House debates

Tuesday, 3 May 2016

Questions without Notice

Carbon Pricing

3:02 pm

Photo of Josh FrydenbergJosh Frydenberg (Kooyong, Liberal Party, Minister for Resources, Energy and Northern Australia) Share this | Hansard source

I thank the member for Bass for his question and acknowledge that he is a fierce advocate for jobs and growth in his electorate, particularly in the manufacturing sector.

When it comes to electricity prices, the coalition has not only talked about lower electricity prices—it has actually delivered them. After Labor's time in office, electricity prices went up around 80 per cent. The coalition came in and got rid of Labor's carbon tax, and we saw electricity prices fall for the first time in a decade and by the largest-ever single amount. We have also reined in network spending, and network spending is important because it can make up some 50 per cent of household electricity bills.

I am asked: am I aware of any alternative approaches? Well, we are aware of the alternative approach from the Labor Party, because it is to bring in the rehashed, rebooted, reheated carbon tax 2.0—and we know how successful it was the first time! I have to confess: after it crashed at the box office last time, we are surprised to see the sequel here so soon. As the Minister for the Environment outlined, Labor's own modelling on their carbon tax showed that wholesale electricity prices will increase by 78 per cent, that activity in the construction sector will be down 11 per cent, and then, importantly, activity in the aluminium sector will be down 46 per cent. Why that is important is because Bell Bay Aluminium is in the member for Bass's electorate and it employs nearly 500 people directly and around 1,000 people indirectly. So what does the Labor Party say to those workers—to the welders, to the painters, to the truck drivers?

The Leader of the Opposition went on Jon Faine's program, and Jon Faine said to him, 'You would have to say that the carbon tax makes things harder for Australian manufacturing.' Bill Shorten's answer: 'It's never hard'—

Comments

Tibor Majlath
Posted on 6 May 2016 10:11 am (Report this comment)

The responsible Minister repeats nonsense without qualification in question time.

Firstly, electricity prices did increase during Labor's term in office. That is, we are meant to infer that Labor was entirely responsible perhaps because of the carbon tax? It wasn't just the price of electricity that went up. Network charges for poles and wires went up much more. The former attracted the carbon tax while the latter did not.

The Minister says "we saw electricity prices fall for the first time in a decade and by the largest-ever single amount". I wrote to the Minister saying that for me electricity went from $0.2856/KWH to $0.2735/KWH or -4.24% and the network charge stayed unchanged at $1.05 per day with the repeal of the carbon tax. I didn't see "electricity prices fall for the first time in a decade and by the largest-ever single amount". The network charge did not drop/change.

The Minister claims "We have also reined in network spending, and network spending is important because it can make up some 50 per cent of household electricity bills.". Network charges continue to rise as they were not subject to the carbon tax. Weren't we told high electricity bills were due mostly to the carbon tax? Now, the Minister says network charges matter and are significant costs.

After all the mendacious political spin around the carbon tax we are now being fed more of the same nonsense over a three year old modeling on the most expensive scenario around the defunct carbon tax published by the Minister of the Environment. It is remarkable that responsible Ministers can keep feeding the public with such dodgy information and wasting precious and limited question time with such contrived econo-babble.

The figures from Labor's modeling are based on 2012 dollars inflated by 2.5% CPI out to 2030. OK, assume the Coalition's claim is true and valid about Labor's modeling.

Ask yourself what their GST on a $2000 bill in 2016 will cost in 2030 assuming the 2.5% CPI used in their calculations. The Coalition's 10% GST applied to a $2000 bill from 2012 with an assumed 2.5% CPI applied out to 2030 :-

YEAR GST
2012 $181.82 = $2000/11 our starting GST value
2013 $186.36 = $181.82 + 2.5 x $181.82 / 100
2014 $191.02 = $186.36 + 2.5 x $186.36 / 100
2015 $195.80
2016 $200.69
2017 $205.71
2018 $210.85
2019 $216.12
2020 $221.53
2021 $227.07
2022 $232.74
2023 $238.56
2024 $244.53
2025 $250.64
2026 $256.90
2027 $263.33
2028 $269.91
2029 $276.66
2030 $283.57

The Coalition's 10% GST will have increased by (283.57-181.82)/181.83 or +56% on an average $2000 electricity bill. Not as much as 78% in Labor's hypothetical model but this is the nonsense peddled by the Coalition when you apply a hypothetical CPI rate over such a ridiculously long period.

Imagine what would have happened if the Coalition had increased the GST rate to 15% in recent times :-

YEAR GST
2015 $181.82 = $2000/11 = 10% GST in 2015
2016 $280.99 = $2000 x 17 / 121 = 15% GST in 2016
2017 $288.02 = $280.99 + 2.5 x $280.99 / 100
2018 $295.22
2019 $302.60
2020 $310.16
2021 $317.92
2022 $325.86
2023 $334.01
2024 $342.36
2025 $350.92
2026 $359.69
2027 $368.69
2028 $377.90
2029 $387.35
2030 $397.03

The Coalition's 15% GST would have actually increased electricity costs by (397.03-181.82)/181.82 or a massive +118.37% for an average $2000 electricity bill. Much more than 78% in Labor's hypothetical model.

Such figures are nonsense but that doesn't stop the political spin over them.

Tibor Majlath
Posted on 6 May 2016 12:11 pm (Report this comment)

Correction:

The last table should have had GST rate of 33/242 applied instead of 17/121 so that table should be

2015 $181.82 = $2000/11 = 10% GST in 2015
2016 $272.73 = $2000 x 33 / 242 = 15% GST in 2016
2017 $279.55 = $272.73 + 2.5 x $272.73 / 100
2018 $286.53
2019 $293.70
2020 $301.04
2021 $308.57
2022 $316.28
2023 $324.19
2024 $332.29
2025 $340.60
2026 $349.11
2027 $357.84
2028 $366.79
2029 $375.96
2030 $385.36

The Coalition's 15% GST would have actually increased electricity costs by (385.36-181.82)/181.82 or by +111.95% for an average $2000 electricity bill. Much more than 78% from one of Labor's most expensive hypothetical model.

Log in or join to post a public comment.