24-May-2009
Portfolio Media Releases, Emissions Trading Scheme
The Rudd Government should use the twelve month delay in the start date in its emissions trading scheme to see what the world decides and to get the deeply flawed scheme right.
There is no good reason to finalise legislation before we see what President Obama does during this year, before we see what the world decides at Copenhagen in December and before the work is done to correct the many flaws in Australia’s scheme.
No assessment has been made by the Government of the loss of jobs and investment if our competitors don’t also put a tax on their CO2 emissions within the next 10, 15, 20 or more years.
Yet, this is looking highly likely. Developments in the United States over the last week suggest Australia may well find itself effectively going it alone until 2025 or beyond at the cost of tens of thousands of jobs, the loss of major investment, and for little or no environmental gain.
During a presentation at the Victorian Liberal Party State Conference today, the Opposition spokesman on emissions trading design, the Hon. Andrew Robb AO MP, detailed the stark differences emerging between the Rudd Government and the legislation endorsed by US President Obama.
Amendments made last week to the draft emissions trading legislation sponsored by Democrat Congressmen with the blessing of President Obama, include very specific provisions providing 100% protection to US export and import competing industries in any future emissions trading scheme until 2025.
What is more the Obama draft Bill now says that a reduction in protection of these industries will only occur after 2025 when more than 70 percent of global output for that sector is produced or manufactured in countries that have a scheme equivalent to that operating in the United States.
This is a wake up call of monumental proportions for Mr Rudd and Senator Wong.
It emphatically confirms that the Rudd scheme will see Australian export and import competing industries facing a significant tax of tens of billions of dollars that is not faced by our competitors, including the United States.
Under the Rudd Government’s proposed scheme we would be making a very major leap in comparison with the rest of the world.
In Mr Rudd’s haste to “lead the world” on emissions trading he runs the great risk of unwittingly going it alone, and for little or no environmental gain.
Mr Robb also outlined the four overarching areas of concern to the Coalition that remain, outside of some industry specific issues.
The first is this loss of competiveness if Australia imposes a tax on its industries not faced by the rest of the world for 10 – 20 years. The public has been duped about the real cost of the Rudd Government’s emissions trading scheme.
Much damage could be done, especially to many major rural and regional centres, because Australian companies, employing millions of Australians, will have to pay a significant new tax, either directly or indirectly, that none of their competitors will be paying. This cost has been confirmed by many companies and industries, with the Minerals Council of Australia detailing on Friday the loss of over 66,000 jobs in the next two decades that will occur under this model. The Government has refused to assess the loss of jobs and investment that may occur if our competitors don’t co-operate. The Productivity Commission should be immediately commissioned to assess various models and scenarios.
The second issue is that many companies will see much of their profitability taken up with the new effective tax they are going to face. That is going to have a serious impact on the capacity of companies to fund the technology transition to a lower carbon footprint.
Thirdly, the problem of churn or recycling of billions of dollars of taxpayer monies through the system at the Government’s discretion.
Finally, in our view the Government has not looked at significant low cost opportunities or complementary measures that are available. Too much is being expected of an emissions trading scheme in the absence of global action. Complementary measures directed at capturing carbon in soil, reducing energy usage, especially in commercial buildings, other bio-sequestration and recognising the efforts of individuals and families in reducing emissions have the potential to quickly deliver very significant cuts in net emissions without putting at risk tens of thousands of jobs and the fabric of many major regional centres.
All these possibilities have largely been ignored in the Government’s scheme, ignored in the Government’s rush to be seen to be “punishing” the big emitters. The Government’s legislation has been trapped within the 20th century policies and rules of Kyoto, rather than expanding the range of processes to cover 21st century solutions such as the many forms of bio-sequestration or energy efficiency measures.
The Government’s scheme, as designed, puts major industries, and the jobs that go with them, at great risk. Commercial realities have been ignored. President Obama’s plans have been ignored. The scheme is deeply flawed.
We have to better understand the prospect and implications of effectively going it alone in Australia with this scheme before we make any decisions about finalising a scheme.
If Australia gets this reform wrong, the impact could be hugely detrimental.
Media Contact: Stuart Eaton, 0433 298 620