The Planet Needs Both Sides

22 June 2009


By Greig Gailey

President, Business Council of Australia

The most comprehensive emissions trading scheme in the world is currently in front of the Australian Parliament. Its ambition is to contribute to the global task of reducing greenhouse gas emissions. But it has substantial implications for Australia’s economy and jobs.

The opportunity for both sides of politics is to come together and shape a scheme that truly delivers Australia the lowest-cost transition to a low-emissions future.

The Business Council of Australia has for some time supported the concept of an emissions trading scheme, but it must be a scheme which ensures that Australia’s economic competitiveness does not suffer simply because we are putting our scheme in place ahead of the rest of the world. In the absence of a global price on carbon, we need a careful scheme design. Otherwise we face a real risk of seeing competitive Australian businesses and Australian jobs simply migrating offshore, with no reduction in global greenhouse gases.

Since the government first published details of its scheme last year, the BCA has been working with the government on ways in which this objective could be met. Initial versions of the government’s scheme had a number of unintended consequences for business and the economy. A series of case studies published by the BCA set out those consequences for all to see.

The government has responded to many of the issues raised and since that first design, a number of important improvements have been made to the proposed Australian scheme.

A number of concerns, however, remain. The BCA has continued to hold discussions with both the government and the Opposition on the further changes that it believes are needed to fully protect Australia’s economic competitiveness, namely:

  • The coal industry must be sustained in the absence of a global approach to reducing greenhouse gas emissions.
  • Coal-fuelled electricity generators must have the right incentives including, importantly, the incentive to continue supplying electricity as Australia makes the transition to a lower-emissions economy.
  • For emissions-intensive, trade-exposed industries such as steel, paper, glass and cement, the detailed basis on which interim assistance would be delivered must be finalised.

The impact of an ETS on the Australian economy is so fundamental and far-reaching that it needs support from both sides of politics with the imperative to get the right scheme in place.

We are seeing signs this week that Australia can take a bipartisan approach to this challenge, with the opposition prepared to negotiate with the government to get the details right.

There are substantial benefits in the government and opposition working together to resolve the outstanding details of Australia’s ETS.

Together they can ensure the scheme contributes to global greenhouse gas reduction without reducing the competitiveness of Australia’s industries.

Business needs the certainty of the right scheme if it is to make the necessary investments to move Australia to a low carbon future. This certainty should be delivered sooner rather than later.

Passing scheme legislation which gives Australia the right ETS this year would provide businesses with just that certainty. 



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