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Garnaut targets a parallel emissions universe.



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AUSTRALIA

SENATOR FOR QUEENSLAND -•

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5 September 2008

B2008/58

GARNAUT TARGETS A PARALLEL EMISSIONS UNIVERSE f "The Garnaut Supplementary Draft Report released today wants to set up a trading scheme for Australia as though we were part of a global emissions trading agreement and then pass limited compensation back to industry and consumers to make up for the fact that that global

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agreement does not exist."

For every unit of production, eligible firms receive a credit against their permit obligations equivalent to the expected uplift in world product prices that would eventuate if our trading ) competitors had policies similar to our own.(Garnaut SD Report).

"Australia would still be acting alone and our industries would be passing on enormous new costs to consumers. New investment in energy and mining would falter and thousands of jobs would be lost under this scenario."

"Garnaut `s modelling suggests that our GDP would be negatively affected by 0.1% if we implemented his plan. Yet this part of the analysis was conducted without Treasury figures. He also cites significant modelling problems with trying to analyse the impact on the economy."

The Report states: The Review's timetable did not allow us to extend the joint modelling with the Treasury to targets for the ad hoc world, before there is an international mitigation agreement.

"This Report is more of a rhetorical flourish exhorting the world to lower emissions rather than

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an incisive look at how emission trading would affect Australian industry and jobs." "It is more than time in this debate to have some facts and figures on the table telling us exactly what investment and jobs will be lost and what household costs raised by an emissions trading scheme."

"The idea of setting up a whole new bureaucracy with powers and responsibilities over key inputs and outputs of private enterprise is frightening. Australian business needs to urgently

ri get to grips with this debate before the debate runs away from them completely and takes jobs and investment with it." L J The Report advises:-

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An independent authority will need to be established with the necessary skills to develop carbon-sensitive price models for relevant product markets ...The calculation of expected price uplift factors, the frequency and timing of credits being distributed to eligible firms, and the relevant accounting rules should all operate to ensure minimum disruption and maximum Acertainty. Expected price uplift factors would be produced by the independent authority at

regular intervals (at a minimum, yearly) through a transparent and consultative process.

"This is a nightmare scenario for Australian business that takes government regulation to levels not seen since Stalin was a boy."

As noted by the Review itself in a classic understatement:-If this issue is not handled well, uncertainty will affect the supply price of investment. It will lead to a diversion of management effort into rent-seeking behaviour rather than the pursuit of low-emissions production processes. It could potentially lead to a wide corrosion of good economic governance. In the worst of circumstances, it could turn out to be as expensive as the costs of mitigation itself.

ENDS

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