For Australian families, the biggest issue right now is pressure on their cost of living. Power prices, for instance, have already risen by 51 per cent since late 2007 and would immediately rise another 10 per cent under a carbon tax even on the government’s own figures. We should take action against climate change but not in ways that raise prices to consumers, threaten jobs or increase burdens on taxpayers.

 

The trouble with the government’s carbon tax, even on its own figures, is that it will leave millions of families worse off without actually reducing emissions. The government admits that more than three million families will be worse off, even after compensation. Single income families with a child start to be worse off at average weekly earnings. Dual income families are clearly worse off once they have the income of a school teacher and a shop assistant; or that of a policeman and a part-time nurse. These families are not rich and don’t deserve to have their standard of living eroded when there are alternatives that would work better.

 

Despite taking $9 billion a year from business and then churning about half of it to families and half back to business, on the government’s own figures, Australia’s annual emissions will actually increase from 578 million tonnes now to 621 million tonnes by 2020. This giant money-go-round does not actually reduce emissions at all and the government only meets its 5 per cent emissions reduction target, on its own figures, through business spending $3 billion a year on foreign carbon credits by 2020. On the government’s own figures, the carbon price will rise, in today’s dollars, from $23 a tonne next year to $29 a tonne by 2020 and to $131 a tonne by 2050. It has to rise dramatically in order to reduce coal from 75 per cent to just 10 per cent of Australia’s power generation.

 

It’s an unnecessarily expensive and complicated way not-to-reduce emissions any time soon. A far better way to tackle climate change is to do so through mechanisms that directly reduce emissions without a price to consumers, without additional burdens on business or taxpayers and without the large new bureaucracies that would be needed to police carbon trading.

 

In February last year, the Coalition released its direct action policy comprising, at its core, a fund enabling the government to buy the most cost-effective means of reducing emissions through a tender process. This is a perfectly orthodox means of utilising the market to obtain an outcome. A business that wants a building, for instance, might seek expressions of interest and then formal tenders as a means of exploring possibilities and then obtaining what it wants at the best possible price.

 

When I was employment minister, the government went to the market to elicit the best ideas for getting unemployed people into work and to fund employment agencies that offered the most cost effective means of doing so. It was called the Job Network and it was much better than the old Commonwealth Employment Service at getting people off welfare. In like vein, the Coalition intends to establish an emissions reduction fund that will seek proposals from the market for reducing emissions and select those which offer the most reductions for the best price.

 

There are a number of well established ways to reduce emissions. For instance, new tree plantings result in the storage of carbon because trees photosynthesise carbon dioxide into oxygen. Estimates show the cost of doing so should work out at about $10 per tonne. Planting trees can never be more than one element in a credible emission reduction strategy, otherwise much of Australia would become a carbon farm but there are many other ways to substantially reduce emissions.

 

Professor Garnaut and the CSIRO have acknowledged in various reports that storing carbon in soils has the potential to achieve substantial emissions reductions. Some farmers are doing this right now, without any need for a subsidy, tax or carbon price, because it makes economic sense to move from chemical to organic fertilisers and improve the fertility of their soils. Even a modest payment per tonne could produce very large reductions in emissions via increased soil carbon.

 

One of my first trips as opposition leader was to James Cook University to inspect a pilot project using carbon dioxide, water and sunlight to grow massive quantities of algae that could be converted to stockfeed and bio-diesel. This bio-sequestration has vast potential to turn power station emissions from harmful waste to an input into a valuable process.

 

Recently, I inspected new power generation about to come on line at Visy in Melbourne that is not just zero-emissions (like solar and wind) but negative emissions power because it burns rubbish that would otherwise produce far more emissions rotting in landfills. This kind of innovation would be harder, not easier, under a carbon tax because business would have fewer resources to invest in new technology.

 

In its recent report, the Productivity Commission found that, without a carbon tax, Australia was already “middle of the pack” when it comes to taking action against climate change. It also found that no country on earth had an economy-wide carbon tax or emissions trading scheme.

 

Australia has already reduced its emissions intensity by nearly 50 per cent over the past 15 years as business takes sensible, pragmatic, market-driven steps to reduce energy usage. The Coalition’s policy aims to build on the common sense measures that are already taking place.

 

The Coalition’s policy cost $3.2 billion to be funded from the $50 billion of savings that we announced pre-election. As before, we will fund direct action from savings in the budget announced in good time before the next election. Savings of the magnitude required won’t be easy but a budget that can accommodate pink batts, school halls and the National Broadband Network has room for economies. For starters, there’s the money that the government will spend on its now no-longer-revenue-neutral-as-promised carbon tax.

 

15 July 2011