Page 1749 - Week 05 - Tuesday, 1 May 2012
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purchase of renewable energy by the government, the additional costs to the budget is now lower than it otherwise would have been. Secondly, as I said, it is inevitable that prices for coal-fired electricity will rise. The obvious way to avoid this cost is to purchase renewable energy instead.
It is worth noting the huge additional investment that will occur in renewable energy as a result of the carbon price package. Billions of dollars will now be spent developing renewable technologies, and improvements in these technologies will ultimately mean savings for Canberrans in the future. Already this year we have seen in the latest price determination a significant reduction in the price of green power. The ICRC determination that I referred to earlier also highlighted the growing competitiveness of renewable energy.
Under the ICRC’s modelling, green energy costs will drop by 17.33 per cent from the 2011-12 to the 2012-13 years. This is consistent with a steady global decline in the overall costs of renewable energy, a trend which is in stark contrast to the rapid rise in the cost of fossil fuels. By assigning a cost to the pollution caused by fossil fuel-based energies, the carbon price will only help to lower the cost of renewable energy further, in turn promoting or prompting reductions in household energy bills.
More generally, I would say that this is just another example of selective and very short-term economics from the Liberals. There is no doubt that pricing carbon is in Australia’s best interests. It is well worth them taking the time today to reflect on the direct action plan proposed by Tony Abbott. After all, this is the alternative policy from Mr Abbott that would become law if there were to be a federal coalition government.
Mr Abbott has gone so far as to say that the very first thing he would do as Prime Minister would be to rescind the carbon pricing package. So while the Canberra Liberals are focused on the carbon pricing package that currently exists it is important to look at the alternative that their party has proposed. I take it that that is something that the Canberra Liberals would support; their clarification of exactly what they would do to address climate change would certainly be welcome.
In a nutshell, what the direct action plan proposes is for the taxpayers to fund the acquisition of carbon abatement, letting the polluters off the hook. In contrast, what the carbon pricing package does is make big polluters pay, assist households through the compensation packages and provide for the future energy options on which business depends.
At the heart of this there is a fundamental difference of approach. Where the direct action plan would ask taxpayers to foot the bill, the carbon pricing package asks the polluters to pay the bill and compensates households for any passed through costs. It is interesting to see what economists think about these two approaches. There was considerable embarrassment from Mr Abbott when he had to concede that he could not find a single reputable economist to back his proposal for a direct action scheme to reduce CO2 emissions. The reason he was asked such a question was that the Economics Society took the time last year to conduct a survey of nearly 500 economists from around Australia on a number of economic policy questions, one of which was their views on the best way to cut greenhouse gas emissions.
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