The climate adviser, Ross Garnaut, has lashed Australian business for playing a ”spoiler” role in the carbon price debate, saying it is putting short-sighted ”self-interest” ahead of the national interest.
He singled out the Business Council of Australia and its president, Graham Bradley, the BlueScope Steel chairman Graeme Kraehe, the BHP Billiton chairman Jacques Nasser and the LNG and coal industries, and accused the business lobby of sliding back to a pre-1980s anti-reform culture that had left Australia with ”the worst productivity in the Western world”.
In his final report, released yesterday, Professor Garnaut recommended households receive $5 billion worth of personal income tax cuts a year, delivered through raising the tax-free threshold to $25,000 with other adjustments, so that the benefit cut out for those earning more than $80,000.
The Prime Minister, Julia Gillard, confirmed tax cuts were ”a serious option” but government sources said Professor Garnaut’s proposal was not affordable and compensation would be delivered at income levels well above $80,000, with family payment increases likely to be used to target households with children.
Professor Garnaut recommended rises in pensions and welfare payments to compensate for a carbon tax which he said should begin at about $26 a tonne.
Government sources also rejected his suggestion that pension rises be lower than proposed under the Rudd government’s emissions trading scheme because pensioners had received an increase since then.
Professor Garnaut said trade exposed industries such as aluminium and steel should get assistance, but it should decline more rapidly than under the Rudd scheme. He repeated his call for electricity generators to get little compensation, instead receiving government loan guarantees to protect power supplies during the introduction of the carbon price.
Professor Garnaut said other countries’ pledges meant Australia’s 2020 emissions reduction target - which Labor and the Coalition agree should be at least 5 per cent below 2000 levels - would probably have to be higher. He suggested 10 per cent.
The Opposition Leader, Tony Abbott, seized on a statement in the report that households would ”ultimately bear the full price” of the tax, claiming it contradicted the government’s argument that only 1000 ”big polluters” would directly pay it.
Professor Garnaut said Mr Abbott’s ”direct action” policy would be ”immensely more expensive” than a carbon market, would raise no revenue to help businesses or households, and would leave a government more exposed to special pleading from vested interests.
Professor Garnaut suggests money for one-off compensation for the initial petrol price rise due to the carbon tax could come from further savings from the fringe benefits tax on company cars and from abolishing ”other subsidies” that encourage fossil fuel consumption, rather than from carbon tax revenue. He said more smaller subsequent price rises could be compensated for by another tax cut.
The government, he said, had ”taken on the most difficult and long-dated policy reform that has ever been attempted in Australia”, but ”parts of business had taken on the role of spoilers”.
The chief executive of BlueScope, Paul O’Malley, accused Professor Garnaut of running an ”anti-manufacturing agenda” and the BCA said it wanted to ensure Australia remained attractive to investors.
Professor Garnaut has suggested an independent committee should advise on a 2020 emissions reduction target.
