Australian PM reintroduces legislation to repeal carbon tax

26 June 2014

The Australian Liberal government on Monday reintroduced legislation to repeal the country’s carbon tax, three months after opposition parties Labor and the Greens rallied in the Senate to defeat the first attempt.

“The people have spoken and now it’s up to this Parliament to show it listened,” Prime Minister Tony Abbott told lawmakers when introducing the bill. “The Australian people have passed their judgement on the carbon tax,” he continued.

The legislation, expected to quickly pass through the House of Representatives where the current coalition government holds a majority, will then be among the first orders of business for the new Senate when it takes office on 1 July.

Abbott has said that he hopes the new Senate will swiftly move to “scrap this toxic tax.” Some senators have nevertheless criticised the government for imposing a seemingly unreasonable timeframe for such a crucial vote.

Should the carbon tax be repealed, the Australian government has said that it plans to introduce a “Direct Action Plan” in its place, which will include another market-based mechanism known formally as the Emissions Reduction Fund (ERF). This will see the government purchase emissions reductions from pre-approved projects, following an auction process.

The Direct Action Plan has, however, largely been panned by the Labor Party, with opposition leader Bill Shorten calling it a “multibillion-dollar boondoggle.” Shorten has said that Labor will only support the carbon tax repeal if meaningful climate action policy takes its place.

Two years in

The controversial tax, introduced by then-Prime Minister Julia Gillard in 2011, entered into force in July 2012, and primarily targets Australia’s largest emitters. (See Bridges Weekly, 4 July 2012)

Levies were initially fixed at A$23 (€16.43) per metric tonne of carbon during their first year, rising annually at a rate of 2.5 percent. The tax was then scheduled to move to a floating price emissions trading scheme (ETS) in 2015. 

At the time, the move was slated as a bid to help Australia – one of world’s largest per capita emitters – move away from domestic dependence on coal and transition towards more sustainable energy supplies. Opponents of the tax, however, warned that the cost to both coal exports and the Australian public would be too much to bear.

Elected last September, Abbott made the repeal of both the carbon and mining taxes – each sources of intense public ire since their introduction – a signature of his election campaign. (See Bridges, 12 September 2013). 

The Australian leader has also been vocal about his opposition to carbon taxes and similar pricing schemes at the international level. Meeting with Canadian Prime Minister Stephen Harper in Ottawa earlier this month, the duo openly lambasted carbon taxes and emissions trading schemes as inefficient and economically costly ways to tackle climate change.

The move came within days of the Obama Administration announcing draft plans to drastically slash emissions from all existing US power plants, and following the US President’s assertion that his preferred method of tackling climate change would be a carbon pricing scheme. (See BioRes, 12 June 2014).

Conditional repeal support

Following hot on the heels of the carbon repeal legislation news, Palmer United Party (PUP) leader and mining magnate Clive Palmer announced on Wednesday that his three senators would support the carbon tax repeal, albeit tied to several conditions.  

The provisos include retaining the country’s 20 percent renewable energy target, keeping a low-carbon lender known as the Clean Energy Finance Corporation (CEFC), and implementing a framework to encourage a fair, global emissions trading scheme. Regarding the latter, Palmer suggested that Canberra could put in place a domestic system with a zero carbon price, to be scaled up once Australia’s major trading partners established their own schemes.

The move will likely come as a blow to Abbott’s government, which has sought to shut down the CEFC. In May, the coalition government also moved to dismantle Australia’s federal renewable energy agency, subsuming its activities into the Department of Industry. (BioRes, 15 May 2014)

The PUP leader was joined at the press conference by former US Vice President Al Gore, who won the Nobel Peace Prize in 2007 for his climate activism.

Citing recent evidence of climate action in the US, as well as by other major emitters including China, Gore said that Palmer’s conditions represented steps in the right direction for addressing climate change.

“All of these developments add up to the world moving to solve the climate crisis and that is why it is so significant that Clive Palmer has announced that his party will support the continuation of the renewable energy target,” he said on Wednesday.

For its part, the Abbott government also sought to swing the announcement in its favour, despite the conditions.

“What we have seen today is vindication for the government, because our plan to deliver families genuine savings by abolishing a policy which is fundamentally failing is set to be passed by the Senate,” Environment Minister Greg Hunt told reporters.

Tough road ahead

Although Palmer’s move may shift voting dynamics on the issue, the coalition government has already added two extra weeks to the Parliament’s schedule, reportedly in anticipation of what are expected to be protracted negotiations.

The carbon tax and related repeals bills will be considered by the Senate starting from 7 July.

ICTSD reporting; “Incoming senators under pressure: Tony Abbott reintroduces carbon tax repeal bills,” THE SYDNEY MORNING HERALD, 23 June, 2014; “Australian lawmaker Palmer wants to scrap carbon tax, seeks conditions,” REUTERS, 25 June 2014; “Clive Palmer places conditions on support for carbon tax repeal,” THE SYDNEY MORNING HERALD, 25 June 2014; “Blackout on green projects if target for renewables is axed,” THE SYDNEY MORNING HERALD, 7 June 2014. 

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