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Not pretty under Abbott's fig leaf

22 Jun 2013

Published in The Australian.

The Coalition's 'direct action' on carbon pricing is really a $1,200 slug for families.

FOR the best part of three years the chief criticism of the Gillard Government's policy of putting a price on carbon is that Australia would be going it alone.

That has always been a fallacy.

Arnold Schwarzenegger's meeting with Prime Minister Julia Gillard in Perth last week was a reminder that California, the world's 12th-biggest economy, has had a carbon price since January 1 this year - and Armageddon has not arrived, just as Whyalla hasn't been wiped off the face of the earth.

In total, 10 American states have priced carbon. So, too, has the European Union and New Zealand. Korea, a manufacturing powerhouse, is implementing carbon pricing from January 1, 2015.

But the Coalition's final fig leaf fell to the ground with this week's announcement by China, the world's most populous country, that it has started an emissions trading scheme in Shenzhen, a city of 10 million people.

Australia's largest trading partner plans to follow this with emissions trading schemes in four more cities - Beijing, Shanghai, Tianjin and Chongqing - and the provinces of Guangdong and Hubei.

How often have you heard that Australia's emissions trading scheme will simply force our manufacturing plants to relocate in China, where there is no price on carbon?

Repeated statements by the Federal Government that China is intent on putting a price on carbon have been dismissed as fantasy. No more.

Exposed for its false claim that China would not act on carbon pricing, the Coalition has now trained its sights on the difference between Australia's carbon price and that of China and other countries.

In Parliament this week, the Coalition asked why the Government was imposing a carbon price of $23 per tonne when China's price will be a mere $5 a tonne.

The Coalition refuses to acknowledge that with the provision of 94.5 per cent of carbon emission permits free of charge to emissions-intensive, trade-exposed industries - such as those that will purportedly pack up and relocate to China - the effective Australian carbon price for them is just $1.30 per tonne.

From 2015, Australia's fixed carbon price will be replaced with a fully-fledged emissions trading scheme linked to the EU's system.

And as countries in our own region adopt high-integrity emissions trading schemes, Australia's could be linked to theirs as well.

This is exactly as the architects of the Federal Government's emissions trading scheme envisaged when they announced a carbon price with a three-year fixed price followed by a floating price.

In basic design, the Gillard Government's emissions trading scheme is similar to that announced by then-Prime Minister John Howard in 2007.

Howard said at the time: "Being among the first movers on carbon trading in this region will bring new opportunities and we intend to grasp them."

More recently, he has recalled that when he was advocating an emissions trading scheme he assumed other nations would also be embracing carbon pricing. Well, they are.

Tony Abbott defeated Malcolm Turnbull by one vote in a leadership ballot triggered by Turnbull's support for an emissions trading scheme. Only a month before that, Abbott himself had been advocating an emissions trading scheme. But he was willing to change his position as the winds of public opinion shifted.

Not much principle there to guide Abbott-led Coalition policy on climate change.

The present Abbott policy on climate change is embodied in so-called direct action.

In Parliament during the week, Abbott boasted that he would abolish the carbon price, thereby providing tax relief to everyday Australians. But his direct action plan is estimated to cost Australian households $1,200 each. That sounds like a new tax, without any compensation for families.

In Australia, there is a bipartisan commitment to reducing carbon emissions by 5 per cent below 2000 levels by 2020. So the debate is not about whether or not we should act, but the best and cheapest way to achieve this common goal.

Despite the Coalition's hysterical opposition to carbon pricing, virtually every expert inquiry in the world has found that this approach is the best way of reducing pollution.

The Coalition has announced that, if elected, it might not honour contracts entered into with private businesses by the Clean Energy Finance Corporation.

Repudiating written commercial contracts would introduce a high level of sovereign risk by an Australian Government. But this doesn't seem to bother Coalition hard-heads such as Andrew Robb and Arthur Sinodinis.

Abbott's chief of staff has reportedly described his direct action plan as a "fig leaf"; pretence that the Coalition is committed to acting on climate change when really it isn't.

In a week during which the Climate Commission released a new report containing dire predictions about the effects of climate change, direct action is a very expensive fig leaf - costing $1,200 a household and doing little to nothing in limiting carbon emissions. Is it any wonder that the Gillard Government portrays Abbott as a risk to the Australian economy?

Craig Emerson is the Minister for Trade and Competitiveness and the Minister Assisting the Prime Minister on Asian Century Policy.

Media contacts: Minister's Office 02 6277 7420

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