Prime Minister Kevin Rudd says scrapping the carbon tax and moving to an Emissions Trading Scheme would save households around $380 dollars a year, but will cut spending in the budget by almost $4 billion.
Treasury estimates that moving from the carbon tax to an ETS in 2014 would cost $3.8 billion but Mr Rudd says making other cuts to spending would ensure the transition from a carbon tax is revenue-neutral.
Amanda Cavill reports.
Prime Minister Kevin Rudd says if he’s re-elected, he’d cut fringe benefits tax, some senior public service jobs and some environmental programs to pay for his plan.
The cuts include removing a tax concession on the personal use of salary-sacrificed or employer-provided cars, netting the government $1.8 billion.
The changes would not affect people who use their own car for work-related reasons or existing concessions for some uses of taxis, panel vans and utes.
The government would also cut $144 million from the Carbon Farming Futures program.
Further cuts would come from public service efficiency dividends, such as better procurement practices.
One per cent of executive level and senior executive public service positions will be also cut.
This would affect about 800 jobs, mostly based in Canberra.
Mr Rudd says government assistance to emissions-intensive, trade-exposed industries would remain unchanged.
He says he has always been committed to moving from a fixed carbon price to a market-based floating price.
“When I was elected back in 2007 as Prime Minister I was elected to bring in an emissions trading scheme and a floating price. I believe overall this is a good package, it’s a balanced package. It’s good for families, it’s good for pensioners, it’s good for small businesses. It’s also good for the environment.”
Mr Rudd says households would continue to receive financial assistance but handouts to affected businesses would be cut when Australia moves to a floating price emission trading scheme next year.
He says the nation’s 370 biggest polluters would continue to pay for their carbon pollution but the cost would be reduced, meaning less pressure on consumers.
Treasury modelling suggests moving to a floating rate a year ahead of schedule would ease the cost of living by around seven dollars a week per family.
It says the impact would be greatest on electricity and gas bills, with the average household saving just over $200 a year on gas and electricity.
In all, Mr Rudd says, the average household would be around $380 a year better off.
Treasurer Chris Bowen says the carbon tax changes wouldn’t impact on the government’s household assistance package or on investments in the renewable energy sector, such as the Clean Energy Finance Corporation.
However Mr Bowen has announced cuts to the Ending Energy Security Fund, changes to the Coal Sector Jobs package, the deferral of payment to the Carbon Capture and Storage program and cuts to the Clean Technology Program.
But he acknowledges not everyone will be happy with the cuts.
“This decision means that we have a positive impact on the budget bottom line. These savings measures will not be universally popular with everybody. They are not easy to make: savings decisions never are. But they are the right decisions to make in a fiscally responsible way. This announcement means that we embrace the market mechanism in a way that should be done.”
However Greens Leader Christine Milne says moving to an Emissions Trading Scheme in 2014 will do nothing to help the environment.
She says it will simply reward the big polluters while drastically cutting important environmental programs that are desperately needed.
And Senator Milne has ridiculed the idea of protecting the environment by cutting environment programs.
“Particulary in the savings they are going to find, the $3.8 billion of savings in order to bring forward emissions trading by one year, in order to make it cheaper for the for the polluters to pollute, they are going to cut a billion dollars from programs that actually help to protect the environment, build resilience in the landscape and to help farmers and to help people in manufacturing to be able to transform to clean energy programs.”
Opposition leader Tony Abbott says Mr Rudd is simply fast-tracking Julia Gillard’s plan to move to an emissions trading scheme in 2015.
Mr Abbott says the Prime Minister’s decision just underlines what the Coalition has always said about the carbon tax – that it doesn’t work and should be axed.
“Look what Mr Rudd has announced is not the abolition of the carbon tax. All he’s done is simply brought forward Julia Gillard’s carbon tax changes by twelve months. He’s not the terminator, he’s the exaggerator. He’s not the terminator, he’s the fabricator. He’s changed its name but he hasn’t abolished the tax.”
Under Mr Rudd’s plan the carbon price would fall from a forecast, fixed $25.40 a tonne to around six dollars a tonne under the floating regime.