Sept. 19 (Bloomberg) -- Australia’s government said its carbon tax plan will provide “certainty” to investors by establishing a mechanism for businesses to buy permits from overseas to meet emission reduction targets.
The legislation isn’t likely to be repealed even if the ruling Labor party were to lose power to the Liberal-National coalition led by Tony Abbott, Climate Change Minister Greg Combet told Australian Broadcasting Corp. television yesterday. Bills for the new tax were introduced into the nation’s House of Representatives last week.
“It’s a practical piece of policy work that needs to be made and I don’t think it will be repealed at all,” Combet said. “It’s a very important economic reform and it will drive productivity and innovation in the economy but it will also provide a lot of certainty for investors.”
Charging polluters A$23 ($24) per metric ton of carbon dioxide from July 1 is forecast to raise A$27.8 billion in three years as the nation targets a 5 percent reduction in emissions by 2020 compared with levels in 2000. Australia will release a new report about the economic impact of the tax this week.
Support for Prime Minister Julia Gillard and her Labor Party has fallen since she announced the carbon tax in July, reversing a pledge made before last year’s election that the government wouldn’t make such a move.
Gillard’s approval rating fell to 23 percent, down six percentage points in two weeks, in a Newspoll survey published Sept. 6 in the Australian newspaper. Support for the government was at 41 percent compared with 59 percent for Abbott’s coalition, it said. The poll queried 1,152 voters between Sept. 2 and Sept. 4 and had an error margin of three percentage points.
The opposition yesterday affirmed plans to repeal the tax if it wins office as it instead opts for a policy aimed at mitigation through initiatives such as carbon sequestration.
“Our approach is a fixed amount of expenditure to clean up Australia,’ opposition climate spokesman Greg Hunt told ABC TV.
The carbon emissions modeling report to be released this week is likely to show the economy will “continue to grow strongly” under a carbon price while cutting pollution, Treasurer Wayne Swan said in an e-mailed statement yesterday.
The price on carbon dioxide emissions will take effect from July 1, subject to the legislation being approved by Parliament, with a cap-and-trade system similar to that in place in Europe to be implemented from 2015.
The program takes its name from caps on emissions that encourage polluters to trade spare permits allocated by government.
While Australia moves toward emissions trading, the European Union is putting curbs on the United Nations-run carbon credit market. The U.S. rejected a federal cap-and-trade program for emissions last year after Congress blocked it because of costs and doubts about global warming.
“The government says it’s looking to clean up the Australian economy. It’s not,” said the opposition’s Hunt. “Their modeling assumes that the United States will have a fully integrated, effective cap-and-trade or carbon tax system by 2016, which is a fantasy.”
The Australian government will provide A$9.2 billion in the form of free carbon permits over the first three years to assist the biggest-polluting businesses such as aluminum smelters, steelmakers and pulp manufacturers.
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