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Govt releases green paper on climate change -

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ALI MOORE, PRESENTER: Well it's hardly a surprise but the Government's green paper tells us an
emissions trading scheme will be costly.

It will be inflationary and could push the price of electricity up by as much as 16 per cent.

But to ease the pain, the Government has promised compensation for pensioners, motorists and low
income households; and assistance for high emitting businesses.

The Greens aren't happy, and neither is the Opposition. But the broad outlines of the Governments
design to reduce carbon pollution has been welcomed by the business community.

Shortly we'll hear from the Prime Minister. But first this report from political editor Michael
Brissenden.

MICHAEL BRISSENDEN, REPORTER: The Governments green paper into what is now called the Carbon
Pollution Reduction Scheme is seen as the first step in the most radical change in the nature of
our economy in a generation.

With that sort of billing it was always going to generate a lot of interest.

MICHAEL BRISSENDEN: One after the other this afternoon the so called stakeholders lined up to pass
judgement.

A Green paper is usually designed to set the parameters for further public consultation and
discussion. But this one's done plenty more than that.

Without setting any specific medium term targets for greenhouse gas reduction it has set the broad
parameters for an ambitious emissions trading scheme.

PENNY WONG, CLIMATE CHANGE & WATER MINISTER: The effect of putting a price on carbon will be
profound.

Indeed in its ability to change the economy over time, the Carbon Pollution Reduction Scheme is
likely to be on par with past economic reforms such as the reduction in tariffs, or deregulation of
the financial system.

MICHAEL BRISSENDEN: The Government concedes that such a change will come at some cost. A carbon
price at $20 a tonne for instance will cause a one off inflationary spike of just under one per
cent.

And electricity prices could rise by as much as 16 per cent.

To offset this the Government has pledged to compensate low income households for any increase in
the cost of living through the tax and payments system. And increase payments to pensioners, carers
and seniors.

PENNY WONG: Tackling climate change will be hard, and there will be costs. But we will hep
Australians every step of the way.

MICHAEL BRISSENDEN: As yet unspecified assistance will also be provided for middle income
households.

BRENDAN NELSON, OPPOSITION LEADER: Well the Government has confirmed today that it has a new tax
coming on petrol groceries and electricity in the form of the emissions trading scheme.

Mr Rudd seems to want us to take him on trust. He hasn't yet dealt with cost of living pressures
with petrol, and groceries, and skyrocketing rents that is happening now.

And now he wants us to trust him to so something after the next election.

MICHAEL BRISSENDEN: But some of it could of course even start rolling out before the next election
or even during the campaign, as

targeted hand-outs.

And one of the most significant compensatory measures will be petrol. The Government says fuel
taxes will be cut on a cent for cent basis to offset any rise in petrol prices caused by the
emissions trading scheme.

As Ross Garnaut observed last week that's a funny sort of signal to send, especially given the
probable continuing rise in the global oil price.

But then this green paper hasn't been formulated in a political vacuum. Professor Garnaut was also
opposed to the idea of handing out free permits to power generators, but that's going to happen
too.

Under the proposed emissions trading system the Government will put a cap on the total amount of
carbon pollution it allows. Polluting industries will require permits to produce greenhouse gases.

The price of those permits will be set by the market but 20 per cent of them will be given out free
to so-called emissions intensive trade exposed industries.

And the biggest polluters, the coal industry, will be given direct assistance in the form of free
permits or possibly cash handouts.

OWEN PASCOE, AUSTRALIAN CONSERVATION FOUNDATION: Sure there's some good things here and I'm glad
that we are making progress towards cutting our carbon emissions.

But there's some disappointments. I'm really disappointed with the focus on compensating polluting
industries rather than climate change solutions.

CHRISTINE MILNE, GREENS SENATOR: The Rudd Government said that their introducing a Carbon Pollution
Reduction Scheme, but we still have idea what the reduction target is except a very weak 2050
target.

And what's more by introducing a price signal and then neutralising the price signal with every
form of compensation possible, what they've done is move from the polluter pays principle to the
polluter gets paid principle.

The Rudd Government is playing politics just like the Howard government. This is something John
Howard would be really proud of.

MICHAEL BRISSENDEN: But the Government says Australian Business needs time to adapt and the
incentives will help prevent emissions intensive industries simply moving offshore to continue
polluting; a process known as carbon leakage.

And on the whole the business community seems pretty happy with what's been offered.

HEATHER RIDOUT, AUSTRALIAN INDUSTRY GROUP: Look it's a very big paper, and there's a lot of detail
and undoubtedly a lot of devil in that detail.

But the Government has ticked all the right boxes that we've been concerned with; cost abatement
commitment, the global issues in terms of trying to get the linkages.

And putting the trajectory aside from that, the energy intensive trade exposed industry, we've been
very concerned about that, and certainly there's a lot of work there.

To put another charge on industry which is not incurred by their trading competitors would be very
retrograde.

GREG EVANS, CHAMBER OF COMMERCE & INDUSTRY: We still await the Treasury modelling which
disappointingly won't be available to business until, as we understand, until October.

Critical aspects of that, of that Treasury modelling will indeed be in the economy wide implication
of an emissions trading scheme; and also the particular compliance costs that will be faced by
Australian businesses with the scheme.

MICHAEL BRISSENDEN: In the end any emission trading scheme, whatever it's called, is all about
timing.

Today's green paper doesn't tell us how fast or how far we have to go, presumably that detail will
be delivered in the white paper at the end of the year.

But to reduce carbon emissions we will have to use less fuel and burn less coal, or at least burn
it more cleanly. The challenge for the Government is to get there without damaging the economy or
scaring the voters.

ALI MOORE: Michael Brissenden with that report.