Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

asked the Minister representing the Treasurer, upon notice, on 18 August 2011:

With reference to the Treasury Carbon Tax modelling, Strong growth, low pollution: Modelling a carbon price:

Given Treasury modelling states in Chapter 3 on p. 53 that '…due to the inelastic nature of oil demand, after a threshold is reached, higher oil prices do not induce lower emissions'.

(1) Does this observation imply that it would be pointless (in emissions reduction terms) for the Government to allow its carbon tax on heavyvehicle transport fuels (which is to be in place by 2014-15) to continue to rise indefinitely, in line with the projected relentless rise of the carbon price in the Treasury modelling; if so, has Treasury advised the Government of this.

(2) Is an eventual unlinking of the transport fuels excise from the carbon price factored into Treasury's economic and fiscal modelling.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The Treasurer has provided the following answer to the honourable senator's question:

The Strong growth, low pollution: modelling a carbon price (SGLP) report shows that an effective carbon price on fuel used in heavy on-road vehicles will reduce transport sector emissions in Australia and provide an incentive for business to develop and adopt cleaner transport fuels and technologies. In the scenarios explored in the SGLP report, abatement from the Australian road transport sector continues to occur at higher carbon prices, encouraging greater uptake of low emission options such as bio fuels and electric vehicles.