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The Carbon Tax Debate

12 Oct
The Carbon Tax Debate

The Carbon Tax Debate

Australia’s Carbon Tax legislation has passed through the lower house. It’s now almost inevitable that it will become law, and Australia will have implemented a price on Carbon by 2012.

I only caught a little bit of the debate in Parliament – however, it was not much different from the debate that has been taking place continually over the year since the law was proposed.

The key elements seem to be :

From the Liberal/National coalition :

  • Rhetoric attempting to brand the tax as “bad”
  • Pointing out specific individuals or communities who will be hit hard by the tax
  • Pointing out that Julia Gillard said “There will be no carbon tax” before the election.
  • “This tax will destroy the economy.”
  • “No other country is doing anything about climate change.”

From the Labor party and the Greens :

  • Pointing out that climate change is real, and we need to do something
  • Pointing out that the Liberal and Labor parties have the same emissions reductions targets, but that the Liberal Party’s plan is more expensive
  • Pointing out that the money raised from the tax will be given straight back to families, and people researching clean energy technologies

Now, all the statements by Labor/Greens are true, and two of those by the coalition are. Frankly, though, even the coalition’s true statements are not really very relevant.

It is true, for example, that Julia Gillard said there would be “no carbon tax” under a government she leads. However, that should not be an important point. The important point is “Is the Carbon Tax good policy?”

In fact, arguing that politicians are untrustworthy is an excellent reason to support, not oppose the Carbon Tax. After all, the Carbon Tax makes the public – companies and private individuals – responsible for deciding the best way to mitigate climate change. And it does so with bite – if the best way to deal with climate change is for you to change your shopping habits, but you fail to do so, it will cost you. If you don’t trust the government, this is surely a better way of dealing with climate change than to let the government decide which industries will get subsidies, rewards or fines. This is why the Labor party is telling the truth when they say that the Carbon Tax is cheaper than the Liberal Party’s policy. The Liberal party wants to hand the responsibility for pollution reduction to big polluters. They will reward them to do so. The cost of this is estimated to be about five times as much as it could be, and this cost will have to be borne by taxpayers. Instead of paying $300/year in increased utility bills, we’d pay $1500/year in increased taxes – or interest rates, if a Liberal government decided to fund their carbon pollution reductio plan through government borrowing.

…. and it’s not as if Tony Abbott has been particularly truthful in his statements on this issue, either.

Likewise, it is true that some communities and individuals will be hit harder by a Carbon Tax than others. However, this is also true for the Liberal Party’s plan. It is for the “no action plan” suggested by climate science deniers.

The structure of the Carbon Tax guarantees, however, that those affected will be those who can most afford it. It may be tough for a coal miner to find a new job – but if he’s forced to by the Carbon Tax, at least we know that the cost of retaining the job is greater still, because of its environmental impact down the road.

Remember, as Steve Landsburg pointed out in a recent comment thread on his blog, that everyone currently alive favours something does not mean that everyone affected favours it.

Some of the other points the coalition makes are blatantly false. The Carbon tax will not destroy the economy. Job losses in even the most exposed sectors will so small, they won’t show up in employment statistics…. and there will be gains in other sectors, such as the natural gas sector, and clean energy.

The other, even more blatant lie, is the allegation that nobody else in the world is doing anything. In fact, important parts of the world are roaring ahead with carbon price plans of various kinds. In particular, China will have a nationwide carbon trading scheme by 2015. I fully expect that by 2017, China will have permission from the World Trade Organization to impose trade barriers against any WTO member nation that has not implemented a similar price on carbon. After all, they don’t want their domestic industries to suffer from unfair competition, and they have the economic clout force action.

Since China is so important to our economy, it’s a brilliant tactical move to get our Carbon price in place now, so that when 2017 rolls along and China starts throwing the WTO’s weight around, our Carbon Trading Scheme will be well established and smoothly running. We’ll become an even more favoured trading partner than we already are. This boost to Australia’s economy in 2016-2020 will far outweigh the zephyr-like negative impact we will probably fail to feel in 2012-2015.

 

 

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  1. klem

    October 12, 2011 at 11:38 pm

    “it’s a brilliant tactical move to get our Carbon price in place now, so that when 2017 rolls along and China starts throwing the WTO’s weight around, our Carbon Trading Scheme will be well established and smoothly running.”

    Only trouble is that China relys on US exports to survive not Ozzies, so China will not be throwing the WTOs weight around as much as you hope and dream. And also the USA is notorious for apealing WTO rulings and stalling them for years and years. So good luck to you Australia, hope it all works out for you. We will buy our coal from whomever is the cheapest, and if the price of Ozzie coal is increased due to your carbon tax, we will find new sources thereby creating new coal jobs in other countries. I suppose since the Ozzie carbon tax is the reason for this, perhaps these are the much vaunted new green jobs, green coal mining jobs that is.

    cheers…

     
  2. Mike H

    October 13, 2011 at 8:04 am

    With the US economy in the doldrums, and likely to remain for some time so unless the GOP suddenly becomes full of Keynesian economic theorists after 2012, China is being forced to boost domestic demand. By 2017, China will be a lot less dependent on exports to the US than they currently are.

    Furthermore, there are already signs that China is actually competing with the US for manufacturing jobs – this will be plainly obvious by 2017. If US manufacturing is artificially cheap because of their failure to implement a Carbon price, and if the US stalls any WTO action initiated by China, don’t you think China would favour trade deals with more reasonable countries?