Prime Minister Kevin Rudd’s decision to delay the introduction of an emissions trading scheme from 2010 to 2011 has met with cautious approval from business groups, although the Coalition, Greens and independent senators have all attacked the decision.
Rudd has bowed to business concerns that introducing the ETS in 2010 would damage the already struggling economy. Instead, the start of the scheme will be pushed back a year and a fixed carbon price of $10-per tonne has been set for the first year of the scheme’s operation, well below the initial estimate of $23.
To further win over businesses, the Government will make $200 million of its Climate Change Action Fund available from July 2009. As part of this, it will create a program called “Early action energy efficiency strategies for business”, which will provide $100 million for energy audits and capital investment. There is also a further $80 million for capital investment grants for businesses and community organisations.
In addition, the Government will also provide $50 million in seed funding for a new Energy Efficiency Trust, which will help businesses fund projects that reduce their carbon footprint.
Most business groups have welcomed the decision to delay the introduction of the ETS.
Australian Industry Group chief Heather Ridout, who has consistently called for the scheme to be delayed, particularly welcomed the “Early action” package, which she says will help SMEs that will be hit hard by introduction of an ETS, but are not eligible for the compensation on offer to heavy industry and power companies.
“These businesses include many small and medium-sized businesses in the metals processing sector; in plastics and chemicals; and in the food processing industry for example,” she says.
Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, gave cautious support for Rudd’s decision to shift the start date, but called for more details about assistance measures to help small and medium businesses.
“A one year delay and a one year fixed price creates some measure of short term certainty for business as it struggles with the recession,” Anderson says. “Given however that investment decisions are made for the medium and long term, it remains the case that Australia should still exercise a high degree of caution before locking in a scheme design or start dates.”
But other political parties appear to be united in their opposition to Rudd’s new package.
Opposition leader Malcolm Turnbull criticised Rudd’s “humiliating backdown” and said he wants a full Productivity Commission review of alternative carbon market reviews.
The Greens were scathing of Rudd’s decision and were not appeased by Rudd’s commitment to cutting emissions by 25% of 2000 levels by 2020, providing there is a global deal to cut carbon emission (like the Kyoto agreement). Most pundits believe the chances of getting such a global agreement in place are slim.
Greens leader Senator Bob Brown described Rudd’s move as being a “seamless follow-on from the Howard years”.
The opposition to Rudd’s revised scheme make it increasingly unlikely that the Government will succeed in its quest to get the ETS legislation through the Senate by 30 June.
This could trigger a double dissolution, whereby a new election would be held for both houses of Parliament. There has been speculation that Labor would welcome the chance to call a double dissolution, as this could give them the chance to wrest control of the Senate back from the Greens and independents.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
