Kevin Rudd has “terminated” the fixed-price carbon tax from July 2014, but Labor’s carbon pricing laws are still likely to require a tougher emissions reduction target than the minimum 5% by 2020.
The immediate focus of the prime minister’s announcement that he would “terminate the carbon tax” will be the short-term price relief for businesses and households as the carbon price falls in July next year from from the legislated $25 in 2014-215 to a floating price the government says will be around $6. This was due to happen one year later. The government estimates the average family will be $380 better off.
Also unveiled by Rudd, the treasurer, Chris Bowen, and the climate change minister, Mark Butler, in Townsville were $3.9bn worth of savings to more than offset the $3.8bn revenue the government will lose from selling carbon permits more cheaply.
Cuts include paring back compensation for coal-fired electricity generators and new rules for fringe benefit tax breaks on company cars. The government has not touched the household assistance already handed out based on the higher carbon price, and has quarantined spending on renewable energy from the cuts.
But conservation groups and climate lobbyists were most concerned Rudd would remove or change the role of the independent Climate Change Authority, which advises the government on how deeply Australia should be cutting its greenhouse emissions by comparing the country’s effort with the rest of the world.
Butler said the government would continue to rely on the authority’s advice about Australia’s greenhouse gas limits, and said this limit, rather than the price paid for every tonne of abated pollution, was the point of the carbonpricing exercise.
“The price isn’t the most important thing from the environment’s point of view. The environment just wants to know there is less carbon pollution being spewed into the atmosphere,” Butler said.
The chief executive of the Climate Institute, John Connor, said it was very welcome news that the independent authority would continue, with preliminary advice due in October and final advice next February.
“We can now have the important debate about what our caps and targets should be. There is no question we will have to consider targets tougher than 5%, and that is going to be the test of the policies of all political parties,” Connor said.
Implementing the earlier start-date for a floating carbon price requires parliamentary approval.
The opposition leader, Tony Abbott, campaigning in Launceston in Tasmania, said: “What Mr Rudd has announced today is not the abolition of the carbon tax. He has simply brought forward the start of Julia Gillard’s carbon tax by one year … He is not the terminator he is the exaggerator; he is not the terminator, he is the fabricator.
“The only way to get rid of the carbon tax is to change the government.”
Referring to Abbott’s claim on Monday that an emissions trading scheme was in fact a “so-called market, in the non-delivery of an invisible substance to no one”, Rudd said Australians needed to “wonder about such a person’s qualifications for being prime minister of this country”.
The Greens leader, Senator Christine Milne, who negotiated the carbon pricing scheme with former prime minister Julia Gillard, attacked cuts to environmental programs.
“You don’t protect the environment by cutting environmental programs … They are going to cut $1bn from programs that actually helped protect the environment … in order to make a political point,” she said.
Savings announced by the government included:
• Cutting $770m from the “energy security fund” which provided assistance to coal-fired generators to make sure there was no threat to power supply from market disruptions as the carbon price was introduced. The generators will get twice as much in 2014/15 but the fund will then be wound up, saving $770m.
• A further crackdown on claiming fringe benefit tax on company cars used for private purposes, saving $1.8bn over four years.
• The government estimates around 320,00 people will be hit by a ban on just estimating the proportion of driving time in which company cars are used for private purposes. From now on company car recipients will have to prove the extent of their private use. The government began clawing back money from this perk in the 2011 budget when it introduced a flat fringe benefit tax rate for company cars, removing a lower rate for people who drove more.
• $186m less compensation to the coal industry in the coal sector jobs package.
• Pushing $200m allocated to the carbon capture and storage program out into future years