Carbon Tax: An Inconvenient 81 cents

Every politician and senior public servant that I speak to repeats a similar line about the search for productivity and an efficient economy.

This line is repeated across social and economic policy by members of both the government and opposition. It makes sense. Since the liberalisation of the 1980s, the focus has been to squeeze every public penny for all it is worth.

We are expecting the carbon tax bill to be repealed on or around July 21. If successful, the repeal will be partly retrospective and include all the dates from July 1. It is likely that I will incur a cost of the carbon tax between July 1 and 21. Should the repeal occur, I will have the right to expect a refund from the place of purchase that charged the tax.

Let us say that I buy a gas cylinder from a warehouse, they cost around $20. The carbon tax impact is about 81c.

Wesfarmers, the parent company of Bunnings Warehouses that sells those gas cylinders, and a bevy of other gas and electricity retailers, are now preparing for what could be called three weeks of government intervention hell. They will need to include that 81c, and comments from their directors’ point to this being a frustrating issue for them and consumers.

I might get an electricity bill or pay for petrol in this 21 day span. There will be a cost from the carbon tax incurred on this.
My views on a carbon tax are quite relaxed. I really couldn’t care less about 81c here or there. I have not noticed a dramatic increase in prices since its introduction and I have not found that it inhibits my habits. I judge policies on their effectiveness and benefit to the economy, and how they can support efficiency. To me, the carbon tax was not wholly bad.

Tony Abbott claims that this repeal is a central part of his economic-action strategy. His fear-mongering when in opposition caused major fright and economic concern over this dreaded tax.  Abbott argues that this repeal will reduce the burden of government over the long-term. Any public policy professional would advise the government of a different course of action – because it seems to increase it unnecessarily. This is not a great impediment to productivity, as much as the government wants us to think so.

We can make this process much less painful and less intrusive. Don’t have a retrospective clause in the repeal bill. It is as simple as that. Even if the government is hell-bent on destroying the carbon tax, repeal it from July 1 2015. The retrospective aspect is destructive to consumer sentiment.

When Clive Palmer, defender of the environment, came out advocating for the repeal of the carbon tax in an effort to move to an emissions trading scheme he signalled a direction Julia Gillard intended on taking the tax. While Palmer was arguably populist and has escaped scrutiny for his position – there are a lot of unanswered questions on this issue – it is a satisfactory means to an end.

Even the World Bank proclaimed last week that fighting climate change is good for economic growth. It enforces innovation and development, which in turn creates jobs and promotes efficiency; it removes excuses on inaction on man-made climate change.

When Abbott says that the carbon tax destroyed jobs, he is wrong. Abbott and his advisers had a wholly ideological position on the tax, which is not always the best way to define public policy.

Inefficient and inappropriate taxation and regulation is a terrible thing. However, the carbon tax was not one of these. It was a politically controversial issue because it could have raised prices and caused slight headaches for CEOs.

There is growing support among Australians for a price on carbon. Part of this is because many Australians did not feel a dramatic impact of a price on carbon. It would be perfectly fine for Abbott to pursue dismantling the carbon tax, but it is incentivising change and the repeal is becoming an actual problem for business. If the carbon tax repeal bill does pass, he cannot blame Labor for causing headaches to business – it is his actions that will be most disruptive to the economy.

This would have been a choice time to put ideology aside for the sake of economic efficiency.

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