The federal government’s White Paper released this week proposes an emissions reduction scheme that is a positive compromise but a stretch nonetheless, the Australian Industry Group says.
Chief executive Heather Ridout acknowledged that the white paper proposals incorporated a number of major improvements but added that the planned Carbon Pollution Reduction Scheme (CPRS) remained “a big ask” and would result in a huge impact on the Australian economy.
Prime Minister Kevin Rudd said Australia would cut its greenhouse gas emissions by five per cent of 2000 levels by 2020, and could make a cut of up to 15 per cent if other countries also signed up to stronger reductions.
The government promised around $6 billion a year in compensation for the CPRS and a 2.5 per cent rise in pension rates to help the country cope with anticipated price increases when the scheme begins in July 2010. However, the Ai Group estimated the CPRS would add approximately $7 billion to business costs in 2010 after compensation, rising to $10.5 billion by 2020 and Australia’s unilateral commitment to reduce emissions to five per cent below 2000 levels by 2020 means, relative to current projections, stripping more than one in six emissions from the economy by 2020.
This will amount to a 27 per cent reduction in per capita emissions over the period.
“These challenges for business will be exacerbated by the fact they will have to be met at a time when businesses are being called on to manage their way through an unparalleled global economic crisis and unprecedented domestic economic uncertainty,” Ridout said.
However, Mr Rudd said the targets delivered the “necessary reform to tackle the long-term challenge of climate change, while supporting our economy and securing jobs during this global recession".
The Ai Group’s view remains that Australia should not be wedded to a particular start date and that putting a robust system in place in line with international developments was more important.
“For businesses, training personnel and putting in place the internal systems required for a 2010 start will be challenging,” Ridout said.
“This is especially so in view of the lack of certainty about the international response and huge uncertainty about the prospects for the world economy in both the near and medium term."
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