Minerals Council at odds with Superpower tax call

A proposal from The Superpower Institute to impose an additional tax on Australian industry would seriously undermine international competitiveness and result in jobs losses across the country.

That is the message from the Minerals Council of Australia (MCA) in response to a National Press Club address last week. The address by Chair of The Superpower Institute (TSI) Rod Sims and economist and TSI founder Ross Garnaut outlined the path to restoring Australia’s prosperity in a post carbon world.

The National Press Club address discussed how following a decade of stagnation of output per person, real wages, and living standards, the TSI believes Australia’s participation in the global shift to achieving net zero is the only credible path to restoring productivity growth and rising living standards – and therefore promoting the nation’s economic prosperity.

The Superpower Institute’s purpose is to help Australia seize the extraordinary economic opportunities of the post-carbon world.

Economist Garnaut and economic public policy expert Sims joined forces through the Superpower Institute, to focus on practical research and policy to unlock this boom. The institute specialises in the regulatory settings and market incentives needed to make Australia an economic superpower and provides practical knowledge to governments and industry to realise this opportunity.

Last week some 15 recommendations were put forward covering 3 themes, which the institute said is package of funded measures to ease cost of living pressures and establish competitiveness in large and growing zero carbon export industries.

Climate wars over?

However, the MCA’s Chief Executive Officer Tania Constable said industry is getting on with the job of reducing emissions at pace, investing in new technologies, innovating their operations, and plotting a genuine path towards decarbonisation.

“The climate wars are over. Australia already has a framework in place which was designed to be agnostic about the source of emissions.

Reducing global emissions will require innovation and creativity, simplistic and blunt taxes on Australian industry is not the way forward.

The challenge Australia must be focused on is how we get there without damaging our economy and slashing tens of thousands of regional jobs and billions in investment

The challenge Australia must be focused on is how we get there without damaging our economy and slashing tens of thousands of regional jobs and billions in investment.”

Sims, who is former Chair of the Australian Competition & Consumer Commission (ACCC), told the National Press Club securing Australia’s place in a decarbonised global economic order is a once in a century economic opportunity.

“If Australia seizes the opportunity offered by the world’s transition to zero net emissions it can repeat the experience of the China resources boom, but the benefits can continue for decades.

We know these 15 policy recommendations are bold. But so too were the reforms of removing tariffs and ending protectionism, and these reforms underpinned Australia’s prosperity for a generation. We lost our forward economic momentum a decade ago. The Superpower Institute’s work will show Australians how to get it back.”

Sims said products will not be able to compete globally until Australia finally addresses the market failures in the economy.

“As Lord Stern has said, the absence of payments for damage that carbon emissions impose on others is the greatest market failure of all time. It is time to again debate this issue. By addressing these market failures, we can comprehensively create the reforms needed to boost productivity, unleash innovation, and bring cost of living pressures down to ensure we create a sustainable, competitive and prosperous economy.”

Founder and Director of The Superpower Institute, Ross Garnaut told the National Press Club that success requires investing 5% or more of Australia’s national income in the zero carbon industries for several decades.

“That sounds impossible. Impossible, until we recall that we invested as much in mining during the China resources boom 2002-12. We know that a general requirement for polluters to pay for the cost they impose on others is impossible in contemporary Australia.

But not as impossible politically as accepting continued stagnation and decline in living standards. Not as impossible as passing on to our children and grandchildren lower standards of living than our own parents and grandparents left to us.

Australia’s immediate future involves choices of which impossible things we choose to do.”

The institute notes that a net zero Australian economy will reduce global emissions by just over 1%. If Australia successfully seizes the economic advantage in exporting zero emissions goods, the institute said this can create an economic boom larger and more sustained than the mining boom and reduce global emissions by about an additional 7%.

The themes and recommendations outlined in last week address include establishing the right balance between the role of the state, and that of competitive private markets. The Superpower Institute said the choice of projects within the Commonwealth’s new Capacity Investment Scheme (CIS) should support investment without imposing official preferences on market choices.

Encouraging innovation to supply export markets in another area the institute focused on.

Mining Operations at Morila Pit 5.

“Australia should not be responding to the Inflation Reduction Act (IRA) by funding the energy transition from budget deficits or being inward looking and protectionist. Australia’s green exports can benefit from Europe’s Carbon Border Adjustment Mechanism (CBAM). Access to premium markets requires Australia to have a green premium, and improved accounting for Australian emissions.

Innovation can be supported by establishing a Superpower Innovation Incentive Scheme (SIIS) to support early investors in each of the new, green export industries.”

Funding and securing a green premium by taking into account externalities is the third of the themes.

The institute said markets only work effectively if firms are required to pay the costs that their activities impose on others, and rewarded for benefits they confer on others. The absence of such a payment or reward is a market failure.

The SIIS rewards the wider benefits of innovation. The market failure associated with carbon emissions can be corrected by a Carbon Solution Levy (CSL) at all fossil fuel extraction sites and import ports in Australia.

The CSL provides the funds to support the building of the ‘superpower’ and other valuable activities without placing a strain on the budget. The CSL needs to be in place by 2031 at the latest.

Introducing it earlier would unlock significant cost of living benefits to Australians, according to the institute.

Write to Adam Orlando at Mining.com.au

Images: Minerals Council of Australia & Firefinch
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.