Climate Change Minister Greg Combet today clarified reports about the budget blowout as a result of the recent European Union (EU) carbon price meltdown.
The collapse led to fears of a revenue write-down in the May budget which is due next week.
For example, the Australian Financial Review (AFR) reported that Australia would take a $3 billion hit from halving the projected carbon price to around $15 when Australia links to the European emissions trading scheme in 2015. Until then the Australian carbon price is set at $23 a tonne.
At a press conference at Parliament House earlier today, Combet admitted the international markets have severely impacted the carbon price.
"But I want to make absolutely clear what a lower carbon price in 2015-16 actually means. It means that it is a lower cost to our economy to cut our pollution," the Minister said.
"And a lower carbon price also means a lower cost to households and businesses to cut our pollution, and it means that we will still achieve our targeted greenhouse gas emission cuts.
"The carbon price mechanism that the government has implemented is working. It is doing what it was intended to do and that is to cut our greenhouse gas emissions. In fact, emissions in the National Electricity Market fell by 7.7 per cent in the first nine months of carbon pricing. That's a reduction of ten million tonnes of greenhouse gas emissions."
Combet said renewable energy sources has increased by almost 30 per cent.
"So the carbon price is working. It's put a price tag on the pollution being emitted into the atmosphere from our economy and that is helping drive down our greenhouse gas emissions," he said.
Combet said the Clean Energy package that was introduced from July 1, 2012, last year was broadly Budget neutral but it would be revised next week.
