THE Federal Government's emissions trading scheme is only just clinging to life after a series of changes designed to win the support of the Senate failed to shift the sentiment of the Liberals, Greens and Independent Nick Xenophon.
In the biggest policy reversal of his prime ministership, aimed at wooing big business and the Liberal Party, Kevin Rudd announced the scheme would be delayed by one year to July 1, 2011, beyond the next election.
Compensation for the nation's heaviest polluters would be more generous and the price of a tonne of carbon for the first year would be fixed at a low $10, reducing by half the original projected impact on energy bills.
As a sop to environmentalists, there was a heavily conditional commitment to increase from 15 per cent to 25 per cent the maximum amount by which greenhouse gases would be reduced by 2020.
"I am in the practical business of responding to realistic challenges," Mr Rudd said of his reversal, which, he said, would mean "a slower start" but a "stronger, greener conclusion".
After warning repeatedly that any delay would be reckless and costly, Mr Rudd now argues the changes were driven by the pressures on business caused by the recession.
Also, with the original plan headed for certain defeat in the Senate, the Government needed bargaining power in the form of a regulated scheme to persuade other nations to take action at a climate summit in Copenhagen at the end of the year.
Despite the delay, business still wanted a legislated scheme in place so it could start making long-term investment decisions.
Mr Rudd said the changes were similar to those being called for by Malcolm Turnbull and he demanded the Liberals support the legislation to be introduced to Parliament this month.
"It's time to get off the fence, Mr Turnbull, and it's time to act in the national interest and to secure this legislation and certainty for the future," he said.
Rejecting the legislation twice would give the Government the trigger for a double dissolution election this year. But the Opposition Leader said the changes were "tinkering" and "no, we wouldn't support it".
But he left open the possibility of compromise. He said there was no need to pass the legislation this year because of the delay and there needed to be more analysis.
"Why not give ourselves more time to get it right?" he said.
Mr Turnbull faces internal pressures. The Coalition is split on the veracity of climate change and how to tackle it. The Nationals leader, Warren Truss, said the changes were "not enough to rescue this dog of a scheme".
A Newspoll published today shows that Mr Turnbull has failed to improve his standing against Mr Rudd as preferred prime minister despite a drop in support for the Government.
Labor's two-party vote has fallen three percentage points to lead the Coalition by 55-45.
The changes were negotiated by the Climate Change Minister, Penny Wong, in consultation with the leading business and industry groups - the Chamber of Commerce, the Australian Industry Group and the Business Council.
All made statements supporting the changed scheme and urging the Coalition to pass the legislation this year to provide investment certainty.
The Business Council of Australia said the delay was "responsible"; the Australian Industry Group said the Government had made substantial steps in the right direction.
The Australian Chamber of Commerce and Industry said the scheme still carried significant risks if the recession was longer and deeper than expected.
The Government 's climate adviser Ross Garnaut, who has been highly critical of the previous plan, said the tougher target "puts Australia on the front foot".
The Southern Cross Climate Coalition, which includes the Australian Conservation Foundation and the Climate Institute, said Australia had given "a vital and strategic boost to international efforts for an effective global climate agreement."
But more importantly for the Government, the independent senator Nick Xenophon said he would vote against the amended scheme while the Greens hardened their opposition because the changes made the scheme weaker.
The Greens slammed the package. Spokeswoman Christine Milne said: "If you add a little green to brown, you still get brown".
The Greens said their bottom line was a minimum 25 per cent cut — well beyond what the Government proposed.
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