FED:Axeing carbon tax would delay CO2 action

AAP General News (Australia)
08-22-2011
FED:Axeing carbon tax would delay CO2 action

CANBERRA, Aug 22 AAP - Business won't have a framework for cutting greenhouse gas emissions
until mid-2016 if the federal coalition wins government and rolls back Labor's carbon
tax, a left-leaning think-tank says.

The Australia Institute (TAI) says the opposition's pledge to scrap the carbon tax
could cost business billions of dollars by creating uncertainty for at least another five
years.

"If the coalition stays committed to rolling back the carbon price and they have the
support of the Australian population for this, then it will be 2016 before we have certainty
on an outcome and 2018 before actual abatement projects begin," institute senior economist
Matt Grudnoff writes in a policy brief released on Monday.

That timeline is based on the federal government surviving in office until late 2013
but losing the next election.

The institute believes the coalition won't win a majority in the Senate.

That means it would have to wait until the second half of 2014 to submit legislation
to replace the carbon tax with its own "direct action" policy if it wanted to set up a
double-dissolution election by mid-2015.

"If we assume that the coalition wins enough seats to pass the legislation then we
can expect the rollback and direct-action plan to start by mid-2016," Mr Grudnoff argues.

But he says it would be 2018 before emissions reduction would actually begin, due to
the time needed to get direct action up and running.

The coalition has also stated that it could possibly replace its grants scheme with
a market-based approach after 2020.

"This of course will create more uncertainty," Mr Grudnoff argues.

He cites a June report commissioned by Australia's major fund managers which analysed
what would happen if a carbon price was introduced in 2016 rather than mid-2012 as planned.

"The report found that the uncertainty would add an additional $2 billion in costs
and increase electricity prices by 20 per cent," the economist writes.

"As the length of time around the uncertainty grows, so does the cost."

ABC election analyst Antony Green agrees if Labor survives in power until the second
half of 2013, and the opposition wins the subsequent election without a majority in the
Senate, "the coalition would probably find it impossible to hold a double dissolution
until the first half of 2015".

But in a late June blog post he also notes that if current opinion polls continue through
to the next election a massive landslide might give the coalition a chance to break the
Labor-Green majority in the upper house.

The new Senate would then be able ditch the carbon tax from mid-2014.

Mr Green further points out that if the coalition took government by mid-2012 in the
current parliament it could feasibly arrange a double-dissolution election before the
end of March 2013.

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