The Institute’s position on carbon
- The price on carbon in conjunction with supporting innovation are key to reducing emissions in the long term, and will also support Australia’s future economic competitiveness in the global market
- Governance is crucial in fostering assurance and certainty in the scheme
- The Institute has been a strong advocate of complementary tax measures.
The federal government announced details of its carbon package in Canberra on 10 July 2011. The Institute’s Manager of Sustainability and Regional Australia, Geraldine Magarey, attended the stakeholder lockup for the announcement.
Response to the carbon package
The Institute has supported a market-based mechanism to price carbon emissions in order to meet the bipartisan policy of a 5% reduction in emissions by 2020. The reason for supporting a market-based mechanism is that the costs arising from other regulatory approaches geared towards reducing emissions are much higher than the costs of market-based policies.
Another reason is that it will provide businesses and their investors the certainty and confidence they require to make long-term decisions about the future allocation of their capital.
Further, a survey conducted in November 2010 among members showed approximately 50% of members supported a price on carbon emissions while 32% believed there should be no price. The remaining members were undecided. Members’ views were split as to whether a carbon tax or an emissions trading scheme (ETS) was the best way to price emissions.
The Institute has also stated that innovation is the long term solution to becoming a low carbon economy. It has called for revenues collected from the introduction of a carbon price mechanism to be quarantined from consolidated government revenues. One hundred percent of the revenues generated through the policy should be ploughed back into initiatives to support and encourage innovation, and to provide an appropriate level of assistance for households and businesses.
The Institute advises that it is critical that any regulatory burden or compliance costs are kept to a minimum in order to reach the government’s objective of making the carbon pricing mechanism efficient and effective.
Complementary tax measures
The Institute has been a strong advocate of complementary tax measures to be introduced alongside the carbon price, including providing incentives for renewable energy projects and workforce relocation to remote regions, tax measures encouraging energy efficiency improvements, and allowances for the primary production sector.
While renewable energy grants announced by the government will help to drive some business investment in new technology, putting in place a broad range of complementary measures such as a green business investment tax allowance would do even more to encourage the sort of investment we need in our future.
A series of policy options have been proposed as complementary tax measures to assist in transitioning towards a low carbon economy.
The importance of assurance to ensure the credibility of any market-based scheme is also part of this strategy.
Extensive coverage of the Institute’s response to the government’s announcement can be found in the media release, member updates and Institute blogs.
More for members
The Institute continues consultation with members and conveys these views in the form of advocacy. It is important for the Institute to be a part of these discussions with government, representing our members as the country moves towards a low carbon economy.
With innovation being a crucial part of the solution, the Institute’s leadership team is developing policies to support and encourage innovation utilising the tax system.
Now that the carbon price has been announced, the Institute is preparing to offer training and development opportunities to members to assist them with the introduction of the carbon price.
Article last updated 18 June 2014