Perspective article

By Fiona Wain, CEO, Environment Business Australia
May 2008

The Rudd Government's first budget funds the key election pledges about tackling climate change and building environmental sustainability into the economy.

Perhaps more importantly it signals that the economy and the environment can no longer be considered separate from one another. And as Minister Wong has said "The cost of inaction outweighs the cost of action."

It is therefore a shame that a strong platform has been undermined by the inclusion of meanstesting for installation of domestic solar panels. As with any new technology, access to a market of scope and scale is needed before it can come down its natural cost curve. Clearly households over the $100,000 provided that start-up market as, anecdotally, 70% of installation projects have been cancelled since the budget. Industry needs clarity and it rightly objects when guidelines are abruptly changed without consultation.

A recommended approach would be to scrap the proposed means-testing and take advantage of wealthier households being the basis of market development leading to reduced costs for lower income households.

EBA most strongly recommends the introduction of a nationally consistent gross feed-in tariff for renewable energy to work alongside the emissions trading scheme. Once this feed-in tariff is showing results then the rebate can be means-tested and even phased out. We estimate this will take 3 to 4 years.

Notwithstanding this criticism of an element of the Budget, Environment Business Australia applauds the commitment to the renewable energy target and the emissions trading scheme and expects to see further commitments to technology development and national/regional interest infrastructure projects with the Green Paper and the final Garnaut Review paper.

Part of EBA�s advice into Government and the Garnaut Review is that there should be an urgent review of policy across all departments, jurisdictions and levels of government to ensure that all policy �levers� are working towards a common outcome. Nation-building and the development of our next competitive edge requires more than money, and policies need updating to meet the rapidly changing market, environmental and societal needs. The overhaul of the tax system announced by the Treasurer was therefore a major step forward.

EBA is hopeful that regulation, fiscal incentives and penalties, as well as Government's own procurement and investment, will focus on national and regional interest infrastructure projects that help build Australia's next competitive edge. Climate change is the biggest imperative for the change we need, but the rapidly increasing cost of oil, gas and coal - and the impacts of this on commodities and throughout all our supply chains - is another. Therefore, the faster that systemic efficiencies are put in place throughout the supply chain the more resilient the Australian economy will be.

EBA is encouraged by the attention now being paid to energy efficiency but tangible standards and performance measures need to be put in place. Creating the next �great technological era� and providing incentives for behavioural change are the short-term drivers that business and governments should focus on.