The Government’s own senior Climate officials have today confirmed that revenue projections for carbon permits contained in this year’s budget are double and triple what the market is predicting.
The consequence is that there is $6 billion in phantom revenue and therefore a $6 billion budget black hole in a document that is less than two weeks old.
In evidence before the Senate Estimates hearings this morning, Climate Change officials confirmed that the actual market forward price for December 2016 carbon permits is $5.42.
This compares with a forward revenue projection in the budget based on a $12.10 price in 2015-16 and an $18.60 price in 2016-17.
The Government has budgeted double and triple the revenue for those years compared with what the actual international market is projecting.
They have learnt nothing from the $5 billion write-down since last year’s budget and have wilfully inflated revenue again in this year’s budget.
In addition, they have also confirmed that any movement in the carbon price will have significant impacts on the budget. With 338 million permits in 2015-16, for every $1 variance in the price there is a consequential $338 million change to the accrued revenue.
Our tax system and our electricity prices are now being held hostage to the European market and decisions made in Brussels.
To be fair to the Department officials, they note in Budget Paper No. 1 that the revenue projections are not their actual forecasts but based on a policy decision to project towards a $38 price in 2020 by drawing a straight line. The officials have done the right thing and the Government has done the wrong thing.
In less than two weeks, the budget figures have collapsed and with it has gone the always dodgy surplus for 2015-16 which is now in tatters.