News Wrap

IN THIS morning’s News Wrap: Stand-off with states over mining royalties; commodity surge helps bridge budget gap; and carbon price squeezes dirty emitters.

Lou Caruana

States in mining royalties stand-off

The Gillard government may have to legislate to protect its mining tax after Western Australia refused point blank to agree to a compromise that would stop federal revenue being gouged by state government royalty increases, according to the Australian Financial Review.

At a meeting of state and federal treasurers in Canberra yesterday, it was agreed to refer the problem with the minerals resource rent tax to Treasury officials for further discussion. But WA Treasurer Troy Buswell said the federal government was wasting its time.

Commodity surge helps bridge budget gap

Surging prices for Australia's most important export commodities will lift the economy from its doldrums in the new year, but will not be enough to rescue the government's budget surplus, according to The Australian.

Growing confidence in China's economy under its new leadership has boosted the iron ore price by more than 50% since its low point in September and coal prices are also recovering.

Carbon price squeezes dirty emitters

Australia’s three dirtiest coal power stations have made big cuts to their output – and greenhouse gas emissions – because of the carbon tax, rising retail power prices and a historic fall in demand for electricity, says the Australian Financial Review.

Energy consultancy Pitt & Sherry estimates carbon emissions have returned to their lowest level in recent years. The drop was largely driven by a “dramatic fall” in emissions from electricity generation.

Report author Hugh Saddler said it was clear that rapidly rising prices and the publicity around them were driving down demand.