Australian Government Pursues Clean Energy Even as Emissions Trading Fails

Australia’s Labor government remains committed to putting a price on carbon and developing clean energy even as its emissions-trading legislation heads for failure, Resources Minister Martin Ferguson said today.

Opposition from the Greens party and the Liberal-National coalition, “spelled the end of legislation in this Parliament,” Ferguson told Australian Broadcasting Corp. radio. Putting a price on carbon and supporting investment in clean energy “are still clearly government priorities.”

The plan to cut carbon output by 5 percent was twice blocked in Australia’s upper house Senate, creating a possible trigger for an early election. It also split the opposition, leading to the resignation of Liberal leader Malcolm Turnbull, who staked his position on a deal struck with Prime Minister Kevin Rudd to support the climate-change bill.

Support for Rudd, who must call a general election within a year, declined two percentage points to 54 percent, according to an April 20 poll published by the Australian newspaper. Tony Abbott, the opposition leader, saw backing for his coalition rise a similar amount to 46 percent, according to the survey.

The failure of the carbon-trading plan comes almost four months after some 190 countries failed to agree on a binding greenhouse gas treaty at United Nations talks in Copenhagen.

High Emissions

Rudd’s climate plan would have taxed companies with high emissions like energy, steel and cement makers and offset the charges with free emissions permits and financial compensation. The assistance package would have cost the government A$20 billion ($18.5 billion), the Grattan Institute, a Melbourne- based think-tank, said in a report on April 22.

The government “is clearly trying to get climate off the agenda before the election,” Greens Senator Christine Milne said in an e-mailed statement today. “Either the prime minister was not genuine when he said climate change was the great moral challenge of our time, or he lacks the courage” to take action.

While deferring action on carbon trading to their next term in office, if elected, the government will release a review of the nation’s taxation system on May 2 that aims to simplify central, state and local government duties.

The 10-year plan drawn up by Treasury Secretary Ken Henry, who oversees Australia’s A$1.21 trillion ($1.1 trillion) economy, reviewed “all of our tax system, not just the business tax system, not just the income tax system, but also the taxation system in the states,” Treasurer Wayne Swan, who commissioned the report two years ago, told Sky News on April 25.

Mining Companies

Mining companies such as BHP Billiton and Rio Tinto Group that currently pay royalties to state governments and a 30 percent tax on profits may face increased contributions.

The level of taxes is “clearly an issue that the government will have to consider post-Sunday,” Ferguson said. “It’s not a question of who collects the tax it’s the amount of tax collected that determines the investment horizons of Australia.”

To contact the reporter on this story: Marion Rae in Canberra at mrae3@bloomberg.net

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