Greg Combet says carbon price working but further tax cuts deferred

Federal Climate Change Minister Greg Combet held a press conference at lunchtime today to scotch rumours and misleading comments on the Government's carbon price package. Basically, due to changes in the forecast carbon price for two years hence, tax cuts worth about $1.59 per week associated with an increasing carbon price will also be deferred.

The Government's carbon price mechanism and clean technology fund and associated support packages are largely working to reduce Australian carbon emissions. In December 2012, just 5 months after the carbon price was introduced the reduction in electricity demand showed a clear trend, a trend for coal fired generation to continue to fall. In fact Gas fired power stations for NSW and Victoria have also been placed on hold.

In terms of compensation packages, the examples of the funding of solar PV energy panels to reduce electricity costs for the Adelaide Ice Services factory, or funding Biomass Renewable Electricity from Mackay Sugar cogeneration plant, show the industry support assistance is working to help businesses adapt.

Here is Greg Combet's press conference statement in full:

There’s some speculation in the media today and some misleading comments being made by the Coalition about the carbon price package in the Budget next week so I wish to address those issues this morning.

The first point that I’d like to make though is that the carbon price mechanism that the Government has implemented is working. It is doing what it was intended to do and that is to cut our greenhouse gas emissions. In fact, the data from the independent agencies demonstrates that emissions in the National Electricity Market fell by 7.7 per cent in the first nine months of carbon pricing. That’s a reduction of ten million tonnes of greenhouse gas emissions. We’ve also seen in the National Electricity Market since the carbon price came in that generation from renewable energy has increased, and been sold in the electricity grid, has increased by almost 30 per cent.

So the carbon price is working. It’s put a price tag on the pollution being emitted into the atmosphere from our economy and that is helping drive down our greenhouse gas emissions. The carbon price mechanism of course was implemented with a structure of a three year fixed price and then transitioning to a fully flexible emissions trading scheme from 1 July 2015. Under an emissions trading scheme it’s possible for us to place a cap on our greenhouse gas emissions and to achieve targeted cuts in greenhouse gas emissions regardless of the carbon price. And the price of course will be set by international markets from 1 July 2015.

In previous Budgets there has been a forecast for the carbon price in the financial year 2015-16 of $29 a tonne. This Budget will revise the carbon price forecast down. The international markets have severely impacted the carbon price internationally, in particular in the European market with which our emissions trading scheme will link, that is still two years away and there may well be further forecast revisions in that period of time but this Budget will revise the forecast down and the details of that will be contained in the Budget.

But I want to make absolutely clear what a lower carbon price in 2015-16 actually means. It means that it is a lower cost to our economy to cut our pollution. And a lower carbon price also means a lower cost to households and businesses to cut our pollution, and it means though that we will still achieve our targeted greenhouse gas emission cuts. Now because there will be no additional anticipated increase in costs to households in 2015-16 with a lower carbon price forecast, the Budget will defer an anticipated further round of additional related tax cuts. Those tax cuts, which of course are two years away, were to be in the order of $1.59 per week for most people earning up to $80,000 a year. I say they are deferred because when the carbon price rises again in the future, and there will be regular reviews as I said, those tax cuts will still be implemented at that point in time.

This is a sensible approach to this particular issue. The Clean Energy package that we introduced from 1 July last year was broadly Budget neutral and we will maintain that approach in this Budget as well, in light of the revised carbon price forecasts. All the details will be contained in the Budget but because of the speculation about this particular issue today we wanted to make this particular element clear.

Finally, it is just very important to recall that a very significant round of tax cuts, increases in Family Tax Benefits, increases in the pension and other measures was implemented on 1 July last year in association with the implementation of the carbon price. That package trebled the tax-free threshold from $6000 to $18,200 and delivered significant benefits, a tax cut of approximately or averaging $300 a year for most people earning up to $80,000 a year. It took one million people out of the tax net of the lowest paid people in this country. They no longer, that one million people, no longer need to submit tax return or pay tax. There were increases of course in the pension, increases in other Commonwealth payments and all of those measures implemented on 1 July last year will remain and they will be permanent and the particular payments that are relevant, such as the pension, will remain and will be indexed and will continue to be delivered.

I would emphasise that in two years time the anticipate change related only to a further small increase in the tax-free threshold from $18,200 a year to $19,400 a year, which meant on average about $1.59 per week for most people earning up to $80,000 a year.

Now the only threat to the Household Assistance – the tax cuts that have been delivered and to which Labor remains completely committed and the pension increases and increases in Family Tax Benefits delivered on 1 July last year – the only threat to those measures is Tony Abbott. The Coalition has explicitly made the point that they will reduce the tax-free threshold from $18,200 to $6,000 and bring one million of the lowest paid people back into the tax net. And they’ll attack the pension rises and the Family Tax Benefit improvements.

It is not good enough for Tony Abbott to go around, running around trying to terrify people by saying the carbon price will go up, up and up, when now he’s running around complaining that it will go down, down and down.

Now this is a sensible measure that I’m announcing today that will be contained in the Budget. One where households continue to have the important assistance that was provided to them from 1 July last year, where millions of people are better off, where one million people are taken out of the tax system altogether and we remain committed to that.

To a question from a journalist on 'Why should voters trust you on this?' Combet replied:

"Because we have made a very important reform here and it is working. And it’s very important that we make our contribution to tackling climate change internationally. We do so in a sensible way and we do it to the lowest cost to the economy. When Tony Abbott’s speaking about this issue just bear a couple of things in mind: firstly he’s going to take a million of the lowest paid people back into the tax system. That’s what he is proposing to do by cutting the tax-free threshold. He’s going to attack the level of their pensions and Family Tax Benefits. He’s also got a ridiculous policy that is no sensible alternative to tackling climate change and which will cost households big time. We’ve costed his policy and it’s going to cost households about $1300 a year in costs to implement his policy which is subsidies for polluters."

Export Coal is the elephant in the room

The area where this Government is failing is with adhering to the idea that emissions produced from export coal is not our problem. The Government has also failed to reign in fossil fuel subsidies, which are more than double the spend on Government schools

Coal mining and export is producing major social dislocation, health and environmental problems. While the carbon price package is reducing Australia's emissions by 5 per cent to 2020, early this year Tony Burke, the Environment Minister, approved fossil fuel projects increasing carbon emissions 8% per year.

Expansion of coal mining impacts agricultural land and natural forests and biodiversity. The transport of coal by train poses health issues for those along the routes to ports. Port expansion affects the health and environmental conditions for urban communities like Newcastle with minimal new jobs.

The major expansion to port facilities for coal and CSG along the Queensland coast endangers the world heritage listed Great Barrier Reef and the tourism industry that it supports. Greenpeace continue to campaign on this issue recently boarding a Korean coal bulk carrier to highlight the danger to the Reef and the global climate.

Clearly it is Time to cease expansion of coal to reduce climate change.