Australia unveils carbon tax

Australia unveils a new carbon tax that will force the country's 500 biggest polluters to pay for emissions.

Australia has unveiled a new carbon tax that will force its 500 biggest polluters to pay for emissions — the country's biggest economic reform in a generation.

Coal miners, steel makers, and electricity generators will be among the companies that have to pay about $24 Cdn for each tonne of carbon dioxide they emit.

Australian Prime Minister Julia Gillard says the carbon tax will cut Australia's emissions by 160 million tonnes within a decade. (Rob Griffith/Associated Press)
Prime Minister Julia Gillard says the carbon tax will cut Australia's emissions by 160 million tonnes within a decade — or the equivalent of taking 45 million cars off the road.

The government says the companies affected will innovate and change as they strive to reduce their emissions and cut their tax bills.

Gillard told a news conference in the capital, Canberra, that decisive action to address climate change is needed.

"As a nation we need to put a price on carbon and create a clean energy future," she said. 

Gillard sought to reassure wary Australians that the deeply unpopular carbon tax will only cause a minority of households to pay more and insisted it is critical to helping the country lower its massive carbon emissions. Australia is one of the world's worst greenhouse gas polluters, due to its heavy reliance on coal for electricity.

'It's socialism masquerading as environmentalism.'—Tony Abbott, opposition leader

"We generate more carbon pollution per head than any other country in the developed world," she said. "We've got a lot of work to do to hold our place in the race that the world is running."

The tax goes into effect July 1, 2012.

Critics believe the carbon scheme will damage the nation's economy and that Australian households will be unfairly burdened by higher costs passed onto them by the big polluters.

Conservative opposition leader Tony Abbott, an outspoken critic of the plan, insisted it will drive up the cost of living for millions of Australians and will do nothing to help the environment.

"It's socialism masquerading as environmentalism," Abbott said.

Steelmakers, coal mines and electricity generators will receive compensation to ensure they stay in business, while other tax cuts are meant to offset higher bills for millions of Australian taxpayers.

To help compensate for the higher bills, nine out of 10 households will receive some kind of assistance in the form of income tax cuts and payments. Two-thirds of all households will receive enough assistance to cover the entire financial impact of the tax, Gillard said.

As part of its reforms, the government is to set up an independent agency to promote renewable energy.

The carbon tax is the government's main tool in meeting its pledge to reduce Australia's greenhouse gas emissions by the year 2020 to at least 5 percent below 2000 levels.   

With files from The Associated Press