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Minister for the Environment and Heritage
Senator the Hon. Ian Campbell

Wednesday, 14 April, 2005

666 ABC Canberra

State carbon trading scheme

Look the states will go ahead with a carbon trading scheme, what do you think they should do if they go ahead?

Well firstly I think they should tell the people of Australia what their scheme is. There are lots of different schemes that we've looked at. The Commonwealth looked at them very closely when we were looking at the White Paper last year.

If you want an effective scheme, you tend to have a fairly high cost, I guess if fairly intuitive, people know that if you want to get a good outcome for the environment, it often costs money. What you need to know when you are looking at a scheme is how much the carbon tax will be. There needs to be a new tax on any use of carbon. The biggest use of carbon in Australia is power for industry and power for people's households. There needs to be a tax or a price signal put on, so I think the Labor state premiers and the Labor Chief Ministers like Mr Stanhope, need to use the opportunity presented by the environment ministers meeting today to tell us just exactly what their scheme is.

The Commonwealth have actually (inaudible) have always said that trading schemes will have an important role to play when they become cost efficient, when the benefits at least match the cost.

So why has the Commonwealth been so slow to act on this, is it because of the cost?

Because we don't think its an effective way to reduce greenhouse gases. The costs imposed particularly on lets say, domestic power bills far outweigh the benefits of the emissions reduced. The jury is still out on the schemes that we've seen to date on whether you will actually get any emission reductions at all. It depends on how you do it and what we need to know from the states is what sort of emission reductions do they expect to get and what will be the cost to domestic power bills, what will be the cost to industry, what will be the cost to the Australian economy?

I'll just make it clear, we, on page 149 of the White paper have left the door open to an emissions trading scheme. We believe that the best scheme is going to be a comprehensive international one because you'll get the best benefit out of that. To make that happen you'll need to have the major emitters of the world involved in that. That's why we are engaged very strongly, multi-laterally, internationally to work up a post-Kyoto regime that ensures that we get emission reductions, reductions in greenhouse gases, a protection of the climate, through the most efficient...

Europe has already though embarked on carbon emission trading, aren't we behind them?

Well, their trading scheme has just started, (inaudible), not many people think it's working particularly well. Although I wish it well, the trouble is the carbon price in their market is so low and this is one of the problems you've got in Australia, the market over the last week is around 14 euros per tonne. Most of the economists and experts advise me that at that price you won't get any emissions reductions. What we really want is emissions reductions. The Commonwealth's approach at the moment through our existing policy is to invest directly on emissions reduction technology about $1.8 billion which we're paying for out of taxes. We believe we will get better emissions reductions and a better outcome for the climate by doing that at this stage.

But wouldn't this be a starting point at least?

Not if the costs divert investment away from emissions technology, so I'm all ears today, I'd like the Labor states to tell me today what does the carbon tax propose, what is the impost on power bills. How much money will that raise and where will that be invested?

Now the New Zealand government by contrast with the labor governments here in Australia will be announcing their carbon tax this week I'm told. They will also be announcing next week how they intend to invest that so all I'm asking the NSW, Victorian and the ACT government to do is follow their comrades over in New Zealand and announce the detail of the plan. What will the tax be? How much money will it raise and where will that money be invested in. What emissions reductions will we get?

Can I just ask finally then Senator Campbell, are you just waiting for a decent style or a decent scheme for emission trading, for you to come on board.

We need an effective scheme that actually reduces emissions at the best price. The most cost effective scheme, we've always said that trading will play a part in the future of the worlds efforts to reduce emissions. We've look at a domestic trading scheme last year in the context of the White Paper. We believe the costs outweigh the benefits. What I want the labor people to do, what I want John Stanhope to do, if he can stop his environment adviser going round and putting graffiti on the walls in Canberra for five minutes is to let us know what will be the cost of it, what will be the tax and how will that reduce emissions? I hope they've got a good scheme. I haven't seen it yet. It's a secret scheme at this stage.

Senator Campbell, thanks for joining us. We await for information I guess on what the scheme is and that will happen throughout today and tomorrow.

Commonwealth of Australia