Now that the carbon tax has arrived and the sky hasn’t fallen in, it is time for people to start adjusting to the reality of life under a carbon tax. So I thought that it was also time to spell out some of the realities of the carbon tax. Sara Henderson’s article about the carbon tax in the Advertiser on Monday June 1 did not make one mention of the one reason for the carbon tax, which is the world that you and I rely on to survive. If this was all you read on the issue, you would think that the carbon tax was a toxic tax introduced by a greedy, malicious and cruel government, hell bent on taking away people’s jobs for no reason at all. You would think that the Liberal Party were the saviours of this world, protecting innocent people from Labor’s megalomania. That is one myth that I won’t bust today.But there has been a few other myths floating around for the past year and it is time to set them straight.
As a member of the Greens party, who are partly responsible for producing this important economic policy, I am deeply offended by the comments made by Ms Henderson. She says, “the carbon tax is a tax on Geelong jobs and on our future”. Does Ms Henderson really believe that the ALP and the Greens are oblivious to the needs of Australians to have stable employment? We all care about jobs. The difference between Ms Henderson and myself is that I happen to believe that we can secure better, long-term employment by making the switch to greener, more efficient industries. The low-carbon economy is an opportunity that Geelong must grasp, and we cannot hide our head in the sand and hope that it doesn’t happen. So in order to clear the air, I’ll start my mythbusting with one so critical to Geelong.
MYTH 1: The carbon tax will cost jobs. FACT – research undertaken in 2010 by the National Institute of Economic and Industry Research shows that strong action on climate change will provide a stronger economy with more jobs in almost every region in Australia, compared to weak action on climate change. The intention of the carbon tax is not simply to wipe out polluting industries, but it is to encourage them to make efficiency improvements. All changes require people and so many efficiency improvements will produce jobs. Where jobs are lost through the carbon tax, many others will be gained and staff will be redeployed from industries with a limited future (with or without the carbon tax) to those with a long-term future. I wouldn’t say I’ve busted this myth, but I’ve surely punctured it – MYTH PUNCTURED.
MYTH 2: “Julia Gillard lied about the carbon tax”. FACT: Julia Gillard didn’t even change her mind – she was forced due to unexpected circumstances to make a compromise. This is not a lie, and no amount of repeating the mantra will change this fact. Don’t get me wrong – I’m not a huge fan of Julia Gillard. But I know the difference between a compromise, a change of mind and a lie and I will not pretend that I don’t know the difference just to put somebody down.
Tony Abbott is an intelligent man and knows the difference between a compromise and a lie. He is being deliberately deceptive when he claims that Julia Gillard lied about the carbon tax. Let me prove it. Let’s say Tony is organising a birthday party for his daughter. He has promised her that her birthday party will be held at the Manly Pavilion, and that it will definitely be held in December this year. Unfortunately, an earthquake occurs in Manly the day before the party and the Pavilion is badly damaged. Mr Abbot had no way of even imagining that this could happen. He has to make a compromise and either hold the party elsewhere or wait until next year. He tries to find a venue but nothing is available. He decides to wait until the pavilion is fixed and hold the party in January. Has he lied to his daughter? Of course not. An unexpected event occurred and forced him to change his plans.
This is exactly what happened to the Prime Minister. She said that there would be no carbon tax under the government she leads, and she meant it. An unforeseen circumstance occurred – a minority government – which forced her to compromise on the nature of the carbon reduction package. Tony Abbott is not stupid. He knows that the Prime Minister didn‘t lie. MYTH BUSTED.
MYTH 3:“The carbon tax will double electricity prices”. This one was spruiked by the Australian Trade and Industry Alliance last year. FACT: if we assume that all costs of the $23 carbon tax are passed onto consumers (hardly likely), the carbon tax will add exactly 2.8 cents to every kwH in Victoria (based on NGER - National Greenhouse and Energy Reporting). This is a rise of 13%, based on a current rate of 22 cents per kwH, hardly double. The carbon price would have to be a fanciful $180 a tonne to double electricity rates!
The electricity prices will probably double, but it has nothing to do with the carbon tax. It is more to do with the need to replace aging infrastructure, which is way overdue. MYTH BUSTED.
MYTH 4: “We should not go it alone on carbon pricing”. FACT: We are definitely not alone. Countries and territories with a form of carbon pricing mechanism include most of Europe, New Zealand, many Canadian and US states including California, the fifth biggest economy in the world. China, Japan and Korea have emissions trading schemes in development and India has announced plans to start an emissions trading scheme very soon. MYTH BUSTED.
MYTH 5: “Australia produces less than 1.5 per cent of the world’s global emissions yet the proposed tax is set to be by far the world’s biggest carbon tax”. FACT: This comes from the Australian Trade and Industry Alliance (ATI - ironically, a group very fond of the colour scheme of Get Up). This is not a myth, but it deceptive. It will be the world’s biggest carbon tax but will not compare in size with many proposed emission trading schemes. The ATI compares our tax with the EU scheme and shows how our tax brings in over 12 times the revenue. This is true, but it is great to hear. The EU trading system collapsed because of reporting difficulties and internal mechanisms that allowed it to be open to manipulation and rorting. The price of carbon fell to around $1 making it largely ineffective. This is why it generated so little tax revenue.
The Australian government, with help from the Greens, designed a system that will avoid this situation by creating a temporary fixed price (a carbon tax) that will eventually be replaced by an emissions trading scheme in 2015. By 2015, many of the issues with the system will have been ironed out and we can safely move to an open market without the risk of collapse.
I won’t get into the claim made by the ATI (and spruiked by many climate change skeptics) that our size makes us immune from the requirement to take action on climate change. It is too childish an argument to refute.
MYTH CONFIRMED BUT IMPLICATION BUSTED.
MYTH 6: “The carbon tax will cost the average family over $10 per week”. FACT – the direct cost of the carbon tax on living costs will be just under $10 per week for the average family. The compensation provided to the average family under the carbon tax will be just over $10 a week. The average family will be 20 cents better off. To claim that the tax will cost the average family over $10 a week is a deliberate deception. Even if compensation is taken out of the equation, the average person spends more on confectionary than they will on the carbon tax. MYTH BUSTED.
MYTH 7: “We don’t need another new tax”. No Australian householder will be taxed directly. The carbon tax is really more like a levy and should have been named a levy in order to avoid the implication that it is a new tax on households. Calling it a tax has unloaded an enormous amount of anger and resentment in the Australian public, even though it is not that different to the emissions trading scheme that had John Howard’s support and would have been in place already if Malcolm Turnbull had held onto the Liberal leadership. This misnomer is one example among many of incompetence in the government’s communication department.
The Carbon tax is not permanent – it is basically a temporary fixed price on carbon that will eventually be replaced by a carbon trading scheme in 2015. Ideally, the people of Australia will hardly notice a difference between the two. MYTH BUSTED.
MYTH 8: “The carbon tax will cost Australia billions of dollars”. FACT – the carbon tax will cost some money, but in the long term it was save us through efficiency improvements and reduction in environmental damage. Tony Abbott has asked the public to imagine many times how much the carbon tax will cost Australia and has proposed instead a direct action policy, which is basically a competitive grant scheme where the federal government buys emissions reductions from businesses. I’d like to ask him how much his Direct Action policy will cost the people of Australia.
Both parties support action on climate change. Both have policies are attempts to reduce carbon emissions. The question is which is cheaper and more effective. Direct action sounds simpler, however as the vast majority of economists will attest, it is hopelessly inefficient. Ross Garnaut made it very clear that the simplest and most efficient way to reduce emissions is through market mechanisms, not direct action. The Australia Institute has shown that the Direction Action policy will cost quite a bit more than the carbon tax. This is because it will create an enormous beaurocratic load, as businesses send in requests for governments to buy into their initiatives, which each have to be assessed individually.
And for the final nail in the coffin for this myth, how does any form of direct action get paid for? You you guessed it –taxes. So what do we want? A levy on polluters that is called a tax but hardly affects our overall cost of living, or a tax which is not called a tax but which does cost us? I know which one I’d choose. So in this case, I’d say MYTH BUSTED.
Tony Abbot may claim that he will repeal the carbon tax if he gets into power. But what will he do if people finally realise that the sky hasn’t fallen in and he has to wait until 2015 to take office. By then there will be no carbon tax and there will be an emissions trading scheme in place. Will he repeal that, taking away our compensation and introducing new taxes to pay for his expensive direct action solution? I think not.