The news that both the Opposition and the Greens are to oppose the reduction in company tax proposed by the government (to be financed by the Minerals Resource Rent Tax) gives the Gillard government a golden political opportunity, if they are competent enough to take it. All they need to do is put the bill up once and, when it is rejected, announce that they will come back again next year. Meanwhile, they can bank the proceeds which will go a long way towards meeting their (ill-advised) commitment to return the budget to surplus in 2012-13. Then, next year they can do a deal with the Greens to make a cut for small business only. That will leave Abbott promising both to reverse the small business cut, and to impose a new levy on big business to pay for his parental leave scheme. This seems to me to work pretty well for both Labor and the Greens, and it gives Abbott the outcome he has chosen, so maybe it’s a win all round.
Meanwhile, and perhaps more significantly, some news on EU cabon prices, which have been the subject of numerous beatups to the effect that a low price will create budget problems for the government. The EU recognises that the low prices means they can make bigger cuts in emissions at low cost. A proposal to do that was vetoed by Poland at a recent ministerial meeting. But a similar proposal is going forward and will be the subject of qualified majority voting in the EU Parliament, probably in June. The most ambitious versions will require emissions cuts of 80-95 per cent by 2050, with milestones along the way.