Julia Gillard can claim to be on right track

JULIA Gillard has little to fear from the Productivity Commission's unambiguous report into global action on climate change.

The report has three key points.

• As The Australian has long argued, a market-based scheme will always provide the best value for money when it comes to cutting carbon dioxide emissions.
• Schemes to promote the use of rooftop solar panels and pink batts have been scandalous wastes of money.
• Despite the sense of urgency being invoked by key campaigners, Australia does not lag the world when it comes to taking action. In fact, Australia, which accounts for less than 2 per cent of carbon emissions produced globally, is on par with the US and China, which together account for about 40 per cent of the world's CO2 output.

Given the Productivity Commission's findings, the federal government can claim it is on the right track with a market-based solution.

Under the Prime Minister's plan, the carbon tax to be introduced in July next year will become an emissions trading scheme in three to five years.

Tony Abbott can point to the absence of an economy-wide trading mechanism elsewhere, but that does not make his direct-action plan more financially appealing.

Gillard can use the commission findings about the state of our global competitors to temper demands for Australia to make an exaggerated climate change response. The fact is, being on par with the two countries that really can make a difference is probably the right place to be.