Isra-Mart srl: Australia’s carbon tax debate-Missing the point at great expense

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Canberra - The government wants to introduce a carbon tax. The Opposition says it’ll drive the country to the wall. The Greens want a higher tax. The public, as usual, is left looking at figures and press releases.
There are a lot of assumptions about this tax:
1. It’s seen as an anti-pollution measure, charging a nominal $26 per ton of carbon.
2. The assumption most relevant to consumers is that all of the costs of this tax will be passed on to them.
3. The government says it’s going to use the revenue to provide compensation to Australian households.
These are the fundamental theories on which implementing this new tax are based. The Garnaut report outlining the proposals is being spun like a bottle, and it’s anyone’s guess who gets kissed first.
Meanwhile-
1. Australia is perhaps the biggest per capita polluter in the world, producing millions of tons of coal and various other forms of carbon a lot of domestic pollution.
2. Energy companies providing electricity have been crying poor and intend to jack up their prices by a staggering 30% per year to pay for upgrading antiquated systems.
3. Motorists are getting buried under costs like petrol and parking, and this tax will probably impact them.
4. Freight costs are directly linked to petrol, and there’s another possible major cost impact there.
5. Coal producers are crying poor and will presumably up their prices, increasing cost pressures on electricity generation from coal-powered plants, hitting business, industry and consumers.
Again, macroeconomics speaks with forked, expedient tongue when it feels like it. All of this happens on the basis of the same $26 a ton.
Garnaut, to his credit, has focused on the economics to a very large extent as The Sydney Morning Herald reports:

“…He recommends that for three years after the carbon tax is introduced in mid-2012 about 55 per cent of the revenue should go to low and middle-income households to assist with price increases.
But once an emissions trading scheme (ETS) is introduced in 2015 the economist argues 60 per cent of the revenue should go to the less well-off.
That could then rise to 65 per cent by 2021/22.
Most of the assistance would be in the form of tax cuts with the tax-free threshold raised to $25,000.”

This may look like fiddling with margins, but it’s a fairly realistic appraisal of the situation for Australia’s low income earners who are likely to get stuck with monster bills from our delightfully rustic energy companies and others. It’s intended to be a progressively tailored tax regime, a new approach, but the question of how people less well-off earning less than that fabulous sum of $25,000 per year are supposed to cope.
The median wage in Australia is a bit of a sick joke. It’s calculated at $55,000, but the actual numbers of people earning under that amount is large enough to be a problem. The sick part of it is that already, without the carbon tax, many pensioners and others are saying they’ll have to go without things just to pay their electricity bills. Garnaut is obviously trying to address this problem, but the record of Australian governments understanding economists is to put it mildly abysmal.
The real elephant in the shoebox here is that there is no evidence that carbon trading actually reduces emissions. The original criticism, that polluters may theoretically pay for polluting, but consumers wear the cost, hasn’t been overturned.
Is there an incentive for polluters to clean up their act?
In Australia, like the rest of the world, the absurd infatuation with oil continues. There are many more efficient methods of providing energy, but the big money sticks with the remains of old Carboniferous swamps as its way of making an income for itself.
Oil and coal are infinitely more valuable as developed products than as fuels, but that idea is apparently too complex. A ton of coal, turned into a useful, non-polluting product, could be worth $10,000, not its current value of about 1.5% of that amount. Do coal producers want to make that sort of money? Obviously not. The same applies to most polluters, who may have business management degrees but know nothing about the science.
So the theory is that another ritual of paying to get poisoned will solve everything for consumers. The trouble is that this is about survival. We can either live on a progressively more polluted planet at ever increasing costs or we can get rid of the problem.
As usual, the wrong choices are being made. Stay tuned for more great options for going to work in acid baths instead of cars and ways of making cyanide fun for all the family.