Campaign Media Release

Minister for Climate Change Mark Butler

INDUSTRY LOSES CONFIDENCE IN DIRECT ACTION NO DETAIL, COST BLOW OUTS Business is increasingly nervous about the Coalitions alternative climate change policy as concerns emerged about lack of detail and cost blow-outs creating business uncertainty. Santos Chief Executive David Knox is the latest industry figure to express concern saying: "I think the issue with Direct Action is we simply don't know enough about it to really intelligently comment. There are many ways you can price carbon. Effectively, through Direct Action, there ultimately will be a price on carbon - the question is what does the policy look like. The key thing for Australia is to maintain a steady hand on the tiller - the less change we have the better, because what we want to do is build the confidence in the Australian economy." Santos queries Coalition carbon details, Peter Trute, AAP Senior Finance Writer, 16 August 2013

Minister for Climate Change Mark Butler said it was no surprise businesses were becoming concerned. The Coalitions Direct Action Penalty is going to hit Australian families and businesses hard. It is an expensive dud and business knows it, Mr Butler said. There is simply no way the Coalition can cut emissions more efficiently with taxpayer funded subsidies for polluters than we will with a market based price on carbon. Thats why theres no detail in the Coalition policy the devil is in the detail. That was also the conclusion of Peter Shergold in his report to the Howard Government in 2007. Tony Abbott has also appointed Peter Shergold as a key adviser to look at the Coalitions costings. His landmark report in 2007 said:

Emissions trading enables the market not government to decide which new or existing technologies will reduce emissions at least cost. Favouring particular technologies over others picking winners will increase the costs we impose on ourselves. Report of the Taskgroup on Emissions Trading (Shergold Report) 2007

Treasury advice suggests the Coalitions plan would cost around $80 per tonne of carbon - www.treasury.gov.au/Access-to-Information/DisclosureLog/2011/1035. This is way above forecasts of the market based carbon price, which we expect will sit at around $6 next year, Mr Butler said. Given both parties have said they are committed to a minimum 5 per cent reduction in emissions by 2020, you dont have to be a genius to figure out the Coalition plan is going to cost business and households much more. The latest concerns from business follows independent modelling released this week that shows a minimum $4 billion hole in the costing of the Direct Action scheme: To achieve the emissions reductions required to deliver the Coalitions commitment to the 525 per cent targets would require additional expenditure of $4$15 billion to 2020. Review of Subsidy and Carbon Price Approaches by SKM MMA and the Centre of Policy Studies at Monash University on behalf of The Climate Institute

Its little wonder they refuse to release their costings when a policy as fundamental as this is so massively under-costed that it can only be paid for by massively slugging taxpayers and businesses, Mr Butler said. Due to the lack of detail outlined in their policy, the independent modellers have given the Coalition the benefit of the doubt on almost every design feature of their scheme, but still concluded it couldnt meet Australias emission reduction target. Key quotes from Shergold Report: Full report: http://pandora.nla.gov.au/pan/72614/200706010000/www.pmc.gov.au/publications/emissions/docs/emissions_trading_report.pdf Emissions trading focuses on the ultimate environmental objective: to reduce emissions in the most efficient manner. Other forms of government intervention would impose a far heavier burden on economic activity. It is better to have the Australian Government set a national framework for reducing greenhouse gases and then let the market set the carbon price. Over time, market responsiveness will drive improved energy efficiency and the development and adoption of new and existing low-emissions technologies.

Emissions trading enables the market not government to decide which new or existing technologies will reduce emissions at least cost. Favouring particular technologies over others picking winners will increase the costs we impose on ourselves. Emissions trading also encourages the development, for trade, of offsets such as forest plantations (carbon sinks). It will help new economic opportunities to emerge.

ADELAIDE 17 AUGUST 2013