The Federal Minister for Climate Change and Water recently spoke at a Committee for Melbourne event hosted at Freehills.
Senator Wong holds one of the most important roles in the Rudd Government and her speech covered the economics of climate change and the design and implementation of the Federal Government’s Carbon Pollution Reduction Scheme.
Members of the audience included George Pappas, Chairman of the Committee for Melbourne, the Consul-General for Germany, Dr Anne-Marie Schleich, and the Consul-General for Japan, Mr Susumu Hasegawa.
Senator Wong opened her speech by stressing the importance of long-term thinking. ‘Politics tends to be an election cycle and people in this room know that the challenges of public policy inevitably extend beyond that and the portfolio,’ said Senator Wong. ‘Climate change is intrinsically one of those policy areas.’
The senator went on to praise the reports of Ross Garnaut. ‘I am really grateful for his contribution to lifting people’s understanding of climate change issues and the complexity of these issues,’ said Senator Wong. ‘These are complex public policy problems, complex challenges that face us and we do need to make sure that we have a constructive dialogue with the Australian people about which way forward.’
Climate change is an economic issue
The central proposition of the government’s approach to climate change is to see it as an economic issue. ‘We’re not in a position where we can choose between a cost-free option and an option with costs, but the reality is we are already paying the cost of climate change,’ said Senator Wong. ‘The real public policy issue is how do we best distribute the costs of climate change across the community and how do we respond to it in the most efficient and responsible way. We have to address the risk of dangerous climate change for Australia,’ continued Senator Wong. ‘There’s also a strong economic argument for us preparing our economy and our new carbon market which is developing already. We know billions of dollars are being invested through the carbon market and that inevitably will grow over time as more countries move on these issues.’
Carbon Pollution Reduction Scheme
Senator Wong succinctly explained Australia’s future role in the carbon market and what is involved with the Carbon Pollution Reduction Scheme. The government’s commitment is to introduce the trading scheme and also to have a 60 percent reduction by 2050.
‘Technically you set a limit on greenhouse gases, on carbon dioxide and other gases,’ said Senator Wong. ‘You then issue permits up to that limit. You enable firms to trade in the permits thereby setting a price. That’s a practical indication of how it works.’
The scheme tracks the current costs of climate change in the everyday things we do. ‘We have to, to some extent, recognise the cost of climate change in the economic decisions we make today, in the choices we make around consumption and investment. The best way, the most efficient way to do that is to place a price on carbon. It is to remedy the greatest mark of failure the world has ever seen, where we essentially had a perverse economic propensity to pollute. We have to shift that.’
Commitments for the future
The Federal Government has committed to every cent raised through the sale of permits being reinvested either to Australian households or businesses. ‘There will be the provision of free permits to deal with the emissions,’ said Senator Wong. ‘The climate change action fund is a fund for businesses primarily those who don’t receive free permits to assist them again with the adjustment. We’ve suggested that we would put in place assistance measures for households, for low income households, for pensioners and other beneficiaries. We will provide assistance above automatic indexation of payments through the tax and welfare system. We will provide similar assistance to middle income households to help them meet the costs of the scheme.’
‘Can I tell you what gives me hope?’ concluded Senator Wong. ‘We’re standing in front of the Australian people and saying: “We are going to ask you to make this transition, to put in place a price on carbon which is going to have impacts in terms of cost for you; and we’re asking you to do it essentially for the next generation and the ones that come after”.’
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