Carbon tax the true cause of power price pain

THE government has desperately been trying to justify a major policy backflip in scrapping phantom solar credits by claiming it will help with the cost of electricity.

If this sounds like pink batts, green loans, the citizen's assembly and cash for clunkers that's because it is. This government makes major announcements with lots of publicity, defends the programs, and abolishes them.

On this occasion Labor's swindle is to scrap the phantom credits scheme, which paid people for solar energy that was never produced, in order to reduce power prices.

However, if the government really wanted to do something about power prices they would simply abolish the carbon tax. The carbon tax is by the government's own estimates 100 times larger than any savings to be made from abolishing the scheme.

So let's use the government's own estimates to show where real power savings can be made.

First, removal of the phantom credits scheme is estimated to save $80 to $100 million next year. Undoing the damage done is useful but it is too little too late.

By comparison, the government's own budgeted revenue for the carbon tax is close to $9 billion a year and rising. In short about 100 times more expensive than the solar scheme.

What is more, the vast bulk of the carbon tax is paid through higher electricity and gas prices for households as well as higher refrigeration costs for small business owners.

Second, removing the carbon tax will have a real and immediate impact on electricity prices. The head of the ACCC has confirmed that if the carbon tax drops the price of electricity would drop accordingly.

You will also save on the removal of the tax on a tax - the GST on the carbon tax component of your electricity and gas bills.

Third, the weirdest part about the carbon tax is that it doesn't even work. Australia's emissions go up under the tax. Over the decade from 2010 to 2020 our emissions during the carbon tax era rise by 77 million tonnes. Instead of cleaning up Australia's environment, we end up just paying higher electricity bills.

It is very telling that since the US election, the White House has emphatically denied it will introduce a carbon tax. The US is meeting its emissions reduction targets without a carbon tax and is instead taking direct action.

In the end, the government is congratulating itself for abolishing its own phantom credits solar scheme. But if we are going to do something that really reduces electricity prices, then the one thing the government should do is abolish the carbon tax.

Greg Hunt is the opposition spokesman on climate change

Carbon tax the true cause of power price pain | thetelegraph.com.au