Making sense of the carbon tax in Australia
When details of the carbon tax assistance package first emerged in early June, the notion was floated that the income threshold above which taxpayers would receive no help with their higher energy bills would be ratcheted up by $20,000 to $170,000. This was startling news.
Not only did it fly in the face of the recommendations put forth by Ross Garnaut, the plan’s chief architect, that the upper limit be capped at a sober $80k. It was also surprising, not to say shocking, coming from a Labor Government that appeared for a moment to step well beyond the limits of its natural, low and middle income constituency.
More worryingly, for those who actually support a tax on carbon emissions, it seemed to imply that the Gillard Government might succumb to the temptation to make the carbon tax a cash cow, the revenue from it going mainly to satisfy the demands of electoral expediency. After all, it was already obvious that a large share of the tax proceeds would be driven back to low income groups who would receive the bulk of the tax compensation.
The concern was that the main objective of a carbon tax, namely the reduction of carbon emissions, would be ill served if adequate investment and appropriate funding failed to go to essential research into cleaner fuels and the development of alternative energy sources. It appears that these fears were without ground. In fact, the Australian Government has gone further than many expected in its support for innovation in green technologies and renewable energy.
In effect, the $23 a tonne carbon tax will enable these important new measures:
- $10 billion over five years will be channeled to clean energy start ups and existing manufacturing businesses intent on transitioning to green technology through the Clean Energy Finance Corporation. It will provide loans, loan guarantees, and equity investments and will be independent from Government. Its board will be made up of experts in banking, investment management, and clean or low emissions technologies.
- The Australian Renewable Energy Agency will devote $ 3.2 billion over nine years to research, develop, streamline and market renewable energy technologies. A number of already established programs such as the Bio fuels Research Institute, the Australian Solar Institute, and the Solar Flagships Program will be united under the new agency’s administration.
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$1.2 billion will be allocated over seven years to the Clean Technology Program. This will potentially be the main source of grants for businesses. It is meant to support research and development in low pollution technologies while helping to improve energy efficiency in manufacturing.
The Clean Technology Investment Program will consist of the following three branches:
- A Clean Technology Investment Program will be allotted $800 million over seven years and will provide competitive grants to manufacturers using above 300 megawatt-hours of electricity to assist them with the purchase of energy efficient and low emissions capital equipment.
- A Clean Technology Food and Foundries Investment Program will receive $200 million over six years to offer competitive grants to businesses involved in the metal foundry and food processing sectors for investment in energy efficient capital equipment, processes, and products.
- A Clean Technology Innovation Program will employ $200 million over five years towards grants in support of business investment in the development of renewable energy and low emissions technologies.
- Last, but in no way least, the budget of the Australian Competition and Consumer Commission will be increased by $12.8 billion over four years to boost its ability to monitor illegal price gouging following from the carbon tax. Businesses caught using the price on carbon as an opportunity to jack up their prices could face fines of up to $1.1 million. Individuals caught profiteering may be slapped with penalties of upwards of $220,000.
All this may seem cold comfort, not to mention ludicrous, to those who believe that carbon emissions are so much hot air and the carbon tax a royal scam. But make no mistake about it: the attention of the world is now pointed at Australia. The ecologically concerned, in particular, will look to see if Australia can match the success of Denmark, a tiny country a fraction of its size and with less than a quarter of its population, that was heavily reliant on coal before it introduced its own carbon tax in the 1990s. On the other hand, those who remain skeptical about the effectiveness of a carbon tax, or who doubt the ability of government to properly implement it, will eagerly point to Spain as evidence of the potential inefficacy and waste of a tax on carbon.
Tags: carbon tax, Carbon Tax Announcement, carbon tax in australia
