Australian investors in energy infrastructure and renewables are bracing for years of uncertainty after the opposition Liberal Party reiterated this week that it will seek a repeal of the government's controversial carbon pricing mechanism.
The Labor-led coalition won a long-running battle last month to pass legislation that enables a carbon tax to be introduced on carbon intensive firms from July 2012, before transitioning into a national emissions trading scheme from 2015.
The bill secured a narrow majority in the House of Representatives despite fierce opposition from the Liberal Party, and has proceeded this week to the government-controlled Senate as part of a package of 19 environmental bills that are expected to gain full approval by 21 November.
However, the opposition Liberal Party has vowed to continue to fight the bills, despite the government's Senate majority, and began deploying delaying tactics yesterday, forcing a debate on the legislation during which opposition senators lined up to criticise the proposed levy.
Significantly, Liberal leader Tony Abbott made a self-styled "blood oath" to repeal the bill if he wins a majority at the next election, which is due in 2013.
His commitment was reiterated by opposition climate minister Greg Hunt who told news agency Reuters this week that any Liberal-led government would seek a mandate to repeal the bill as a central plank of its election campaign.
The Liberal Party is currently well ahead of Julia Gillard's government in the polls, and the commitment raises the serious prospect that Australia could introduce a carbon tax and mechanisms to compensate those affected by higher energy bills only to repeal the tax months later.
Responding to the Liberal commitment to repeal the bill in The Australian newspaper, climate change minister Greg Combet warned that the pledge will seriously undermine investor confidence.
"Of all the blatantly absurd claims we have heard from Abbott in recent months, this 'blood oath' on carbon pricing is the least credible and the most hysterical," he said.
"The investment community knows that, if Abbott's threat were ever realised, it would increase sovereign risk. Consequently, Australia would suffer as an investment destination."
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