Australian Prime Minister Julia Gillard

Full details of Australia's new carbon tax to be announced by July

Details of Australia’s new carbon tax will be announced by July, Prime Minister Julia Gillard says.

Australia, the world’s biggest coal exporter, accounts for around 1.5 per cent of global emissions but is one of the developed world’s highest per-capita emitters due to a reliance on coal-fired power for 80 per cent of electricity generation.

A Newspoll in an Australian newspaper found 60 per cent of voters opposed the proposed carbon tax, with only 30 per cent in favour, adding pressure on a government which needs Greens and independent support for its parliamentary majority.

“My government is putting forward a big reform. That can make people anxious,” Gillard told reporters, adding full details of the tax and household compensation would be available by the middle of the year.

The government, Greens and independent lawmakers are working on details of the carbon tax, to start in July 2012 ahead of a full emissions trade scheme, and the levels of compensation to industry and households.

The opposition Liberal Party and big business have run a strong campaign against the carbon price, and the country’s powerful trade union movement, which is allied to Gillard’s government, has also warned it would oppose the plan if it leads to job losses.

The government has promised generous compensation to export-exposed industries, and to householders who face higher costs, but has yet to detail any assistance.

Treasury documents in April said a A$30 a tonne price on carbon would add between A$11 and A$16 to weekly household bills, or push up prices by between 1.0 and 1.5 per cent. The government's key climate adviser, Ross Garnaut, has suggested a starting price of between A$20 and A$30 a tonne.

The government wants a fixed price on carbon for three to five years, before moving to a full emissions trading scheme, under its plan to cut emissions by five per cent of year 200 levels by 2020, and to help fight global warming.

Australian manufacturers, steel makers and resources sectors have called for full compensation for the impact of the carbon price, which comes on top of an Australian dollar trading at record highs and hurting export revenues.

“This currency issue has changed the ball park profoundly for the implementation of carbon pricing in Australia over the next five years,” said Australian Industry Group chief executive Heather Ridout, who represents Australia’s manufacturing sector.

“It’s in this environment - this environment of eroding competitiveness - that we’re going to put on another competitiveness eroder, unless we get the compensation arrangements correct.”

Treasurer Wayne Swan has previously ruled out linking industry compensation to the floating value of the Australian dollar.

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