Business leaders in Australia are seeking a drastic cut in the carbon tax to just $10 from the $23 per tonne scheduled to be collected beginning July 1, 2012. Their $10 proposal is close to the carbon price in the European Union.
A new study suggests of earth’s mercury further rising by four degrees at the turn of the current, which according to the World Bank would lead to catastrophic events mostly affecting low-lying countries and their poverty-stricken inhabitants.
Heather Ridout, outgoing head of the Australian Industry Group, pointed out that the $13 price difference is equivalent to a tax on industry and negatively impacts the global competitiveness of Australian firms.
At $23, the Australian tax is apparently the highest in the world, while the lowest is India at $1 per tonne.
The call for a $13 reduction was backed by Jennifer Westacott, chief executive of the Business Council of Australia.
"It is clear there is a substantial gap between the international permit price and the starting price in our fixed-price period, and this is a concern for the competitiveness of Australia's industries and the impact this might have on our economy," The Australian quoted Ms Westacott.
Economists Judith Sloan and Warwick McKibbin made similar calls this week.
However, despite their calls, Treasurer Wayne Swan rejected the proposal to reopen the carbon package.
As a run-up to the carbon tax collection, Prime Minister Julia Gillard, together with New South Wales Premier Barry O'Farrell, announced the opening of the Clean Energy Finance Corporation headquarters in Sydney. Ms Gillard said the government selected Sydney as the site of the agency due to the city's financial and professional networks.
Mr O'Farrell's presence was seen as a political coup since the Opposition has been pushing for the scrapping of the carbon tax and the corporation.
Ms Westacott cited a Deloitte Consulting study that at a $15 permit price from 2015, the payouts to Australians that would cost $3 billion a year could make the projected $9.6 billion cumulative surplus from 2015 to 2019 into a $9 billion cumulative deficit.
Ms Ridout added that once the government starts paying the compensation promised to citizens, it would be harder for the government to make the budgeting of its carbon scheme add up.
Tim Jordan, a Deutsche Bank analyst, warned that the international carbon price would likely remain volatile for a long period because it is tracking below the Treasury modeling estimates and Europe's weak economic conditions place downward pressures on the region's carbon price.
"I think it will take the best part of a decade for a uniform global carbon price to emerge. In the meantime, countries with different targets and different policies will join the global market, and that means that Australian firms could face a volatile carbon price," The Sydney Morning Herald quoted Mr Jordan.
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