Some people are worried about climate change. Many of these people believe that the solution to climate change is to throw politicians and bureaucrats at the problem, and maybe have a conference about setting up the terms of reference for a steering committee that will investigate the rules for a community forum that elects a board to appoint a working group to write a discussion paper.
Take THAT you evil climate.
For the proponents of climate change “action”, I have some good news. Not only will Australia have the world’s biggest carbon “tax”, but we also have a few government programs working to save the penguins from sun-stroke. Did I say “a few”? Let’s have a closer look… Read more…
The debate about the carbon tax is so passionate and divisive that a compromise is almost certainly out of the question. But that doesn’t mean we can’t consider the thought experiment. I am on the public record as being against Gillard’s carbon tax, but after Ross Garnaut came out recently talking about linking the carbon tax with other tax cuts I started thinking about what else could be done to make the carbon tax “less bad”. The following are the demands I would put to the government if they wanted me to consider supporting their new tax…
1. The first requirement, and non-negotiable for me, is that the tax cuts must be at least as large as the new carbon tax. I believe that the federal government is already too big, and I am very strongly opposed to any policy that would further increase the size of government. If the proponents of a carbon tax really believe that the policy is vitally important then they should be willing to offer large tax cuts, even if that means they need to cut government spending.
2. My second requirement, which is also a game breaker, is that the carbon tax must not later convert into an emissions trading system (ETS). While both will have a cost to the economy, in my opinion an ETS is worse, and is likely to be an ever-growing bureaucratic and regulatory nightmare. If there must be a price on carbon dioxide, then it should remain at a low, simple, and predictable tax.
Yesterday, Malcolm Turnbull explained his reasons for supporting the ETS legislation. The ALP has jumped on the opportunity to attack the Liberals, while some Liberals have jumped on the opportunity to attack Turnbull. Just to be different, I thought I’d actually engage the ideas.
I’ll start with some points of agreement with Turnbull. I agree that the world has gotten warmer over the last 100 years (specifically between 1910-40 and 1970-2000) and that some of the latter warming is due to human emissions of greenhouse gases. I agree that if we continue to emit greenhouse gases then we can expect some continued warming into the future. And I agree that this will cause costs in some areas.
Where I disagree with Turnbull is (1) I don’t think we should exaggerate the expected net cost of global warming; (2) I do not agree that an ETS is the most market-friendly policy available; (3) I believe the long-term solution must be production-based (new technology) not consumption based (lower energy use); and (4) I don’t believe that an ETS will pass a benefit-cost analysis and therefore it shouldn’t be introduced.