Friday, June 6, 2008

Govt prepared for tough decisions on climate change: Wong

ABC Online, Posted Fri Jun 6, 2008 3:20pm AEST

It's the big reform challenge for the Government and it's not going to be easy, but Climate Change Minister Penny Wong is making it very clear it's a debate about the economy.

"I think it's fair to say that generally and conventionally climate change has been seen as an environmental issue," she said.

"So let me be absolutely clear: this Government believes climate change is an economic issue and the only way to tackle climate change is through economic reform."

It's not going to be an easy reform because it's long-term. It will push up energy prices and will hurt those producers and consumers who can't easily switch to a more climate friendly product or business model.

Senator Wong says the Government will develop measures to help households, particularly those on low incomes, and address the challenges faced by emissions intensive and trade exposed industries.

But in a climate where the Government has already faced trouble in a debate about the rising cost of petrol and where some such as the Opposition are leaning towards fuel being left out of an emissions trading scheme (ETS), the minister is favouring the scheme having the broadest practical coverage, arguing that shares the burden and lowers the costs.

"And the point is this, the more emissions intensive industries who aren't making a contribution to emissions reduction through the ETS, the more work that needs to be done by those industries that are making a contribution," she said.

"In addition, the more compensation or free permits given to some firms, the harder it is for others.

"And the more narrow the coverage, and the more compensation or free permits the Government provides, the less capacity we have to assist families.

"So none of these decisions are isolated; they are all linked. Giving relative priority to one or another inevitably involves a trade-off.

"So it boils down to what is the most economically responsible design. The more we adjust the ETS to suit particular interests, the less robust and credible the carbon market will be."

And she criticised shadow treasurer Malcolm Turnbull, who's favoured leaving fuel out of the emissions trading scheme and concentrating instead on driving greater fuel efficiency standards.

"This debate will be littered with temptation for the Opposition, and they may choose to continue with the old short-term politics and they will score some points along the way," she said.

"But any attempt by the Opposition to undermine the integrity of the ETS will expose their economic credentials to serious question."

Senator Wong's plea to have the most broadly based scheme possible has been echoed by the Government's chief adviser on climate change, Professor Ross Garnaut, who told AM it would be better to have fuel in.

"The costs of mitigation will be lower, the broader the base," he said.

"So if you exclude anything, it puts a bit more of a burden on other things.

"And it's going to be a hard adjustment task for a lot of parts of the Australian economy, so it's better to share that right across the economy."

Greens leader Bob Brown has welcomed the comments by both the minister and the professor.

"That's world's best practice," he said. "Australia has to catch up there, and if you don't include the fossil fuel burners, be they fossil fuel coming from oil or from coal, then you put an added cost on to the rest of the economy.

"It has to be shared right across the economy. That's obviously good market practice. And it has to be aimed at reducing the enormous amount of greenhouse gases, a lot of it wasted."

It will be a tough debate for the Government and the closer it gets to the next election, the harder it will be to resist the pleas of those who don't want to face higher prices or higher business costs.

But Senator Wong wants the debate cast completely in the national interest.

"So the question for all of us is are we here for short-term political gain or are we here for Australia's long-term economic future?" she said.

"As the Prime Minister has said, we recognise this will involve some hard decisions but if we're serious about Australia, preparing Australia for the long-term climate challenge we must make difficult decisions now."

Based on a report by Lyndal Curtis for The World Today

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