Key business groups, the Business Council of Australia and Australian Industry Group, have made a last-minute plea to the government to amend its carbon price legislation ahead of its likely passage through the House of Representatives tomorrow.
With a second reading vote on the 18 pieces of carbon price legislation expected late this afternoon and a final vote tomorrow, the BCA and AI Group separately said today the initial starting price of $23 from July 1 next year needed to be reduced.
The Federal Government has previously rejected pleas by business groups for a lower starting price and is unlikely to change course now. After the legislation passes the House of Representatives, the legislation will go to the Senate where it is expected to pass with the assistance of the Greens next month.
BCA chief executive Jennifer Westacott said the legislation imposed a hard start on Australian industries that could not be offset by action to reduce emissions overseas.
The legislation needed to be amended to include specific safeguards so Australia acted in tandem with other major emitting nations over time and adjustments can be made to keep Australia competitive in case of economic shocks, she said.
“The legislation without the safeguards proposed by the Business Council of Australia is neither workable nor responsible and is a flawed approach to pricing greenhouse gas emissions," Ms Westacott said.
“The council’s analysis demonstrates the legislation is based on optimistic assumptions in the Treasury modelling that have not been stress tested and there is not the flexibility to adjust the approach to maintain competitiveness."
The BCA has proposed safeguards in the Bill including increased assistance to trade-exposed industries and a replacement of the 2050 emissions reduction target of 80 percent with a clause which states parliament must agree future targets subject to independent evaluation and community consultation.
AI Group chief executive Heather Ridout said the initial carbon price should be no higher than $10.
“In its present form, the Government’s legislation proposes the carbon tax will take effect from next July, when a price of $23 will be imposed per tonne of covered greenhouse gas emissions. This is prescribed to rise to $25.40 per tonne in 2014-15," she said.
“At these prices, Australian manufacturers are facing prices around 50% higher than those in the European Union for the same years. This will place Australian manufacturers at a competitive disadvantage even relative to their European counterparts."
Ms Ridout said together with the implicit carbon price already being paid by virtue of existing greenhouse gas policies both at the federal and state levels, the high fixed price on carbon would mean Australia would have a very high effective carbon price by this time next year.
The Australian Financial Review