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

I want to raise the impact of the carbon tax announced in this budget—it is the first budget in which the carbon tax has been included in the figures—on my constituents in Flinders. Let us begin with the fact that the budget includes $36 billion of carbon taxes which will be imposed on the Australian public. Those taxes are not going to be imposed on some mythical group of 248 or 400 or 500 companies—

Mr Melham interjecting—

I will tell you about that in a minute, matey. Those taxes will be passed through in electricity, gas and grocery prices to Australian mums and dads. I know precisely why this does not work because, as the member for Banks raised, I did a thesis over 20 years ago on trade waste—zinc, cadmium, lead—and economic instruments and on the way in which economic instruments can be successful or the ones around the world which have failed. A critical factor is about finding a tool which does not push on an inelastic good.

What is the most significant essential service that consumers purchase? It is electricity. That is why it is an inelastic good. That is why driving up the price of electricity is highly ineffective. Because it is an essential service, what occurs is that people substitute out of discretionary items. That is why we have seen 70-plus per cent increases in electricity prices—74 per cent in my own home state of Victoria, according to KPMG—and the result has been pain for families but no significant change in electricity consumption. In other words, it is a massively ineffective tool—with a good purpose, may I add, but incredibly ineffective, on the basis of not just economic theory but the lived experience of Australians everywhere who have faced massive increases in electricity prices. And guess what? Members on both sides of this House know that.

That brings me again to my own electorate. The first thing we see as a result of the carbon tax is the direct impact on families, on their electricity budgets, on their gas budgets, on their grocery bills. Increasingly you will see it on the transport of all goods, as heavy transport is brought into the scheme. According to the Minerals Council, the best part of 100,000 firms by 2014 will be hit with off-road and on-road changes to their diesel fuel rebate, which is the other half of the carbon tax. That is going to be incredibly painful for small businesses, but everybody—every Australian, every time they turn on the light, use the television, use the air conditioning or use the heating—pays for the carbon tax. That is its intention. That is its design. That is its reality. And, sadly, that is its effect.

But there is also another secondary impact that I particularly want to focus on—that is, the impact on council budgets and council services. The government says that there will be a 10 per cent increase in electricity prices and a nine per cent increase in gas prices, as part of its modelling. The Energy Supply Association of Australia, which comprises the members that actually issue the bills, says there will be a 20 per cent increase in relatively short order in electricity bills. That is because, under the system the government has designed, they will be forward-purchasing permits from early 2014, which means that the electricity companies are going to have a second massive round of price increases, which will take us to 20 per cent.

What does that mean for councils? When you look at the Mornington Peninsula Shire Council, they have responsibility—as do all the others—for street lighting, community halls, toilet blocks, sporting facilities, council offices, car parks, depots, barbeques, security lighting, information centres and community theatres. All of these things continue. Mornington Peninsula Shire Council spend about $1.75 million a year on gas and electricity. At 10 per cent, that is a $175,000 increase a year. At 20 per cent, that is $300,000 a year in increase. Either services will be cut or rates will be increased. The City of Casey council spends $3.155 million a year on gas and electricity. It will have between $315,000 and $630,000 a year increase. Bass Coast Shire Council will have an increased bill of between $39½ thousand and $79,000 a year. Those are the real impacts: firstly, on families; secondly, on council budgets; thirdly, on services; and, fourthly, on rates.