BCA carbon plea risky business: BP

Weekend Australian
Saturday 23/8/2008 Page: 6

THE Business Council of Australia's plea for extra assistance for trade-exposed industries under the Government's proposed emissions trading scheme could put extra burdens on the rest of the economy, other business leaders have warned. The chairman of BP, Gerry Hueston, has expressed deep frustration that the increasingly bitter debate over compensation for trade-exposed industries is obscuring the broader arguments about the need for Australia to quickly introduce an ETS.

As reported in The Australian yesterday, the BCA has proposed the Government fix a carbon price at between $10 and $20 a tonne and provide more generous compensation to trade-exposed businesses unable to pass on extra costs, warning that the Government's plan would force companies to close and move offshore.

Peter Anderson, the chief executive of the Australian Chamber of Commerce and Industry, whose membership includes many small- and medium-sized businesses, appealed to the Government to remember that extra compensation for big trade-exposed companies meant a higher burden for the rest of the economy.

"The design of a scheme must recognise that compensation in one sector could transfer costs to another sector," Mr Anderson said. "The Government has to make sure its analysis of economic impacts covers the economy as a whole, and that includes the direct and indirect costs on small and medium businesses." Origin Energy executive general manager Carl McCamish said a carbon price of between $10 and $15 "won't drive much change in the power sector".

Origin Energy believed the Government should aim for an early price of $20 or more to drive the switch from coal-fired power to cleaner gas. Mr Hueston appealed to business and environmental groups not to get bogged down in a fight over the ETS's short term economic risks and lose sight of the economic and environmental benefits of early action and the fact that the basis of the Government's proposed scheme was "sound".

The absence of a long-term international climate change agreement "should not deter Australia from starting now", he said. "There is no doubt that the only way to effect any change is to set an example.

We won't be able to move on to a focused and fruitful discussion of the policy details that can lead to effective change both at home and abroad until we acknowledge that the broad principles in the (Government's) green paper are sound." Wayne Swan said the Government would "take on board and seriously study" the BCA report but warned that it had "no bottomless pit of permits" to hand out. "We recognised very clearly in the green paper these energy-intensive trade-exposed industries were at risk," the Treasurer said.

Brendan Nelson said the BCA report proved the Government's proposed ETS would lead to job losses. "If you want to talk about job losses, if Mr Rudd keeps on the train that he's currently on for his emissions trading scheme in 2010, we tragically will have even more, because he does not think things through," the Opposition Leader said.