Henry Ergas on the cost of the latest Gillard Government backtrack – dropping the $15 a tonne floor price on carbon permits:
But even if the carbon price falls to only $10, and then rises after that by 4 per cent in real terms annually, the commonwealth’s fiscal position during the period from 2015-16 to 2019-20 worsens by $25 billion…
Climate Change Minister Greg Combet repeatedly stressed that the entire purpose of the carbon scheme was to provide a “predictable, long-term price signal”… Moreover, the floor price … avoids “the risk of sharp downward movements in the carbon price, which could undermine long-term investment in clean technologies”. Where is that predictability now, given the wild gyrations that characterise European carbon prices?…
As for the Climate Change Authority, established to advise on the future price path, what possible justification is there for spending taxpayers’ money on seeking its sage counsel? After all, once our scheme is fully linked to the EU’s, it is the EU’s decisions that will determine our carbon price…
Since carbon prices are going to be allowed to fall in 2015, what useful purpose is served by keeping them at gravity-defying levels, all the more so as a study by the Centre for International Economics shows having a higher carbon price than Europe’s will cost our economy $1.6bn to $3.4bn in 2012-13 alone?
No useful purpose at all. For as a signal to long-term abatement, the current high level of the carbon tax is entirely worthless. But there is one thing it does do: it raises revenue.
Again, it has left a sense of confusion and doubt about the government’s grip on vital issues.
Climate Change Minister Greg Combet and Gillard are now faced with the prospect of the EU carbon price staying low and pleasing business but leaving the government with a budget revenue shortfall, or the price going to the Greens’ preferred level of $50 and helping the budget but damaging industry.
THE symbolism couldn’t be more deliciously appropriate: we are linking the collective insanity of our carbon tax to the collective insanity of Europe’s…
Europe is the world’s basket case. Spain and Greece have unemployment rates of 25 per cent. Their youth unemployment rates are 50 per cent… The overall jobless rate for the European Union – our new partner – is more than 10 per cent…
The whole European project, built around the euro and collective and hugely punishing fantasies like the Emissions Trading Scheme, is crumbling.
… the decision to link to Europe looks sensible enough
It’s a massive tax that kills jobs and hurts business, while transferring billions of dollars from earners to spenders. Yet these clowns just make it up as they go along:
SECURING a clean-energy future, July 10 last year:
THE floor is designed to reduce the risk of sharp downward movements in the price, which could undermine long-term investment in clean technologies.
PM, July 11 last year:
PM: The price ceiling is $20 more than the international price.
John Laws: Why?
PM: Well, we just thought for stability …
PM, Hansard, September 13 last year:
THE bill also provides for a price cap and a price floor … This will limit market volatility and reduce risk for businesses …
Mark Dreyfus, Carbon Expo 2011, November 8 last year:
FOR those investing in abatement technologies whose value is sensitive to the level of the carbon price, a price floor helps reduce downside risk.
PM, November 9 last year:
WELL, we have set a floor and cap so that there can be stability in pricing … because people are making very long-term investments …
Penny Wong, Hansard, February 28:
OUR policy does include a price floor which acts as a safety valve for investors in low-emissions technology by establishing a minimum price for the first few years.
Christine Milne, May 4:
ESTABLISHING a floor price is critical to certainty, as is sticking by an agreement once it has been delivered.
Milne, May 8:
GETTING rid of it would not only be a blow to business certainty but would also potentially blow a hole in the budget.
Greg Combet, The Australian, July 5:
WE have legislated a three-year fixed price period. We are committed to the whole package.
Milne, Radio National Breakfast, July 4:
IF you allow the volatility that has occurred in Europe, you get kind of chaos in the system.
Andrew Bolt’s columns appear in Melbourne’s Herald Sun, Sydney’s Daily Telegraph and Adelaide’s Advertiser. He runs the most-read political blog in Australia and hosts Channel 10’s The Bolt Report each Sunday at 10am, and his book Still Not Sorry remains very widely read.