Carbon tax price floor scrapped but Coalition says it’s just “window dressing” for small business

The Federal Government has scrapped its carbon tax price floor but the Coalition says the change will make little difference to small business.

Yesterday’s decision to link Australia’s carbon scheme with Europe’s and ditch the $15 floor price on permits probably means the cost for Australia to reduce emissions will come down?in the medium term at least. But it may also make it harder for the Coalition to repeal the carbon tax if it wins the federal election.

The carbon scheme will be linked to the European carbon price from July 1, 2015, allowing Australian polluters to buy and sell permits on the world’s biggest carbon market.

However, the move also puts the government’s budget prediction into jeopardy as emissions permits in Europe are currently trading at $8 a tonne, which is below the $29 a tonne figure the government is relying on to secure $9.2 billion in revenue in 2015-16.

Bruce Billson, shadow minister for small business, told SmartCompany the changes to the scheme don’t lessen the punishment behind the carbon tax and instead are all about presentation.

“It is all about the presentational value the government seeks to project. They claim this scheme has been well researched yet now it is getting changed again, which in no way lessens the harm and the hurt that small businesses face,” Billson says.

“Small businesses are still faced with the world’s largest carbon tax and no compensation for the costs.”

Billson says he finds it interesting that the government says nothing has changed about the forward forecast for the carbon price.

“Yesterday was a government window dressing exercise when the hurt and the harm is unchanged,” he says.

“What small business has been telling us consistently is to axe the tax and the certainty they are looking for is to axe the tax.”

Iain Smale, managing director of carbon consultancy Pangolin Associates, says the impact of the changes on small business will be limited as they do not kick in until 2015. He says the “big grey area” is whether Australia will have a change of government by then, given the Coalition’s stated intention to scrap the carbon tax.

Smale says linking Australia’s carbon scheme with Europe may make it more difficult for the Coalition to scrap the tax.

“International agreements would probably strengthen the calls for keeping a carbon tax in place,” he says.

Smale says many small to medium enterprises are yet to experience any impact from the carbon tax.

“A lot of the power prices forecast are due to change of infrastructure, and variation to carbon price will have a very nominal effect on SMEs,” he says.

“The potential lowering of the floor price won’t see a drop in the cost of electricity but may see a drop in the intensity of the price increases.

“It’s pretty early to tell, but the general consensus seems to be the general impact has not been as dramatic as it was made out in the media prior to the carbon price.”