Carbon Pricing - Getting on with the Job

I spoke in parliament yesterday against Tony Abbott's motion that calls for a carbon price plebicite.

Carbon Tax Plebiscite Bill 2011

22 August 2011

The Carbon Tax Plebiscite Bill before the House is an embarrassing leftover from the Leader of the Opposition's attempt to have a vote that even he said he would not abide by. Having told this parliament that a plebiscite was going to be brought before it, the Leader of the Opposition has had to follow through. But it is difficult to know what the Leader of the Opposition expects to make of this. As with his 'say one thing to one audience and another thing to another audience' approach, on this issue the Leader of the Opposition has said on some days that he would abide by the results of a plebiscite and on other days that he would not abide by the results of a plebiscite.

I think ordinary Australians see this for the stunt that it is. They recognise that what faces Australia now are two very different plans. The major political parties in Australia are committed to the same targets. Both sides of the House are committed to a target of a five per cent reduction in emissions by 2020. That percentage sounds fairly small, but it is important to remember that is against a business-as-usual case in which emissions rise substantially and in a context in which the Australian economy grows substantially. If you think of total carbon emissions per dollar of GDP, the five per cent emissions reduction target actually represents a halving of the carbon intensity in the Australian economy. So it is a target worth fighting for. It is going to make a real difference to the environment.

I am pleased that, at least for now, the opposition are in the tent on that policy. The trouble is that they are in the tent in the most inefficient way. While the government are looking at the high-speed rail solution, the coalition are standing by the side of the road seeing if they can thumb a ride from anyone going by because their battered jalopy has broken down.

The government's strategy goes directly to the problem. It goes directly to the fact that dangerous carbon pollution is causing world temperatures to rise. We have seen steady warming—there is a vast consensus among scientists that the world is warming and that humans are causing that warming. We know, for example, that in Australia each decade since World War II has been warmer than the one that preceded it. We know that sea level rises have occurred. We know that temperature rises have occurred. And we know that the pattern of temperature change is consistent with human induced warming. If you look at the different levels of the atmosphere in which the warming has taken place, what you see will be entirely consistent with what anthropogenic climate change models would predict. That means we need to go directly to the heart of the problem, and the government is doing that by pricing carbon pollution. By putting a price on carbon pollution we induce innovation in the market, we encourage entrepreneurs, small business people and large business people to make the decisions that will ensure that we as a community reduce dangerous carbon pollution to the greatest extent possible.

By contrast, the coalition has a 'subsidies for polluters' plan. While Labor will put in place a price on pollution and provide generous assistance to households and businesses and investment in renewables, the coalition will slug Australian households. We thought that slug would be $720 a year until the coalition said that they would not internationally link those schemes. Whereas the trend throughout the world has been international linkage of carbon pricing schemes, the coalition now has a 'go it alone' approach. That, of course, would push up the cost to households. Our estimate now is that the cost of the coalition's 'subsidies for polluters' scheme would be $1,300 on each Australian household. That would be a substantial slug, and what you would get for it would be a much less effective scheme.

At the same time, the coalition are committed to axing the very public servants who would be needed to administer their scheme. There are many virtues to a market based scheme. One of them is that individuals put in place all of the changes that you expect. We will encourage polluters to put in place abatement technologies to use their fuel more effectively and we will encourage households to choose the lower carbon product on the shelf. But the coalition's direct action program, far from allowing them to scrap the department of climate change—as they have claimed it would—would most likely require more public servants to administer it. It would most likely require an increase in personnel because, if you put in place a scheme which is straight out of central planning, you need more people to do that central planning.

We have seen throughout this process the Prime Minister being willing to face the hard questions. The Prime Minister has constantly been willing to go out and speak to people in shopping centres and engage with people at community meetings. She has engaged with a wide cross-section of Australians. But the Leader of the Opposition has constantly been running away. He is only willing to speak to hand-picked audiences. He is only willing to speak to the party faithful.

A couple of weekends ago, after walking out of a Western Australian Liberal Party conference, which voted for a royal commission into climate science, a great embarrassment on the Liberal Party if ever there was one—one assumes the next Western Australian Liberal Party motion will be for a royal commission into the notion that Elvis is alive and well and living in Subiaco, or into whether or not the moon landing was faked—the Leader of the Opposition literally ran away from journalists. They asked him many hard questions, and his car was not there to pick him up, so he had to run around the corner.

When he arrives here in Canberra, we see much the same. On the weekend, the Leader of the Opposition made his way up to Dickson—my local shopping centre, where I was holding a mobile office—and sought to hold a media stunt, as he often does, at a local butcher. The only slight snag he ran into was that the butcher would not have a cut of it. The butcher would not let the Leader of the Opposition through the door. So the Leader of the Opposition had to drive down to the other end of Canberra—to Fyshwick—to find another butcher, who would let him in. The matter, not surprisingly, arose at the subsequent media conference—this was on 17 August—that the Leader of the Opposition put in place. Questions were put to the Leader of the Opposition such as:

'Did your office try to persuade the owners to let you still come in this morning?'

Mr Abbott's answer:

'Again, I'm not going to go into the ins and the outs …'

The next question was:

'So they didn’t refuse to let you in?'

Mr Abbott's response:

'But the point I try to make at all times is …'

The journalist asked:

'But on the subject, though, were you refused entry to that shop? Were you refused entry to the shop by the staff there?'

The Leader of the Opposition said:

'I can understand why the Australian people feel deeply ripped off …'

Finally, at that point, one of the journalists said:

'But you’re not answering the question, Mr Abbott.'

And that is symptomatic of the Leader of the Opposition's approach. It was noted in Twitter:

'So much for steak-holders.'

And 'Will Mr Abbott again appear on Meat the Press?' Another wag noted, 'Perhaps some of his schedulers might be in for the chop.'

But while there is much amusement to be had from the Leader of the Opposition's flips and backflips, we are dealing here with very serious issues. Those serious issues concern the House and concern those of us who are serious about long-term economic reform when we see the sort of scare campaign that the Leader of the Opposition is running. On A Current Affair on 1 December 2009, the Leader of the Opposition said, 'This will be a truth campaign, not a scare campaign.' But, alas, we have seen anything but. At a doorstop on 12 July the Leader of the Opposition said:

… the whole purpose of the carbon tax is to phase out the coal industry.

Of course, that is not true at all. We know that trade-exposed emissions-intensive industries will have generous assistance available to them. We know that the permits that will be provided will be provided for good reason: Labor has always been the party that has stood up for Australian jobs. And Labor recognises that because climate change is a global problem we will not solve anything by exporting pollution overseas. If an emitter simply moves to another country then that will not do any good for climate change. So we want to ensure that emissions do not move overseas, but we do not want to blunt the effect of the carbon price. Providing free permits prevents that: the price effect is still there but by providing the free permits we will ensure that the jobs are maintained.

The Leader of the Opposition has said, at the Peabody Metropolitan mine on 9 June 2011:

'… the problem is that this mine will be one of many mines under threat if Julia Gillard’s carbon tax goes ahead.'

Later on that occasion the Leader of the Opposition said:

'A carbon tax ultimately means death to the coal industry and that’s very, very bad news for the Illawarra, bad news for this mine and everyone who works here.'

This constant scare campaign would be one thing if it was just directed to people in this place, but Australians are busy people, they often only have a chance to get small snippets of the news—maybe a few grabs here and there—so it is not surprising that, having run a vigorous scare campaign over the past couple of years, Mr Abbott has succeeded in scaring some Australians. We have seen the effect of that in some of the trucks that have arrived, snarling up the traffic in my electorate this morning.

But just because you run a scare campaign does not mean you have your facts right. Mr Abbott has said that as a result of the carbon price Whyalla will be 'wiped off the map'. He said that at a doorstop on 22 April 2011. But that is not the view of the steel companies. OneSteel is completing a $65 million upgrade of its Whyalla blast furnace to extend its working life beyond 2020. BlueScope has described the carbon price as a pragmatic solution to a complex problem.

We have had many respected voices in the industry who have recognised the importance of putting a price on carbon pollution. The value of using a market based mechanism is that if you start early then you are able to achieve least-cost abatement. As with many things in life, as the Prime Minister has noted, this will not get cheaper by putting it off.

The Leader of the Opposition has had a multiplicity of positions on carbon pricing. In 19 July 2011 he said:

'I've never been in favour of a carbon tax or an emissions trading scheme.'

But that stands in stark contrast with his interview on Sky News when he said, on 29 July 2009:

'I also think that if you want to put a price on carbon, why not just do it with a simple tax.'

Then he supported the emissions trading scheme. On 22 November 2009 on 2UE he said that you cannot have a climate change policy without supporting this ETS at this time. On 2 October 2009, on Lateline, he said:

'We don't want to play games with the planet. So we are taking this issue seriously and we would like to see an ETS …'

As the member for Wentworth has noted on his blog on 7 December 2009:

'His only redeeming virtue in this remarkable lack of conviction is that every time he announced a new position to me he would preface it with "Mate, mate, I know I am a bit of a weathervane on this, but …'

And his having this multiplicity of positions really means that Australians are increasingly realising that the Leader of the Opposition will say anything to any audience. That stands in stark contrasts to the leaders that have come before him.

There are many things on which I would disagree with former prime minister John Howard but he did take seriously the challenge of carbon pollution. He commissioned work to be done on climate change and the use of market based mechanisms in the late 1990s. Former prime minister John Howard went to the 2007 election promising to implement an emissions trading scheme. The member for Wentworth, as Leader of the Opposition, continued that tradition. Why? Because sensible conservatives around the world recognise that market based solutions to environmental problems are in the great tradition of small 'l' liberalism. As a result, we on this side of the House are now the heirs to the Deakin legacy. We are the heirs to the legacy of ongoing reform. We stand for economic reform, for the long game, for focusing on solutions that will build a better Australia.

The modern Liberal Party has simply turned into the party of no. They hate us on every issue. You can see that hate is palpable when they hold their community meetings, but ultimately they need us. The modern Liberal and National parties are no longer parties of ideologies, of belief, as they once were. They are now anti-Labor parties. They are now antireform parties. They need us because without us they stand for nothing. The definition of the modern Liberal-National Party platform these days is 'Whatever the Labor Party is for, we are against it.' They are the party of opposition, the party of denial, the party of negativity and the party of no.

There is another party like that in world politics and that is the Tea Party. We have seen Senator Bernardi calling for an Australian Tea Party. Senator Bernardi would like to see the Tea Party imported into Australia, but we do not need a modern Tea Party because we have the Liberal and National parties willing to say anything to any audience, willing to oppose anything that this government puts forward. They have been willing to oppose so many sensible reforms over the course of this year, including reforms which they introduced. We saw the extraordinary situation earlier this year in which reforms on fuel taxation introduced by then Treasurer Peter Costello were opposed by the Liberal and National parties for the sake of a cheap headline. They decided that it was better to back economic populism rather than support economic reform that was in the long-run interests of Australia.

The Leader of the Opposition is pursuing a strategy which has its strongest antecedence in the doomsday cult leader. Doomsday cult leaders are greatly successful for a number of different reasons. The first thing a doomsday cult leader can do is offer absolutely everything to their followers: 'You want free food? I've got it. You want free wine? I've got it. You want free love? I've got it.' You can see that in the $70 billion black hole in the opposition's costings. The opposition have such a deep black hole in their costings because they are willing to offer something to everybody but are never able to say where the money will come from. If you want to stand before the Australian people as an alternative government you need to identify where the savings are coming from. But, no, the opposition would rather stand up as a doomsday cult and say you can have anything you want: 'You won't have to pay for it; we'll give it all to you.'

The second similarity with a doomsday cult is that the opposition are predicting the end of the world. They have—like all good doomsday cult leaders—a particular date in mind. Their date is 1 July 2012. On 1 July 2012 prices will skyrocket, towns will be wiped off the map and whole industries will be destroyed. We know that none of these claims are true. We know the price effect will be 0.7 per cent of the CPI, less than one-third of the price impact of the GST, we know that generous assistance to emissions-intensive trade-exposed industries will ensure that jobs are supported and we know that the generous household assistance will ensure that Australians are able to buy the basket of goods that they currently buy, but for those running the doomsday cult it is useful to have a date on which the world will end. That is how you rally the supporters around you. You need to have a concrete moment at which the world will end and that date for the opposition is 1 July 2012.

There is just one small problem—one which is common to all doomsday cults—and that is the date eventually comes around. There is a day on which you have to look your followers in the eye and say, 'Well, it didn't quite pan out the way we said it would.' And so on 2 July 2012 the opposition will be looking their followers in the eye and trying to explain why the prices on the shelves and jobs look pretty much the way they did. I do not think we should predict that the cult will completely fall apart. I am indebted to some work by Leon Festinger and other sociological researchers and their book When Prophecy Fails: A Social and Psychological Study of a Modern Group that Predicted the Destruction of the World. They note that after the failure of events to come true groups sometimes regroup realising that as a form of coping mechanism—called dissonance reduction, a form of rationalisation—members often dedicate themselves with renewed vigour to the group's cause after a failed prophecy. They rationalise with expectation, such as the belief that their actions forestalled the disaster. I suspect we will see some of Festinger's predictions after 1 July 2012, but that doomsday cult leader strategy will not wash with the Australian people. They will see straight through the Leader of the Opposition.

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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.