Climate response must protect jobs: Getting too far ahead on an ETS is bad economic policy

An editorial from "The Australian":



It is neither desirable nor remotely feasible, Ross Garnaut wrote in his interim report in June, "to seek to lower the climate change risk by substantially slowing the rise in living standards anywhere, least of all in developing countries." As Professor Garnaut noted, Australians would not accept such an approach. This is why the Business Council of Australia's "real world" analysis of the economic consequences of the Rudd Government's proposed emissions trading scheme is so effective and devastating.

It reveals that even with the Government's proposed compensation, three firms of the 14 companies that opened their books to Port Jackson Partners for the analysis would face a carbon cost so high they would close. Four others would be forced to review operations to remain viable after losing between 32 per cent and 63 per cent of pre-tax earnings. Many potential investments would be canned.

The companies, with annual revenues ranging from $90 million to more than $3 billion, are in cement manufacturing, petroleum refining, steel making, sugar milling and zinc and nickel refining. On average, the ETS would reduce their pre-tax earnings by 22 per cent, with the worst-affected suffering a 136 per cent reduction. The ETS will apply to 1000 Australian companies, each producing more than 25,000 tonnes of carbon pollution a year.

The ramifications of the BCA analysis are clear. Giving more compensation to trade-exposed high-emitters to stop them going broke or taking their businesses and jobs off shore would reduce the amount of compensation available to others. But without it, new investment and business growth would be decimated and unless remedied, growth in living standards would be substantially slowed - precisely the scenario Professor Garnaut acknowledged was unacceptable.

The analysis for the electricity generating sector, too, is sobering, warning that a 10 per cent emissions reduction target by 2020 involves a "major risk" to power supply and a lift in retail prices of 25 to 40 per cent.

It is hardly surprising, overall, that the report canvasses the notion that a less ambitious 2020 emissions target may be required. The Australian has argued consistently that a small nation such as Australia, emitting just 1 per cent of the world's greenhouse gases, is powerless alone to change global warming. This is why it would be foolish to jump ahead of the world in cutting emissions and compromising living standards.

At the same time, we need to assure the world of our willingness to co-operate in international efforts. The 2010 start-up of the ETS is one way of doing so. Another would be a broad-based carbon tax levied on fuel producers, sooner rather than later, at a realistic level, while concurrently gearing up for an eventual ETS to start at the same time that the world's largest industrial nations - including the US, China and India - introduce similar schemes.

Former Labor leader Mark Latham, writing in The Australian Financial Review this week, canvassed the benefits of the Government levying a carbon tax on fuel producers. The advantages, Mr Latham said, would be: "It is comprehensive in coverage and immediate in impact, as companies pass on the new costs to consumers." In its paper, the BCA canvassed a fixed carbon price of $10 to $20 a tonne. Some senior figures in the Government agree, at least in private, that this would be a more prudent approach than a more extravagent plan that would be rich in green symbolism but poor for the economy.

Opinions polls, including Newspoll, have showed consistently that a majority of Australians is prepared to pay more for energy, including petrol and electricity, to help curb global warming. Given this sentiment, a carbon tax with as few exemptions as possible would spread the economic impact of cutting emissions as broadly as possible, standing the best chance of protecting jobs and growth.

The BCA report acknowledged as much. A fixed carbon price of $10 to $20 a tonne, it argued, until an effective global agreement was finalised, would avoid the problem of trade exposed intensive industries investment needing to be outside a cap until there is a world scheme. It would also addresses the issue of potentially volatile emission prices.

There is also merit in the BCA's call for a more modest target for reducing emissions by 2020. A goal of a 10 per cent reduction from the 2000 level instead of the 2010 level might be more realistic, or even a target of holding them steady at 2000 levels.

While the ACTU and environmental groups dismissed the BCA concerns, the Rudd Government cannot afford such irresponsibility. The Government cannot go it alone on climate change without business, and it knows it. Wayne Swan has promised close scrutiny of the BCA's case. The Treasurer must also take on board the concerns of the Minerals Council of Australia and the warnings from the natural gas, cement and petrol refining sectors about the potential impact of the ETS. The ETS was the preferred option in the Government's green paper, but it does not preclude alternatives, including a simple, low-level carbon tax and waiting until our major trading partners adopt an ETS. Achieving a sound balance between climate and economic protection has emerged as the Government's big test.

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Opinionated young Leftist emptyhead wises up about Israel

Rose Jackson, the former campaign manager for failed Labor candidate George Newhouse, has retracted anti-Zionist statements she made in 2006 as she attempts to clinch a seat on a Sydney local council with a large proportion of Jewish voters. The 23-year-old law student, who is the daughter of award-winning ABC journalist Liz Jackson, said two years ago she opposed Zionism because it calls for the creation of a Jewish state, "and I think all governments should be secular". "No Jewish, Islamic, Christian states anywhere in the world, just good, robust, secular democracies," Ms Jackson said in an email to an online chat group. "By speaking out on behalf of the Palestinians and Lebanese people, we can give voice to those that some governments and media would wish to silence."

But this week, as Ms Jackson prepares to run on the ALP ticket for Waverley Council in Sydney's east, which is home to a significant Jewish population, she admitted her comments, made when she was president of the National Union of Students, were "naive". "Looking back, I think I just bought the prevailing polemic on campus at the time that Israel was some sort of quasi-theocracy. Having explored the subject more deeply since then, I understand this is nonsense," she told The Australian Jewish News this week. "I realise I just misunderstood. Obviously, the state of Israel is not a state for the Jewish religion, but a homeland for the Jewish people.

"It's a really robust democracy; there are plenty of non-Jewish people in Israel who have full citizenship rights. "If there is discrimination, it's no worse than what would happen in Australia or America or anywhere else. I completely support Israel's right to exist as a Jewish state."

The chief executive officer of the NSW Jewish Board of Deputies, Vic Alhadeff, said that while some of Ms Jackson's previous comments were "unfortunate", she had acknowledged that they were based on misunderstanding and she deserved credit for clarifying her remarks. "It would have been very easy for Ms Jackson to go along with the anti-Semitism of the far Left when she was president of the NUS," Mr Alhadeff told The Weekend Australian. "Instead, she chose the politically unpopular and risky path of speaking out against the anti-Semitism of the far Left, and she deserves credit for that."

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Deadbeat public hospitals

Public hospitals are threatening the livelihood of small businesses across New South Wales by failing to pay their bills. Suppliers have been forced to suspend services or pursue legal action until tens of thousands of dollars worth of outstanding invoices are paid. Companies struggling to recoup unpaid bills range from a bakery, hardware store, taxi service and dairy supplier to fuel stations, a tyre dealer, software supplier, grower's market and confectioners. Medical providers - including pharmacists, physiotherapists and psychiatrists - have also been left as much as $40,000 each out of pocket.

Hospitals in the Greater Southern, Greater Western, South Eastern Sydney Illawarra and North Coast areas have among the biggest debts. "Most hospitals never pay their bills for months and most of the suppliers are too scared to create problems because they are threatened with losing their contracts," a NSW Health source said.

Belinda and Wayne Morrison, owners of Bels Gordon St Bakery in Port Macquarie, have supplied the town's hospital for nine years. But, in the past six months, the hospital's unpaid invoices have mounted to as much as $7000. "We are a small business and we do need cash flow," Mrs Morrison said. "It's frustrating having to chase money - especially when I give them goods and they get money back on the same day." The buns and cakes that her bakery supplies are sold at a profit by the hospital's cafeteria. "They sell them for quite a healthy profit." she said.

NSW Opposition health spokeswoman Jillian Skinner said the Government had an obligation to pay bills on time. "It's the lowest of the low for a big government agency to make suppliers hold out for payment of services and goods that they have supplied," she said. "It's mean and it's jeopardising some of those small businesses that have to pay their bills and staff on time - they struggle to stay afloat."

The Sunday Telegraph has learned of a case in which a fuel station refused to fill up area health service vehicles in the South Eastern Sydney Illawarra area because of unpaid hospital bills. Colin Richardson, managing director of Global Direction software suppliers, suspended services to Dubbo Base Hospital's pathology service in May after accounts of more than $22,500 were unpaid. "Now we have put them on pre-pay so they pay in advance," Mr Richardson said.

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Australian teens' risky drinking "linked to" infertility

But not shown to CAUSE infertility -- as Queensland's Nick Martin points out -- deflating a finger-wagging American puritan

Heavy drinking by females in their teens and 20s may reduce their chances of motherhood later in life, new research has found. Previous studies have linked teenage drinking with risky sex and early motherhood. Now a study of Australian twins has shown that alcoholism in women resulted in later childbearing. The study by Washington University's school of medicine analysed the drinking habits and reproductive histories of two groups of Australian twins, born before and after 1964.

Researchers found female alcoholics in both groups had children later in life - a trend not repeated in male alcoholics in the groups. In the first group, comprising people born before 1964, 64per cent of female alcoholics had children compared with 78per cent of other women. In the second group, 38per cent of alcohol-dependent women had children, compared with 49per cent of other women. The study confirmed increasing alcoholism in women. Only 4per cent of women met the criteria for alcohol-dependency in the group born before 1964, compared with 15per cent for the group born after. The study did not consider what amount of alcohol consumption affected fertility.

Lead researcher Mary Waldron, of Washington University, said the study, to be published in Alcoholism: Clinical And Experimental Research in November, served as a warning against excessive alcohol consumption. Previous research examined risks to teens or adults but not both, Professor Waldron said. "Our findings highlight a risk associated with [alcohol dependence] in women that is not widely recognised - a risk that has assumed increasing importance given the increased rates of alcohol misuse by women, and particularly young women. "Young women who drink alcohol may want to consider the longer-term consequences for later childbearing. "If drinking continues or increases to levels of problem use, their ability and opportunity to have children may be impaired."

Nick Martin, a professor at Queensland Institute of Medical Research who took part in the study, said the links between alcohol and fertility were not conclusive. "This was about women with persistent drinking problems," Professor Martin said. "The observation is that they will have less reproduction and delayed reproduction. "While the affect may be hormonal, women with alcohol-dependency probably don't make good partners - that's another possible explanation. I think we have to consider the direct behavioural consequences of alcohol too."

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