Economic pain for no environmental gain

October 26, 2011

The passing of the Carbon Tax by Federal Parliament this month is a very important issue affecting all Australians.

As your elected representative, I want you to know that I voted against the imposition of this new tax and it was for one simple reason: the carbon tax will create enormous economic pain for no environmental gain.

Let’s take a serious look at the rationale behind this new tax.

Australia relies on fossil fuels such as coal for cheap, base-load electricity generation. Coal power generates CO2 emissions, which is said to contribute to global warming. In order to cut CO2 emissions the Gillard Government believes we should be forced to use less Coal power generated electricity.

This is where the carbon tax comes in.

The Gillard Government has admitted that the carbon tax is designed to make using electricity more expensive. They believe that as a result of the increase in the cost of electricity, we will use less of it. Using less electricity means less CO2 emission. Less CO2 emissions - less global warming.

Everyone, from the Government to the Opposition agrees that electricity prices will rise under this carbon tax – that is the whole point of it.

In fact, the Gillard Government’s own modelling indicates there will be a 10% increase in electricity prices with the imposition of the carbon tax. However, Labor’s modelling is legitimately questionable.

The NSW Treasury Department has predicted that the imposition of the carbon tax will increase the cost of electricity for households and business by at least 15%, while the Electricity Supply Association estimates prices will rise by at least 20% – double the impact on prices from what the Government claims.

The real issue is whether lifting electricity prices is an effective way to reduce emissions.

This is where the Government’s rationale begins to fall apart.

Under the Government’s own modelling, Australia’s emissions will continue to rise – even with the introduction of the carbon tax – from 578 million tonnes to 621 million tonnes between now and 2020.

But won’t people use less electricity if it is more expensive? The answer is no.

The evidence is clear that when faced between paying higher prices for electricity or using less of it, people will cop the price increase to still use electricity. In NSW we have seen a 50% increase in the costs of electricity over a 5 year period. Yet despite this mammoth increase, there was only a 6% decrease in consumption per capita.

Why no massive decrease in consumption? Because our livelihoods and entire way of life rely upon a cheap, accessible and reliable supply of energy, and we are not willing to forgo our standard of living.

So if Australians have already demonstrated that they are not prepared to sacrifice using electricity and that, even on the Government’s own projections emissions will increase by another 43 million tonnes by 2020, the question the Government has failed to answer is this: for all the economic pain, where is the environmental gain?

The Carbon Tax is purpose-built to negatively impact household budgets and increase the cost of doing business. But what the Government fails to understand is that families and small businesses are already struggling to meet the increased cost of food, electricity and petrol.

Unfortunately, while Australians pay a carbon tax the rest of the world, particularly the developing powerhouses China and India, will continue to increase their emissions and exploit their newfound economic advantage.

This will lead to more businesses closing their doors and more Australians losing their jobs because businesses will be unable to compete against cheap, carbon tax-free imports from overseas.

The carbon tax will not achieve a reduction in emissions, let alone stop or abate global warming.

I want to make one final point. It is totally unacceptable to justify the imposition of a carbon tax by arguing that ‘at least we are doing something’ to try to reduce emissions, as some in the community believe and point out.

People who make this argument are obviously more interested in clearing their consciences by emptying other people’s wallets and sacrificing Australian jobs rather than looking at ways of actually reducing emissions and helping our environment. 

There are better ways of abating and reducing emissions without imposing an economy-wide carbon tax. The problem is that while the Government persists with this doomed policy, we will be distracted from developing and investing in measures that will actually benefit the environment.