Herald Sun

Bill’s tax has the power to hurt us

- Tom El­liott

IF La­bor wins the next elec­tion, power prices will rise. That, we’ll be told, will help com­bat global warm­ing. In re­al­ity, how­ever, pricier elec­tric­ity will cut the liv­ing stan­dards of most Aus­tralian house­holds.

As re­vealed by the Her­ald Sun this week, La­bor has de­signed a Car­bon Tax Mk2 to re­duce our col­lec­tive CO2 out­put. Ap­par­ently, the tax will re­strict the out­put of coal-fired gen­er­a­tors (which cur­rently pro­duce the vast ma­jor­ity of power in Vic­to­ria), im­pose tougher ex­haust stan­dards on new cars and force busi­nesses that ex­ceed cer­tain tar­gets to pur­chase emis­sion per­mits from over­seas. In time, the Op­po­si­tion plan as­sumes that fos­sil fuel use can be phased out in favour of re­new­ables.

It’s great to have dreams for the fu­ture. Who wouldn’t want a world where wars are a thing of the past, no one goes hun­gry and energy is clean, cheap and abun­dant?

Un­for­tu­nately, real life rarely lives up to such high stan­dards. De­spite the fact most peo­ple agree wars are hor­ri­ble, one glance at much of Africa and the Mid­dle East proves that armed con­flict is a daily re­al­ity for mil­lions of peo­ple.

We now pro­duce more than enough food to feed ev­ery­one. Notwith­stand­ing that, pic­tures of starv­ing chil­dren with dis­tended bel­lies still at­tract do­na­tions aimed at fight­ing poverty.

And when it comes to energy, it’d be great if sun­light com­bined with silent, non-bird-killing wind­mills could heat our houses, power up our gi­ant TVs and keep mo­bile phones, tablets and lap­tops fully charged. Again, re­al­ity has a nasty habit of in­trud­ing upon utopia.

Dur­ing the fore­see­able fu­ture there is sim­ply no way that re­new­able tech­nolo­gies can meet our power de­mand. Ir­re­spec­tive of what Bill Shorten, the La­bor Party and the Greens say, the elec­tric­ity con­sump­tion pat­terns of most Aus­tralians are pretty sim­ple. We ex­pect to switch on the lights when and where we want. We de­mand wire­less in­ter­net ac­cess 24 hours a day. Un­like our fore­bears, we nei­ther shiver in win­ter, nor sweat in sum­mer; cen­tral heat­ing and airconditi­oning were de­signed to make such dis­com­forts a thing of the past.

In short, we like to use elec­tric­ity pretty much when we want. It is a sta­ple of life in the 21st cen­tury. As a re­sult, any politi­cian who in­creases its price will lose pop­u­lar­ity quick smart.

The first Car­bon Tax un­veiled in 2010 by for­mer prime min­is­ter Ju­lia Gil­lard pro­duced a great deal of gob­bledy­gook. Back then we were told that our re­liance on coal could be phased out with­out pain. Yes, elec­tric­ity prices might rise, but house­holds would be ad­e­quately com­pen­sated us­ing the very rev­enue gen­er­ated by the tax it­self.

Jobs were also to be pro­tected via pro­tec­tion for “in­ter­na­tion­ally ex­posed in­dus­tries”. Frankly, I never un­der­stood what any of that meant. To re­duce emis­sions, our over­all elec­tric­ity con­sump­tion had to be cut. Be­cause we like us­ing power in so many dif­fer­ent ways, rais­ing its price meant a drop in col­lec­tive liv­ing stan­dards. And has a new tax ever im­proved the lot of av­er­age Aus­tralians?

The Car­bon Tax Mk1 cost both Ju­lia Gil­lard her job as prime min­is­ter and La­bor its po­si­tion in gov­ern­ment. Why then does Bill Shorten wish to re­peat this failed experiment on vot­ers in 2016?

THIS new ver­sion of the Car­bon Tax will al­most cer­tainly dif­fer in de­tail from its pre­de­ces­sor. Per­haps the phase-in pe­riod will be longer, or the new house­hold com­pen­sa­tion pack­age higher; we’ll find out in a week or so.

What will not change is the fun­da­men­tal pur­pose of this tax. In or­der to change our de­mand pat­tern for power, the Car­bon Tax Mk2 must in­flict pain. To pre­tend oth­er­wise is to stick one’s head in the prover­bial sand.

Na­tional sta­tis­tics sug­gest that Aus­tralian in­comes are barely keep­ing pace with in­fla­tion. As a re­sult, ev­ery ex­tra dol­lar that a car­bon tax and its ex­pen­sive re­new­able elec­tric­ity re­moves from peo­ple’s pock­ets rep­re­sents money sub­tracted from other parts of the house­hold bud­get.

Ev­ery for­eign emis­sions per­mit that an in­dus­trial power user is forced to pur­chase may con­trib­ute to job losses among its work­ers. And La­bor’s al­leged plan to make new cars more ef­fi­cient (read ex­pen­sive) will keep work­ing fam­i­lies in older ve­hi­cles for longer.

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