LOWER-INCOME households, pensioners, business and industry will receive more than $11 billion a year to compensate for increased costs caused by the emissions trading scheme.
Families and singles on high incomes, however, will be worse off under the scheme, which was locked in yesterday to begin on July 1, 2010 – only months before the next election is due.
Billed as the biggest economic upheaval since the 1980s deregulation of the economy, the scheme was tweaked to accommodate the demands of industry in lean economic times.
This angered the Greens and environmental groups, which say it will not cut emissions enough to save such icons as the Great Barrier Reef.
The Government aims to cut greenhouse gas emissions by 2020 by between 5 and 15 per cent. The final target, most likely to be 10 per cent, will be set in early 2010, by which time the intentions of other nations will be better known.
An anticipated reserve target of 25 per cent, to be put on the table in the unlikely event all the world’s big emitters agree to act together, was missing yesterday. However, Mr Rudd said he would seek a mandate at the next election to increase Australia’s 2050 reduction target from 60 per cent to 80 per cent as a show of goodwill.
The Prime Minister said yesterday’s targets were "appropriate and responsible" in this economic climate. "We are not going to make promises that cannot be delivered," he said. [These measures] "deliver the necessary reform to tackle the long-term challenge of climate change while supporting our economy and securing jobs in this global recession."
Mr Rudd was heckled by three environmental supporters as he unveiled the scheme at the National Press Club.
About 1000 of the nation’s biggest industries, responsible for 75 per cent of Australia’s non-farm emissions, will pay about $25 for each tonne of carbon they emit. The cost will be passed on to consumers, adding about $350 a year to the average household energy bill but as much as $1300 for some households.
In the first year, the sale of carbon permits will raise $11.5 billion, all of which will be returned as compensation and adjustment assistance.
Of this, about $4 billion will go to low- and middle-income households, pensioners, carers and veterans through increased pensions and family payments.
The compensation will cover all low-income households, of which about 90 per cent will be better off. Almost all middle income households will receive some assistance, while 60 per cent will be fully compensated.
A couple with two children, one aged under five and the other between six and 12, would be generously compensated up to income levels of $120,000. After that, they go backwards.
Petrol will increase by about 7c a litre but the excise will be cut by the same amount, meaning no net increase. This will cost $2.4 billion.
Compensation for heavy polluting industries with competitors in countries with no scheme was made more generous to include petrol refiners and the liquefied natural gas industry.
Of the $11.5 billion raised, $2.9 billion will be refunded as free permits. The heaviest polluters, such as cement and aluminium producers, will receive free permits for 90 per cent of their emissions, while lesser polluters, such as LNG and petrol refining, will receive permits for 60 per cent of emissions.
In addition, the dirtiest coal-fired power stations will receive $3.9 billion over five years to help keep prices down.
Another $2.15 billion over five years will help coalmining communities as well as small businesses and community organ-isations cope.
The Opposition Leader, Malcolm Turnbull, commissioned an independent economic analysis of the proposal. He said the Opposition would respond in February when the study was finished and when Parlia ment resumed.
With the Greens hostile, Labor will target the Coalition for the necessary Senate support.
A senior Government source said if the Opposition blocked the legislation in the Senate, Labor would fight a second successive election painting the Coalition as climate change sceptics.
Mr Rudd said: "It’s time for the real Malcolm Turnbull to stand up. Is it the Malcolm Turnbull who was supposed to be gung-ho about this 12 months ago, or is it the Malcolm Turnbull of today seeking short-term political advantage?" he said.