Gillard Says Australia Will Compensate 90% of Households Under Carbon Tax

Australian Prime Minister Julia Gillard said her government will pay compensation to nine out of 10 households to help families absorb the cost of a carbon- emissions trading system.

The government will offset entirely for nine out of ten households the cost of a carbon price through tax cuts, extra payments to couples with children, and increased pensions, Gillard said today. The assistance will go to about 7 million Australians, she said.

“The price, of course, is going to be paid by the 1,000 big polluters,” Gillard told Australian Broadcasting Corp. radio. “We are going to assist Australian families with tax cuts and increases in payments. The vast majority of Australians won’t pay an extra cent as a result of the price on carbon.”

Gillard is seeking to garner support for an emissions trading system in the world’s biggest coal exporter, where the number of Australians who say the nation should take action has slipped to a record low 41 percent, according to a poll published today.

To pass the plan through parliament, she needs the agreement of independent lawmakers and the Greens Party, whose leader Bob Brown said yesterday there are “still one or two major hurdles” to clear before a deal is reached.

That may take “weeks, rather than days,” Brown said on the Australian Broadcasting Corp.’s “Insiders” program. Calling Gillard “a very good negotiator,” Brown said “we’re not there yet, but we’re working toward it.”

A report is scheduled by month’s end from the Multiparty Climate Change Committee of lawmakers on proposed legislation to go to parliament in the next three months.

Big Polluters

The group, which the main opposition Liberal-National coalition has declined to join, will work out a fixed price per ton of carbon in an emissions system that would move to open trading as early as 2015. Also to be decided is aid to businesses and consumers to offset the impact.

“I want to tackle climate change by putting a price on carbon pollution that big polluters will pay and then use that money to assist Australian families,” Gillard said yesterday.

While the government hasn’t detailed a carbon price, a charge of A$20 ($21) a metric ton would cost households A$550 a year, or A$10 a week, the Sunday Telegraph reported yesterday.

‘Relatively Cheaper’

A carbon price makes “goods and services that generate more pollution relatively more expensive, and those that generate less pollution relatively cheaper,” Treasurer Wayne Swan said in his weekly economic note yesterday. Consumers can either use the government compensation to buy the more costly goods, or save some of the money by choosing low-carbon items, he said.

Some 39 percent of Australians polled by the Lowy Institute between March 30 and April 14 said they aren’t prepared to pay anything extra on their electricity bills to help solve climate change. The poll also showed 62 percent were against Australia building nuclear-power plants to cut emissions.

Opposition Liberal-National coalition leader Tony Abbott, who has said he will repeal the plan if he becomes prime minister, pledged June 25 to deliver tax cuts without a levy on carbon.

Gillard’s government, formed after last year’s closest election result in 70 years with the support of three independents, is under pressure to deliver a carbon system. The Greens, who have one member in the lower house, will have control of upper house Senate votes beginning in July, when new members take their seats.

Opposition

Opponents of the carbon plan include the Minerals Council of Australia, which says it would destroy 126,000 jobs and threaten company investment. It would be the world’s third emissions-trading system after the European Union and New Zealand.

Coal & Allied Industries Ltd., a unit of Rio Tinto Group, and Whitehaven Coal Ltd. may see earnings fall by as much as 10 percent should a carbon tax be put in place, Citigroup Inc. analysts led by Elaine Prior said in a June 16 research note.

The Australian Coal Association says 18 coal mines may close in the next decade if the system is introduced and that it will be harder to attract investment. Anglo American Plc (AAL), the third-largest producer of steelmaking coal, said it will struggle with a $4 billion Australian expansion because the climate plan would slash its investments there by 45 percent.

“We’ll work with the coal industry in this transition, the details will be available when we announce the full carbon pricing package,” Gillard told ABC today. “We will be ensuring we work with coal, with the people who work in coal mining to get the right policies and plans for that industry’s future.”

To contact the reporters for this story: Jacob Greber in Sydney at jgreber@bloomberg.net;

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

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