PM defends backflip as carbon tax fight turns to petrol By Sid Maher and Dennis Shanahan

PM's climate change

Peter van Onselen on why Julia Gillard had no other option than a carbon tax backflip

 THE Greens have pushed petrol to the front line in the war over a carbon tax, insisting prices should rise at the bowser as part of the plan to combat pollution.

 As alarm grew within Labor ranks about the backlash against Julia Gillard for breaking her election promise not to introduce a carbon tax, Greens deputy leader Christine Milne turned petrol into a flashpoint for Labor by insisting the transport sector should be included in any carbon pricing regime. 

 Including transport in the carbon tax regime, which is due to start on July 1 next year, is expected to raise petrol prices at a time when rising oil prices -- sparked by the instability in the Middle East -- are already driving prices higher and adding to cost of living concerns.

 Tony Abbott said the carbon tax meant people would pay $300 more a year on their electricity bills and 6.5c a litre extra for petrol, which would add about $3 to the cost of a tank of petrol.

 NSW Opposition Leader Barry O'Farrell also moved to capitalise on the carbon pricing decision while campaigning in Penrith in western Sydney yesterday. He called on voters to make the March 26 state election a referendum on the issue and vowed to travel to Canberra to lodge a protest against the carbon tax if he won.

 The federal Opposition Leader yesterday seized on the carbon pricing decision to draw attention away from internal divisions in the Liberal Party, accusing the Prime Minister of lying over her decision to reverse an election pledge not to introduce a carbon tax.

 Mr Abbott's climate action spokesman, Greg Hunt, also rallied business, recruiting former Caltex chairman Dick Warburton and former Visy chief executive John White to a business roundtable to advise the opposition on its direct action policy.

 Mr Warburton told The Weekend Australian he had joined Mr Hunt's roundtable because the debate on a carbon price was one-sided. "The panel that the Prime Minister had set up just takes one point of view and that annoys the hell out of me," he said.

 Hitting the airwaves to sell the carbon decision, Ms Gillard dismissed as "semantics" suggestions she had broken an election-eve promise ruling out a carbon tax.

 But Mr Abbott branded her a liar, saying she had no mandate for her three- to five-year carbon tax that would morph into an emissions trading scheme. "I think if the Prime Minister wants to make a, politically speaking, honest women of herself, she needs to seek a mandate for a carbon tax," he said.

 As Ms Gillard tried to take control of the debate, Senator Milne said the climate change committee behind the carbon plan had been the Greens idea and the party had ownership of the scheme "because it's the one we put on the table ourselves".

 She said while negotiations on the details of the carbon price package had yet to begin, the point of putting a price signal on carbon into the economy was to "drive changes in behaviour".

 "That is why we think transport should be in, and we think the price signal in transport should start to drive that transformation," she said, adding that funds from the carbon tax could be used to improve public transport in Sydney and Melbourne, the fast train proposed for the eastern states and electric cars.

 But new figures released by the Department of Climate Change yesterday showed Australia's biggest energy companies would be put out of business if they had to pay the world price for carbon emissions under a carbon tax without compensation.

 The giant NSW power company Macquarie Generation, Australia's biggest emitter, would face a bill of $613 million if it had to pay the $26 a tonne the Rudd government's emissions trading scheme was based on. The tax bill would be more than three times the company's latest profit of $196m, while the second ranked Delta Electricity would face a bill of $538m or almost 10 times its last full-year profit.

 Compensation for the most energy-intensive companies will be one of the most contentious issues in the negotiations with the Greens.

 Ms Gillard was forced to defend her decision to proceed with a carbon price after her election-eve declaration: "I rule out a carbon tax."

 Ms Gillard said she'd consistently argued during the election campaign that a price on carbon was needed to tackle climate change.

 Mr Abbott also faced accusations of a backflip. Speaking in 2009, Mr Abbott said: "If you want to put a price on carbon why not just do it with a simple tax?"

 Last night he defended his post-election position saying: "I never went to the election ruling out a tax beforehand and embracing the same tax afterwards."

©theaustralian.com.au