CARBON TAX: QUICK FACTS
Well, it’s here.
After all the arguing, the protests, the morning visits to small businesses around the country to convince people of its merits or otherwise, the Gillard Government’s carbon tax is now in effect.
For the ALP it’s not quite the Holy Grail in its fight against climate change. That would be an Emissions Trading Scheme which Prime Minister Gillard’s predecessor Kevin Rudd dearly wanted to introduce and tried twice to get off the ground. (Rudd had bipartisan support for an ETS, only to be stifled by Tony Abbott’s ousting of Malcolm Turnbull, who, like Rudd, thought it was the way to go.)
Rudd’s successor promised, you might recall, during the snap election she called in August 2010 that she would rebuild consensus on carbon pricing. There was even talk of a people’s assembly.
But significantly Julia Gillard promised there would be no carbon tax under a government she led. That of course assumed an outright election win, which Australians didn’t deliver her.
After a few weeks of tortuous negotiations with the independents with whom Ms Gillard was forced to negotiate to resume the Prime Ministership, though in a minority government, the idea of an assembly disappeared.
Early in 2011, an ETS was back on the agenda, to be phased in over time, with a carbon tax as its starting point for 3 years. The ETS will be a market-based scheme to allow the buying and selling of permits for emissions or credits for reduction in emissions.
What does that mean? An industry that reduces its emissions below the legislated threshold collect credits which can be sold to industries which use higher levels of carbon emissions.
So what is a carbon tax and who pays?
- A carbon tax is generally believed to be a cost-effective way of reducing carbon output. The idea is that polluters pay per tonne of carbon that they release as a result of producing whatever it is they produce.
- The government argues that what we pay for so-called “carbon intensive goods” and services hasn’t reflected the cost to the environment. That’s about to change.
- From today, about 300 companies across Australia will be paying the carbon tax.
- Some industries will be exempt – farmers for example who will receive a financial incentive for every tonne of carbon they prevent from entering the atmosphere. Farmers can plant trees, for example, to generate carbon credits which they can sell to polluters. Not everyone is enthusiastic though: the National Farmers Federation says Aussie farmers will become less competitive.
- The government has set the price per tonne of carbon at $23. But it will increase between now and 2015 at which time Australia will move to an ETS which allows the market to set the price.
- Australia produces about 500 million tones of carbon pollution each year. And according to the Department of Climate Change and Energy Efficiency that figure is rising: “Emissions increased in the December quarter 2011, with trend emissions rising by 0.3% and seasonally adjusted and weather normalised emissions increasing 0.1%. This is the fourth consecutive quarter of positive trend growth.”
- Even though we account for less than 2% of global carbon dioxide emissions, ours are nearly twice that of most OECD nations. In other words, we are one of the world’s top polluters. And our emissions are increasing. Although the increases are not huge, nor are they to be ignored, according to the CSIRO.
- Our relatively high per capita emissions rate is due to our “high usage of coal in electricity generation, the energy intensive aluminium smelting sector, and the high dependence on motor vehicles and trucks for transport,” according to the Australian Bureau of Statistics.
- The Opposition reckons Australia is stepping out ahead of the rest of the world and it has vowed to abolish the carbon tax if it wins power. Opposition leader, Tony Abbott says: “There is not a single problem in this country which is going to be helped by the carbon tax and all of our economic difficulties will be made worse by the carbon tax”.
- The Government counters we’re not ahead of the rest of the world. Europe, for example, has had an ETS since 2005. That’s a cap and trade scheme under which the 27 EU member states place a cap on the amount of carbon dioxide and nitrous oxide that can be legally emitted. (The EU is aiming for a 21% cut of its 2005 emissions by 2025.)
- Already, carbon pricing via a carbon tax, an ETS or other taxation schemes is in place or being piloted in the EU, China, Japan, various states of the United States, South Korea, India ( it has a coal tax) and New Zealand.
- Some 14 of Australia’s top trading partners have energy performance standards for appliances, buildings and industrial plants.
- Here’s something that might surprise you: 26% of the energy infrastructure that China built in 2010 was renewable. And it’s readying to spend $473 billion on clean energy over the next five years.
- Even Russia has set national renewable targets.
- Some argue that the financial cost of not acting will soon begin to bite. Qantas for example has to pay a 15% penalty to the European Union on flights into and out of Europe because Australian doesn’t – or hasn’t until now – had a carbon tax. You pay for that in increased fares.
- Of course, now that industry must pay for the pollution it creates, it will need to push up what it charges us for whatever it is we buy from the polluters.
- The government reckons this will drive businesses to find new environmentally friendly ways of producing. It says it will force industry to embrace renewable energy technology that it will plough financial incentives into.
- The Clean Energy Legislation now comes into effect to help individuals and industry to cope with the change. $13 billion will be funnelled through the Clean Energy Finance Corporation and the Australian Renewable Energy Corporation to push the expansion of clean energy.
- The Opposition is not convinced any of these measures will stop affected businesses going to the wall.
- And undoubtedly there will be flow through effects for business, which are not emitters as a result of higher electricity costs. These costs will be passed on to consumers.
- Tony Abbott says the carbon tax “will swing like a “wrecking ball” through the economy and squeeze household budgets like a “python”. Julia Gillard says she sees a “great clean energy future for our great country.”
- So where will the money government takes from the carbon tax go? The Government says it will go towards compensating you and businesses affected by the tax. There will be $15 billion of tax cuts for low and middle income earners and the tax threshold has been tripled to $18,200. Pensions and family assistance benefits are also being increased. In all, 8 million households will get some assistance. This will help you figure out what help you might receive.
Whether it turns out to be a python squeeze or a cobra strike, one thing is for certain – it won’t be the cause of job losses at Fairfax.
Nice try, Senator Brandis.
It will however, begin to change the way we live. Even if that only means turning off your TV from the power point before you turn in for the night.
*Monica Attard OAM, is a five-time Walkley award-winning Australian journalist – including the Gold Walkley Award for Excellence in Journalism 1991. She was the host of the ABC’s PM, the World Today and Media Watch.She spent 28 years at the ABC, leaving to start up The Global Mail where she was, until recently, the Managing Editor. In 1997, Monica published a book entitled Russia: Which Way Paradise? documenting her time there as a foreign correspondent.