Rudd readjusts Labor's carbon tax policy for votes

Australian Prime Minister Kevin Rudd announced on Tuesday a shift from the current fixed carbon price to the emission trade scheme effective July 1, 2014, a year earlier than scheduled, in an attempt to shore up more votes for the Labor Parry through this key election topic. Under Rudd's plan, Australia will move from a fixed carbon price of 24.15 AU dollars (21.94 U.S. dollars) a ton to a floating price of about 6 AU dollars by July next year, easing cost pressure for Australian businesses and saving average Australian households by 380 AU dollars a year. However, to plug the budget hole of 3.8 billion left by the switch, Rudd has to cut a number of environmental programs, including the biodiversity fund and the carbon capture and storage program, among others. Rudd's policy shift was met with criticisms from some sectors. "You don't protect the environment by cutting environment programs," Greens leader Senator Christine Milne said. "Today's announcement is politically motivated and adds up to a 1 billion hit to the environment and the transition to clean energy." Milne said that Rudd's decision is to shore up support in marginal suburban electorates at the expense of rural and regional Australia. Carbon tax has been in the center of policy debate in Australian politics for the past three years. It is expected to be a major issue against Labor in this year's election scheduled on September 14. Former Prime Minister Julia Gillard had been haunted by her broken election promises of no carbon tax under her government. She introduced the carbon tax to please the Greens, a key player to bring Labor to power after a hung parliament following the 2010 election Australian Associated Press said in its report that the Greens' preferences will be crucial for Labor in key metropolitan seats and the Senate. The Coalition has long been opposing carbon tax and promised to scrap it if elected. For Rudd's decision, aiming to neutralize the issue, the Coalition argued that a "tax is a tax" and households and businesses will continue to be slugged, despite the move from a fixed to a floating carbon price linked to the European ETS. International carbon market linkages will also put the Australian economy at the whim of European bureaucrats, the Coalition said. "He (Rudd) hasn't told us that the Eurocrats are now looking at schemes to increase the European price of carbon to some 70 dollars a ton by 2020," Opposition leader Tony Abbott said when commenting on Rudd's decision. In reacting to Rudd's decision, the Australian Financial Review said: "It is a crucial swing in the politics of carbon that can turn the carbon tax -- and all the negatives it represented for Julia Gillard -- into a positive fighting weapon for Kevin Rudd against Tony Abbott." The newspaper also hailed the measures as "hard to disagree with as a package." The report said the new policy keeps all the measures in place, giving certainty to the renewable energy sector, hitting the coal sector hard, and appealing to environmental groups with the pragmatism of the policy mix. On the other hand, the measures could get rid of a lot of the excessive spending of the original carbon package and would please the business sector, which has always preferred an emission trading scheme over a fixed price.