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CARBON TAX
 
Australia's lower house passes carbon tax
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12th October 2011
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PERTH (miningweekly.com) − Australia’s controversial carbon tax plan was given a boost on Wednesday after the lower house of Parliament, the House of Representatives, passed the set of bills by a tiny margin.

The A$23/t carbon tax, which would likely be implemented next year, would be introduced to the Senate, where it is expected to pass with the assistance of the Greens.

The Clean Energy legislative package will likely be passed through the upper house by the end of this year.

Despite the majority vote in favour of the carbon tax, Liberal leader Tony Abbott said that it was the “worst possible time” to introduce a tax on carbon emissions.

“Confidence in our own country is at a rock-bottom record low. Unemployment is edging up. The euro is under great pressure and countries in Europe face the risk of sovereign debt default. There is the threat of a worldwide recession. And what is the response from this government? To clobber the Australian economy with a carbon tax.”

Abbott said under the federal government’s own figures, the gross national income per head for Australians would be A$5 000 less a year under a carbon tax, than it would be without a carbon tax.

“This is A$5 000 in lost income for every Australian, A$5 000 out of every Australian pocket because of this government and the act of economic self-harm, which is constituted by its carbon tax.”

Abbott reiterated the opinions held by a Senate Select Committee, which last week called on Parliament to oppose the introduction of the carbon tax.

The Senate Select Committee stated that the carbon tax would impose an impost on Australian businesses, without the same impost being placed on foreign competitors, costing the economy $1-trillion.

INDUSTRY RESPONSE

The mining industry was swift to respond to the passing of the carbon tax through the House of Representatives, with the Queensland Resources Council (QRC) saying that Canadian, US and South American governments would be celebrating the introduction of the tax.

“The hugs and backslapping in Canberra this morning are nothing compared with the level of excitement that this tax on Australia’s key export industries is generating among our global competitors.

“The last time Australia made our competitors so happy was when the hugely discredited resource super profits tax was unveiled,” QRC CEO Michael Roche said.

He said the House of Representatives had approved the world’s biggest carbon tax on Australia’s resource sector industries while none of its global competitors was even contemplating one.

Roche noted that resource exporters in Canada, the US, Indonesia, Africa and South America would be delighted that Australian MPs have voted to hand over a “large chunk” of the Australian resource sector’s future growth and with it, thousands of jobs.

“New jobs, investment – and the emissions they generate – will simply shift to resource-exporting countries that do not have a carbon tax. The global challenge to reduce carbon emissions will not be helped by Australia’s unilateral actions but by concerted international effort,” Roche said.

The Western Australian Chamber of Minerals and Energy also warned that Australia’s resource competitors would be the ultimate winners with the implementation of the new carbon tax.

“Australia’s natural resource endowment is impressive but certainly not unique. Gold, nickel, iron-ore, uranium, you name it, are all found in other countries. Any thought that these countries will follow suit by introducing a price on carbon is laughable,” said CEO Reg Howard-Smith.

He added that government should be doing everything it could to increase investment and protect its resources sector, in the face of global uncertainty.

“Instead, it commits to a carbon tax that our competitors don’t have to worry about.. It’s clear the Federal Government has no understanding of what is underpinning our economy.”

The Association of Mining and Exploration Companies (Amec) also lamented the fact that the federal government voted against an amendment to the Clean Energy reform plan, which would have seen regional mining and exploration companies exempt from changes to the diesel fuel rebate.

“Here was a golden opportunity to provide tax relief to many of the struggling smaller businesses in remote and regional Australia. The amendment would have returned the diesel fuel rebate that has been partially removed under the carbon tax legislation. This rebate has formed an important component of small business operations,” said Amec CEO Simon Bennison.

He added that many smaller operators that generate their own power due to their geographic isolation, including many of the smaller mining and exploration companies, would be financially disadvantaged by the legislation.

Employment would also be threatened by the government’s approach to tax reform, said Bennison, adding that jobs would be lost as a direct result of a carbon price.

“The government continues to increase Australia’s sovereign risk in the mining and exploration sectors. The design of the tax will seriously impact on the international competitiveness of mining and exploration companies and no doubt we will continue to see capital flow into Africa and South America instead of the exploration sector in Australia,” said Bennison.
 

Edited by: Mariaan Webb

 

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Martin Ferguson, Julia Gillard, Wayne Swan
 
Picture by: Reuters
Martin Ferguson, Julia Gillard, Wayne Swan