CANBERRA (Reuters) - Australian plans to put a price on carbon emissions won't stop the nation's strong economic growth and will have only a small impact on incomes, according to Treasury modeling to be unveiled by Treasurer Wayne Swan on Tuesday.
The carbon price is a key policy which could make or break Prime Minister Julia Gillard's minority government, which relies on support from the Greens and three independents for its one-seat parliamentary majority.
The government is struggling to sell its climate policy, in the face of opposition claims that it will drive up the cost of living and trigger job losses.
Swan will spell out Labor's argument for a carbon tax and eventual emissions trading scheme in a speech to the National Press Club, and he will release new modeling on the impact of a carbon price.
"Our economy will continue to grow solidly while making deep cuts in carbon pollution," Swan will say, according to excerpts of his speech obtained by Reuters.
"The modeling will show real national income growing strongly under a carbon price, at an average annual rate per person of around 1.1 percent until 2050.
"This means a carbon price would only reduce annual growth in GNP per person by about one tenth of one percentage point."
Swan's speech says Treasury modeling will show real national income per person would be 16 percent higher by 2020, and about 56 percent higher by 2050.
Gillard plans to introduce a carbon tax on 1,000 of the country's biggest polluters from July 2012, with a move to an emissions trading scheme three to five years later.
Australia has one of the world's highest per capital levels of greenhouse gas emissions because of reliance on aging coal-fired power stations for 80 percent of its electricity.
But the government is facing a tough fight to win over voters, with a new Galaxy poll showing 58 percent of Australians opposed emissions pricing and 64 percent wanted new elections to be fought on climate policy.
Only 24 percent of respondents believed Gillard had a mandate from a dead-heat election last year to introduce a carbon price, while 73 percent expected to be financially worse off under the scheme.
Thousands of carbon price backers rallied in major cities across the country over the weekend, hoping to counter similar recent demonstrations by opponents of the tax.
Swan has already promoted the benefits of a carbon price on the switch from coal-fired electricity to cleaner gas-fired electricity for Australia.
"Treasury modeling shows a carbon price will see gas-fired electricity generation expand by between 150 and 300 percent over the period to 2050," Swan said in a weekly economic note.
Australia is a major producer and exporter of thermal coal, but is also expected to see gas production soar with a series of massive coal-seam gas projects in the works.
"Dirty energy will become more expensive and clean energy cheaper under a carbon price, creating the jobs of the future and helping to protect our environment and our economy," Swan said.
But mining firms warned last week that the planned carbon pollution cutting scheme would slash investment, output and jobs, and demanded the minority government enter talks to recast its ideas.
(Reporting by Rob Taylor and James Grubel; Editing)
