Price on pollution - for or against?

This weekend the Gillard Government plans to announce a price on pollution as the central element of a comprehensive policy to tackle climate change, cut pollution and drive the transformation of the Australian economy to a clean energy future. Some business and industry sectors are saying it will provide more certainty while others say it will only further add to uncertainty.

Almost 40 companies including Infigen, Grocon and The Body Shop have signed on to a joint statement backing a price on carbon. The new wave of businesses signing the statement coincides with the launch of a website called Business for a Clean Economy and the government’s carbon price announcement which is set for Sunday 10 July 2011.

The businesses agree that a carbon price with cost-effective complementary measures is critical to reducing Australia’s emissions and ensuring Australia remains globally competitive as the rest of the world reduces their emissions. Current signatories are urging more businesses to sign the statement through the Business for a Clean Economy website: www.b4ce.com.au. The project is a joint venture between the Climate Group, the Clean Energy Council, the Climate Institute, the Investor Group on Climate Change and WWF.

Daniel Grollo, CEO of Grocon, said: “Personally, I’m in favour of a cost on carbon. As I look forward in Australia, I see us at the threshold of some fantastic times and I get disillusioned when I see some critical decisions that need to be made for our future getting bogged down in politics.”

Mark Kindness, CEO of The Body Shop Australia, said: “Practising responsible environmental stewardship and advocating for strong climate change legislation is a key priority for us as a business. We hope the price on carbon will act as an incentive for corporate Australia to think twice before choosing carbon-intensive business practices.”

Australian Chamber of Commerce and Industry director of economics and industry policy Greg Evans disagrees and says Sunday's scheduled announcement will only further add to uncertainty and exacerbate the situation. He said a carbon tax will be a negative for both profitability and earnings.

The chamber has been opposed to a carbon tax from the outset and believes the best way to mitigate carbon emissions, in the absence of an international agreement, is through technology and energy-efficiency measures.

ACCI has yet to decide whether it will join an anti-carbon tax campaign.

The Gillard Government has indicated that more than half the revenue raised from the carbon price will be used for tax cuts and increased payments to households, which will be generous, fair and permanent, and will keep pace with cost impacts from the carbon price in the future. After the announcement is made on Sunday, the legislation will be drafted and debated in Parliament and business support will continue to provide an important voice in the debate.