Constituent Members. AAA s Response to Green Paper: Carbon Pollution Reduction Scheme

Transcription

1 Constituent Members AAA s Response to Green Paper: Carbon Pollution Reduction Scheme September 2008

2 Table of Contents 1. Introduction AAA position on emissions trading Response to green paper on design of scheme Cap and trade and point of acquittal Broad coverage Merits of including transport International linking Cent for cent offset Practical application of the offset proposal Adoption of fuel and energy efficiency measures Reforming fuel taxation and establishing road user charges Cleaner fuels and more environmentally friendly motor vehicle technology Provision of consumer Information Tackling traffic congestion Enhancing the public transport network Extending the broadband network Conclusion...18

3 AAA RESPONSE TO GREEN PAPER: CARBON POLLUTION REDUCTION SCHEME 1. Introduction Australian Automobile Association (AAA) represents the interests of around 6.5 million motorists through its State and Territory motoring associations. On behalf of our members, we take the issue of climate change seriously. Indeed earlier this year, AAA issued a Climate Change Statement that identified the climate change challenge from a motoring perspective, some guiding principles for tackling climate change, four (4) climate change objectives and a range of policy responses. The Climate Change Statement On the Road to Greener Motoring can be downloaded from: AAA has also contributed by way of submissions to the Task Group on Emissions Trading (March 2007) and the Garnaut Climate Change Review (April 2008). These submissions can be located on the AAA website at In this response to the Government s Green Paper on the Carbon Pollution Reduction Scheme (CPRS) we set out our policy on emissions trading and respond, in particular, to the sector analysis in the Green Paper relating to Transport, recognizing that passenger cars generate around 8 per cent of Australia s total greenhouse emissions. Since the focus of the Green Paper is on emissions trading, so too will be our response, although we will also address aspects of energy efficiency opportunities and challenges covered in Chapter 8 of the Green Paper: Household assistance measures. We will focus not so much on households, but on energy efficiency measures to reduce greenhouse emissions from passenger cars. This is particularly important since Australia has one of the highest rates of car ownership in the world, with a car in almost every household. 2. AAA position on emissions trading On the Road to Greener Motoring sets out AAA s position on ETS. In the Statement, we note our support for such a scheme because a carbon price AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 3 of 18

4 creates incentives for households and businesses to explore low-cost ways to reduce greenhouse emissions. In principle, it would be preferable to make motorists the acquittal point for emissions trading permits so they can take the necessary action to reduce emissions. However, the sheer number and diversity of vehicles would make comprehensive coverage difficult and costly to achieve in practice. Apart from the costs involved in a large number of emitters being required to acquit permits, there are difficulties in locating, monitoring and attributing vehicle emissions back to their owners. Hence a better approach is to ensure that upstream petroleum refiners and importers are the point of acquittal for transport emission permits. AAA considers, therefore, that under an emissions trading model being proposed for Australia, the road transport sector is best covered by the imposition of emission permit obligations on upstream petroleum refiners and importers rather than through carbon taxes. In addition, AAA considers that the following principles should apply: a carbon emission trading scheme should include all industry sectors and all automotive fuels; a carbon emissions trading scheme should be tailored to Australia s needs and be compatible with international goals; Federal Treasury should conduct and publish economic modeling on the effects of emissions trading; and fuel taxation should be reformed and road pricing introduced ahead of the implementation of an emissions trading scheme. 3. Response to green paper on design of scheme Following the release of the Green Paper on 16 July 2008, AAA issued a Media Release welcoming its release and noting that in recent years, motorists have endured significant increases in the price of fuel. We also stated that the Government s proposal to remove part of the excise and replace it with a more transparent carbon price was consistent with our longer term goal for Government to introduce a road user charge. We also stated that there is a need for Government to introduce complementary measures that reduce fuel consumption and the emissions of all vehicles, such AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 4 of 18

5 as reducing traffic congestion and the provision of improved public transport infrastructure and services. In this Response to the Green Paper, we address these issues as well as the specifics of some of the Government s preferred positions regarding the proposals directly related to motoring. 3.1 Cap and trade and point of acquittal AAA supports the cap and trade scheme being advocated by the Government and, since permits will be tradeable, we support the price of carbon being determined by the market. In addition, since the AAA position on acquitting permits upstream is consistent with what is proposed in the Green Paper, we also support this proposal. 3.2 Broad coverage We agree with the Government s view that broad coverage reduces the overall cost of cutting greenhouse gases. It is for this reason that we favour the inclusion of all sectors of the economy and accept that transport - and motoring - should be included. AAA therefore supports the Government s proposal in the Green Paper to include transport in the CPRS to ensure ongoing incentives for carbon reduction over time. 1 The Green Paper proposes that agriculture be included in the scheme by 2015, with a final decision to be made in In the interests of achieving broad coverage, least cost abatement across the economy and an equitable burden share for transport, AAA considers that agriculture should be included at the earliest possible time. As far as biofuels are concerned, the AAA policy position proposes that such fuels should be included. The real question though is what carbon price should apply. The Green Paper reports that with comprehensive coverage, the life-cycle emissions from the domestic production of biofuels would be addressed via the carbon price applied to those emissions the carbon costs would be incorporated in the pump price of these fuels. 1 Green Paper, page 16 AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 5 of 18

6 The Green Paper goes on to say that given that life-cycle emissions would be addressed by comprehensive scheme coverage, emissions combustion of biofuels and biomass for energy could receive a zero rating, in recognition of the carbon sequestered in feedstocks. Therefore, the Government s preferred position is that scheme obligations would not apply to combustion of these fuels. AAA agrees that biofuels should be included and that emissions from combustion be zero rated. According to the Green Paper, liquefied petroleum gas (LPG) accounts for around 6 per cent of Australia s transport fuel requirements. Since it is not taxed, the cent for cent tax cut proposal (discussed in more detail in Section 3.4, below) is not applicable at present, although under previous Government policy, a new tax regime was scheduled to be phased in for LPG from 2011, a year after the commencement of ETS. The tax regime therefore needs to be clarified and will presumably be one of the issues covered in the Henry Tax Review. 2 As far as the carbon cost of LPG and its impact on motorists is concerned, the Green Paper provides little detail other than reporting a preferred position that scheme obligations for emissions from LPG would be applied to producers, marketers, distributors and importers of LPG supplied to energy users. Since no fuel tax is applied to LPG and the Government has said it proposes cutting fuel taxes to offset the price impact on fuel, it is not clear whether, and how, the Government intends to offset the price impact on LPG, estimated by AAA to be around 4 cpl for a permit price of $25 per tonne. There is a need, therefore, for the Government to clarify its position regarding the impact of ETS on LPG prices. 3 Adjusting some fuel prices and not others will result in demand shifts from one fuel to another and may penalize those fuels that are more greenhouse friendly. As to the treatment of trade exposed industries such as petroleum refining where production costs due to ETS cannot be passed on to customers because 2 Other issues we expect would be covered by the Review include the Alternative Fuels Grant Scheme, and the LPG conversion scheme so that there is consistency and integrity between the operation of the taxation system and the CPRS. 3 We note, however, via newspaper reports that Climate Change Minister Penny Wong said the commitment to help motorists would also apply to liquefied petroleum gas, but that industry would need to be consulted about the best way to deliver it. See AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 6 of 18

7 of import parity pricing - there is merit, we believe, at least from an energy security viewpoint, to ensure that domestic refining is treated fairly by way of assistance. It would be in Australia s interests - and also Australia s motoring public s interests - to retain an element of domestic refining capacity Merits of including transport As noted earlier, AAA believes that transport should be included in the CPRS. AAA agrees with the views expressed in the Green Paper that while fuel users might not be responsive to prices in the short term, they are more responsive in the long term, with the BITRE reporting a long-term price elasticity of demand estimate of The Green Paper also suggests that with a longer term period of elevated fuel prices that Australia might now be experiencing for the first time, the long-run responsiveness to prices might be greater. Since the carbon cost under CPRS will be offset, and given the low price elasticity, there is a strong case for further policy incentives to reduce emissions from transport. To deal with this issue, the Green Paper suggests that the key is to encourage consumers to adopt greater fuel and energy efficiency measures over time. 5 AAA agrees. Behavioural change is already happening to some extent as motorists have been responding positively from an environmental perspective, to higher petrol prices over the past few years and to Government initiatives. This is borne out by the following facts established by the Bureau of Infrastructure, Transport and Regional Economics 6 : Since real fuel prices began to rise in 2005, fuel sales have slowed below the business as usual growth trend. Car (including 4WD) size choices in the last four years have swung from 30 per cent large vehicles in 2003 to 18 per cent in Diesel vehicles are more fuel-efficient than a conventional petrol vehicle of comparable size; the diesel vehicles share of new vehicle sales rose from 5 per cent in 2005 to 9 per cent in The new hybrid technology has also been favoured as petrol prices have risen; hybrids were 0.2 per cent of sales in 2005 but increased to 0.6 per cent in BITRE, How do fuel use and emissions respond to price changes?, Briefing 1, Green Paper, page 16 6 BITRE, op.cit. AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 7 of 18

8 In the last few years, use of public transport has grown significantly above the trend of the last 30 years. In addition to these developments, it is estimated that the LPG Conversion Scheme will fund approximately 80,000 conversions in International linking Consistent with the AAA policy enunciated above, AAA supports the Government s desire for the scheme to be designed to link with other schemes overseas to contribute to a global solution and to ensure that Australian businesses can access low-cost pollution reduction. 3.4 Cent for cent offset The Green Paper states that the Government proposes to cut fuel taxes for the first three years of the CPRS on a cent for cent basis to offset the price impact of fuel. AAA supports this proposal but sees no reason why the offset would be limited to three years. Indeed, AAA would hope that the cut in excise is a first step towards reforming fuel tax and expects that this aspect will be considered in the Henry Review of Taxation, particularly since excise taxes are specifically mentioned in the Terms of Reference. 8 Price impacts for a range of transport fuels and permit prices have been estimated by AAA and are shown in Table 1. These are examples of the prices that will need to be offset. Table 1: Impact of emissions trading on transport fuel costs for selected permit prices Fuel Type Emission Factor Fuel Price Increase (cents per litre) for three permit prices Permit Price (per tonne CO 2 -e) t CO 2 -e/kl $5 $25 $50 Petrol Diesel LPG Biofuels Source: AAA research 7 Department of Innovation Budget Statement, Green Paper, Box 8.3 Australia s Future Tax System Review, page 289 AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 8 of 18

9 The Green Paper states quite explicitly that fuels, unlike other sources of emissions, are currently subject to their own tax regime. 9 In fact, motorists pay cpl on petrol and diesel. It is for this reason that AAA has always argued that were a carbon tax to be introduced to address climate change, it should not be on top of the existing fuel tax. The offset proposal is consistent with this position. One of the reasons for not wanting the carbon cost to be added to excise is that the amount of fuel tax collected already far exceeds the amount allocated by the Federal Government to road expenditure (currently the equivalent of around 11cpl) and while there may be other external costs associated with road use such as air and noise pollution, research for AAA indicates that motorists more than pay their way. 10 It is for this reason that AAA believes that the offset proposal should not be seen in any way as assistance, or compensation, to motorists. It is reasonable to argue that under the current excise regime, there is already a component within fuel excise to cover the costs of carbon. Rather, the offset proposal should be seen as reducing excise as a way of making room for the introduction of components of a road user charge. Indeed, there is every reason why a carbon price that would flow from acquitting permits for combustion of fuels should be completely offset so that excise is cut by an amount that equates to the carbon price. This change goes some way towards meeting AAA s objective of ensuring that fuel taxation is reformed and road pricing introduced ahead of the implementation of an emissions trading scheme. AAA has long argued that fuel taxation needs to be reformed with an access charge introduced to cover the costs of access to the network including the costs of monitoring and compliance where necessary, plus a usage charge to cover such costs as pavement wear and other external costs (including costs of carbon, provided all sectors are covered by such an arrangement). AAA s proposed reform of replacing the current fuel tax system and other motoring related taxes and charges with a road user charge is a long-term goal that equitably apportions costs for motoring impacts - including environmental and road congestion and aligns itself with the proposed CPRS. We would expect however, that revenue raised from both the reformed users-pays road user charge and carbon permits, will in part be directed towards R&D and the implementation of alternative transport fuels and technology programs. 9 Green Paper, page See for example research results contained in the Appendix to AAA s submission to the Productivity Commission Inquiry into Road and Rail Freight Infrastructure Pricing, December 2006 at AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 9 of 18

10 In this context, we are delighted that the Henry Tax Review proposes to consider enhancing the taxation arrangements on consumption (including excise taxes). Some further details related to replacing fuel excise with a road user charge are discussed in Section 4.1 (below) Practical application of the offset proposal The Green Paper is vague about exactly how the Government proposes to offset the price impact of the CPRS on fuel. Equally vague is the statement that the Government will periodically assess the adequacy of this adjustment mechanism and adjust fuel taxes accordingly. 11 While the Government has stated that it will offset the impact on a cent for cent basis, it is not clear whether the Government aims to offset the amount at the time fuel is purchased by motorists, at the time excise is paid by fuel excise remitters, over a period of time, at the time permits are acquitted or whatever. The Government needs to clarify this aspect so that motorists can understand exactly what they are paying for in the price of fuel at any point in time. Transparency is necessary. A couple of options present themselves for addressing the issue. One option might be for the Government to maintain the existing excise regime by effectively participating in the ETS. Since it knows the volume of fuel sold each week via its excise collection regime, it could purchase the appropriate number of permits and then retire them immediately. Motorists would then be confident that the carbon cost had been offset. Another option might be for the excise regime to be adjusted according to the market price of carbon, although if auctions are held infrequently, say quarterly, as is the preferred Government position outlined in the Green Paper, then it would be difficult to assign a carbon price at the excise point. Secondary spot and futures markets may also provide an appropriate marker. More frequent auctions could also, in theory, ensure that a more accurate carbon price is identified at a point in time, but as the Green Paper states, more frequent auctions will mean smaller auctions and affect the reliability of price information. Under this excise adjustment option, fuel suppliers could conceivably calculate a carbon content at the excise point, but different strategies between firms (which would be influenced by risk and cash flow issues) would not necessarily allow a definite and consistent carbon price to be established. 11 Green Paper, page 101 AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 10 of 18

11 There may also be an inter-temporal issue to consider because at that point when a motorist purchases fuel, the carbon price may have been offset many days earlier in the case of fuel purchased in the city and possibly up to 12 weeks earlier for fuel purchased in the country. It would be impossible, therefore, under this scenario, to inform motorists at the point of sale what the carbon price is. In addition, because of this inter-temporal issue, significant variations in the citycountry price differentials may occur, particularly if carbon prices change rapidly over time. It may be that secondary markets will emerge under ETS, but there are no guarantees that the prices in such markets will accurately reflect a daily carbon price that has been used to calculate the offset in the primary market. It is clear therefore that the mechanics of just how the cent for cent proposal will work need to be explained by Government. Motorists need this transparency so that they can be confident that the carbon cost has been offset. And AAA will need this information in order to respond to the inevitable enquiries that will emerge from the motoring public. 4. Adoption of fuel and energy efficiency measures Auctioning of permits is expected to generate significant revenue and the Government has indicated that every cent raised for the Australian Government from the CPRS will be used to help Australians households and business adjust to the scheme and to invest in clean energy options. It is not AAA s role to comment in detail as to which households and businesses should be compensated and by how much. This is an equity issue although it is fair to say that our Clubs are extremely concerned about the impact that high fuel prices are having on low-income motorists since they are disproportionately affected by high fuel prices. As shown in Table 2, households with below average income spend more on fuel, as a proportion of total expenditure, than households with above average income. Poorer households also spend less on public transport, or on the purchase of motor vehicles, as a proportion of total expenditure. AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 11 of 18

12 Table 2 Expenditure on motoring as a proportion of total household expenditure Source: ABS, 2006 Since the price impact of CPRS will be offset, there is no need for compensation from permit revenue. However, AAA considers that revenues from permits should be allocated to clean energy options and the adoption of fuel and energy efficiency measures that will reduce the carbon footprint from motoring in general. The options that Government must consider are: reforming fuel taxation and establishing user-pays road charges; supporting the take-up of cleaner fuels and more environmentally friendly motor vehicle technology; provision of consumer information to encourage the purchase of green vehicles and fuels and fuel efficient driving; tackling traffic congestion by improving the capacity and the efficiency of road transport infrastructure through network design and capacity improvements, particularly through greater use of Intelligent Transport Systems (ITS); extending the public transport network into the outer suburbs of cities provided it is economic and population density justifies it - as well as increasing the number of trips on the existing network and ensuring that various forms of transport in both existing and new urban centres and in regional areas, are integrated; and extending the broadband network to improve opportunities for people to work, shop or do their banking from home. Each of these options is discussed in the following sub-sections. AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 12 of 18

13 4.1 Reforming fuel taxation and establishing road user charges AAA has a long-held view that current arrangements for charging motorists for road use have a number of shortcomings, namely: the current level of fuel taxation cannot be justified on revenue raising grounds; tax rates vary by fuel type; current arrangements fail to achieve an efficient use of roads; fuel excise is regressive and inequitable; the NTC methodology for determining truck charges is not efficient or equitable given that cars are overcharged compared to heavy vehicles. Heavy vehicles (over 4.5 tonnes) currently pay for the costs of pavement wear using a cost recovery methodology determined by the National Transport Commission (NTC). There are two components to the charge a road use charge which is 19.6cpl (after receiving a rebate of 18.5cpl from fuel excise) and registration charges that vary according to the configuration of the heavy vehicle. By contrast, cars are not charged for the use of the network using the NTC formula and simply pay cpl at the Federal level as well as registration charges that vary from State to State. Research for AAA has shown that if the pavement wear attributed to cars were to be charged for using the same methodology used by the NTC to determine truck charges, cars would continue to pay existing State-based registration charges, but only 7cpl as a road use charge, rather than the 38cpl that they are currently charged. 12 In advocating for the inclusion of transport fuels in ETS, AAA has taken the view that the Government needs to develop a fairer and more efficient system of charging road users which replaces current Federal and State road taxes with a road user charge. An ideal road user charge would have two components an access charge and a user charge. The access charge would cover the costs of vehicle registration to enable monitoring for enforcement, security and consumer protection purposes. 12 AAA submission to Productivity Commission Inquiry into Road and Rail Freight Infrastructure Pricing, December 2006, AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 13 of 18

14 A user charge would have five components: a road wear charge, levied according to the wear attributed to vehicle and axle classes; an environment charge, levied according to engine type and fuel type to cover air pollution (as distinct from greenhouse gases) in practice, however, the external costs may best be addressed via registration charges ; a carbon price, conditional on all other industry sectors being included in a scheme to deal with climate change; a charge to help fund the external cost of crashes in practice, however, the external costs may be addressed more efficiently via infrastructure investment to reduce the cost of crashes; and a congestion charge, collected directly according to road location, time of day and type of vehicle and collected only if the vehicle contributes to congestion. If congestion charging were to be introduced, then charges should not be on top of existing fuel taxes, but introduced only as part of overall reform of current fuel taxation. This has also been AAA s position regarding carbon prices. The objectives of AAA s long-term reform proposal are also the overall objective of the CPRS to internalise the external costs of pollution, based on an agreed level of pollution output. As long as the level of pollution output (or the cap) is set in a way that reflects societal preferences, then a carbon price will internalise the external costs of pollution. The proposal in the Green Paper to remove part of the existing fuel excise and replace it with a more transparent carbon price is a first step towards a more progressive system of road charges, and one that AAA endorses. The exact details of the components of the road user charge and how the external costs might best be dealt with (including via regulation, Federal or State road user charge, or registration fees) and how revenue from the charges should be allocated - will be explored in more detail in a submission to the Government s Future Tax System Review, announced on 11 May Cleaner fuels and more environmentally friendly motor vehicle technology Motorists who are unwilling or unable to switch to a motor vehicle or motoring substitute can still adjust their fuel consumption by purchasing smaller or more fuelefficient vehicles. As discussed in a previous section of this submission, this has already started to happen to some extent, with sales of motor vehicles showing that consumers are buying fewer large vehicles, and more light and small vehicles. AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 14 of 18

15 There has also been a shift towards diesel vehicles and hybrids. Governments can promote greenhouse gas reductions by buying lower fuel consumption efficient vehicles. In February 2003, the Government agreed on an environmental target covering approximately 8,000 vehicles within the Commonwealth Contract Fleet based upon Green Vehicle Guide (GVG) ratings. 13 The target aimed to increase the proportion of government vehicles with scores in the top half of the GVG from 18 per cent to 28 per cent by 2005, while maintaining the Australian-made proportion of the fleet. 14 Unfortunately, the target was not met and it would seem that the community is ahead of Government in moving to greener motoring. As new innovations and technologies become available to the market, governments should adopt policies that encourage the use of a wide mix of power and fuel systems to enhance consumer choice and gradually reduce dependence on fossil fuels. 4.3 Provision of consumer Information Both governments and motoring Clubs have a role to play in supporting the provision of information to reduce carbon emissions. The motoring clubs have promoted the need for all motorists to take into consideration their impact on the environment when deciding where and how to travel. This has included the publication of tips on ways in which to save fuel and reduce emissions and assistance in finding the best performing low-emission vehicles (see for example, Governments, working together with AAA, should support the dissemination of consumer information that encourages: the purchase of clean and less carbon intensive vehicles, fuels and components; fuel efficient driving for both private and public motorists. Efforts to promote EcoDriving should be supported by the introduction of in-vehicle ITS devices, such as econometers and gear shift indicators, that assist motorists in sustaining fuel efficient driving; and travel choice, mobility and information on carbon emissions See for example AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 15 of 18

16 4.4 Tackling traffic congestion It is estimated that the avoidable costs of congestion in the Australian capital cities is $9.4 billion a year, comprising $3.5 billion in private time costs, $3.6 billion in business time costs, $1.2 billion in extra vehicle operating costs, and $1.1 billion in extra air pollution costs. Traffic is expected to grow by 37 per cent between 2005 and 2020, which will result in a burgeoning of avoidable congestion costs to $20.4 billion a year. 16 A particularly frustrating aspect of congestion is the fact that its intensity is volatile, which impacts negatively on travel time reliability. Although peak congestion periods in cities can be predicted with a reasonable degree of certainty typically occurring before and after normal business hours the intensity of congestion on any given day can vary significantly depending on prevailing conditions. According to Department of Transport, Victoria: at peak times, approximately 640km of the arterial road network operates under congested conditions. By 2021, if changes are not made, congestion will spread to over 1300km of the arterial road network; and approximately 40 per cent of total tram travel time in Melbourne is taken up by delays attributable to other road vehicles. On arterial roads the average travel speed of trams is only 16 km/h (compared to 40 km/h for private cars). In addition to improvements to the public transport network (discussed earlier) and other options such as extending use of the broadband network (in the next section), Governments can promote fuel efficiency by actively using urban planning, network design and intelligent transport systems (ITS) to avoid congestion and improve traffic flow. For example, by enabling traffic to flow more freely in Melbourne s eastern suburbs, it is estimated that the EastLink motorway reduces fuel use by $23 million a year which translates into significant reductions in greenhouse gas emissions. 17 An important factor in this will be the uptake of ITS by planners, traffic managers and transport operators. According to ITS Australia, the introduction of new ITS technology has the potential to reduce transport related greenhouse gas emissions by 6.55 million tonnes a year Bureau of Transport and Regional Economics, 2007, Estimating Urban Traffic and Congestion Cost Trends for Australian Cities. Working Paper Intelligent Transport Systems Australia, Annual Review, AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 16 of 18

17 4.5 Enhancing the public transport network With 9 out of 10 motorists using their cars every day or most days of the week, the car continues to be an integral component of the Australian lifestyle because of necessity, independence and convenience. 19 Creating options for households to use alternative forms of transport is an important way of minimising the economic impact of greenhouse emissions from motor vehicles. Making sure that the various forms of transport are integrated in both existing and new urban centres, as well as in regional areas, will be critical to ensuring the community has the opportunity for safe, reliable, convenient, affordable and efficient travel. Unfortunately, the provision of reliable and accessible public transport services is limited in many cities, not only in outer suburbs but in inner-metropolitan regions as well. While Perth is often held up as an example of good urban planning, with strong investment in rail infrastructure and regular train services, a survey by RACWA of more than 1500 of its members found that 68 per cent of train users and 77 per cent of bus users cited difficulties and concerns with their regular service. In terms of the train system, overcrowding was of greatest concern followed by a lack of parking, infrequent service, personal safety concerns and a lack of reliability. 20 In order to provide people with the option to use public transport and provide genuine mode choice for motorists, AAA considers that it is necessary not only to increase the number, safety and reliability of services on the existing transport network, but also to extend the network itself and encourage greater integration with cars through the provision of measures such as park and ride facilities. 4.6 Extending the broadband network One of the obvious ways in which fuel consumption can be reduced is through a reduction in the number and distance of trips made. Some analysts argue that rather than investing in public transport infrastructure, the money would be better spent investing in Australia s broadband infrastructure, making the point that: The transport substitute of telecommunications has allowed many of us not to visit banks (internet banking), libraries (Google), shops (internet sales), entertainment centres (broadband) and people (Facebook). Telecommuting saves journeys to work while salesmen's visits are ANOP National Survey of Motorists Attitudes and Priorities 20 Attitudes and opinions by RAC members and the wider community on Perth s metropolitan public transport system, July 2008 online survey AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 17 of 18

18 abbreviated because of websites with details of every companies' wares. Reducing urban congestion and family fuel costs will probably depend on how quickly the broadband infrastructure network takes market share away from rail, road and airport networks. 21 A report by Climate Risk 22 identified seven areas in which improved broadband infrastructure could reduce greenhouse gas emissions. Two of these the facilitation of high definition video conferencing, and telecommuting or working from home have obvious implications for motorists. Workers have the option of conducting meetings using video conferencing software rather than driving to meetings or, in some cases, without flying to meetings. As for working from home, this would save some employees from having to drive to and from work. 5. Conclusion Although AAA awaits an announcement of the Government s position on trajectories and targets for ETS as well as the release of results of Treasury modeling, AAA broadly supports the design of the CPRS set out in the Green Paper. In particular, AAA supports the cap and trade approach, the inclusion of transport in the Scheme, the imposition of emissions permit obligations on upstream petroleum refiners and importers and the cent for cent proposal to offset the price impact of fuel, particularly since motorists are already paying fuel excise of 38cpl. The fact that motorists pay this excise - as well as GST - lends supports to our argument that the offset proposal should not be seen in any way as assistance, or compensation, to motorists. However, the Government s intentions as to how the excise cut will be applied in practice are somewhat vague. AAA expects the Government to provide more detail on how it will work, so that the price impact is completely offset and the mechanism easily explained to motorists. In supporting the offset, AAA sees this cut in excise as a first step towards reforming fuel taxation and we expect this issue to be considered in the Henry Review of Taxation. AAA also considers that revenues from permits should be allocated to clean energy options and the adoption of fuel and energy efficiency measures that will reduce the carbon footprint from motoring AAA Response to Green Paper Carbon Pollution Reduction Scheme Page 18 of 18