Carbon Tax ... It's all in the Timing!

I don’t know about you but I spent most of ‘Carbon Sunday’ glued to the TV, channel surfing between ABC News 24 and Sky News. It was riveting TV for a political junkie like me.

So what do you make of all this carbon tax stuff?

I have formed some views during the past few months culminating in the announcement by Prime Minister Julia Gillard last Sunday week.

First of all regardless of whether we believe the planet is warming due to human activity, in the long term it is of great benefit all round to consume less and pollute less. This part is a no-brainer.

Second, it seems inevitable that the world as a whole will eventually implement policies which result in lower CO2 emissions. The only question is ‘When?’.

Third, the Carbon Tax policy announced by Julia Gillard on July 10, has more to do with politics and staying in Government in than with reducing CO2 emissions. This is evident by the fact that Ms Gillard was one of the four kitchen cabinet members under former PM Kevin Rudd who pushed for a shelving of the previous emissions trading scheme until some time in the future. Prime Minister Gillard then stated a few days before the 2010 election that there would be no carbon tax.

Fast forward to February 2011 and the Prime Minister announces that there will now be a carbon tax. This is the price of forming a minority government with the Greens. My question is would a carbon tax have been announced if Labor had won government in it’s own right??

Fourth, the major CO2 emitters of USA, China and India have not committed to any serious CO2 reduction scheme. In fact the US has completely abandoned its proposed cap and trade scheme.

Fifth, Imposing a carbon tax in Australia will not make the slightest difference to global CO2 emissions in the absence of the major world economies joining in.

Sixth, How is over compensating consumers going to change behaviours? It actually amounts to bribing people to consume more.

Seventh, To impose a carbon tax of $23/tonne on the Australian economy at a time of low consumer confidence and a seriously slowing economy apart from mining, not to mention the serious state of the US, UK, EU and Japanese economies, is sheer madness.

Finally, to further prove the point that this is more about politics than saving the planet, if you did happen to witness the proceedings on Carbon Sunday, you would have seen Greens Leader Bob Brown and his deputy Christine Milne grinning like a pair of Cheshire cats who had just swallowed a flock of canaries and who had all their birthdays and Christmases come at once. They were the happiest people in town and that in itself is a cause to be concerned.

That’s not to say Tony Abbott’s proposed direct action scheme is any better, in fact it is more expensive and still may not have the desired effect.

The main issue is the timing and mechanics of the government’s carbon tax relative to the rest of the world. We are very small players in the world economy (remember Copenhagen?) and our CO2 emissions are less than 2% of global emissions.

However, the proposed tax at this time, I feel, risks causing serious damage to a seriously slowing economy, albeit one which survived the GFC, and that’s the real worry. There is a time and place for everything. It may be a good idea in principle but this is not the time for a carbon tax in Australia.