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May 5, 2009

THE Federal Government’s emissions trading scheme was clinging to life last night after a series of changes designed to win the support of the Senate failed to shift sentiment.

In the biggest policy reversal of his prime ministership, aimed at wooing big business and the Liberal Party, Kevin Rudd announced the scheme would be delayed by one year to July 1, 2011, beyond the next election.

Compensation for the nation’s heaviest polluters would be more generous and the price of a tonne of carbon for the first year would be fixed at a low $10, reducing by half the original projected impact on energy bills.

As a sop to environmentalists, there was a heavily conditional commitment to increase from 15 per cent to 25 per cent the maximum amount by which greenhouse gases would be reduced by 2020.

“I am in the practical business of responding to realistic challenges,” Mr Rudd said of his reversal, which, he said, would mean “a slower start” but a “stronger, greener conclusion”.

After warning repeatedly that any delay would be reckless and costly, Mr Rudd said the changes were driven by the pressures on business caused by the recession.

Also, with the original plan headed for certain defeat in the Senate, the Government needed bargaining power in the form of a regulated scheme to persuade other nations to take action at a climate summit in Copenhagen at the end of the year.

Despite the delay, business still wanted a legislated scheme in place so it could start making long-term investment decisions.

Mr Rudd said the changes were similar to those being called for by Malcolm Turnbull and he demanded the Liberals support the legislation to be introduced to Parliament this month.

“It’s time to get off the fence, Mr Turnbull, and it’s time to act in the national interest and to secure this legislation and certainty for the future,” he said.

Rejecting the legislation twice would give the Government the trigger for a double dissolution election this year. But the Opposition Leader said the changes were “tinkering” and “no, we wouldn’t support it”.

But he left open the possibility of compromise. He said there was no need to pass the legislation this year because of the delay and there needed to be more analysis.

“Why not give ourselves more time to get it right?” he said.

Mr Turnbull faces internal pressures. The Coalition is split on the veracity of climate change and how to tackle it. The Nationals leader, Warren Truss, said the changes were “not enough to rescue this dog of a scheme”.

A Newspoll published today shows that Mr Turnbull has failed to improve his standing against Mr Rudd as preferred prime minister despite a drop in support for the Government. Labor’s two-party vote has fallen three percentage points to lead the Coalition by 55-45.

The changes were negotiated by the Climate Change Minister, Penny Wong, in consultation with the leading business and industry groups – the Chamber of Commerce, the Australian Industry Group and the Business Council. All made statements supporting the changed scheme and urging the Coalition to pass the legislation this year to provide investment certainty.

The independent senator Nick Xenophon said he would vote against the amended scheme while the Greens hardened their opposition because the changes made the scheme weaker.

As well as the one-year delay, the changes included extending from 90 per cent to 95 per cent the number of free permits for the heaviest polluters whose overseas competitors were not subject to an emissions scheme.

There is a $200 million fund to help trade-exposed industries not eligible for free permits to implement energy savings.

The original scheme promised to cut emissions by between 5 per cent and 15 per cent, the final level to be set after Copenhagen.

Mr Rudd offered yesterday to extend the 2020 target to 25 per cent but only if the world as a whole agreed to do the same.

Phillip Coorey is the Herald ‘s Chief Political Correspondent.

http://www.smh.com.au/environment/global-warming/carbon-bill-burns-as-rudd-fiddles-20090504-asme.html?page=fullpage#contentSwap1

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