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Taking care of the next generation

Australian Industry Group adds to call for $10 carbon price

Archived News, Posted on 30 May 2011

The Australian Industry Group has added its voice to the business lobby's call for a $10 starting price under the Gillard government's proposed carbon tax.

The Age reports that the Ai Group, in its submission to the government's multi-party climate change committee to be released Monday, says a low starting price of $10 would reduce disruption to business and households.

And in an opinion piece for the The Age, Ai Group chief executive Heather Ridout writes that "a low starting price would be essential to allow businesses to get used to the new scheme."

It is understood as part of the cross-party negotiations on a carbon tax the government is pursuing a starting price as close to $20 as possible, while the Greens are hoping for something closer to $30.

This follows reports last Friday that the Business Council of Australia's submission to the government's Climate Change Department called for a $10-a-tonne starting price for the carbon tax and demanded all trade-exposed industries be fully exempt in the absence of similar action from global competitors.

The Australian newspaper reported that the BCA was also critical of the so-called hybrid model being negotiated by the government and the Greens, warning it risks increasing the costs of implementing a greenhouse gas emissions reduction policy and of uncertainty for business. It also said the $10/tonne price should rise only modestly over time to reduce the need for compensation to households and business.

The AiG submission comes after a weekend of tense negotiations with the Greens and independents on the final design of the carbon pricing mechanism – talks that are expected to last for weeks..

A compromise over the starting price is expected, but the parties are divided on how the price will increase over time and what price measures will be put in place to move from a tax to a trading scheme after three-to-five years.

And while the BCA's submission on a proposed carbon price has been claimed as a victory by the federal government and the opposition – with each saying it's proof they are on the right policy track – the Greens say it's laughable.

"The council ought to be embracing a market mechanism ... the fact is we have to reduce greenhouse gas emissions and we have to transform the economy," Greend deputy leader Christine Milne said.

"What they are proposing, a $10 price and then 100 per cent compensation for anyone who is trade exposed, just isn't a realistic contribution to the debate."

Greens MP Adam Bandt told The Age last night that the minor party was looking not just at the starting price but the whole ''package'' including the yearly escalator.

Greg Combet, meanwhile, refused to be drawn on whether he thought the $10 figure was too low, saying the multi-party committee was continuing to nut out the details of the overall scheme.

"We have made progress this weekend but a lot of work remains to be done and the discussions will continue throughout June," Combet said.

The government wants to finalise the issue of a carbon price by late June so it can work to have legislation introduced to parliament by September and passed by the year's end.

A fixed carbon price is due to start from July 1, 2012.

Published 10:10 AM, 30 May 2011
Updated 10:15 AM, 30 May 2011

Staff reporter with AAP

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