Direct Action versus Carbon Con

Leader of the Opposition's Address to the Future SA Dinner


The Prime Minister’s commitment to a carbon tax from the middle of next year and to an emissions trading scheme from 2017 is inevitably going to be the dominant issue of this parliament. Make no mistake. This new tax is designed to change your way of life. This new tax is designed to change the way our economy works. What’s the point of a carbon tax if it doesn’t make it harder for people to turn on their air conditioners or to drive their cars? After all, the only way that a carbon tax can reduce emissions – rather than just make them more expensive – is if people use less coal-produced electricity and less oil-powered transport.

If a carbon tax does not reduce the use of fossil fuels, it’s just another tax – not an environmental measure at all. Given people’s propensity to use their air conditioners and to drive their cars, if a carbon tax is to reduce electricity use and car use it will have to raise the price of daily life very considerably indeed. It’s no wonder that the Prime Minister prefers to talk about the principle of the carbon tax rather than nasty details like the level at which it would have to be imposed.

When the Prime Minister, Senator Brown, the Greens and other ministers talk blithely about a low carbon economy or a carbon constrained future, this is exactly what they mean. They mean an economy where much less electricity is generated by burning coal, where transport means less use of private cars and where industries that use lots of electricity like steel and aluminium scarcely exist in Australia. If this is to be more than just a hit on people’s cost of living, it must utterly transform the way we live and how we work.

Not for nothing was the old Soviet Union emblazoned with slogans such as “communism equals worker control plus electrification”. It’s odd that Julia Gillard seems to have forgotten her history. You can’t have a modern economy or rising standards of living without rising power consumption. The leaders of China and India certainly haven’t forgotten. That’s why they’ll never agree to any limitation on their carbon dioxide emissions that would lock their people permanently into the kind of poverty from which they are only now beginning to escape. That’s why a new coal-fired power station opens in China every fortnight. That’s why any unilateral step to tax emissions will hurt Australia’s economy without improving the world’s environment.

There was, of course, a stronger argument for putting a price on carbon when the whole world seemed to be moving in that direction. Pre-Copenhagen, it could have been argued that the costs of a carbon tax would be equally shared among all the world’s economies. Now that President Obama has abandoned his “cap and trade” scheme, it’s clear that the best way to reduce emissions is through measures that would be in the national interest regardless of international action. 

In the absence of wind that never stops blowing and sun that never stops shining; in the absence of hydrogen cars; and in the absence of nuclear power stations to supply most base load electricity, big reductions in emissions are currently impossible without a big increase in people’s cost of living or a significant change in their lifestyles. Eventually, technologies that we can hardly envisage today will make fossil fuels less important. In the meantime, though, making coal, oil and gas more expensive is the modern equivalent of hastening the computer age by a tax on typewriters.

Thanks much more to the closure of the coal industry and to deindustrialisation than to a widely scammed ETS, Europe has hardly increased its production of emissions over the past decade. It has, though, increased its consumption of emissions by about 50 per cent. Almost nothing has changed environmentally. What’s happened is that emissions-intensive activities have migrated from Europe to the rest of the world. The rest of the world is sustaining Europe’s standard of living by doing the things that Europeans are too environmentally vain to do.

It was to avoid this kind of debate in an election year that the current Prime Minister kyboshed her predecessor’s emissions trading scheme.  Along with the Treasurer, she sabotaged Kevin Rudd’s political standing and then seized the prime ministership herself because she wanted to avoid an election debate that couldn’t be won. The ETS had to be off the election agenda because, given a choice, the electorate was hardly likely to put preventing climate change ahead of protecting its standard of living.

Julia Gillard did not just depose the prime minister who’d championed an ETS. She did not just let it be known that this was one of the key factors why the government “had lost its way”. She went further. With her announcement that climate change policy would be put in the hands of a citizens’ assembly until what she called a “deep and lasting consensus” had been created, she deliberately built the impression that there would be no carbon price in the term of the current parliament.  The otherwise implausible citizens’ assembly now looks like a cynical ploy to reassure struggling families worried about cost of living pressures.

On her own admission, the Prime Minister always wanted to impose a carbon price. She just didn’t want to justify it to the electorate in an election campaign. She wanted to avoid it during the last election campaign, to impose it during this term of parliament, and to justify it during the next campaign as a done deal that couldn’t be undone without causing havoc.

As sure as night follows day, I said on at least 15 occasions during the campaign, there would be a carbon tax if this government is re-elected. The Prime Minister’s statement “there will be no carbon tax under a government I lead” should haunt her to the political grave because it was the culmination of a deliberate strategy to hoodwink voters.

The rationalisation that the Prime Minister has changed her position because circumstances have changed is false. She may not have anticipated a hung parliament but she certainly anticipated a hung Senate and knew that any carbon arrangements would have to be negotiated with the Greens who were the only group campaigning for a carbon tax.

The Prime Minister’s claim that voters will reject what she calls the politics of fear is false. If she believes it, why didn’t she make a carbon tax to be followed by an emissions trading scheme front and centre of her election campaign? Rejection of such a policy would not be evidence of an electorate that’s scared of the future but of an electorate that expects a level of basic honesty from its leaders.

The Prime Minister’s boast that she is taking a courageous decision is false. Courageous governments inform voters of their tough intentions before an election, not after one. If this is as important as she now says it is, why wasn’t it important enough to be an issue in last year’s election? Not only was her statement that there would be “no carbon tax under a government I lead” untruthful but it was specifically designed to stop voters from casting judgment when they had the chance. It wasn’t just a false statement. It was a deliberate deception.

Regardless of when the next election is held, the carbon tax will be the big issue. The Coalition will oppose it in opposition and rescind it in government, as we will the mining tax and as we would the flood tax were it still in place. The government claims that business wants certainty. Once a carbon tax is in place, the only certainty is that it will increase. There will be no carbon tax under the Coalition. It doesn’t get more certain than that.

We are against a carbon tax today, tomorrow, next week, next year, this term and next term. We are against it because it is a new tax from a government addicted to unnecessary new taxes and wasteful new spending. More fundamentally, though, we are against it because it won’t achieve its stated objectives and because we have a better plan that will. Our job is not to make a bad tax less damaging. Our job is to present voters with a clear alternative and we will.

For a government that denied it would bring in a carbon tax to bring one in without first seeking a new mandate would be a travesty of democracy. Only one single member of the House of Representatives went to the election supporting a carbon tax. Voters did not elect a parliament that supported a carbon tax.  Voters did not force a carbon tax on a reluctant prime minister. The opposite is the case. The Prime Minister is forcing a carbon tax on reluctant voters. Now that voters finally know the Prime Minister’s real intentions, now that they know what was fake and what was “real Julia”, they should have another chance to vote before a way-of-life-changing tax is brought in as a conspiracy of the parliament against the people.

In modelling the impact of Kevin Rudd’s emissions trading scheme on prices, the Treasury used a carbon price of $26 a tonne. This, remember, is the scheme that the Greens rejected because the carbon price wasn’t high enough. Even at $26 a tonne, a carbon tax would add an average of $300 a year to electricity bills (and $500 in NSW). It would add 6.5 cents to the cost of a litre of petrol. At this rate, a carbon tax would raise about $10 billion a year without materially reducing emissions because consumers have previously absorbed price rises of this magnitude.

A carbon tax of about $25 a tonne would close 16 coal mines and cost 10,000 jobs in coal mining (according to Access Economics). It would cost 24,000 jobs in mining generally (according to ACIL). It would cost 45,000 jobs in emissions-intensive industries (according to Frontier Economics). It’s “economic vandalism” according to the head of Bluescope Steel that will drive manufacturing jobs offshore.

A carbon tax would add 25 per cent to the price of electricity and up to five per cent to the cost of groceries because power and transport costs are embedded in the price. If these estimates are wrong, the government should give us the correct ones. The revelation that the government has not attempted to model an economy-wide carbon price since 2008 suggests that it’s scared of what the answer might be. It has been prepared to cite estimates of so-called green jobs that might be created under a carbon tax – but this assumed a carbon price of $45 a tonne – and didn’t net out the existing jobs that would be lost.

For the record, the Coalition holds that climate change is real and that mankind is contributing to it. We have a different policy to deal with it, that’s all, one which aims to reduce emissions, not just to make them more expensive. There is a better way. That’s the Coalition’s strong plan to reduce emissions that is economically responsible and that won’t cost Australian jobs. We support action on climate change but, unlike Labor, don’t think that it should reduce our standard of living.

Last February, the Coalition announced a direct action policy to reduce emissions by 5 per cent by 2020 through more tree planting, better soil and smarter technology. Our plan would cost $3.2 billion over the forward estimates period rather than the $40 billion that the government had sought to raise through its ETS. Our plan would cumulatively reduce emissions by some 600 million tonnes of carbon dioxide over the decade by purchasing abatements at an average cost of $15 a tonne. Our plan was backed by various experts in the field, including a former Labor treasurer of Queensland, who said that large scale emissions reductions were feasible at this price.

Our plan was fully funded from the budget through savings in other government spending. It did not involve a net increase in government spending, it did not involve a net increase in the tax burden on the public and it did not involve the government picking winners, merely selecting the most cost-effective forms of emissions reduction from the various proposals that the market would produce.

Our proposal is straight-forward, easy to understand, and practical to deliver. Yes, it implies the international recognition of emissions reduction through storage of carbon in the soil but the US government as well as our own is campaigning to bring this about. By contrast, the government’s proposal involves a new tax, a new slush fund and a new series of handouts designed to buy the next election.

The Prime Minister will insist that jobs will be protected in energy intensive industries and will insist that no one will be worse off because everyone will be compensated – except the rich. She will insist that this is a painless way to reduce emissions – just like she said before the last election that there will be no carbon tax under the government I lead. This is a dishonest government trying to do the wrong thing by stealth. I will do everything I humanly can to prevent them getting away with it and to give voters a chance to pass their verdict at the next election.

I have a plan for a modern, low emissions economy that maintains our standard of living, makes best use of Australia’s natural advantages in soil, sun and wind and doesn’t hit families at a time when they’re already doing it tough. That’s what I will be offering at the next election whenever it comes.