Wesfarmers Chairman Backs Carbon Tax; Urges Caution On Timing

The chairman of Wesfarmers Ltd. (WES.AU), an Australian conglomerate with substantial coal mine assets, said Wednesday he backed the idea of a carbon tax but wanted the federal government to wait for other countries to introduce a levy first.

Bob Every said reform to put a price on carbon in Australia was "inevitable" and likely to happen during the current parliament of Prime Minister Julia Gillard.

Debate on tackling emissions growth in Australia has largely focused up to now on the introduction of a cap-and-trade emissions scheme--a market-based trading system similar to one in Europe that caps the amount of carbon dioxide that companies such as power generators are allowed to vent.

However, there is concern among business leaders that a cap-and-trade emissions system is too complicated.

"I personally favor a carbon tax. Having just gone through the Global Financial Crisis where there was too much use and misuse of derivatives, I don't see why we should produce another derivative," Every said on a panel at The Australian & Deutsche Bank Business Leaders Forum in Sydney.

He added the Gillard government must be mindful of the consequences of any reform, and taking action before other countries would put "Australia beyond its station".

"Energy-intensive industries will have to be recognized otherwise we'll just be exporting jobs and industry," Every said.

Michael Chaney, chairman of gas producer Woodside Petroleum Ltd. (WPL.AU), said on the same panel that Australia "shouldn't be ahead of the pack" in putting a price on carbon.

"We should not be introducing and mandating any laws before major emitters are on board," Chaney said.

The executives' comments signal a consensus may be forming in the business community on regulation to tackle climate change in Australia--the developed world's biggest per capita polluter because of its reliance on fossil fuels for power generation.

Marius Kloppers, chief executive of BHP Billiton Ltd. (BHP), said Sept. 15 there is a need for a clear tax on carbon emissions and urged the Australian government and businesses to anticipate changes.

"The decisions we take now on power production will still be with us long after a global price for carbon is finally in place," Kloppers said.

However, Prime Minister Gillard vowed during the election campaign not to push for any form of tax on carbon emissions during the current parliamentary term.

She now seems to be shifting position as the government looks to protect a wafer-thin majority in parliament that includes relying on support of a lawmaker from the small environmentalist Greens party. The Greens back the introduction of a carbon tax as an interim measure before introducing a full carbon trading scheme once a global agreement is reached.

Acknowledging the reality of global warming and putting a price on carbon emissions are "priorities for the new Parliament," Gillard said Sept. 18 in her first major policy speech since securing a second term for her center-left administration.

-By David Winning, Dow Jones Newswires; +61-2-82724688; david.winning@dowjones.com

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