If one were to take the Coalition resolve at face value and an attempt at a repeal is made, Abbott is in for some reality checks, not least of which is the federal parliamentary process for a double dissolution.
To repeal the carbon tax the Coalition will have to win not one but two elections and therein lies Abbott’s double trouble. By most accounts, a double dissolution is unlikely before 2015, largely due to parliamentary checks and balances, and two years is a very long time in both politics and business.
While the households most likely to feel the pinch of the energy cost rise are likely to get used to the compensation regime, businesses would be well into emissions reduction plans that a repeal of the law would have severe negative consequences.
The premise of the Abbott promise is that no investment decisions would be made in the next few years that cannot be rolled back.
However, while industry is not supportive of the carbon pricing plan structure, there is broad consensus that some federal policy needs to be in place to tackle climate change.
While many in the industry did not choose to comment on Abbott’s promise, industry groups that would invest in carbon abatement were appalled. The chief executive officer of Investor Group for Climate Change – which represents a cluster of asset managers – Nathan Fabian said the policy “greatly undermines certainty for investors and business community that want this policy”
A recent survey by Australian National University’s Crawford School of Public Policy found an overwhelming majority of industry experts believe a carbon price is here to stay.
Unsurprisingly, the survey indicates pervasive uncertainty about the future of the carbon pricing scheme.
While 40% of the respondents to the survey said the tax in its present form could be repealed by 2016, 79% of the overall respondents expect there will be a carbon price in Australia in 2020.
The survey respondents also differed widely on what the price of carbon will be, with the expected range of $10-11 a tonne up to $22/t. This range is reflective of the extent of the policy uncertainty.
However, 69% of the respondents from large carbon emitters said they expected companies to have cut emissions in anticipation of a carbon price and 84% expected their companies to do so in the next three years.
It is precisely these kinds of investments that Abbott’s promise to cull the law takes away.
This article first appeared in ILN's sister publication MiningNews.net.