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Wednesday, 31 December 2014

Remind me why we got rid of carbon pricing? - The AIM Network

Remind me why we got rid of carbon pricing? - The AIM Network

Remind me why we got rid of carbon pricing?

We all know that the Coalition’s dire predictions about the
introduction of the carbon tax proved false – Whyalla was not wiped off
the map and lamb roasts did not cost $100.

We now know that Greg Hunt was wrong in saying that the carbon tax
would do nothing to reduce emissions.  Carbon emissions declined across
Australia by 1.4 per cent in the second year, compared with a decline of 0.8 per cent in the first year.

Matthias Cormann jumped to attribute the drop in emissions to lower growth.

“Over the past two years the economy has grown below trend, and below
trend growth means that emissions will be lower than they otherwise
would have been.”

There may be some truth in that but I thought getting rid of the
carbon tax was supposed to “help small business and restore confidence
to the economy.”

And the Coalition has been governing for 75% of those last two years.

In December, the NAB changed its forecast after much weaker than expected gross domestic product
figures for the September quarter and a larger than anticipated slump
in Australia’s terms of trade, which compares the prices received for
exports with those paid for imports.

I thought removing the carbon tax was supposed to make our exports more competitive and hence improve our terms of trade.

The Liberal Party website made a number of claims and promises regarding the repeal of the carbon tax.  My comments are in italics.

“The carbon tax has meant:

  • a $9 billion a year new tax;

Paid by polluters into the common wealth

  • a 10 per cent hike in electricity bills in the first year alone;

Over the past five years the average Australian household’s electricity bill has risen by 70 per cent.

  • a 9 per cent per cent hike in gas bills in the first year alone;

Average households in most major cities can expect gas bills to soar by hundreds of dollars a year as prices surge amid an emerging export industry

  • higher marginal tax rates for low and middle income earners.

And an increase in the tax free threshold from $6000 to $18,200
making them much better off and relieving many low income earners from
having to fill in a tax return

If Labor is re-elected, Australians will still be
paying more – a total of over $3,000 for the average family over the six
years to mid
‑2020, on top of $545 this year.

As we were moving to a floating price this purposely ignores up-to-date information on EU carbon prices.

The Coalition will not let the carbon tax destroy
Australian industry and Australian jobs. The carbon tax is an act of
economic self-harm that unnecessarily adds to the cost of living.

NAB has slashed its growth forecast for the current financial
year from 2.9 to 2.5 per cent, and also trimmed its 2015-16 forecast to 3
per cent.

It is also expecting a higher peak in unemployment at 6.75 per
cent, which would be a considerable rise from the current rate of 6.2
per cent.

NAB’s November Monthly Business Survey showed that confidence
slipped from +5 to +1, while conditions dropped from a very high +13 to
+5, giving up most of a steep rise in October.

Measures of trading, profitability, employment and stocks also went backwards, while forward orders and exports remained steady.

Business confidence declined as well, and is now at its lowest level since the pre-election jump in mid-2013.

Mining has the lowest trend confidence (-12) by a significant margin.

The Coalition will keep the current income tax
thresholds and the current pension and benefit fortnightly rates while
scrapping the carbon tax.

This means that Australian workers, families and
pensioners will keep the tax cuts and fortnightly pension and benefit
increases provided in Labor’s carbon tax package, but without the carbon

As a result these tax cuts and fortnightly benefit
increases will become genuine cost of living relief, worth around $4
billion a year, rather than partial compensation for Labor’s damaging
carbon tax hit.

No change to pensions?

But under Kevin Rudd’s minor tweaking, the carbon tax
will still be a $58 billion tax through to 2020 instead of a $64
billion tax.

Lost revenue

Electricity is not a luxury – it is an essential part
of daily life. If the Rudd-Gillard Government was even half sincere
about taking the pressure off electricity, gas and other utility prices
it would start by scrapping its carbon tax.

Or we could scrap the GST on this essential item?

They included the ubiquitous table telling us how we would be better off when the carbon tax was removed.

Impact on families:  More than $3,000 better off

The federal government delivered its May budget fully aware its
spending cuts would hit poorer households much harder than wealthier

The Treasury analysis of the budget reveals the spending cuts cost an average of $842 a year for lower income households, while the average high income family lost just $71. Middle income families were down $477.

This does not include the abandoning of the superannuation guarantee increase or possible GP co-payments.

Electricity prices:  10 per cent lower  

The effect on prices has varied from state to state.  In
Queensland, electricity bills for typical customers supplied under most
tariffs will still increase even though the carbon tax has been removed.

Gas prices:  9 per cent lower

In Melbourne, where 90 per cent of homes use gas for all their
cooking, hot water and heating, an average bill could rise be as much as
$435 a year.  High gas users in Sydney will face an increase of about
$225, while high users in Adelaide will pay an extra $200 a year.

Cost to make an Australian-made car:   Up to $400 cheaper  

Except we no longer have Australian made cars

Impact on aluminium production:   61 per cent higher

In February, Alcoa announced that it was closing its Point Henry aluminium smelter and two rolling mills, costing a total of 980 jobs.  The smelter will cut Alcoa’s aluminium output by 190,000 tonnes.

It follows the closure earlier of the Kurri Kurri smelter which was located in the Hunter valley, in NSW.

Impact on coal production:  17 per cent higher

Coal prices declined steadily in the first months of 2014 in
response to a combination of in-creased supply and lower import demand
from China.

Australian Mining estimates that more than 2500 jobs in the coal sector were cut as mining companies either downsized their operations or shut them down completely.

Impact on steel and iron production:  21 per cent higher

In a consistent slide since December 4, 2013, the benchmark iron ore price has fallen 41 per cent to reach the point where several of Australia’s junior exporters are barely break-even propositions.

The recent corporate reporting season was littered with companies
that named weakness in the mining sector as a factor in their own

The trend went far beyond the traditional mining services crowd
and was seen in airlines, media publishers and even clothing
manufacturers who have noticed demand for their workwear products to be
lower than in the past.

Billions of taxpayer dollars spent on foreign carbon credits:  No

Direct Action is so inefficient that if we used it to meet targets similar to the US, the cost would be $30 billion a year.

Australia’s carbon emissions:  Down

NEM demand for electricity stopped falling; total demand in both
July and August 2014 was higher than in the corresponding months in
2013, the first time this has happened in two consecutive months since
2010.  This was equivalent to an increase in emissions of 0.8 per cent.

Your cost of living:  Lower

In the September quarter 2014,
the first quarter after the repeal of the carbon tax, the living costs
of pensioner and beneficiary households (PBLCI) rose 0.2%. Over the same
period, the living costs of self-funded retiree households rose 0.5%,
employee households rose 0.4%, other government transfer recipient
households rose 0.3% and age pensioner households rose 0.1%.

Meanwhile, away from Abbottmania…

  • In October, the Climate Performance Leadership Index found that
    companies that anticipate climate change risks outperform the market on
    average by almost 10%
  • In November, 350 investors worth over US$24 trillion signed the 2014
    Global Investor Statement on Climate Change. Over 73 countries and
    1,000 businesses also spoke out in support of a price on carbon.
    Hundreds of world’s major companies & investment firms have agreed
    that a charge for GHG damage to the environment is necessary
  • Singapore Exchange is now mandating all listed companies to publish sustainability reports.

Finally, on the local good news front, Tasmanian salmon producer
Tassal achieved a world first with WWF sustainability certification in
November. And Westpac was rated the highest ranked bank globally on the
Dow Jones Sustainability Index and the Most Sustainable Corporation in
the World. Westpac also increased the proportion of women in leadership
roles to 44%

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