We need real incentives, not another tax: Greg Hunt Op Ed for The Punch

10/10/11

http://www.thepunch.com.au/articles/Counterpunch-we-need-real-incentives-not-another-tax/

Australians want to help improve the world in which they live. Most would therefore rightly assume that if they pay a Carbon Tax this will at least clean up emissions in Australia. Certainly this is the impression given by the Government’s Carbon Tax ad campaign and from the debate as the Parliament this week votes on the legislation.

But nothing could be further from the truth.

Australia’s emissions will go up, not down under the Carbon Tax. And on top of the $105 bn the tax is to raise between now and 2020, Treasury’s own modelling shows that we will also have to spend an additional $3.5bn each year on foreign carbon credits.

The Carbon Tax will take $9 billion out of the pockets of every day Australians and businesses each year and continue to increase. At the same time, Australia’s annual emissions will rise from 578 million tonnes to 621 million tonnes. That’s right. by 2020, under the Carbon Tax, Australia will emit 43 million tonnes of carbon dioxide per year more than it does now.

So, rather than cleaning up our own environment, we will have to buy permits from countries such as China, India or Kazakhstan.

There are two problems with this approach of sending huge and ever increasing funds offshore.

First, Australians will not only have to pay the Carbon Tax in the form of higher electricity, gas and grocery prices, but will then have an additional $3.5 billion go overseas every year to buy foreign carbon credits. This overseas purchasing will increase to $57 billion by 2050 or 1.5 per cent of GDP. We will be spending almost five times the percentage of our economy on carbon credits as we currently do on foreign aid.

This is money that will not be spent on research and technological development in Australia.

It is also likely to be a lot more expensive, as the Business Council has suggested, if the United States does not have its own Cap and Trade or carbon tax by 2016. While this is a fundamental Government assumption it is utterly unbelievable. Indeed, the Government cannot name one White House, US Cabinet or Congressional official to back up the fantasy that the US will have a nationwide carbon tax during the next presidential term. Without a US System, a bad deal at $3.5bn will become even more expensive for Australia.

The second cause for great concern is that the Government assumes there is no fraud in the huge flow of funds to purchase foreign carbon credits. Unfortunately, as the Australian Crime Commission has just told an international conference on Organised Fraud, the carbon market is already the subject of major organised crime activity. In Norway, authorities are investigating a $5bn fraud under the European carbon trading scheme. In Italy, one of the Mafia Dons has been dubbed Lord of the Winds for his deep involvement in renewable energy and carbon fraud. Moreover the Treasury assumes that 50 per cent of our purchases will be from Russia and other parts of Asia with less transparent markets and regulators than Europe, which itself has already been subject to massive fraud.

It is important to remember that even with dramatically smaller programs at home, doing easily monitored things such as installing pink batts, there was still massive fraud. Multiply the scale, move from pink batts to certificates, send the activity offshore and the potential for fraud grows exponentially.

There is a better way and one which can make a real difference at home and indeed place Australia as a world leader in improving our own environment. It is about cleaning up our landfill gas at home. It is about cleaning up our waste coal mine gas. It is about cleaning up our power stations not closing them down. And it is about capturing carbon in our trees and soil to help provide a once in a century replenishment of our national soils. Indeed why wouldn’t we invest further in this, rather than sending billions of dollars overseas?

Let’s take a positive approach and support local programs that make a real difference. The Coalition’s Direct Action Plan will provide $3.2 billion which will be capped and funded by savings. In the same way that the Government buys back water through a market system we will purchase the lowest cost abatement. Our Emissions Reduction Fund will deliver real cuts in Australia’s own emissions achieving 160 million tonnes of abatement each year by 2020.

For this reason, the best approach to tackling climate change is to encourage Australians to reduce our emissions. Sometimes the simplest thing is the best thing - and instead of a trophy tax on top of which we will send huge volumes of funds offshore, it could just be better to go and clean up own backyard first.

That is the choice that Labor MPs should consider as they go to vote on this Carbon Tax legislation this week. Which really is the better plan to achieve the target we all want, which is a cleaner and greener Australia?