Wednesday, 10 October 2012
Questions without Notice: Take Note of Answers
That the Senate take note of the answer given by the Minister for Agriculture, Fisheries and Forestry (Senator Ludwig) to a question without notice asked by Senator Macdonald today relating to carbon pricing.
I listened—at least I tried to listen—to the words of Senator Ludwig, but it seemed to me that the more he used the word 'confused' the more confused he became, because his answer was virtually unintelligible in response to Senator Macdonald's quite clear three questions—both his primary question and his supplementary questions—in relation to the government's prediction of the carbon price being $29 by 2015-16. The mystery as to what Senator Ludwig was actually talking about may remain uncovered for some time, perhaps until Senator Macdonald gets to pursue that further.
What we on this side know about the carbon tax is the devastating effect that it is having on members of the Australian community. In my portfolio of housing, in particular, and—as my colleagues would know—in Western Sydney in particular, residents are looking at a hike of $208-plus in electricity bills, along with a multitude of indirect cost increases that nobody receives any compensation for, and most certainly the small businesses bearing them receive no compensation for them.
We have a hub for new homebuyers in my area of Western Sydney, and we have new home builders who are trying to start their lives and their families, but all the carbon tax is doing is making it that much harder. The Housing Industry Association estimates that the carbon tax will add $5,200 to the cost of building an average new home—even after compensation. If you think about the families that we all work with every single day, right around Australia, that does make a difference to a family's capacity to commit. When they are sitting around the kitchen table discussing whether they can build their new home, it does make a difference to whether they are actually able to sign on the bottom line, and anyone who does not think it does is not living in the real world. No matter how much this government talk about compensation, no matter how often they try to protest—methinks too much—they are denying the reality of the situation in which so many Australian families find themselves.
It is ironic indeed that the government would find themselves penalising people for building newer and more energy-efficient homes. Surely that is a particularly perverse approach that does nothing for the environment in the end. We already have a housing shortage in this country of over 228,000 homes. But, if the Labor government were actually listening to the concerns of stakeholders, they would see that the carbon tax is only making things much worse. If they do not want to listen to members of the opposition, perhaps they will listen to people who are actually experts in their particular areas, like the CEO of the Master Builders Association, Wilhelm Harnisch, who said:
… work in the pipeline is at very low levels and profit margins are low to non-existent. Builders and contractors have no capacity to absorb any cost increases incurred as a consequence of the carbon tax.
Mr Harnisch also said:
Treasury’s carbon tax modelling indicates that the carbon tax will reduce the gross output in the building and construction industry by 5.6 per cent by 2050. This impact is considerably higher than negative impacts on mining and manufacturing, which are anticipated to go down 4.3 per cent and 2.8 per cent respectively.
That is a very considered, very authoritative view of the impact of this government's policy on a vital Australian industry.
If the HIA is not enough for you, then what about the small business operator in Western Sydney—in Greenway in fact—who makes home construction products? He is completely reliant on the home-building industry. He tells us that he has recently reduced his factory operation from 24 hours a day, seven days a week, to 24 hours a day, five days a week, and turned off some machines altogether. The flow-on impact from that on jobs in communities which need more jobs in the areas in which they live, not fewer, is a very significant one. But, no, we are simply told to refer to the modelling and that that will answer the question, but it does not. It does not answer the question for real Australians, and they are the people whom we are representing here in this chamber.
We find small businesses across Australia but particularly in Western Sydney who are also concerned about the uncertainty that the tax is causing their business. They know that their costs will go up but they have no mechanism to recover those costs through their own prices because they will end up with the ACCC and Labor's multitude of other regulatory bodies talking to them about how they are doing that and why they are doing that. It is a one-way street that this government has set up to blindly pursue their policy in relation to this, without any real consideration of the impact that it is having on real Australians and the price that they have to pay. (Time expired)
Opposition senators interjecting—
I actually lived in and around Western Sydney during all of my time in Sydney, so I know a bit about Western Sydney. Senator Payne, I think Peter van Onselen will be happy that you have actually made a contribution.
I am happy to come down to High Street. Organise it. I will come down to High Street, Penrith, with you and discuss why the coalition is not going to look after the kids of Western Sydney; why the coalition want to put in a direct action policy, which is a load of nonsense and which will cost Western Sydney families far more than anything this government has done; why we are prepared to ensure that families are looked after as the carbon price kicks in; and why we want to look after the future of the kids of Western Sydney. All you do is come in here with your nonsensical rhetoric and scare campaigns.
I did not hear you being worried about the workers of Western Sydney when you put your hand up in support of Work Choices. I did not hear you saying that the workers of Western Sydney will have a problem with Work Choices. You did not do that, Senator Payne. You put your hand up here and you supported Work Choices. You supported the workers of Western Sydney having—
Opposition senators interjecting—
Mr Deputy President, on a point of order on relevance: I know that we allow a very wide-ranging set of circumstances, but unfortunately the question we are talking about is not about Senator Payne; it is about the government's confusion on the $8 price of carbon suddenly becoming $29. I really want to hear what Senator Cameron has to say about it, because certainly the minister could not answer it.
Thank you, Senator Macdonald. I do draw Senator Cameron's attention to the question before the chair, and can I remind senators not to interject. Could I also remind Senator Cameron to address his remarks to the chair. Senator Cameron, you have the call.
I certainly will address my remarks through the chair. But, with the greatest respect, Mr Deputy President, I will certainly draw your attention to the issues raised by Senator Payne in her contribution. You cannot have a situation where Senator Payne is talking about the cost impost on the families in Western Sydney, without dealing with all of the issues of the cost imposts on the families in Western Sydney. Senator Payne's support of Work Choices is an issue.
Mr Deputy President, I rise on a point of order, and I seek your guidance in relation to this point of order. As I understand it, we are currently in motions to take note of answers. The answer, theoretically, at least, in relation to Senator Macdonald's question about carbon tax was about carbon tax. My remarks were about carbon tax—entirely apposite and to the point. They have nothing to do with the matters that Senator Cameron is raising, which are not apposite or to the point.
Mr Deputy President, I will persist in dealing with the cost-of-living issue for the population of Western Sydney. It is exactly the right issue to be dealing with. I am happy that Senator Payne raised the issue of cost of living in Western Sydney, because the biggest impost in recent times on the working families of Western Sydney was the abolition of penalty rates under Work Choices. It was getting rid of their annual leave loading. It was workers getting $90 to $100 a week ripped out of their wages by the coalition's Work Choices position. This will continue under the coalition because the coalition have what they call direct action. What is direct action? Direct action is supposedly—
Mr Deputy President, I rise on a point of order. I think you have been very generous in the latitude that you have given Senator Cameron, but the fact of the matter is that we are responding and he is meant to be responding to the answers given to the question that Senator Macdonald directed on carbon tax.
They are two words that he has not covered in the 3½ minutes that he has been speaking and I would ask him to draw his attention to the question.
Mr Deputy President, I rise on a point of order. That is what I was going to say; he was talking about direct action and was returning to the issue of carbon price. So Senator Kroger getting up to make a point of order at that time was a little late.
Thank you, Senator Brown. I was going to indicate to Senator Cameron he did return to the topic. I will be listening carefully to the remainder of his answer. He has wandered in the past. Senator Cameron, you are aware of the situation.
I hope I do not wander because of that unfair interjection. I was dealing with direct action. As you are aware, nothing could be more relevant to the issue of the cost of living of workers in Western Sydney than the impost that this nonsense of a policy called direct action would have on working families in Western Sydney. You see, what the coalition seek to do is to use taxpayers' funds to provide so-called incentives to business in this country to reduce carbon pollution. What we are doing is exactly what Peter Shergold indicated in the Shergold report and that was: deal with carbon issues, deal with them through a market mechanism and do not wait till the rest of the world acts, but act now because it is the most important thing to do. I note Senator Sinodinos nodding sagely behind Senator Payne, and that is because Senator Sinodinos was there when this advice was given to the Howard government. Senator Sinodinos supported this position. Senator Sinodinos knows that the cheapest way to deal with carbon pollution is to use a market based mechanism. It was what John Howard said he would use. (Time expired)
I suppose some might think it is a time for a celebration. It is 100 days since the introduction of the carbon tax. If I had thought about it, Senator Cameron, I may have baked a cake, but I cannot afford to anymore because it costs too much to bake. On a serious note, Senator Payne is quite right, particularly with respect to small business and the discount rates they get on electricity. It is costing up to 30 per cent more for small business throughout this country. That is a problem—it is affecting not only pensioners and working families but also small business.
I have somewhat of a penchant, some call it a fetish, for old government documents. I went through what I received at my home in Brisbane—a document called 'What a carbon price means for you'—one of my favourite documents. It says this:
A carbon price is not a tax on households—it will be paid by Australia's biggest polluters.
Yes, you will not pay, just the big polluters will pay. Let me tell you, ladies and gentlemen: you will pay. Australia will pay. Business will pay. You will all pay. But, according to this document, it is okay because:
Countries are already taking action on climate change. In addition, 89 countries—representing 80 per cent of global emissions and 90 per cent of the world’s economy—have already pledged—
If you believe politicians' pledges—
to take action on climate change.
What are the comparable countries? What have they done? What has Brazil done? Russia? India? China? The United States? Canada? What have they done?
I was in quiet mode! However, I will do my best. Suffice to say that none of the comparable countries—Brazil, Russia, India, China, Canada and the United States—are doing virtually nothing at all. China was mentioned—let me get to that in a minute. I am told, after today's performance from Senator Ludwig, that the government stands behind the $29 per tonne prediction. Today, the price in Europe is $8 a tonne. So it has got to rise 350 per cent in the next three years otherwise the government's budget predictions are out and there is no way they can fulfil their budgetary forecasts or return to surplus. It has got to go up 350 per cent over the next three years so they can balance their budget. Who thinks the European carbon price will go up 3½ times in three years? Who believes that, except Senator Thorp? No-one on earth believes that. If it does not happen—and it will not—this lot opposite will never, ever be able to balance their budgets. That is the problem. That is the farce of this entire scheme. From the word go, this has been an absolute fiasco.
We have got a Prime Minster and a government that believe unilateral action by the Australian government ahead of the world is good public policy. They believe even if the United States, Britain, Russia, India, China and Canada do nothing, it is in our national interest to adopt a carbon price. Why are those countries not adopting a carbon price? Because it will harm their economies. It is already harming ours. The cost of living in this country is going up. The cost for business is going up. If that is not bad enough, it is making no impact at all on the climate—none. Is it having any impact on carbon emissions in Australia? No. They are still going up, even if somewhat more slowly. It is having no impact on the carbon emissions and no impact on the climate. We are stuck with this blasted tax forever.
In the end, Mr Deputy President, never forget—and Senator Macdonald's question highlighted this—when the carbon floor price is not met, and it will not be met at $29 per tonne, their budget will be blasted to hell. They will never be able to balance another budget for another hundred years. We will never, ever let the Australian community forget what they have done to our country.
I hope that members opposite can hear me. The honourable senator was quite right when he referred to the fact that it has been a hundred days since the introduction of the carbon price. Let us remind ourselves of some of the dire predictions that were made leading up to that date. Do we all recall the Whyalla wipe-out? The whole area was going to be gone off the map; I believe it was almost set to music. In fact, just recently, the Mayor of Whyalla was quoted in his local press and more broadly as saying that the whole area is going gangbusters. So, no Whyalla wipe-out. Whole regions were going to be destroyed. You can almost hear the music in the background, and the lightning claps. Whole regions were going to be destroyed, including Gladstone. Yet, just in recent months—
Mr Deputy President, I raise a point of order. I am having some difficulty hearing Senator Thorp. You might ask the good senator if she could speak up so that not only senators on the floor but those in the gallery may have the benefit of her contribution.
There have been billions and billions of dollars of investment in the Gladstone area, and that was only one of the regions destined to be wiped out. We were also going to see the death of the coal industry, the death of the steel industry and the death of manufacturing, and yet in those hundred days so oft referred to we have seen an additional 9,000 jobs created in the manufacturing industry. Huge price increases were anticipated, enormous price increases, but not according to the Reserve Bank of Australia. The price of electricity was going to go through the roof, but if you peel some of the layers off the onion and look more closely at the issue and take, for example, Western Australia, where electricity prices have gone up considerably—in fact, I have heard some quotes, and I am not sure whether they are correct, that it is by as much as 60 per cent in some areas—only nine per cent of that could ever have been attributed to the carbon price.
So here we are, back again in this place, with the pathetic fear campaign of those opposite now blaming the carbon price for any issues that maybe impacting on housing in Australia. It is very sad. According to the honourable fellow opposite, the loud one, he was saying—
Order! Senator Fifield, I understand where you are going and I do not believe there is a point of order. I think Senator Mason had a mental blank—sorry, it was Senator Thorp. Senator Mason is the senator you are looking for, Senator Thorp. You have the call, Senator Thorp.
We are but human. Treasury has just recently stated and anticipated not fear about the complete collapse of the Australian economy, no. In fact, Treasury is predicting strong economic growth will continue, with gross national income projected to grow at 1.1 per cent a year to 2050. Incomes will grow. Real income per person is projected to increase by $9,000 per year, from today's level, by 2020.
These figures are from the Treasury. Employment will grow, with 1.6 million new jobs created by 2020. Pollution will fall—unlike the comments from the senator opposite. By 2050, carbon pricing is expected to reduce Australia's domestic emissions by nearly half what they would be without a carbon price—a reduction of a significant amount. The price impacts will be modest. A one-off increase of 0.7 per cent to CPI, which compares with the 2.5 per cent increase that was the result of the GST. Gross state product for all states continues to grow strongly.
That is what Treasury says. Those are the facts. This is not emotive fear and rubbish. Whyalla has not gone, Gladstone has not been wiped out, the coal industry has not died, the steel industry has not died, the manufacturing industry has not died—in fact, 9,000 extra jobs were created in the hundred days. There have not been huge price increases. The price of electricity has been impacted by carbon pricing but not by the amounts that are often reflected in state prices. I think it is most inappropriate and most unfair by those opposite to try to blame everything that goes on in the global economy on carbon pricing, feeding the fear of vulnerable Australians. I find it quite despicable, particularly when you see it in the context of the fear people have around their futures, generally speaking. (Time expired)
I rise to take note of the answer given by Senator Ludwig to a question asked by Senator Macdonald today. Well, what a debate it has been. We have gone right round the world, particularly Western Sydney. We have talked about Work Choices and we have talked about Brisbane. We have talked about all sorts of things but, if we come back to where Senator Macdonald began this whole issue, it was around what the carbon price would be in 2015-16, because the Treasury modelling was estimating it would be $29 per tonne, based on assumptions about what many countries around the world allegedly would be doing or had pledged to do.
As we know, there is quite a gap between what governments pledge to do or promise to do and what they actually do. In this particular case, none of the speakers from the other side have addressed this very simple point: is there one serious economist in Australia who is backing up what the Treasury is saying about what the price will be for carbon in 2015-16?
Yes, under direction from the government, the Treasury has used the modelling, because the modelling is a machine—you put assumptions in, you get certain results out. They have pumped out this result of $29 a tonne based on the parameters they have been given by the government, and they have probably been directed to make assumptions about what other countries would do. So they have gone around to find any piece of information that justifies them being able to say that country X or Y is planning or pledged to do this or that, and they used that as a basis to say, 'On that basis we think it will be $29 a tonne as a world price.' But no serious economist in Australia, as far as I am aware—and I am happy to be corrected on this—has said that the Treasury modelling is appropriate in the circumstances, is appropriate in terms of pumping out that $29 a tonne figure.
We are talking about a situation where we are going from, at the moment, a European price of $8 a tonne. Make no mistake, the Europeans will continue to dominate this market over time because of the extent of credits that they have got on issue. They are at $8 a tonne. So are we saying that the biggest carbon market in the world, the one that will dictate prices come 2015-16, will be at $29 a tonne? What are we assuming about what European governments will do to get to $29 a tonne—at a time when the European economy continues to be mired in recession? We are saying, unilaterally, that they will take action that will lift their prices to $29 a tonne by 2015-16. It is possible that there is some miraculous recovery in the European economy that means that they feel more confident about putting additional burdens on themselves, such as a much higher carbon price, but the fact of the matter is that that is not looking likely at this stage. It is an unreasonable approximation or estimation to be making at this time. If you look at the IMF report that was issued recently, the World economic outlook, all the downside risks in Europe mean that growth is likely to be pretty anaemic across the European zone and not supportive of a strategy of raising carbon prices to $29 a tonne by 2015-16.
Senator Thorp, in particular, raised this issue of dire predictions about the carbon price and its impact on electricity. The fact of the matter is that the electricity price rises that were initiated by the introduction of the carbon price are wending their way through the production system as we speak. Across the economy there have been price rises of varying magnitudes. Some have been around the 10 per cent mark, some have been higher. But what the government consistently misses in this debate is that the carbon tax is being imposed on top of quite large electricity price rises which have been induced by, in some cases, electricity regulators seeking to promote investment in the sector to meet rising electricity demand. Consumers have now been faced with this double or triple whammy of rising electricity prices from a variety of sources: the Renewable Energy Target, the carbon price and also network investment. What the government has missed on the way through, or does not want to acknowledge, is that they are also in part in the gun because they have done something directly to raise electricity prices at a time when people are dissatisfied with the level of electricity prices because of all the other actions that have been undertaken, including by regulators. They seem to be unwilling to acknowledge that that is going to lead to them paying the price for not listening to Australians who are saying, 'We are fed up with the rising cost of living, particularly in utilities. We are fed up with what we are having to pay.' (Time expired)
Question agreed to.