Australian Prime Minister Kevin Rudd said on Tuesday he will transform a deeply unpopular carbon tax a year ahead of schedule, in a bid to cut costs to households as a national election looms.
The fixed-price carbon tax on Australia’s worst industrial polluters, which went into effect in July last year, was supposed to remain in place until 2015. At that point, it was set to be replaced by an emissions trading scheme, in which the cost of producing a ton of carbon would be determined by free market forces.
Rudd is advancing that timeline by a year, with the emissions trading scheme now beginning on July 1, next year. The move to a floating price will reduce the cost of carbon from a predicted $A25.40 (US$22.40) per metric ton in July next year to an estimated A$6 per metric ton, Rudd said.
“This is the fiscally responsible thing to do,” Rudd told reporters in the northern city of Townsville. “The nation’s 370 biggest polluters will continue to pay for their carbon pollution, but the cost will be reduced, meaning less pressure on consumers.”
The move is expected to save Australian households an average of A$380 a year, Rudd said. It would largely be in the form of lower energy bills.
The government will make up for the predicted US$3.8 billion shortfall in the federal budget with cuts to other programmes, including scaling back funding for some environmental programmes.