Carbon Tax Passes in Australia
There were many opposing views last week in Hobart, Australia as the lower house of Parliament, led by Prime Minister, Julia Gillard, voted to adopt the second-largest emissions trading proposal in the world, the first being the European Union.
The bill would enforce a carbon tax on 500 of the country’s biggest polluters, starting in July of 2012, before transitioning into a market-based trading scheme in 2015. It narrowly passed through a divided House of Representatives with a vote of 74 to 72. About 80 anti-carbon tax protesters flooded the parliament-viewing gallery, criticizing and taunting Ms. Gillard, bringing government business to a virtual standstill.
Before the vote, Ms. Gillard stated, “Today is a significant day for Australians and the Australians of the future who want to see a better environment.”
Although it is expected to pass the Senate next month, the opposition of the Liberal Party was very quick to dispute the passage of the proposal. The bill sets an initial price of $23.15 per ton of carbon, while guaranteeing billions of dollars in compensation for consumers and businesses alike. Tony Abbott, the opposition leader says that the plan would prove disastrous for Australia’s economy, which relies heavily on resource extraction. He is fighting to repeal the bill, stating, “We can repeal the tax, we will repeal the tax, we must repeal the tax. This is a pledge in blood. This tax will go.”
Tim Jordan, a supporter of the bill and Senior Analyst at Deutsche Bank in Sydney, says that this type of fierce opposition to the bill is being driven by political, not financial, orthodoxy. He states, “The impact on most businesses is modest. Businesses that are ready for a world where carbon is priced, such as electricity utilities with renewable generators in their portfolio, will do well. Many high-emitting industries will receive free carbon allowances, giving them time to adjust to a carbon price.”
Regardless of the position many Australians find themselves in, Ms. Gillard continues to argue that Australia is one of the world’s largest polluters per capita and can no longer ignore its global responsibilities.