Albury CBD

Can they, or can’t they?

The New South Wales and federal governments are at loggerheads over carbon credits.

The NSW government has banned councils from investing in carbon credits – while the federal government says there is no reason councils can’t comply with the Clean Energy Act.

A NSW ban on trading in derivatives was imposed during the global financial crisis in 2010 to prevent councils losing money in complex financial investments. And now the Division of Local Government has judged eligible carbon credit units to be of the same class of product.

NSW Local Government Minister Don Page said there was “no way at the state levels that we are going to change good state policy for bad federal policy”.

However, a spokesman for federal Climate Change Minister Greg Combet said the NSW government was misleading the public and local councils about the impact of the carbon price and how the Clean Energy Act worked.

“Local councils have been at the forefront of action of climate change, reducing their emissions and taking advantage of opportunities such as the Carbon Farming Initiative,” he said.

“The Australian government is confident that the NSW local government legislation and Ministerial Orders do not prevent NSW councils from complying with the Clean Energy Act.”

Parliamentary Secretary for Climate Change and Energy Efficiency Mark Dreyfus said the relevant restrictions on local councils in the Local Government Act 1993 only apply to investments of money by local councils.

“There is no way these restrictions could affect the ability of the Clean Energy Regulator to issue a carbon permit to local councils for the purposes of compliance with the Clean Energy Act,” Mr Dreyfus said.

Federal opposition climate action spokesman Greg Hunt said the carbon tax was “in further chaos” if NSW councils risked breaking the law if they were forced to purchase carbon permits to pay their carbon tax bills.

“It is appalling for the federal government to have put these councils in legal limbo which may end up as a constitutional battle.

“We support the NSW Government in its refusal to overturn a good state law to fix a bad federal one.”

NSW councils on the carbon tax list of directly liable entities, most due to emissions from landfill sites, include: Albury City, Cessnock City, Clarence Valley, City of Shellharbour, Gosford City, Griffith, Lake Macquarie City, Maitland City, Newcastle City, Port-Macquarie Hastings, Tamworth and Wagga Wagga City.

– with Tina Perinotto