Carbon Pricing

I spoke in parliament last Thursday about carbon pricing.
Carbon Pricing, 7 July 2011

Labor's policy on climate change is grounded on three simple facts: (1) Australia is the largest per capita polluter of carbon in the developed world; (2) climate change is real; and (3) the market mechanism is the most efficient way of dealing with dangerous climate change. What is striking about what the member for Moncrieff likes to say about this is that Australia's emissions should not be taken into account; Australia cannot do anything about dangerous climate change. He neglects the fact that Australia's per capita emissions are the highest in the developed world. And what is particularly striking about the comments of the member for Moncrieff is that the coalition themselves are committed to a five per cent reduction by 2020. It is odd, isn't it? You would think if the member for Moncrieff really believed what he was saying, he would be arguing that Australia should not do anything and that the Liberal Party should walk away from the bipartisan emissions target. But he is not saying that. He just thinks that we should get to that target in a very inefficient way. That is the coalition's policy. By contrast, Labor recognises that we want to reduce pollution using market mechanisms. Business needs certainty, big polluters should be taxed and families deserve appropriate assistance. So our package targets the big polluters. It provides assistance to nine out of 10 households and it will cut 160 million tonnes of carbon pollution by 2020.

The Leader of the Opposition has gone into interesting territory in recent weeks. He has been repeatedly asked to name a single economist who will back him up, and he cannot name one. He cannot name a single economist who will back him. I have put that question to the member for Moncrieff from time to time and he will sort of shrug his shoulders and wriggle a little. But the Leader of the Opposition has decided he is going to come out punching on this. He said last week: 'maybe that is a comment on the quality of our economists'. Professor Joshua Gans, my good friend and co-author, who won the Economics Society of Australia award for the best Australian economist under the age of 40, put it best on his blog when he said: 'maybe that's a comment on the quality of our opposition leaders'.

You might well think, if you were to listen to the Leader of the Opposition, that he is talking about just Australian economists. There is something specific about the Australian economics profession. But as Professor John Quiggin pointed out in the Australian Financial Review today, overseas economists are just as hostile to the sort of voodoo economics that the coalition would have you believe in. John Quiggin reminds us that Greg Mankiw, George Bush's chair of the Council of Economic Advisors, established the Pigou Club dedicated to the notion that appropriate corrective taxes are the best way of dealing with environmental challenges. Who are the radical, low-quality economists that have signed up to the Pigou Club? There is Gary Becker, Paul Krugman, William Nordhaus, Kenneth Rogoff, Larry Summers. You would expect maybe there is a 'No Pigou Club' to go up against it. Well, actually there is not. Someone tried to form one and it turned out that they could not find any members for it.

Then you might think—and we have been making this claim a little—that the opposition's policy would have some supporters among command and control economies. We have been suggesting that their climate change is effectively Moscow on the Molonglo. The sad thing is I think we now have to withdraw that claim. Even in China, as John Quiggin points out, where central planning is still very much in vogue, the Chinese Communist Party's 12th five-year plan, the one that will run from 2011 to 2015, includes market mechanisms to deal with dangerous climate change. The Chinese, with all their central planning, are far more pro-market than is the current opposition.

Of course, the Leader of the Opposition has been hitting up businesses left, right and centre with his mobile scare campaign. This is a man who is pulling more stunts than Jim Rose. The great stuntman of Australian politics has been inflicting much of this misinformation upon my own constituents. That is the great cost of things. He has been taking his mobile scare campaign to some of the local businesses near this House. He went to David Smash Repairs in Queanbeyan and said that they would face substantial costs and substantial job losses. It is a little hard to see exactly how this is going to eventuate. They are a smash repairer. They fix people's cars. Are we going to be sending cars overseas to get fixed under an emissions trading scheme? I do not think so.

Of course, there is generous household assistance. This is exactly the sort of thing that the household assistance is for. More than half the carbon price revenue raised from big polluters will go to households to cover the very small price impacts.

The Leader of the Opposition then went to Ziggy's Garden Fresh in the Belconnen Markets. He walked around there telling any shopper who would listen to him that food and grocery prices were going up under a carbon pricing regime. We can go to CPRS modelling. What does it say about the impact of the former Carbon Pollution Reduction Scheme on fresh food prices? It suggests the impact would have been 0.6 per cent. Let us take a kilogram of apples or oranges. That means that the price impact would have been less than 2c. A kilo of broccoli would have been 3.5c. Once we take into account household assistance, many households will be well ahead under the carbon pricing package. They will not, however, be well ahead under the Leader of the Opposition's 'subsidies for polluters' policy. As the Minister for Climate Change and Energy Efficiency has pointed out, the Leader of the Opposition's subsidies for polluters policy would cost an average family $720 a year which is, if you want to talk Ziggy's Garden Fresh numbers, 241 kilos of apples.

The Leader of the Opposition then took his mobile scare campaign to Capital Doorworks, a business owned by a former Liberal Party political candidate in the ACT. The Leader of the Opposition then began his scare campaign suggesting the price of doors would go up as a result of carbon pricing. Capital Doorworks is, I can assure the House, not one of the businesses to which carbon pricing will apply. Treasury modelling suggests that the prices of products such as those sold by Capital Doorworks would rise by 0.7 per cent under the former Carbon Pollution Reduction Scheme and the government will provide generous assistance to deal with price impacts.

The Leader of the Opposition has been taking his mobile stunt campaign, his Jim Rose campaign, to Visy. He has visited a number of Visy plants, claiming that there will be massive impacts on Visy's business. Of course, he always neglects to mention the industry assistance that will be provided. Under the former CPRS, 94.5 per cent shielding from the carbon price would mean an impact of just $1 per tonne of product. Put another way, if you had enough boxes to hold 3,000 pizzas, the cost impact under the former CPRS would be $1. I think the household assistance will well and truly cover that.

It is very difficult to know the position of the Leader of the Opposition on this because he did write in Battlelines:

The Howard government had a preference for market mechanisms because these are generally most conducive to maximising choice.

A government member: He was right.

Dr LEIGH: He was right, as my colleague points out. The Leader of the Opposition also wrote:

The Howard Government ... proposed an emissions trading scheme because this seemed the best way to obtain the highest emission reduction at the lowest cost.

That leaves me with a dilemma. This was written down by the Leader of the Opposition in Battlelines and the most recent claims were things that he said. So, given the guidance that the Leader of the Opposition gave us in the last election campaign, I suppose we should probably favour the things that are written down. But then he sends out press releases as well. I am a bit confused by that because it is something he said but it is written down. Do I believe this or do I believe the book because it has a nice solid binding around the outside?

Frankly, the Leader of the Opposition is all scare and no facts in this debate. The carbon pricing scheme is the right scheme to deal with dangerous climate change. We will provide appropriate household assistance and Australia has a bright future ahead of us under a carbon pricing regime.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.