Rudd dumps carbon tax, leaves Abbott punch drunk: media round up [1]

It has been speculated for some time that the newly returned Kevin Rudd may scrap the carbon tax. 

Today’s Age reports Rudd has done so. This is significant for the debate about climate change and the policy response in Australia:

Prime Minister Kevin Rudd is scrapping the controversial carbon tax.

A senior government source confirmed late on Saturday that Labor would move to an emissions trading scheme by next July.

Tony Abbott accused Mr Rudd of trying to deceive Australians into believing he was backing away from a carbon tax which had slugged Australian families and businesses.

”Mr Rudd can change the name but whether it is fixed or floating, it is still a carbon tax,” the Opposition Leader said. ”It is still a tax on electricity bills which will still hurt families and still hurt local families.

”This is just an election trick from the Prime Minister, who has always wanted families to pay the carbon tax.

”Only the Coalition will do the right thing by families to reduce their cost of living by scrapping the carbon tax, lock, stock and barrel.”

Abbott is of course worried. As Rudd has just knocked out what was the core of his message these past three years.

“Great Big Emissions Trading Scheme” is a less effective slogan. And it’s more than three words.

“Axe-the-Great-Big-Emissions-Trading-Scheme!”

Hmmmm, not quite as catchy as “Axe-the-tax!”.

What have I been saying about the LNPs climate policy being a mess and genuine risk to their election prospects? Goodness, they may have to come up with something sensible rather than simple opposition.

Sky News also reports, but it would appear we’ll be moving to a floating price on carbon:

Prime Minister Kevin Rudd is reportedly set to announce plans to scrap the carbon tax as he prepares for an election.

News Ltd reports that under the plan to be announced by Mr Rudd within days, the fixed $24.15 per tonne carbon tax will be dumped in favour of a floating price of between $6 and $10 per tonne to ‘ease cost of living pressure for families’.

The decision is predicted to slash electricity bills by up to $150 a year for families spending $2000 annually and also cut costs for business.

Federal cabinet was already considering fast-tracking the introduction of an emissions trading scheme to July 1, 2014.

Australia had previously planned to move from a carbon tax to an emissions trading scheme by July 2015.

‘Economic modelling will show this will ease cost-of-living pressures for families and create jobs,’ a government source said of the shift to scrap the tax, News Ltd reports.

‘This is about transitioning the economy from a post-mining boom world to a more competitive agenda.’

A shift from a fixed to a floating price looks set to blow a large hole in the federal budget, costing billions of dollars a year.

But the government’s razor gang is reportedly preparing tough spending cuts to offset reduced revenue, News Ltd reports.

Thoughts:

  • The move neutralizes the cost of living concerns (unjustified) voters had about the “tax”
  • Rudd’s move takes from Abbott and the LNP there most effective line of attack on Labor
  • It gives Labor even more clear air to talk about policies as well as bringing renewed focus on the LNP’s climate policy (or lack thereof)
  • There will be lots of talk about this in the media and blogosphere (/wink)
  • The most important question is will the new scheme work and help reduce emissions?

Interesting times! 

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29 thoughts on “Rudd dumps carbon tax, leaves Abbott punch drunk: media round up [1]

  1. john byatt says:

    http://www.abc.net.au/news/2013-07-16/public-service-cuts-to-help-pay-for-carbon-rethink/4822556

    Meanwhile, a new survey on Australians’ attitudes towards climate change suggests the opposition to carbon pricing has softened to some degree.

    The Climate Institute has released its latest annual Climate of the Nation survey, showing two-thirds of Australians accept climate change is real and is already having an impact.

    Chief executive John Connor says many people were more troubled by the Gillard government’s perceived “lie” about bringing in a carbon tax, rather than the policy itself.

    He says people now seem more open to giving some form of carbon pricing a go.

    “We’re not pretending that it’s become popular… opposition to it has dropped considerably,” he said.

    “But it’s not well understood, and what we do see is when it’s explained that all the revenue that comes from carbon pricing goes to households and industry and goes to renewable energy, then we see a majority of people supporting that package.”

  2. john byatt says:

    This is the add that labor should use during the election

  3. john byatt says:

    Crikey

    Abbott’s thunder has been stolen, and he doesn’t have a credible policy to offer. Abbott can’t argue that Direct Action can deliver cheaper abatement than $6/tonne. Opposition climate change spokesman Greg Hunt is playing Chicken Little and was warning of a carbon price of more than $350. Now, that might occur if the world hits the action button and seeks dramatic reductions in a short period. The question that needs to be put to Hunt is what that price would be in a Direct Action policy environment with all abatement achieved in Australia. Double?

    and i agree with Hunt that the ETS price could skyrocket, that is the whole point

  4. john byatt says:

    Jo Nova “As I’ve said before, a tax is still better than a trading scheme — it can be removed,”

    bottom line, if Rudd can manage to gain the election we have the ETS permanently.

    with an ETS the coalition will be unable to remove it, with a tax they could

    • John D says:

      There is nothing in the rules that says Abbott cannot dump either a carbon tax or an ETS. In the case of an ETS fairness suggests that Abbott would have to buy out people who held credits if they were unable to sell them into the EU market.
      There is also nothing in the rules that stops floors and ceilings being set for ETS credit prices. This reduces some of the uncertainty associated with all emission trading schemes.
      Abbott is right to say that the proposed EU style ETS would also be a tax. It is, after all, a complex way of generating government revenue. This is why carbon price based systems come with such large, and politically poisonous, price rises.
      The price rises would be much lower if all the money collected from polluters was used to subsidize clean technology. The successful Australian RET emission trading scheme is an offset credit trading scheme that uses the market to set a levy on dirty that is all used to subsidize clean.
      We should be supporting the end of both the carbon tax and the EUstyle ETS and pushing for either an increase in the RET target or sufficient direct action to meet challenging emission reduction targets.

      • john byatt says:

        The compensation for dumping the ETS would be prohibitive

        “There is also nothing in the rules that stops floors and ceilings being set for ETS credit prices.”

        that is how the ETS works “But importantly it’s not actually the price that causes the overall cuts in emissions. The cap determines the level of emissions, and the required cuts in emissions cause the price”

        appreciate what you are stating JohnD it is correct but leaves the door open for coalition governments to just drop targets, the direct action plan might and i say might reduce emissions by 5% by 2020 but that would be about it.

        http://theconversation.com/will-the-oppositions-direct-action-plan-work-12309

        Abbott is screaming that ETS it is a tax but the media are still reporting “Rudd axes the tax”

        loving it

        • John D says:

          You would be right to say that the coalition’s ultra-lite direct action system won’t reduce emissions very much despite diverting lots of tax to protect big polluters from the result of poor decision making.
          On the other hand, emission trading schemes are not the right way to move to 100% renewable power generation. You need to control both the technical and geographical mix to get reliable power production. Carbon taxes and emission trading schemes can’t give this type of control. They will tend to encourage the most profitable technology in the most profitable location even though this is not what is needed for the common good.
          The most logical way to drive the move towards 100% renewable power is to use competitive tendering for the supply of clean electricity as the driving mechanism. This is how major engineering projects work.

        • john byatt says:

          again I agree but it will not happen under a coalition government ever

          In Qld , 12 hours before the election Newman announced scrapping the climate change ministry and all reduction schemes including Solar Dawn , So he could not be accused of being dishonest,

          Bligh was genuinely reducing QLD’s emissions, We did not seem to get a mention when state reductions were announced recently, so cannot say what newman’s white anting has achieved
          This was the government which wanted to remove climate science from schools

          return to the Moonlight state

        • john byatt says:

          My son is involved in major engineering works, so have a good handle on some of the disasters due to competitive tendering, He has a massive amount of work on this year fixing up a lot of the low tender cowboy projects which he missed out on last year,

          but that is another story

        • John D says:

          John: I have worked most of my professional life in the construction and mining industry. Companies that don’t do their due diligence and give contracts to cowboys often end up spending a lot of money fixing problems. However, it is a bit hard to imagine how the industry would work without competitive tendering.
          All a carbon price does is help decide what needs to be done. Once a decision is made to build a wind farm, normal project management procedures take over and suppliers and sub-contractors selected by competitive tendering.

        • Nick says:

          What depresses me is that intelligent discussion of the pros and cons of carbon restraint measures can be found here,and at other blogs,but is not generated by the political parties! Why?

          Why are our parties too immature to discuss this issue in a USEFUL,explanatory,exploratory manner? Why is Abbott allowed to invent his own facts about carbon pricing and the ‘invisible substance’?

          Why does our media allow them to get away with it? Aaaargh!

  5. Apparently, Abbott is saying an ETS is nonsense because you can’t trade an invisible product. Yet his policy is to spend billions paying companies to stop producing this invisible product….

    • john byatt says:

      yes it certainly will be a big problem for him trying to find it and weigh it

    • Nick says:

      Abbott as usual tries to dumb down the issue because he is personally clueless about the science,the carbon trading mechanisims,and his party polling suggests Aussies are too stupid to see through him. We can thank Ltd News for that…

  6. john byatt says:

    http://blog.hotwhopper.com/

    Sou is Hot

    someone at WTFIUMA

    claimed that Mann was like a misinforming creationist

    what happened?

    all watts creationist monkeys came out of the woodwork

    good read Sou

    • john byatt says:

      Watts realising the number of creationists on his blog, throws the writer under a bus and distances himself from the comment

  7. starscream says:

    The problem with democracy is that it’s just another t.v. show.

  8. It may be a politically smart move for Rudd, or maybe not. I supported a ‘carbon tax’ and I thought some of the initiatives associated with it, such as a Biodiversity Fund, were fundamentally good ideas. Although, the Biodiversity Fund was savaged in the budget a few months back anyway.
    I doubt there’ll be any significant reduction in household electricity bills. If some households do manage to save themselves the equivalent of $3 a week than good luck to them! Realistically cost of living pressures in Australia stem from over-indulgence in consumerism and over-reliance on credit cards…

    Effectively certain sections of business will be happy with Rudd’s move. Other sections of society will have to pay for it. There will have to be big cuts to government spending to make up the shortfall that will occur in the budget with the Carbon Tax removed from it. (Doesn’t make sense to get rid of the carbon tax yet keep the compensation element, but I guess this is politics)… Admittedly it does remove (an unnecessarily) negative and toxic political issue from mainstream discussion.

    From a pragmatic perspective Australia was moving towards an ETS anyway, we’ll just get there a bit quicker! Tony Abbott is going to have to start doing something because he is completely losing traction in the media. A rejuvenated Rudd and Bowen are totally all over him.

  9. john byatt says:

    nova has gone quiet, about to throw him under a bus?

    2nd announcement

    http://www.announcements.mq.edu.au/vc/professor_murry_salby_and_his_dismissal_from_macquarie_university

  10. John D says:

    Moving from a carbon tax that is too low to have much effect on emissions to an EU linked ETS that will lower the carbon price even more sends out a number of signals:
    1. Rudd is no more serious about climate action than Abbott.
    2. Linking to the EU allows Australia to squib on climate action by buying EU permits instead of actually doing something. Hardly an encouragement to companies thinking of investing in renewables.
    3. Rudd has to find another source of revenue to replace the revenue being generated by the carbon tax – or find even more savings or alternate sources of revenue.
    4. Here is a big opportunity for hedge funds to make speculative profits.
    Rudd will only retain credibility if he drops the tax and replaces it with:
    1. A significant increase in the RET emission trading scheme target – will give a bigger reduction in emissions with much lower price increases.
    2. Does very sensible things such as using competitive tendering for the supply of clean electricity to drive investment in renewables. (See: http://pragmatusj.blogspot.com.au/2009/12/driving-investment-in-clean-electricty.html)
    3. Sets up an RET type scheme to drive down the average emissions of new cars. (Actually reduces the price of low emission cars without any need for a change in fuel price – See:http://pragmatusj.blogspot.com.au/2011/08/using-offset-credit-trading-to-drive.html)
    4. Other actions with predictable outcomes.

    I am a climate action believer and a carbon price skeptic. My personal view is that Rudd should drop the carbon tax and the proposal to move to an EU style ETS and move to a climate action plan that will produce tangible results before the end of the next term of parliament. (See: http://pragmatusj.blogspot.com.au/2011/01/we-need-to-put-carbon-price-to-one-side_30.html#more)

  11. john byatt says:

    I believe that the objection to moving to and ETS is more because we are linking with europe and currently that price is quite low,

    I think that the ETS will get there and will be global by the end of this decade

    The European Parliament has approved plans aimed at reducing the glut of carbon permits that have sunk the price of CO2 to record lows in the world’s biggest emissions trading scheme.

    MEPs voted in favour of “backloading” proposals at a plenary vote in Strasbourg on Wednesday, approving plans for the European Commission to temporarily postpone the auction of 900 million allowances for the bloc’s ETS.

    The proposals were approved – 344 votes to 311 – as a compromise by the EU’s three largest parties, after initial stricter plans were rejected by a similar margin in April, amid fears the measure would push up the cost of energy across Europe.

    The news saw carbon prices – down by around 10 per cent before the vote – rebound to €4.7/t, up 10 per cent on Tuesday’s close. But prices still have a long way to go to regain the 48 per cent they have lost after falling from a 12-month high of €9/t – or indeed the 70 per cent they have lost over the past four years.

    According to The Guardian, analysts say the backloading measures could raise carbon prices to €15, but believe prices above €20 are needed to give utilities sufficient incentive to make serious switches to lower carbon energy generation.

    In Australia, the news adds yet another twist to local climate politics, as newly reinstated Prime Minister Kevin Rudd weighs his options on bringing forward the 1 July 2015 date at which the nation’s carbon tax converts to an ETS, and is thus linked to the foundering EU market.

    Putting aside the significant complexities of unwinding Australia’s carbon tax early, the vote in favour of proposed EU ETS reforms could help push Rudd’s decision either way: A switch to the floating European scheme, with its comparatively much lower prices, might be good news for industry and consumers, but it also risks putting a possible $15 billion hole in the government’s revenue forecasts.

    But before any EU reforms are implemented, they will need to be signed off by the Member States in the Environment Council – a move that HSBC analyst Nick Robins says probably won’t be made before September’s federal elections in Germany, making it likely that backloading will only start in 2014.

    Once implemented, this temporary fix would reduce the surplus through to 2016,

    • Watching the Deniers says:

      Thanks for extra commentary John, and linking up the other issues.

    • john byatt says:

      once you have a global scheme and a global price then each country can impose its own caps on a yearly basis

      http://theconversation.com/explainer-the-difference-between-a-carbon-tax-and-an-ets-1679

      • john byatt says:

        An ETS works by setting a cap on emissions and requiring emitters to hold a permit for each tonne of CO₂ that they emit. The level of the cap determines the number of permits available.

        If emitters don’t already hold a permit, they must either cut back on their emissions or buy a permit from another emitter, who must then cut back.

        This means that a cost is imposed on emissions, equal to the price of buying or selling a permit.

        But importantly it’s not actually the price that causes the overall cuts in emissions. The cap determines the level of emissions, and the required cuts in emissions cause the price.

        That is, permits have a value because they allow you to avoid making cuts in emissions.

      • john byatt says:

        How does this differ from a carbon tax?

        A carbon tax is sort of the opposite. A cost is added to all emissions, equal to the level of the tax, and this causes people to cut back.

        There is no cap on emissions in a tax-based system. People are free to emit as much or as little as they like, but if they do emit, they must pay the tax.

        Unlike an ETS, under a carbon tax it is the price that determines the level of emissions.

  12. Steve says:

    I prefer the tax to an emissions trading scheme.

    • Watching the Deniers says:

      Likewise, I agree. A flat tax with the costs passed back to the polluter. It would need to be balanced by the requisite personal income tax costs. It address both supply and demand side questions.

      Consumers can then take those savings and reinvest in more energy efficient vehicles, transport and buildings/technology (demand side).

      It would also drive innovation in technology by shifting us away from fossil fuels to other sources (supply side).

      Most sensible policy I think, but compromised by irrational opposition.

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