Clean Energy & Sustainability In Our Long-term Interests.
The sense of annoyance and frustration of many businesses at the Federal government’s behaviour over the past three years in relation to its proposed carbon pollution reduction scheme (CPRS) will be great, and it has been made worse by the government’s response to the Henry review of taxation. What’s more AGL Energy has criticised Canberra’s energy policies, warning that Australia’s reputation as a stable place to invest is threatened by delays to a green power scheme.
Wayne Kayler-Thomson in The Age (5 May 2010):
Sustainability is in our long-term interests.
THE sense of annoyance and frustration of many businesses at the federal government’s behaviour over the past three years in relation to its proposed carbon pollution reduction scheme (CPRS) will be great, and it has been made worse by the government’s response to the Henry review of taxation.
Not so long ago, the CPRS seemed almost inevitable, with the government raising the prospect of a double-dissolution election and a joint sitting of Parliament to ram it through.
In this context, coal-fired electricity generators were delaying investment, putting upward pressure on power prices, as were large electricity-dependent manufacturers.
Now the government will delay consideration of an emissions trading scheme until the end of 2012, amid increasing public scepticism of the cost and impact of the scheme on reducing carbon, as well as the slow or non-existent pace of adoption by other countries.
This has caused those in the gas and renewable energy sectors, and other businesses that stand to gain from a carbon price, to consider delaying investment themselves.
In a sense, the posturing of the past three years has produced the worst of both worlds. Apart from a shared distaste for the emissions trading issue being ruthlessly used as a political football, regardless of collateral damage, there is another thing the ”green” and ”brown” oriented businesses can agree on, and that is the importance of resource efficiency.
Optimal use of power and water and better waste-management processes not only help the environment, but also save money.
Sustainability is in the long-term interests of business, the broader community and the environment, and in this sense, the baby should not be thrown out with the bath water. The development and take-up of environmental technology will also help bolster Australia’s position as a leader in environmental technologies.
The Victorian Employers Chamber of Commerce and Industry’s view is primarily that action on sustainability makes business sense, and that businesses should be encouraged and supported in taking action.
The Rudd backflip does not change the fact that we still need frameworks to deliver strategic, planned investment to commercialise low-carbon energy technologies, build smart networks (where cost-effective) and encourage appropriate use of distributed generation.
The take-up of sustainability products and services, including those offered by VECCI such as ”Grow Me The Money” and ”Carbon Down”, show that pragmatic support can make a difference. By taking action individually, businesses demonstrate that embarking on a sustainability journey actively contributes to saving money, cutting emissions and helping the environment.
Business can lead the way in sustainability adoption, both as inventors and users of sustainable practices, regardless of the stylised political shenanigans going on in Canberra. The government response to the Henry review is more of a “mixed blessing” for business, although anger is growing with the realisation that the rises in superannuation costs will not be offset by cuts in company tax rates, as most small businesses are not companies.
While small business will undoubtedly benefit from a suite of commonsense measures, including phased cuts in the company tax rate, immediate write-offs for depreciable assets and a standardised rate for all other assets except buildings, the cuts in company tax are less than those recommended by Henry (25 versus 28 per cent), and are also delayed, depriving business of any immediate benefit in a climate where business costs are rising.
Increased superannuation costs will hurt the bottom line and discourage the hiring of new labour, especially after the bottom-line hits many businesses have taken with the Fair Work Act – although the rise from a 9 per cent superannuation contribution to 12 per cent is tapered out to 2019-20.
A mining super-tax will punish one of the few industries in which Australia has a global comparative advantage, possibly pushing some mining company head offices overseas and delighting competitors such as Brazil and South Africa.
A federal infrastructure fund, a concept supported by VECCI for a decade, will help build the nation’s capacity to cope with its trade and population challenges, but the $700 million starting figure is puny compared with the money wasted during the school building and insulation rollouts.
There has been little focus on reducing the size of government or making it more efficient – for example, a review and consolidation of back-office expenditure.
The Henry report contains some exciting aspirational measures, including the abolition of inefficient taxes on insurance and payrolls, but these have not been taken up. It is hoped that some more measures to benefit business and the economy will be unveiled leading up to the election.
Wayne Kayler-Thomson is chief executive of the Victorian Employers Chamber of Commerce and Industry.
Clancy Yeates in The Age (3 May 2010):
AGL Energy has criticised Canberra’s energy policies, warning that Australia’s reputation as a stable place to invest is threatened by delays to a green power scheme.
Amid widespread industry complaints that companies are operating in a policy vacuum after last week’s delay to emissions trading, AGL’s chief executive, Michael Fraser, took aim at the renewable energy target (RET).
In a speech delivered in Adelaide at the Clean Energy Conference, Mr Fraser warned of “very serious consequences” if Parliament fails to pass amendments to the RET, which requires 20 per cent of all power to come from renewable sources by 2020. The troubled scheme was revised in March after generous subsidies for solar water heaters caused a slump in the price of renewable energy certificates, undermining investments in wind farms.
But the changes have not yet passed, leaving final investment decisions on renewable energy projects up in the air. Failure to implement them before the election would have ”very serious consequences” for jobs, investment, and industry confidence.
“Following the deferral of the introduction of the CPRS [carbon pollution reduction scheme], stability and certainty are not the first words that come to mind in relation to investors viewing the Australian power generation sector,” Mr Fraser says.
He told Clean Energy Council conference that passing the RET reforms would restore confidence. ”If investment confidence is not restored this year, there is a real risk that global players may not return to Australia.”