Cameron Praises Australian Carbon Tax

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

03 August 2011

British Prime Minister David Cameron has written to his Australian counterpart to praise her carbon tax policy.

In the letter, dated July 22, he said: “I have always been clear that in order to tackle (climate change) effectively, all major economies will need to take robust action to curb their emissions and put their economies on a more sustainable, low-carbon footing.”

David Cameron’s praise for Australia’s carbon tax plans came in the same week as Tony Blair, former British Prime Minister, in a joint press conference with Julia Gillard also showed support, saying: “Round the world right now people are moving towards a low-carbon economy as the future. I mean, that’s what’s happening, and the only way you do that in the end is you put some sort of price on carbon.”

Details of Australia’s carbon tax plans, released on July 10, show that the levy will be set at AUD23 (USD24.5) per tonne of pollution beginning July 1, 2012. This is to rise by 2.5% a year in real terms during a three-year fixed price period until July 1, 2015. The carbon price mechanism will then transition to an emissions trading scheme where the price will be determined by the market.

Around 500 businesses will be required to pay for their pollution under the carbon pricing mechanism, with more than half of this revenue used to assist households with tax cuts, increased family payments and higher pensions, benefits and allowances. Carbon price revenue will also be used to support jobs and to invest in clean energy and climate change programs.

Commenting on the correspondence from Mr Cameron, Julia Gillard said: “Looking at the letter from the UK Prime Minister, it's another piece of evidence in a mounting pile, a pile as high as Mount Everest, that nations around the world are acting and we can't afford to be left behind.”

“We can't afford to be the nation that hasn't moved to seize a clean energy future with all of the opportunities that that gives us for new investment and new jobs.”

“So for me as Prime Minister this is about leading the nation to get that clean energy future. If we put a price on carbon we will send a signal to domestic capital to invest in clean energy projects.”

“If we put a price on carbon we will send a signal internationally that here in Australia the rules are known, the rules are certain, this is a great place to invest in a clean energy future. And for Australians that means new jobs and new opportunities and I'm determined we get those new jobs and opportunities for Australians.”

An endorsement from the British Prime Minister was not music to the ears of Opposition Leader Tony Abbott, who responded by saying: “[The] British have given themselves an out clause, they will only proceed with further deep cuts in emissions if on review they find that the rest of the world is similarly proceeding with deep cuts.”

“Britain is a very different country, it’s a very different economy. Britain has de-industrialized over the last generation. Britain has exported its emissions to the countries which now do its manufacturing for it.”

“We are a resource intensive economy. We’re an economy that produces an abundance of coal and gas. We want to be a manufacturing society. What’s appropriate for Britain is not necessarily appropriate for us.”

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