Less than two months into Labor’s carbon tax, the Gillard Government has announced a major backflip and redesign that only adds to the uncertainty and confusion surrounding its hugely expensive dud policy.
The Government’s scramble to sort out international deals and abandon altogether its floor price confirms a carbon tax in chaos, Acting Shadow Minister for Climate Action, Environment and Heritage Simon Birmingham said today.
Clearly the Gillard Government either knew its carbon tax model was flawed when they imposed it on the Australian people, despite Julia Gillard’s solemn promises not to, or was blind to the failings in its model.
Labor is attempting to have it both ways today – claiming it stands by its carbon tax modelling yet abolishing its carbon tax floor price.
If the Gillard Government stands by its Treasury modelling, as Climate Change Minister Greg Combet has indicated today, then the debate around its $15 a tonne floor price is a diversion because Treasury modelling predicts a rise to $37 a tonne by 2020.
Clearly, the Government and Treasury are no longer predicting a rise to $37 a tonne by 2020 and therefore the carbon tax simply must be remodelled.
Any collapse in the rate of the carbon tax has huge implications for government revenue. The Government should come clean about the risks of its carbon tax creating a massive budget black hole unless they are secretly planning to reduce household ‘compensation’.
Meanwhile, Australian farmers and councils are being dudded on the one-way linkage aspect of this deal, which for several years sees Australian companies buying European permits but Australian permits banned from Europe’s scheme.
The slashing of the potential to use eligible Kyoto units makes a mockery of the Government’s longstanding claims to want to facilitate lowest cost abatement options for Australian businesses.
This deal creates the worst of all worlds for Australia – higher electricity prices, reduced incentive for domestic abatement and a potentially massive budget black hole.
The only way to deliver certainty is to repeal the carbon tax. A Coalition Government will scrap the carbon tax as its first order of business.