The direct costs of waiting for direct action

• Matt Grudnoff
• The Australia Institute

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22 August 2011This paper examines the Coalition's 'Direct Action' plan for reducing carbon emissions. 

In the 2007 federal election both major parties committed to introducing an Emissions Trading Scheme (ETS). By 2009 both parties agreed on an emissions reduction target of five per cent on 2000 levels by 2020. But since Tony Abbott became leader of the Liberal Party the bipartisan position for a reliance on a market based mechanism to reduce Australia‟s carbon emissions has broken down.

While the Coalition remains committed to the same target as the Government it now proposes to meet that target with a competitive grant scheme which it calls the Direct Action Plan and in turn oppose all forms of market based carbon pricing including the Labor Party‟s proposed carbon tax that converts into an ETS after three years.

The Coalition is doing more than campaigning against a carbon price. It is the job of an Opposition to be critical of Government policies they disagree with but the Coalition has decided to go much further than critique in committing to „roll back‟ the carbon price should they form government4. This commitment creates uncertainty in the business community since even if the carbon price passes Parliament it does not resolve the issue and may be subject to a roll back at a later date. Furthermore, the Coalition has also committed to a double dissolution election if it wins government but cannot pass its legislation to roll back the carbon price. This will create even more uncertainty.