Axing carbon tax floor price not enough: Opposition, AIG

Yesterday’s decision to remove the floor price on carbon of $15 per tonne was welcomed by the sharemarket and the AIG, but some are saying it doesn’t do enough.

Yesterday’s decision to remove the floor price on carbon of $15 per tonne was welcomed by the sharemarket and the AIG, but some are saying it doesn’t do enough.

The removal of the floor price on the carbon tax, which will link to the carbon market in the EU in 2015, was criticised as an admission that the tax was a failure and should be scrapped.

“You can't fix it. You've just got to scrap it,” said federal opposition leader Tony Abbott in comments reported by the Sydney Morning Herald and others.

“We haven't had the carbon tax for two months yet and they've admitted there is a fundamental flaw at the heart of the carbon tax.”

The stock market showed increases in share prices for manufacturers such as BlueScope, Arrium and Boral – all affected by the tax – after the floor price news was announced.

Meanwhile, The Australian reported that Bloomberg New Energy Finance was predicting a price per tonne of carbon on the European market to be 10 Euro (or $12) in 2015.

“It means a lower price in the near term but the price will go higher towards the end of the decade,” predicted Seb Henbest from Bloomberg.

Innes Willox, CEO of the AiG, welcomed the announcement as “a step in the right direction,” but said it didn’t address issues such as competitiveness faced by business.

“In addition to the removal of the floor price, in order to maintain international competitiveness, at the very least Australian industry needs lower fixed prices between now and 2015 and an earlier transition to trading,” he said.

“That [floor price] looked unworkable in practice and was reducing the ability of businesses to plan ahead for investments and to manage future liabilities.”