The present Australian Government is expecting a carbon price of 29AUD in 2015-2016 to in part fund the deficit. Treasury has supplied their expectation of the price at 29AUD, yet if the price fell to the then applicable floor – there would be several billion short in terms of income, if the price fell to the current international carbon price in the absence of a floor the deficit would balloon to some 5.7bn AUD according to Climate Spectator
The issue is of course that the structure of the CPRS is designed to raise revenue so speculation that if it was not in place the deficit would be some $6bn is moot. You may as well say if the top tax rate of 49% was reduced then the deficit would balloon also. Policy dictates the revenue and the policy is clear. The point on the modelling at 29 AUD versus the floor is a good one. No doubt treasury looked carefully at the EU intent to reduce their target to minus 30% with a stated objective of 30 Euro for an EUA by 2020
As they say only time will tell….