Australia becomes first developed nation to repeal carbon tax

July 17, 2014

On a 39-32 vote on July 16, Australia’s Senate repealed that nation’s carbon tax, leaving it as the world’s first developed nation to do away with carbon laws that put a price on greenhouse gas emissions.

The carbon tax has been a hot-button issue in Australia since it was first introduced by then Prime Minister Kevin Rudd in 2007 and led, in part, the fall from power of three Australian leaders since 2007.

Australia, the world's 12th largest economy, is one of the world's largest per capita greenhouse gas emitters due to its reliance on coal-burning power stations to power homes and industry. In 2011, daily emissions per head amounted to 49.3 kg (108 lbs), almost four times higher than the global average of 12.8 kg, and slightly ahead of the U.S. figure of 48.2 kg, The Wall Street Journal reported. 

When the carbon tax was introduced it was with the promise of slashing emissions by 160 Mt by 2020 and billions of dollars in compensation through tax breaks and welfare payments. However, But after the global financial crisis took hold in 2008, followed by the end of a decade-long mining boom in 2012 that slowed growth and employment in the Australian economy. Australian voters turned against climate laws blaming them for rising energy bills and living costs.

Prime Minister Tony Abbott, who made a pre-election "pledge in blood" to voters and business to prioritize growth above climate shift, delivered on his promise after independent senators with deciding votes in the upper house sided with his conservatives, following a power shift this month that ended years of domination by the pro-environment Greens party.

"Today the tax that you voted to get rid of is finally gone, a useless destructive tax which damaged jobs, which hurt families' cost of living and which didn't actually help the environment is finally gone," Abbott said in a news conference after the Senate's decision.

He said the carbon price was acting as a A$9 billion a year handbrake on the economy, which was adjusting to the end of a record mining investment boom that helped shield Australia through much of the recent global economic downturn.

Without matching emissions policies in other industrialized countries, Abbott has said earlier the tax was an unfair shackle on local companies and individuals, unequaled except in Europe, where an emissions market has operated since 2005.

Labor and Green opponents of the government said the repeal would make the country an international "pariah" on efforts to combat climate change.

The carbon tax has affected industries ranging from mining and energy to aviation, and was widely opposed by manufacturers and a majority of business representative groups including the country's main chamber of commerce.

Abbott has promised repeal will save voters and business around A$9 billion a year, although his government also risks a political backlash, having promised yearly savings to households of more than A$500, which economists and market analysts believe unlikely due to rising energy bills.
 

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