Industry reactions to Rudd carbon price changes

17th Jul 2013

It is barely three weeks into Kevin Rudd's return to the prime ministerial seat, but the Labor leader has already outlined his intentions to scrap the fixed carbon price.

Rudd said he wants to move towards an emissions trading scheme in the country, which will take the cost pressures off families while maintaining climate change responsibilities.

The prime minister will switch to a floating price on the levy, resulting in charges dropping from $24.15 per tonne to between $6 and $10 per tonne.

This will have a large impact on the government's coffers. Labor was coy over the exact amount, but admitted it will be around several billion dollars.

How is this money going to be replaced? Again, the government failed to offer alternatives but claimed it would find the savings to ensure a balanced budget in 2015-16.

A floating price was due to be introduced in 2015, but the changes will now be brought forward 12 months to July 1 next year.

Political backlash

Political opponents have lambasted the decision, most notably Greens leader Christine Milne, who described it as "cowardly".

"The carbon price has driven electricity away from coal to renewables," she explained, such as solar power.

"Making coal-fired power cheaper will slow down the transition to clean energy in the Australian economy."

She said there is no good reason to accelerate flexible carbon pricing, arguing that the move is clearly political.

If Europe moved its price to $50 a tonne, would Rudd be so eager to make this move, Milne questioned. Probably not.

"Kevin Rudd believes a five per cent emission reduction target is enough. This denies the science, which requires a much higher level of ambition," she said.

Opposition leader Tony Abbott also criticised the move, although his reasoning was at the other end of the spectrum.

According to Abbott, moving to a floating price is incidental and it still constitutes a carbon price, which remains an impediment to businesses.

Business backing

Despite this, Rudd did receive support from Australian businesses.

The Australian Industry Group said it welcomed the decision, which it claimed would still hit carbon emission reduction targets without hurting commercial development.

Chief executive of the organisation Innes Willox said: "We will be looking for more detail, but in principle a switch to much lower internationally linked carbon prices next year would be very positive for businesses struggling with high energy prices and lost competitiveness."

Posted by Bob Dawson

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