Why the climate movement shouldn’t support the Greens’ carbon tax proposal

The Greens’ Proposal

The Greens have proposed an interim two year carbon tax, as a transition to carbon trading. Starting at $23 per tonne this year, rising to $24 the following year. It would be simpler than the CPRS, and unlike the CRPS would not involve tradeable permits, or the use of offsets, but as Greens state “The scheme would operate using the proposed CPRS administrative framework to ensure a smooth start”. The proposal originally comes from the Garnaut review, the report by free market economist Ross Garnaut which led to the CPRS.

The Greens have proposed a carbon tax to deal themselves back into climate negotiations with the government, rather than fight for solutions that would actually work. Given the scale of the problem, their carbon tax proposal is remarkable for its timidity, and that is likely to be made worse by negotiations with the Labor government. However timidity is not the only problem, a carbon tax will make getting solutions that work more difficult.

Carbon taxes are market mechanisms which work on the same basic mechanism as carbon trading – price signals. The Greens are proposing exemptions for “trade exposed emissions intensive industries”, just as with the CPRS. This would include exemptions for companies like Alcoa, which has just done a deal with Loy Yang power to keep polluting for the next 26 years. This is because the Greens want to support Australian companies against international competitors. But being Australian companies, does not make their emissions any less harmful to the climate. Climate change doesn’t recognise nations.

What’s wrong with Carbon taxes?

Even if Alcoa were included in the Greens carbon tax proposal, it would not solve the problems with carbon taxes. Should the polluters pay (what amounts to a nuisance tax), or should they stop polluting? If government is serious about stopping something dangerous, it bans it. DDT was banned because of its effects on the environment. So is asbestos. Why allow companies to pay a tax and continue to destroy the planet? Companies will continue to add to greenhouse gas emissions even with a carbon tax, if it is still profitable to do so. We need to regulate absolute limits on carbon pollution.

Carbon taxes are always less effective than regulation. For instance taxing old incandescent light globes would reduce their use, but banning them stops them altogether – providing new ones free would be better still. Taxing the car industry or petrol, might lead some poor people to stop driving, but mandating electric cars run of renewable energy alongside massively expanded public transport would make a real difference. Taxing the carbon in aviation fuels, would make flights more expensive and reduce numbers flying, but replacing flights with high speed rail, would be more effective.

Carbon taxes are unfair.

The rich person in first class on a flight uses 5 times the space of someone in economy, but even if they paid five times the tax, a price rise would matter less to them. Carbon taxing, like carbon trading allows destructive behaviour to continue for those who can afford to pay. The same is true of taxes on cars, or coal-fired power. Petrol price rises can leave people stuck in the suburbs without transport. Coal-fired electricity producers will pass a carbon tax on to consumers while continuing to pollute.

You can’t build a movement based on unfairness

We need a mass movement to force our rulers to act to stop climate change. People will not join our movement if it means they will be stuck in the suburbs without transport, or if they are cut off electricity. They will not join our movement, even if they just think these things are likely to happen.

A carbon tax would be just as vulnerable as carbon trading to being labelled a “big new tax on everything”. This is already having an impact. The right will continue to use the slogan as a way of convincing ordinary people that action to stop climate change will hit them financially. A carbon tax is an unfair flat tax like the GST – we can’t build a movement on that basis.

Won’t it raise money that can be used for climate action?

The Greens say that their proposal “Results in a surplus of $2.97 billion … which could be directed towards climate mitigation and adaptation infrastructure” But not only does this not come close to the sort of money that is needed to seriously address climate change, in actual practice budgets do not work as they suggest. Governments constantly move money around from one budget to another. All taxation becomes general revenue, which can be used for anything government decides matters, at this point it is more likely to be used for the war in Afghanistan than emission reductions.

If government was serious about addressing climate change it could get far more money by raising corporate tax and the highest individual tax rate back to where they were in the 1980’s – corporate tax would go from 30% back to 40% and the highest tax rate from 45% back to 60%.

Isn’t a small carbon tax better than nothing? No. Carbon taxes can actually give government an interest in continuing emissions. This already happens with cigarettes. Cigarette taxes are high enough to stop some people smoking, but not high enough to stop everyone smoking and consequently for the government to make no money.

If people think the government is already acting with carbon taxes or carbon trading, they will be less likely to see the need to protest for real climate action. The climate movement must demand what needs to be done, rather than try to come up with “solutions” that are acceptable to those who run our world, but that will not work.

Instead of a carbon tax the Greens should be demanding “No New Coal”, a stop to the Alcoa-Loy Yang deal, and direct government investment in renewable energy and public transport.

By Chris Breen


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