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Costa fires up climate change debate -

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Costa fires up climate change debate

The World Today - Monday, 7 July , 2008 12:11:00

Reporter: Samantha Hawley

EMMA ALBERICI: But first the Federal Government is facing a fight over its plans to introduce an
emissions trading scheme, with one senior Labor Party figure condemning the Garnaut Report released
last Friday.

The New South Wales Treasurer has issued a stinging attack against Ross Garnaut's report into an
emissions trading scheme, saying it's inadequate, is missing detail and is not a serious attempt to
outline a trading framework.

And Michael Costa has gone even further, saying "chicken little" warnings about the viability of
the Great Barrier Reef included in the report are nonsense and don't add to a rigorous debate.

Mr Costa has also warned that the Garnaut plan could lead to a crisis of confidence in the power
sector and to a shortage in electricity supplies for which he says the sector needs compensating.

The New South Wales Treasurer spoke to our reporter in Canberra, Samantha Hawley.

MICHAEL COSTA: Well I think the interim report is inadequate. All it argues for is an emissions
trading scheme. Now we've all supported an emissions trading scheme, the real issue here is the
details of that scheme, and in fact there's some disturbing features to the report in that it
assumes away problems that are a real consequence, particularly in the area of energy supply.

I do acknowledge that there's some modelling to be done, but let me say that some of the underlying
assumptions about the economy for example that it's frictionalist and there's no transaction costs
and that over time everything will be ok, seems to me to be quite a classic example of economists
assuming the problem away.

SAMANTHA HAWLEY: Ok but you go further than that don't you, you actually question the accuracy of
Ross Garnaut's report, even saying that there's "chicken little" warnings in it.

MICHAEL COSTA: Well I think it's absurd to ... and it wasn't the report so much it was some of the
response to the report, to argue that we should dismiss legitimate concerns about the details with
sort of broad based and fairly generalised references to you know the future of the Great Barrier
Reef. I mean we don't need chicken little, we need detail and we need to make sure that we get this
right.

SAMANTHA HAWLEY: But you dispute Ross Garnaut's findings that the Great Barrier Reef is at great
risk and could be gone within a couple of decades.

MICHAEL COSTA: What I'm disputing is the claim that somehow Australia that emits less than two per
cent of global greenhouses can alone deal with the problem such as the Great Barrier Reef.

SAMANTHA HAWLEY: I see today also James Packer has questioned Professor Garnaut's finding that
Australia's skiing industry will be wiped out. I mean do you think that report is trying to scare
people into action?

MICHAEL COSTA: Well I don't know if that's the design of the report but certainly from the point of
view of what we were expecting - and that was we were expecting a serious attempt to outline a
framework for an emission trading regime - this report fails.

But look I don't think there's any sensible person around the place that believes that Australian's
actions alone can affect global greenhouse emissions and as a consequence can affect environmental
outcomes. Certainly we've got a role to play but overstating the case only leads to people that are
cynical about motivation dismissing the case.

SAMANTHA HAWLEY: Ok, you're also unhappy with Professor Garnaut's suggestions on how the funds from
carbon permits should be spent, what you don't think there's been enough work on that?

MICHAEL COSTA: Well I think it's completely arbitrary, I mean the fact of the matter is he comes up
with a 50 per cent for households and 30 per cent for the trade exposed sector and then 20 per cent
for renewables are indeed to extent that renewables isn't compensation, it's actually investment in
the future.

The pool that's available for compensation is diminished and he's got to explain the justification
for that.

SAMANTHA HAWLEY: Why do you think that the electricity generators in the states really need to be
compensated?

MICHAEL COSTA: The bottom line is if you implement the report as currently proposed by Professor
Garnaut and others, you will have a crisis of confidence in investment, particularly in the energy
intensive area and you could lead to shortages of electricity supply.

SAMANTHA HAWLEY: Because Professor Garnaut argues that they don't need any compensation, that
they're doing very well in fact.

MICHAEL COSTA: Well Professor Garnaut's wrong, he's absolutely wrong.

SAMANTHA HAWLEY: And your argument here has nothing to do with the fact that New South Wales is
currently trying to privatise its electricity assets?

MICHAEL COSTA: Well it certainly means that we're more attuned to the problems that are associated
with it.

SAMANTHA HAWLEY: You basically want Kevin Rudd to reject this report?

MICHAEL COSTA: Well I'm not arguing to reject the report, I just think the report's inadequate, it
doesn't have the details. If the report's arguing that an emissions trading scheme is a way to deal
with carbon emissions, I agree.

But the detail is what's important here and this report is missing a lot of detail and assumes away
a lot of problems.

EMMA ALBERICI: The New South Wales Treasurer, Michael Costa, speaking there to Samantha Hawley.