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Australia approves carbon emissions tax

By Matthew Knight, CNN
updated 8:42 AM EST, Tue November 8, 2011
A hot air balloon stands in front of Parliament House in Australia's capital, Canberra during a pro-carbon tax rally in October.
A hot air balloon stands in front of Parliament House in Australia's capital, Canberra during a pro-carbon tax rally in October.
STORY HIGHLIGHTS
  • Bill to introduce carbon tax on country's biggest polluters passed by Australian Senate
  • Carbon price fixed at AUS$23 from July 1 2012 before moving to flexible pricing in 2015
  • Prime Minsiter Julia Gillard decribes vote as "history making"
  • Opposition leader Tony Abbot says tax will threaten jobs and raise taxes

(CNN) -- Australia has passed a controversial new law which will see the country's 500 most-polluting companies pay tax on their carbon emissions.

The Clean Energy Act was passed by 36 votes to 32 in the Australian Senate on Tuesday and will come into force on July 1 next year.

The legislation sees carbon taxed at a fixed price of 23 Australian dollars ($23.7) per ton for three years before moving to flexible pricing in 2015.

In a statement on the prime minister's official website, Julia Gillard described the vote as "history-making" and "a major milestone in Australia's efforts to cut carbon pollution and seize the economic and job opportunities of the future."

The legislation, which passed through Australia's House of Representatives by 74 votes to 72 in October, will deliver cuts in carbon pollution of at least 160 million tons a year in 2020, according to Gillard's website.

Nine out of 10 households will receive compensation to offset the expected rises in energy bills caused by the legislation, say the government.

This will take the form of a mixture of tax cuts and extra family benefits funded in part by the revenues the government collects from the businesses affected.

Australia's carbon tax bill passes

But opposition leader Tony Abbot, a staunch opponent of the legislation, called it "a betrayal of the Australian people" adding that three million Australian households will be worse off because of the tax.

"The longer this tax is in place, the worse the consequences for the economy, jobs and families. It will drive up the cost of living, threaten jobs and do nothing for the environment," Abbot, leader of the Liberal party in Australia said in a statement on his website.

Abbot also pledged to repeal the tax should he win the next general election scheduled to take place in 2013.

International mining group Rio Tinto, one of the companies which will be affected by the new law, believes it will hinder the country's competitiveness abroad.

"Australia's minerals sector now faces significant additional costs not faced by competitors. This will inevitably reduce potential investment and jobs growth in Australia, without reducing global emissions," David Peever, managing director of Rio Tinto Australia said in a statement earlier this year.

But the Australian Greens, whose support ensured Gillard's minority government won the vote, said the new law promised a greener future.

"Voting for a price on pollution is a vote for our ability to make a difference to climate change and provide a healthy, safe future for our kids and grandkids," Penny Wright, Australian Greens' Senator for South Australia, said in a statement.

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