Oz Carbonized

By Global Tax Weekly

By the time you read this, the farcical saga of Australia’s carbon legislation may have reached the end of its beginning, to use Winston Churchill’s words, but it probably won’t have reached the beginning of its end. The new Senate will have been installed on July 1st, and after no doubt a considerable amount of ritual grandstanding (all legislatures do it) may have gotten to vote on the repeal of the carbon tax installed by the outgoing Labour government. But if it does so, the minority parties will have extracted a high price by forcing the Government to retain its Renewable Energy Target, and the Clean Energy Finance Corporation which has supported renewable energy projects. They are also going to try to compel the Government to enshrine a carbon pricing scheme in law, although the price would be set at zero until the country’s “main trading partners introduce similar systems.” Taking into account the effective collapse of the European Union’s emissions trading scheme, the US Republicans’ outright refusal to contemplate any such scheme, and the deferral for two years of South Africa’s carbon tax, the Abbott Government may feel that carbon pricing legislation is a risk it can afford to take, and that the law may sit on the shelf at least until the next election. If on the other hand the Government refuses to pay the price demanded by the Opposition parties, and the Senate rejects the repeal legislation for a second time, there will be a “double dissolution” and Abbott will have taken a massive political gamble. Playing poker for such high stakes is no way to run a country – but that’s not Abbott’s fault, it’s just how the constitution works, or rather doesn’t.

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