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.
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*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.
30 Responses to this article
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Heather July 1, 2012
Thankyou Monica. What a clear summary of a complex issue.
And it was great to wake up and find that the world hasn’t ended today. -
Sandy July 1, 2012
Excellent summary, this needs wider publication!
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Fred July 1, 2012
Tony Abbott seemed to have a different opinion of a carbon tax back in 2009
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mex July 1, 2012
There’s a lot more snake oil under the bridge in the global warming/climate change hoax now than there was in 2009. Many of us held a different opinion back then.
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Mark July 1, 2012
Sandy makes a very good point, this article does need wider publication; however the reality is that the majority of the voting public are not interested in a detailed analysis of the carbon tax. They do not want to be “informed” about this issue, although they do intend to retain their opinions. This
is not to suggest there is any form of right wing conspiracy, only human nature that switches off an issue when any degree of complexity is involved. This is how alarmists like Alan Jones or Tony Abbot are able to have such influence on an issue like this. -
Jane Cattermole July 1, 2012
I voted for Rudd then Gillard because they wanted to push on with an ETS. The fact that Gillard did it by using a tax is irrelevant as far as I’m concerned. As you explained the minority government meant she had to negotiate and to her credit she did. Sometimes leaders have to make decisions that may not be popular but this one is about responsible citizenship. It’s about a liveable future for our children’s children and we all need to get on board. We are immeasurably better off than most people on the globe and still cry foul when asked to pay our way. It’s an excellent summary Monika and great to see someone presenting the facts. News Ltd has transformed itself into a war machine against Gillard and the carbon tax and sadly some of the others, including our ABC have followed suit.
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Sandra July 2, 2012
I agree with you and must congratulate Monica as well for a great informative article.
How about when everyone starts to wake up to the fact that our country will be better off with this carbon emissions tax that they get together and make sure that TA doesn’t get anywhere near to governing this country – it would be a sorry day for Australia if this ever happens.
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mex July 1, 2012
‘There will be no carbon tax under a Government I lead.’ Sick to the stomach.
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WENDY GREEN July 2, 2012
Move on, for goodness sake!!!
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Liz July 1, 2012
Even though they have raised the tax free threshold they have also reduced the low income rebate so most people will on be about $200 a year better off. I’m pretty sure it will cost us a lot more than that. Having said that I do think we need to reduce our emissions but less so than other countries. I would also like to know why they reduced the feed in tariff for solar power if they want us to use clean energy and why abolish or reduce most of the solar rebates. More political bunkum.
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Space Kidette July 1, 2012
Monica,
Your claim that Julia lied is factually incorrect.
“I don’t rule out the possibility of legislating a Carbon Pollution Reduction Scheme, a market-based mechanism,” she said of the next parliament. “I rule out a carbon tax.”
Julia Gillard, The Australian, 20/08/2010
Guess context is king, and most morons aren’t smart enough to know the difference between a market mechanism and a broad based consumption tax. #auspol
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Pam July 2, 2012
Excellent summary, but as others note it has a limited audience. I partly agree with mark, there’s low tolerance in the electorate for the detail, but if Monica can present it succinctly I have to wonder why popular media cant, – looking at you morning tv programs!,
Remember when GST came in? Now that was a tax, and we were all terrified, Goods and seervice costs went up 10%, and everone including retailers felt it. . JH would have lost if an election was held. Now no one’s conscious of that 10%. Same will happen with carbon price.
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airdre grant July 2, 2012
Senator Brandeis was laughable in his blaming of the carbon tax for oh, just about anything really.
i suspect it will get absorbed into daily business relatively quickly. -
Paul July 2, 2012
Fred, Thanks for setting the record straight with yet another example of Abbott’s hypocracy.
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liza July 2, 2012
It is a case of “ROLL UP.ROLL UP’ Tony abbott’s flying circus. Watch Tony turn two fishes and five loaves of bread into money for all the pensioners who will lose their recent top up as he winds back the “Toxic Tax”
listen to the squeals of delight when the billionaires get THEIR christmas top up of all our hard won taxes.
Watch the” I believe in renewables” in his own electorate while sniggering that Warringah are all a bunch of gullibie
people.
Vote for the ABBOTT circus if you really hate your kids. -
WENDY GREEN July 2, 2012
Bring it on! And let’s stop talking about fixing our planet and start GETTING ON WITH IT!
A vote for Labour at the next election will be a vote for our children’s future. To vote any other way would be unthinkable! -
Royce July 2, 2012
Blah blah blah…. It’s just a tax.
That’s what governments need to do to fund their programs. A targetted tax on high polluters makes sense. As Dr No will ever be able to unscramble the ‘egg’. It will be fun watching. ‘
But maybe… just maybe… we will never have to find out…. -
Bridget July 2, 2012
Why has political support and community interest in reducing carbon emissions flat lined? Energy around the impact of climate warming and the necessity to address was it was once palpable. Am i imagining things? Maybe the drought disappeared and profit and individualism once again became more attractive.
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Jill July 3, 2012
Pity Monica didn’t pay attention to this book which came out last year:
http://www.aim.org/guest-column/the-fraudsters-who-invent-the-science-of-climate-change/Excerpt from the article:
Laframboise identifies a number of graduate students (at least one without so much as a Masters degree at the time) who served as coordinating lead authors (the most important role, in charge of the entire chapter) or lead authors (responsible for large segments of text). Half of those “four thousand of the world’s best specialists” were chosen on the basis of affirmative action criteria, above all geographic diversity, so that “the developing world” would be fully represented.
One of those chosen on this basis said candidly “we were out of our intellectual depth as meaningful contributors to the process.” Many of the anointed experts were activists with close ties to environmental lobbies like the World Wildlife Federation, openly wedded to the proposition “It is nearly impossible to overstate the threat of climate change.”Pachauri has boasted that “you can’t think of a more transparent process than what we have at the IPCC.” In fact, Laframboise shows, it is opaque, with no one outside the inner circle having any idea how key decisions are made.
Pachauri declares “The IPCC studies only peer-reviewed science.” Anything else, he says, can just be thrown “in the dustbin.” Laframboise reveals that this too is a fairy tale.
….
There is much, much more. Laframboise describes how the IPCC manufactured peer- reviewed literature. She quotes an IPCC insider who reported that when governments wanted questions covered for which there was little peer-reviewed literature, lead authors would try to have material published in peer reviewed journals while they were drafting the chapter so the article could be cited at least as “in press” by the time the final draft was ready. Laframboise notes that journals run by IPCC insiders could be counted on to cooperate.What Laframboise shows beyond a reasonable doubt is that UN Secretary General Ban Ki-Moon was grossly distorting reality when, on the release of the final segment of the 2007 IPCC Report, he said: “Today the world’s scientists have spoken, clearly and with one voice.”
Rather, as Laframboise writes, “a highly politicized body–cloaking itself in the prestige and authority of science–has spoken.”
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amd July 3, 2012
As has been stated ad nauseum, the polluters are in no way prevented from passing the costs to us, the consumers, so of course will just keep polluting. This has nothing to do with lowering emissions. We are one of the few western economies to have avoided a depression, but have been teetering on the brink for years. Consumer spending down, house prices flat lined, electricity already through the roof, food and petrol costly and getting costlier. Another tax at this point is ludicrous. How fortunate are the smug who don’t have to worry about the extra costs.
Let us be clear – Ms Gillard DID lie to us. Just because politicians have been getting away with lying for so long does not make it acceptable or right. If the choice is between the religious misogynist and the lady who lies at the next election, I will be writing none of the above on my ballot – but many will vote for the right wing party out of sheer anger at being so blatantly lied to. Labor’s only chance is to ditch both Ms Gillard and the Carbon Tax, post haste.
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The Colonel July 4, 2012
Amd,
Companies will gain competitive advantage by reducing their emissions. They’ll be able to offer their good and services cheaper than those who do not reduce their emissions.
There is NO evidence that Julia Gillard intended to introduce a Carbon Tax at the time when she used those words. That is what you must show if you are going to claim that she lied.
In fact, she explicitly ruled IN a CPRS before the election, which includes a fixed price introductory period, the only part of this package that resembles a Carbon Tax. So she neither lied, nor broke a promise.
Most importantly, she has introduced the most effective policy on offer to tackle the important task of reducing greenhouse emissions. Tony Abbott’s alternative is effectively a $150 plus per tonne carbon price, but it will be paid for by households instead of large greenhouse gas emitters.
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amd July 4, 2012
No, Ms Gillard went into an election, looking us straight in the eye and said – and I quote – “There will be no carbon tax under the government I lead.” Not a claim, statement of fact, she lied. Here is a link in case you have forgotten: http://www.youtube.com/watch?v=d5pzSvSCUZo – and I note you have not addressed the central issue which is of course that this tax at a time of recession, when so many are already struggling, will not improve the environment. Lucky those who can afford the extra costs. Nothing more to be said really.
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amd July 4, 2012
As I stated, if they are the only two candidates on offer, neither will get my vote. The vast majority are extremely angry with Ms Gillard for lying to us. Many will vote right wing through this anger. I won’t, but neither will I reward her for a blatant lie. As stated, just because politicians have been getting away with lying to us for years does not make it acceptable. Labor must immediately lose Ms Gillard and the deeply unpopular Carbon Tax, or we will be stuck with the Liberals. I do not claim they will make a better government, merely that the present leader got in on a lie which will in no way benefit the environment, only government coffers.
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Anna Tantau July 12, 2012
A very good summary, I agree that it needs wider publication. We all need to understand the basics at least.
I hope that the legislation will encourage not just businesses but everyone to be more careful with our energy resources. -
Janet July 24, 2012
I support the Carbon Tax as climate change is not a fallacy and will cause us great harm.
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Ricardo Ignacio July 24, 2012
Please take the “blindfold” off. First you have to understand that “No Tax” will stop the climate change and if that would be the case it has to be done in conjuntion with “EVERY” person in the PLANET and not only ONE COUNTRY, but the planet has it’s agenda and the greed that this TAX represent has not impact on the climate except making polis richer and ourself poorer and ease to control. on the otrer hand why don’t we pay a “SUN TAX” in sumer when there is no water at all but we still sufer the heat. Just think for your self and not be one of the bunch that only repeat what others say.
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Matt September 6, 2012
Good explanation but you failed to mention the relative differences between Australia’s carbon price and the rest of the world’s. Our price on Carbon is astronomical compared to anywhere else on the planet. It’s also a bit rich to be praising China too. They are so enormous that their ‘Green initiatives’ are merely token only. China spews more carbon into the atmosphere than anywhere else.
I find this whole taxation system to be needlessly complex and it will only serve to fund yet another government bureaucracy to administer it.
Technology is the only thing that can save our planet from environmental degradation. What’s the point of taxing polluters who have no viable ‘green’ alternative’? What are they supposed to do except pass the costs onto us?
Remember back in the 80′s there was this big issue regarding Chloro-Flouro carbons and it’s effect on the ozone layer? Overnight the world shifted to Hydro-carbon instead. Problem solved by using a better technology. We didn’t tax Chloro-flourocarbon to encourage change over time and come up with a series of rebates and compensation, we found a technology solution and switched.
A small tax on polluters to fund Green research would have been the way to go. Once we have those answers we can then switch overnight.
But this bureaucratic nightmare of a carbon tax we have today is ridiculous an ineffective for the environment.
I’m definitely going to get in on this carbon credits for sale business. What a scam that will be! Puhlease!!
