Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

Yes, Labor's carbon tax is unravelling—and it is unravelling fast, at a rate of knots. Labor is in a complete mess over the carbon tax; the government is in complete chaos over the carbon tax. Why is that so? Because fundamentally, at least privately, Labor members and senators understand that Labor's carbon tax, the Gillard government's carbon tax, is taking Australia in the wrong direction.

There is never a good time to introduce a bad tax. There is never a good time to introduce a job-destroying tax. There is never a good time to introduce a tax which will push up the cost of electricity, which will push up the cost of living, which will push up the cost of doing business in Australia, which will make us less competitive internationally and which will just shift jobs and emissions overseas instead of reducing emissions. There is never a good time for such a tax, but this would have to be just about the worst time for any government to introduce a tax like this.

Do not take my word for it when I talk about the impact of the carbon tax on our economy and on jobs. Look no further than the government's own Treasury modelling. This government knows what the impact of the carbon tax is going to be on the economy, on the cost of living, on the cost of doing business and on jobs because their Treasury modelling pointed it out. And because their Treasury modelling pointed it out there is only one possible conclusion, and that is that the Gillard Labor government is wilfully and recklessly taking Australia in the wrong direction with its carbon tax. By pushing up the cost of electricity, by pushing up the cost of doing business in Australia, this government is making it harder for Australian businesses to compete with businesses in other parts of the world—with businesses in Asia, in the US, in South America, across Africa and even in the European Union. Yes, the cost of doing business in Australia as a result of Labor's carbon tax is going up by even more than it would in the European Union under their particular scheme.

How did the government go about all of this? As they put together their carbon tax package, their first political strategy was to suck in everybody across Australia with the proposition that the success or failure of the carbon tax had to be judged on day one: if the sky did not fall in on 1 July 2012, it would mean that the carbon tax was a success. What a minimalistic benchmark for success by this Gillard Labor government: if the sky does not fall in, this must be a great new tax! Well, the sky was never going to fall in on day one; the implications of a tax like this on our economy, on the cost of living, on the cost of doing business, on jobs and on our international competitiveness has got to be judged over time—and no amount of hoping that the frog-in-boiling-water syndrome is going to somehow come in as the political saviour for this government is going to do away with that fact.

When it comes to the carbon tax, this government has put all its hopes in the frog-in-boiling-water syndrome. I can see you smiling, Mr Acting Deputy President, but, just to remind the chamber, this is the frog-in-boiling-water syndrome: if you put a frog in a pot of boiling water, he will jump out; but if you put a drop in a pot of cold water and just gradually increase the heat, he will stay there as he is slowly brought to the boil. That is exactly how the Gillard Labor government hoped that the carbon tax would play out—that people across Australia, businesses across Australia, would not realise that the carbon tax was slowly and gradually having its effect and would think that things other than the carbon tax were to blame. That is why they put all of the additional cash handouts on the table up-front; that is like putting additional cold water into the pot of boiling water. That is why they wanted to provide all that additional transitional assistance up-front—so that people would not quite realise what the impact of the carbon tax was going to be on the cost of electricity, the cost of living and the cost of doing business.

But people are starting to realise, and that is because Labor's carbon tax is the biggest such tax anywhere in the world. The government often likes to point to the European Union and say: 'They've got an emissions trading scheme. They've got a price on carbon. If they can do it, why can't we?' Well, you have got to look at the detail. When we started asking questions of this government, they could not provide any answers. Here is one question: why is it fair to Australian businesses and Australian workers that 23 million Australians are being asked to pay over the next three years five times the carbon tax of 500 million Europeans across 30 countries? We have 23 million Australians in one country who are being expected by this government to pay five times as much carbon tax as more than 500 million Europeans across 30 countries. How can that not have an impact on our international competitiveness? How can that not have an impact on the capacity of our businesses to compete with businesses, even in Europe? And our carbon tax is also bigger than the regional greenhouse initiative in the northern part of the US that the government often points to. In fact, we are expected to pay 20 times the carbon tax that is paid by a part of the US that has twice our population.

Over the past few weeks I have asked questions of the government—through Senator Wong, who was then representing the Minister for Climate Change and Energy Efficiency as well as the Treasurer. I asked: how do you think it is fair to impose that cost on businesses here in Australia who are not fazed by our competitors in other parts of the world? How is it fair to impose that cost on businesses in Australia, putting jobs at risk, when all we are doing is shifting emissions to other parts of the world, not reducing them? How is it fair to ask people here in Australia to make a sacrifice when other countries are not being asked to make the same sacrifice and there is not going to be a beneficial outcome in terms of reduced global greenhouse gas emissions as a result? Senator Wong's answer to some of my questions was that we have got to remember the free carbon permits. She said the free carbon permits will reduce the impact of the carbon tax on the most emissions intensive trade exposed industries down to about $1.30 a tonne, so those businesses will only have to pay about $1.30 a tonne for their emissions. So I asked the minister the obvious question: how many of Australia's 42,500-plus export businesses will actually get the benefit of free carbon permits? The minister threw her hands up in the air and effectively said, 'I don't know.'

But last night in this chamber the government finally came clean and released the information. What we found out last night is that not a single business in Australia so far has received a free carbon permit and, even when all of the free carbon permits have been delivered, the government does not expect to hand out more than 170 of them. So up to 170 businesses across Australia will get free carbon permits. What about the other 42,500 export businesses? What about the hundreds of thousands of import competing businesses? And then they go off and drop the floor price. They say to us that they still believe the price will be $29 a tonne. Well, if that is the case, why do you think you have got to drop the floor price of $15 a tonne? It does not make sense. If it is going to be the same, people will still face the same impact on their cost of living. If it is going to be less, the government will face a multi-billion-dollar budget black hole—part of their $120 billion budget black hole. If it is going to be as high as the Greens say, $50 a tonne, what a massive new additional hit that will be on household budgets—and, of course, a significant revenue windfall for the government.

There are problems wherever you look. They link it to the EU scheme now, which means that Australian coal producers will eventually have to use the European coal price when European coal producers do not—because in Europe fugitive emissions are excluded from the scheme but in Australia they are included in the scheme. Wherever you look there is problem after problem. That is why the government is chopping and changing this bad tax. That is why the government is in complete chaos over this tax. The only way to fix this bad tax is to scrap it.