2011/05: Should Australia introduce a carbon tax?
What they said...
'If we don't change as the world moves, we could get stuck with a old fashioned high carbon pollution economy and not have the jobs of the future'
The Prime Minister, Julia Gillard
'This tax will not only hit your home, it will hit every single item you purchase, every business that you deal with, every price that you pay - this will be the tax that keeps on taxing'
John Alexander, the Liberal member for Bennelong
The issue at a glance
On February 24, 2011, the Prime Minister, Julia Gillard (together with her government's Climate Change Minister, Greg Combet,) announced that as of July 1, 2012, Australia would have a 'carbon price'. This means that those companies producing goods that emit carbon dioxide into the atmosphere will be taxed. The tax is intended to reduce Australia's greenhouse gas emissions and Australia's contribution to global warming.
The Prime Minister gave no detail as to the precise size of the tax. Nor did she give any detail as to how consumers (to whom the cost of the tax would be passed on in increased prices) would be compensated. It has also not yet been explained how businesses will be assisted to make the transition.
The proposed tax has the backing of key Green and independent MPs in the lower house of Parliament but could still face obstacles in the upper house where three earlier carbon pricing schemes have been defeated.
The leader of the Opposition, Tony Abbott, has declared the tax an 'utter betrayal' of the Australian electorate, claiming it runs counter to promises Ms Gillard made prior to the last election.
The Gillard Government intends that within three to five years of the introduction of the carbon tax, Australia should shift to an emissions trading scheme (ETS).
The immediate political debate is focused on the proposed carbon tax which the Opposition opposes and which it hopes will win it the next federal election.
Background
(The following information is drawn from three sources. The Wikipedia entry on 'carbon tax'. The Wikipedia entry on 'emissions trading schemes' and the Debatepedia entry on the question 'Should a carbon tax be part of plans to combat global warming?'
The Debatepedia entry can be found at http://debatepedia.idebate.org/en/index.php/Debate:_Carbon_tax
The Wikipedia entries can be found at http://en.wikipedia.org/wiki/Emissions_trading
and http://en.wikipedia.org/wiki/Carbon_tax)
Carbon taxes and emissions trading schemes
A carbon tax is an environmental tax on emissions of carbon dioxide and other greenhouse gases. A carbon tax can be implemented by taxing the burning of fossil fuels such as coal, petroleum products such as petrol and aviation fuel, and natural gas in proportion to their carbon content.
The primary purpose of a carbon tax is to discourage the inefficient use of fossil fuels, which when burnt release carbon dioxide and other greenhouse gases into the atmosphere and so contribute to global warming.
By increasing the cost of greenhouse gas emitting energy sources, a carbon tax also increases the competitiveness of non-carbon technologies. Thus, a carbon tax is meant to encourage the use of non-combustion energy sources such as wind, sunlight, hydropower and nuclear power.
The Gillard Government hopes that within three to five years Australia will be able to shift to an emissions trading scheme (ETS). Emissions trading (also known as cap and trade) is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant.
Firms are required to hold a number of permits (or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level.
Firms that need to increase their emission permits must buy permits from those who require fewer permits. The transfer of permits is referred to as a trade. Thus, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. It is anticipated that this ETS will ultimately operate internationally.
Carbon taxes and emissions trading schemes around the world
United States
The United States has no schemes currently in place that affect the whole country. A number of jurisdictions have instituted schemes of their own.
In November 2006, voters in Boulder, Colorado passed what is said to be the first municipal 'carbon tax'. It is a tax on electricity consumption (utility bills) with deductions for using electricity from renewable sources. The goal is to reduce carbon emissions to those outlined in the Kyoto Protocol.
In 2006, the state of California passed AB-32 which requires California to reduce greenhouse gas emissions. In May 2008, the Bay Area Air Quality Management District, which covers nine counties in the San Francisco Bay Area, passed a carbon tax on businesses of 4.4 cents per ton of CO2.
In May 2010 Montgomery County, Maryland passed the United States' first county-level carbon tax. The new legislation calls for payments of $5 per ton of CO2 emitted from any stationary source emitting more than a million tons of carbon dioxide during a calendar year.
Canada
Although there is no federal carbon tax, some Canadian provinces do have carbon taxes. These include Quebec, British Columbia and Alberta.
India
On July 1, 2010 India introduced a nation wide carbon tax of 50 rupees per metric tonne ($1.07/mt) of coal both produced and imported into India. In India coal is used to power more than half of the country's electricity generation.
New Zealand
In 2008, the New Zealand Emissions Trading Scheme was passed into law.
Europe
In Europe, a number of countries have imposed energy taxes or energy taxes based partly on carbon content. These include Denmark, Finland, Germany, Italy, the Netherlands, Norway, Slovenia, Sweden, Switzerland, and the United Kingdom. None of these countries has been able to introduce a uniform carbon tax for fuels in all sectors.
Internet information
The full text of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 2007 can be found at http://www.ipcc.ch/publications_and_data/ar4/wg2/en/contents.html
The Report details the environmental and economic harm already attributable to climate change and suggests further harms likely to occur unless greenhouse gas emissions can be reduced.
The Garnaut Climate Change Review is a study by Professor Ross Garnaut, commissioned by then Opposition Leader, Kevin Rudd and by the Australian State and Territory Governments on 30 April 2007. The Review examines the impacts of climate change on the Australian economy, and recommends medium to long-term policies and policy frameworks to improve the prospects for sustainable prosperity.
The Review includes detailed overviews of the anticipated effects of climate change on Australia and other nations.
The full text of the final Review , released in 2008, can be read at http://www.garnautreview.org.au/index.htm
The Institute of Public Affairs Review Vol.60 No 4 contains four articles and an editorial opposing emissions trading. The first is titled 'Emissions trading: Towards the biggest economic change in Australian history' and was written by Chris Berg and Alan Moran. The authors argue that such a scheme is too open-ended, its economic consequences too ill-defined and its environmental benefits dubious. The full text of these articles can be read at http://www.ipa.org.au/library/publication/1229552842_document_review60_4-distro.pdf
They begin on page 35. All are criticisms of the emissions trading scheme and the environmental science that is used to justify it.
In 2008 LaTrobe University News published an opinion piece by Keith Knedall arguing that a carbon tax was a more effective means of reducing carbon emissions than an emissions trading scheme. The piece is titled 'Why a carbon tax should be Australia's answer to climate change' and can be read in full at http://www.latrobe.edu.au/news/articles/2008/opinion/why-a-carbon-tax-should-be-australias-answer-to-climate-change
On September 27, 2010, the ABC published an opinion piece by Leigh Ewbank, a volunteer for Beyond Zero Emissions. The comment is titled, 'Carbon tax could be the ticket for a greener Australia'. The piece looks at the shortcomings of the European Union's Emissions Trading Scheme and argues that a carbon tax may be a better alternative for Australia. The full text of the comment can be read at http://www.abc.net.au/environment/articles/2010/09/27/3023084.htm
On December 8, 2010, the Institute of Public Affairs released an opinion piece titled, 'Retreat now, before the cost soars'. The piece considers the adverse economic effects (including a reduction of investment in power-generation plant) that would result from the carbon tax then being discussed by Julia Gillard. The full text of this report can be found at http://www.ipa.org.au/news/2249/retreat-now-before-the-cost-soars
On February 23, 2011, there was a debate in the federal parliament on whether a carbon tax should be introduced into Australia. A range of speakers presented elements of both sides of this issue. Their comments can be found at http://www.openaustralia.org/debates/?id=2011-02-23.76.2
On February 24, 2011, the Prime Minster's Press office issued a media release titled, 'Climate change framework announced'. The full text of the press release can be read at http://www.pm.gov.au/press-office/climate-change-framework-announced
On February 24, 2011, the ABC's The 7.30 Report produced a report on the Labor Government's announcement of a carbon tax. The report includes comments from both the Prime Minister and the leader of the Opposition. A full transcript of the report can be read at http://www.abc.net.au/7.30/content/2011/s3148276.htm
The report can be viewed at http://abcscience.com.au/news/video/2011/02/24/3148276.htm
On February 24, 2011, The Greens issued a media release indicating their support for the Gillard Government's proposed carbon tax. The release also states The Greens' long-term objective of a fix carbon price with 'no international offsets allowed'.
The full text of this release can be read at http://bob-brown.greensmps.org.au/content/media-release/carbon-price-agreement-transformation-clean-energy-can-start-now
On February 25, 2011, The Sydney Morning Herald ran an opinion piece titled 'Common myths about climate change' written by Ben Cubby which refutes a variety of claims about climate change including that it is not caused by human activity. The full text of this article can be found at http://www.smh.com.au/environment/climate-change/common-myths-about-climate-change-20110225-1b86f.html
On February 27, 2011, new.com.au ran a report titled, 'Carbon tax "vital" for future jobs, says Climate Institute '. The report details the Climate Institute's claims that a carbon tax could lead to the generation of some 31,000 in clean electricity generation. The full text of the report can be found at http://www.news.com.au/national/carbon-tax-vital-for-future-jobs-says-climate-institute/story-e6frfkvr-1226013148844
On February 27, 2011, the ABC ran a news report titled 'Households to be compensated for carbon tax'. The report treats the Government's assurance that it will 'assist people, households, industries most affected'. The full text of the report can be found at http://www.abc.net.au/news/stories/2011/02/27/3150029.htm
On February 27, 2011, The Daily Telegraph ran an editorial titled, 'Carbon tax will change our world'. The editorial argues that the tax will cause wide ranging increases in the cost of most goods. It raises questions about the Government's ability to effectively implement such a scheme. The full text of this editorial can be found at http://www.dailytelegraph.com.au/news/opinion/carbon-tax-will-change-our-world/story-e6frezz0-1226012515335
On February 28, 2011, the ABC's The 7.30 Report interviewed the leader of The Greens, Bob Brown, on the proposed carbon tax. Brown is questioned on the role his party played in the formulation of the proposed tax and whether the tax will be imposed on petrol. The full text of the interview can be read at http://www.abc.net.au/7.30/content/2011/s3151237.htm
There is also a link to video of the interview.
On February 28, 2011, the ABC's opinion site The Drum Unleashed published a comment by Mungo MacCallum, a political journalist and commentator. The comment is titled 'No more jokes on climate change: this is serious'. The piece looks at the political background to attempts to reduce Australia's carbon emissions. It is essentially in support of the tax. The full text of the comment can be found at http://www.abc.net.au/unleashed/44516.html
On February 28, 2011, Inside Retailing published an opinion piece by Robert Stockdill arguing that the Gillard Government has not reached consensus as to how and on what this new tax will be applied. The piece also argues that the Government has no idea as to what its probable effects on the economy will be. It is titled, 'Carbon tax folly lacks foundation' and can be read in full at http://www.insideretailing.com.au/Latest/tabid/53/ID/10175/Carbon-tax-folly-lacks-foundation.aspx
Stop Gillard's Carbon Tax is a lobby group whose aim is to stop the imposition of a carbon tax in Australia. The group's Internet site encourages browsers to petition the federal Parliament not to introduce the tax. The site can be found at http://www.stopgillardscarbontax.com/
On March 1, 2011, The Institute of Public Affairs published an editorial titled, 'Dirty little lie on carbon tax'. The Institute claims that the tax is unlikely to be successful and would only be legitimate if taken in conjunction with other measures that the government does not appear to support. This opinion piece can be found at http://www.ipa.org.au/news/2299/dirty-little-lie-on-carbon-tax-
On March 1, 2011, The Weekly Times ran a report titled, 'Food prices to soar with carbon tax'. The full text of this article can be found at http://www.weeklytimesnow.com.au/article/2011/03/01/301741_latest-news.html
On March 2, 2011, the Institute of Public Affairs issued a media release titled, 'Consumers and business will feel the pain of emissions tax'. The release details the harm that the IPA believes will be done Australian consumers and the Australian economy by a carbon tax.
The full text of the comment can be found at http://ipa.org.au/news/2297/consumers-and-business-will-feel-the-pain-of-emissions-tax-
On March 4, 2011, The Punch published an opinion piece by Greens senator, Christine Milne, titled, 'A carbon price is the answer'. The comment details some of The Greens reasons for believing that a carbon price is an effective strategy for reducing Australia's greenhouse gas emissions. The full text of the comment can be found at http://www.thepunch.com.au/articles/counterpunch-a-carbon-price-is-the-answer/
On March 5, 2011, the ABC published a report titled, 'Coal jobs safe under carbon scheme: Combet' which included comments from the Government's Climate Change Minister, Greg Combet, that jobs in effected industries would be protected under a carbon tax regime. The full text of this report can be read at http://www.abc.net.au/news/stories/2011/03/05/3156017.htm?section=justin
On March 10, 2011, The Punch published a satirical comment by Tim Wilson which traces a hypothetical day in the life of The Greens leader, Bob Brown, and suggests the contribution to greenhouse gas emissions that a lifestyle such as his might make. The piece implies that all citizens in the modern world are implicated in the emission of greenhouse gases. The piece is titled, 'Carbon Bob: Can he fix it?' and can be read at http://www.thepunch.com.au/articles/carbon-bob-can-he-fix-it/
On March 12, 2011, The Daily Telegraph published an opinion piece by Piers Akerman titled, 'Gillard's great carbon lie'. The piece criticises Julia Gillard for breaking an election promise and then claims that a carbon tax would harm the Australian economy for no benefit.
The full text of this comment can be found at http://www.dailytelegraph.com.au/news/opinion/gillards-great-carbon-lie/story-e6frezz0-1226012509728
Arguments against Australia introducing a carbon tax
1. A carbon tax will cause the cost of living to rise
It has been claimed that one result of a carbon tax is that the cost of living will rise. Carbon-producing industries will be taxed and are likely to pass on the cost of all or some of that tax via increased charges to the consumer. Thus, it is assumed, as a result of a carbon tax the price of products such as electricity will increase.
In addition to this, there is likely to be a general flow-on effect. All those goods which are produced using electricity will also increase in price as manufactures pass on their added costs to the consumer.
This point has been made by the lobby group 'Stop Gillard's Carbon Tax' which states on its website 'Electricity prices will skyrocket; the price of everyday goods will increase'. An editorial published on March 5, 2011, in the Daily Telegraph opened with the claim, 'One thing is clear about the carbon tax debate: everything is about to get more expensive.'
While the Government is yet to state the price of the carbon tax, it is estimated that under a $26 a tonne carbon price power bills will increase $300 a year and petrol prices would rise 6.5c a litre.'
A national survey of 500 food and grocery retailers has shown that 83 per cent intend to pass on the cost of a carbon price in higher prices. Though a carbon price is yet to be determined, Woolworths, for example, could be faced with a potential annual carbon bill of about $10 million a year, based on a carbon price of $26 per tonne, which industry experts and the Opposition are using as a rough guide.
On February 24, 20011, Mark Coulton, the Liberal member for Parkes stated, 'A carbon price will be forced on the energy sector, transport, industrial emissions and waste, which experts predict will translate into a steep rise in living costs...'
On February 23, 2011, John Alexander, the Liberal member for the federal seat of Bennelong, stated during a parliamentary debate on a carbon tax, 'This tax will not only hit your home, it will hit every single item you purchase, every business that you deal with, every price that you pay - this will be the tax that keeps on taxing.'
2. Under a carbon tax the economically disadvantaged will be worst affected
It has been claimed that a carbon tax is inequitable because it will function like a consumption tax, affecting the unavoidable expenses of all sections of the community, irrespective of their capacity to pay. This is in contrast to a tax such as income tax which is scaled so that the highest tax rates are paid by those on the highest incomes.
This point has been made as one of the arguments on the Internet debating site, Debatepedia where it is stated, 'Energy consumption generally makes up a larger portion of the personal budgets of poorer groups. Because energy consumption would be taxed equally across social groups with a carbon tax..., the costs of the tax would disproportionately affect poor groups.'
Similarly, John Alexander, the Liberal member for the federal seat of Bennelong, has noted, 'Despite all the variation of this constituency [Bennelong], the one common thread is that the residents and businesses are struggling to make ends meet.
[Theirs] are not complaints about the prices of luxury items but concerns about the cost of items that are absolutely essential for survival: food, electricity, gas, water and petrol-not to mention increasing rents and mortgage interest rates. These struggling Australians talk to me about their problems because it is the obligation of government to implement policy agendas to minimise the impact of rising prices and work to prevent a further decline in the quality of life of those who elect us as their representatives.'
Scott Driscoll, the National President of United Retail Federation, has stated, 'To wave through a new broad-based tax on basic living expenses when people have faced devastating natural disasters and massive increases already in electricity, water and petrol is simply cruel, unreasonable and unnecessary. It will push overheads up dramatically for retailers and small businesses and will be passed on to consumers...'
3. A carbon tax will damage the Australian economy and cause a loss of jobs
It has been claimed that one of the consequences of a carbon tax is that the Australian economy will be damaged and Australian jobs will be lost. It has been suggested that this will happen for a variety of reasons.
One is that some employers may be forced to retract their businesses because of the cost of the new tax and will therefore put off staff. BlueScope Steel has warned that if a carbon tax is implemented, it could lead to plant closures and the loss of 15,000 jobs. The company has claimed the tax would force closure of its Port Kembla steelworks in New South Wales unless the government offset the $300 million to $400 million per year in additional taxes the company expects to pay at a $25 a tonne carbon price.
Another possibility is that increased costs to consumers will result in reduced consumption and so businesses may cease to be viable as their customer base contracts.
It has also been suggested that some businesses will move out of Australia to operate in countries that do not have a carbon tax and therefore the jobs they created will go offshore. Thus the chief executive of BlueScope Steel, Paul O'Mailey, has argued, 'If you tax the local steel producer, you are basically saying we want to encourage imports of steel and hide the carbon overseas.'
Relatedly, retailers may begin to import staples like food from countries without a carbon tax and thus jobs would be lost in agriculture. This point has been made by Scott Driscoll, the National President of United Retail Federation, who has stated, 'the very real threat is that the tax will deliver ... a severe blow [to] the food and retail sector adding ... enough pressure to see more food imports from areas such as Asia and South America inevitably [resulting in] the loss of food production in Australia which is fundamentally a national security issue.'
It has also been claimed that overall the Australian economy will slow. Currently we are an economy with a heavy reliance on electricity generated through burning coal, as this becomes more expensive, it has been suggested that investment in Australian industries will drop off and that employment will correspondingly contract. The independent think tank , the Institute of Public Affairs (IPA) has stated, 'The planned carbon tax regime (and opposition to nuclear generation) makes significant new power plant investment impossible. This lights a slow fuse under the economy's growth potential.'
The Opposition leader, Mr Tony Abbott, has stated, 'A carbon tax of about $25 a tonne would close 16 coal mines and cost 10,000 jobs in coal mining (according to Access Economics). It would cost 24,000 jobs in mining generally (according to ACIL). It would cost 45,000 jobs in emissions-intensive industries (according to Frontier Economics).'
4. Many people do not accept either that climate change is occurring or that it is caused by human activities
A carbon tax is unlikely to be acceptable to the many Australians who do not believe that climate change is occurring or, if it is, that it is primarily the result of human activity.
In a survey conducted by Essential Media and published on December 6, 2010, it was found that only 45% of those surveyed believed that climate change is happening and is caused by human activity (down 8% since last surveyed in November 2009), 36% thought we are just witnessing a normal fluctuation in the Earth's climate (up 2%) and 19% din not know (up 6%).
Such scepticism has been feed by climate change critics such as Lord Christopher Monckton, a British politician, journalist, and hereditary peer, formerly a member of the Conservative Party, and now deputy leader of the UK Independence Party. While in Australia in January 2010 Monckton said of then Prime Minister Kevin Rudd's proposed emissions trading scheme to reduce carbon dioxide in the atmosphere, 'It will destroy the economy of Australia and it will do it without the slightest immeasurable [sic] difference on the climate. This is a policy as near to total lunacy as I have ever seen.' Monckton does not believe that the world's temperature is rising. Nor does he believe that human activity has any significant effect on climate..
The influence of such views can be seen in former liberal politician Nick Minchin who has stated, 'I personally remain to be convinced that anthropogenic CO2 emissions are, quote, the main driver of the degree of global warming that occurred in the last 30 years of the 20th century.' Minchin was the leader of a group of Liberal politicians who destabilised the leadership of former Liberal leader Malcolm Turnbull because Turnbull supported Labor's Emissions Trading Scheme.
The acceptance of such views among the Australian electorate can be seen in a letter published in the Adelaide Advertiser on March 2, 2011. The letter writer, Colin Brooks, asked, 'How can the message be sent to politicians, economists and soft-subject scientists that carbon dioxide is not a pollutant and that man's emissions of that gas have never been shown to have caused any significant rise in global temperature?'
5. The tax will have no significant impact on greenhouse gas emissions
It has been claimed that an Australian carbon tax will have no significant impact on the level of greenhouse gases in the earth's atmosphere. This claim has been made on two bases. Firstly that it is unlikely to succeed in significantly reducing Australian greenhouse gas emissions and secondly, that even if these emissions were to stop completely this would have no useful effect on world greenhouse gas emission rates.
Critics of a carbon tax for Australia argue that it will damage our economy without reducing climate change. The independent think tank, the Institute of Public Affairs (IPA) has stated that the proposed tax, although burdensome and damaging is not sufficiently large to force reinvestment in different forms of power generation.
In a media released issued on March 2, 2011 and published in The Age, the IPA stated, 'The price itself, while severely harming the carbon-intensive, coal-based generators, would not force their premature departure from supply, which would be necessary to leave a gap for new gas generators.'
The IPA Review in September 2008 included the following response to Kevin Rudd's proposed emissions trading scheme, 'Australia contributes 1.1 per cent of total global greenhouse gas emissions. Our contribution is dwarfed by big emitters like the United States which contributes nearly 21 per cent, China which contributes 17 per cent, and Russia which contributes just over 5 per cent.'
The IPA believes, therefore, that even if Australia were to stop producing any carbon dioxide this would have negligible impact on the world's carbon dioxide levels. The Review stated, 'Even if we entirely eliminated our carbon footprint, the impact on the global total would be statistically insignificant. Reducing emissions would do nothing for the Murray-Darling Basin, or the Great Barrier Reef, or Australia's rainfall patterns, even if human-induced climate change was the culprit. What matters for the environment are global emissions, not Australia's emissions.'
6. The Labor Government has no electoral mandate for a carbon tax
Democratic political theory holds that contesting parties or candidates put their policies before the electorate so that if the voters like these policies they will indicate this at the ballot box. An elected government is then said to have a mandate to put its policies into effect. This means that its policies have been endorsed by the electorate at the last election and so, within a democracy, which is government based on the will of the people, these policies should be acted on.
Julia Gillard and the current Labor Government has been criticised because at the last election both Julia Gillard and the Labor Treasurer, Wayne Swan, stated that under a Labor government there would be no carbon tax.
On August 16, 2010, in the lead up to last federal election, Ms Gillard stated, 'There will be no carbon tax under the government I lead.' The week before, when asked about a carbon tax, the Treasurer, Wayne Swan replied, 'We have made our position very clear; we have ruled it out.'
The Opposition has made it plain that they consider this means that the Government has no right to impose a carbon tax during its current term in office. During question time in Parliament on March 1, 2011, the Shadow Treasurer, Joe Hockey stated, 'They [the Government] have no mandate for a carbon tax.'
Critics of the government's apparent change of policy claim that a carbon tax is only being introduced because it has been demanded by the Greens. The Government needs the support of the Greens if it is to continue to govern as it does not have a majority in the House of Representatives.
Arguments in favour of Australia introducing a carbon tax
1. A carbon tax has not harmed other economies
It has been claimed that those country that have already adopted a carbon tax have not been economically harmed as a consequence.
David Suzuki is a Japanese Canadian academic, science broadcaster and environmental activist who, until his retirement, was a professor in the genetics department of the University of British Columbia. David Suzuki has stated, 'I say, look at Sweden . . . Sweden in 1991 initiated a carbon tax. Today they pay $150 a tonne. That's a hell of a lot of money. But they have reduced their greenhouse gas emissions by 8 per cent. The Swedish economy has grown, grown, by 44 per cent. So what the hell is going on? Our politicians lie through their teeth.'
The same point has been made by Paul Elkins, professor of Energy and Environment Policy at the University College London. Professor Elkins had claimed that in a in a Europe-wide study on the competitiveness effects of a carbon tax, 'We could not find any effects on competitiveness on these taxes at all. We looked at it every which way . . . They really have not appeared to have any effect on the energy intensive industrial sectors at all.'
Professor Tim Flannery is an Australian paleontologist, environmentalist and global warming activist. Professor Flannery has similarly claimed that other countries that have introduced a carbon tax or an emissions trading scheme have not been damaged economically. Professor Flannery has suggested that anyone worried about a carbon tax's impact on the Australian economy needs to contact those running businesses in Europe under a carbon tax. The Professor's own contacts with European businesses have made him confident of the lack of adverse effects. Professor Flannery has urged, 'Just pick up the phone. Not one business reported a demonstrated impact on their bottom line. Not one.'
Referring specifically to what might be expected for the Australian economy, John Connor, the chief executive of the Climate Institute, has stated, 'All of the models have shown that even with significant reductions in pollution ... that virtually all sectors of the community will continue to grow.'
2. A carbon tax will create jobs
It has been claimed that a carbon tax will encourage new industries which will in turn create jobs.
A new report from the Climate Institute was released on February 28, 2011. The report claims that a price on carbon could create 34,000 new jobs in the renewable energy sector in regional Australia over the next two decades.
The chief executive of the Climate Institute, John Connor, has claimed that a price on pollution coupled with the renewable energy target would lead to thousands of jobs in every state in the solar, wind, geothermal, hydro and natural gas industries. Mr Connor has suggested, 'By 2030 almost 43 per cent of Australia's electricity could be produced from clean energy, up from about 12 per cent currently.' These new, clean energy sources will all create jobs.
The Prime Minister, Julia Gillard, has stated, 'If we don't change as the world moves, we could get stuck with an old fashioned high carbon pollution economy and not have the jobs of the future.'
Also referring to the creation of jobs in the future, the leader of the Greens, Bob Brown, stated on February 2, 2011, 'The burning of fossil fuels is creating a potential five-to-20 per cent loss of income for our children and our grandchildren.'
The Prime Minister has stated that the plan of the Opposition leader, Mr Tony Abbott, to scrap a carbon tax would harm Australian employment prospects. Ms Gillard has stated that such a move would be 'dreadful for the businesses that have made investment decisions on the basis of a carbon price, particularly in our energy sector, where we need to see investment ...Directors, businesses, boards would make decisions where they would start employing people and Mr Abbott would come and sweep that away, recklessly stranding those investments and losing those jobs.'
3. Consumers and workers will be compensated for the impact of the carbon tax
The Federal Government has insisted it will make sure people are compensated for price increases as part of its plan to charge for carbon emissions.
Greg Combet, the federal Climate Change minister has stated, 'Every dollar raised by the payment of the carbon price will be used to assist people, households, industries most affected and to help assist with other climate change programs.' The same claim has been made by the Prime Minister, Julie Gillard, who has stated that Australians can 'expect to see a generous assistance package'.
Mr Combet has also said that in the interim, as new sectors were being developed and new jobs were being created the government would do all it could to soften the impact on workers currently employed in polluting industries that were ultimately to be phased out.
Mr Combet stated that the Labor Government would strive for an 'economically sensitive' compensation package in its negotiations with the Greens on the detail of the carbon pricing package. He said any economic transition driven by the carbon price would take place slowly and not be at the expense of workers in high-polluting industries.
Mr Combet stated, 'As a former union official, I am very concerned to make sure that we underpin the jobs in the industries affected most by a carbon price.'
4. There is general consensus within the scientific community that climate change is real, injurious and created by human activities
Though there are some areas of dispute, the general consensus within the international scientific community is that climate change is real and damaging and that it has been largely caused by human activities.
Chapter 2 of the Final Garnaut Report 2008 states, 'The majority opinion of the Australian and international scientific communities [is] that human activities resulted in substantial global warming from the mid-20th century, and that continued growth in greenhouse gas concentrations caused by human-induced emissions would generate high risks of dangerous climate change.'
The Intergovernmental Panel on Climate Change's (IPCC) Fourth Assessment Report: Climate Change 2007 stated with regard to Australia 'As a result of reduced precipitation and increased evaporation, water security problems are projected to intensify by 2030 in southern and eastern Australia...' The panel also judged, 'Ongoing coastal development and population growth in areas such as Cairns and South-east Queensland (Australia) ... are projected to exacerbate risks from sea-level rise and increases in the severity and frequency of storms and coastal flooding by 2050.' The PPCC also stated, 'Production from agriculture and forestry by 2030 is projected to decline over much of southern and eastern Australia, and over parts of eastern New Zealand, due to increased drought and fire...'
In 2006, Dr Roger Jones and Dr B Preston produced a report for the CSIRO which stated, 'Australia is one of the many global regions experiencing significant climate change as a result of global emissions of greenhouse gases from human activities. The average surface air temperature of Australia increased by 0.7 C over the past century - warming that has been accompanied by marked declines in regional precipitation, particularly along the east and west coasts of the continent. These seemingly small changes have already had widespread consequences for Australia.'
The report further stated, 'Future changes in climate extremes, such as tropical cyclones, heat waves, and extreme precipitation events, would degrade Australian infrastructure and public health, for example, through increased energy demands, maintenance costs for transportation infrastructure, and coastal flooding.'
5. Australia must not be left behind as technological advances are made to deal with climate change
Supporters of a carbon tax argue that it will provide a major incentive for Australian industry to change, bringing it into accord with a low emissions future. According to this line of argument, as more and more of the world's economies adapt to the demands of reduced emissions it is important that Australia not be left behind with an industrial base founded on outmoded polluting technologies.
Were this to happen, other countries may ultimately place embargos on our goods, while demand for some of our raw materials, especially coal, may well reduce. It is important that we develop industries and a domestic consumer base that is able to rely on renewable, clean energy sources. Developing these energy sources and the technologies that allow them to be exploited could be a growth area for the Australian economy.
On February 25, 2011, Prime Minister Gillard stated, 'If we don't change as the world moves, we could get stuck with a old fashioned high carbon pollution economy and not have the jobs of the future ... I'm not ... going to put the nation in that position, pricing carbon is the right thing to do...'
The Prime Minister further stated, 'History teaches us that the countries and the economies that prosper at times of historic change are those who get in and shape and manage the changes.'
The chief executive of the Climate Institute, John Connor, has claimed , 'We don't want to be lumbered with the energy sources and jobs of the 20th century, while the 21st century charges on without us.'
Chapter 23 of the Final Garnaut Report states, 'At some time, there will be breakthroughs that fundamentally lower the costs of producing goods and services in the low-emissions economy.' The report then goes on to consider some current areas of Australian research and development which are well-placed to make such breakthroughs. It is claimed that a carbon price will act as a powerful incentive to ensure that Australia continues to invest in the development of these technologies. Chapter 20 of the Garnaut Report states, 'The key to changes in sources of energy has always been the interaction between economic and environmental factors. With the challenge of climate change, the introduction of a price on greenhouse gas emissions will accelerate the change by increasing the cost of fossil fuels relative to alternatives.'
It has also been claimed that the longer Australia delays making changes to its industries to bring them into line with global low-emission standards the more expensive the changes will ultimately be. On March 18, 2008, Dr Guy Pearse wrote, 'A host of studies confirm that the longer Australia delays emission cuts the more it will cost.'
6. A key element of the Australian electorate expects action on climate change
It has been claimed that public recognition of the importance of climate change policy is growing and that all governments will be required to develop credible policies to mitigate climate change. Those concerned acknowledge that Australia is the highest per capita polluter in the world and the planet's fifteenth-largest emitter of greenhouse gases.
The success of the Greens at the last federal election has been seen as an indication of the extent to which action on climate change has become part of the Australian political agenda.
Professor Nicholas Low is director of the Australasian Centre for the Governance and Management of Urban Transport, at Melbourne University. Professor Low has stated, 'The consequences of global warming are so severe that avoiding climate change is not just a policy, it must become the overriding context of policy... The surging Greens vote in the federal election shows that after 20 years the public are now awakening to that reality.'
On January 21, 2011, the Australian Greens announced an 'interim carbon price proposal'. This suggested that carbon would be taxed essentially within the framework of the federal Labor government's proposed Carbon Pollution Reduction Scheme .
Instead of releasing pollution permits at a given rate (the government had proposed a starting price of $10 a tonne), the Greens proposal would tax emissions, at a rate of $23 per tonne in the first year, starting July 2010, and $24 in the second year. This proposal strongly influenced the Labor Government's new carbon tax.
Professor Low has argued that voter concern over climate change is here to stay and will either continue to give the Greens influence or will affect one or other of the two major parties to the point where the Greens are no longer required to voice the environmental concerns of a key element of the electorate.
Professor Low has suggested, 'Australia is at a turning point. Whether or not the movement in public opinion turns into a vote for the Greens depends on how quickly the major parties and the independents adopt effective climate change policies.'
Further implications
This is a proposal the strength and effectiveness of which cannot be fully judged until its details are known. Even then it will not be until it has been in operation for some time that its consequences will begin to become clear.
The established scientific view is that Australia, along with the rest of the world, needs to reduce its greenhouse gas emissions. The challenge for all nations is to find an effective way to do this that will not be electoral suicide for any government that attempts to do so. Any market mechanism, but especially a tax, is intended to alter consumer and business behaviour by making carbon dioxide-producing energy sources and industrial processes more expensive than lower polluting alternatives. That is, behaviour is being shaped by economic pain. The concern with the current proposals is that they may not be onerous enough to achieve the desired effect. The Greens have long been of the view that whatever scheme is put in place should target what they refer to as 'the big polluters'. The current tax proposal seems likely to allow carbon-dioxide producing industries to pass on the cost of the tax to the consumer. If this is so, it seems unlikely that there will be sufficient incentive for producers to alter their behaviour. The Government is then left in the position where it will need to decide who among the consumer base it will compensate and to what extent.
On the face of it, it seems a rather futile exercise to tax one group which then passes it on to another which the Government then compensates using the initial tax. Presumably each group, business and consumers, is going to have to experience some economic distress if consumption and production habits are to change.
For the intent of the tax to be achieved, there have to be serious, affordable alternatives. The Government will need to use at least some of the revenues from this tax to promote the further development of clean energy sources.
The scheme may well cost the Gillard Government its political life at the next election. Interestingly, failure to implement an emissions trading scheme contributed to former Prime Minister Kevin Rudd's political demise.
The electorate appears to want action on climate change but to be uncertain about how much they are prepared to pay for it.
Were a Liberal Government to be returned without a clear majority it is hard to imagine how they would be able to govern with the support of the Greens while they continue to oppose strong action on climate change.
An emissions trading scheme (which allows high cost-polluting industries in one country to trade carbon credits with countries where emissions reduction is less costly) offers a partial way out of the impasse outlined above. Such a scheme, however, relies on a global consensus that has not yet been achieved. The Australian Government hopes within three to five years of the introduction of a carbon tax to be able to shift to an emissions trading scheme (ETS).
The Greens, however, have reservations about an ETS. They want the 'big polluters' to change their practices and they want that action sooner rather than later. From their perspective it is important that any scheme Australia introduces actually reduces carbon emissions rather than appears to.
Newspaper items used in the compilation of this issue outline
Herald-Sun: March 3, 2011, page 30, comment (photos of independents Rob Oakeshott and Tony Windsor) by Miranda Devine, `Tax betrayal haunts MPs'.
http://www.heraldsun.com.au/opinion/tax-betrayal-haunts-independent-mps-tony-windsor-and-rob-oakeshott/story-e6frfhqf-1226014938584
The Australian: March 3, 2011, page 14, comment by Gary Johns, `No happy ending for Gillard's carbon tax fairytale'.
http://www.theaustralian.com.au/news/opinion/no-happy-ending-for-carbon-tax-fairytale/story-e6frg6zo-1226014940249
Herald-Sun: March 2, 2011, page 34, comment by Andrew Bolt, `Gillard's lie hurts us all'.
http://www.heraldsun.com.au/opinion-old/gillards-lie-hurts-us-all/story-e6frfifx-1226014405738
The Australian: March 2, 2011, page 14, comment by Geoff Carmody, `Doing nothing is preferable to this'.
http://www.theaustralian.com.au/news/opinion/doing-nothing-is-preferable-to-this/story-e6frg6zo-1226014386019
The Australian: March 2, 2011, page 4, news item, `Garnaut questions cost of Abbott option'.
http://aap.newscentre.com.au/acci/110302/library/environment/25149383.html
The Age: March 2, 2011, page 19, comment by Shaun Carney, `Switching our whole way of life'.
http://www.theage.com.au/opinion/politics/switching-our-whole-way-of-life-20110301-1bd46.html
The Australian: March 1, 2011, page 13, cartoon. (no web link)
The Australian: March 1, 2011, page 6, comment by Peter van Onselen, `Gillard's backflip has her on back foot'.
http://www.theaustralian.com.au/news/opinion/gillards-backflip-has-her-on-back-foot/story-e6frg6zo-1226013782112
The Australian: March 1, 2011, page 6, news item by Andrew Trounson, `Switkowski wants broader plan'.
http://www.theaustralian.com.au/national-affairs/former-telstar-boss-and-nuclear-power-advocate-wants-broader-energy-plan/story-fn59niix-1226013786586
The Australian: March 1, 2011, page 1, news item by Sid Maher, `Labor loses key carbon supporter' (ref to Heather Ridout).
http://www.theaustralian.com.au/national-affairs/labor-loses-key-carbon-supporter-heather-ridout/story-fn59niix-1226013808402
The Age: March 1, 2011, page 7, comment by Michelle Grattan, `Abbott carbon coats next election campaign'.
http://www.theage.com.au/opinion/politics/abbott-carbon-coats-next-election-campaign-20110228-1bbrg.html
The Age: March 1, 2011, page 12, cartoon and letters, incl, `We have paid to cut footprint / Create jobs here / Carbon quotas real deal'.
http://www.theage.com.au/national/letters/we-have-paid-to-cut-footprint-20110228-1bbme.html
The Age: March 1, 2011, page 7, news item (photo of Bjorn Lomborg) by Adam Morton, `Impost can help, not solve, climate change, says sceptic'.
http://www.theage.com.au/national/impost-can-help-not-solve-climate-change-says-sceptic-20110228-1bbrf.html
The Age: March 1, 2011, page 7, news item by Michelle Grattan, `Coalition vows to scrap carbon tax'.
http://www.theage.com.au/national/coalition-vows-to-scrap-carbon-tax-20110228-1bbrd.html
The Age: February 28, 2011, page 13, comment by Kenneth Davidson, `Carbon tax is a first step in climate fight'.
http://www.smh.com.au/opinion/politics/carbon-tax-is-a-first-step-in-climate-fight-20110227-1b9w6.html
The Age: February 27, 2011, page 1, news item by Josh Gordon, `Millions win in carbon tax plan'.
http://www.theage.com.au/national/millions-win-in-carbon-tax-plan-labor-20110226-1b9b2.html
Herald-Sun: February 26, 2011, page 23, comment by Andrew Bolt, `Impossible to warm to Gillard's tax'.
http://www.heraldsun.com.au/opinion/impossible-to-warm-to-gillards-tax/story-e6frfhqf-1226012249593
The Australian: February 26, 2011, page 12, comment by Greg Combet, `Carbon price is the best way forward'.
http://www.theaustralian.com.au/national-affairs/people-in-politics/carbon-price-is-the-best-way-forward/story-fn5oad9h-1226012246858
The Australian: February 26, 2011, page 12, comment (on New Zealand's carbon scheme) by Rowan Callick, `Kiwis comfortable with their early greenhouse scheme'.
http://www.theaustralian.com.au/news/opinion/kiwis-comfortable-with-their-early-greenhouse-scheme/story-e6frg7e6-1226012249485
The Age: February 26, 2011, page 24, comment by Shaun Carney, `Gillard's policy reboot is close to carbon copy'.
http://www.smh.com.au/opinion/politics/gillards-policy-reboot-is-close-to-carbon-copy-20110225-1b8hy.html
The Age: February 26, 2011, page 23, Spooner cartoon. (no web link)
The Age: February 26, 2011, page 22, editorial, `Gillard must hold the line on carbon'.
http://www.theage.com.au/opinion/editorial/gillard-must-hold-the-line-on-carbon-20110225-1b8i2.html
The Age: February 26, 2011, page 9, news item by Grattan and Morton, `Voters knew Labor stance on carbon price, says PM'.
http://www.smh.com.au/environment/climate-change/voters-knew-labor-stance-on-carbon-price-says-pm-20110225-1b8m1.html
Herald-Sun: February 25, 2011, page 32, editorial, `PM's hand is in our pocket'.
http://www.heraldsun.com.au/opinion/editorials/prime-ministers-hand-in-our-pocket/story-e6frfhqo-1226011598116
Herald-Sun: February 25, 2011, page 6, comment by Andrew Bolt, `Gillard lies again about green tax'.
http://www.heraldsun.com.au/opinion/gillard-lies-again-about-green-tax/story-e6frfhqf-1226011602957