The Gillard government has this week summoned big polluters to Canberra for negotiations on the shape of its carbon pricing compensation package.
And the opposition has revealed it will scrap tax cuts linked to any climate change measures if it wins office.
Opposition Treasury spokesman Joe Hockey, speaking after shadow cabinet decided to continue to oppose the carbon tax, said a Coalition government would also unwind any compensation arrangements linked to it.
“You don’t need to have compensation if you have no tax,” Mr Hockey told Sky News.
“We will repeal the carbon tax so there will be no need for the compensation, so we will unwind the compensation.”
Tax cuts as part of the carbon package were thrust on to the political agenda last week by the government’s climate change adviser, Ross Garnaut.
Professor Garnaut proposed coupling carbon pricing with productivity-boosting economic reform. Yesterday, Wayne Swan said the government was looking at delivering compensation through the tax and welfare systems, including adjustments to the low-income tax offset. He repeated Julia Gillard’s vow that all revenue from the tax would be returned in compensation to households and businesses and to fund climate change innovations.
Professor Garnaut recommended Kevin Rudd’s carbon pollution reduction scheme as a starting point for the industry compensation package, less a 6 per cent premium included in the 2009 scheme because of the global financial crisis.
But industry has signalled it no longer considers the compensation levels in the 2009 package adequate because Mr Rudd’s package had been premised on the striking of a global agreement.
Negotiations with emissions-intensive companies are expected to begin on Thursday night at the first meeting of a group of the business roundtable, which will discuss compensation levels.
Modelling conducted for the Minerals Council of Australia by the Centre for International Economics shows the huge amounts of revenue at stake in the compensation debate. At a carbon price of $26 a tonne, the 2012-13 liability for steelmaker Bluescope Steel would be $317.61m without compensation. Mining giants Rio Tinto and BHP Billiton would face bills of $451.18m and $181.23m respectively in the first year of the carbon tax.
The opposition’s decision to maintain its strategy against the carbon tax came as the Prime Minister and Tony Abbott traded barbs over carbon pricing in question time. Ms Gillard told parliament the carbon tax would apply to about 1000 big polluters, who would be required to “pay for the carbon pollution they create”.
“At this time, pollution can be put into the atmosphere for nothing. We will put a price on it,” she said. “Because there is a price, business will innovate and business will find a lower-pollution way of doing what they do.”
The Treasurer’s office yesterday confirmed the carbon tax and associated compensation would be left out of the May budget.
His spokesman said the budget would be framed independently of the carbon tax plan to give the multi-party climate committee time to work out the details of the tax. It would then be included in a budget update. The timing means plans for wider tax cuts as a result of the carbon tax won’t be unveiled until the second half of the year but they are likely to be announced before the government’s October 4-5 tax forum, which won’t look at the carbon tax.
The opposition has called for the carbon tax revenue to be included in the forward estimates of the 2011-12 budget.
Mr Swan’s office said there was no need, because the tax would be revenue-neutral.
“Every cent paid by the biggest polluters will be provided to households, businesses and programs to assist the transition to a clean energy economy.”
