Carbon price necessary but not before global agreement

Date issued: 23 July 2010

An effective business response to the challenge of climate change must take into account all Australian businesses, CPA Australia has said.

CPA Australia acknowledges that a price on carbon is appropriate but it must be premised on a global agreement.

'A global agreement before the introduction of a carbon price in Australia is a must to ensure the competitiveness of Australian businesses and to ensure the effectiveness of the response to climate change,' CPA Australia CEO Alex Malley said.

In addition any effective and sustainable action must factor in the effect such a price would have on all Australian businesses.

'The government's current approach focuses largely on the 1000 or so largest emitters and while their position is undoubtedly critical, there are 2 million other entities who will be fundamentally affected by a business environment where carbon emissions come at an increasing cost,' Mr Malley said.

'Through the supply chain effect, the vast majority of businesses, regardless of size, will be affected despite not being directly liable under the proposed emissions trading scheme. While the rewards for early action for emission-intensive activities is welcomed, it is critical that all businesses be given incentives to reduce their emissions in the lead up to the introduction of such a scheme.'

To encourage a reduction in emissions among all businesses, CPA Australia recommends the next government consider a package of policy responses including:

• a 200 per cent deduction under the existing R&D tax concession or an equivalent 60 percent tax credit fully refundable (for R&D into new or improved low emissions and carbon capture and storage technology)
• accelerated depreciation for capital expenditure on replacing or upgrading existing plant and equipment with lower emissions technology
• an upfront investment allowance of 20 percent for capital expenditure on low emissions technology

'These measures are not dependent on the start of a carbon price and should proceed regardless,' Mr Malley said.

Mr Malley also said business certainty was crucial in any successful response.

CPA Australia would also hope that the intended consultation process announced today would canvas the views of all key stakeholders, especially those in the business community.

'It is the response of the business community to this challenge after all, that will dictate whether Australia reduces its emissions.'