Report: Repeal of Carbon Tax Would Take About 2 Years

In spite of the promise of Opposition leader Tony Abbott to repeal the carbon tax if he wins the election and becomes prime minister, the repeal would take a minimum of two years, according to a report by Deutsche Bank released on Tuesday.

The report said the earliest that a new government could repeal the controversial measure would be April 2014 or almost two years after the Gillard government starts to collect the carbon tax this July.

"Each step in the constitutional process takes time, and in practice, it could take eight to 14 months for the repeal bills to pass, with risks of further delay at each stage of that process," The Sydney Morning Herald quoted the report of Deutsche Bank research analyst Tim Jordan.

Mr Jordan pointed out that another factor that could delay the repeal of the carbon tax is that while the Coalition may win the next election, it is not sure if the Opposition could gain control of the upper house. This would leave Mr Abbott the choice of initiating a double dissolution or fresh election for all seats of Parliament. His next option, if the double dissolution method would fail, is to seek a joint sitting to pass a law that would repeal the carbon tax.

That second option is premised on Mr Abbott's group having majority of seats in the two houses combined.

Mr Jordan pointed out that if Australia's next parliament would abandon the market mechanism which would reduce greenhouse gas emissions, it would only provide temporary relief for large emitters.

"The carbon price is likely to have a modest impact on most listed emitters: most high-carbon firms in trade-exposed sectors will receive free units (and in the case of steel makers, cash grants) to offset the impact; resources companies face a small impact relative to earnings; airlines will pass on the cost in ticket prices; and utilities are likely to recover most of their additional costs through higher electricity prices," Mr Jordan pointed out.

Mark Butler, Minister for Mental Health and Ageing, supported Mr Jordan's report that Mr Abbott's promise to repeal the carbon tax would be difficult to keep. He cited as an example previous campaigns to rollback the general sales taxes - which he considered the mother of all rollback campaigns - but the efforts failed.

Other senior ministers warned on Monday that the carbon tax is killing the Gillard government and pushed to speed up plans to shift to a floating carbon price instead of the fixed $23 per tonne price during the initial months of implementation.