Abbott may face $4bn bill and legal confusion if carbon tax repeal is stalled

http://www.theguardian.com/world/2013/oct/16/abbott-repeal-carbon-tax-stalled

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The Abbott government could face a $4bn cost and corporate confusion if the new Senate — where Clive Palmer’s senators hold crucial balance of power votes — does not rapidly pass the bills repealing Labor’s carbon pricing scheme as soon as it sits next July.

Palmer said on Wednesday he would not be revealing his stance on the repeal for some time, and repeated his demand that the Coalition refund businesses for the carbon tax they have already paid — something the new prime minister has already said will not be possible.

Palmer, who is disputing a $6.2m carbon tax bill for his Queensland Nickel mine, insisted the fact that his senators would vote on legislation directly affecting his business interests presented no conflict of interest.

“Conflict of interest is about personal interest, my interest … it is not about parties having conflict of interest, that is a lot of bullshit, it is a beat up of the press … It’s just a load of rubbish, it’s a beat up by you guys because you haven’t got a lot of news,” he said.

With Labor insisting it will not vote to dismantle its own carbon policy, and the Greens implacably opposed to the idea, the government is banking on either forcing the Labor party to buckle or persuading the new Senate to quickly pass the repeal so the carbon tax can end on 1 July 2014.

The Palmer United party’s policy is to repeal the tax, but as he announced that former rugby league player Glenn (“the brick with eyes”) Lazarus would be his team’s Senate leader, Palmer refused to say whether his senators would vote that way and indicated that he would keep the government guessing for some time.

“We don’t know what the bills say,” Palmer said, despite the eight pieces of legislation having been released on Tuesday.

“We won’t release our policy until we see what the bills say … we don’t want to undermine the current Senate.

“We are not the government. The principle is that Tony Abbott is saying this is a bad tax and we should never have had it … and people should not have paid it.”

Lazarus said he had also not looked at the bills because he didn’t start his new job until next year and was currently “dedicating my time to my wife and family”.

Explanatory documents released with a package of eight draft bills designed to demolish Labor’s carbon pricing scheme state: “The government will not extend the carbon tax beyond 2013-14, even if the parliament does not pass the carbon tax repeal bills until after 1 July 2014.”

But leading lawyers and business groups are concerned that if the new Senate does not pass the repeal, their liabilities will continue and they will be forced to continue to pass the price through to their customers. And without a repeal the government will still have to pay compensation to trade-exposed business and free permits to electricity generators.

Between July and October 2014 liable companies can apply for $3bn worth of compensation and on 1 September electricity generators would get $1bn in free permits.

“The meter starts running on the Commonwealth’s exposure on 1 July 2014 and there is potentially a $4bn barrel over which Clive Palmer’s party and other crossbenches can hold the government, in order to extract their own particular interests or concessions,” said the chief executive of the Climate Institute, John Connor.

A spokeswoman for the environment minister, Greg Hunt, said that if the government found itself in the position of not having legislative backing by July 2014 for the carbon tax’s designated end date, it could refund companies for permits they were forced to buy.

“The draft bills stop the requirement for a [carbon permit] auction to happen as soon as the bills take legal effect. Businesses aren’t required to purchase via the auction. However if they did occur, the Clean Energy Regulator would refund any payments made and cancel the units — a very straight forward process,” she said.

Labor’s acting climate change spokesman, Mark Butler, has indicated the ALP would negotiate over ending the fixed carbon price, or “tax”, or reducing its rate, but has said Labor will not vote for a repeal or to dismantle the architecture of an emissions trading scheme.

"The problem with this legislation as it stands is that it puts absolutely nothing credible in place of the carbon tax. Come to the table and seriously discuss an emissions trading scheme," he said.

On Tuesday, Abbott said he could not agree to Palmer’s demand that companies be refunded carbon tax already paid.

“For reasons of technical efficacy, for reasons of making a clean break with this toxic tax it makes abundant sense to abolish the carbon tax at the end of the current financial year and obviously people will be liable for their carbon tax obligations up until that time … Obviously people do need to honour their obligations under tax law and that is true under existing carbon tax law just as it is true under any other law of the Commonwealth,” he said.

Elisa de Wit, partner at legal firm Norton Rose Fulbright specialising in climate law, said until the repeal passed parliament, companies would still be liable and she would be advising clients to continue to pass the tax through to their customers.

“This legislation does not deal with the scenario that the repeal is not passed by the abolition date,” de Wit said.

“If that happens companies will still be liable and as a lawyer I would be advising my clients that they still need to comply with the existing laws because they would not know if the repeal was going to be passed, or when, or in what form.

“It would be prudent for them to continue to pass the price through to their customers, but once the repeal goes through those customers may want a refund … that is going to get very complicated.”

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