Prime Minister Kevin Rudd is likely to push for the dumping of the carbon tax in favor of an emissions trading scheme during his first cabinet meeting on Monday.
According to a report from the The Telegraph published via News.com.au, the carbon tax, which is set to rise to $24.15 next week from $23, will be on top of Mr. Rudd’s agenda, sources close to the PM confirmed.
The comeback Prime Minister has also hinted that no changes will be made without the approval of the cabinet.
It is believed that the main problem for Rudd lies in how quickly and how low the carbon price could drop.
The Australian Industry Group has called for a compromise to lower the carbon price for now to $6 a tonne, in line with the European market scheme. This is considered the middle ground between Gillard’s steadfast commitment to the fixed $23 price and Tony Abbott’s call for outright dumping.
According to ABC’s Business Editor Peter Ryan, the suggestion that the carbon price could quickly be put in line with the European scheme could be good news for the industry, but bad news for the government budget.
“The problem for Kevin Rudd is just how low to go with the carbon price. The recession in Europe means less industrial output, that means less pollution, companies have been buying fewer carbon permits so the price over there has dived dramatically to around just $6 a tonne,” says Ryan in an interview with AM’s Elizabeth Jackson.
“So the suggestion that with the stroke of a pen the carbon price would just switch to be in line with the floating European scheme might be good news for industry and consumers, but it could put a hole in the Government’s revenue forecasts – perhaps as much as $15 billion. And the Coalition says this would blow another black hole into the budget.”
The carbon issue has been a contentious one for Rudd, who is known as describing climate change as “the greatest moral, economic and environmental challenge of our generation”.
He abolished his government’s controversial emissions trading scheme back in April, 2010, causing his credibility to suffer. Greens leader Christine Milnes said any changed position Rudd takes could be seen as electioneering.
”He has backflipped on climate so much I don’t think people will really trust him to actually respond to the science,” Milnes told ABC Radio. ”He will be much more interested into caving into business and caving into the big miners than responding to the climate crisis.”
Should Rudd push for the dumping of the carbon tax, he is likely to announce it as an election policy, which would require legislation and is something the Greens do not support.
Ryan says there is a lot of self-interest from businesses in the lower carbon price. He says the AI Group is testing the returning Prime Minister in what could be a “brief honeymoon period”.
Lowering the carbon price would provide household relief and maybe some electoral relief for Kevin Rudd says Ryan, “but not without a high level of confusion and a very hot debate within the Government and also some of the environmental lobbying groups.”