Carbon tax about-face

Green Lifestyle magazine

Labor cuts carbon tax and farm programs in favour of an emissions trading scheme.

Hazelwood power station

Hazelwood power station, Latrobe Valley, Victoria

Credit: Martin Wurt, ACF

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The Federal Government, under the new leadership of Prime Minister Kevin Rudd, has decided to bring forward a floating carbon price by a year. From July next year, the carbon tax will be replaced by an emissions trading scheme (ETS).

To fund the change, three environment programs have been cut; $213 million from the Biodiversity Fund, $143 million from the Carbon Farming Futures program and $362 million from the Clean Technology Program. This is in addition to cuts from the May 2013 budget of $257 million to the Biodiversity Fund and $627 million to the Australian Renewable Energy Agency (ARENA) and low carbon communities programs, announced earlier this year.

“Today’s announcement is politically motivated and adds up to a $1 billion hit to the environment and the transition to clean energy," Australian Greens Leader Senator Christine Milne said. “You don’t protect the environment by cutting the environment... Labor’s capitulation to the big polluters will undermine clean energy business confidence and hurt the environment."

Milne's criticisms echo concerns from farming groups that say Labor benefits, but farmers, manufacturers and the environment are the biggest losers.

Normally in disagreeance with each other, the National Farmers' Federation (NFF) agrees with Milne's general annoyance at the scrapping of unallocated funds from the Biodiversity Fund and the Carbon Farming Futures program.

“The Carbon Farming Futures program delivers the science and extension to help farmers manage their land in a way that reduces emissions and leads to enhanced productivity and sustainability. Today, the Government announced they are cutting the program funding by one third," said CEO of the NFF, Matt Linnegar. "Meanwhile the Biodiversity Fund helps farmers store carbon, enhance biodiversity and build greater environmental resilience – and its funding will be cut by close to a quarter."

Linnegar and the NFF have long advocated cutting the carbon tax, saying it causes "additional and unnecessary costs" to Australian farm businesses. "The early move to an emissions trading scheme will reduce these costs, because the current international carbon price is lower than the fixed price under the tax,” Mr Linnegar said.

The Australian Conservation Foundation (ACF) CEO Don Henry also said today that while he supports an ETS to tackle climate change and welcomes the protection of renewable energy policies, he was disappointed by cuts to the Biodiversity Fund, Carbon Farming Futures and the Clean Technology program.

However, the ACF applauds Rudd's changes to the fringe benefit tax break on company car use, and an early end to the Energy Security Fund. “Ending the Energy Security Fund two years early and amending the economically senseless, environmentally damaging fringe benefits tax break for company car use is smart," said Henry.

Henry stated that the environmental gains delivered by an ETS will always depend on where the limit on pollution is set. “Australian taxpayers give away more than $10 billion a year in fossil fuel subsidies. Mining companies still pay 38c less per litre for diesel fuel than ordinary Australians. This should fund any budget shortfall as a result of the early shift from a fixed carbon price," he said.

“That limit needs to be at least 25 per cent by 2020 if Australia is serious about keeping global warming below the critical two degree threshold."

Mr Linnegar wants the Government to now answer the question on what this means for farmers. "It is important that the benefits for farmers under the emissions trading scheme outweigh the costs, including the program funding cuts. Otherwise, this move risks the Government delivering with one hand and taking away with the other."