Monday, December 15, 2008

The big grab, then the great giveaway

EVERY dollar raised by emissions trading will be returned to households and business, virtually all of it with no strings attached.

Treasury estimates the first two years of trading will raise $23.5 billion as 1000 or so firms have to buy emission permits. The figure is far lower than earlier forecast, partly because 25 per cent of permits will be given away, rising to 45 per cent by 2020.

The Government has kept its promise to give back the entire amount as compensation to households and industries — so much so that no money will be left over to invest in developing low-emissions technology.

Costings show that in the first two years:

¦ $9.9 billion will be paid to households through increased benefits for families, pensioners, self-funded retirees, the unemployed and students, and a $390 rise in the low-income tax offset.

¦ $4.4 billion will be spent to cut petrol taxes by as much as emissions trading raises fuel prices.

¦ $6 billion will be spent on compensating 40 industries that generate heavy emissions and are exposed to competition from countries without carbon charges. They include not only aluminium smelting and concrete making, but liquefied natural gas, oil refining and parts of the pulp and paper chain.

¦ $1.4 billion will go to compensating coal-fired power stations that will be displaced by gas as the cheapest source of electricity.

¦ $1.7 billion will go to a climate change action fund to subsidise coalmines, regions where employers shut down, and small business to invest in energy-efficiency equipment.

Business welcomed the compensation, without giving the scheme support.

Minerals Council chief executive Mitchell Hooke called it "the most aggressive emissions trading scheme and interim targets in the world".

But community groups criticised the plan's failure to fund research, development and commercialisation of new technology; climate adaption in developing countries; or retrofitting of energy-saving equipment in low-income households.

"Compensation for heavily polluting industries robs the clean industries of the future", said Paul Toni of the World Wildlife Fund. "If Australia wants to dramatically reduce emissions, we must invest in new technologies such as wind, ocean, geothermal and solar."

Brotherhood of St Laurence executive director Tony Nicholson praised the Government for lifting welfare benefits, but urged it to retrofit 3.5 million homes.

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