Australia will have a carbon tax for three to five years before a full emissions trading scheme is introduced, under a blueprint for dealing with climate change agreed by a multi-party parliamentary committee.
Julia Gillard has unveiled the key principles of the government’s climate policy today, saying a fixed price would be placed on carbon pollution from July 1 next year.
She said a “smooth transition” would follow, within three to five years, to a cap-and-trade system.
A review one year before the end of the fixed price period would consider if there were any reasons to delay moving to a cap-and-trade scheme.
The starting carbon price, the length of the fixed period and assistance measures for affected individuals and firms are still to be determined.
The Prime Minister said Australia had to put a price on carbon because “history teaches us that the countries and economies that prosper are those that get in and shape and manage the change”.
“I’m determined to price carbon,” she told reporters. “The time is right and the time is now.”
Comparing the need to price carbon to the early adopters during the information technology revolution of the 1980s and 1990s - such as Bill Gates - Ms Gillard said Australia had to adapt and innovate.
“I do not believe Australia needs to lead the world on climate change, but I also do not think we can afford to be left behind,” she said.
The carbon price will apply to the energy sector, transport, industrial emissions and waste. It will not hit the agricultural sector.
Climate Change Minister Greg Combet left the door open for fuel to be included in the cap-and-trade system.
“That is not a settled issue at this point in time, but it is an issue the committee will consider,” he said.
Mr Combet said the committee would consider phasing in emissions trading for different sections of the economy.
Asked about compensation for households and business, Ms Gillard said: “We have work to do on compensation arrangements.”
Ms Gillard made the announcement at Parliament House flanked by the Greens, Mr Combet and key independent MPs.
Greens deputy leader Christine Milne said the deal would not have occurred without the party’s input.
“It’s happening because we have shared power in Australia,” she said.
“Majority governments would not have delivered this outcome. It is because the Greens are in balance of power working with the other parties to deliver not only the aspiration but the process to achieve it.”
A climate change committee - comprising the government, Greens and independents Tony Windsor and Rob Oakeshott - has held four meetings since it was set up in September last year.
Ms Gillard said the government’s emissions reduction target was unaltered at 5 per cent by 2020.
She said the system would not remain a simple carbon tax, as it was “hard wired” to shift to an emissions trading system.
Crossbenchers Mr Windsor and Mr Oakeshott will be crucial in securing a parliamentary agreement on a carbon price.
Mr Oakeshott endorsed the framework, declaring “I would vote for this tomorrow”.
Mr Windsor was more circumspect, saying his support was not guaranteed.
“Please don’t construe from my presence here that I will be supporting anything,” he said.
He said there was “a whole range of unanswered questions” still to be answered.
Both independents welcomed the exclusion of agriculture from the framework agreement.
Ms Gillard predicted would be a tough fight ahead with Opposition Leader Tony Abbott, saying he would immediately start a fear campaign and label the measure a “great big new tax”.
“Can I make it very clear that in the debate that will ensue I am not intending to take a backwards step,” she said.
Greens leader Bob Brown said his party would be lobby for a good deal for householders.
“It isn’t just a matter of compensating industry - particularly polluters,” he said.
“What we want to do is compensate those people who are suffering the outcome of long-term carbon pollution of the atmosphere.”
