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Canberra urged to cut back relief for carbon tax

CONSERVATIONISTS have proposed the federal government fill a looming $3 billion a year hole in its carbon tax revenue by cutting back assistance to some industries.

Big business has warned the government could face the revenue shortfall when the carbon tax floats in 2015 because of the gap between the predicted international carbon price and the price upon which its generous, and locked-in, household assistance package has been calculated.

By 2015, when the carbon tax shifts to a floating market-based price, it will have risen to $25.40, but forecasters predict the international price will be even lower than the Australian ''floor'' price, meaning the $15 a tonne floor price is likely to apply to Australian companies.

The Australian Conservation Foundation spokesman Tony Mohr said the government could easily fill any gap and keep its promise that the carbon package would be broadly revenue neutral by cutting back on assistance to industries that were doing well.

"By 2015 emissions-intensive industries will be receiving $3.3 billion dollars in free permits. Given the boom in mining and extractive industries such as coal and gas, this level of assistance should be revised down to ensure that some of the wealthiest companies in Australia are pulling their weight," he said.

The suggestion will outrage the coal industry, which believes it has been short-changed in comparison with other trade-exposed industries with its proposed $1.3 billion carbon tax assistance package.


The low global price is primarily driven by low prices on the European carbon market - driven down by economic turmoil in the European Union.

The Greens deputy leader, Senator Christine Milne, said the low price in Europe was ''in reality … irrelevant'' for Australia.

''Firstly, the Australian scheme is designed to face our markets in Asia and we have already built in industry assistance that takes that into account. Secondly, European governments are preparing plans to bolster their price and we have every expectation that, by 2015, a recovery will be under way,'' she said.

But groups like the Business Council of Australia and the Australian Industry Group have expressed concern that it will be increasingly difficult for the government to make sure the revenue from carbon permits matches the costs of its promised compensation.