How Much Will the Australian Carbon Tax Cost?

Written by Andrew Puhanic
Published on Sunday, February 5th, 2012
Globalist Report

The growing chorus of climate change enthusiasts demonstrates that there is consensus in the wider community that man-made climate change is real. To the frustration of everyone else who would like to further investigate if global warming is not man-made, the debate has now shifted from proving whether or not climate change is man-made to how it can be managed.

Unfortunately, most countries are now implementing a carbon tax to reduce global emissions.Australia has already passed legislation to introduce a carbon tax of which will take effect on July 1 2012. There has been little or no discussion about what effects a carbon tax will have on industry, business and employment. Evidence being publicized about the economic effects of a carbon tax is concerning and needs to be discussed in a wider public forum.

This article has no intention of proving whether or not climate change is real, its aim is to provide you with evidence on what the costs of a carbon tax will be from an Australian perspective.

COSTS OF A CARBON TAX

In Australia, it is expected that Australian families will be confronted with an increase in the cost of living under the carbon tax greater then they experienced when the federal government introduced changes to the taxation system with the introduction of a GST.

In a report released by the CSIRO last year, they concluded that there will be an overall rise in consumer costs of 0.6 per cent in the first year the carbon price is in place, based on a starting price of $23 a tonne. This sounds all well and good because the Australian economy is booming. So what happens if the markets crash? What happens if commodity prices collapse? What happens if the Greens Party gets in power (The Greens Party would prefer a much high carbon price be set)?

The cost of a carbon tax has already hit the consumer with higher air fare tickets even before it has taken effect. ‘QANTAS will raise surcharges for international and domestic flights by as much as 24 per cent, blaming higher fuel costs and the impact of carbon taxes in Australia and Europe. Qantas and its regional offshoot, QantasLink, will increase domestic fares by an average 2.5 per cent from February 9. This translates into a $5 fare increase for a flight between Sydney and Melbourne’ (O’sullivan, Matt. 2012). That doesn’t sound like a lot? But what happens when the carbon price rises to $50? With global oil supplies under threat, the aviation industry of which employs 10,000+ people in Australia stands to lose the most from a carbon tax.

The following are a few examples of what the Australian Government will pay for the introduction of a carbon tax.

• $105 billion of taxes out to 2020/21 largely paid for in electricity, gas and diesel price rises.
• A further $15 billion in direct government expenditure. This includes $10 billion of unfunded expenditure to buy shares in speculative energy companies that the private sector will not support. It also includes $3 billion in other energy programs and $2 billion to close down power stations.
• $4 billion budget deficit in the tax and transfer payments associated with the package in just its first three years.
• Purchase of at least $8 billion in foreign carbon credits to 2020. In 2020 alone, Australian companies will have to purchase $3.5 billion in foreign carbon credits on top of the Carbon Tax.

Sadly, most supporters of a carbon tax are under the illusion that a carbon tax will force industry and change to reduce carbon output. This couldn’t be further from the truth.

In a report about the impact of U.S. climate legislation on trade with China written by Acuna et al. (2012),they demonstrated that ‘previous studies show that climate legislation will likely have little impact on regional and thus global emissions. At a carbon price of $31.70, very little change in output and, therefore, emissions will occur unless legislation provides incentives for technology change within each industry.

China is not likely to implement a domestic carbon tax and will either enter into negotiations with the U.S. Trade Representative to reduce the import barriers or will take a case to the WTO. If a case is brought to the WTO, the U.S. legislation as it currently stands is not likely to win, as ACESA’s exceptions for border taxes discriminates among U.S. trading partners.

Ironically, most of the coal mined in Australia is shipped off to China and India. As China and India will not be introducing a carbon tax, the reductions made to greenhouse emissions in Australia will be offset by the mega polluting coal power plants in China and India. Also, due to Australia’s very, very small population, the effect of global carbon emissions is only around 1.5%. For all the effort taking place, for all the potential hardship the Australian public is going to have to face with the introduction of a carbon tax, Australia only outputs 1.5% of global emissions and will reduce that to 1.2 % (20% Saving)

HOW THE GOVERNMENT WILL OFFSET THE COSTS OF A CARBON TAX?

To offset the costs of a carbon tax, the federal government will change the tax system to subsidise low to middle-income earners. On the surface this sounds good, however isn’t the point of introducing a carbon tax to reduce emissions, not keep them the same? If middle and low-income earners have no incentive to change their habit’s, what emission’s will be reduced? Also, the additional costs that the coal industry will be charged is apparently meant to incentivize the coal industry to change is habits and for other industries to sprout and replace coal-fired power plants. Again, this sounds good on the surface but there are a few questions that need to be answered.

1. How does the government know that the coal powered power industry will change? What if this is not possible?
2. How long will it take for alternative power sources to enter production?
3. What if alternative power sources never become available? Or take 50+ years to go online?
4. Shouldn’t it be the job of the consumer to change his or her behaviour? At the end of the day, consumers are the ones who use the power. What if they don’t change their habits? What if they can’t afford the anticipated rise to $40 per tonne emissions costs? What happens if the Australian economy collapses 10 years into the program? Will Australians be left without power?

CONCLUSION

There is compelling evidence to suggest that the introduction of a carbon tax will hurt the Australian public financially. This article has not attempted to prove whether or not global warming is real, but what the potential costs of the introduction of a Globalist carbon tax will be. In Australia, the carbon emission savings that are anticipated to be made by the introduction of a globalist carbon tax is only .3% of total global emissions. The globalists and the Australian Government have lied to the Australian public and now they are about to pay a heavy price.

Cited Sources

1. Acuña, S. Akujuobi, C. Brigance, N. Kasper, B. Nearbur, T (2012) The Impact of U.S. Climate Legislation on Trade with China
2. O’sullivan, Matt (2012). Qantas puts carbon taxes in frame for fare increases.

How much will the Australian Carbon Tax Cost?: