Isra-Mart srl : Australia's 'tail cannot wag the world's dog on carbon pricing'

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LABOR'S claim that China, the US and other nations will follow Australia's lead on carbon pricing is ridiculous, a business leader says.

We must "accept our place in the world order", says Tony Shepherd, the chairman of Transfield Services and ConnectEast.

He claims the biggest myth in the carbon debate is that if Australia leads the world in carbon pricing, then the rest of the world will follow.

"Tails do not wag dogs," Mr Shepherd writes in an exclusive commentary piece published in The Australian today.

"Perhaps we do punch above our weight in certain areas but this is one area where Australia, its government and concerned members of the environment movement need to accept our place in the world order . . . Logic says we should follow rather than lead."

Mr Shepherd argues that the only beneficiaries of a carbon price in Australia will be countries such as China because jobs will be shifted there -- undermining the reduction in global emissions.
"The case for racing ahead of the rest of the world, in particular China and the US, has simply not been made," he says.

Mr Shepherd's comments are the latest in a string of criticisms of Julia Gillard's claim that Australia is "at risk of falling behind the rest of the world" if it fails to put a price on carbon.

Echoing other business leaders, Mr Shepherd warns that imposing a carbon price on July 1 next year without free permits would introduce a "dangerous level" of sovereign risk for long-term investment in Australia.

"To say to a group of government and private investors that the federal government should proceed to wipe out the value of your equity without adequate notice or compensation is patently unfair," he says.

This comment comes after the government's main climate change adviser, Ross Garnaut, this week rejected compensation for electricity generators.

Other business leaders, including BlueScope Steel and Brambles chairman Graham Kraehe, have warned recently that sovereign-risk concerns have been greatly heightened by the government's handling of its plans for a carbon price. Mr Shepherd also lashes as a "dangerous and ignorant" error the suggestion that only big corporate polluters will pay the carbon tax. "There is no magic pudding. One way or another, the cost of taxing CO2 will be passed on to the consumer," he says.

He warns that if these costs are not passed on but are instead absorbed by industry, there will be job losses.