Today the Australian Government announces one of the largest and most important structural reforms to our economy in a generation, the introduction of a Carbon Pollution Reduction Scheme.
Climate change is an inconvenient truth and a truth that we can no longer conveniently ignore.
No sustainable leadership can ignore an elephant in the room of this proportion.
To do so would be to threaten the future of our people, our nation, and our planet.
Today the Australian Government responds to the threat of global warming, longer droughts and more extreme weather by embracing a responsible plan of action on climate change.
Climate change is one of the greatest, enduring challenges that we face as a nation and as an international community.
Climate change is nothing less than a threat to our people, our nation and our planet.
It is a threat that, if left unaddressed, has the capacity to permanently to affect our way of life.
The incontestable truth of climate change is that a decision not to act is in fact an active decision - an active decision to place the next generation at grave risk.
Today, this generation - our generation - stands at the crossroads of history.
We are the first generation empowered with the fullest understanding of climate change.
And we are the first generation to experience the tangible effects of climate change on our planet.
So the question for our generation is simple.
Do we act on the knowledge that we have in our possession?
Or do we wait - leaving the effects of climate change to our children and our grandchildren by which time it may well be too late?
Do we reduce our pollution today so our children and grandchildren can experience the same beautiful and bountiful planet that we have inherited?
Or do we wait - knowing our grandchildren may never see the grandeur of the Great Barrier Reef, or experience the wonder of the wetlands at Kakadu.
Do we become more energy efficient today so that we can start down a path towards a sustainable low pollution economy?
Or do we wait - knowing our children and grandchildren will experience longer droughts, declining food production, rising sea levels and more extreme weather events.
I say we can wait no more.
The time has come for action.
And what I outline today is a program of responsible action.
Costs of inaction
Australians understand that climate change threatens our economic prosperity, our unique natural environment and our way of life.
As one of the hottest and driest continents on earth, Australia's environment and economy will be one of the hardest and fastest hit by climate change if we do not act now.
11 of the 12 hottest years in history have all occurred in the last 12 years.
Scientists predict that temperatures in Australia may rise by around 5 degrees by the end of the century.
And without action, rising temperatures will have dramatic effects on Australia.
* Rising sea levels and storm surges will threaten those who live and work along our coasts;
* We will face declining food production from our farms through longer, more frequent and harsher droughts; and
* Many of our natural treasures and the tourism industry they support will be at risk.
We simply cannot afford to ignore climate change any longer.
The case for action is clear.
The cost of inaction is equally clear.
We need to take responsible action to reduce carbon pollution over time, to invest in the low pollution jobs of the future and to do so in concert with other economies around the world.
Just over one year ago, during the 2007 Federal election, I promised to end the 12 years of climate change denial under the previous Government.
To end the 12 years of climate change inaction under the previous government.
12 years of opportunities squandered, rather than opportunities seized.
I made the commitment that, if elected, I would make Australia part of the global climate change solution - not just part of the global climate change problem.
I undertook to ratify Kyoto, to underpin out commitments abroad.
The Government has honoured that commitment.
I undertook to release in our first year our blueprint for reducing carbon pollution at home.
Today, notwithstanding the economic challenges of the last 12 months, the Government honours that commitment.
The Government has been working hard all year to deliver on our commitment to tackle climate change, against a background of the worst financial crisis in three quarters of a century.
Five of the world's largest economies have already fallen into recession, including the US, Japan, Germany and France.
The OECD has predicted that we will see around eight million jobs lost across the advanced economies in the period ahead.
Australia is not immune from this crisis.
We're already beginning to see the impact on Australian growth and jobs.
We will need to deal with what will be a long and drawn out crisis.
That is why the Government has taken early and decisive action to support growth and reduce the impacts of the global financial crisis and global recession on Australian families and jobs.
Last Friday I announced a $4.7 billion nation building plan to strengthen the Australian economy and help create up to 32,000 Australian jobs.
This builds on four previous steps the Government has already taken:
* the $10.4 billion economic security strategy to help create around 75,000 jobs;
* the $6.2 billion long term plan to support our automotive industry and its 200,000 direct and indirect jobs;
* the $300 million investment in regional and local government infrastructure to sustain local communities and protect local jobs; and
* the $15.1 billion investment in education, health and housing reform delivered through the Council of Australian Governments, capable of creating an estimated 133,000 jobs.
Taken together, these measures are designed to provide economic stimulus capable of creating nearly a quarter of a million jobs over time.
The Australian Government will continue to take whatever further action is necessary in the months ahead.
But today's difficult circumstances should not be used as an excuse to ignore the threat climate change poses to Australia's long term economic prosperity.
Instead, investing in the clean energy jobs and industries of the future must be part of our response to the global financial crisis.
The work of the Treasury and Professor Ross Garnaut demonstrates that the longer we wait to take action on climate change, the more it will cost.
Furthermore, the Treasury has advised that taking responsible action on climate change will, at most, cost the economy one tenth of one percent of GDP growth measured against no policy change.
In designing the Carbon Pollution Reduction Scheme, we have been mindful of the challenges facing the Australian economy today.
Our primary objective has been to get the balance right.
To set in place a scheme that reduces carbon pollution and supports economic growth.
This means supporting Australian jobs and assisting households today, while moving to the low pollution economy that will help create the jobs of the future.
Hundreds of thousands of jobs will be created over time as Australia makes the transition to a low pollution economy.
Treasury modelling estimates that taking responsible action on climate change will see the renewable energy sector alone grow to 30 times its current size by 2050, creating thousands of new jobs.
If Australia is to be a leader in the new clean energy industries, we need to build a low pollution, clean energy economy.
If we accept the premise that we will all be living in a carbon constrained world in the future, it follows that the economically responsible course of action is to prepare for that constraint today.
If we begin to act now, the transformation can be engineered at a manageable pace.
If we continue to put it off, the transformation will be abrupt and the dislocation acute.
Acting now will enable us to develop the skills base, trial the new technologies, and refine the business models that will help Australia become a leader in the low pollution industries of the future.
Acting now also helps us shape the global outcome on climate change action that Australia needs.
To delay any longer - would be reckless and irresponsible for our economy and for our environment .
The truth is that 12 years of inaction under the Liberals makes our transition to a low pollution economy more difficult today.
Today, Malcolm Turnbull and the Liberal Party are still divided and still debating whether climate change even exists.
Malcolm Turnbull and the Liberals are now looking for excuses not to act again.
Australia is today the biggest carbon polluter in the developed world on a per capita basis.
This is the country the Liberals left us.
This is a record of which we should not be proud.
Yet we are the developed country with the most to lose from climate change.
This has been a triumph of the worst kind of short termism Australia has ever seen.
On climate change, we are not ahead of the curve.
We have been behind the curve.
How could it be that we pioneered breakthrough solar technology in Australia and the previous government sat idly by while we lost that technology to China.
That company, Suntech, is now one of the world's largest solar cell makers and employs 3,500 people.
The Government will do everything we reasonably can to deliver business certainty; to ensure as smooth a transition as possible to a low pollution future, and to boost the renewable energy sector in the future.
We will do this because we know this is the economically responsible course of action.
We will be attacked from the far right for taking any action at all.
We will be attacked from parts of the far left for not going far enough by refusing to close down Australia's coal industry.
The Government believes we have got the balance right.
The White Paper released today is the culmination of a robust and intensive process underpinned by the extensive Treasury Modelling exercise; the Garnaut review and the Carbon Pollution Reduction Scheme Green Paper.
Over the past year we have put a strong focus on assessing the scientific evidence, conducting the economic modelling and consulting widely with businesses, expert groups and the wider community.
The plan we advance in this White Paper represents an evolution of the proposals in the Green Paper - retaining the overall design, while refining a number of key features - as a result of our extensive consultation.
The Carbon Pollution Reduction Scheme to start in 2010 will reform the way our economy works:
* by, for the first time, putting a cost on carbon pollution which will encourage major carbon polluting businesses to lower their emissions;
* by using the funds raised by the scheme to help industries that pollute, to lower their emissions, transition to a low pollution future and to secure jobs in these industries;
* by using the funds raised to assist households to adjust to the scheme, making sure Australian families are not asked to carry the full cost burden of climate change; and
* by creating a market incentive that builds on the Government's direct investment in clean energy technologies to expand solar energy, wind farms, geothermal, and other renewables and new technologies like carbon capture and storage.
For the first time in history, we will begin to include the cost of carbon pollution in the price of goods and services.
By making the cost of carbon pollution visible, we will begin to redress what Sir Nicholas Stern rightly described in 2006 as the greatest market failure in history.
And the time has come for Australia to embrace this future.
The Government was elected with a long-term commitment to reducing Australia's carbon pollution by 60 per cent from 2000 levels by 2050.
The Government reaffirms that commitment.
Today I announce the Government's medium-term target range: in other words, our 2020 target to reduce carbon pollution.
These targets are appropriate and responsible.
They deliver necessary reform to tackle the long term challenge of climate change, while supporting our economy and securing jobs during this global recession.
By the end of 2020, we will reduce Australia's carbon pollution by between 5 per cent and 15 per cent below 2000 levels.
5 per cent below 2000 levels is our minimum, unconditional commitment to reduce emissions by 2020, irrespective of the actions of other nations.
15 per cent below 2000 levels is our commitment to reduce emissions further, if there is a global agreement where all major economies commit to substantially restrain emissions and advanced economies take on comparable reductions to that of Australia.
This is a substantial commitment and will require us to turn around current trends which, if there is no policy change, have Australian emissions growing by around 20 percent between 2000 and 2020.
To maximise certainty, today we have announced the rate of reduction in Australia's emissions for the first three years from 2010 to 2013.
By introducing the scheme in 2010 Australia will start reducing our contribution to carbon pollution the very next year, 2011.
To further increase business certainty, at all times, we will provide clear scheme caps for the following five years.
For up to a further ten years we will provide a range for emissions reductions to provide guidance on the path of future scheme caps.
Treasury modelling demonstrates that we can deliver on this 5-15 per cent commitment while maintaining solid economic growth.
By starting work towards this target range now, we will ensure the carbon price is introduced gradually - giving the economy time to adjust - rather than with a sharp shock further down the track.
Australia's medium term targets for reducing carbon pollution compare favourably with those of other nations that have announced targets, such as the European Union.
The EU's 20 per cent target announced over the weekend is equal to a 24 per cent reduction in emissions for each European from 1990 to 2020.
Our 5 per cent unconditional target is equal to a 27 per cent reduction in carbon pollution for each Australian from 2000 to 2020 - and a 34 percent reduction for each Australian from 1990.
That is because Europe's population is not projected to grow between 1990 and 2020.
By contrast Australia's population is projected to growth by 45 per cent over the same period.
In fact if the Europeans were to adopt the same per capita effort as Australia is proposing, their economy wide cuts would be around 30 per cent by 2020.
Second, it should be emphasised that not every European country will each reduce their emissions by the 20 per cent that Brussels has recently announced. Depending on their circumstances - taking into account population growth and resource base - different European countries will make different contributions. Some will make less than 20 percent; some more.
Third, it should be noted that at this stage the incoming US administration is committed to a mid-term target of 0 per cent growth against 1990 levels by 2020 - albeit with an ambitious 2050 target of 80 per cent.
Fourth, demonstrating that we can make real cuts to Australia's carbon pollution while continuing to grow our economy will encourage other countries to join the global fight and see that reducing emissions is consistent with solid economic growth.
The Government also confirms today that it accepts the findings of the Garnaut Climate Change Review that it is in Australia's interests to pursue a fair and effective global agreement delivering deep cuts in emissions, so as to stabilise concentrations of greenhouse gases in the atmosphere at around 450 parts per million or lower by mid century.
However, we also realise that achieving global commitment to such action in the near term will be challenging.
The Government is therefore pursuing responsible action now, to help move the economy to a low pollution future and position Australia to be part of a comprehensive 450ppm agreement in the future if that proves possible.
Of course, as part of our efforts to help shape a global solution, Australia stands ready to adjust our post-2020 targets to play our full part in achieving a 450ppm agreement.
This includes reconsidering our 2050 target, should it become necessary to play our part alongside commitments from both developed and developing countries.
Should that become necessary, as part of a truly ambitious global agreement around 450 ppm, the Government would of course seek an explicit mandate at the next election in support of a 2050 target beyond a 60 per cent reduction.
At present, such an ambitious outcome is an extremely difficult prospect.
But if all major economies were to move as one towards a truly ambitious target, Australia's comparative advantage would not be disadvantaged.
Australia's targets for 2020 however will lie between 5 and 15 per cent.
We are not going to make promises that cannot be delivered.
We are starting the scheme with appropriate and responsible targets - targets that are broadly consistent with those of other developed nations.
In the circumstances we currently confront, this is a responsible course of action.
The government will use every cent raised by the sale of pollution permits to transition to a low pollution economy and help households and business adjust to the Scheme.
The reality is, that there is no cost-free way to transition to the low pollution economy of the future.
We are being completely honest and upfront about that.
While big businesses will need permits for their carbon pollution, households will ultimately face increases to the price of electricity, gas, petrol and other goods and services as the cost of those permits is passed on.
With a starting carbon price of $25, the impact on most households will be modest - resulting in an average increase in spending of $4 a week on electricity, $2 a week on gas and other fuels, and an estimated overall increase in the cost of living of 1.1 per cent in 2010-11.
The Government nonetheless recognises that many Australians are already doing it tough.
The White Paper sets out a comprehensive new package of financial assistance for Australian households worth around $6 billion a year to be funded from the sale of carbon pollution permits. This assistance will be available from the commencement of the Scheme in 2010.
Our household assistance package contains 5 core undertakings:
* Pensioners, seniors and carers will receive additional support, above indexation, to fully meet the expected overall cost of living flowing from the scheme.
* Other low-income households will receive additional support, above indexation, to fully meet the expected overall increase in the cost of living flowing from the scheme.
* Around 90 per cent of low-income households (or 2.9 million households) will receive assistance equal to 120 per cent or more of their cost of living increase.
* Middle-income households will receive additional support, above indexation, to help meet the expected overall increase in the cost of living flowing from the scheme. Around 97 per cent of middle income households will receive some direct cash assistance. For middle-income families receiving Family Tax Benefit Part A, the Government will provide assistance to meet at least half of these costs.
* Motorists will be protected from higher fuel costs flowing from the scheme, by ‘cent-for-cent' reductions in fuel tax for the first three years.
* The Australian Government is also providing substantial assistance to secure Australian jobs as we transition our industries to the low pollution economy of the future.
In determining the level of assistance to be provided to business and industry, the Government has been very mindful of the present day challenges facing Australian firms.
With this in mind, we have listened closely to the concerns of the business community and made a number of significant improvements to the Scheme as a result of their feedback.
The package of assistance to emissions-intensive trade-exposed firms that we have set out today has been designed to support Australian jobs, today and into the future.
For industries that produce significant amounts of carbon pollution and who face international competition, introducing a carbon price in Australia in the absence of appropriate adjustment mechanisms could lead to carbon leakage - that is, an activity could be displaced from Australia, only to reappear elsewhere with a higher carbon footprint.
To manage the risk of carbon leakage, support jobs and ease the transition to a low pollution future, the level of assistance to be provided to firms performing emissions intensive activities has been significantly increased from the proposal outlined in the Green Paper.
These changes mean that a number of important Australian industries that would not have received assistance under the Green Paper model will receive significant assistance.
When the Scheme commences, all firms that qualify for assistance will receive free permits to cover at least 60 per cent of average emissions in their industry.
Based on the changes that we have made it is likely that both LNG production and petrol refining will receive assistance at the 60 per cent rate. These industries would have missed out on assistance under the Green Paper model.
The most emissions-intensive activities like aluminium smelting and integrated iron and steel production will receive free permits at a rate of 90 per cent.
Our package of assistance for emissions intensive trade exposed industries will support growth, jobs and new investment in these industries.
The total level of assistance to emissions-intensive trade-exposed industries at the commencement of the Scheme has increased to around 25 per cent of total carbon pollution permits - or 35 per cent if agriculture is included - rising to around 45 per cent by 2020 if agriculture is included in the scheme after 2015.
In contrast, in the Green Paper it was proposed that assistance to these industries would commence at around 20 per cent of the total permit pool - or 30 per cent if agriculture were included - and remain constant around this level going forward.
This comprehensive assistance package for emissions-intensive trade-exposed industries is designed to keep these industries strong in the absence of a carbon price being in place in competitor countries.
At the same time, it is also designed to ease the transition of this sector to the low pollution economy of the future - increasing carbon productivity over time and thus global competitiveness into the future as the rest of the world moves to cut emissions.
Importantly, those receiving assistance will still face a strong financial incentive to reduce emissions, as they will be able to sell the permits if they are able to reduce their emissions by investing in new cost effective production methods, cleaner technologies or energy efficiency.
Today, I announce that the Climate Change Action Fund will be allocated $2.15 billion over five years. The Fund will smooth the transition to a low pollution economy for businesses (not allocated to free permits) community sector organisations, workers, regions and communities.
The Fund will have four streams.
The first stream will provide information to businesses and community service organisations about the scheme, and about how to become more energy efficient.
The second stream will support investment in energy efficiency and low emissions technologies in businesses - particularly small businesses - and community organisations. This stream help will fund capital investments, such as lighting and air conditioning upgrades, or other energy-saving equipment.
The third stream makes a provision for structural adjustment assistance in the event that workers and communities face unanticipated challenges.
The fourth stream will promote reductions in carbon pollution in the coal mining sector, while assisting the sector to adjust to the Carbon Pollution Reduction Scheme over time.
Australia enjoys high levels of energy security underpinned by a solid regulatory environment. A key priority for our Government in designing the Scheme has been to maintain these high standards and foster a positive investment environment for the electricity sector into the future.
As part of this, I can announce the Government will provide assistance to the most emissions intensive coal-fired electricity generators through the Electricity Sector Adjustment Scheme.
This assistance will be delivered through a fixed allocation of free permits - worth approximately $3.9 billion - to be provided over five years. A review will take place after three years to ensure the windfall gains made by power generators under the European Union scheme are not revisited here in Australia.
Australia's three energy market bodies were asked by the Government to consider the broader Scheme design and the ESAS package. All three concluded that risks to energy security had been significantly mitigated.
The Australian Energy Regulator (AER) noted that the risk of Scheme-related plant shutdowns are low.
The Electricity Sector Adjustment Scheme will play a key role in supporting a positive investment environment for the electricity sector and in-turn, a secure overall investment environment for Australia.
Given the scale of investment we will see in our energy sector as we move to the low pollution economy of the future, a secure investment environment in the electricity sector is critical.
Moving to a low pollution economy will require significant investment in new electricity generation from renewable sources like solar, wind and geo-thermal energy. It will also require us to find a low pollution way to continue using coal by making Carbon Capture and Storage (CCS) work.
The Electricity Sector Adjustment Scheme represents a necessary and important contribution to support this essential new investment in Australia's electricity generation sector.
The Carbon Pollution Reduction Scheme will deliver a market incentive to build on our investments in renewable energy, carbon capture and storage and low emission technologies.
We recognise that the scale of the economic transformation required is so large, the barriers to change are so high, and the imperative to change so pressing, that additional measures are required to enhance the market incentive provided by the Scheme.
We are taking substantial action to accelerate the large-scale development, demonstration and deployment of new, clean energy technologies.
The Government is driving this transformation through measures such as the Renewable Energy Target, which will require 20 per cent of Australia's electricity to be generated from renewable sources - like solar, wind and geo-thermal - by 2020.
This is further supported by the Government's $500 million Renewable Energy Fund, to support the development and commercialisation of advanced renewable energy technologies in Australia.
Yesterday I announced that we would make the full $500 million available over the next 18 months to accelerate the demonstration and commericalisation of new renewable energy technologies.
To secure Australia's position as a major energy exporter, our carbon productivitiy must improve significantly.
Carbon capture and storage technologies will play a crucial role in this transformation.
The Government has already made a range of substantial commitments to the development and deployment of this important new technology. These commitments include:
* the establishment of the Global Carbon Capture and Storage Initiative
* funding of up to $100 million a year towards a new Global CCS Institute
* the provision of $500 million over eight years through the National Low Emissions Coal Fund, and
* the development of a new legal framework for carbon capture and storage through the Offshore Petroleum Amendment (Greenhouse Gas Storage) Act, which Parliament passed earlier this year.
Both renewable energy and CCS are likely to be deployed in regional areas. By supporting these technologies, the Government will further secure low pollution jobs in Australia's regions.
We are also assisting industry to respond to climate change, with the $500 million Green Car Innovation Fund and the $240 million Clean Business Australia Fund.
We know some groups will say we are not doing enough.
Other groups will say we are doing too much, too soon.
That is why we have worked hard to get the balance right.
The Carbon Pollution Reduction Scheme is the best way to achieve a low pollution economy for the future cost effectively, and across our whole economy.
The most important decisions a government makes are never the easiest.
Establishing the Carbon Pollution Reduction Scheme won't necessarily be easy or popular.
The easiest thing to do in response to the global financial crisis is to do nothing.
Instead the right course of action is to set robust and responsible targets, establish a real price for carbon and to begin the long term process of transformation.
Without action on climate change, Australia faces a future of parched farms, bleached reefs and empty reservoirs.
And we risk being left behind as other nations invest in the clean energy jobs and industries of the future.
Recently a bloke named Jason from Ballina in northern NSW wrote to tell me seven practical steps he is taking to reduce his greenhouse pollution - like using the cold water cycle on his washing machine, and turning off his computer at night.
A few months ago a school girl at our community cabinet meeting in the southern suburbs of Adelaide asked me pointedly, if I'm Prime Minister, why can't I get all the office blocks to turn their lights off at night?
A 61 year old grandmother from O'Connell in the NSW Central Tablelands wrote to tell me that she's never voted Labor before, but she feels that more than ever in our nation's history now is the time when Australia needs strong leadership, because of the impact on climate change for our kids' future.
One after another, in their own way, Australians are saying they are willing to do their bit, but the Government must provide leadership.
Today's White Paper on climate change is about responsible leadership in the context of a global financial crisis.
Australia faces a choice.
We can either wait and allow the challenges to get worse, or we can take action now.
No longer can Australia's government ignore this crisis.
No longer can Australia's businesses miss this opportunity.
Today, the Australian Government has chosen to take the reasonable and responsible action that will set Australia on the path towards a more secure and more prosperous low pollution future.
I am pleased to formally launch the White Paper on the Carbon Pollution Reduction Scheme: Australia's Low Pollution Future.
The White Paper Carbon Pollution Reduction Scheme: Australia's Low Pollution Future is available on the Department of Climate Change website.
The Carbon Pollution Reduction Scheme and You at the Treasury website.