Introduction
The plan for a clean energy future
Expert climate scientists from around the world - including Australia's CSIRO and Bureau of Meteorology - warn that the earth is warming and that continuing high levels of carbon pollution risk environmental and economic damage. Australia's carbon pollution levels are very high for a country with a relatively low population. This is largely due to our heavy reliance on fossil fuels, which have underpinned Australia's energy and industrial sectors for the past century.
Climate scientists advise that the worst effects of climate change can largely be avoided if we reduce carbon pollution to acceptable levels. By taking appropriate action now, Australians can look forward to long term economic prosperity, while protecting our environment for ourselves and future generations.
In November 2011, the Australian Parliament passed legislation to deliver a comprehensive plan for Australia to move to a clean energy future. This plan will cut carbon pollution and drive investment in new clean energy sources, such as solar, gas and wind.
Central to the plan is pricing carbon pollution, which will commence from 1 July 2012.
The carbon price will transform our economy by decoupling economic growth from growth in pollution. This transformation will underpin Australia's future productivity and international competitiveness in the coming decades, as clean energy and low-pollution technologies will be key to a nation's competitive advantage.
The carbon pricing mechanism will apply directly to around 500 of Australia's largest polluters, representing around 60 per cent of Australia's total carbon pollution. This will create a powerful incentive for these businesses to find the cheapest and most effective way of reducing their carbon pollution.
This price signal will encourage businesses to reduce carbon pollution and to invest in energy efficiency and low pollution technologies. Households, industry, business and community organisations are being supported through the transition to a clean energy future.
Over 50 per cent of the carbon price revenue is being used to support households. In all, nine out of ten households will benefit from assistance through tax cuts, higher family payments, and increases in pensions and allowances.
The Government is ensuring those who need help the most, particularly low- and middle income households, receive appropriate assistance for the impact of the carbon price on their cost of living.
Businesses are also being supported to make the transition to a clean energy future, including though the Jobs and Competitiveness Program, Clean Technology Programs, the Steel Transformation Plan and measures to support energy efficiency. These programs will foster investment in capital, skills and innovation to improve competitiveness and support jobs in a low carbon economy.
The Government is continuing to invest in education, skills and training to ensure the workforce, and especially young people, have the skills they need to participate fully in a low pollution economy and support industry in the transition.
The Government is investing in clean energy technologies and projects to support the transformation of the energy sector. Unprecedented levels of support for innovation and investment in renewable energy are occurring through the Australian Renewable Energy Agency, and will occur through the $10 billion Clean Energy Finance Corporation. The Renewable Energy Target will continue to drive deployment of renewable energy to 2020 and beyond.
Improved land management practices can also help to reduce Australia's carbon pollution and protect the environment. The clean energy future plan therefore includes an integrated package which creates economic rewards for farmers who reduce or store carbon pollution on the land, protect biodiverse carbon stores and secure environmental outcomes from carbon farming.
Implementing the plan
Since the passage of the legislation, the Government has made significant progress in establishing the regulatory framework to underpin the carbon price and support its implementation.
A number of key milestones have already been achieved. In particular, the Clean Energy Regulator has been established to administer the carbon pricing mechanism and the Government has begun delivering assistance for key sectors of the economy.
Industry assistance, to help with the transition to a cleaner energy future, has begun rolling out, including to steel manufacturers and eligible coal-fired generators. The first round of support for innovation and investment in energy efficient equipment and low emissions technologies will flow to firms before the carbon price starts. The regulations for industry assistance programs which provide free permits are now in place, ready for the programs to open on 1 July this year. Key land measures such as the Carbon Farming Initiative and Biodiversity Fund have begun.
Assistance will start flowing to households from 16 May through June 2012. These Clean Energy Advance payments will be delivered to recipients of family payments, pensions and allowances, to allow them to prepare for the introduction of the carbon price. Through its package of energy efficiency programs, the Government is also helping households to save money on their energy bills.
From 1 July 2012, all taxpayers with incomes under $80,000 will receive at least $300 in tax cuts a year. Further tax cuts will follow in 2015-16. The tax cuts will be delivered through a major structural reform of the tax system, increasing the statutory tax-free threshold more than threefold in 2012‑13, from $6,000 to $18,200. Workers earning less than the new tax-free threshold will be able to keep all of their wages in their regular pay packets, instead of waiting to receive some of it at the end of the financial year, as happens now. This will increase the rewards from work and encourage workforce participation.
A carbon price is the lowest-cost and most economically-efficient way of reducing emissions of greenhouse gases. In November 2008 the Council of Australian Governments (COAG) agreed to a number of principles upon which climate change policies can be examined to ensure they are complementary to a carbon price. With the carbon pricing mechanism starting from 1 July 2012, the Government is now working with the States and Territories through the Select Council on Climate Change (SCCC) to examine the complementarity of existing climate change policies. In April 2012, COAG asked for urgent advice in advance of the next COAG meeting on how to fast track a rationalisation of programs that are not complementary to a carbon price or are ineffective. The SCCC will assist in providing this advice and a proposed process for an expedited review of the complementarity of climate change measures.
Budget measures
In addition to the measures announced as part of the Clean Energy Future plan, in the 2012‑13 Budget the Government is continuing its support for energy efficiency and adaptation, whilst acting responsibly within the tighter fiscal environment.
In the period of the forward estimates, the Government will provide:
- $37.1 million in funding to introduce a nationally-consistent legislative framework for Greenhouse and Energy Minimum Standards to regulate equipment energy efficiency. This framework will replace an inefficient patchwork of state and territory schemes and deliver on a 2007 election and a Council of Australian Governments' commitment;
- $2.8 million in additional funding for a range of building energy efficiency activities, including maintenance and improvement of current building regulatory schemes; and
- $3 million in additional funding in 2012‑13 to support the development of climate change adaptation policy and risk analysis.
Conclusion
The Government is fully committed to tackling climate change. The Clean Energy Future plan responds to the best advice available from respected scientists and economists and delivers a comprehensive set of measures that will drive the transformation of the Australian economy. This ministerial statement includes further details on the range of support included in the plan and provides an update on the implementation of the measures announced as part of the Government's Clean Energy Future plan.
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