 million. The government likes to talk about Whyalla. The $64 million question for the government is: why did the ALP spend $64 million bailing out One Steel which has, as its centrepiece, the Whyalla Steelworks? The answer is very simple: we know, they know and the Australian people know that that steelworks would have been in dramatic trouble had there not been a special $64 million bailout. What they are doing is turning good businesses into bad businesses and then they bail them out.

This then leads to the second of the major changes: they cut out a significant proportion of funding which would have been available to small businesses under the clean technology investment grant scheme, so as to give extra money to big businesses which, in the first couple of weeks of the carbon tax, were facing a dramatic problem. So the small business owners suffered and the big business owners were apparently given a windfall by having greater access to the clean technology investment grant. But I will come to that in a minute.

That then leads to the third of the major changes. Six weeks after announcing that they would give greater access to big business to clean tech investment grants—and by the way, small business begins to miss out—they halted the clean tech investment grant scheme entirely. So they trumpeted the changes and then froze the scheme. The minister for climate change—and I would remind him and the House of this fact—had previously said that, if you dismantle one piece of the carbon tax package, you dismantle all. We did not dismantle it. He did, the government did, the Treasury did, the Prime Minister did. They announced and trumpeted their own grants scheme. They then took a significant proportion of that away from small business to give to big business, which was struggling with the impact of the carbon tax, and then six weeks later they took it away from everybody. Major change No. 4: the clean energy regulator added more businesses and councils to the so-called big polluters risk, taking the total amount to 315. The only problem is that was after the carbon tax started. So the carbon tax starts and new names are being added. Some names drop off, some names are put on and there is complete uncertainty.

In the Prime Minister's own electorate, the draft price facing the Wyndham City Council for the first year of the carbon tax was $14 million. That one council faces a provisional bill of $14 million for the carbon tax for the first year because it has a significant landfill.

Major change No. 5: the government changed the regulations for landfill and for pipelines. But that has a consequence: where savings would otherwise have been made, emissions are now being transferred from larger landfills to smaller landfills. That story was widely reported earlier in the week. The landfill association of Australia expects that this will mean there is an extra million tonnes of real emissions generated through landfill being taken out of high-quality, highly developed, sophisticated landfills and put into low-quality landfills which are not involved in the same level of methane draining. Because the smaller landfills do not pay the carbon tax, there is a shifting of emissions between large landfills and smaller landfills, and emissions go up. It is an act of genius: emissions go up as a consequence of those changes!

Major change No. 6 is close to my favourite. After having trumpeted for aeons and aeons the Contract for Closure program, the government abandoned it. This program was designed to act in contradistinction to the Energy Security Fund. On the one hand, the government had a $2 billion Contract for Closure fund, which was meant to close down brown-coal power stations. On the other hand, it had a $5½ billion Energy Security Fund, which was meant to prop up brown-coal power stations. It is not surprising that the $5½ billion fund trumped the $2 billion fund. I defy any member of this House to name a similar policy anywhere in the world—where there is a fund for closure and a fund to prop up. It is an act of policy confusion which remains to be challenged by a similar example anywhere else in the world. The Contract for Closure program collapsed.

Beyond that, we see the essence of this legislation: the government scrapping the floor price for the carbon tax. They have taken away the floor price, having said on multiple occasions how vital it was. What did the Prime Minister say in this House on 13 September last year? The Prime Minister said:

The bill also provides for a price cap and a price floor to apply for the first three years of the floating price period.

This will limit market volatility and reduce risk for businesses as they gain experience in having the market set the carbon price.

The Prime Minister also said, on 9 November 2011, in a doorstop:

… we have set a floor and cap so that there can be stability in pricing …

It went on, with Mr Combet. It went on, with Senator Wong. It went on, with Mark Dreyfus. All these people, on at least 11 occasions, declared how vital, how fundamental, how critical, the floor price was to certainty. And then one day they woke up and it was gone. So what was said yesterday means nothing today.

This leads me to the last of the eight major changes, and that is the linking to the European system. I want to deal with the fact that we lose control of our electricity pricing as a consequence of this. In linking to the European system, we see a dud deal for farmers. Australian farmers were going to be able to sell credits to Europe, under any reasonable expectation. What the government have done, in their desperation to strike a deal, is give Europe a virtual monopoly over the sale of foreign carbon credits to Australia. In return, you would imagine that Australia got a virtual monopoly. No. You would think that Australian farmers would at least be able to sell their credits beginning at exactly the same time as Europe will be selling to Australia. You would, but, no, that did not happen. Perhaps by 2015 Australian farmers will be able to sell to Europe? No. What actually happened was that, in order to get a deal with Europe, which had the whip hand, the Australian Labor Party struck an agreement which locked Australian farmers out of selling to Europe till 2018. They did not strike a deal which was in the national interest. They struck a deal which locked Australian farmers out of selling to Europe till 2018, six years from now. It was a bad deal, a dud deal, a bad outcome, and it is not good for Australia.

As part of that, we also see the loss of control over electricity pricing. The carbon tax, as I have said, is at its core, at its heart, an electricity tax. The consequence of this is that we set carbon tax prices in Europe, according to the government—although the price of the carbon tax and therefore the revenue is apparently not going to change. In so doing, we give away control over our electricity prices. On every front, we oppose these bills. On every front, we think that this system does not work. It is not the way to do it. It does not achieve the desired outcome. First and foremost, it is about massive electricity costs. Second, it is about chaos. Third, these bills are about giving away control over electricity prices to Europe. For those reasons, we oppose these bills absolutely, fundamentally, categorically. I seek leave to table the letter from the Copper Motel and the electricity bills pertaining to the motel.

Leave granted.

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