Why Gillard can’t afford to drop the floor price

If the government was to yield to pressure from industry lobbyists and Rob Oakeshott to drop the floor price on carbon, it could leave them teetering on the edge of another budget deficit in 2015-16.

Treasury is continuing to assume in their financial projections that the Australian carbon price in 2015-16 will be $29 per tonne of CO2 , when most market forecasters expect it to fall to the floor price of $15. According to The Australian this equates to a $3.2 billion dollar budget black hole.

But imagine what it would be if there was no carbon floor price.

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