Monday, 2 July 2012

Aussie Carbon Tax - A Kiwi's Perspective

Bluewaters Coal Power Station - WA
This week my Facebook news feed has contained some of my Australian friends ranting.  Their frustration at the moment is regarding the carbon tax that the Gillard government has just put into place.

Their comments range from general complaining about the price of things going up to plain climate change denial.  I used to be a fairly staunch climate change denier but then I read about it in depth and unfortunately, the evidence is overwhelming.  All of this prompted me to do some reading about what the Australian Carbon Tax really is and how it will really affect people.

The gist of it is that the worst polluters will be made to pay $23 per tonne of carbon emitted, the price will be dictated until July 2015 when it will be switched to a cap-and-trade market based price.

The list of the worst polluters is expected to cover about 60% of Australia's carbon emissions.  The main culprits are power generation, mines, heavy industry and landfill methane.  The result of this is that household bills are expected to rise by about $10 per week and construction cost rises are expected to be at the lower end of the 0.7% to 1.8% range predicted by building companies.

So, whats happening with the money then?  Well, the tax-free threshold has risen from $6,000 to $18,200 and will rise to $19,400 next year.  The changes mean all those earning less than $80,000 will receive a tax cut.

The delusional Larry Pickering goes so far as to call this Marxist and is an advocate of Abbots alternative direct action plan to combat climate change.  A plan not supported by Australian economists.

This criticism of modest wealth redistribution is what really confuses me.  When wealth is distributed more evenly, everything gets better in a given society.  I'm not talking about communism - we all know that would suck.  What I'm talking about is taking steps to prevent the levels of inequality that America is experiencing at the moment and is reaping social havoc.

The TED talk below illustrates my point very nicely.

So, what the Aussies have is a tax that will encourage the worst polluters to evolve or disappear which will make the country nicer to live in (who wants to live around pollution?) while increasing income equality which will also make the country nicer to live in.

I would happily put up with a similar measure here in NZ.  It's a shame that the Key government is going down the direct opposite path by granting oil exploration rights to overseas companies and selling our power companies.  The sale of our power companies becomes a big problem when we sign the Pacific Free Trade Agreement.  When we have done that and overseas investors try to mine more and more lignite in Southland, those investors will be able to sue us (the New Zealand tax payers) for lost profit in the event that we ever actually take decent measures to curb climate change.

To me the Aussie Carbon Tax is at worst just a bad tasting good medicine that will improve Australia and the rest of the world.

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