Australia to Scrap Carbon Tax
16 July 2013
Posted by: Author: Fin24
Australia plans to scrap its carbon tax and bring forward an emissions trading scheme, Treasurer Chris Bowen said on Sunday, a policy shift certain to be a focal point in the forthcoming election.
Under current plans, Australia would move from the current fixed price on carbon - essentially a tax assessed on larger companies entitling them to produce carbon emissions - to a floating price in July 2015.
However, since Prime Minister Kevin Rudd regained the leadership of the governing Labour party last month, there has been mounting pressure to ditch the unpopular tax sooner.
Bowen said in a television interview that the tax would be axed and a planned emissions trading scheme, under which assessments for emissions are subject to market forces, brought forward.
He gave no details and said Rudd would announce the full plan in the coming days.
"It is no secret that we have been looking at this, that we are heading in this direction," Bowen told Channel Ten.
"We have believed in an emissions trading scheme for some time. What we are seeing is an emissions trading scheme being implemented earlier than was envisaged."
The carbon tax, set at A$24.15 a tonne, applies to around 300 of Australia's biggest polluters, including mining giant BHP Billiton [JSE:BIL], Qantas Airways and BlueScope Steel.
The emissions trading scheme would replace that with a floating price, based on current EU carbon futures and expected to be cheaper for big business.
Any new carbon plan cannot be legislated until after the elections, due to take place between late August and November. The conservative opposition has promised to scrap the carbon price if it wins office.
The planned change could undermine the government's budget strategy, as the carbon tax was due to raise A$8.14bn ($7.38bn) in 2013-14, and A$8.6bn in 2014-15. The shift could see revenue cut by around A$5.8bn in 2014-15.
Bowen would not be drawn on the impact on the budget, but said it would be "substantial" and would run to "several billion" Australian dollars.
The carbon tax was introduced last year under former prime minister Julia Gillard, ousted by Rudd in an internal party vote last month. He reclaimed the job she took from him in a similar fashion in 2010, shortly before the last election.
Rudd's reinstatement as prime minister has give Labor a boost from poor ratings in opinion polls. Surveys show Rudd is preferred by voters to opposition leader Tony Abbott, but Labor still trails the opposition narrowly.