The Business Council of Australia (BCA ) is pleased to provide comment on the Department of Climate Change, Energy, the Environment and Water (the Department ’s) Safeguard Mechanism Review Consultation Paper (the consultation paper).
The BCA is ambitious for Australia. We aspire to drive prosperity for all Australians, leveraging our collective expertise and influence to shape a bright and innovative future for businesses, industries and communities. We are committed to working towards an Australia that is globally competitive, productive and fair.
Productivity is the primary factor which will define Australians’ future quality of life. Simply put, there are ‘no free lunches’, and we must be able to produce more with what we have if we are to sustain growing wages and national prosperity. If businesses cannot run efficiently and invest with confidence to strengthen their operations, the cost of what they are producing is higher than necessary. If the opposite is true, however, higher wages can be afforded without fuelling inflated prices.
Australian productivity has not meaningfully improved in a decade and today, our productivity growth languishes well behind most comparable nations — including the United States, United Kingdom, Germany, and France. Other nations are winning the business investment that can make our efforts more productive, in new technologies and capabilities.
The BCA endorses Australia’s participation in the Paris Agreement and supports Australia’s climate legislation enshrining this participation.
The BCA report, Achieving a net zero economy was supportive of Australia adopting ambitious interim emission reduction targets consistent with the Government’s 2030 target of 43 per cent below 2005 levels.
The BCA report, Australia 2035 – Maximising Our Potential provides an evidence base in relation to the measures required to deliver the Government’s 2035 emission reduction target of 62 to 70 per cent below 2005 levels. Key findings from this report include the following.
- New capital investment to deliver Australia’s emission reductions to 2035 is in the order of $400 to $500 billion (for all sectors of the Australian economy).
- The business case for many low emission technologies needs significant additional funding support before these technologies can be deployed and adopted commercially, notwithstanding the possibility of new technologies emerging and cost reductions in existing technologies over the next ten years.
- The efficiency and effectiveness of Australia’s regulatory approvals system need to improve significantly to enable a rapid acceleration in build rates of electricity and energy and other low emission technology and infrastructure.
- A comprehensive approach to scaling skilled labour capacity through cross-industry reskilling, international migration, vocational education and training and university programs is a critical enabler to the transition.
- If target ambition is not matched with policy ambition, if we do not get the fundamentals right and if we fail to attract the investment needed over the next decade, then Australia risks squandering its green economic opportunity and locking itself into a disorderly and more costly transition to net zero.
Key takeaways
- The review should have particular regard for Australia’s international competitiveness and broader investment attractiveness when making decisions regarding the Safeguard Mechanism’s design and operation beyond 2030.
- The Safeguard’s existing policy architecture is fit for purpose and therefore well positioned to deliver on its 2050 objectives efficiently and effectively.
- Safeguard policy settings for 2030 to 2035 (and beyond) must be very carefully considered and, in any case, must not exceed 4.9 per cent.