The carbon tax went into effect in July 2012, under then-Prime Minister Julia Gillard's Labor government.
Australia's Coalition government, which took office in September, has vowed to scrap the tax and replace it with what it calls a Direct Action policy which would offer financial incentives to businesses to reduce emissions.
Federal Environment Minister Greg Hunt's criticism of the carbon tax follows the Department of Environment's release Wednesday of national greenhouse gas inventory figures.
Those figures show Australian greenhouse gas emissions fell 0.3 per cent in the year to the end of September 2013, the Financial Times reports.
In the electricity sector, which is covered by the carbon tax, emissions fell 5.5 percent in that period. In the transport sector, which is not covered by the tax, emissions increased 2 percent. In the coal and gas sectors, which are partially covered by the tax, emissions increased 8.3 percent.
Hunt, in a news release Wednesday said the emissions figures "show the carbon tax is still inflicting plenty of pain, with no environmental gain."
"What's driving this very slight reduction is a fall in demand for electricity due to a decline in manufacturing, the Renewable Energy Target and reduced economy activity," Hunt said.
Australia's Renewable Energy Target scheme, enacted in 2009, requires energy retailers and large customers to source a proportion of their energy from renewable sources. It calls for 20 percent of the country's power generation to come from renewable sources by 2020.
Hunt said the government is committed to reducing emissions by five percent by 2020. "The Carbon Tax won't achieve this," he said. "The Carbon tax does not work – plain and simple."
But the Climate Institute said in a news release Wednesday that the emissions data "shows that Australia needs stronger, not weaker limits on pollution."
"The new greenhouse inventory data shows that the electricity sector, which is covered by the carbon laws, has seen significant declines in emissions," said John Connor, chief executive of the Institute, noting that the decline has been offset by increases in the coal and gas sector, deforestation and transportation emissions.
Connor said that sectors not covered by the carbon laws, such as transport and deforestation, "are major growth areas in emissions urgently requiring stronger, not weaker policies."
The Organization for Economic Co-operation and Development says Australia has the highest per capita emissions intensity of any of the OECD's 34 member countries, the Guardian newspaper reported last month.