Carbon tax to become floating price a year earlier

Prime Minister Kevin Rudd yesterday confirmed that the carbon tax would move to a floating price on carbon a year earlier than previously planned.

The current tax on carbon of $24.15 was scheduled to move to $25.40 in 2014-15 before moving to a floating price, predicted to be about $6 to $10, a year after that. This is now due to happen on July 1 next year.

The decision would “take the cost of living pressures off Australian families and still act on climate change,” Fairfax reported Rudd as saying. Prior to Rudd’s statement, federal treasurer Chris Bowen announced the earlier transition in carbon pricing yesterday morning on Channel 10.

The Coalition was scathing of the decision, with opposition leader Tony Abbott questioning Rudd’s authenticity.

"What he's trying to say is that he is somehow against a carbon tax,” Abbott told the ABC.

“In fact, he was a senior minister in the Government that voted for the carbon tax."

"Mr Rudd can change the name but whether it is fixed or floating it is still a carbon tax."

The Australian Industry Group welcomed the news, with CEO Innes Willox saying in a statement, “We will be looking for more detail, but in principle a switch to much lower internationally linked carbon prices next year would be very positive for businesses struggling with high energy prices and lost competitiveness.”

The Australian Financial Review reports that programs most likely to be cut due to the decision include the Clean Technology Program, which has about $1/2 billion left to provide to manufacturers in the next two years.

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