Garnaut calls for bipartisan support for emissions trading

ABC News Online, Posted 4 hours 23 minutes ago 

Updated 3 hours 38 minutes ago

• http://www.abc.net.au/news/stories/2008/07/06/2295724.htm
• Video: Alan Kohler speaks to Professor Ross Garnaut (Inside Business)
• Video: Barrie Cassidy speaks to Kevin Rudd (Insiders)
• Video: Emissions trading scheme to reap $4billion (ABC News)
• Related Story: Rudd says trading scheme will raise living costs
• Related Story: QRC backs emissions trading scheme

The Federal Government's climate change adviser says support from all sides of politics for an emissions trading scheme will give it a better chance of success.

Professor Ross Garnaut has recommended the scheme be set up by 2010, and phased in over two years if necessary.

The Opposition says it supports an emissions trading scheme, but is waiting to see the Government's proposal before deciding whether to support that timetable.

Professor Garnaut has told Channel Nine it is almost inevitable that the Opposition will look to politicise the issue.

But he says the scheme will fare better with bipartisan support.

"The chance of Australia getting it right, getting it right through the period of this Government, and getting it right through the period of the next government and the one after that are much better if we end up having bipartisan support," he said.

Deputy Opposition leader Julie Bishop has told Sky News the comments are unhelpful.

"He says he's an economist he's not an expert climatologist, he's not a politician, well then I agree he should stick to the economics of it all," she said.

"The Coalition has said we support an emissions trading scheme. We agree with many of the principles that Professor Garnaut put forward."

Ms Bishop says the Opposition also believes that the net price of petrol should not go up as a result of the scheme.

"The price signal from petrol is already being sent, well and truly, I mean petrol's increased significantly just in the last six months," she said.

"So the price signal is being sent, and we shouldn't clobber the Australian motorist by making it just unaffordable when there is no alternative."

Inflation fight

Prime Minister Kevin Rudd says the Government will continue to take a hardline approach against inflation after its emissions trading scheme is introduced.

The Government has acknowledged the scheme will lead to higher prices for energy, food and other services.

It has pledged to use all the revenue raised under the scheme, to compensate businesses and low-income households for the higher costs.

And Mr Rudd has told ABC1's Insiders, the Government will always have a hardline approach against inflation.

"And when it comes to this carbon pollution management system that we are talking about in this debate, we're very mindful of that as well," he said.

"The governor of the Reserve Bank was asked about this only a few months ago, and he indicated then that he did not see long-term inflationary impact resulting from this scheme."

Political landscape

Meanwhile, Professor Garnaut has agreed that the politics have changed dramatically in the past year, with rising oil prices, the credit crisis and a possible US recession.

"And let's not pretend that oil prices, coal prices, gas prices going the way they have don't make any difference, they make a big difference," he told ABC1's Inside Business.

"Australians already face large increases in petrol prices. They'll face large increases in electricity prices whether or not there's an emissions trading scheme because capital costs have gone up so much, that's the other side of the resources boom, because natural gas prices have gone up and they'll go up a lot more in eastern Australia because of the internationalisation of the gas market.

"Coal prices have gone up enormously because of what's happening in export markets, so all of those things are pushing electricity prices up a lot, much more than the ETS would, but the ETS is coming on top of that and will affect things."

He says businesses can best prepare for emissions trading by getting a handle on their carbon footprint.

"A lot of businesses have put a lot effort into that," he said.

"They've started looking into how they can cost effectively reduce emissions. BHP's investment in huge hydro-based aluminium smelting in the Congo is intelligent adjustment on a global scale.

"In the financial sector, for this system to work effectively, we're going to need new markets for new products, a lot of financial innovation - a lot of firms are already involved in that."