Thursday, October 13, 2011

Carbon tax: We'll wonder what all the fuss was about

Here's Quiggin this morning:

Now that the legislation has been passed, the doomsayers who predicted economic ruin will be put to the test. Will the businesses who have claimed catastrophic effects cease investment or even shut up shop altogether? Will the economy go into a tailspin? Unless the global economy collapses at the same time, these predictions are going to look sillier and sillier as the date for the tax approaches, and even sillier once it comes into effect.

It is a measure of how little those public companies who forecast doom believed their forecasts that most didn't pass them on to the ASX.

Here's a map of advanced minerals and energy projects in April, when the passage of the carbon tax legislation seemed assured:

A record $207.2 million was spent exploring for coal in the June quarter, head and shoulders above the previous high of $122 million set in the December quarter when Julia Gillard announced plans for the tax.

Coalition leaders from John Hewson to John Howard to Malcolm Turnbull have supported such schemes as good for the economy and unlikely to much harm business.

Greg Hunt who these days says emissions trading schemes and taxes would wreck things, didn't think so when he prepared his thesis on the topic in 1990.

His conclusion:

"Ultimately it is by harnessing the natural economic forces which drive society that the pollution tax offers us an opportunity to exert greater control over our environment."

Here it is:

A Tax to Make the Polluter Pay

Tony Abbott himself said cutting emissions was best done with a carbon tax in a sit-down television interview in 2009:

"I also think that if you want to put a price on carbon, why not just do it with a simple tax? Why not ask motorists to pay more, why not ask electricity consumers to pay more, and then at the end of the year you can a rebate of the carbon taxes you've paid. It would be burdensome, all taxes are burdensome, but it would certainly change the price of carbon, raise the price of carbon, without increasing in any way the overall tax burden."

The carbon stuff begins 7.00 minutes in:

Our world won't end. It really won't.

By this time next year we'll wonder what the fuss was about.

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