PM is just adding crippling costs

JULIA Gillard's commitment to a carbon tax is inevitably going to be the dominant issue of this parliament. This new tax is designed to change your way of life and the way our economy works.

What's the point of a carbon tax if it doesn't make it harder for people to turn on their airconditioners or to drive their cars? After all, the only way that a carbon tax can reduce emissions, rather than just make them more expensive, is if less coal-produced electricity and less oil-powered transport is used.

If a carbon tax does not reduce the use of fossil fuels, it's just another tax, not an environmental measure at all. Given people's propensity to use their airconditioners and to drive their cars, if a carbon tax is to reduce electricity use and car use it will have to raise the price of daily life very considerably. It's no wonder the Prime Minister prefers to talk about the principle of the carbon tax rather than nasty details like the level at which it would have to be imposed.

When the Prime Minister, Bob Brown, the Greens and other ministers talk about a low carbon economy future, they mean an economy where transport involves less use of private cars and industries that use lots of electricity such as steel and aluminium scarcely exist in Australia.

It's odd Gillard seems to have forgotten her history. You can't have a modern economy or rising standards of living without rising power consumption. The leaders of China and India certainly haven't forgotten. That's why they'll never agree to any limitation on their carbon dioxide emissions that would lock their people permanently into the kind of poverty from which they are only now beginning to escape. That's why any unilateral step to tax emissions will hurt Australia's economy without improving the world's environment.

There was a stronger argument for putting a price on carbon when the whole world seemed to be moving in that direction. Pre-Copenhagen, it could have been argued the costs of a carbon tax would be shared equally among all the world's economies. Now that US President Barack Obama has abandoned his cap and trade scheme, it's clear that the best way to reduce emissions is through measures that would be in the national interest regardless of international action.

In the absence of wind that never stops blowing, sun that never stops shining and tides that never stop turning; in the absence of hydrogen cars; and in the absence of nuclear power stations to supply most base-load electricity, big reductions in emissions are impossible without a big increase in people's cost of living or a significant change in their lifestyles. Eventually, technologies that we can hardly envisage today will make fossil fuels less important. In the meantime making coal, oil and gas more expensive is the modern equivalent of hastening the computer age by a tax on typewriters.

Thanks to the closure of the coal industry and to deindustrialisation more than to a widely scammed emissions trading scheme, Europe has hardly increased its emissions during the past decade. It has, though, increased its consumption of emissions by about 50 per cent.

Emissions-intensive activities have migrated from Europe to the rest of the world, sustaining Europe's standard of living by doing the things that Europeans are too environmentally vain to do.

The Prime Minister kyboshed her predecessor's ETS, sabotaged his political standing, then seized the prime ministership herself because she wanted to avoid this kind of election debate that couldn't be won.

On her own admission, the Prime Minister always wanted to impose a carbon price. She just wanted to avoid it during the election campaign last year, to impose it during this term of parliament, and to justify it during the next campaign as a done deal. I said at least 15 times during the campaign there would be a carbon tax if this government were re-elected.

The rationalisation that the Prime Minister has changed her position because circumstances have changed is false. She may not have anticipated a hung parliament but she certainly anticipated a hung Senate and knew that any carbon arrangements would have to be negotiated with the Greens, who were the only group campaigning for a carbon tax.

The Prime Minister's boast that she is taking a courageous decision is false. Courageous governments inform voters of their tough intentions before an election, not after.

In modelling the impact of Kevin Rudd's ETS on prices, Treasury used a carbon price of $26 a tonne. This, remember, is the scheme the Greens rejected because the carbon price wasn't high enough. Even at $26 a tonne, a carbon tax would add an average of $300 a year to electricity bills (and $500 in NSW). It would add 6.5c to the cost of a litre of petrol. At this rate, a carbon tax would raise about $10 billion a year without materially reducing emissions because consumers have previously absorbed rises of this magnitude.

A carbon tax of about $25 a tonne would close 16 coalmines and cost 10,000 jobs in coalmining (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). It's "economic vandalism", according to the head of Bluescope Steel, that will drive manufacturing jobs offshore.

A carbon tax would add 25 per cent to the price of electricity and up to 5 per cent to the cost of groceries because power and transport costs are embedded in the price. If these estimates are wrong, the government should give us the correct ones.

It has been prepared to cite estimates of so-called green jobs that might be created under a carbon tax but this assumed a carbon price of $45 a tonne and didn't net out the existing jobs that are likely to be lost.

The Coalition holds that climate change is real and that mankind is contributing to it. We have a policy to reduce emissions, not just to make them more expensive.

We would reduce emissions through more tree planting, better soil and smarter technology. Our plan would cost $3.2bn over the forward estimates period rather than the $40bn that the government had sought to raise through its ETS. We would reduce emissions by about 600 million tonnes of carbon dioxide over the decade by purchasing abatements at an average cost of $15 a tonne. Our plan was backed by various experts in the field, including a former Labor treasurer of Queensland, who said that large-scale emissions reductions were feasible at this price.

Our plan was funded through savings in other government spending. It did not involve the government picking winners, merely selecting the most cost-effective forms of emissions reduction from the various proposals that the market would produce.

SOURCE: The Australian