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Green Paper ticks right boxes but questions remain unanswered

28 July, 2008

“The Green Paper on the proposed Carbon Pollution Reduction Scheme (CPRS) ticks the right boxes and shows the Government has heard many of the central concerns raised by business,” Australian Industry Group Chief Executive Heather Ridout has said.

“There remain, however, a wide range of details that require elaboration and we welcome the Government’s commitment to further close consultation with industry.

“Business will need to look closely at the proposals and we will consult with our members to test whether the Government’s approach will allay their concerns and give them sufficient investment certainty.

“In particular, the adequacy of the approach to address trade exposed emissions intensive activities put forward in the Green Paper needs careful further analysis.  This includes assessing whether the proposed approach will be sufficiently compatible with businesses making long term investments and whether the future growth of these industries is appropriately built into the proposed arrangements.

“The Green Paper addresses the chief areas of concern raised by Ai Group in its discussions with Government.

“There is a welcome emphasis on the fundamental importance of building a genuinely global response to climate change.  In particular, the Government has stated that it will take account of international developments when setting the emissions targets.  Without an effective global response, Australian efforts will be futile.

“The Paper confirms the significance of having a scheme with broad coverage of Australian emissions.  Broad coverage is a key requirement in meeting the objective of reducing greenhouse gases at the lowest possible cost.

“There is acknowledgement of the difficulties that businesses will face in preparing for a 2010 start date.  The earlier the start date the stronger is the case for a relatively gentle transition period that allows businesses breathing room in preparing for the compliance tasks, making new investments and adjusting operations.  The proposal for a price cap for the first five years would assist in this regard.

“The Green Paper recognises the opportunities there are to phase out existing regulations as the CPRS takes effect.  This will reduce administration and compliance costs and will avoid imposing unnecessary regulatory imposts.  It is vital that State and Territory Governments also commit to keeping regulation to a minimum.

“The proposed revenue neutral outcome is also welcome.  The proceeds of the CPRS will be returned to households and businesses through a range of compensation and emissions reduction measures,” Ridout said.

“There should be no mistake: introducing this new scheme is not only one of the most important reforms that we are likely to face.  It is also one of the most difficult. The CPRS will impose significant costs on businesses and households and it will call for major efforts in searching for low-emissions options.

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