THE carbon tax is not bad for business, says Climate Change Minister Greg Combet.

“The carbon price and associated assistance measures are helping Australian businesses become more energy-efficient and competitive,” a spokeswoman said.

“Australia is part of growing international action on climate change, with around 1 billion people expected to be living in jurisdictions with a price of carbon by the end of the year.”

The comments followed a statement by the Australian Industry Group calling for the fixed price carbon tax to be immediately replaced with an internationally linked emissions trading scheme.

AI Group chief executive Innes Willox said if the federal government made the switch, electricity prices would drop by about 1.5 cents per kilowatt hour, an average cut of about 10% for business and households.

“Full emissions trading without the carbon tax element would slash the uncompetitive burden that has been imposed on Australian industry and the Australian community, which is dampening jobs growth,” he said.

“Today, Australian companies are paying $23 per tonne … our competitors in Europe are now paying around $6 a tonne and look set to stay at around this level for several years.”

The trouble with a switch to emissions trading is Australian businesses would open themselves up to influence from the international market, which could experience volatility.

AI Group said it did not support Coalition policy that would only permit domestic abatement without international influence.

That, it said, could cause abatement prices to be more than double international levels.

Combet said this was a reflection of poor policy.

“This reflects the fact businesses know repeal is significantly more complex than the Opposition Leader Tony Abbott’s daily sound bites suggest,” he said.

“Coalition policy has been in complete disarray this week.

“The reality is Tony Abbott can’t and won’t repeal the carbon price.”

Opposition spokesman for Climate Action Greg Hunt said the coalition had a clear policy.

“If elected, the coalition will repeal the tax and we challenge Labor to respect the mandate given to a new government and support the scrapping of this jobs-damaging tax,” he said.

“No other country has a carbon tax which is as costly and broard as Australia’s and our competitors, such as China and the US, do not have one at all.

“It also comes at the worst possible time as Australian manufacturers are dealing with the high Australian dollar.”

He said the Prime Minister was not putting Australian jobs first, a policy line she had pushed in recent weeks.

The carbon tax is becoming an increasingly divisive issue in this election year.