Treasury head says uncertainty on climate change is a threat to investment, but Coalition says small business ignored in policy

Treasury head Martin Parkinson says uncertainty about Australia’s response to climate change poses a bigger threat to investment than the Government’s carbon tax, but the Coalition says small business is forgotten in the policy, which is expected to pass the Senate shortly and become effective next July.

Parkinson, who formerly headed the Climate Change department, yesterday warned that “continuing uncertainty about the policies might pursue in response to climate change” posed a larger risk to investment than the introduction of a carbon price.

His comments follow complaints by energy giants AGL, Pacific Hydro and Origin Energy that the country’s energy policies are uncertain, and calls from former Reserve Bank member Warwick McKibbon for the Coalition to the support the carbon tax rather than vow to repeal it.

Meanwhile a report released this week prepared on behalf of the Investor Group of Climate Change with $20 trillion of funds under management has mostly ranked Australia as “investment grade”.

The report says countries that succeed in attracting private capital into low-carbon growth areas will receive “substantial economic benefits” such as “new jobs, new businesses, new research and technology innovation, more resilient and secure energy systems”.

Small Business Minister Nick Sherry says the overall price impact for business will be a modest 0.7%, and will be accompanied by $15 billion of household assistance over four years.

“The Government is also establishing the $40 million Energy Efficiency Information Grants program to support small to medium businesses and community organisations in taking practical measures to reduce their energy costs,” Sherry says.

“And they’ll share in $1 billion in grants for energy efficiency.”

But Shadow Small Business Minister Bruce Billson says the Prime Minister Julia Gillard appears to have forgotten that “some investors and financial traders have a vested interested in a carbon tax because it’s good for them”.

“How the PM has just seized on this report is just further evidence of her contempt and lack of thought for small business under a carbon tax.”

“Let’s not forget there is no compensation for small business under the Government’s carbon tax.”

Alongside scrapping the carbon tax, the Opposition has promised to repeal the Government’s $10 billion Clean Energy Finance Corporation, an independent body designed to make “commercial investments” in clean energy through loans, loan guarantees and equity investments.

Shadow Climate Change Minister Greg Hunt this week said the Coalition’s own “Direct Action” policy would be sufficient to meet a bipartisan commitment to cut carbon dioxide emissions by 5% through to 2020.

The Coalition also this week flagged a white paper into its climate-change policy, having warned businesses not to buy carbon credits because they would be repealed if the Coalition wins the next election.

Separately, the International Energy Agency has estimated that at least $40 trillion will be needed for investment in energy and energy infrastructure over the next 25 years, with $20 trillion of that required for clean energy if climate change goals are to be met.