George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

My question is to the Minister representing the Minister for Climate Change and Energy Efficiency, Senator Wong. I refer the minister to modelling undertaken by the Centre for International Economics showing that, under the Gillard government's carbon tax, by 2020 Australia's GDP will fall by $180 billion, real wages will fall by 1.9 per cent, average household earnings will fall by $11,340, productivity will fall by 1.9 per cent per worker and electricity prices will rise by nearly 30 per cent. Given those facts, how then can the Gillard government stand by its claim that the world's biggest carbon tax will be good for Australia?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

In relation to the CIE modelling, it was commissioned and released by the Minerals Council of Australia, an organisation that has a very clear view about the carbon price and has a well-known position in opposition to it. It is entitled to hold that position, but it is important to recall the context of this. In the government's view, the report released by MCA on the impact of carbon pricing on the Australian economy significantly overstates the costs of carbon pricing. The modelling is driven by unrealistic restrictive assumptions on international carbon trading. This is why the carbon price projected by the modelling is higher than Treasury projections. For example, the analysis projects that the carbon price will be significantly higher in 2020 than the Treasury modelling, $36.10—and this is in 2010 dollars—in 2016, growing to $43 in 2020. That compares with the Treasury modelling of $24.60 in 2016, rising to $29.40 by 2020.

The MCA assumed that international action is restricted by lower demand for carbon permits due to lower international ambition. The assumption is also made that sources of relatively cheap supply are disallowed from international carbon trading. This contradicts reality, as relatively cheap internationally tradeable abatement is already being generated through the Clean Development Mechanism and this is set to expand. To assume that this abatement is no longer available, as the modelling does, simply ignores reality and therefore creates modelling that significantly overstates the impact of a carbon price.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Isn't it the case that the government's heroic assumptions about its carbon tax rest on there being a global carbon price and international emissions trading in place by 2016? Given that the congress of the United States recently voted against participating in Europe's trading scheme, Canada's foreign minister has said that his nation would never, ever introduce an ETS and the Japanese government has dismissed calls for a new global deal by 2015, why is the government irresponsibly rushing ahead without any meaningful international support?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

There is a significant factual error in the question from Senator Brandis. Senator Cormann knows that, but he is too embarrassed to stick his head up in this question time. The 2016 that is referenced is not consistent with the medium global action scenario, which is the scenario relevant to the package that is before the chamber. The medium global action scenario incorporates the low-end pledges until 2020 by nations. In this scenario, developed regions, China, South Africa and OPEC enter the multistage approach from 2021. India, Indonesia and other South and East Asian nations enter in 2026 and the rest of the world's regions enter in 2031. The 2016 date that is being utilised by the opposition in relation to this is incorrect.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Given that the authors of the report, the Centre for International Economics, are yet another of the long list of experts to reject the Gillard government's wildly optimistic assumptions about global action on climate change, how can the minister justify imposing on the people of Australia a carbon tax with an impact, reach and scope far more severe than the carbon tax of any other country in the world?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am certainly happy to stack up the experts on our side of the debate against the experts on your side of the debate, Senator Brandis. We have the best scientists in Australia, the people at the CSIRO and the Bureau of Meteorology. We have the best economists in Australia, those in the Australian Treasury. We have the best advice on this issue—the same advice that was given to Mr Howard—which is that if you delay action it will cost you more. The science is clearly demonstrating the imperative for action, and in fact the situation is getting worse. That is why no credible economist supports the opposition's plan, which imposes more costs on the Australian economy, more costs on Australian business and more costs on Australian households to achieve what they say is the same environmental target. The reality is that there is no credible policy on that side of the chamber on this. Mr Turnbull knows that and Mr Hewson knows that. (Time expired)