Carbon Tax Not Yet ‘Catastrophic’: Abbott

Opposition Leader Tony Abbott has conceded the introduction of the carbon tax has not immediately been “catastrophic”.

But he is adamant its long-term effects will eventually spell disaster for Australia’s economy.
Speaking at the Tasmanian state council of the Liberal Party, Mr Abbott restated his promise to abolish the controversial tax if he is elected prime minister at the election due next year.

“Yes, the initial impact of the carbon tax may not be absolutely catastrophic,” he told the council conference.

“But I ask you Tasmanians to understand the logic - if there is any - in a five-and-a-half per cent increase in your power prices because of the carbon tax, even though some 85 per cent of your electricity is hydro-generated.”

Mr Abbott said government modelling of the tax’s impact painted a dire picture for Australia’s future.

“I’m often accused of running a scare campaign about the carbon tax,” he said.
“I invite people who think I could be exaggerating the impact of the carbon tax to look at the government’s own modelling.”

He said it showed Australians would on average be $5000 worse off by 2050 and the country would miss out on $1 trillion.

“It’s as if our country were to shut down for a whole year because of the carbon tax,” he said.
“This is an unmitigated economic disaster for our country.”

Mr Abbott announced he had formed a working group of Liberal senators to examine how the struggling Tasmanian economy can be grown.

Qld Taxpayers Warned about Carbon Tax

Queensland taxpayers will pay the price for state-owned power generators being devalued by the federal carbon tax, a Senate committee has been warned.

A committee scrutinising the proposed federal tax sat in Brisbane on Monday, where Queensland Resources Council chief Michael Roche argued Australia should not adopt a tax ahead of its international competitors.

The Bligh government has estimated the asset value of state-owned generators will decrease by around $1.7 billion.

Mr Roche said Queenslanders would likely have to prop up the generators after write-downs, although Premier Anna Bligh later told reporters that was a "furphy".

"In the case of government-owned generators, there's only one source of equity and it's the Queensland Treasury, it's the Queensland taxpayer," Mr Roche told the committee.

"Or other programs will be cut to fund the injection into the government-owned generators."

Mr Roche said the carbon tax was expected to comprise up to half of the operating costs of the state-owned generators.

But Labor senator Doug Cameron attacked the ACIL Tasman modelling Mr Roche quoted, saying it had proven unreliable.

The other potential impact on taxpayers was a predicted $1 billion loss in coal royalties to the Queensland government by 2020 due to the premature closure of mines, Mr Roche said.

"I would have thought that the Queensland government would see the risk for their single largest source of revenues outside of grants from the federal government," he said.

But Ms Bligh told reporters the industry had a "very strong future", with almost $60 billion worth of mining applications in the pipeline.

She said federal treasury modelling showed an expected 47 per cent growth by 2020 would only drop to a 45 per cent growth at worst.

"Let's be realistic here, the Queensland coal industry has taken some 40 years to get to where they are now and they expect to increase by almost 50 per cent in the next eight years," she said.

"I think the bigger question frankly is whether the industry itself, with or without changes in federal government regulations, is capable of that sort of expansion."

The committee heard Queensland Chamber of Commerce polling shows the tax will make 10 per cent of the state's small to medium-sized businesses unviable by raising power, transport and supply costs.

"Anybody with a power point, with an engine, with a gantry crane, a mig welder, will pay more for what they do," the chamber's David Goodwin said.

"Right across our economy we feel very, very exposed.

"We're not an economy which sits with a lot of head offices, sitting in buildings, working on computers.

"We are an economy which actually does stuff, and because of that we will be in the eye of the storm."

Senator Cameron ridiculed the chamber for relying on its own surveys rather than Queensland Treasury estimates, which predict strong growth after the recovery from summer's floods and cyclone.

"You're the Tony Abbott of the business community, you're the weathervane, are you?" he said.

Carbon trading has its risks including fraud, warn experts

CARBON trading experts say there is potential for fraud in the global market, but checks and balances are improving.

Under the government's carbon pricing plan announced on Sunday, more than half of the emissions abatement to 2020 will come from companies buying it from overseas, at an estimated cost of $3 billion, with the remainder coming from Australian carbon farming and other initiatives.

A new body called the Clean Energy Regulator (CER) will determine companies' carbon price liabilities and operate the national register of emissions units, and work alongside the Climate Change Authority headed by former Reserve Bank chief Bernie Fraser.

Already more than 30 Australian-based brokers and companies, such as the Commonwealth Bank and Origin Energy Electricity, are registered with the CER.

But the fledgling global carbon trade has seen its share of fraud and corruption, with such problems as companies buying into non-existent forests or renewable energy projects that don't get off the ground.

The Australian Federal Police also will have a role in investigating allegations of fraud or corruption.

GreenCollar Group chief James Schultz, who advises companies on carbon trading, told AAP much had been learned in the past decade.

"Rigour is important," he said.

"One of the lessons is the need for the market to understand what they are buying.

"It takes a while to be sophisticated about what is a shonky product - like a tree plantation that doesn't exist - versus something that has been rigorously audited."

While the details of the Australian system were yet to be fully spelled out, he expected it would be consistent with "international norms".

"Audit is an essential part of the process. You need a national standard, which at the moment is the Kyoto protocol," Schultz says.

"The carbon farming initiative is another standard.

"Auditors say: 'Have you adhered to the standard, have you told us the truth?' And if all those things stack up then you now have a climate change benefit."

Nationals senator Barnaby Joyce, who opposes the system, says despite $382 million being spent on a new climate change bureaucracy there were bound to be rorts as $3 billion went overseas on abatement.

"(It's) like those dodgy emails you get from the West African coast, only your government will actually start replying to them with your nation's bank account details," he said.

Taxpayers' money would be "cast like confetti around the world".

But Treasurer Wayne Swan says Australian governance arrangements will be effective.

"We're setting up a whole series of arrangements in our Climate Change Authority to make sure that governance is first class and world class," he said.

Opposition Leader Tony Abbott earlier this month told an industry forum that a "dependable carbon cop" would be needed if the scheme was to have any credibility.

The Australian Federal Police has been examining the issue since an ETS was first raised as a serious proposal four years ago.

Former AFP chief Mick Keelty told a forum at that time that any carbon trading scheme had the potential to be undermined by "corruption or fraud".

In April 2010, AFP deputy commissioner for national security, Peter Drennan, said carbon trading "may in time provide opportunities for organised criminal syndicates to exploit new markets and engage in fraudulent activity".

An AFP spokesman told AAP this week the final design of the scheme's governance was still being developed by the climate change department.

"The AFP has commonwealth responsibilities in relation to the investigation of serious fraud in government programs and in addressing organised crime," the spokesman said.

"It is too early to speculate on any potential criminal risks or the size and impact of any obligations for the AFP.

"However, the AFP will work closely with the relevant agencies ... to address identified risks, enhance the scheme's overall integrity, and manage any law enforcement resourcing impacts."

GreenCollar chief Schultz said carbon trading was becoming like buying any other commodity, but some companies will find that investing in Australian-based abatement projects, such as forests and farms that cut their use of fertilisers, is better than looking overseas.

"Some product is cheaper than others and some has a higher or lower risk profile than others," he said.

"There is significant upside for companies that are able to invest directly into the primary market - companies that create credit, create the project itself as opposed to buying on the secondary market, which is cheaper but has a higher risk."

Schultz said the public could trust the auditing system as "these are the same people who tell you ships won't sink and planes won't fall out of the sky".

"The same level of audit is brought to this, and in fact it is more rigorous," he said.

The public concern was driven largely because in many cases "you are trading something that didn't happen", Schultz says.

"Most of what you are trading is an avoided emission. You are trading something that didn't happen, like stopping deforestation. It's not planting trees but has a great impact," he said.

"By not chopping down a forest that is however many millions of tonnes of CO2 that goes into the atmosphere and that compensates another activity."

People's revolt looms on Australian carbon tax, Tony Abbott predicts

TONY Abbott has predicted a "people's revolt" over Julia Gillard's proposed carbon tax, saying the measure is a breach of faith with the Australian people and an assault on their standard of living.

The Prime Minister today announced Australia would have a carbon tax for three to five years before the introduction of a full emissions trading scheme.

But this afternoon Mr Abbott moved to suspend question time in parliament to censure Ms Gillard, saying she had broken a pre-election promise.

The Opposition leader said that under a $26-a-tonne carbon price, power bills would jump $300 a year and petrol prices would rise 6.5c a litre.

He said voters had believed Ms Gillard when she promised before the election that she would not introduce a carbon tax.

"Today's announcement is an utter betrayal of the Australia people," Mr Abbott said.

"We will fight this tax every second of every minute of every day of every of very month.

"I think there will be a people's revolt against this carbon tax and I don't think it will every happen because the Australian public will be so revolted by this breach of faith."

In a 2010 election-eve interview with The Australian, Ms Gillard said she would not introduce a carbon tax.

"I don't rule out the possibility of legislating a carbon pollution reduction scheme, a market-based mechanism,'' she said then. "I rule out a carbon tax.''

Moving the censure motion, Mr Abbott asked whether it was the “real Julia” who made the pledge in the first place.

“Nothing is more fake than making a promise to the Australian people before the election and breaking it after the election,” Mr Abbott said.

Ms Gillard said Mr Abbott only wanted to “wreck”, comparing him unfavourably to former prime minister John Howard.

"He wanted to be remembered for the things he created, not the things he destroyed,'' the prime minister said.

She said Australia could not be left behind as the world moved to a low-carbon future.

A price will be put on carbon from July next year under a framework agreed with the Greens and key independents.

The carbon price will apply to the energy sector, transport, industrial emissions and waste. It will not hit the agricultural sector.

Climate Change Minister Greg Combet today left the door open for fuel to be included in the cap-and-trade system.

"That is not a settled issue at this point in time, but it is an issue the committee will consider," he said.

Mr Combet said the committee would consider phasing in emissions trading for different sections of the economy.

A review one year before the end of the fixed price period would consider if there were any reasons to delay moving to a cap-and-trade scheme.

The starting carbon price, the length of the fixed period and assistance measures for affected individuals and firms are still to be determined.

The Prime Minister said Australia had to put a price on carbon because "history teaches us that the countries and economies that prosper are those that get in and shape and manage the change".

"I'm determined to price carbon," she told reporters. "The time is right and the time is now."

Ms Gillard predicted a tough fight ahead with Mr Abbott, saying he would wage a sustained fear campaign.

"Can I make it very clear that in the debate that will ensue I am not intending to take a backwards step," she said.

Ms Gillard made the announcement at Parliament House flanked by the Greens, Mr Combet and key independent MPs.

Greens deputy leader Christine Milne said the deal would not have occurred without the party's input.

"It's happening because we have shared power in Australia," she said.

"Majority governments would not have delivered this outcome. It is because the Greens are in balance of power working with the other parties to deliver not only the aspiration but the process to achieve it."

A climate change committee - comprising the government, Greens and independents Tony Windsor and Rob Oakeshott - has held four meetings since it was set up in September last year.

Ms Gillard said the government's emissions reduction target was unaltered at 5 per cent by 2020.

She said the system would not remain a simple carbon tax, as it was "hard wired" to shift to an emissions trading system.

Crossbenchers Mr Windsor and Mr Oakeshott will be crucial in securing a parliamentary agreement on a carbon price.

Mr Oakeshott endorsed the framework, declaring "I would vote for this tomorrow".

Mr Windsor was more circumspect, saying his support was not guaranteed.

"Please don't construe from my presence here that I will be supporting anything," he said.

He said there was "a whole range of unanswered questions" still to be answered.

Both independents welcomed the exclusion of agriculture from the framework agreement.