Australia's carbon tax repealed after 2 years

Australia's Conservative government repealed a much-maligned carbon tax on the nation's worst greenhouse gas polluters on Thursday, ending years of contention over a measure that became political poison for the lawmakers who imposed it.

The Senate voted 39 to 32 to axe the $24.34 Cdn tax per metric tonne of carbon dioxide that was introduced by the centre-left Labour government in July 2012. Conservative lawmakers burst into applause as the final tally was announced.

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Australian Prime Minister Tony Abbott's conservative coalition government rose to power last year on the promise of getting rid of the tax, assuring voters that removing it would reduce household electricity bills. He plans to replace the measure with a taxpayer-financed $2.57 billion fund to pay industry incentives to use cleaner energy.

"Today, the tax that you voted to get rid of is finally gone: a useless, destructive tax which damaged jobs, which hurt families' cost of living and which didn't actually help the environment," Abbott told reporters in Canberra.

Australia is one of the world's worst greenhouse gas emitters per capita, largely because of its heavy reliance on the nation's vast reserves of cheap coal for electricity.

Opposition leader Bill Shorten lashed out at Abbott after the vote, dubbing him an "environmental vandal."

"Today, Tony Abbott has made Australia the first country in the world to reverse action on climate change," Shorten told reporters. "History will judge Tony Abbott very harshly for refusing to believe in genuine action on climate change. Tony Abbott is sleepwalking Australia to an environmental and economic disaster."

Controversial tax from the start

The carbon tax, charged to about 350 of Australia's biggest carbon polluters, was controversial from the start. Former prime minister Julia Gillard had initially vowed not to introduce a tax on carbon emissions. But after her Labour party was elected in 2010, she needed the support of the minor Greens party to form a government — and the Greens wanted a carbon tax. Gillard agreed, infuriating a public that viewed the measure's imposition as a broken promise.

Labour's popularity plummeted, particularly when consumers saw their power bills soar. In reality, the tax accounted for a relatively small portion of that increase, but many blamed it for the hike nonetheless.

Desperate to improve its standing with the public, Labour replaced Gillard with previous prime minister Kevin Rudd, who promised to get rid of the tax and transition it earlier than planned to a cap-and-trade scheme, which would have significantly lowered the per-tonne carbon price.

But it proved too little, too late. Abbott's party swept to power in last year's elections by vowing to get rid of the tax for good.

'A vote for failure'

The prime minister said families will be about $554 a year better off now that the tax is gone.

Big businesses and industry groups across Australia rallied behind the tax's abolition, including the Australian Chamber of Commerce and Industry, which dubbed the levy a dead weight on the economy.

Today, Tony Abbott has made Australia the first country in the world to reverse action on climate change.- Opposition leader Bill Shorten

"It really did impact on the competitiveness of many Australian businesses and of course it put up the price of power," the group's CEO Kate Carnell said. "So it's a good step forward for competitiveness and also for employment in Australia."

In a fiery speech ahead of Thursday's vote, Senator Christine Milne, leader of the Greens, called it an "appalling day for Australia."

"A vote for the abolition of the clean energy package is a vote for failure," she said. "If this parliament votes to abandon the clean energy package, you are voting against the best interests of the nation."

Environmental groups called the tax's repeal an international embarrassment.

"It's a very sad day because it was working, this carbon price," said Australian Conservation Foundation CEO Kelly O'Shanassy. "Our government has failed Australians and they need to go and look their kids and their grandkids in the eye and tell them why — why — they are unwinding laws that will protect people in this country from climate change."