Aussie Carbon Tax Praised by 4 Major Green Investment Groups

Despite the criticisms the Labor government received for the carbon tax, four major global green investment groups back it and predict it will provide economic benefits to Australia.

The four are the Investor Group on Climate Change, Institutional Investors Group on Climate Change, Investor Network on Climate Risk and the United Nations Environment Programme Finance Initiative. These four groups represent $20 trillion in green funds from 285 pension funds and other institutional investors.

"Investors believe that carbon pricing is the only real, long-term policy solution for Australia," The Sydney Morning Herald quoted Nathan Fabian, chief executive of the Investor Group on Climate Change.

The report, made by British investment expert Rory Sullivan, which was commissioned by the groups, said Australia has clear carbon reduction targets, transparent climate policy and the planned carbon trading scheme is linked to international markets.

But Sullivan warned of the political risk in the carbon tax because of the threat from Opposition Leader Tony Abbott to repeal it if the opposition wins.

On Wednesday, Abbott said a new government could remove the carbon tax without becoming liable for compensation claims by providing businesses a fair warning not to purchase forward permits. The permits have a 12-month life that lapse at the end of the financial year and could not be traded or transferred until 2015.

"International investors believe Australia's policy framework is one of the best in the world for investment certainty. Experience shows that when good policies are rolled back, confidence of investors is undermined for several years," Mr Fabian warned.

To counter Abbott's threat, Prime Minister Julia Gillard cited a National Centre for Social and Economic Modelling study that showed the tax cuts and compensation scheme that would accompany the carbon tax when combined with easing of cost-of-living pressures, would benefit the average Australian household by $2.40 a week.

Gillard added the amount is 12 times higher than the Treasury's initial projection of 20 cents a week.

"I think these figures today are further evidence that Mr Abbott's fear campaign is without foundation, that many Australian families... who earn less than $80,000 a year... can look forward to tax cuts, increased pensions and increased family payments," News.com.au quoted Gillard.

However, the opposition leader in the Senate, Eric Abetz questioned the two figures.

"Both of the modeling sets can't be right, and I think that puts a question mark over all of the modeling.... A few dollars thrown at them by way of compensation may take off pressures on household and living expenses, but it will not substitute for a job," Abetz said.