Australia Repeals its Hated Carbon Tax

Australia has become the first country in the world to abolish its hated carbon tax – in fulfillment of an electoral “pledge in blood” by Prime Minister Tony Abbott.

The tax was introduced by the Labor-Greens coalition in mid-2012, despite earlier promises to the contrary by then Prime Minister Julia Gillard.

Prime Minister Abbott described the tax – estimated to have cost every Australian household $550 per year – as “useless and destructive.” It has now been repealed, after much wrangling – and only on the third attempt – by the Australian senate.

As Phillip Hutchings reports at Watts Up With That?, the tax was indeed a total waste of time and money.

Among the reasons it was so misbegotten are:

1. Australia is an island built on carbon and is the world’s largest exporter of coal and Liquid Natural Gas. So to impose a tax on its economic raison d’etre made about as much sense as a well-endowed male porn star lopping five inches off his penis.

2. In order to buy off its friends in industry, the Labor-led Coalition created so many exemptions that it was never going to be very effective. As Hutchings reports:

To minimise the economic fall-out, the Labor-Green Government limitedthe carbon tax to large industrial emitters (more than 25,000 CO₂e/yr).Road transport and agriculture was exempt. Put together, that meantonly about 185 companies in Australia’s US$ 1.5 trillion economy had tocomply. And even those few were only lightly touched.

Industries which are “trade exposed” such as cement or aluminiumsmelting were mostly excused. They got either 66% or 94.5% of theircarbon cost covered by the award of free units.

Just over one-third of Australia’s carbon emissions come fromcoal-fired electricity generators. And the dirtiest electricity comesfrom the aging brown-coal plants in Victoria – with almost double theemissions of modern gas-fired plants. Yet being located in aLabor-voting union heartland, they too got off lightly with the firsthalf of their emissions effectively carbon- tax free. Nice.

3. It did little, if anything, to reduce carbon dioxide emissions. The Guardian, of course, claims otherwise. But this is greenie wishful thinking. As Hutchings notes, though greenhouse emissions in Australia have been declining for almost eight years (long before the carbon tax was introduced) this has much more to do with the doubling of electricity prices, which caused consumers to cut back drastically on their consumption. This is exactly what the carbon tax was supposed to do (drive up prices; change consumer habits) but it had already happened naturally so the tax was pointless.

Other countries to have experimented with either a carbon tax or an emissions trading scheme (which instead of taxing carbon dioxide directly, imposes a ceiling on CO2 production through tradeable permits) include the European Union member states, Japan and Korea.

Some US states – eg California – run similar schemes, although these expose them to perhaps the most fundamental problem of carbon taxation: unless it is instituted on a universal global level both big energy users and ordinary consumers will always have the option of moving elsewhere where the costs of energy have not been driven unaffordably high by well-meaning but pointless eco legislation.