Age
Tuesday 16/12/2008 Page: 1
CARBON polluters have won big concessions and the economy will bear only modest costs under an emissions trading scheme designed by the Federal Government to win the backing of the Senate. In a plan denounced by environmentalists and criticised by industry, Australia will cut its emissions unilaterally by 5% from 2000 levels by 2020.
The Government has promised to go to 15% if other major emitters play ball in next year's international climate negotiations. A coalition of more than 60 environment and community groups attacked the plan as "simply unacceptable", saying that if it were adopted globally it would "guarantee the loss of the Great Barrier Reef and the Kakadu National Park wetlands". The Greens and the Climate Institute Australia also lashed out, while business reaction varied from fearful to muted.
With the Government looking first to the Coalition to try to get its scheme through the Senate, the Opposition is keeping its options open, commissioning its own economic analysis. On Treasury estimates, households will face an average $4-a-week rise in electricity costs and a $2 increase in gas and other household fuel, with the scheme adding 1.1% to the cost of living and slicing only one-tenth of 1% off the economy's annual growth.
The Government will raise $11.5 billion a year from selling carbon permits to emitters, but promises to return $6 billion of that in compensation to households, $2 billion to motorists and the rest to businesses. Welfare recipients and other low-income earners will get full compensation or more. About 2.9 million low-income households have been promised at least 20% more than the scheme would cost them. About 97% of middle income Households - defined to include families earning up to $160,000 - will receive some direct cash assistance, but high income earners will have to pay the full cost. Motorists will be protected for three years by equivalent cuts in fuel tax.
Prime Minister Kevin Rudd launched the plan in a speech disrupted by three protesting environmentalists. As the Prime Minister ploughed on, ignoring the drama, Greens leader Bob Brown told one of the women: "You're a real Australian." Mr Rudd said climate change "is an inconvenient truth and a truth that we can no longer conveniently ignore". He rejected the argument that the Government had sold out by not embracing a 25% cut by 2020 - in effect writing off the chance of a comprehensive international agreement in Copenhagen next year.
In the unlikely event of such a deal, Australia would adjust its cuts beyond 2020 to accommodate the 25% goal. "Australia, in the negotiations, will be ambitious and working hard to bring about a maximalist agreement," he said, leaving open the possibility he will go to the Copenhagen conference. Mr Rudd said the Government had "listened closely" to the concerns of business and improved the scheme since the green paper earlier this year.
The total level of assistance to emissions-intensive trade exposed industries has been massively increased. Petrol refining and liquid natural gas are among 40 industries now expected to qualify for free permits covering most or almost all of their output. The Government will offer almost $4 billion over five years to compensate the owners of coal-fired power stations for the loss of their asset value, recognising that some - particularly in the Latrobe Valley- could be forced to shut down early. The unconditional target to reduce total emissions by 5% would represent a cut of 27% per head between 2000 and 2020, and a 34% cut from 1990.
Legislation for the scheme will be put up next year for a July 2010 start. Seeking to put the pressure on the Opposition Leader, Mr Rudd said it was "time for the real Malcolm Turnbull to stand up. Is it the Malcolm Turnbull who was supposed to be gungho about this 12 months ago or is it the Malcolm Turnbull of today seeking some short-term political advantage?" The Opposition declined to take a stand yesterday. "We will approach this with an open mind on targets and on start dates," said Coalition climate change spokesman Andrew Robb.
But he said the Opposition would examine the plan "very critically", looking at whether Australian jobs would be at risk. The Opposition has argued that an emissions trading scheme should not start before 2011 and probably by 2012. Its review will be conducted by the Centre for International Economics, and its executive director, David Pearce, an economist who has worked on climate change issues.
Business was ambivalent at best, negative at worst. While the Business Council acknowledged that "the Government has taken into consideration many of our concerns", the Australian Chamber of Commerce and Industry was unequivocal. "Introducing the scheme unilaterally and at a time when our economy is trying to stare down a global economic recession is too high a risk," said the chamber's chief executive, Peter Anderson.
The Greens were even more hostile. Senator Brown called the 5% target "a global embarrassment and a recipe for global catastrophe ... It is exactly where John Howard would have placed Australia in 2009." Environment groups were incredulous. Climate Institute Australia chief executive John Connor said the Government had "buckled to the short-term interests of selfish business voices", leaving itself with a "credibility deficit" with voters. Victorian Environment Minister Gavin Jennings offered rare support, saying the plan had the potential to "kick-start green investments for Victoria".
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