Labor managed to pass its carbon tax legislation through the lower house this morning, in a move it argues puts to bed years of fiery debate about how Australia should tackle climate change.
With the bills expected to pass through the upper house, Australia is now on its way to having a fixed price on carbon starting July next year.
The price, starting at $23 per tonne from July 2012, will rise to $24.15 the year after, and $25.40 from July 2014, before changing into an emissions trading scheme with a flexible price.
The passing of the bills, including a $300 million compensation package for the steel industry, was met by applause from the Government, sole Greens MP Adam Bandt and independents MPs.
Council of Small Business of Australia executive director Peter Strong says while the Government has flagged that average household compensation of $10.10 per week will exceed the expected price increase of $9.90 per week, there’s still no clarity about how much it will cost individual small businesses.
“Small business wants to know, what will it cost me as a truck driver, as an accountant, as a real estate agent?” Strong says.
“At the moment, we’ve got a general figure coming out from the Government. That’s easy to say, but we need more information.”
The Government says under its plan, nine out of 10 households will receive assistance through tax cuts, extra payments or both. It also says assistance for two out of three households will cover the entire average price impact.
But even if the law passes the Senate and kicks in next July, there is still some confusion over how long it will stay in place should the Coalition win the next election in two years.
Opposition leader Tony Abbott this morning delivered a “pledge in blood” to “repeal this tax” and “dismantle the bureaucracy associated with it.”
“I am giving you the most definite commitment any politician can give that this tax will go. This is a pledge in blood this tax will go.”
But Prime Minister Julia Gillard has dismissed Abbott’s promise to remove the tax, pointing out doing so would require stripping compensation payments attached to it.
A recent report prepared for the Australian Chamber of Commerce and Industry by Castalia Research said that while SMEs will not be subject to the carbon price for their direct emissions, they will “face a substantial increase in costs through the effects of the price on the costs of their inputs.”
“The starting level of the carbon price is irrelevant: what matters is where the price will increase to, and how the fixed price transitions to an ETS,” the report says.
“Our empirical research shows that a carbon price will have a material impact on the profitability of SMEs, with consequent flow-on effects for investment and employment.”
“This impact is caused by the fact that the sector’s businesses are largely price takers subject to a greater degree of trade exposure than is commonly understood. SMEs have almost no ability to pass on the additional costs of electricity and transport from the carbon price to their customers.”