Using Markets to Address Environmental Challenges

I spoke briefly in parliament today about the use of market-based mechanisms to deal with environmental challenges.
Market-Based Environmental Mechanisms
29 February 2012


Yesterday it was my pleasure to meet in this House with members of a Chinese-Australian Leadership Award Fellowship delegation—about 15 Chinese visitors, led by Jiao Xueli of the National Development and Reform Commission, coming to Australia to learn from Sydney University Professor Alan Randall about our experiences of using market based mechanisms to deal with environmental challenges.

As the Minister for Sustainability, Environment, Water, Population and Communities pointed out in a speech to the Sydney Institute last year:

'Some commentators have suggested there is an irony in Labor being the party which is backing the market system—'

in dealing with environmental regulation. But, as the minister said, that view is dead wrong. The major market reforms in Australia's history have all been Labor reforms—banking deregulation, floating the dollar, competition policy and, in the area of agriculture, the abolition of the AWB monopoly and the reform of drought policy.

So it is not surprising that, in the area of the environment, it is Labor which is using market based solutions as the most efficient and effective way of dealing with environmental challenges. That is true in pricing carbon rather than taking the approach of direct action. It is true in putting a price on water. Market based mechanisms have choice at their core and they ensure that we use the best available science and the best available economic research in order to achieve the environmental targets we all aspire to.

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