Kevin Rudd’s carbon tax “termination” faces a hostile passage through parliament, but probably not until after the election, as the new prime minister clears the way to go to the polls in August or September.
The environment minister, Mark Butler, told Guardian Australia Labor would “seek a mandate” from the voters for the carbon price change, which brings forward by one year the floating carbon price.
He said they would act on the advice of the independent Climate Change Authority in making crucial decisions on the “cap” on emissions in the first year, and the longer term 2020 emissions reduction target.
Butler said he had already met the authority’s chair, Bernie Fraser, and he “had a high level of confidence in the capacity of the authority to provide this advice”. Late on Tuesday he released a detailed discussion paper on the changes.
The Greens voted down Rudd’s first emissions trading scheme in 2009 because it “locked in” a low 5% emissions reduction target by 2020, and they insisted on leaving open the possibility of a tougher target on the advice of the authority before they agreed to Julia Gillard’s scheme in 2011.
The Greens leader, Christine Milne, has said her party would also vote against the earlier start for emissions trading because it reduced the tax burden on big polluters and was funded from cuts to other green schemes, including the biodiversity fund.
The Coalition leader, Tony Abbott, said Rudd had “changed its name but he hasn’t abolished the tax. All he has done is given Australians one year only of very modest relief.”
That “modest relief”, when the carbon price falls in July next year from from the legislated $25 in 2014-215 to a floating price of around $6, will amount to around $380 per household.
Rudd, who said on Tuesday he was “terminating” the carbon tax, hopes the change will take the political sting out of Abbott’s anti-carbon tax campaign and refocus the debate on the competing merits of the climate change policies.
Butler said he regretted the “intransigent position being taken by the Coalition and the Greens” but said the changes “were in any case something we need to seek a mandate for”.
Rudd has not nominated an election date nor said publicly that parliament will not sit again, but Labor sources point to the speed with which he is addressing the three changes he wanted to finalise before going to an election.
Rudd has now unveiled two: the party reforms to make if very difficult for the party to again remove an elected prime minister as its leader and the carbon pricing shift. He is now in active negotiation on the third issue – a new approach on asylum policy – as opinion polls consistently show Labor level-pegging with the Coalition on 50% of the two-party preferred vote.
The parliamentary hostility to both Rudd’s changes and Abbott’s Direct Action scheme – which both Labor and the Greens say they will oppose – means investors face several months of policy uncertainty, unsure who will win the election and whether that party will be able to implement its policy if it does.
Rudd, Butler and the treasurer, Chris Bowen, also unveiled $3.9bn worth of savings on Tuesday 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 a crackdown on 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.
“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.
Conservation groups and climate lobbyists were most concerned Rudd would remove or change the role of the 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.
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,” Connor said. “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.”
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.