Aussie Labor Party teams up with Greens in effort to block carbon tax repeal
Household power bills are unlikely to fall for two years, despite Tony Abbott’s intention to make the carbon price repeal his first item of legislative business, the electricity industry is warning.
With both Labor leadership candidates insisting the ALP will vote with the Greens to block the repeal, the Coalition is likely to have to wait until after the new Senate sits next July to get the abolition through the upper house.
But electricity retailers say that means they will have to factor the price into forward contracts for another financial year, with July 2015 the earliest practical date that it could be unwound from power bills.
Cameron O’Reilly, chief executive of the Energy Retailers Association, said that by July 2014, “the industry is likely to have locked in hedging arrangements for 2014-15 – so there will be a lag between passing the bill and carbon coming off retail bills.”
The chief executive of the Energy Supply Association of Australia, Matthew Warren, agreed.
“Price regulation and forward contracting make it very difficult to unwind the carbon price in the middle of a financial year. It would create enormous logistical problems to try to unwind the carbon price from electricity pricing before the end of the financial year in which the carbon price repeal took place,” he said.
The Coalition has promised that an average family will be $550 a year better off once it has “axed” the carbon tax, but O’Reilly pointed out that future movements in retail prices will also be influenced by network charges and green schemes like the renewable energy target, which the Coalition has promised to review next year.
The Coalition has made unwinding Labor’s climate policies a top priority for its early days in office – immediately abolishing the Climate Commission and starting the process to repeal the carbon pricing scheme, the Climate Change Authority – which advises on Australia’s fair share of the global emission effort – and the Clean Energy Finance Corporation, which funded renewable energy and energy efficiency projects and earned commercial returns for the government.
The Climate Change Authority – chaired by former reserve bank governor Bernie Fraser – is set to release a draft report next month, widely expected to recommend that Australia’s target of reducing emissions by 5% of 2000 levels by 2020 will need to be increased as global efforts on climate change intensify.
The authority told Guardian Australia it had not yet discussed its work with new the environment minister, Greg Hunt, and was continuing to work on its report. A spokeswoman for Hunt said no decision had been made about whether the report would be received and considered.
The Coalition insists its Direct Action plan, which offers competitive grants to companies and organisations proposing to reduce emissions, can meet the 5% target, although independent modelling suggests it will fall well short. The Coalition has agreed to raise the ambition of Australia’s target under the same conditions as proposed by the former Labor government.
The Coalition will propose separate legislation to repeal Labor’s carbon pricing scheme and to implement its own Direct Action policy. It appears likely the Coalition will win support from the required six of eight crossbench senators who assume the Senate balance of power from next July to repeal Labor’s scheme, but it is not certain to win their backing for Direct Action, leaving some long-term industry observers deeply concerned that Australia could be left with no policy to reduce its greenhouse emissions.
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