14 Nov 2011

High political price of new carbon tax

6:59 am on 14 November 2011

A climate pricing scheme in Australia has finally been passed into law.

Radio New Zealand's Sydney correspondent reports it is being hailed as Australia's biggest economic reform in a decade, but it came at huge political cost.

Action on climate change killed the prime ministership of Kevin Rudd, the opposition leadership of Malcolm Turnbull and turned Labor into a minority government at the general election last year.

But carbon pricing became a reality last week when it was passed by the Senate.

Under the scheme, Australia will impose a fixed carbon tax of $A23 per tonne on the top 500 polluters from July next year, before moving to an emissions trading scheme three years later.

To soften the blow, the federal government will pay compensation for export-exposed industries and says there will personal tax cuts for 90% of working people.

However, Opposition leader Tony Abbott has declared a "blood oath" to overturn the legislation if he wins the next election.

Radio New Zealand's Sydney correspondent reports most independent observers say that would be practically impossible.

But there are rumblings from business groups, who argue the tax will only add to their expenses while doing little to cut global pollution as Australia exports most of its carbon in the form of coal and other minerals.

On the flipside, proponents of alternative energy see the change as a major fillip for solar, wind and other renewable sources. Other industry groups are welcoming the certainty after years of stop-start debate.