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AUSTRALIANS must pay more for petrol, food and energy or ultimately face a rising death toll, economic loss and the eventual destruction of the Great Barrier Reef, the snowfields, Kakadu and the nation's food bowl, the Murray-Darling Basin.
That is the stark ultimatum presented yesterday by Professor Ross Garnaut in the first comprehensive assessment of the impact on the country of climate change.
Arguing that Australia must introduce an emissions trading scheme in 2010 to discourage the use of polluting forms of energy, Professor Garnaut said the more forms of energy encompassed by the scheme, the lower the price rises would be. This included petrol and other transport fuels.
He said the impact on petrol prices would not be as large as that being caused by the present oil shock and argued against compensating motorists at the pump by reducing fuel excise.
Offsetting the price by "a few cents would not destroy the scheme" but "it weakens the message", he said.
His 537-page report, commissioned by the Prime Minister, Kevin Rudd, and released yesterday, says: "Climate change is a diabolical policy problem. It is harder than any issue of high importance that has come before our polity in living memory."
He warns that, as well as environmental degradation, taking no action would by the end of the century result in $425 billion being wiped each year from the economy and a reduction in wages of almost 8 per cent.
The report recommends adopting an unconstrained emissions trading scheme from 2010.
This would involve charging high-polluting industries such as coal-fired power stations for each tonne of carbon they emit. They would have to buy permits to emit greenhouse gases and the costs would be passed on to consumers, encouraging them to use less and driving everybody to look for cleaner energy sources.
Professor Garnaut said Australia alone could not have any significant impact on reducing greenhouse gas emissions but, unless the developed countries moved first, the polluters in the developing world would not act.
"Any effective remedies lie beyond any act of national will, requiring international co-operation of unprecedented dimension and complexity."
It would be delusional to argue for a delay based on scientific uncertainty and only cost more in the long run.
He criticised the lack of action by the Howard government, saying it should have moved years ago and that Australia had given the US an excuse to do nothing.
The Government will respond on July 16 with a green paper that will indicate for the first time the shape of the scheme it proposes.
The Garnaut report recommends starting the scheme in 2010 but gives an option that would allow a transition to a full scheme in 2013. If there were a transition period, the Kyoto Protocol would define Australia's emissions reduction target and permits would be sold at a low, fixed price. These years would be used to pursue effective international global agreements.
But the Government is unlikely to opt for a delay and will probably start the scheme in 2010, an election year. Sources told the Herald there were ways to soften the immediate impact of the scheme, such as setting a low initial target to reduce carbon emissions. This would result in a low carbon price and only small increases to energy and consumables.
The report warns that current high prices will create political difficulties.
"The emissions trading scheme is likely to be introduced into an environment of recent and perhaps continuing large increases in fuel, electricity and fuel prices - precisely the goods and services whose prices will be affected most by the scheme," it says.
The price increases caused by the scheme will be lower than those being caused by current factors, but consumers will not know what is causing what.
"Households will not be able easily to distinguish between the varying sources of price increases, while agitators against the scheme will be busy spreading disinformation," the report says.
The Minister for Climate Change, Penny Wong, said the report "makes it absolutely clear that the time for playing short-term political games is over".
She backed Professor Garnaut's recommendation that all the billions to be raised by auctioning permits should be returned as compensation.
"Every cent of revenue that we gain through the introduction of an emissions trading scheme will be invested to ensure we assist families, households and Australian businesses to adjust to the impact of a carbon price," Senator Wong said.
The report recommends half the money should go to those on low incomes through tax cuts or social security payments.
Another 30 per cent would go to industries disadvantaged against unconstrained international competitors, and 20 per cent would be invested in developing and commercialising low-emissions technology.
Professor Garnaut said bipartisan support was essential.
But the Opposition Leader, Brendan Nelson, demanded yesterday it be delayed by at least a year so it was not botched.
He repeated that the impact on petrol prices should be offset by a reduction in petrol excise because "$1.70 a litre is a significant price signal for the average Australian motorist".
"To further increase taxes as a result of climate change policies without some other kind of off-set is something that will be opposed by the Opposition".
Professor Garnaut says that in the next 20 years climate change will affect Australia in familiar ways - longer, drier periods, with city people forced to cope with water rationing and country people worried about the ability of the land to remain productive.
But then it will get much worse, he warns. By 2050 the snowfields will be all but gone and the Great Barrier Reef will barely be hanging on.
By the end of the century the Murray-Darling Basin will have collapsed as a food-producing region and people will be moving away. "By 2100, 97 per cent of agricultural production will be lost."
Professor Garnaut said climate change held a serious threat to tourism. "With unmitigated climate change, on the basis of the mainstream science, we won't have much, if any, of the Great Barrier Reef, of Kakadu, of a number of our great environmental assets that are important attractions for international tourists."