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Gillard must hold the line on carbon

The Age

Saturday February 26, 2011

JULIA Gillard's announcement of a carbon-pricing policy has set her government a challenge that it failed under Kevin Rudd and which probably cost him his job. The political stakes are high, but are nothing compared to the risks of climate change. Public awareness of this helped propel Labor into office, only for its promise of carbon emissions trading to be thwarted in Parliament. Ms Gillard has shown a welcome resolve to try again with a policy compromise that starts with a fixed carbon price leading to market-based trading.Detail is minimal and dates are rubbery, but the thrust of the policy is right. This time, the government must show the courage of its convictions. As Ms Gillard says, it must win this debate. Opposition Leader Tony Abbott, who was installed specifically to block emissions trading, won't compromise. His declared aim is to wreck any move towards a carbon-pricing mechanism. His specific dollar-figure claims for increases in power bills and fuel prices are misleading; such calculations are baseless until the carbon price and other key details are known. In any case, the carbon "tax" is explicitly budget-neutral, with revenue to help households and businesses with bills and costs. Mr Abbott also says Ms Gillard has betrayed Australians by breaking her 2010 election promise not to introduce a carbon tax (his past disregard for Labor and Coalition promises of emissions trading apparently counts for nothing). Ms Gillard must wear the political cost if people who voted for her government feel betrayed, but her leadership may also benefit from taking a stand on a critical point of policy difference.The emergence of a hung parliament necessitated a compromise of the sort agreed in principle by the cross-party climate change committee. The plan accords with the view of the government's key climate adviser, Ross Garnaut, on how best to advance from policy uncertainty, which has its own great costs. Ms Gillard put the case against inaction: "I do not believe that Australia needs to lead the world on climate change, but I also don't believe that we can afford to be left behind."Representatives at the government's business round table on climate change including heavily affected companies such as BHP and Qantas all agree a carbon price is needed. With only the starting date of July 1, 2012, decided, consultation is essential on any such broad economic and industrial transition. This should not be confused with pandering to rent seekers and alarmists. Australia need not do anything exotic or rely on yet-to-be-developed technology to achieve emission cuts in the range of 5-25 per cent by 2020. Amid global policy uncertainty, Australia should start with steps that ought to be taken anyway to cut the costs of wasteful use of increasingly precious energy and fuel resources, while boosting productivity. Governments should aim to fix urban transport, improve building design and raise efficiency standards for industrial processes and domestic appliances (energy efficiency alone has the potential to achieve a third of required emission cuts). This will also help build an industrial and manufacturing base that can be competitive and sustain jobs through the 21st century.The returns on many of these measures will outweigh initial costs. Energy-efficient carbon pricing offers positives, which can be contrasted with the negative campaign against it. Having drawn the line on climate policy, this time the Gillard government must hold it.

© 2011 The Age

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