First to Impose and First to Remove: Australia Repeals Carbon Tax
Friday 18 July 2014 @ 10.53 a.m. | Legal Research | Taxation | Trade & Commerce
Yesterday, (17 July 2014) the upper house of the Federal Parliament, the Senate, passed the coalition government's Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 and so made Australia the first country ever to abolish a Carbon Pricing Scheme.
The numbers in the Senate which saw the controversial Carbon Tax repealed were reported as 39 to 32, a result made possible following the decision of members of the Palmer United Party (PUP) and various other independent senators (namely, Senators Muir, Leyonhjelm, Day and Madigan) to vote with the coalition government members to allow the repeal. Labor and the Greens voted against the repeal.
Details of Passage
After several rounds of negotiation with the PUP, the relevant Bills were reintroduced into the House of Representatives on Monday (14 July 2014). The reintroduced Bills incorporated amendments designed to meet the demands made by the PUP for its support in the Senate. The key PUP demand being amendments to impose a 250 percent penalty on power companies that do not pass on the savings the coalition government is claiming will flow from the repeal to consumers.
The Bill was passed quickly in the House of Representatives but debated at length in the Senate, being debated over two days (on 16 and 17 July 2014) before the final vote to repeal the carbon tax was taken. It is reported that the repeal Bills were not amended in the Senate.
The Aftermath
Some interesting political considerations arise from the repeal of the carbon tax.
First, is whether having achieved its key election promise, admittedly with more than a little help from the PUP, such an achievement will actually make the the coalition government more popular in the electorate. Michelle Grattan writing for The Conversation points out that while the coalition government is riding high right now on the back of the repeal, it may eventually be judged to have taken the wrong action in repealing the tax:
"In the years when public opinion (at home and abroad) moved back from its earlier belief in the priority and urgency of action on climate change, Abbott was in the mainstream of the retreat. But now there are indications the wind is changing again. Australian polls show more concern. There are new signs of international progress."
"But there might be complications for the government too. Peak business groups welcomed the repeal 'as the first step in moving towards an emissions reduction policy that works for the economy and the environment'. If international developments disadvantage high-polluting countries, business could over coming years want and need Australia to be as 'green' as other nations".
Thus if the world and public opinion move in the opposite direction to that which the repeal has taken Australia, the repeal could actually leave Australia out of step economically with countries who have an Emissions Trading Scheme (ETS) and who would then be penalising or imposing costs on countries who do not have the same ETS approach.
A second range of matters to consider are whether the actual savings promised from the repeal of the Carbon Tax materialise in a way that registers with the consumer. As Michelle Grattan further points out, in the short term the current government will be held to account for claiming the benefits of the repeal to families and putting a number on it (namely, around $500 over the coming year for the average household), a number that consumers will expect to see delivered. A number which already retailers, energy suppliers and local councils are reported to be retreating from.
The third consideration is what next after the repeal as there is still the large public expectation that something will replace the Carbon Tax and climate change will not be ignored entirely. While the current government has its "direct action" policy, it is still a long way from being a detailed and clear policy and even further from passing through the Senate into actual law.
What Next to deal with Climate Change
It will be interesting to see how "direct action" manifests as legislation and indeed, as was hinted at yesterday by the government not ruling out an ETS in future, whether direct action does not eventually morph into an ETS, in the face of world pressure and economies overseas that appear to be moving more in that direction, making it compelling for Australia to do so too.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
- Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 and explanatory materials as reported in the TimeBase LawOne Service.
- Abbott’s big victory on carbon tax has a tart taste (The Conversation - 17 July 2014)
- Abbott Axed The Tax, And With It What's Left Of His Credibility (New Matilda - 17 July 2014)
