Statement by Heather Ridout
Chief Executive, Australian Industry Group


"The White Paper released today proposes an emissions reduction scheme that is a positive compromise but a stretch nonetheless," Australian Industry Group Chief Executive Heather Ridout said today.

"The White Paper proposals incorporate a number of major improvements sought by the Australian Industry Group (Ai Group) on behalf of Australian businesses. Nevertheless the planned Carbon Pollution Reduction Scheme (CPRS) remains a big ask and will have a big impact on the Australian economy:

• Ai Group estimates that the scheme will 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 5 per cent below 2000 levels by 2020 means, relative to current projections, stripping more than one in five emissions from our economy by 2020. This amounts 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.

"Ai Group remains of the view that we should not be wedded to a particular start date and that putting a robust system in place in line with international developments is more important. For businesses, training personnel and putting in place the internal systems required for a 2010 start will be challenging. 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.

"The White Paper approach makes a number of important changes to the preferred positions set out in July in the Green Paper. Critically these include six substantial steps along the lines argued for by Ai Group on behalf of businesses exposed to competition from countries that do not commit to reduce their greenhouse gas emissions:

1. The Government’s recognition that the extent of emissions reduction required under the CPRS should be linked very closely to progress towards a concerted international effort; 
2. The allocation of the bulk of the $2.15 billion Climate Change Action Fund (CCAF) to assist businesses invest in reducing their carbon footprints. These funds will particularly benefit trade exposed businesses that do not qualify for permits; 
3. The increase in the initial proportion of permits allocated to emissions intensive trade exposed (EITE) businesses; 
4. The proposal to allocate 60 per cent of permits to activities with emissions intensities between 1,000 and 1,500 tonnes per $ million of revenue; 
5. The increase over time in the proportion of total permits allocated to EITE industries; and 
6. In addition, measures such as the option to have emissions intensity assessed on the basis of value-added; the changes to the base period for assessing emissions intensity and the inclusion of indirect emissions from non-electricity inputs.

"The 2020 emissions target of a reduction of between 5 per cent and 15 per cent below 2000 levels depending on the degree of international agreement will not be easy. A target of 10 per cent would imply a reduction in 2020 emissions of 25 per cent relative to current projections and a reduction in per capita emissions of about 30 per cent relative to 2000 levels will not be easy to achieve.

"Ai Group will be working closely with our members to examine the impact of the White Paper measures and the adequacy of compensation.

"We acknowledge the efforts of the Minister and her Department for the consultative process in the preparation of the CPRS White Paper.

Ai Group will continue to engage constructively with the Government as well as the Opposition and the minor parties and independents as the legislation is prepared and taken to the Parliament," Mrs Ridout said today.


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