Carbon Tax


The Wall Street Journal
REVIEW & OUTLOOK ASIA JULY 17, 2011, 12:15 P.M. ET
The Last Carbon Taxer

Carbon cap and trade is dead in America, the Chicago emissions trading exchange has folded, and European nations keep fudging on their Kyoto Protocol promises. But Al Gore’s great green hope still has a champion: Australian Prime Minister Julia Gillard, who announced last week that her government will impose a cap-and-tax regime.

Her Labor Party-led coalition wants 500 of the country’s “biggest polluters” to buy carbon permits issued by the government, starting next year. Canberra would then create new bureaucracies to re-allocate that money to interest groups and selected businesses, to the tune of billions of dollars annually.

The news has caused a public uproar—not least because Ms. Gillard ran and won last year on an explicit promise not to pursue such policies. She ousted her predecessor in a backroom coup after his popularity tanked because of climate-change boosterism and promises to raise taxes. But Ms. Gillard’s Green coalition partners hold the balance of power in parliament and pushed hard for cap and trade. The PM caved and has now been labeled “Juliar” in the popular press.

The Gillard government estimates its plan will increase electricity costs by 10% and gasoline by 9%—increases it calls “modest.” That’s easy for politicians to say. In a nationwide poll taken after the announcement, 60% of voters opposed the tax and 68% said they’d be financially worse off because of it. Ms. Gillard’s popularity has plumbed new lows.

The plan is economically damaging enough that even the normally timid business lobby—many of whose members originally supported climate-change legislation—is speaking up. Opposition leader Tony Abbott slammed the plan as “socialism masquerading as environmentalism,” and he has a point. The government plans to use some of the carbon tax receipts to triple the income threshold before the income tax hits. In other words, this is in part a scheme to redistribute income from energy users to Labor voters. It is an odd kind of tax reform that narrows the tax base.

All of this for negligible environmental benefits. Australia emits 1.5% of the world’s greenhouse gases. Even if the country cut its emissions to zero, the move would do little to reduce global emissions. Australia’s per-capita emissions are high compared to other developed nations because it’s a sparsely populated continent blessed with an abundance of natural resources. Aussies have developed profitable, world-class natural resource and energy businesses that have lifted incomes at home and helped supply developing countries like China and India. This is bad?

It is if you believe in the theology that loathes carbon fuels and wants government to allocate the means of power production. In a speech Thursday, Ms. Gillard vowed to press forward with cap and tax and said that her convictions are “very deeply held.” We’ll see if her government can survive them

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There is a significant mix and mash on the Carbon Tax Debate. Firstly Australia probably does emit 1.5 % of the worlds Greenhouse Gas emissions. This is still a disproportionate level for a population somewhat closer to .75% or the worlds population. So I for one believe that we do need to do something about it.

I guess the economic quandary for Australia is that if the big polluters of  the world reformed and became all green and clean we would probably (read almost certainly) face a significantly reduced market for our coal. It is not simply what we emit, there is also a question about what we enable others to emit.

Does a new tax make sense, with a new layer of bureaucracy to oversee it, imposing a tax that puts up the price of everything, and then moving the tax threshold so that it does not hurt the bulk of the voting public. Will this not just simply become another revenue stream for another layer of government, so that we have more people counting and less people making stuff.

The argument is that there is no other way to reduce carbon emissions.

Should we see alternative action plans. A C.S.I.R.O. empowered to help us find new ways. Maybe investment in ethanol technology so we reduce vehicular greenhouse gas emissions ( I think that is no 2 on the list). We seem to have just canned scheme that was encouraging people to get into solar panels which seemed to be a good idea and working towards the right end. Could it be that some of the cash up for an NBN would be better spent on developing some alternative power generation. Should the Snowy Mountains scheme extended? Should we be exploring some other methods, or is the only answer a tax.

Why has it not worked in the USA? Why have they canned it. What else is going wrong with those who have a Carbon Tax. What is the Indian experience who have a carbon tax half what is proposed here.

I believe that the large majority of Australians believe that climate does change over time, however it is also clear that since the industrial revolution we have engaged in more and more activities that contribute to greenhouse gases and the problem. At the same time we have reduced forests which has been the natural way to restore balance to the atmosphere (photosynthesis is the process whereby trees absorb carbon dioxide and return oxygen to the air and carbon the the tree and the earth). The vast bulk of Australians believe we have a problem, and if we don;t do something we are being part of the problem, not part of the solution.

I also have to note that the Wall Street Journal, respectable publication that it might be, is not commentating from a neutral position. The US economy is a huge polluter globally and so a positive move in Australia will move them further into the cold, and judging by the current equations they are probably less able to do anything about it, so a fail in Australia would let them breath a little easier (though for how long).

As usual in Australia we have made the debate about the wrong things, and invested it with too much personality. Tony Abbott has been painted as a climate change skeptic, though I have not heard him use that description himself, and Julia Gillard has become the true believer, but most of us think that Bob is whispering on her ear. These things don’t matter. What we need to hear is if there are any other alternative solutions. Bob Brown clearly does not think so. None the less this is where the debate should be heading, though i don;t see it happening anytime soon.

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