AAP
The federal government has scrapped its planned floor on the carbon
price under a deal which links Australia to the European Union emissions
trading scheme (ETS), the world's biggest carbon market.
However,
Climate Change Minister Greg Combet said it would not create a budget
shortfall and households would still be compensated even if the price
falls.
Mr Combet told reporters Australia's price on carbon from
July 1, 2015 will be linked to the European Union ETS and the planned
floor price of $15 per tonne "won't be implemented".
He said a
second change would put a 12.5 per cent limit on the use of cheap Kyoto
carbon units, which can sell for a third of the cost of European units,
which are trading around $9.80.
"From 1 July, 2015, Australia's
carbon price will effectively be the same as that that operates in our
second largest trading bloc," Mr Combet said.
The carbon tax debate
Full linkage of the markets will occur no later than July 1, 2018.
Mr
Combet was asked if it would create a budget shortfall, rather than the
estimated $9.4 billion of revenue a market-based price was predicted to
generate in the 2015/16 budget.
"We stand by the budget as it was announced in May," he said.
"How
about we have a bit of trust in that, than some ridiculous allegation
made by (Opposition Leader) Tony Abbott about the impact of carbon
pricing."
Mr Combet said the government would not cut household
assistance payments and tax cuts set up to compensate for the price
impacts of the carbon tax in the economy.
"We committed to it and you might recall that there are further tax cuts that have been legislated from 2015 as well," he said.
Mr Combet had previously said a floor price would provide certainty, confidence and stability for business.
But business chiefs wanted to move to a fully flexible market price as soon as possible.
"This
delivers certainty to businesses that will have a liability under the
Australian scheme because they will have access to largest carbon market
in the world," he said.
"There are sophisticated markets that
have developed in Europe - futures markets that will give businesses a
great deal of confidence, access to financial organisations expert in
dealing with those matters to allow them to reliably predict what their
carbon price liability might be."
Under the full arrangement,
businesses will be allowed to use carbon units from the Australian ETS
or the European Union ETS for compliance under either system.
Mr
Combet said businesses would be able start buying European units from
Tuesday in order to comply with the scheme from July 1, 2015.
He
said it would not be in Australia's national interest for Mr Abbott to
scrap the scheme if the coalition wins power at the federal election due
in late 2013.
"This is a manageable, rational, reasonable economic and environmental reform," Mr Combet said.
"And he cannot, and will not, repeal it - this only demonstrates further why he won't."
But Mr Abbott said there would be a "huge hole" in the budget as a result of the decision and recommitted to scrapping the tax.
http://au.finance.yahoo.com/news/ets-change-won-t-hit-budget--compo--labor.html
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