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Big polluters need to be part of emissions sc -

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Big polluters need to be part of emissions scheme: Wong

The World Today - Friday, 6 June , 2008 12:24:00

Reporter: Lyndal Curtis

ELEANOR HALL: As one debate over tackling the high cost of petrol prices eases off for the
Government, another is underway about whether fuel should be included in the emissions trading
scheme. This is a move which would push petrol prices even higher.

But while the Opposition favours leaving petrol out, the Climate Change Minister, Penny Wong today
sent a clear signal that big polluters will be included in the scheme.

As chief political correspondent, Lyndal Curtis reports.

LYNDAL CURTIS: It's the big reform challenge for the Government and it's not going to be easy. But
the Climate Change Minister Penny Wong, is making it very clear it's a debate about the economy.

PENNY WONG: I think it's fair to say that generally and conventionally climate change has been seen
as an environmental issue. So let me be absolutely clear: this Government believes climate change
is an economic issue and the only way to tackle climate change is through economic reform.

LYNDAL CURTIS: It's not going to be an easy reform because it's long-term. It will push up energy
prices and will hurt those producers and consumers who can't easily switch to a more climate
friendly product or business model.

Penny Wong says the Government will develop measures to help households, particularly those on low
incomes, and address the challenges faced by emissions intensive and trade exposed industries.

But in a climate where the Government has already faced trouble in a debate about the rising cost
of petrol and where some such as the Opposition are leaning towards fuel being left out of an
emissions trading scheme, the minister is favouring the scheme having the broadest practical
coverage arguing that shares the burden and lowers the costs.

PENNY WONG: And the point is this, the more emissions intensive industries who aren't making a
contribution to emissions reduction through the ETS, the more work that needs to be done by those
industries that are making a contribution.

In addition, the more compensation or free permits given to some firms, the harder it is for
others. And the more narrow the coverage, and the more compensation or free permits the Government
provides, the less capacity we have to assist families.

So none of these decisions are isolated; they are all linked. Giving relative priority to one or
another inevitably involves a trade-off.

So it boils down to what is the most economically responsible design. The more we adjust the ETS to
suit particular interests, the less robust and credible the carbon market will be.

LYNDAL CURTIS: And she criticised the Shadow Treasurer Malcolm Turnbull who's favoured leaving fuel
out of the emissions trading scheme and concentrating instead on driving greater fuel efficiency
standards.

PENNY WONG: This debate will be littered with temptation for the Opposition. And they may chose to
continue with the old short-term politics and they will score some points along the way.

But any attempt by the Opposition to undermine the integrity of the ETS will expose their economic
credentials to serious question.

LYNDAL CURTIS: Penny Wong's plea to have the most broadly based scheme possible has been echoed by
the Government's chief advisor on climate change, Professor Ross Garnaut, who told AM it would be
better to have fuel in.

SABRA LANE: Can a scheme be effective without petrol?

ROSS GARNAUT: Yes, it could be effective, but I'm on record as saying something that I continue to
think is correct, that the costs of mitigation will be lower, the broader the base. So if you
exclude anything, it puts a bit more of a burden on other things.

And it's going to be a hard adjustment task for a lot of parts of the Australian economy, so it's
better to share that right across the economy.

LYNDAL CURTIS: The Greens leader, Bob Brown has welcomed the comments by both the minister and the
professor.

BOB BROWN: That's world's best practice. Australia has to catch up there. And if you don't include
the fossil fuel burners, be they fossil fuel coming from oil or from coal, then you put an added
cost on to the rest of the economy.

It has to be shared right across the economy. That's obviously good market practice. And it has to
be aimed at reducing the enormous amount of greenhouse gases, a lot of it wasted.

LYNDAL CURTIS: It will be a tough debate for the Government and the closer it gets to the next
election, the harder it will be to resist the pleas of those who don't want to face higher prices
or higher business costs.

But Senator Wong wants the debate cast completely in the national interest.

PENNY WONG: So the question for all of us is are we here for short-term political gain or are we
here for Australia's long-term economic future?

As the Prime Minister has said, we recognise this will involve some hard decisions but if we're
serious about Australia, preparing Australia for the long-term climate challenge we must make
difficult decisions now.

ELEANOR HALL: That's the Climate Change Minister Penny Wong ending that report by Lyndal Curtis.