Doomed Planet

Taxing our credulity

Our very own scheme to reduce pollution

In the last week or so there have been some wondrous developments in climate change policy. Most dramatically, we now know What a carbon price means for you. Or do we?

My copy of this 18 page booklet the Government has sent to households arrived on 3 August with the news that by 2020 it will mean less “pollution” (interpretation: lower C02 emissions). But nothing is said about what is supposedly the main objective of a policy to reduce pollution (sic) – that is, lower temperatures than would otherwise occur. Nor is there any explanation of why, despite the continued increase in emissions, temperatures have not risen in recent years.

Then on 5 August Treasury released a consultant’s report that suggests little reduction in emissions from the electricity industry by 2020 because the proposed carbon price of $23 a tonne is not high enough to cause a shift by even the electricity industry to other energy sources. Confused about how Australia will “cut net expected pollution by at least 23 per cent by 2020”?

Don’t forget also that “our” 5% reduction in emissions by 2020 (cf 2000) is mainly achieved by buying reductions from other countries! So not much reduction in “pollution” here in Australia.

And isn’t this a tax? Remember Gillard said on 10 July that this would be “a fixed-price mechanism for three years. That works effectively like a tax; it means the government sets the price”. However according to the booklet this “is not tax on households”. Yet the consumer price index is expected to increase by 0.7% because  the top 500 polluters are required to pay the price, ie they pay a tax that in the case of goods and services produced for domestic use is mostly passed on to households, just like the GST which is actually paid by businesses. Surely the Statistician must do his job and treat this is as a tax even if it means the Government breaks its commitment not to increase taxes as a percentage of GDP.   

The opposition to the tax is mounting. For example, the Galileo Movement, run by two retired engineers, has created a bumper sticker for their campaign to  Axe the Tax.

And does this have adverse effects on the economy? Well hardly at all it seems! The booklet claims Treasury modelling shows strong growth in average incomes and employment to 2020. Yet Swan refuses to release the details of that modelling and analysis by Professors Ergas and Blandy (in articles in The Australian) suggests it may have serious problems. If economic growth would be strong under a carbon price, why haven’t we made the shift to alternative sources of energy before now?

Also relevant is that Treasury modelling assumes that there will be global action to reduce emissions based on the pledges made at Cancun. A more realistic assumption would be that, with a carbon price of $23 per tonne, Australia would be left high and dry as having one of the severest  emissions reduction policies that would in consequence cause a loss in international competitiveness. The recently published  Productivity Commission analysis suggests we would be a world leader.

What about the “tax” revenue the Government receives? About half the booklet is taken up with explaining the distribution of half of that ie we are increasing taxes but then paying them half back to some households as tax cuts and/or increases in pensions and other benefits. This is also the main message of the full page ads financed by the Government – oops, taxpayer. The other half of the revenues will mostly go to businesses, including those subject to international competition.

How is this to be enforced? At an IPA dinner in Melbourne last month Czech President Vaclav Klaus caused considerable laughter when he asked – what on earth has the Climate Change Department been doing? The answer is preparing 13 bills to, inter alia, enforce the carbon price, establish a Clean Energy Regulator, a Climate Change Authority and a Clean Energy Finance Corporation. Close analysis of this proposed legislation will almost certainly reveal that the regulators/inspectors are scheduled to have frightening powers of enforcement. One wonders if the additions to administrators explain why strong growth is expected in employment between now and 2020!

Although the booklet doesn’t say anything about sea levels, an ongoing farce is the story about we continue to be told about sea levels in 2100 viz they could rise to levels that would inundate coastal properties unless action is taken to reduce emissions. Human Services Minister Tanya Pilbersek told Central Coast residents in NSW on 15 July that they face the highest risk of inundation in NSW – and then in a subsequent radio interview on 2GB she denied saying it. Then the Australian Financial Review reported on 1 August that decisions by Victorian Planning Minister, Mathew Guy, require  that coastal buildings be movable in some areas where increases in sea levels could produce inundations. The AFR stated that a government report assumes “a maximum sea level rise of 0.8 metres by 2100, which is the minimum set out by the Intergovernmental Panel on Climate Change”. I failed to have a correction published. 

The correct picture is that the IPCC predicts a rise in sea levels by 2100 of a maximum of 0.59 metres and that a continuation of the rate of increase in sea levels in recent years (and in the last century) would produce an increase consistent with the IPCC minimum prediction to 2100 of 0.19 metres. Yet Chief Climate Commissioner, Tim Flannery, still tells The Australian (6-7 August) that the best predictions are an increase of 40-80 cms. 

The reality is that any serious assessment of the likely sea level rise would have to conclude that there is minimal risk of any serious inundation in Victorian and other coastal areas by 2100 – and nothing Australia does could reduce the risk unless accompanied by global action. So, take your pick – Gillard and Combet (before the booklet) up to 1.1 metres, Flannery (after the booklet) up to 0.8 metre, or (the trend over the last century) 0.19 metre. Still confused? 

Unsurprisingly,  the booklet proudly claims that  “more money is now invested in new renewable power than in high-pollution energy generation” (emphasis added) and the full page ads claim a carbon price “also means clean energy from gas, solar, wind and other renewables will become more widespread”.

There is no reference, however, to the high cost of these renewables (including the tax breaks/subsidies) or to the increasing opposition to wind turbines for health reasons in many Western countries. An assessment published on 28 July by a New York think tank,  the Manhattan Institute, shows that opposition to the use of wind comes from 485 organizations in 22 European countries, 250 in the UK, and 170 in the US (the number of such organisations in Australia is not available).

The assessment says the problems from low-frequency noise are addressed in the August edition of the Bulletin of Science, Technology & Society and reflected in increasingly overt action taken by protesters.

Needless to say, some wealthy individuals are trying to stop the use of wind near their properties. Robert J Kennedy Jr, for example, says NIMBY for a Cape Wind project off Cape Cod near the Kennedy clan’s place; and US billionaire T Boone Pickens, who helped finance government subsidised wind turbines through his half owned Clean Energy, says “I’m not going to have the windmills on my property”.  

The Manhattan publication also refers to research by an energy analyst showing wind turbines “have vastly overstated wind’s ability to cut sulfur oxide, nitrous oxide, and carbon dioxide.” And research indicating that to make them cost-effective would require a carbon price of $33 per tonne. But as the author suggests, “Congress cannot, will not, attempt to impose a carbon tax, no matter how small”.    

Also relevant to the climate change policy environment is the phone hacking by News of the World journalists, which has been seen as an opportunity to attack Murdoch owned media. Such attacks are responses on a wide range of issues that cannot be explored here except to suggest that one major response undoubtedly relates to the publication of analyses that indicate defects in the supposed science used by warmists. 

Gillard’s agreement to consider an inquiry into the media in Australia, and her comment that News Ltd papers have “hard questions to answer” (but refusal to name the questions), doubtless partly reflect the criticisms of those papers by Greens leader Brown. This despite the fact that the papers continue to support action to reduce emissions (although a recent Wall St Journal article titled “The Last Carbon Taxer” comes close to outright opposition). But the attack on News Ltd for publishing critiques of climate science must be regarded, overall, as helpful in that it indicates that some raw nerves have been hit.          

This is also reflected in an article in the UK Sunday Telegraph by Christopher Booker on a BBC presentation by a geneticist who was asked by that organisation to review its science coverage. The result? The Professor of genetics called for the BBC to give less coverage to sceptical views. Given ClimateGate, and the now much wider recognition that there are genuine concerns about the science, this is remarkable. But it shows how important it is to continue exposing the many defects in the supposed science being used to justify emission reductions policies. Booker’s book on Scared to Death shows that climate analysis is far from the only area where expert scientists have made analytical errors.

A lot more could be said about the defects in the Government’s climate change policies. But it needs to be recognised that even with problems/defects their initial establishment would likely have only limited adverse consequences. The major concern would come afterwards, with progressive increases in the carbon price and in subsidised renewables. The negative productivity growth of recent years would increase.

But perhaps the most disturbing aspect relates to the apparent absence of  any common sense at the political level and the apparent inability to recognise the seriousness of the critiques by people who are not driving a political agenda. If this climate change policy is implemented, what next?

A not dissimilar situation has developed in regard to the international debt crisis and the failure of governments (and their institutions) to recognise the underlying causes. The debt crisis provides a sensible Government with an opportunity to at least postpone the carbon tax.


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