I’ve read some nonsense about the impact of a carbon price in recent months, but I have to confess yesterday’s effort by Catherine Cashmore was the downright weirdest piece of carbon price analysis I’ve read for a while.
Her argument seemed to be… well, I’m not sure, really, what her argument was. I think it was “no one really knows how much prices will rise” under a carbon price, but then she went on to explain in detail how they’d go up in the property sector. And then there was this:
“The arguments surrounding the carbon dioxide tax, should not focus on the scientific evidence, but rather the policy changes we’re facing. Although everyone has a desire to reduce harmful emissions and create a better world for future generations, we have a natural adherence to authoritative dictation on how we should conduct our lives. It’s fair to suggest that any reduction in carbon emissions will result in some element of short-term pain and therefore not be popular — but the question mark should be over how much pain our largest employer (small business) can take.”
Gee Catherine, I don’t know about you, but I don’t go in for much authoritative dictation on how I should conduct my life. I’d have thought, in fact, fixing climate change would be a damn sight easier if we indeed had such a natural adherence, because then governments could just tell us to cut back on our emissions-intensive behaviour.
And then there was her strange warning that property prices would go up in Canberra because “staff recruited to administer the new “tax” place extra demand on the inner-city ring supply” (please, no wisecracks), as though a few extra staff on top of the 60,000-odd Federal public servants in Canberra is going to make a significant change from either the steady growth in public service numbers that has been going on since 2000 or of the level of Canberra office accommodation (presumably what she was referring to) that has expanded rapidly to meet it in recent years.
Having declared that no one really knows the impact, Cashmore then took the Housing Industry Association’s claim that a carbon price will add $6000 to the cost of a house and ran with it. “Even with the tax benefits, first home buyers will be hit hard,” she predicted. The HIA’s $6000 claim emerged back in May, when they issued a press release (without any accompanying detail or modelling) saying a carbon price of $20 would increase the cost of an average house by $6000. The figures were run with no context in — where else? — The Australian, by Sid Maher, who has routinely provided a platform for rentseeker press releases during the most recent iteration of the carbon price debate.
I’ve long fought the HIA’s corner on housing supply, but what they omitted to note, except obliquely, was that their figure was before industry compensation. And both the steel and cement industries will get billions in taxpayer handouts under a carbon price — indeed, the steel industry will actually come out ahead courtesy of the protectionist steel package that accompanied the carbon price scheme. In June, the HIA finally directly acknowledged that its figure didn’t include compensation. Fairfax’s Carolyn Boyd had, in the interim, skewered the HIA over the issue.
In fact, the HIA claims go to the entire logic of why industries like steel and cement are receiving generous assistance: they face competition from imports, and therefore can’t pass on the costs of a carbon price to consumers. So if that’s the case, how can they increase the cost of building materials in the first place?
None of this made it through to Cashmore’s piece. Perhaps it was her natural adherence to authoritative dictation.
Maybe there’s been something in the water this week. Monday’s Financial Review contained an extraordinary piece by Perry Williams headlined “Study tips $17 billion hit to coal assets”. Perry declared “Australian coal producers could have $17 billion knocked off the price of their coal assets under the proposed carbon tax.” Williams was reporting on research by analysts Wood Mackenzie. The Fin even piously editorialised that day about the need to help coal mining companies in retraining relocating workers. Because, as we know, the coal mining industry has for generations highly-valued its workers and done the right thing by them, right?
But $17 billion — sounds serious, even for an industry enjoying booming conditions like the coal industry.
Now, Wood Mackenzie are specialist energy sector consultants, so they’re unlikely to say anything that’s going to upset their client market too much, but the report actually reads as pretty sensible — indeed, it rejects claims by the Australian Coal Association about the number of mine closures resulting from a carbon price. Instead, it was Williams’s telling of it that was the problem. You had to read down seven paragraphs to find out that the $17 billion scenario — or $16.8 billion to be exact — was the outcome predicted by Wood Mackenzie if a carbon price reached … $60 a tonne.
$60.
Most of the time we’re playing rentseeker whack-a-mole in the carbon pricing debate. But other times, it’s just journalists and editors who are responsible for the rubbish that’s out there.
Bravo Bernard.
Reading that piece of fluff yesterday had me wondering if Crikey’s website had been hacked by an “evil” unemployed trucker posing as an industry rep. 😀
Glad to see normal service has resumed.
This is a good rebuttal of the factually sparse piece posted yesterday, but I get distracted when I hear/read the term carbon “price” – especially when it comes from a non-politician. Why do we have to use euphemisms all the time, why can’t we just call a tax a tax? Or do we pay income prices now and is it a 10% GSP? It’s just a given that politicians will babble their sugar-coated gobbledygook, but surely us non-politicians can speak in plain terms and argue for the merits of a carbon tax without having to use euphemisms.
Chess, it is called a price because in a couple of years the cost of the permit will be able to float and permits will be able to be exchanged.
Chess, a tax it is not, in the purest sense of the term. It is a price or a charge, but not a tax.
Garnaut: “[It is] an emissions trading scheme starting with a fixed price.” If I’ve only got time for two words I say, “carbon pricing”.
I tend to think of it as a charge levied by the government for the right to pollute which, after several years, will be replaced by an emission trading scheme. If the charge was adequate to cover the real costs to Australian society resulting from Australian carbon dioxide pollution, the charge would be fair. As it is, the charge falls very much short of that mark.
When somebody takes a trailer load of rubbish to the local landfill site, he is asked to pay a disposal fee or charge. It isn’t a tax and it has nothing to do with tax collection. The same principle applies to CO2 which is, ultimately, a charge levied for damage done to society’s commons.
One further distinction is that those faced with paying this charge can reduce their liability by the expedient of reducing their CO2-e emissions. Again, this is indicative of a charge (for polluting) as against a tax (levied for the operation of government).
There is no similarity between this charge and a tax – the language has been trashed again and with it the clarity of meaning which this whole debate lacks.
The Cashmore article has to be one of the most inept rent-seeking efforts of the carbon pricing debate so far. Reminded me of the old line about the Irish mafia- that they ‘made me an offer I couldn’t understand’.
One of the fundamental difficulties in the climate action debate is the time scales involved. Humans as individuals tend to apply high discount rates to future costs. This is one of the reasons we have governments- to make the long-term investments that leave us all better off in the long run.