Strong Aussie dollar hits ETS bottom line

But you can guarantee that the Treasury modelling will massage the figures to make it look like everything is rosy in the ETS garden:

THE resurgent Australian dollar and strong commodity markets have slashed by more than $10 billion the expected revenue from the emissions trading scheme over the next decade, dramatically reducing the government’s scope to accept Malcolm Turnbull’s amendments.

Ten-year costings for the ETS, expected to be released with the government’s mid-year economic forecasts next week, are likely to show that instead of the $11bn surplus estimated by independent forecasters by 2020, the ETS could run at a loss in many of those years and require top-up funding from the budget.

A large or ongoing deficit would contradict government promises that the scheme will over time pay for itself, and jeopardise promised compensation to businesses and households from revenue raised from selling emissions permits.

And the good news is that this may prevent the Government from being able to negotiate with the Opposition, forcing them to vote it down:

The forecast estimates will dramatically lessen the chances of a deal in ETS negotiations between the government and the opposition, ahead of the second Senate vote late next month when the laws could become a double-dissolution trigger.

The Coalition could reject Kevin Rudd’s proposed carbon emissions trading scheme next month even if the Prime Minister accepts all of Malcolm Turnbull’s proposed amendments.

Senate leader Nick Minchin said yesterday there was no guarantee the Coalition partyroom would accept any agreed proposals, sparking government claims the opposition was acting in bad faith in negotiating with it over amendments.

Read it here.

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