Julia Gillard seals carbon tax but Greens want more

Lauren Wilson and Matt Chambers From: The Australian November 09, 2011 12:00AM

THE Greens yesterday triumphantly hailed the passage of the carbon tax laws that have divided the nation but warned that there was more to do to move to a full reliance on renewable energy. As the minor party dubbed the Senate's rubber stamp of the 18 Clean Energy bills a "green-letter day", Greens deputy leader Christine Milne claimed Australia had "turned its back on the fossil fuel past and will now move to a renewable energy-powered future".

An emboldened Senator Milne said the $23-a-tonne carbon tax to be paid by 500 big polluters from July 1 next year was delivered only because the Greens had entered a power-sharing arrangement with Labor. "At last we have the foundations," she said. "We need to build on this. It doesn't go far enough but it puts in place a fantastic platform on which we can now campaign for even more."

Australian Coal Association chairman John Pegler said the Senate had voted "to handicap one of Australia's largest exports at a time when uncertainty in the global economy once again threatens to reach our shores". He told The Australian last night that the Greens' calls for further action illustrated "the kind of extremism that has resulted in the fundamental and serious flaws that were passed into law today".

Business Council of Australia chief executive Jennifer Westacott said the carbon package was based on optimistic assumptions in Treasury modelling and risked placing Australia "too far ahead of its competitors in pricing carbon". Australian Industry Group chief executive Heather Ridout said the policy would impose significant economic costs at a time when global conditions were weak and international carbon prices volatile.

The carbon tax, which begins as a fixed price before converting to an emissions trading scheme in 2015, is Australia's biggest economic transformation since the introduction of the GST, and its passage leaves a nation deeply divided. Environmentalists have embraced the carbon tax, but big business argues that the only certainty it will deliver will be higher electricity prices, less competitiveness and job losses.

The sale of carbon permits is forecast to raise $24.5 billion in the first three years. To compensate households for the impact of the tax, the government will distribute $15.4bn through pension and benefit increases, tax cuts and other assistance for higher power bills and related cost increases. The government will also spend $10.3bn compensating business, particularly trade-exposed polluters in sectors such as steel manufacturing.

Julia Gillard described the policy as true to Labor values and a win for Australia's children, while Tony Abbott has issued a blood vow to rescind the pricing package. He accuses the Prime Minister of breaking her election-eve promise not to introduce a carbon tax and has pledged to turn the next federal election, due in 2013, into a referendum on the issue.

"Today Julia Gillard and the Labor Party have confirmed in law their betrayal of the Australian people," Mr Abbott said in a statement. But Ms Gillard said: "We have made history - after all of these years of debate and division, our nation has got the job done, and from the first of July we will see a price on carbon pollution. "This comes after a quarter of a century of scientific warnings, 37 parliamentary inquiries and years of bitter debate and divisions," she said.

Climate Change Minister Greg Combet told the ABC's 7.30 program the climate change package was a Labor reform, not a Greens' victory. "When you are successful in something, there are a lot of people who claim authorship," he said. It came as top energy chiefs warned Mr Abbott, who was en route to London, to scrap his plans to overturn the carbon tax if he was elected prime minister because he was destroying the certainty required to build new baseload gas-fired power.

The Clean Energy Future package relies on a significant expansion of cleaner gas-fired power generation to help replace coal-fired power and meet targets of cutting Australia's carbon emissions by 20 per cent by 2020 and 80 per cent by 2050. Renewable energy, such as wind and solar power, will expand even faster, helped by the new $10bn Clean Energy Fund, a condition of Greens' support for the legislation.

As the tax passed through the Senate yesterday 36 votes to 32, AGL Energy boss Michael Fraser said Mr Abbott's plan to repeal the tax was "very unfortunate". "The uncertainty created by the Abbott factor is unfortunate and we will have to proceed with absolute caution," Mr Fraser said at the Carbon Expo Australasia 2011 in Melbourne. "Getting investment decisions, particularly around baseload gas, we won't be making (those) until we've got clarity around where the contracts for closure are heading and we've got clarity around what is the bipartisan approach."

The contracts for closure, where the government will pay the biggest coal-fired polluters to shut down plants, has already hit speed bumps, with the country's dirtiest power plant, Hazelwood in Victoria, requesting more than the government says it is prepared to pay. GE Energy Australia chief executive Steve Sargent said the Liberal party stance was disappointing, especially when both sides had the same emissions targets.

But he said he did not believe the Liberal Party would get the Senate seats in the next election to repeal the tax because they would need to win five or six seats from Labour to do so. "That makes it very difficult, and once you've put $1000 in a bunch of people's pockets to help with higher energy prices, boy, that's hard to take back - I just don't know how you do that," he said.

The mood following the vote was noticeably more subdued than the hugs and kisses exchanged on October 12 when the legislation passed the House of Representatives, with Labor leaving the celebrations to the Greens senators. The vote came after Mr Rudd's carbon pollution reduction scheme was twice rejected by the Senate in 2009 after failing to win the Greens' support.

Greens leader Bob Brown said the carbon tax measure was "manifestly better" than the CPRS. In negotiations, the Greens secured the increase in the emissions reduction target to 80 per cent by 2050, the establishment of an independent climate authority that would advise government on the effectiveness of the carbon price and the Clean Energy Fund. Ms Gillard said the carbon package she negotiated with the Greens and the regional independents in the House of Representatives was "the right carbon package for our nation". Wayne Swan said Mr Abbott had gone overseas "with his tail between his legs after all of the tough-guy talk".

Ms Gillard was twice asked if the historic vote marked a turning point for her and Labor, which has had a six-percentage-point bounce in its primary support since mid-September. "This is about what's right for the nation's future," she responded.

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