climate policy

Labor’s Climate Policy Will Entrench Inflation, Cripple Industry

23 February 2023

2.8 MINS

The latest announcement of Labor’s promised climate policy, unveiled by Climate Change Minister Chris Bowen in Gladstone, Queensland, on January 10, will impose mandatory limits on carbon-dioxide emissions to achieve Labor’s target of 43 per cent emissions reductions by 2030. The limits are backed by financial penalties on the so-called “biggest polluters” — those that emit more than 100,000 tonnes of carbon dioxide a year.

These so-called polluters include the major electricity generation companies — because coal continues to provide more than half of Australia’s electricity — as well as Australia’s largest manufacturing industries, including aluminium smelters and glass and plastics manufacturers.

This will inevitably mean increased costs to electricity generators, which will be reflected in higher prices of electricity being passed on to consumers, both households and businesses. It will force up electricity prices every year until 2030.

It will add to inflationary pressures. Australia’s national inflation rate has risen to 7.8 per cent, despite hopes that the rate had peaked at 7.3 per cent last October. Inflation is now running at its highest level since Paul Keating’s “recession we had to have” in 1990.

Bowen’s statement did not disclose the impact of the new measures on electricity prices, but it did indicate that the “biggest polluters” will be required to cut emissions “by 4.9 per cent each year to 2030”.

The policy is expected to accelerate the closure of coal-fired power stations around Australia.

Mockery

The policy makes a mockery of Albanese’s claim that the election of a Labor government would lead to a fall of $275 a year for the average household’s electricity bills. In fact, it will guarantee electricity prices will rise every year, directly impacting on cost-of-living pressures already facing Australian families, and indirectly forcing up the price of Australian-manufactured goods.

As imported goods are not subject to the additional costs, it will be a nail in the coffin of Australian manufacturers, particularly those supplying domestic markets. Exporters, including Australia’s huge coal export industry, are exempt from the policy.

In announcing the policy, Bowen said the safeguards mechanism would be good for consumers and business. He said: “These proposed reforms have been carefully calibrated to deliver the policy certainty and support Australian industry needs through decarbonisation.”

To the contrary, it will, in fact, cripple Australian businesses, and create inflationary pressures in the Australian economy for the next seven years, at least.

Bowen said that the Government’s proposals were contained in a “consultation paper” released on January 10. The consultation process concludes about six weeks later.

The Government proposes to legislate its climate policy, and it will take effect on July 1, 2023.

Dissensions

The policy will likely face amendment, as the Coalition and the Greens have expressed opposition, for differing reasons. The Greens have attacked the proposal’s carbon credits, saying it allows companies to offset emissions while increasing carbon-dioxide emissions.

The National Party has described Labor’s climate policy as a carbon tax that will lead to job losses. Federal MP for Flynn Colin Boyce said the policy was an attack on heavy industry and the thousands of workers that work in the sector.

“Labor’s Safeguard Mechanism targets facilities that emit more than 100,000 tonnes of carbon dioxide a year. If facilities go over this amount, the business will need to buy carbon credits. As these credits cost money, this is just a new tax on job-creating industries.” he said.

“It is a disgrace that Minister Bowen and his Labor colleagues flew into Gladstone to make this job-crippling announcement and then jumped onto a plane back to a major city. Why didn’t he speak directly to the workers set to be impacted?”

Another Queensland MP, Michelle Landry from Capricornia, said the policy was just a tax on energy. “Australian families are already doing it tough with the current cost-of-living crisis and this hasty decision made by Labor will only increase the pressure they face to make ends meet,” she said.

“This announcement by the Labor Government has a more far-reaching effect than just on the companies operating these facilities. It will affect how much you pay to switch a light on, [and] the economies of our mining communities of Capricornia.”

Labor’s climate policy, clearly designed to placate teal and Greens voters as well as the UN’s Intergovernmental Panel on Climate Change (IPCC), will cause acute problems for Australian families and businesses, and may threaten the Party’s prospects at the next federal election, in 2025.

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Originally published at News Weekly. Photo by Iurii Laimin.

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