CLIMATE Change Minister Greg Combet has hit back over claims that this week's carbon price policy reversal would blow a hole in the federal budget, saying any impact would likely be dwarfed by fluctuations in exchange rates and other variables.   The government announced on Tuesday it was scrapping a $15 carbon ''floor price'' previously planned for 2015 when the carbon tax becomes a market-based emissions trading scheme.   Instead, Australia's carbon price would be linked to Europe's ETS, which means the price per tonne of carbon would effectively be set by the well-established European carbon market.   But with the European price now under $10 and forecast to be just $12 or $13 in 2015, there are fears a price crash in 2015 would hit government revenues from the sale of permits here, blowing a hole in the budget totalling at least $2 billion.   Advertisement

Treasury has assumed a carbon price of $29 in 2015 in calculating the government's revenue from carbon permits.   Yesterday, Opposition Leader Tony Abbott said: ''If the European price goes up, well, our economy is devastated. If the European price goes down, our budget is devastated.''   But Mr Combet said the figures needed to be put in perspective. Government figures show that a carbon price of about $15 in 2015-16 would affect government revenues that year by 0.5 per cent.   ''When you're doing a budget, you do estimates across the next one, two, three, four years based on a whole range of factors - exchange rates, interest rates, what economic growth will be, what company tax revenue there'll be, what income tax revenue, what our employment will be, what commodity prices are - I mean there are a huge number of variables,'' Mr Combet told ABC radio.   The carbon price was just one variable, he said, and the government was entitled to rely on the Treasury's economic modelling.   The possible budgetary impact of scrapping the floor price comes as the government is under increasing pressure over its big spending decisions, including the dental scheme announced yesterday, expensive changes to school funding to come out of the Gonski report and the earlier commitment to a National Disability Insurance Scheme.   The opposition - which has been targeted by Labor for big spending promises - yesterday issued a multibillion-dollar list of government policies that it said were unfunded or not included in the budget bottom line. Shadow treasurer Joe Hockey said: ''Where is all this money coming from? Frankly, what we know is, Labor is going to increase taxes.''  

Source: Brisbane Times