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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

carbon tax: going slow « Previous | |Next »
July 11, 2011

The various Australian industry lobby groups (Australian Chamber of Commerce and Industry or ACCI, the Australian Coal Association and the Australian Industry Group) some free market economists and conservative politicians have beaten up the carbon tax big time as a radical and painful measure that would lay waste to the economy.

Australia's media bears some responsibility for perpetrating this deception in that they failed to investigate and critique the cartoon doom and gloom images about economic ruin:


Despite Australia being the world's 10th biggest aggregate emitter, with the world's highest per capita emissions, our mitigation effort and short-term target (a cut of minus 5 per cent below 2000 levels by 2020) are among the weakest among all industrialised and major industrialising nations.

And there are heaps of subsidies and compensation to ease the political fallout on the Gillard Government by showing that Abbott’s big scare campaign about the cost of living has been wrong and to deprive him of the chance to offer his own tax cuts.

The economic reality is otherwise and the ground underneath the Australian industry lobby groups and the conservative politicians has been effectively undercut. Their lines of "a toxic tax ", "socialism masquerading as environmentalism", economic ruin, recklessly shooting our wealth-creating industries in the foot etc etc now sound decidedly hollow.

It is the free market economists who are quick of the mark to create doubt about this first step to a low carbonb economy. For instance, Sinclair Davidson says at The Drum that Treasury modelling relies very heavily on assumptions about technology. Consequently,

Electricity generation is expected to move from being predominately coal-generated to renewable energy with some coal being used in combination with carbon capture and storage technology. Right now that technology is not viable; Treasury assumes it will be viable after 2021. Renewables are expensive and unreliable. Treasury imagines the greatest growth will be in geothermal energy – again a technology that is unproven.

Davidson comments:
Of course technological improvements occur all the time and these technologies may well be viable in future. Yet the Government is betting our economic prosperity on these technologies becoming viable in the very near future. If those assumptions do not work out, electricity prices will be very high and very likely Australians will experience rolling black-outs. This is a policy that undermines our domestic energy certainty.

The message? It's too risky. The lights will go out. So the deal fails. What has happened to the Hayekian idea of markets and innovation? What has happened to an analysis of the public policy that addresses this risk--eg., the investment fund to facilitate innovation ion the renewable industry?

Judith Sloan's response is that to the target of a reduction of 5 per cent by 2020:

the wildly inefficient schemes – particularly the subsidisation of small-scale renewable energy and the appalling Mandatory Renewable Energy Target – will be required to do the heavy lifting in order for the target to be met..Indeed, it is a case of a major opportunity foregone – to replace the melange of inefficient schemes with a carbon tax...The explanation, of course, is politics. The only way to get the Greens across the line with a 'low and slow' approach to the introduction of a carbon tax was to continue, indeed bolster, the concoction of visible, feel-good but costly schemes.

Her judgment is that it is:
Better to feel you are doing good rather than actually do good, seems to be the message. And when billions of dollars of other people's money can be directed to your mates in the renewable energy industry and the research community, the package all of a sudden makes sense. Hence the creation of ARENA – the Australian Renewable Energy Agency – clinched the deal.

The inference? Corruption!

Sloan does not mention that Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation with its $10 billion for innovation in renewable and clean energy--- will be placed out of the hands of politicians. They are independent and will sit beyond ministerial interference.

The unspoken assumption of Davidson and Sloan economics is that the governments have the ability to destroy economies and that interventionist politics undermine economic prosperity. There ought to be less not more regulation with respect to energy markets. Heavy-handed regulation by hands-on apparatchiks, undermines investment and the rewards for risk taking in business.

| Posted by Gary Sauer-Thompson at 9:15 AM | | Comments (7)


I've had half a dozen people tell me they don't understand this. They were expecting to be personally taxed and to wake up this morning to find prices had doubled. Instead most of them won't notice any difference. They're thinking they must have missed the bit that's going to end the world.

Tony Abbott's purple faced bellowing has been effective, but it's sounding a bit silly this morning. Hopefully, at some point in the near future, someone will wonder out loud how much of the fall in consumer confidence can be sheeted home to his scare mongering.

Yes there is scaremongering going on but that is nothing new. That is part of the political process and is used by both sides when it suits.
Give the public some credit for intelligence. They know that had Labor gained a clear majority at the last election and or The Greens not got control of the senate then the whole carbon tax issue would be on the cutting room floor of a back office somewhere.

it is true that up to now Tony Abbott has set the political contours and shape of the carbon tax issue.

He forced Gillard to admit her carbon price was a tax;and forced her to compromise on the nature and scope of that tax. He also changed the debate in the community by controlling the tempo, the language and the structure of the debate. He rallied his base and he swept up a poll-obsessed media to back his cause.

The "game" has now changed. The carbon tax deal will will become law later this year, and it will take effect from July 1, 2012. So Abbott's easy, made-up scare of the sky collapsing will need to be replaced with a factual scare.

It will most likely likely take till some time in 2013 to provide factual evidence of higher prices or people not being compensated fully so I think Abbott and Co will focus on the trust issue with Labor and keep saying tax, tax, tax while they come up with another issue to keep the polls in their favor.

The contrast between 2 cartoons is vivid.
Leak continues his abject subjagation to his role as a rightist propagandist whilst Petty offers a more nuanced view.

I sometimes wonder where the world would be without the Murdochian boot to squash democracy.
I suppose without Murdoch we would still have something very much like him/it as long as we have the various lobby groups Gary mentions in this post.

It would be so nice not to be told what and how to think all the time.
Ahh 'freedom' in a capitalist society!

BTW- I don't think Leak and his masters [I'm assuming most of his masters are fellas] understand the irony that his cartoon is really a tribute to Brown and the Greens. Without the Greens the lobbyists would have continued to ignore the needs of Oz and the world and the boots on the face of the ALP would have resulted in zero progress re climate change.

[2nd BTW -Ta Gary for the potted history in the last thread.]

First of all, thanks to Fred. The prostitution of intellect involving cartoonists has became a bit blatant lately.
The giant foot coming down on Gillard is, of course, the fossil fuels industries, perhaps Leak thinks if he makes the lie blatant enough, people will see through it.
Funny he should mention Sinc and the Sloan Ranger. Was just over there for a little look, as one does, from time to time.
Catallaxy is truly a remarkable document for monitoring the thought processes of the
heathen right, last post had someone calling someone else, "vile scum" during the outworkings of a convoluted argument over whether Allah is a god of "The Book" or not.

The carbon tax has yet to become law, but poor beleaguered Qantas says it simply MUST increase it's prices!

Why pass up an opportunity to pad the profit margin, eh?

Then again... that nasty South American volcano DID spew out tons of carbon... so maybe its sort of payback!