Jotters welcome Tony Shepherd's Press Club address, but one notes a carbon pricing contradiction following the EU price drop.

Business Council of Australia chief Tony Shepherd has sparked a variety of discussions with his address to the National Press Club, from Australia’s potential future as a carbon trading destination, to the future of domestic manufacturing.

Starting off with The Herald Sun’s Terry McCrann, it’s clear that Shepherd gave an unmistakably pro-business vision of the nation. But McCrann gives the speech some solid praise, particularly in the absence of much vision coming from Canberra.

“One could quibble, indeed outright disagree, with some of the exaggerated rhetoric – that Australia should ‘rank in the top five’ in this, that and the other, sort of thing. And one could certainly debate some of his specific policy suggestions – indeed, Shepherd would just love, especially those that purport to work in Canberra, to do exactly that. But even as just a broad-brush speech, what Shepherd had to say was easily the most substantive, most soundly based and most inspiring thing to come out of that city in some years, in the process, shaming politicians and the bureaucracy, both.”

The Australian Financial Review’s Geoff Kitney picked up on an apparent “contradiction” in Shepherd’s ambition for Australia with his suggestion that Australia should be a follower in the carbon trading world rather than a leader. Kitney writes that he was there when the European carbon trading scheme was announced. It hasn’t gone well since then.

“At that time, Europe was enthusiastically aspiring to be recognised as it saw itself – a global power, ready to play as crucial a leadership role as the United States and the rapidly emerging China. Business warnings that the EU was endangering the competitiveness of European industry by acting first and on such a grand scale were dismissed. Political leaders believed that as wealthy nations, the EU member states could afford the costs of taking the lead on pricing carbon emissions. Political leaders were convinced that the rest of the developed world would soon have to follow Europe’s lead, as ultimately would the developed world and, that by going first, Europe would be the first to win the economic benefits of abatement. But that was then."

Fairfax’s Malcolm Maiden explains how the collapse of European carbon trading prices directly hinders Labor’s carbon trading dream, which is set to come in during 2015-16.

“Existing and proposed prices for Australia's scheme are far above those that now exist in Europe. The carbon tax was introduced last year at a price of $23 a tonne, and the government's budget papers predict a price of $29 a tonne by the time the scheme shifts to carbon trading. If the European price stays down, Australia's price will be below $10 a tonne after trading begins. Permits will be cheaper than expected, government revenue from the sale of permits will be lower, budget balances will be pressured and the government's commitment to carbon scheme compensation packages that range from power generators to households will be reviewed.”

Meanwhile, Business Spectator’s Stephen Bartholomeusz muses that it was purely coincidental that Incitec Pivot announced its much anticipated decision to build an $US850 million ammonia plant in the US to take advantage of the drastically reduced Henry Hub gas price, as opposed to setting up the operation in Australia where prices are higher and regulations are tougher.

“In the States they now talk about re-shoring – the return of large slabs of manufacturing that had previously been offshored to China and other developing countries. The Incitec decision tends to illustrate that newfound competitiveness in the global contest for investment. Conversely, Shepherd was bemoaning the poor environment for business in this country and the lack of long-term thinking and planning and policies to lower costs, lift productivity, improve competitiveness and strengthen the national finances. The Business Council of Australia has been developing a long-term vision and recommendations for action in response to what it, and business generally, sees as highly-politicised policy positions from the major parties and – in this seemingly endless lead-up to the federal election – politics-driven, poor-quality, anti-business legislation and unsustainable/unfundable policies from the Gillard government. (Not that Shepherd put it quite that crudely).”

Meanwhile, The Australian Financial Review’s Matthew Stevens explains China’s regulators have gone a step further than most by inserting themselves into the sales process for Glencore’s Las Bambas copper project in Peru as a condition of its mega-merger with Xstrata.

What are the chances of this asset ending up in the hands of a Chinese company?

The Australian Financial Review’s Chanticleer columnist Tony Boyd is also on the Glencore-Xstrata marriage. The columnist wonders whether the centralised management style of Glencore boss Ivan Glasenberg will work when the company gets rids of the silo strategy of Xstrata boss Mick Davis.

In other company news, Fairfax’s Elizabeth Knight has got her hand son an analysis from Macquarie Equities concerning the News Corp split and some of the trading milestones that we might expect from the far less lucrative publishing division.

Elsewhere, The Australian’s John Durie is relieved by the news that Lend Lease has put its audit contract up for tender. The relationship between company and auditor is often long and cosy so the latter can get a thorough understanding of the former.

But as we saw with Lend Lease and Abigroup, the relationship can sometimes become a little bit too cosy.

And finally, The Australian’s Asia-Pacific editor Rowan Callick joins a chorus of critics bashing analysts for their enormous influence over the markets. If a country or company misses expectations, all hell breaks loose, only for the market to take stock when the data is later revised up or the real implications of them become more widely acknowledged.

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