Australia's crazy carbon trading scheme?

[topcropper]

The coalition is going to block Kevs crazy emissions trading plan, and rightfully so. Is Kev just stupid, or just incredibly stuborn? Why can't he see all the flaws in his scheme?

The KGB fellas have been right onto the scheme for ages,.....trading carbon for disaster,......

http://www.businessspectator.com.au...isaster-pd20090807-UNS4L?OpenDocument&src=kgb



I won't pretend to fully understand all that's going on, but I understand what he's proposing for agriculture to know that Kev's a nut. A nut who wants to commit economic suicide.

If Kevs emissions plans for Australian agriculture were implemented globally, it would be fantastic for farmers everywhere. Agricultural output would be slashed globally, and this would lead to much higher food prices and profits for farmers. But the rest of the world [barring New Zealand] is excluding agricultural emissions, and allowing farmers to benefit from agricultural offsets. This will be a massive profiting advantage for the farmers in the rest of the world.

Under the government's proposed emissions trading scheme, agriculture would be subject to coverage from 2015. The rest of the world realises that it's too risky to slash agricultural output, so it's being excluded.

As it is though for Australia, his plans would make beef, mutton and dairy production unprofitable. This just as the US and Europe are ramping up their farm subsidys again. Australian dairy farmers are looking at milk prices this year at about 26c per litre. Aussie farmers have adapted to our unsubsidised market by getting bigger and leaner, but now this?

It's pretty clear that rural regions which depend on agriculture and mining will bear the brunt of Kevs stupid unfair scheme, whereas the services based cities would be largely uneffected.

Turnbulls proposed scheme will treat agriculture just like the rest of the world,.....

http://www.theaustralian.news.com.au/story/0,25197,25911623-5013871,00.html



Kev and the rest of the Australian labor party are nut cases. It's clear that their scheme will just destroy Australian agriculture, and not reduce carbon emissions, just send them to China.

See ya's.

 

[Aaron Sice]

i agree whole heartedly.

KR's emissions trading scheme is pointless and fruitless -just a token measure to make everything more expensive and shut down our reasonably strong agri businesses - all to fulfill an election promise.

y'know what? if this trading scheme goes to vote - i'll be voting turnbull.

 

[Witzl]

Kev's a bloody idiot, period.

Well posted topcropper.
(i must spread the love before giving it to you again)

 

[topcropper]

If Kev wants all Australians to be vegetarians like himself, and if he wants to finish off the livestock industry, then they should simply bung a tax on meat and dairy at the checkout. At least then overseas imports will be taxed the same. His proposel will see Australian producers disadvantaged and the imported [and subsidised] meat and dairy not.

Grain production is not as much effected as livestock, but Kevs emissions scheme would see the end of Australias livestock industries, so I'd have no local feed markets anymore.

The big agriculture initiatives overseas that will see farmers financially rewarded for carbon sequestration in their soils is exactly what Aussie farmers have been moving to for 20 years, as in zero till, stubble retained farming. We are way ahead of the rest of the world in this regard. I can prove I've increased soil carbon by 1% in 20 years by stopping ploughing and increasing total fertility and thus output.

See ya's.

 

[HiEquity]

Good post TC. IMO the main problem with including agriculture is the administrative nightmare it involves. The science behind soil carbon / tree planting, fertiliser use, crop type, etc etc is just sooooo complex there is no simple way to account for it. Better to just put it into the "too hard" basket and move on. Maybe applying an excise on diesel of some sort would be as far as I would go, in an environment where our competitors did the same. I don't think the use of (mainly imported) liquid fuels should be tax free for anyone - there needs to be an incentive to use less of the stuff.

Regarding the emissions trading scheme as proposed by KR - it is just an administrative miasma of exemptions and regulations complicated by political expediency. It will spawn a whole industry of carbon consultants and accountants and result in very little carbon reduction. Much like the Tax act in that respect - imagine how many accountants and lawyers would be out of work if we actually had a simple, easy to administer tax system?

As for the Coalition's response it is half way there but they are going to have a hard time arguing their point when the Australian public generally has no idea what is going on with the detail!

I subscribe to the KISS concept - I'm very glad to see the Business Spectator guys out there pushing the simple carbon tax band wagon as I was beginning to despair there for awhile about the public debate. We have the admin infrastructure already in the GST (input credits - end user pays) and just specifying a simple price path for carbon gives business certainty over its response rather than trying to guess future prices for carbon based on a scheme full of holes, exemptions and pork barrelling...

Just get rid of the GST and replace it with a carbon tax that gives you the same revenue - replace a disincentive to use goods and services with a disincentive to emit carbon - how hard is that? Then you can just apply different tax rates to the "emission intensive, trade exposed" aluminium etc crowd so they don't leave the country.

On an international level surely we can reach agreement that a certain proportion of tax revenue for the governments of each country should be received from carbon taxation in whatever form they like?

One wonders how hard all this really is...

 

[topcropper]

Just get rid of the GST and replace it with a carbon tax that gives you the same revenue - replace a disincentive to use goods and services with a disincentive to emit carbon - how hard is that? Then you can just apply different tax rates to the "emission intensive, trade exposed" aluminium etc crowd so they don't leave the country.

...

Hmm. A tax would be so simple. How would you do it..??



Kevs plan is so so dumb. OK, as I said, I'd love to see his plan implemented to agriculture globally. It would be fantastic as food production would plummit. But it's not, and agriculture is being excluded everywhere except Oz and NZ.

So here we will have an aussie dairy farmer, unsubsidised, getting perhaps 26c per litre for his milk as like this year, and getting slugged for his carbon emissions, getting slugged again with higher fertilizer prices, and not being able to profit from his sequestration, selling his milk at the checkout, competing with an overseas producer, who probably has a guarenteed milk price of 50c per litre [24c coming from the tax payer via subsidies], and not getting slugged for emissions and profiting from his sequestration.


Economic suicide is all it is.


See ya's.

 

[topcropper]

I'm very glad to see the Business Spectator guys out there pushing the simple carbon tax band wagon as I was beginning to despair there for awhile about the public debate. ...

Hell. I just checked my inbox, and here is this point about a simple tax by the KGB blokes,.....

http://www.businessspectator.com.au/bs.nsf/Article/Carbon-pd20090810-US75F?OpenDocument&src=kgb



........"Access Economics cofounder Geoff Carmody says that Australia’s proposed emission’s trading scheme is the "GST from hell" as it penalises the export industries and import-competing firms at the core of our export-driven economy. The CEDA paper explains that Europe’s emissions trading acted like a “GST from hell” and is almost certainly contributing to Europe’s malaise.

Porter points out that Ross Garnaut's final report favoured a well-designed emissions trading system. But both sides of of the Australian parliament are proposing a complex, subsidy-ridden emissions trading scheme. One of Garnaut’s strong recommendations is that "a carbon tax would be better than a heavily compromised emissions trading scheme".

So here we have the experts telling the politicians that they are hopelessly wrong. Yet it does not seem to phase them".........




See ya's.

 

[topcropper]

From the same KGB article,...

http://www.businessspectator.com.au/bs.nsf/Article/Carbon-pd20090810-US75F?OpenDocument&src=kgb



.....""If Wall Street's manipulation of debt and derivatives gave us the global financial crisis the emissions trading is certain to give us far worse."........




Can you just imagine the derivitives debarcle all this carbon crap will create in financial markets. It's probably all just designed so the money markets and traders can fleece more money from the real people who produce real stuff.

See ya's.

 

[steveadl]

Been following the articles on the emission trading scheme on BS as well. I think it's a case of Kevin not being able to back down anymore now for fear of losing face.

Anyway, agree with what RG is saying on the subject, and from my limited knowledge and reading - a tax does seem like a more effective solution than this ETS. It's put Aust. at a disadvantage to other countries, and in particularly even in our own backyard it gives importers who can ignore it an advantage over local businesses that have to heed the ETS.

 

[skater]

You asked the question....

Is Kev just stupid,

Of course the answer is YES!!

But, why did you need to ask? Or was that a rhetorical question?

 

[HiEquity]

Hmm. A tax would be so simple. How would you do it..??

Just like the GST - the tax would be charged originally on the carbon source (eg coal, liquid fuels, carbon component of imported goods etc at the appropriate carbon intensities). End users (consumers) eventually pay through the input tax credit system so businesses can pass through the costs, as they do with the GST now.

OK to put all this in context, using some real numbers, from here 2006 Australian total emissions, excluding agriculture were 460Mt/year.

At a $20/tonne carbon tax (carbon prices are meant to start around this level at the start of the proposed CPRS) that yields govt revenue of $9.2bn

At a $60/tonne carbon tax (carbon prices are meant to end up around here by 2030 ATM if you believe it) that yields govt revenue of circa $28bn.

From here total GST revenue for 2005-06 was $37bn.

So even at the $60/tonne carbon price where everyone says the economy will jump off a cliff, the impact on the economy will still be significantly less than the current GST, even without allowing for the fact that carbon emissions will reduce as prices rise (basic demand/supply), although a growing economy will balance that a bit to keep revenue reasonably whole over the period.

So, reduce the GST accordingly so the govt (the States in particular as GST revenue goes to the States) doesn't have a revenue hole while you increase carbon prices to allow industry to put in place transition measures and plan accordingly.

Voila - you have just put on a decent price for carbon at very little net cost to the economy IF GST rates are reduced accordingly... and it's certainly nowhere near the impact the original GST had anyway so lets keep all this in context shall we?

Not that hard is it?

 

[HiEquity]

By the way, regarding exported goods (eg aluminium) the GST system makes it easy for those industries to claim an exemption as they don't have an Australian end user to pass the tax on to - so they shouldn't have to pay in the absence of our international competitors having similar arrangements. This would take a bit of a chunk out of the tax revenue so would have to be factored into the carbon prices / GST reduction modelling.

The revenue from the carbon intensities of some imported goods would partially have to be achieved at the cost of cutting current tariffs otherwise it could be viewed as a trade barrier, which is not the intent. Just have to suck it up on that one if we want to maintain our reputation as a "free trade" country. Tariff reductions are on their way in some sectors anyway.

However, the majority of imported goods will require an "average" carbon intensity to be applied to them (similar to the tables of duties / tariffs). Otherwise most imported goods would be more attractive in the Australian market as their cost base won't have changed compared to the Australian producer who has to pass on their carbon tax.

For example the price of imported aluminium could be cheaper than domestically produced if an equivalent carbon intensity tax was not charged to the end user for both products. There can be no argument that this would be a trade barrier as it is just treating the imported product the same as the domestically produced one while giving the domestic one the opportunity to improve their competitiveness via reducing their carbon intensity.

Hope that clarifies the import / export issues...

 

[Witzl]

build a big pipe from australia to china.
send all our carbon pollution to china.
..........
net effect on china's carbon output ~= 0

 

[NedKelly]

Kev and his entourage love the carbon trading scheme. This is what comes from flying to exotic places, staying in the best hotels and eating caviar, lobster and drinking fine wines with all the other entourages from all the other countries under the guise of saving the planet from global warning. It's a complete load of b*ll*cks.

 

[plusnq]

Just like the GST - the tax would be charged originally on the carbon source (eg coal, liquid fuels, carbon component of imported goods etc at the appropriate carbon intensities). End users (consumers) eventually pay through the input tax credit system so businesses can pass through the costs, as they do with the GST now.

OK to put all this in context, using some real numbers, from here 2006 Australian total emissions, excluding agriculture were 460Mt/year.

At a $20/tonne carbon tax (carbon prices are meant to start around this level at the start of the proposed CPRS) that yields govt revenue of $9.2bn

At a $60/tonne carbon tax (carbon prices are meant to end up around here by 2030 ATM if you believe it) that yields govt revenue of circa $28bn.

From here total GST revenue for 2005-06 was $37bn.

So even at the $60/tonne carbon price where everyone says the economy will jump off a cliff, the impact on the economy will still be significantly less than the current GST, even without allowing for the fact that carbon emissions will reduce as prices rise (basic demand/supply), although a growing economy will balance that a bit to keep revenue reasonably whole over the period.

So, reduce the GST accordingly so the govt (the States in particular as GST revenue goes to the States) doesn't have a revenue hole while you increase carbon prices to allow industry to put in place transition measures and plan accordingly.

Voila - you have just put on a decent price for carbon at very little net cost to the economy IF GST rates are reduced accordingly... and it's certainly nowhere near the impact the original GST had anyway so lets keep all this in context shall we?

Not that hard is it?

The original GST replaced a lot of other taxes. The carbon tax is obviously in this country, and others, a great way for governments to raise taxes supposedly to save us from global warming. If you believe they will reduce taxes after increasing the deficit to $200B, maybe you need to look for work in Kev's inner sanctum.

Cheers

Shane

 

[Perp]

The continual proposal of exceedingly complicated and fatally compromised schemes is exactly why a benevolent dictatorship is more efficient than a democracy.

What's the saying? "A camel is a horse designed by a committee"?

Groan.

 

[topcropper]

Surely a simple tax would be much simpler, and much fairer. A tax would see everyone pay a bit, rather than entire industries go under. At the same time put imports on the same playing field as Aussie producers. And I'm not exagerating, because Kevs scheme would see Australia's livestock industry go under.

There is plenty of research showing that rural areas will bear almost the entire brunt of Kevs ETS, and cities would be largely uneffected. Of course that would be initially, but eventually cities would be effected once the loss of export income flowed through.



This is what we get when a bunch of academics, greenies, unionists and public servants get to run a country instead of people who have actually run a business before.

The amount of farmers who vote labor in the entire country, you could probably count on one hand. Farmers didn't vote for these idiots. Australia is going to get what it deserves here if Kevs scheme got in.

See ya's.

 

[Perp]

I must be reading your post wrong. However, It seems as if your saying, "it's not fair, get over it".

Nah, sorry, got on a rant about how compromised all schemes get when the parties try to "negotiate" them... And remarking on how far we compromise schemes in order to make them "fair" to every possible individual circumstances, but if it effects entire industries rather than individuals, we don't seem to be as concerned.

Surely a simple tax would be much simpler, and much fairer.

Yes, it would. In this case, simpler and fairer appear to coincide. So who is opposed to a carbon tax? (Forgive my ignorance, I've not followed this issue as closely as I should.)

 

[steveadl]

This is my favourite part of the proposed ETS:

Although few people realise it - and for many months Rudd's minister, Penny Wong, sought to deny it - the design of his scheme is such that any voluntary action on our part does nothing to reduce the nation's total emissions of greenhouse gases. Rather, it makes it easier for the polluting industries to meet their requirements under the scheme.

http://business.smh.com.au/business/save-energy-to-help-industry-20090811-egva.html?page=-1

Awesome!

 

[Perp]

That's quite the "flaw" in this cunning plan, Steve. Oh dear.