Impact of the Carbon Pollution Reduction Scheme on job security, and
Australia's states and regions
As discussed in chapter 5, the proposed Carbon Pollution Reduction
Scheme (CPRS) will have a significant impact on trade exposed industries.
Chapter 7 explores the evidence provided to the committee regarding how this
will impact on employment, including the effects of this in particular states
The majority of evidence received by the committee indicated that there will
be significant job losses as a result of the CPRS if implemented in its current
form, particularly in trade exposed industries. Although there may be some job
opportunities in emerging 'green industries', the evidence indicates that these
are unlikely to offset the jobs lost, particularly those lost in trade exposed
The Australian Workers' Union (AWU) unequivocally communicated their
view on the importance of employment security:
Every job in every enterprise is important to us and the AWU
will be doing everything in its power to retain these jobs for the future to
maintain the living standards of our workers and the health of our communities
and the future for our children.
The majority of evidence addressing the employment implication of the
CPRS indicated that there would be significant job losses, particularly in
regional areas, and they would fall most heavily in trade exposed industries.
The committee also received evidence regarding opportunities for growth in
employment in low emissions industries.
The modelling undertaken by the Department of the Treasury (the
Treasury) indicated the share of employment will decline in the following
sectors in the CPRS -5 scenario as against the reference case: coal
mining, gas mining, refinery, aluminium, coal fired electricity, construction,
accommodation and hotels, and other services. Sectors that increase the share
of employment in the modelling are dairy cattle, grains, forestry, other food,
other manufacturing, other electricity, business services and public services.
However, the committee notes that given the Treasury assumed in its
modelling that 'full employment' would be maintained (as noted in chapter 4), no
conclusions can be drawn at all from the Treasury modelling in terms of the
overall impact of the proposed CPRS on jobs.
The committee received evidence from Mr Daniel Price from Frontier
Economics noting that:
...when one of these models has produced an outcome of full
employment, it is a modelling assumption; it is not a modelling result...But the
way the model seeks to achieve full employment is to adjust Australian
industry, and the way it does that is to change, mostly, real wages.
So, if you want to achieve full employment in the model, real
wages decline because what is happening is that our costs are going up because
of an emissions trading scheme. To remain internationally competitive,
something has to give.
In the committee's view the way in which the Treasury modelling
information on employment levels was presented by the government is misleading.
For example, it is obvious based on the evidence that any increase in so called
'green jobs' in the Treasury modelling is merely the result of the assumption
of 'full employment' being maintained. That is, if jobs are lost in all other
industries, to comply with the government's forced assumption of 'full
employment', 'green jobs' have to increase in the model, even if they will not
grow in reality.
The committee heard evidence from a number of trade exposed industries stating
that unless Australia's competitors are forced to take similar emissions
reduction action, the CPRS will result in reduced production or future
investment in Australia, which will lead to job losses. The industries which
gave evidence to the committee include cement, coal mining, aluminium and steel.
For example, Mr Michael Hitchens from the Australian Industry Greenhouse
Network stated, particularly in relation to trade exposed industries:
The proposals that are in the emissions trading scheme—in the
white paper—do not, as I said, fully offset the competitive disadvantages that
those Australian companies will face. That will have an impact on both jobs and
investment in those industries in Australia.
A similar view was expressed by Mr Ralph Hillman of the Australian Coal
Association, who stated 'there will be job losses as a result of the CPRS
and...they will impact on regional areas.'
He continued by explaining that the jobs that are at risk include 'substantial
construction jobs as well as ongoing jobs for the actual mining operation.'
In addition to potential job losses in industries that are considered
trade exposed, Qantas, which as discussed in chapter 3 is not considered to be
strongly affected, argued that the CPRS will impact on jobs in the aviation
sector: 'It is possible that, by adding a further significant deadweight cost
to the business that we have to absorb, it is possible that there are further
When asked about the changes to the structure of the Australian economy
and resultant changes to jobs, Mr David Pearce of the Centre for International
Economics explained to the committee that:
I expect that some [jobs] will appear in Australia and some
will appear overseas. Also, it is of course very unlikely that it will be the same
person who looses a job in the coal industry and then becomes a software
engineer in some other industry. It is clearly most likely to be a different
person. This really comes to my point that we do not really understand a lot
about the short-term and transitional consequences of the CPRS, and the
transitional effects are very, very microeconomic. They are exactly the things
you are talking about. The transitional costs are experienced at the very micro
Contrary to the view that significant job losses were inevitable, in
particular in coal mining and in the steel industry, as expressed by every
employer or employer group appearing before the inquiry, the committee
considered the views expressed by union officials to be surprisingly
The Construction, Forestry, Mining and Energy Union (CFMEU) was one of
only a few witnesses who maintained that the union does 'not think there will
be job losses in coalmining due to the CPRS.'
Mr Paul Howes, National Secretary of the Australian Workers' Union,
stated 'I do not believe that a single member of mine needs to lose their job
because of the advent of the CPRS.'
Mr Howes, however argued that the effects of the global financial crisis need
to be taken into consideration and companies provided assistance to protect businesses
I think it is important that during the Senate’s
deliberations on the legislation that thought is given to how we best assist
companies that are in severe financial distress at the moment, regardless of
the carbon price once the ETS is introduced...
Further, Mr Howes argued that there may need to be:
...a strong mechanism to allow companies who are severely
affected by the global financial crisis to possibly have a quarantine or an
additional application just for the period of the financial crisis...
A number of witnesses discussed the possibility of new 'green jobs',
some of whom argued that Australia should take up the opportunity to develop
new industries and gain from this new area of growth.
The Commonwealth Scientific and Industrial Research Organisation (CSIRO)
...achieving a rapid transition to sustainability via emission
trading and related mechanisms would have little or no impact on national
employment...achieving the transition will require a massive mobilisation of
skills and training – both to equip new workers and to enable appropriate
changes in practices.
Mr Howes stated 'you can see there is potential for the expansion of new
jobs in new industries, such as alternative fuel sources, carbon capture and
storage and so on'.
The Australian Conservation Foundation agued enthusiastically that
'there is a major potential in green industries, renewable energy and
Pacific Hydro argued that an increase in renewable energy will create:
...tens of thousands of jobs...they are not some kinds of devalued
jobs in the economy. The jobs that we talk about are the same sorts of jobs
that you would have in a coalmine—electrical engineers, steel fitters,
concreters and things like that.
The Queensland Resources Council agreed that job opportunities are
likely to emerge in the renewable energy sector, however raised the issue of
the need to consider the full impact of different types of jobs:
I think probably the modelling that needs to be done...is the
multiplier effects of those jobs. Do we get the equivalent multiplication of
mining from 50,000 to 216,000 jobs as in Queensland?...That would be an important
piece of analysis to be able to compare like with like.
Mr Hillman also raised the issue of a job in one industry not
necessarily being of equivalent value to the economy as a job in another
industry, arguing that the loss of coal mining jobs will be particularly
...coalmining is globally competitive and a totally competitive
industry. It can stand on its own feet without any government assistance, and
we are constantly irritated to see references in the press to coalmining
receiving assistance. The only assistance it receives is the fuel rebate that every
other operation in Australia receives. So what you are going to do is replace
globally competitive jobs, something Australia does better than anybody else in
the world, with jobs which are probably going to have a substantial element of
subsidy—such as wind farms that are based on a substantial element of subsidy
provided by the proposed renewables target. So in a way they are second-rate
jobs in that respect.
The committee understood the issue of potential job losses to be of
particular importance because of the impact of the global financial crisis (GFC)
on employment. For example, Mr Hillman, Executive Director of the Australian
Coal Association informed the committee that the GFC 'has had an enormous
impact on the coal industry...We have 3000 redundancies already declared. There
is the prospect of more'.
The committee, on assessing the evidence provided regarding employment,
was concerned that the 'green jobs' that may be created as a result of the
change to a lower emissions economy would not offset the jobs that are likely
to be lost as a result of the implementation of the CPRS. Further, the
committee was particularly concerned by the evidence indicating that those who
lose their jobs are not likely to be the same people who will be employed in
emerging industries, therefore potentially leaving those who lose their jobs
with very few options. This is of particular concern given the current economic
Impact on Australian states
The committee received evidence about the impact of the CPRS on
Australian states, particularly Queensland and Western Australia, which have a high
number of trade exposed industries.
The Department of the Treasury modelling examined the impact of emission
pricing across states:
Real gross state product (GSP) falls in most
states/territories (Chart 6.17 and 6.18). Generally, the faster growing states,
Queensland and Western Australia, face the greatest impacts from emission
The impact of emission pricing on GSP is heavily influenced
by differences in industry composition and the degree of export orientation
The Department of the Treasury informed the committee that 'Queensland
is the most affected state of Australia, with South Australia being the least
While Queensland is the most emissions intensive state and it
is expected to be most affected relative to the reference scenario, the
Queensland economy in absolute terms under the CPRS minus five scenario by 2050
is expected in the modelling to have the strongest growth over that period of any
state...the modelling is that Queensland will still experience the highest
economic growth over the next 40 years even though it is the most affected
state as a result of the CPRS minus five scenario.
The Australian Coal Association explained to the committee that 2700 of the
redundancies in the coal industry which were as a result of the GFC were in
The Queensland Resources Council explained the importance of the coal
industry and mining more broadly to Queensland:
Coal is the most significant export commodity produced in Queensland
and accounts for approximately half of the mining sector’s economic and employment
contribution. As at November 2008, the coal sector had in excess of 22,000
fulltime equivalent employees. It goes without saying that mining is critical
to the prosperity of regional Queensland.
The broader resources sector in Queensland employs directly
about 50,000 people, but with the multiplier effects you are talking about
another 216,000 people.
We are talking about 12 per cent of Queensland employment
that is in the resources sector.
The Queensland Resources Council also argued that Queensland is
receiving insufficient compensation through the Electricity Sector Adjustment
Despite estimations that the CPRS will impose a $3 billion
direct asset loss on Queensland’s black coal fired generation fleet over their
remaining lives, it is not clear why they will only receive two per cent, or
$60 million, of the proposed assistance measures during the first five years of
operation of the CPRS under the Electricity Sector Adjustment Scheme. By
contrast, and despite having very high emissions intensities, Victorian brown
coal fired generation assets are expected to receive $3.4 billion in direct
assistance, representing approximately 75 per cent of asset losses associated
with the introduction of the CPRS.
The committee also heard evidence about the impact of the CPRS on
The Western Australia Department of Treasury and Finance argued:
Western Australia is the most trade-exposed state in the country.
About 45 per cent of our income in 2006-07 was derived from exports compared to
20 per cent nationally. The final scheme design and how it treats trade-exposed
emissions-intensive industries is what will drive how Western Australia fares
under the emissions-trading scheme...
The Chamber of Commerce and Industry of Western Australia argued that
the people of Western Australia will experience the greatest impact:
Mr Canion—Clearly, WA is an isolated location. We rely on
freight to get products in and out of the country, and it is long-distance
freight at every turn. This adds a cost impost right through the economy, so we
are very vulnerable to changes and fluctuations in fuel pricing. That gets passed
right through the supply chain down to the end user or consumer of that
CHAIR—More so than in any other state?
Mr Canion—We believe so, based on our geographic isolation
and, also, a lot of our heavy industry is in the north-west of the state, which
is one step further again from Perth, and you are talking thousands of
kilometres potentially to travel.
The Western Australia Department of Treasury and Finance argued that
Western Australian consumers will be paying higher prices for energy to benefit
...the community pays for an emissions-trading scheme in the
form of higher energy prices, but in Western Australia the major structural
adjustment will be observed on the east coast, so a consumer paying more for
energy in Western Australia does not necessarily see a large number of new
gas-fired projects or renewables coming onstream. They are paying for that to
happen on the east coast, which is really the point of an emissions-trading
scheme: where it is cheapest for these things to happen is where you will see
it happen first.
The issue of the distribution of the ESAS compensation was also raised
in regard to Western Australia by Griffin Energy:
Mr Trumble-...90 per cent is going to approximately four very
large brown-coal-fired plants in Victoria and South Australia.
CHAIR—How much of it is going to Western Australia?
Mr Trumble—$24 million of the $3.9 billion is returning to
Western Australia to two plants owned by the state owned generator, Verve
The Western Australia Department of Treasury and Finance argued that as
a result of the CPRS:
We will see a shift away from the intermediate processing,
particularly in the resource industries. So where we have, say, gold refining
or processing base metals up into concentrates, the emissions-trading scheme
will distort the activity away from that value-adding process and push it back
towards more the raw materials. That would be contrary to perhaps how state
governments have wanted to develop the Western Australian economy away from a
‘dig it up and ship it off’ economy into a more value-added economy. This will
provide a driver back towards digging it up.
The committee is concerned about the impact of the CPRS on Western
Australia, given the economy of Western Australia is resource and energy
intensive and relatively less diversified and mature than the economies of the
The committee is of the view that the CPRS as proposed will constrain
Western Australia's ability to diversify and mature its economic base by developing
value adding economic activities.
As discussed in chapter 6, the committee also received evidence about
the energy security issues facing Western Australia.
Impact on regional areas
Mr Price confirmed to the committee that the New South Wales (NSW) Government
commissioned Frontier Economics to undertake modelling of the impact on
regional areas of the CPRS as proposed in the Green Paper.
The Frontier Economics report provided to the NSW Government was released to News
Limited following a Freedom of Information request.
The Frontier Economics modelling reportedly found that the effect of the
CPRS would be 'much more severe' in the states and regions where the economy is
based on emissions intensive industries.
The modelling found the impact on coal prices would mean the
economies of Gippsland and central-west Queensland contracting by more than
20 per cent.
The gross regional product of the Hunter Valley in NSW and
central Western Australia would fall by about 20 per cent...
The modelling also reportedly found that the economy of the Kimberley
region would contract by over 25 per cent.
The committee notes the evidence provided by Mr Price that given the changes to
the treatment of liquid natural gas (LNG) in the White Paper, the impact on the
Kimberley region will not be this severe.
On 2 April 2009, the committee requested that the NSW Government provide
the report as prepared by Frontier Economics to the committee. At the date of
publishing no response has been received by the committee.
The State of the Regions 2008-09 report concluded:
The cost of climate change (enhanced water security, loss of
production and carbon prices) will fall disproportionately on non-metropolitan
regions. Non-metropolitan region households will have up to double the cost of
climate change, compared to metropolitan regions, with only a quarter to half
the capacity of metropolitan regions, in terms of income and wealth, to absorb
the additional costs of climate change.
The committee received a considerable amount of evidence regarding the
impact of the CPRS on regional areas. The disproportionate impact is largely
due to the location of many trade exposed industries in regional areas. Mr
Price of Frontier Economics put the view: 'If carbon intensive regions were not
adversely affected, the whole scheme would not work.'
Mr Price explained to the committee that Frontier Economics has
undertaken modelling which shows that regional economies will contract by 20
per cent compared to the reference case, in which there is no emission trading
He stated that modelling showed the following regions will most likely be
affected by the introduction of an ETS:
Central Queensland, South-West Queensland, the
Hunter-Illawarra, Gippsland, which is the Latrobe Valley, pockets of South
Australia—very severe effects on South Australia because they have so little
industry. The Kimberleys before—they will still be affected but not as badly as
our initial results.
Consistent with the view put to the committee by a number of
organisations from regional areas, the Gladstone Chamber of Commerce and
Industry expressed concern that there is no publicly available government
modelling that shows the impact of the CPRS on regional areas.
The National Institute of Economic and Industry Research informed the
committee that their research indicated the areas that will be hardest hit by
the CPRS are those that have significant emissions intensive industries:
Because the resource industries—that is, mining and smelting
and so forth—are emissions intensive, you end up with the non-coastal
Queensland, plus parts of the Queensland coast—places like Townsville—remote
Western Australia, South Australia north of Port Augusta. You also end up,
fairly obviously, with the areas where heavy industry is still quite important—places
like Wollongong and the western suburbs of Melbourne. So it is not entirely a remote
area hit. It is simply a reflection of where the carbon-intensive industries
The CFMEU explained that:
...the mining and power generation industries take place
primarily in regional areas rather than in major urban areas and that because of
that they tend to have a significant multiplier effect on jobs at the regional
The Australian Coal Association pointed out that in addition to
employing a large number of people in regional areas, it contributes 'to the
social fabric of the nation, including through the underwriting of significant
rail and port infrastructure as well as social infrastructure in regional and
more remote communities.'
The National Farmers Federation also argued that the CPRS may have a
disproportionate impact on regional areas:
The other issue is the potential for a disproportionate
impact on regional communities. We must remember that regional communities have
limited access to public transport works and also are more exposed to fuel for transportation
over greater distance. Therefore they have greater exposure to fuel use, which
means that potentially they could be disproportionately affected by any
emissions trading scheme implemented on the domestic market.
Virgin Blue argued that aviation:
...is the key to the viability of many Australian regional
When we go to a regional centre, us taking an aircraft there
is far more than us providing air travel. The reason that regions like us to go
there is because of the ongoing economic impact that we have. You need it to
sustain those regional environments.
When we go into a new market, by providing reduced fares in
that market, we stimulate activity. That activity is not just the airfare; it
is the hotels and the taxi fares and all the other things that go with
stimulating a local regional economy.
The Australian Council of Social Service stated:
We have real concern for those communities likely to be
adversely affected by change, but we think also that much of this change will
be a while in coming and that arrangements can be put in place for transition.
The Australian Council of Social Service also pointed out that despite
the difficulties faced by some communities, new opportunities are likely to
There are going to be some particular communities that suffer
extremely adverse effects and some categories of workers and some industries.
But on the other hand—and I think we have worked very hard to look at the other
hand in recent times—there ought to be industries and opportunities that spring
up in those opportunities in place.
Pacific Hydro explained that employment in the renewable energy industry
is based in regional areas.
Similarly, the Biofuels Association of Australia informed the committee that
the majority of jobs in the biofuels industry are in regional areas.
Therefore if these industries grow, this is likely to have a positive affect on
employment in regional areas. The Biofuels Association of Australia argued
If the biofuels industry in Australia was provided with the
right policy environment then the Biofuels Association of Australia
believes...This would create 3,000 green jobs in regional Australia and when
indirect employment flow on effects are taken into account, a further 1,280
green jobs in regional Australia. In total regional Australia would benefit by
4,280 green jobs.
The committee considered the issue of the impact of the transition from
jobs in one industry, for example coal, to jobs in another industry, for
example renewable energy. Mr Price informed the committee that:
...the actual transitional pain that we see from any structural
change in industry is in fact completely assumed away in these models [used by
The cost of all the friction that causes the economy not to
adjust as seamlessly and costlessly is not included. None of the actual social
costs of dislocating communities are included. I think that is going to be
pretty severe. It is unlike any other policy in that it comes along and almost
overnight changes the relative economics of industry.
One of the main themes of the evidence received by the committee in
regional areas was highlighted by Mr Glenn Churchill representing Gladstone
Area Promotion and Development Limited who explained that:
...there needs to be a balanced community awareness program so
that everybody can be aware of what this truly means from the industrial giants
right down to Mr and Mrs Smith.
The Australian Chamber of Commerce and Industry also argued for an
educative initiative to inform small business of the impact of the CPRS on
Assistance for people in regional
The Department of Climate Change explained that while the assistance for
emissions intensive trade exposed (EITE) industries is designed nationally,
those areas with more EITE exposure will receive more compensation.
The Western Australia Department of Treasury and Finance argued for more
assistance to be allocated to regional communities, rather than to coal fired
That assistance, instead of being provided to a coal-fired
power generator, may actually be better off being provided directly to the
community or the regions that will be experiencing that structural adjustment
more acutely, because that adjustment will occur regardless of the provision of
that assistance, so those communities will experience the impacts of that
regardless of the provision of assistance to the generator.
Further, the department argued:
...there may really be a case for regional and remote households
to receive additional assistance to help them adjust to the Carbon Pollution Reduction
Scheme above and beyond the standard level of assistance that is proposed to be
provided to households in the Commonwealth’s green paper.
The Australian Workers' Union argued that any assistance should be
designed to support ongoing employment:
My primary concern would be to ensure that the assistance
that will be made available will actually support our industries and
workers—that workers maintain their jobs and industries remain profitable—that it
is a key contribution that the assistance could be making to the economy.
The committee sought information from regional areas considered likely
to be impacted by the CPRS, and held public hearings in Wollongong, Mackay and
Gladstone. The report now considers the evidence regarding specific regional
The committee heard evidence on the impact the CPRS is likely to have on
the regional economy and future investment in regional Queensland.
The Queensland Resources Council informed the committee that 'in the
central and north-west regions...mining accounts for approximately 90 per cent of
those regions’ economies.'
As discussed in chapter 5, Cement Australia has put on hold a possible
expansion to their Gladstone plant, pending the outcome of the CPRS, putting at
risk 50 ongoing jobs and hundreds of construction jobs.
The Gladstone Chamber of Commerce and Industry argued that they are
'concerned that the only real burden from a carbon trading scheme will be
imposed on citizens and small business and large industry will be exempt.'
The Mackay Regional Council explained to the committee the impact of the
CPRS on local councils, including the cost of emissions from landfill and
increased costs for fuel and energy. The council informed the committee that
the only method of funding the increased costs was by increasing rates, which
they estimated may need to rise by as much as 10 per cent.
On the issue of green jobs, the Gladstone Area Promotion and Development
Limited argued that green jobs 'are the way of the future', however 'not to the
detriment of current jobs and the potential for jobs especially in the Surat
basin with the future of the coal industry.'
However, the Gladstone Regional Council stated that it is unlikely that
sufficient green jobs would be created in the region to off-set the possible
Mr David Phillips, the General Manager of Mackay Tourism highlighted the
importance of the tourism industry to the area, employing 6000 full-time people
in the region. Mr Phillips explained that most of the tourism operators 'are
acutely aware of the need to protect and sustain our environmental performance
in this region.'
Mr Phillips also explained that the coal industry is critical to the tourism
industry in the area as 'It is through the coal industry that Mackay
airport...enjoys the airline frequency and the number of seats that it does.'
Mr Arthur Rorris, Secretary of South Coast Labour Council (the Labour
Council), explained that the Wollongong area has 'a significant base of heavy
industry' which 'employs...thousands of workers locally and makes up what we call
the backbone of the regional economy.'
Mr Rorris further explained that the Labour Council:
...wants to explore the options for the region to create the
so-called green jobs, or sustainable jobs...It is something that our region needs
to pursue in order to be relevant in the post-climate-change world...our ability
to plug into that new green economy...will depend on our ability to retain our
heavy industry and our heavy industry infrastructure. We see our manufacturing
and our related base as the key to actually being competitive in the new green
economy...What we are saying, therefore, is that the new green economy is one
that will be built on the back of our existing industrial base.
Mr Noel Cornish, the Chief Executive of BlueScope Steel, explained that:
Currently in the Illawarra we employ 4,700 people. A study
that was undertaken in 2006 by an independent research organisation showed that
our multiplier effect of indirect jobs is somewhere between 12,000 and 16,000
additional jobs in the Illawarra.
Describing what he foresees as the impact of the CPRS on BlueScope
Steel, Mr Cornish stated:
These are very, very difficult times for most businesses in
Australia today...I do not believe that we have any capacity from next year to
take on a tax that would not apply to all our competitors in the global
marketplace...The tax would be of such a nature that I am not aware of any other
steel maker in the world that is going to bear this carbon tax. Even the
Europeans, who are in phase 2 of their emissions trading carbon reduction
activities, are not talking about imposing taxes on their steel industry until
at least 2012...it is tens and tens of millions of dollars of impact from the
first year of operation. Of course, it increases at 1.3 per cent per annum...What
it means is that if our business becomes unviable in the global marketplace,
then the whole Port Kembla steelworks is threatened.
Hydro Aluminium Kurri Kurri, which is based in the Hunter Valley,
explained that the 'smelter is the largest employer in the local area,
generating jobs for approximately 2,500 workers in the area, including 500 direct
The company is evaluating a:
AU$4 billion investment in the Kurri smelter to secure its
long term viability...would generate approximately an additional 3,000 new
long-term jobs in the area, as well as approximately 15,000 jobs during an
anticipated three year construction period.
However, the company argued that 'the combined impact of the RET and the
CPRS costs will effectively destroy the economic viability of the smelter.'
The Collie Chamber of Commerce provided information to the committee
regarding what they see as the potentially significant impact of the CPRS on
The potential for job losses, migration of residents to other
towns as a result of heavy job losses and a loss of community as a result of
this process is significant. Towns like Collie, whose economic viability has
been closely linked to a strong commitment by successive Federal and State
governments to encourage the use and expansion of coal fired power stations
puts the town in a precarious position. If the move to the CPRS places any of
our major industry entities in a position where operating becomes unprofitable
and they choose to close operations...the residents of Collie, its economy and
social fabric will be altered forever.
The White Paper proposals for the CPRS do not assist the
Collie district in any meaningful way. It places the black coal mining industry
in a perilous situation and the flow on effect of this in the community is
immeasurable at this stage, but likely to be economically and socially
disastrous for the town.
The Gippsland Area Consultative Committee argued that:
...Gippsland, and especially the Latrobe Valley, is a region
likely to be affected by the proposed CPRS in several contexts. The region's
key industries...are both emissions intensive and trade exposed and Gippsland is
therefore likely to sustain an impact unlike any other region in Australia.
International Power provided the following information to the committee
regarding the impact of the CPRS on the Latrobe Valley:
As currently designed, the Carbon Pollution Reduction Scheme
will adversely impact IPRA Latrobe Valley generators – Hazelwood and Loy Yang B
Power Stations. As a major employer in the Latrobe Valley district, the impact
on the district will also be adverse...With the commercial viability of the two
stations being compromised, the ability to maintain current workforces (540 at
Hazelwood and 140 at Loy Yang B together with the use of full-time contractors of
more than 300) is threatened...In summary, the potential impact of the CPRS, as
it is currently designed, on the Latrobe Valley district will be immediate,
long lasting, immense and adverse.
I acknowledge the Government has allocated support through
another transitionary scheme (Climate Change Action Fund) of which some funds
may be directed to the Latrobe Valley but this fund is dwarfed by the potential
impairment which would ensue if the CPRS policy remains unchanged.
The Gippsland Resources Group expressed a different view to the
In its current format, (5-15 percent reduction in carbon
emissions, free carbon permits for major polluters) we do not believe there
will be major impacts in the short to medium term arising out of the Federal
government's carbon pollution reduction scheme (CPRS).
The committee considers that the current design of the CPRS is flawed.
The scheme as currently designed will lead to significant job losses,
particularly in trade exposed industries, and will devastate some regional
communities. The committee is concerned about the impact of the CPRS on these
individuals and communities, particularly given the impact of the GFC.
7.86 The committee recommends that the government conduct a proper assessment
of the impact of its proposed CPRS on levels of employment, to assess levels of
employment as a 'modelling result' rather than including employment levels as a
7.87 The committee recommends that before legislation to introduce the
proposed Carbon Pollution Reduction Scheme is passed, the government conduct a
more comprehensive assessment of the impact of the proposed CPRS on individual
states and regional economies to ensure the scheme, including compensation
arrangements, is structured so that particular states and regions are not
disproportionately and unfairly impacted.
The committee recommends that the government properly inform the
community how the scheme will impact them and advise of actions they can take
to reduce the cost impost of the scheme.
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