The Prime Minister Kevin Rudd has announced nearly $4 billion worth of cuts or deferrals to government spending to move the carbon tax to an Emissions Trading Scheme (ETS) a year earlier than planned.
Rudd's decision to move from a carbon tax to an ETS on July 1, 2014 will cost the budget about $3.8 billion over the next four years.
Cuts to the public service sector - including 800 senior public servant positions in Canberra - will deliver $248 million in savings, while several environment programs have been targeted to help offset the cost of the early move to an ETS.
Previously, the carbon price was set at a fixed $25 per tonne but under a floating price, the figure is expected to be around $6 a tonne.
Announcing his decision at a press conference in Townsville today, Rudd said the government has decided to terminate the carbon tax, to help cost of living pressures for families and to reduce costs for small business.
Treasury modelling shows that in the 2014-15 financial year an average family will be $380 a year better off due to the decision to move sooner from a carbon tax to an ETS, he said.
The Prime Minister said his decision will be "budget neutral" and that despite cuts to environmental and clean energy programs to fund the move it's still a good day for the environment.
However, Greens leader Christine Milne, expressed disappointment at the cuts.
''Mr Rudd, you don't protect the environment by cutting environment programs,'' she said adding that the government was making it cheaper for polluters to pollute.
Following the announcement Rudd challenged Opposition Leader Tony Abbott to a debate on carbon pricing at the National Press Club.
''Here is the challenge. You pick the day next week at the National Press Club to debate the carbon price," he said.
"The emissions trading scheme under this government versus your scheme and let the people decide through that debate whether we have the facts supporting our case or yours."
The government's cuts include $213 million from the Biodiversity Fund, $143 million from the Carbon Farming Futures program and $200 million from the Clean Technology Program.
Opposition Leader Tony Abbott, did not comment on the specific cuts to cover the $3.8 billion carbon tax hole, but he did point out that Rudd has done very little.
''All he's done is simply brought forward Julia Gillard's carbon tax changes by 12 months.," Abbott said.
Responding to the Prime Minister's claims that he had ''terminated'' the carbon tax, Abbott said Rudd is not the terminator; he's the exaggerator.
"He's not the terminator; he's the fabricator," he said.
''He's changed its name but he hasn't abolished the tax.''
