The Labor Government has decided to drop the fixed price carbon tax, switching to an emissions trading scheme from 2014, a year earlier than planned.
Today Kevin Rudd announced the fixed price carbon tax would drop from $25 which was legislated for 2014-2015 to a floating price of around $6 in an effort to ease cost of living pressures and small business sectors of the economy. Estimates are that the average family will be $380 better off. The move is set to cost the government billions of dollars, but cuts would be made elsewhere in order to return the budget to a surplus in 2015-2016.
Cuts include cutting compensation for coal-fired electricity generators, a $770m reduction by closing the fund a year early. Also, new rules for fringe benefit tax breaks on company cars used for private purposes, saving $1.8bn over four years. There will also be $186m less allocation to the coal industry and for coal sector jobs, and $248m savings through public sector redundancies in the federal public service. Around $162 million will also be cut from the Clean Technology Program which has supported a number of solar PV installations on business premises.
The Government will continue to rely on the independant Climate Change Authority for advice on Australia’s greenhouse emissions and comparing the country’s effort to the rest of the world. Environmental groups including the Australian Conservation Foundation and the World Wide Fund for Nature have moved to increase the renewable energy target to at least 25%.
Recent polling for Fairfax Media found that 62 per cent of respondents didn’t want the carbon tax scrapped if doing so would damage government revenue.