Alex Moran, Herald Sun 29th June, 2012
On Sunday the Australian carbon tax will be implemented. This tax is the latest and most lethal of the suite of carbon-reduction measures delivering crushing blows to businesses and households.
We already have the cancer of the Commonwealth’s Renewable Energy Target.
This requires an increasing proportion of electricity to be supplied from high-cost wind and solar generators. As well as dotting unsightly giant windmills around the countryside, wind and solar renewable facilities are hopelessly uneconomic.
The RET presently adds 6 per cent to consumers’ electricity bills and the scheme is only halfway to its goal.
On top of this, taxpayers are carrying the additional taxation weight of about $3 billion a year to finance green schemes and subsidies to exotic energy developments. None of this spending will ever prove worthwhile.
And the Government has also created a $10 billion green-energy bank to fund business proposals that private-sector banks and venture capitalists have rejected. The taxpayer will pick up the costs of its failures.
The carbon tax builds on these injurious policies by adding 40 per cent to the wholesale price of electricity.
This crushes the profitability of many of Australia’s most productive businesses, especially exporters and those facing import competition, which are unable to raise their prices to cover additional costs.
Half of the carbon tax revenue goes to handouts to the less well-off voter and half goes to preventing the most adversely affected businesses from immediately going broke.
Brown-coal electricity generation, aluminium, concrete, steel, glass and many other such types of industry cannot survive without the antidote of these subsidies.
And supplementary life support now being offered to aluminium smelters such as Port Henry, already demonstrates that planned levels of assistance are insufficient.
In addition to taxing firms out of business, Canberra’s carbon-reduction policy is also offering the owners of the Hazelwood Power Station cash to close it down. Carbon-emission policies have already prevented Hazelwood from rolling over its bank loans and forced a bailout by its owners.
The carbon tax and buy-out of Hazelwood are policies designed to force the closure of some of our most productive firms.
The coal-based power stations have given households and industries the world’s lowest-cost electricity.
But the Government needs these and emission-intensive businesses such as aluminium smelters to shut down in order to meet its carbon-policy goals.
Indeed, an equivalent effect to buying and scrapping Hazelwood would be to immediately close down all Australian aluminium smelters rather than watch its policies force their slow death. Although this would have an even greater adverse effect on national productivity and incomes, for the Government the overwhelming concern is unpleasant publicity on job losses.
And there lies the rub! Once confronted by the effects of the electricity bill-boosting and industry-slaying monster it has created, an alarmed Government rushes in with additional funding to delay the closures caused by the very policies it has introduced.
The world will not end on Sunday. Commerce will continue, energy will still be available.
But the carbon tax will introduce a new, more potent poison into the economy inflicting incalculable damage on living standards.