By JONATHON HOWARD
THE Warwick Chamber of Commerce and Industry President David Littleproud has expressed his concerns overt the Prime Ministers’ announcement that Australia would be converting to an Emissions Trading Scheme (ETS) 12 months early, costing Australia $3.8 billion.
Mr Littleproud said while transitioning to an ETS early would save households and businesses in the short-term, there was a need to be mindful of the inherent risks and costs of tying such a large market-based mechanism to the country’s budget.
The chamber has concerns that while we could see a reduction in the carbon price from its existing $24.50 back to around $10, based off current European pricing, should the price fall further it would put further pressure on the government’s current budget deficit while they provide such a large assistance package to low-income households.
“This ironically could lead to further government spending cuts to programs which they have taunted the Opposition over in recent months,” Mr Littleproud said.
“Conversely should the price go above $24.50 then pressure will be put on government to increase their assistance to low-income households to maintain living standards, especially when the European market which the Australian ETS will be tied to reached $40 in 2008.”
Mr Littleproud said the fact that the Europeans were now looking to limit the number of permits issued to increase the price highlighted just one of many factors that could influence the market and reinforced how dangerous this could be when such a large portion of the Australian budget was tied to it.
Mr Littleproud said while there are definitely short-term benefits to Mr Rudd’s announcements both in a cost of living and political sense, the implications this could have for our economy were not understood and needed to be made clear to the public.
