The Opposition also has a plan to reduce carbon emissions, and – as I mentioned in an interview on ABCnews24 recently – a better (although fanciful) outcome for industry might be a combination of the major Parties’ policies, rather than allow unfettered Greens influence over the Government’s policy. Remember, the Greens will have the balance of power in the Senate after 1 July.
So far there is not much detail about the Government’s policy. They are breaking us in gently to the notion of paying for polluting. PM Julia Gillard has acknowledged that she broke her election promise of no carbon tax. She says it will be the starting point to what she did promise, and that was an emissions trading scheme. (There are a few people still looking for the 2010 policy statement about an ETS!) The Government says that, while industry will be taxed, it won’t be disadvantaged. And, while the increased costs of producing energy will be passed through to consumers, the Government has also promised that those who can’t afford it won’t have to pay for it.
The argument goes that the companies that cause pollution in the creation of their product will be competing against each other. While those costs will be reflected in the price of their products, consumers will still choose products that are price competitive. And consumers who can’t afford the products (or energy) at the higher prices will be compensated.
Also, companies that compete internationally with companies that do not pay a carbon price will be compensated so they are not disadvantaged.
The Opposition’s “˜Direct Action’ policy is based on incentives for the public and business to reduce pollution. Business and farmers will be able to “˜sell’ their abatement of CO2 production to the Government. Financial incentives will be used to encourage older coal-fired power generators to switch to gas. The Coalition has promised funding for private homes and schools to install solar panels and coastal towns to adopt tidal energy.
Both schemes are expensive – the Government’s through a tax on pollution, and the Opposition’s through financing (via budget cuts) specific reduction by specific industries, companies and communities.
The Greens want as little compensation to businesses as possible and the Government will want to avoid a similar campaign to the one against the mining tax. While this won’t make the Greens happy, they will have little choice. Having rejected the Rudd Government’s first attempt to introduce an ETS – the Carbon Pollution Reduction Scheme (CPRS) – they would lose credibility if they rejected a second proposal, whether it’s a carbon tax, CPRS or ETS.
Australia will, therefore, probably have a carbon tax before voters have a say on the matter at the next election, due in 2013. Clearly, at some stage, this should increase demand for natural gas as coal-fired power generators begin to invest in a cleaner burning fuel that is not as expensive as renewable energy. APIA members should see benefits from this, as the gas will require transportation. The other benefit for APIA owner members is the description of the scheme as a “˜tax’, so transmission owners can pass through the increased costs, which they couldn’t do under the Rudd Government’s scheme.
The only way a carbon tax won’t happen is if there is an early election (unlikely) and the Labor Party loses office (also unlikely). The Independents and the Greens have guaranteed they won’t support a Motion of No Confidence which would see the Government defeated on the floor of Parliament. The only other way there would be another election is if a Labor MP steps down – for family, or health, or any reason – and the Coalition wins the resulting by-election. So, unless Kevin Rudd is offered a very good job outside Parliament, expect to see a carbon tax next year. (By the way, his seat could go either way in a by-election depending on the candidates chosen by the major Parties.)