Right: a fistful of dollars paid by polluters via a carbon tax; is this money eventually used to compensate those very polluters?.
Further implications
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.