The Australian Government is committed to repealing the carbon tax as soon as possible. It has announced plans to repeal the Clean Energy Act 2011 and associated legislation (Carbon Acts) with effect from 1 July 2014.
The impact, if passed, would be that the obligations of liable entities' to pay a price for carbon emissions will cease with effect from 1 July 2014. In broad terms, removal of the carbon price will result in a reduction in the cost of carbon intensive goods and services.
UN climate chief Ms Figueres has criticised the Australian Government's so-called Direct Action policy on climate change, saying it may prove more expensive than a carbon price. "What the new Government in Australia has not done is it has not stepped away from its international commitment on climate change, so what they're struggling with now is not what are they going to do but how are they going to get there. They're going to have to pay a very high political price and a very high financial price," she said.
The new plan suggests that:
• 2013-14 will be the last financial year that the carbon tax will apply.
• The Government will not extend the carbon tax beyond 2013-14, even if the Parliament does not pass the carbon tax repeal bills until after 1 July 2014.
• Liable businesses and other entities must pay all carbon tax liabilities incurred up to 30 June 2014 under the carbon pricing mechanism, the fuel tax credits system, excise or excise-equivalent customs duties, or synthetic greenhouse gas levies.
• Liable businesses and other entities must pay their final carbon tax compliance obligations at the next payment time under the current legislated arrangements.
• Industry assistance provided under the Jobs & Competitiveness Program (JCP) and the Energy Security Fund will continue in 2013-14 for the purpose of meeting carbon tax liabilities.
• The Australian Competition & Consumer Commission (ACCC) will have new powers to monitor prices andtake action against businesses that attempt to exploit other businesses and consumers by charging unreasonably high prices or making false or misleading claims about the effect of the carbon tax repeal on prices.
• Businesses with a carbon tax liability are obliged to comply with current carbon tax compliance and reporting arrangements.
• The Climate Change Authority will be abolished.
The Government will introduce the carbon tax repeal bills as the first item of legislative business for the 44th Parliament. The Australian Government has released exposure drafts of legislation to repeal the carbon tax.The Department of the Environment, with the Treasury, will consult to: identify any technical issues with the draft carbon tax repeal bills; and identify transitional issues for liable businesses and other entities.
The Government has proposed "The Emissions Reduction Fund" (the Fund) as the centrepiece of the Australian Government’s Direct Action Plan. The Fund will work together with other incentives under the Direct Action Plan and the Renewable Energy Target to help meet Australia’s target of reducing emissions by 5 per cent below 2000 levels by 2020. Through the Fund, the Government will purchase low-cost abatement through reverse auctions - an 'abatement buy-back'.
The Fund will provide incentives for abatement activities across the Australian economy and work in conjunction with the Carbon Farming Initiative. The Fund will have an initial allocation of $300 million, $500 million and $750 million over the forward estimates period. Community input will be invited on potential sources of low-cost abatement and on key design features such as auctions, baselines and contract arrangements.