Mandatory green reporting will snare small business and lower productivity

As cost-of-living pressures and supermarket prices are at the top of the personal and political agenda, there comes a timely warning from farmers that climate reporting policy is running in the wrong direction. It is further proof, if any were needed, that compliance costs risk becoming a serious burden across the productive sector. It is mirrored in the federal government’s proposed new rules for motor vehicles where emissions averaging across a carmaker’s fleet will add a new layer of record keeping and act as a subsidy from the vehicles people want to drive today to the electric cars governments want consumers to drive tomorrow. The big winners will be the bureaucrats and ticket clippers attached to what has become a global climate industrial complex.

For agriculture, farm groups are warning that high costs and big penalties for not collecting sufficient data or meeting arbitrary targets will hasten the loss of small-scale farms already struggling under the burden of higher production costs, lower wholesale prices paid by supermarkets and increased labour rates delivered by Employment and Workplace Relations Minister Tony Burke’s ill-considered changes to industrial relations laws.

The problems identified by farm groups are not confined to those on the land. They will affect all businesses that are included in the supply chain for big corporations, whatever the commodity. Under the government’s proposed new rules, large companies and asset managers will be required to reveal climate-related risks, risk-management strategies and emissions targets to investors. Companies with $500m in revenues must report from July 1. Companies with turnover of $200m would start in 2026 and those with $50m in 2027. Asset owners with more than $5bn under management will be required to begin reporting from July 1, 2026. The new rules are part of expanding Australia’s climate change response beyond the electricity sector to meet a bipartisan target of net zero by 2050. Treasury expects the new regimen to add $1m to $1.3m in transaction costs to almost 1800 captured entities but says these will fall across time to as low as $500,000 to $700,000. As with all things from the bureaucratic mind, mandatory reporting is sure to experience mission creep across time, likely to include the travel and consumption emissions of the individual.

There also will be a long list of unintended consequences that will work against productivity and increase costs for ordinary consumers when governments should be doing everything possible to achieve the opposite results. Big companies inevitably will consider the emissions and risk profile of suppliers when deciding who to do business with. This is because the new rules include scope three emissions – emissions generated along the supply chain that are not generated directly by a company within its fence line or through its electricity consumption. For green groups and architects of the scheme this no doubt is considered an intended consequence and an effective way of deepening the impact of the change. It therefore provides another window into how the green agenda prefers to do business with big government, big unions, big business and large institutions including the university sector. It is a world ill-suited to individual enterprise and one that leads inevitably to less flexibility, reduced productivity and higher costs.

As weeks of farm protests across Europe demonstrate, there are limits to what rural communities will tolerate. The same is true for the rollout of the hoped-for renewable energy transition. As the experience with the China-Indonesia nickel boom shows, other countries are less concerned about green dreams and well prepared to leave Australia in their economic wake.