Climate: Warning of $30bn hit from high carbon price

AUSTRALIA faces a $30 billion hit to growth by 2018 if domestic carbon prices remain higher than the European price, according to new economic modelling that will add to business pressure to bring the $23 starting price closer to Europe's $10.

The modelling, by the Centre for International Economics consultancy, warns that keeping the $23 fixed price regime and the floor price of $15 a tonne - key elements of the current package - will have almost twice the impact on economic growth by 2018 as allowing the Australian price to track international prices.

A higher price in Australia than in comparable international markets could also cost the mining industry a cumulative $4bn and durable manufacturers $1.5bn over six years, the CIE modelling predicts. In a blow to the Coalition's direct action policy alternative, leading CSIRO researcher Michael Battaglia has warned that the abatement figures in Tony Abbott's alternative policy are "ambitious". The centrepiece of the policy - sequestering 85 million tonnes of carbon in soil by 2020 - might only achieve abatement of between 5 million and 20 million tonnes, he said yesterday.

The CIE research, commissioned by the Minerals Council of Australia, comes amid projections that slow growth in Europe will mean international carbon prices will not rise significantly above the $10 around which they are currently sitting.

When Australia's carbon package was announced, Treasury assumed an international carbon price of between $29 and $61. But the European credit crisis caused prices to slump. The research will amplify calls by key business backers of carbon pricing, including the Australian Industry Group's Heather Ridout and the Business Council of Australia's Jennifer Westacott for the policy to be rewritten.

Last week, Ms Ridout said the difference between the Australian and European prices was effectively "a tax on industry", while Ms Westacott described the disparity as a concern for the competitiveness of Australia's industries.

Kevin Rudd, during his failed leadership challenge to Julia Gillard, reignited the debate last month when he said if he again became prime minister he would examine the implementation of the carbon tax within six months and that the scheme should move to a floating price as quickly as possible.

The CIE modelling said that, if global carbon prices remained low, there was a risk the Australian fixed price or the Australian minimum price (in the subsequent three years) would be above the accessible international price and this would have "important implications for the cost effectiveness of the Australian scheme". "An important consequence of this is that the cost of abatement in Australia could be higher than necessary as the administrative arrangements do not allow the use of relatively low cost international abatement," the report says. "In 2018, for example, the Australian GDP loss is around two times higher with a fixed and minimum price in place compared with what it would have been without the minimum price (-0.9 per cent compared with -0.5 per cent)".

Treasury modelling last year as part of the government's Clean Energy Future Package put the reduction in GDP compared with business as usual at -0.3 per cent in 2020.

Minerals Council of Australia chief executive Mitch Hooke said the CIE modelling "further confirms Australia will have the world's biggest carbon tax and that the proposed system is a long way from least cost abatement". "The current carbon tax is being introduced at the wrong time and is the wrong design for our economy," Mr Hooke said. "It is simply a revenue churn that imposes massive costs without reducing global . . . emissions."

A spokesman for Climate Change Minister Greg Combet said the initial fixed-price period would provide certainty before the transition to an emissions trading scheme, under which carbon prices would be determined by the market. "The government is including a price floor and ceiling for the first three years of emissions trading to avoid sharp price spikes or plunges," the spokesman said. "This will reduce risks for businesses as they gain experience in having a market set the carbon price."

The government was providing a multi-billion-dollar Jobs and Competitiveness Program to provide aid to firms that emitted a lot of pollution and faced strong competition from imports or on export markets, the spokesman said.

"It shields those industries from the full carbon price; in fact, the most emissions-intensive, trade-exposed industries will only face an initial effective carbon price of $1.30 a tonne once you take this assistance into account," he said.

Opposition climate action spokesman Greg Hunt said the $30bn hit was "an extraordinary indictment of the government's approach".

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Australian taxpayers will fork out at least $60 million in free legal advice for asylum seekers this year

TAXPAYERS will fork out at least $60 million in free legal advice for asylum seekers this year as new figures reveal 80 per cent of detainees are winning their appeal for refugee status.

A Daily Telegraph investigation can reveal $32 million has been paid to 22 refugee legal firms since July - and the surge in boat arrivals is likely to swell their slice of the immigration budget.

And Labor's immigration review scheme is on track to cost up to $30 million as record numbers of asylum seekers use courts to challenge refugee visa rejections.

Meanwhile, the lawyer who led the fight to have the Gillard Government's Malaysia Solution overturned in the High Court, David Manne, appears to be one of the landmark decision's biggest beneficiaries. His Melbourne-based Refugee & Immigration Legal Centre has received $4.13 million since the refugee swap deal with Malaysia was sunk last August, courtesy of funding through the Immigration Advice and Application Assistance Scheme.

With 1221 asylum seekers arriving in the first two months of this year, a small army of immigration lawyers are receiving similarly generous taxpayer funds, with 22 organisations receiving a large cash injection to give free advice to asylum seekers.

Just $220,000 was spent on the Independent Merits Review scheme in 2009-10 but this increased to $12 million in 2010-11 and $6 million was spent in the three months to September 30, 2011.

The opposition dubbed it the "Hotel California" scheme with the firm message to asylum seekers that "once you're here, you'll never have to leave".

New figures show the proportion of asylum seekers winning their appeals to become refugees has jumped from 46.8 per cent in 2009-10 to 79.3 per cent.

The department anticipated the scheme cost $22.8 million in 2010-11, with most of this ($19.4 million) allocated to help asylum seekers.

In eight months this financial year, the government has forked out $32.6 million in IAAAS funding, according to figures from the Commonwealth's tender website.

Other big winners include Adelaide-based Australian Migration Options, which secured $5.5 million in IAAAS funding, and the Refugee Advice and Casework Service, with $3.6 million.

Opposition immigration spokesman Scott Morrison last night vowed to scrap the merit review scheme if the Coalition wins office.

He said Labor's "only policy now is a 'let them in and let them out' that has made Australia an even bigger magnet for boat arrivals than at any other time".

Immigration Minister Chris Bowen said: "If the Coalition really cared about reducing asylum seeker costs, they would stop saying no to offshore processing so the government can put in place a genuine deterrent."

He said Australia had a "robust process for determining whether people seeking asylum are in need of our protection".

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Australia's very own false prophet

Called out by someone who knows what he is talking about

HE could be NSW's very own rainmaker. Every NSW town visited by Professor Tim Flannery or his Climate Commission colleagues for community forums where residents were told they were in a "drying trend" has been deluged by rain up to three times the annual average.

After being warned to expect drying conditions but more rain in winter than summer, Tamworth was drenched last month with 121mm of summer rain in 24 hours - the highest fall on record.

Wollongong was warned it could experience such significant drying conditions that bushfires would be worse, and when rain came it would be in intense bursts.

The city was drenched in the past nine weeks with 661mm of rain, more than twice the 258mm average for the first three months of the year.

Port Macquarie was told to expect prolonged droughts - yet has experienced flash flooding with 100mm in just one night last month. Rainfall for the year is now more than 100mm above average.

An academic who specialises in climate science has accused Prof Flannery of getting predictions "spectacularly wrong." Writing for education publication The Conversation, Associate Professor Stewart Franks from the University of Newcastle's School of Engineering said he believed Prof Flannery was no better than an "amateur enthusiast" at climate science.

"The most obvious factor could well be Flannery's lack of background in a climate science. He is an academic, however his background is mammalogy - he studied the evolution of mammals," wrote Prof Franks who researches climate variability, particularly flood and drought risk, and the predictability of natural climate variability across NSW. "He is perhaps best described as an amateur enthusiast, in which case I could actually have a little sympathy for him getting it so wrong."

The Climate Commission claims the media is getting confused between "climate and weather". Professor Lesley Hughes said there were plans to hit back at criticisms this week with a new report on rainfall "to further clarify this issue for the community".

Prof Hughes, who gives region-specific information at the forums hosted by Prof Flannery, said the climate was drying, although climate change could also cause intense bursts of rain.

"The climate in southeastern Australia has been changing over the past few decades, overall becoming hotter and drier," she said. "Climate models indicate that this drying trend may continue in the long term, increasing the risk of droughts and fires. "However, we still expect variability from year to year in temperature and rainfall."

Prof Flannery did not respond through his spokeswoman to criticisms in The Conversation article.

Prof Franks said the CSIRO and Bureau of Meteorology had mistaken the drought this decade as climate change-related, when the dry spell and now rain was a long-term La Nina and El Nino weather pattern. He said the weather events occurred in 20 to 40-year clusters.

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Bureaucracy of the NSW Department of Education will be stripped back under the state's biggest education revolution

NSW Minister for Education Adrian Piccoli at Griffith North Public School. Picture: Nathan Edwards Source: The Sunday Telegraph

THE unwieldy bureaucracy of the Department of Education will be stripped back under the state's biggest education revolution in 50 years.

The move will potentially save millions of taxpayer dollars, which could be pumped back into schools but Premier Barry O'Farrell and Education Minister Adrian Piccoli have promised there will be no cuts to teaching staff or overall front-line school funding.

The sweeping changes announced yesterday will arm principals with unprecedented powers to hire and fire staff, control 70 per cent of school budgets and see teachers paid on performance - not years of service.

Mr Piccoli said the reforms were designed to de-centralise control and cut red tape by shifting decision-making from head office to school level.

"We're putting our principals and teachers back in the driving seat - allowing them to exercise their professional judgment and making them accountable for their decisions," he said.

The reforms will also fundamentally shatter the age-old allocation formula where school funding was based on student numbers.

This has long been criticised because a small change in students - of which a principal's salary is also pegged - can have a big effect on an individual school's budget and number of teachers.

Instead schools will control a budget that separates staffing and non-staffing funding and reflects not only its student population but a school's "complexity".

The Secondary Principals Council has welcomed the move to slash more than 200 policies governing administration, reporting and centrally run programs in favour of greater autonomy.

A spokeswoman said schools had a good track record for managing their accounts, whereas within the department "you do wonder where the money goes?"

It comes as the Opposition, Teachers Federation and the Greens warned the reforms were a "smokescreen" for the government to slash school funding and leave principals to shoulder the blame.

Opposition education spokeswoman Carmel Tebbutt said the decision to "break the nexus" of funding based on pupil numbers offered nothing to hold the government to account. Teachers Federation president Maurie Mulheron said the real motive was to slash up to $700 million from the education budget and leave principals holding the can when schools deteriorated.

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