Swan Talks Up Carbon Tax Compensation

Treasurer Wayne Swan is talking up carbon tax compensation cheques for Australian households a month before the federal budget.

Mr Swan has defended the scheme to hand out carbon tax compensation even as the government faces a tough budget with declining revenues.

Pensioners and families with children eligible for family tax benefits will start to receive cheques in coming weeks.

"We raise revenue from the carbon price, and we use that revenue to assist with the price impacts which are relatively small," Mr Swan told ABC Radio on Monday.

"The fact is we've got to look our kids in the eye and say we did the right thing .... to reduce carbon pollution into the atmosphere, to combat dangerous climate change, but also to assist people with the price impacts of that."

He could not say how much an advertising blitz about the compensation package would cost because it was still under government consideration.

"We will have to advertise some of the important parts of this package so people know what they're getting and why they are getting it," Mr Swan said.

"There's nothing unusual about that at all, nothing unusual at all."
Mr Swan said restoring a budget surplus was entirely appropriate.

"It's very important given this global instability and uncertainty that Australia sends a message to the world that our financials are strong, but also giving the Reserve Bank room to move, should it wish to do so, in terms of interest rates at some stage in the future," he said.

Our ETS Future 'Will Not Come Cheaply

AUSTRALIA will be unable to produce affordable baseload power supplies while meeting its emissions targets under present policy, new research has found.

A study by Melbourne's Grattan Institute, to be published today, warns that while carbon pricing will help make low-emissions technologies competitive, it will not be enough without big structural and policy changes.

Tony Wood, the institute's energy program director, says governments face "an acute intellectual and policy challenge" steering a course between inadequate support for low-emissions technologies or unduly favouring one technology over another. He cautions "Australia's move to a low-carbon future will be too expensive unless they do."

The Grattan research stresses markets as the primary mechanism by which Australia can reduce its emissions, but it says markets cannot work properly unless governments optimise regulatory and policy frameworks.

The study also warns against letting ideology limit the scope for manoeuvre by preventing serious evaluation of carbon capture and storage and nuclear energy. "A range of technologies available today can generate electricity at or below 0.2 tonnes of carbon dioxide per megawatt-hour and have significant scale-up projection," the Grattan research finds.

"Yet none currently represents more than 2 per cent of Australia's electricity supply and

their future technical and economic potential is shrouded in uncertainty."

The report finds further refinement of the underlying technologies of low-emission energy options will be the most important tool for their future development and commercialisation.

It reminds governments of their roles overseeing the development of new transmission networks and pipelines, resource maps, market frameworks, regulations and engineering skills.

The Grattan researchers urge the commonwealth to ensure the carbon pricing scheme works properly by setting long-term emission caps and call on all governments to act to ensure there is a level playing field for all power-generating technologies.

The report's authors urge the removal of obstacles that impede technologies such as wind and geothermal from connecting at large-scale to electricity grids built around the needs of very large fossil-fuel plants.

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