The government has announced its “Clean Energy Future” package to commence from July 1, 2012.
Carbon price of $23 a tonne starting July 1, 2012, rising by 2.5% in 2013-14 and 2014-15
Floating price from July 1, 2015
Price floor of $15 a tonne (indexed), ceiling of $20 above the expected international price (indexed).
5% reduction by 2020 as default position, new target of 80% reduction by 2050
First 5 years’ caps announced in 2014 budget, extended every year by one year
Nine-member Climate Change Authority (headed by Bernie Fraser) to recommend caps and targets and advise on all aspects of the scheme
First report February 2014, then every two years. Government required to explain why if it does not adopt CCA targets.
Stationary energy, industrial processes, fugitive emissions, emissions from non-legacy waste
Agriculture not covered, light commercial and household transport not covered
Other transport to face reduced business fuel tax credits outside agriculture, aviation to face higher excise;
PC to review fuel excise arrangements regarding emissions intensity
International permit use not permitted until >2015; maximum of 50% of international permits can be used by an entity.
Expected economic impact:
0.7% CPI rise in 2012-13
GDP growth reduced by >0.1% pa
10% increase in electricity prices in 2012-13.
Pension to rise by 1.7%
Self-funded retirees to receive increase in Senior Supplement
Family Tax Benefit to rise by 1.7%.
Two-stage increase in the tax-free threshold from $6000 to $18,200 on July 1, 2012 and $19,400 in 2015-16 – tax cut of $300pa for incomes up to $68,000
Matching adjustment to tax rates to increase second tier (30%) to 32.5% and then to 33%; other tier rates to remain the same; no one to face a tax increase as a result of tax changes
One million people no longer have to lodge tax return.
$9.2 billion in compensation
Emissions intensive trade exposed industries
Under Jobs and to receive assistance on three tiers:
94.5% of free permits for industries with average baseline of a minimum 2,000t CO2-e/$m revenue or 6,000t CO2-e/$m value added
66% of free permits for industries with average baseline of a minimum 1,000t CO2-e/$m revenue or 3,000t CO2-e/$m value added
50% for LNG industry
Assistance to be scaled back 1.3% pa
Assistance to apply for at least six years
Productivity Commission to review assistance in 2014-15 (or earlier if there is evidence of windfall gains) with the goal of assistance being wound back in 2018 to levels proposed by Garnaut Review if PC agrees
Steel Transformation Plan: $300 million for “innovation” in steel manufacturing (in addition to EITE assistance plus an additional allocation of free permits)
Coal Sector Jobs Package: $1.26 billion over six years to assist with emissions from gassy mines
Clean Technology Program: $1.2 billion to support low-emissions manufacturing
Energy Security Fund: to pay for closure of up to 2000MW of highly-emissions intensive generation capacity by 2020, provide $5.5 billion in free permits and cash to the sector to 2016-17, establish an Energy Security Council
Clean Energy Finance Corporation: to invest $10 billion over five years from 2013-14 in renewables and low emissions technologies (not Carbon Capture and Storage), run by an independent board
Australian Renewable Energy Agency to oversee $3.2b in renewables funding, in addition to any dividends from Clean Energy Finance Corporation
Revenue: $7.7-$8.6 billion pa to 2014-15
Fuel tax savings: ~$600 million pa
Household assistance: $4.1-$4.8 billion pa
Industry compensation: $2.8-$3.3 billion pa
Total impact: Additional cost to the budget (beyond scheme revenue) of $3.96 billion over four years including this year — spending to be accommodated within goal of return to surplus and 2% real spending cap.