Senior Ministers Warn PM Gillard: Carbon Tax is Slow, Painful Death for Government

Senior ministers in the Gillard administration had warned on Monday that the carbon tax is killing the government. Their warning includes suggestions to change the sales pitch for the tax and to redesign the pricing.

Some ministers were pushing for the acceleration of plans to shift to a floating carbon price instead of a fixed one at $23 per tonne during the initial implementation.

Independent MP Rob Oakeshott wants the floor price scrapped because of its harm on Aussie businesses. He hinted that he may vote against plans to introduce a floor price to give Australian companies the flexibility to purchase cheaper carbon permits in other countries where there is a similar trading scheme.

The ruckus over the carbon tax has led to tensions in the cabinet, including accusations that Bill Shorten leaked details of the cabinet discussion on the tax in which some minister expressed apprehension over the impact of the tax on the government.

Mr Shorten has denied the charge and insisted that he supports Prime Minister Julia Gillard.

A powerbroker who supported Ms Gillard's battle for the Australia Labor Party leadership post a few weeks ago is now pushing for her and Treasurer Wayne Swan to quit and for Climate Change Minister Greg Combet to take over any of the two top posts. The powerbroker said Ms Gillard and Mr Swan could not box their way out of the mess they created through the carbon tax.

While Ms Gillard won the Feb. 27 leadership challenge with 71 votes versus challenger and former Prime Minister Kevin Rudd's 31, some of her support has likely collapsed, the powerbroker said.

Ms Gillard insisted that the approval of a regulation about a floor price will be a future legislative action. She said the government is holding consultations and it not rushing action on the price.

The renewed controversy over the carbon tax came the same day that the Clean Ehergy Regulator published on Monday the initial list of 250 Australian firms liable to pay the tax upon its introduction on July 1.

The list, which has companies and facilities that contribute over 95 per cent of carbon dioxide emissions covered by the carbon price mechanism, include large Australian firms such as ALCOA, BHP Billiton, Boral, La Trobe University, Brisbane City Council, BlueScope Steel, City of Armadale, Rio Tinto and Thales. Besides the 250 firms, another 80 were informed it would be included in the list, which will continually be updated.

Mr Combet said that the basis of the inclusion of the top 500 polluters is their greenhouse gas emissions reported by the companies over the last four to five years.