Australia Sets Up Consultations On Carbon Tax

by Mary Swire, Tax-News.com, Hong Kong

29 September 2010

The Australian government is to establish two roundtables to engage the business community, and environmental and non-government organizations on climate change policies, in addition to a new multi-party parliamentary Climate Change Committee.

The new Labor government has recently begun to indicate that it will consider all options to reduce the country’s greenhouse gas emissions, including the carbon tax that the previous Labor government had rejected.

Before the election last month, Prime Minister Julia Gillard ruled out a carbon tax and announced that there would be a 12-month consultation process to examine the evidence on climate change and the policy choices available. Nevertheless, the government now only appears willing to look at options to establish a “carbon price”.

It is said that the new roundtables will play “an important role providing advice to the government on the issues surrounding climate change”. However, it was also announced that their discussions will focus on “the introduction of a carbon price into the economy, particularly the need to give businesses certainty to invest in low-pollution technologies.”

The government will announce the full composition of the roundtables in the coming weeks, following discussions with leaders of the business, union, environment and non-government sectors. They will be chaired by government ministers, and the intention will be for them to meet monthly, or as required.

The business roundtable will, additionally, discuss how the government's climate change policies intersect with our other economic policies, including tax reform, and both roundtables will help inform the positions that the government takes to the newly-formed multi-party parliamentary Climate Change Committee.

The government hopes that the latter will, within a parliament in which it is in the minority, help build consensus on how Australia will tackle climate change. It will report to the Cabinet, through the Minister for Climate Change and Energy Efficiency, Greg Combet, and will be informed by discussions with independent experts, the public and industry.

The Climate Change Committee will start from the government’s chosen position that “a carbon price is an economic reform that is required to reduce carbon pollution, to encourage investment in low emissions technologies and complement other measures including renewable energy and energy efficiency”.

The government will be represented on the Committee by the Prime Minister (as chair), and the Deputy Prime Minister and the Minister for Climate Change and Energy Efficiency. It is hoped that there will be two representatives from the Coalition (led by the Liberals), two from the Greens (one of which will serve as a deputy chair), and representation from independent MPs.

Interestingly, it has been stated that parliamentary members of the Committee will only be drawn from “those who are committed to tackling climate change and who acknowledge that effectively reducing carbon pollution by 2020 will require a carbon price”.

In the press conference announcing the formation of the Committee, the Prime Minister was joined by Bob Brown, the leader of the Greens, whose support will be essential to the government in the Senate from next year, and who have previously advocated an immediate carbon tax.

Gillard reiterated that her government’s priorities “are in three areas - supporting renewable energy, promoting energy efficiency and working towards the introduction of a price on carbon”. She confirmed that the government sees the Committee being wound up at the end of 2011, but refused to comment on whether a policy on climate change would then be introduced into parliament, or whether it would form part of a manifesto for an election in three years’ time.

In a subsequent press release from the Liberal party, its leader, Tony Abbott, who has previously confirmed that a Coalition government led by him would never introduce a carbon tax, looked on the establishment of the Committee as “the final nail in the coffin for Julia Gillard’s election-eve pledge to the Australian people not to impose a carbon tax”.

Given the likely effect of carbon pricing on consumer energy prices, he has renamed it the “Gillard Electricity Tax Committee”, and rejected the concept that “a pre-requisite for membership of this committee is a belief-test in some form of carbon tax”. He added that the Coalition finds it “unacceptable that membership of a parliamentary committee is effectively barred unless an elected representative signs up to a dictated solution in advance”.

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