High price on carbon a risk to economy: Ridout

19-07-2011

The Federal Government’s proposed starting price on carbon – $23 a tonne – poses a risk to the economy, says Australian Industry Group Chief Executive Heather Ridout.

Speaking on the Meet the Press program on Network 10, Ms Ridout said the high initial price came as a shock to industry groups.

“We have not seen the blood flow through the veins on this system (carbon price scheme) yet, said Ms Ridout.

“There are a lot of risks to electricity prices, there is a lot of risk to jobs, there is a lot of risk to competitiveness and these things really need to be known, so we said you should start very slow and build-up and still enter it at a reasonably market price.

“We also believe that this price does not take account of the huge regulatory burden that’s already in place that was identified in the Productivity Commission report which already put us middle of the road in the world in terms of an implicit carbon price.

“So this is going to be layered on to an already existing carbon price that neither side of politics has really embraced getting rid of.

Ms Ridout said many AiGroup members would begin incurring higher costs from July 1 next year with no cash in the hand to pay for them.

“They are going to have to take this out of their profits and margins, Ms Ridout said.

“The other issue for business is we are not really confident how this thing can be rescinded or repealed. It is a very complex package. It looks like it will go through in its current form. “What I want to do is sit down with the Government to work out how we can ameliorate further some of these impacts, particularly when we are intent on having such a high carbon price from the get-go.”

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