Following months of tense negotiation between the minority Labour Government and the Green and independent MPs, Australia’s prime minister Julia Gillard yesterday revealed the ‘Strong Growth, Low Pollution’ report, which models how the country’s economy can continue to grow at the same time as reducing carbon pollution with a carbon price. The new tax, which will come into effect from July next year, will hit Australia’s top 500 emitters with an AUD$23 per tonne carbon tax.
Gillard also confirmed the tax will rise 2.5% a year through 2015 when the levy will transition into an emissions trading scheme that is expected to be the world’s third national greenhouse gas cap-and-trade scheme after the EU and New Zealand.
“Delaying action on climate change will only lead to dramatically higher costs, will undermine our competitiveness and will ultimately hit jobs and living standards,” said the Government’s release.
Half the revenue raised from the tax will be immediately recycled in the form of tax cuts to households worth over AUD$15 billion. According to Government calculations, two thirds of all residents will receive some form of financial assistance to cope with rising energy bills, while many of the poorest households will find themselves better off, despite anticipated increases in energy bills of AUD$10 a week.
A further AUD$10 billion has been earmarked for the formation of a new Clean Energy Fund to help accelerate the development of renewable energy projects.
"At its core it really is quite simple, we at the moment put carbon pollution into our atmosphere for nothing, a big polluter can just keep chugging it up into the skies and not pay anything," said Gillard.
"Big polluters will pay a price, they're smart business people, when a bill comes in for carbon pollution they'll say, 'How can I reduce that bill, how can I change my processes so I generate less carbon pollution?'."
The Australian solar industry received the tax with mixed feelings, stating that the boost that large-scale solar will receive will be welcome, but additional targeted support for small-scale and medium solar energy seems to have been overlooked.
Jeremy Rich, CEO of Australian solar energy company Energy Matters said, “We welcome the support for large-scale solar announced on Sunday, but echoing a statement I made recently, the Government needs to further its targeted support for small- and medium-scale solar; which could come out of the funding for large-scale – no new money needs to be allocated.”
“This will ensure Australia can gain the most carbon emission reduction benefit in the years ahead and accelerate the nation to the point where solar goes beyond grid parity and becomes cheaper than filthy fossil fuels.”
The model is also not without its detractors. Some carbon-intensive businesses and opposition politicians lined up to attack the proposed tax, predicting it would have a crippling effect on the country’s economy.
Opposition leader Tony Abbott said this was "a tax increase pretending to be an environmental policy – it’s socialism masquerading as environmentalism".
Qantas and Virgin Blue said the impact of the tax on their operations would be passed down to customers in the form of higher ticket prices, while the Australian Coal Association predicted the tax would result in around 4,700 direct jobs being lost across the mining industry.