Tax fossil fuel exports or risk losing revenue to other nations, says Zali Steggall

Australia Broadcast Center

2 days ago

Climate change has been left on the sidelines of the government's upcoming productivity roundtable, Zali Steggall warns, as she pitches a proposal to ensure Australia collects on fossil fuel exports rather than foreign nations.
The federal government is hosting the event in search of new solutions to overcome Australia's falling productivity, which risks limiting incomes and the overall quality of life for Australians.
Ms Steggall said climate change was already hurting the economy and weighing on the federal budget, pointing to record-breaking floods in NSW and Queensland earlier this year and the ongoing algal bloom in South Australia, killing marine life in the thousands.
"I have been discussing with a number of ministers the need for climate resilience to be at that roundtable, there is no productivity without resilience," Ms Steggall said.
"Let's be really clear, as soon as climate risk hits, productivity is down to zero. You can't really talk about a strong future Australian economy without the resilience piece underpinning everything."
Ms Steggall said a $10 billion climate resilience fund that could invest in infrastructure to mitigate the impact of climate disasters would help to limit local economies from grinding to a halt when disasters struck.
Her pitch follows a visit to parliament by the United Nations' chief climate diplomat, Simon Stiell, who warned climate disasters were already costing Australian home owners $4 billion a year, but that Australia could reap "colossal" rewards by embracing clean energy.
One of the key measures Ms Steggall proposes is for Australia to get the jump on collecting revenue from an emissions price on exported fossil fuel prices, instead of that being collected by a foreign nation.
She said the revenue from that could help to pay for the proposed resilience fund without burdening taxpayers.
Known as 'carbon border adjustment mechanisms', several nations, including the European Union and the United Kingdom, are moving to establish levies at the border on polluting imports, priced based on the emissions intensity of those products.
But those levies only collect where emissions have not been priced in earlier in the supply chain.
While Australia's 'safeguard mechanism' requires the biggest polluting industries to progressively cut their direct emissions over time, and penalises them for each gram of emissions over a set amount, it does not apply to emissions resulting from products exported for consumption overseas, exposing those goods to possible levies imposed by foreign nations.
Ms Steggall said that rather than emissions price revenue being collected overseas, Australia should introduce its own fossil fuel export levy, set at the same effective emissions price as the safeguard mechanism, so that revenue was not lost.
"The EU's is due to come into effect in 2026, other jurisdictions in 2027, so it's not like this is something that's not happening around the world … we don't have the luxury of time," Ms Steggall said.
In exchange, the Sydney MP proposes Australia should also introduce its own levy at the border to level the playing field for domestic industries, so they are not having to unfairly compete with imported products that do not have to pay an emissions price.
Australian National University economist Emma Aisbett, who helped to develop Ms Steggall's pitch, said the mechanisms could help to drive new clean industries.
"The whole point is Australia has a huge opportunity to grow industries that we have struggled with traditionally, like steel, because we can make clean and green steel," Dr Aisbett said.
"Australia, despite being the world's biggest iron ore exporter, actually imports all of its steel … it's really about enabling an environment for growing those clean industries."
A government-commissioned review investigating the feasibility of a carbon border adjustment mechanism, particularly concerning steel and cement, is due to be handed to the government later this year.
Dr Aisbett said, unlike market-distorting tariffs, a carbon border adjustment was designed to make it fair for those already paying a carbon price domestically, with those importing products into the country.
Federal and state governments have committed billions of dollars collectively to incentivise home owners to take up more energy-efficient products, rooftop solar, and batteries — including federal Labor's election promise to establish a $3 billion subsidy to household batteries.
But Ms Steggall said there were opportunities for the government to change rules that were causing roadblocks for renters, landlords, apartment owners, and strata companies who want to adopt renewable and energy-efficient technologies.
As an example, she said exemptions for stratas in the government's battery subsidy scheme were limiting opportunities to make apartments more efficient.
"We need to look at some of the regulatory roadblocks — it's not just about subsidies, it is sometimes that the regulations don't permit," Ms Steggall said.
"It seems counterproductive. There is still a process of picking winners and losers."
She said the National Construction Code should also be updated so that new builds were made energy efficient and resilient to climate change.
Ms Steggall also suggested tax breaks, such as negative gearing, could be limited where rental properties did not meet minimum energy standards — using an already existing subsidy to drive an outcome desired by the government.
Ms Steggall's proposals will be submitted alongside a raft of ideas from industry, unions, community groups, and other politicians to next month's roundtable.
She hoped the government, with its massive majority in parliament, would consider the opportunity it has to do more than just tinker around the edges.
But Ms Steggall also joined several other voices who have expressed skepticism over whether the government was entering the event with a pre-determined plan already in mind.
"I hope this is not a situation where they have got a policy setting they want to go in and they're reverse-engineering a roundtable to suit their purposes," she said.
"I certainly hope the treasurer and the prime minister look at this term of government with their big majority to genuinely be change makers."