Swan warns of carbon price over-reaction

Written By Unknown on Jumat, 19 April 2013 | 11.25

FEDERAL Treasurer Wayne Swan has cautioned against making too much of a plummeting carbon price in Europe, saying a floating market for Australia is still two years away.

Treasury is forecasting a carbon price of $29 a tonne in 2015 when the local carbon pricing mechanism is linked to Europe's emissions trading scheme.

This week the European price dived below $4 a tonne.

Mr Swan insists Australia's carbon tax of $23 a tonne, introduced on July 1 last year, is a realistic price to set.

"I just would urge you not to get too taken by a particular price at a particular time around a particular event in Europe," he told Sky News from Washington on Friday, noting the price was close to 30 euros (about $A38) two years ago.

The big difference between the Australian forecast and the latest European carbon price could cost the federal budget up to $7 billion, some experts predict.

That's because the government has committed to providing households with financial assistance to offset the impact of the carbon tax.

Mr Swan insists that assistance will continue even if the government collects less carbon tax revenue than it has forecast.

"The household assistance that we have got in place is guaranteed," he said.

The May 14 Budget will include the government's response to a likely lower market price for carbon from 2015.


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