Michael Pollack unravels the carbon tax debate, suggesting it’s time Australia stepped up to the plate in putting a price on carbon emissions.
I suspect that most people don’t know very much about the main issues of the carbon tax debate. That’s no indictment of the Australian public but rather a reflection of a dry, dull topic that has been in the news for some time without much happening and, like the mining tax, has been very poorly sold by the Prime Minister.
This has left the public vulnerable to misinformation from interest groups who want to avoid paying the tax, and an opposition intent on destroying the plan regardless of any merit. And as Lenore Taylor suggested in Saturday’s Fairfax papers, the media could be be a bit more stringent on reporting the sometimes-unsubstantiated opinions of vested interest groups.
Let’s look at the facts:
Australia’s electricity use is on the rise, and over 30 per cent of the country’s greenhouse gas emissions come from electricity generation.
If we want to contribute to reducing climate change it’s in our interest to limit greenhouse gas production and find cleaner ways to generate power. Unfortunately, most people will only reduce their electricity consumption if they have a financial disincentive i.e. if power bills go up.
Energy providers also need a disincentive, such as a carbon tax, to continue discharging huge amounts of carbon into the atmosphere and to build cleaner power stations. A $23 per tonne charge on emission will inevitably be passed on from power companies to consumers as higher electricity prices, which the government will offset with tax cuts and pension increases.
The goal of a five per cent minimum reduction by 2020 in a country the size of Australia might seem fairly insignificant in the big picture but as with many of our sporting exploits, we punch above our weight for the size of our population when it comes to carbon emissions.
It’s well known that Australia is one of the highest per-capita emitters of greenhouse gases in the world, but we actually pump about as much carbon into the atmosphere as the UK and more than France, both of which have populations around three times the size of ours.
Former Prime Minister, Paul Keating, suggested last week that Australia should be looking to capitalise on opportunities to develop renewable energy technologies, as the Chinese have, rather than focusing inwardly on the threats of climate change.
‘Do we want a first-rate industrial economy, or do we want an economy with a brown, fat underbelly?’ PK asked.
Treasury modelling indicates that many of the popular concerns circulating prior to ‘Carbon Sunday’ have now been addressed.
The carbon tax is expected to weaken economic growth by just 0.1 percentage point over the next 40 years compared to a contribution of 0.3 percentage points from an ageing population.
The impact on inflation is projected at 0.9 percentage points over the first four years, due mainly to higher electricity and gas prices. The introduction of the GST had a far greater influence, adding 2.5 per cent to the CPI in 2000/2001.
Although around 4,000 jobs are expected to be lost in the coal industry, Treasury forecasts that the carbon tax will have no net effect on the employment rate to 2050.
Many of the projected job losses in the coal industry would arise from the closure of brown coal burning power stations in the Latrobe Valley, some of the highest polluting in the OECD. The government has established the $5.5 billion Energy Security Fund to compensate the industry for such closures.
According to IBISWorld, mining companies in Australia are currently generating profits of around 35 per cent of revenue on average, so with compensation, would not be critically affected by the imposition of a carbon tax.
Last week a survey of 145 economists by the Economics Society of Australia found that 59 per cent think the carbon tax is sound economic policy with only 11 per cent in favour of the coalition’s Direct Action Plan.
The CSIRO also refutes the number s of the Direct Action Plan, saying that the maximum amount of carbon dioxide that can be sequestered in soil per year is 25 million tonnes, compared to the coalition’s claim of 85 million tonnes.
Direct Action is also short on policy to develop renewable energy initiatives for the long term such as the government’s $10 billion Clean Energy Finance Corporation and $3.2 billion Australian Renewable Energy Agency.
Although many experts in economics and science don’t view the Direct Action Plan as a viable alternative to the carbon tax, its simple language is more digestible by the populace than the government’s very complex strategy. And that’s why only 30 per cent of Australians are in favour of the carbon tax.
In this age of multi-platform media that exposes us to an overwhelming volume of information, clear and concise communication from those in public office is more important than ever before. The Gillard government might be doing a terrible job of selling the carbon tax, but does that necessarily make it bad policy?
The opinion expressed above is the writer’s own and does not necessarily reflect the views of Business21C or UTS.
