Short on detail but the principles are right

So we finally have some direction in terms of a carbon price. Or do we? The announcement last week of a hybrid carbon price mechanism does not contain a lot of detail and there is still a lot of work to be done to get the fundamentals right. Although we cannot evaluate the implications of the scheme until concrete details are announced, the 11 underlying principles which the carbon price mechanism will be based on are sound. We all need to ensure the government is accountable to these principles and they are truly reflected when the details of the final scheme are announced.

These principles include:

• Fairness by providing help to those individuals and groups that will need assistance in adjusting to a price on carbon
• Ensuring the competitiveness of Australian businesses
• Provide investment certainty to Australian businesses and give them confidence to make long-term investment decisions
• Ensuring the administrative requirements are simple
• Flexibility so that we can respond to changing domestic and international developments
• Accountability.

Putting a price on carbon is the initial step in reducing emissions but it is not a solution in itself. The real solution will come from innovation. The way we do things currently has to change and that is why fresh ideas are needed to develop new low emission technologies.

What happens to money raised from a carbon price? We would not support this money getting lost in consolidated revenue. It needs to be isolated and used for assistance in terms of the ‘fairness’ principle I mentioned above and to assist with encouraging and supporting innovation. We’ve long advocated for a sovereign wealth fund to hold such ‘extra’ money.

I’d be keen to hear members’ views on the hybrid system - implementing a price on carbon (from 1 July 2012) with a cap-and-trade emissions trading scheme in three to five years.