Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

The carbon tax starts in just a few days, on 1 July. This carbon tax's impact will not be felt straightaway. This economy-wide tax will be a slow burn as the costs make their way to consumers through a range of measures in our economy, and this tax will go up every year.

I have the Boddington mine in my electorate. At a meeting with Tony Esplin, the general manager of Newmont's Boddington Gold Mine, in April this year Mr Esplin highlighted the crippling effects that Labor's taxes are about to have on the mining industry. Mr Esplin is concerned about the carbon tax's negative effect on their business. He believes that if the mining tax is eventually applied to gold—which the Greens want—and Newmont's Boddington Gold had a double whammy of big taxes then it would make it very difficult for it to stay profitable. This is troubling news to hear, particularly as the site has petitioned to become Australia's largest goldmine when in full production; some suggest it could be up to a million ounces a year. It simply shows us that the companies that mine resources, other than iron ore and coal, are still very nervous about what taxes might be thrust upon them next by this government, in coalition with the Greens, and they should be.

Just six days before the last election, we know what Prime Minister Gillard said: 'There will be no carbon tax under the government I lead.' She misled the Australian public and business owners nationwide. I am very concerned, as Newmont Boddington Gold supports my electorate greatly through the provision of jobs, with Canning having about 1,500 fly-in fly-out and drive-in drive-out workers, encouraging consumer spending throughout the local economy.

This brings me to the area of small business. When the shadow small business minister, Bruce Billson, visited my electorate on 7 June, he heard the concerns about the carbon tax from local small business people. This tax does not discriminate. If you use power, lighting, cooling, heating, computers or any such electrical machine, you will be paying a tax. If you have transport costs associated with doing business, you will be paying the carbon tax. If you need products built and made for your businesses—steel, office furniture or motor parts—your business will feel the impact of this carbon tax.

Local government authorities are feeling carbon tax pain as well. There is pressure on councils and local government authorities to factor carbon tax costs into their budgets from now on. Councils may be shocked to see that the impact could go as high as $1 million to them individually. Any increased costs are difficult for councils to easily absorb, particularly ones with small ratepayer bases. It is unfair for this Gillard government to say that businesses cannot say cost increases are due to the carbon tax or they will be investigated by the ACCC. That is a bit of a standover tactic by the government. The City of Armadale in my electorate has been listed as one of the top 500 organisations on Prime Minister Gillard's hit list for this carbon tax. Armadale city's landfill pushes them onto this list because landfill facilities with emissions of 25,000 tonnes of carbon dioxide equivalent or more are liable to pay this carbon tax. Although the city will not pay carbon tax on legacy emissions—legacy emissions are those produced from waste deposited prior to 1 July 2012—these emissions have been used to calculate whether they are liable for the tax. The calculation, including the legacy emissions, pushed the City of Armadale to just around 26,000 tonnes. How unfortunate! If it were 24,000 tonnes they would not pay anything, especially as the city has operated at this landfill since 1974 and, back then, having a landfill was doing the right thing. They have not even had time to budget for or install any gas-capture technology to soften the blow of this carbon tax, even though it was only discovered they were on this carbon tax hit list when it was announced through media reports less than two months ago.

The shire of Murray in my electorate has also indicated it may need to review the hours that the streetlights stay on in their local government authority because of the additional cost of the carbon tax on electricity. The shire wants to keep rates as low as possible and has said that any increase in costs is always a concern as it risks other projects and services within the community. Councils are also finding it difficult to calculate these costs. Housing affordability will be hit, some say by up to $16,000 on a new home.

I say to the members opposite: you are like a bunch of lemmings following your Prime Minister over a cliff and you will come back to us here one day and say, 'Yes, but we all thought we were doing the right thing.' The difference is that when I lost my seat to the GST election, John Howard took it to the people. Julia Gillard, this Prime Minister, did not take it to the people, and it is going to cost her members dearly. (Time expired)

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

In response to the previous speaker, the member for Canning, it is important to put a price on carbon. Despite the scaremongering by him and his colleagues, the Leader of the Opposition and his fellow deniers on the science that warns of the disastrous consequences of global warming, the latest reports of the rapid decline in Arctic sea ice further reinforces the concerns of climate scientists and responsible governments around the world about the destructive effects of carbon dioxide emissions and why it is so important to put a price on carbon.

For some time, climate scientists have warned that, unless carbon dioxide emissions are reduced, the world risks passing through irreversible climate tipping points that will push the world's climate from the current stable state to another less desirable state—for instance, from present conditions where the world has polar ice caps to one where there are no polar ice caps and where, according to the United States Geological Service, sea levels would be 80 metres higher. By definition, once a climatic tipping point is passed, returning to current conditions will be impossible because tipping points are self-reinforced by positive feedback, the well-understood process familiar as the howl that emanates from a public address system when the microphone is brought too close to the loudspeakers.

Positive feedback in climate change is of great concern because, like a screeching PA system set off by moving the microphone, what may seem to be inconsequential changes are rapidly amplified and fed back into the climate system, driving it to another less desirable stable state. For instance, positive feedback has been shown to drive the climate from ice ages to conditions similar to those that prevail at the present time, when cyclic changes in the earth's orbit initiate the switch from glacial episodes to interglacials every hundred years or so.

In 1941, the Serbian geophysicist and astronomer Milutin Milankovic published a paper entitled Canon of Insolation of the Earth and Its Application to the Problem of the Ice Agesin which he showed that the driving force behind the cycles of ice ages and interglacials were regular variations in the intensity of solar radiation received at higher latitudes. Such was Milankovic's prestige that, despite the fact that his country had been invaded and was then occupied by Germany, German scientists assisted in the publication of this important document. According to Milankovic's theory, the earth should now be cooling and beginning to enter the next glacial period. Yet what we see, as the CSIRO said in its 2012 report on climate, is that average global warming temperatures are increasing—

A division having been called in the House of Representatives—

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Each decade since the 1950s has been warmer than the previous decade. Ice-core evidence, which shows that carbon dioxide levels follow average global temperatures from ice-age frigidity to warm interglacial conditions, is frequently used by deniers to argue against the fact that carbon dioxide is driving global warming. In fact, this process is actually a clear demonstration of the operation of a positive feedback in the climate, wherein an initial warming caused by orbital changes is amplified by the build up of atmospheric carbon dioxide, driven from the oceans by increasing temperatures.

To digress, it is a well-known principle of chemistry that warmer water will dissolve less gas than colder water. In the regular switch from glacial to interglacial periods, the initial warming at high altitudes, identified by Milankovic, is reinforced by accumulating atmospheric carbon dioxide that further drives up temperatures by positive feedback, until an equilibrium similar to present day conditions is reached. Positive feedback initiated by global warming is now evident in the Arctic Ocean, where the decline in sea ice initially caused by increased local temperatures has been reinforced by darker seawater absorbing more solar heat, thus accelerating a further decline in the ice cover. As temperatures increase, more ice melts, more sea water is exposed to the sun, and since 2007, the difference between summer and winter ice cover is now more than one million square kilometres and growing.

New evidence presented by Professor Tim Lenton of the University of Exeter at the Planet Under Pressure Conference in London at the end of March this year, suggested that we are close to or may even have crossed the tipping point in the Arctic, with the area of summer sea-ice cover having reached a record low that may be the prelude to ice-free summers across most of the Arctic ocean. Drastic changes in the northern hemisphere weather systems are expected to follow the development of an ice-free Arctic ocean. Some palaeontologists believe that the Neanderthals were driven to extinction by climate change and despite the population imagine of Neanderthals, recent discoveries suggest that these close relatives had a complex culture, comparable to modern humans. Yet they are, as we well know, extinct., the well-known NASA scientist and climate change adviser to US presidents, seriously warns that unless we drastically curtail carbon dioxide emissions, the same fate may await us, the last surviving human species. (Time expired)

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

With the arrival of the carbon tax on 1 July, we will see cascading price increases throughout much of the economy, including in particular a sharp increase in electricity prices continuing and being exacerbated as a result of the introduction of the carbon tax. In my own electorate of Bradfield, sporting clubs wishing to hire sports grounds for the purpose of practice on winter evenings, who are required to play a floodlighting fee to Ku-ring-gai council, are facing sharp increases in the charges that they are required to pay, as a consequence of steeply rising electricity prices, which are of course associated with the introduction of the carbon tax. The floodlighting fee charges that are faced by sporting bodies in Ku-ring-gai are going to increase by up to 22 to 25 per cent.

That is just one instance of the kind of impact throughout the economy of the introduction of the carbon tax, because the carbon tax is going to contribute to an increase in electricity prices, coming on top of substantial price increases that have already come through in recent years. The regulated retail electricity prices in New South Wales will increase in July 2012 by up to 19.2 per cent. It is hardly surprising that Ku-ring-gai council needs to pass on increases of that magnitude, and it is local sporting bodies which are bearing the impact of that by being required to pay substantial increases in the charges for the floodlit sports grounds they require for practice on dark winter evenings. This is but one instance of many of the way that the increase in prices due to the carbon tax is going to cascade through the economy. What do we hear from the government in response to this? The government says, 'Don't worry because the ACCC is on the case and they are going to come down hard on any business which increases prices.' For example, the member for Isaacs recently in the parliament said, 'If businesses make false claims they run the risk of breaching the competition law and could expose themselves to a $1.1 million fine.' Recently in the parliament the Treasurer said:

I make the point that those sorts of claims and pricing decisions will be subject to scrutiny from the ACCC.

So do not worry about price increases because the ACCC is apparently there to protect against that! This is a deeply misleading claim from the government and it is a claim which deliberately obfuscates the key point about how the carbon tax is designed to work. It deliberately obfuscates the key point about the very nature of the policy design.

The design and purpose of the carbon tax is to reduce carbon-intensive economic activities by increasing the price of goods and services which draw on a carbon-intensive production process. That is the very purpose and intent of this regulatory scheme. It is designed to use the price signal to make goods and services which are based upon a carbon-intensive production process more expensive in relative terms. Of course that means that in the energy sector in the area of electricity generation or transport, or in a whole range of other sectors which use a carbon-intensive production process, prices are going to increase. Then we hear repeatedly the economically illiterate claim from senior members of the government that the tax falls on the big polluters so everybody else need not worry.

Mr Deputy Speaker Leigh, you would have on many occasions drummed into first-year economics students the difference between the legal incidence and the economic incidence of a tax. The economic incidence of the carbon tax will cascade throughout the entire economy. It will drive prices up across a whole range of activities and the reason is that that is what it is designed to do. The carbon tax is designed to increase the price of a whole range of activities so as to produce a consumption effect to reduce consumption. So for the government to argue that the ACCC is going to prevent price increases, to argue that only a small number of companies will pay the tax, is misleading and wrong.