Rudd poised to target carbon tax as business groups call for relief

One of Kevin Rudd’s first policy moves as prime minister may be to “brown down” the carbon tax, according to Greens leader Christine Milne and two Labor ministers.

Milne told ABC Radio this morning Rudd may dump the fixed carbon price in favour of an earlier transition to an emissions trading scheme.

”The concern here is the extent to which Kevin Rudd will ”brown down” carbon pricing and the effort on climate change,” Milne said.

”He will be much more interested in caving in to business and caving in to the big miners than responding to the climate crisis.”

Milne’s comments were given support by Home Affairs Minister Jason Clare, who told Channel Nine this morning Australia would move to a floating carbon price as soon as it could be done and that he wants Labor to make the change.

Fairfax also reports Mental Health Minister Mark Butler expects carbon pricing will be discussed at the first meeting of Rudd’s new cabinet.

Australia’s existing carbon pricing mechanism isn’t due to transition to a market-based emissions trading scheme until July 2015.

The scheme would be difficult to unwind as the $23 dollar-per-tonne carbon price came into place on July 1 last year, and on Monday it goes up by 2.5% to $24.15 a tonne.

But dumping the fixed-price carbon tax and making an early move to emissions trading is a policy move the Australian Industry Group has been lobbying for over the past few years.

Peter Burn, director of public policy at Ai Group, told SmartCompany a market mechanism is the best way to go.

“No matter what price we charge over the next couple of years, we will get the same contribution to global abatement by 2020. So we are saying: Why are we paying four times the European price?” he says.

“Why are we putting ourselves through electricity prices that are 10% higher for business than it needs to be.”

Burn says an emissions trading scheme could be introduced tomorrow and is Ai Group’s preference to the current government position and the Coalition’s direct action proposal.

“The Coalition is saying it also has the same targets as the government for 2020, but it has a direct action proposal. At this stage, we really have not been told the details of this,” Burn says.

“We do know such schemes are very complicated so it is very uncertain what needs to be done.”

Burn says small business would get an immediate boost if the Rudd government backed an early move to emissions trading.

“They would see a decrease in their own electricity and gas bills by around 10% and an increase in the purchasing power of households who would also see a decrease in their electricity and gas bills,” he says.