Citizens’ dividend a dual answer
Steep carbon charge wholly returned to the taxpayer could tackle inequality and climate change together
Many New Zealanders wonder, like Lizzie Marvelly (Weekend Herald, April 20), what our Government will do to reduce inequality in our country, which has soared since the 1940s and 1950s when I grew up.
It’s time also that it act against climate change, which threatens our children’s and grandchildren’s future, indeed the future of most life on Earth. The UN warns we have only 11 years to avoid climate warming tipping out of human control.
Most people will be surprised to learn there’s a measure which could provide an effective, low-cost fix for both these urgent problems. It consists of a stiff and rising carbon charge, with a twist.
The charge is levied on all fossil fuels entering a country according to how much CO2 they will emit when consumed. It’s levied only at their point of entry (port, mine-head, etc), so is simple to administer. Economists agree such a carbon charge is the most effective, efficient, and lowcost way to transform an economy away from reliance on fossil fuels, to renewable energy and efficiency.
The problem is, however, that (if fossil fuel suppliers pass on their costs) it would significantly increase everybody’s cost of living.
As with the gilets jaunes in France, after decades of rising inequality there are many people in the world today (and in New Zealand too) who feel they’re barely surviving, and can’t stomach the idea of anything that would make their lives harder.
So James Hansen, the climate scientist who first alerted the world in the 1980s to the danger of climate change, then worked with economists to devise the best counter-measure, proposed the following.
The whole revenue collected from this carbon charge is to be returned to the public as a “citizens’ dividend”, a monthly or fortnightly payment into the bank account of every adult legal resident, with a half share for children, up to two children per family.
Economic modelling indicated that most people, and especially people on low incomes, would be better off with such a measure. It’s progressive, reducing social inequality. And it lets even poor people make changes to lower their carbon footprint, e.g. buying insulation, a few solar panels, or an e-bike; or moving closer to work.
Those who wish to continue frequent overseas travel, or running several houses
or big power boats, pay more for the privilege. That’s fair, since those activities harm the world belonging to us all.
A fairly similar measure was trialled in British Columbia, the western Canadian province, since 2008. The provincial government brought in a carbon charge on fuels for
transportation and domestic heating, rising gradually till 2012 to $30 a tonne of CO2 emitted.
It was legislated to be “revenueneutral”, so though not called a citizens’ dividend, the revenue was all returned to the public through tax cuts and targeted benefits.
At first BC citizens weren’t thrilled about a new tax, but after a few years it became quite popular, surviving a change of government and a review process. Most business leaders supported it. The economy of BC out-performed the rest of Canada during the years from 2008 onwards. BC’s emissions lessened by almost 20 per cent relative to the rest of Canada during this time. This tax now has cross-party support in BC, and is nearing $50 a tonne; and Canada’s federal government now proposes a similar system of carbon charges for Canada as a whole.
British Columbia is fortunate to have trialled this measure early, which gave its business community the luxury of leisurely adaptation.
Unfortunately, now we no longer have that luxury of time.
The UN Secretary General is begging us to “bend down” by 2020 the emissions curve, still rising in most countries including New Zealand.
We need to act on his call, to give the world hope.
Science tells us that climate change will get worse before it gets better (it might, but only if we act soon).
It also tells us that damage from uncontrolled climate change will be far greater than the cost of bringing it under control with a carbon charge.
Since infrastructure cannot be changed without lead-in time, it makes sense for our Government to announce stiff and rising carbon charges now.
And please let the public have the benefit of a citizens’ dividend from the revenues, so we can enjoy a more equal society and a civilisation worth the name.