Judith Troeth (Victoria, Liberal Party) Share this | Hansard source

The proposed carbon tax will come into effect on 1 July 2012. Coincidentally, that is the beginning of the 2012-13 financial year—the very year the government expects to bring the budget back into surplus. I would imagine that the ordinary Australian would rather pay less tax and see more government spending restraint, especially given the waste found in stimulus spending on projects like the Building the Education Revolution and pink batts, in order to achieve any future budget surpluses.

A carbon tax will add to the already overstretched home budget of many Australian families. They will have increased cost-of-living pressures imposed on them every time they go grocery shopping, every time they turn on the lights at night and every time they fill up the car with petrol when taking children to school. The proposed carbon tax comes on the back of a mining tax which will also slug families with higher prices at the counter and for lighting, warming or cooling the home. The cumulative effect of the two taxes will put more pressure on household budgets that are already struggling with mortgages, the costs of education and transportation, and food prices.

The Reserve Bank forecasts that the impact of floods and Cyclone Yasi over summer will be a three per cent rise in the CPI inflation rate on items like fruit and vegetables—the effect of which is already compounded by the introduction of a flood levy. In the year to February the TD Securities and Melbourne Institute inflation gauge rose by 3.6 per cent—well outside the RBA’s two to three percent band. TD Securities reported that prices have risen over 16 consecutive months and should be above three per cent since September last year.

There is little wonder then that retail spending is not as robust as one would hope and that the saving rate has increased from negative two per cent to positive 10 per cent since the global financial crisis. This is a very responsible attitude on behalf of citizens, but for the economy to go around Australian families need to do more than just spend on essentials and save for rainy days. All of these cost-of-living pressures arrived in concert with the announcement of a carbon tax to begin just next year.

How are hardworking Australians expected to shoulder the burden of inflation and the Gillard government’s increasing dependency on, and proclivity to, tax, tax, tax? In my home state of Victoria, households are facing increases in the cost of water and electricity as a result of past failed state Labor policies, yet the federal government turns it head the other way on the pressures already faced by Victorians. The fact of the matter is that the real architect behind this policy is the Greens, not Labor.

Given Prime Minister Gillard’s ‘there will be no carbon tax under the government I lead’ election promise, it is clear that the government has been dragged kicking and screaming to this position, behind closed doors, to remain in favour with a minor party like the Greens. We know that Prime Minister Gillard was the one that advised former Prime Minister Kevin Rudd to drop his commitment to an ETS. Let the public record show that the Greens have taken full credit for the recent announcement on a carbon tax.

I take note of Senator Milne’s push for a ‘high enough carbon price’ which is to be linked by achieving the Greens aspirational carbon dioxide reduction target of 25 per cent of 2000 emission levels by 2020. No price has yet been set but we can imagine that behind closed doors the carbon tax architects will be pushing for the highest possible price. Concern for the environment is one thing but to foist a tax on struggling families is economic vandalism. The Greens also propose to put petrol in the equation. There are already substantial price fluctuations on the world market for oil given the current political and civil instability in oil producing nations. Economics 101 teaches us that with higher oil prices consumption at the bowser is lessened. Australian families are already dealing with this simple economic principle. So, should we reasonably expect Australian businesses and households to absorb more and more of the spiralling cost of petrol and ask them to limit their movements? If you were going to use public transport, the public transport in Victoria has been a very unreliable alternative given past state Labor policy failures.

We are not to expect a static price lift annually with the carbon price but a dynamic price surge in the cost of living over the three- to five-year period. How much will the tax increase annually? I am afraid this proposal raises more questions than it seeks to answer.

The cost to industry should not be left unreported. BlueScope’s Paul O’Malley has already signalled that a carbon tax poses a threat to manufacturing in Australia. Mr O’Malley claims that with a carbon tax:

… imports will get a free ride, and Australian manufacturing will be taxed, and there will absolutely be leakage …

Economists like Alan Kohler and Terry McCrann have backed these concerns. Will the Greens stand up to scrutiny when cost-of-living pressures begin to weigh down on the backs of hardworking Australians?

Prime Minister Gillard and the Labor Party sought to make comparisons with Prime Minister John Howard’s introduction of the GST, but it is educational to note that the purpose of the GST was to broaden the base of the tax regime and ultimately lower the rate of taxes. This carbon price is designed to do nothing of the sort.

It is well known that I support action on climate change, but the ETS of some 14 months ago, with the Malcolm Turnbull amendments that I supported, is a very far cry from this heavy-handed slug on consumers and industry alike. Australian families, taxpayers and business will live to regret the day that this tax is introduced.