Business Council statement on Safeguard Mechanism design

10 January 2023

The Business Council welcomes critical progress on reforming the Safeguard Mechanism to help reduce Australia’s emissions and looks forward to continuing to work with the Government on the finer details of this important scheme.

The Government’s proposals are a measured step that will provide greater certainty for business, helping to cement Australia’s pathway to meet our 2030 commitments and putting us on track to reach net zero emissions by 2050.

The Safeguard Mechanism is a crucial tool in Australia’s ability to accelerate the decarbonisation of the economy while remaining internationally competitive and the Government is right to ensure it works as effectively and as simply as possible.

We must do everything we can to ensure Australia is at the global forefront of the clean energy transition.

The final design of the Safeguard reforms will require ongoing consultation, recognising that for some businesses the transition will be more difficult because the necessary technology is still to be developed.

Importantly, the reforms proposed in the Government’s position paper recognise the role the Safeguard Mechanism has in Australia’s ability to send investment signals. This enables business to continue growing and remain internationally competitive, which will minimise carbon leakage overseas.

This is an important reform and elements of this draft proposal will be challenging for some businesses. Business is ready to work through the detail to ensure a workable safeguard mechanism that keeps the economy strong.

The transition to net zero will also be challenging for some communities, and we support the allocation of funding and support to those most impacted through the Government’s Powering the Regions Fund. The implementation of this will be important as we work to ensure people, communities and trade exposed industries are not left behind.

We also welcome the government’s commitment to further explore the use of international credits and further consideration of an Australian Carbon Border Adjustment Mechanism.

We thank the government for progressing the reforms and appreciate its willingness to listen to business and adopt many of our recommendations. These recommendations are the result of detailed consultations and input from across the Business Council’s membership.

This includes:

  • Reducing emissions consistent with Australia’s greenhouse gas emissions reduction targets.
  • Setting baselines on a consistent and transparent basis and achieving an equitable distribution of the costs and benefits.
  • Allowing the market to find the lowest cost abatement wherever it occurs and encouraging production where it is least emissions intensive.
  • Making baseline setting arrangements, and administrative and reporting arrangements, as simple and low cost as possible.

We strongly welcome the Government’s commitment to continue engaging with business and other stakeholders.


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