Abbott’s gigantic carbon lie

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The Abbott Government’s new carbon reduction target of 26-28% is one thing, achieving it is entirely another. From Tristan Edis:

Environment Minister Greg Hunt continues to talk up his Direct Action plan as the answer — not just for 2020 or even 2030, but even beyond. Meanwhile, Tony Abbott said he’ll give him just $200 million per annum extra.

The Australian Industry Group stated in response to the target announcement that it thought $200m would fall rather short of the task:

“The new target is a major step change from anything deliverable by current policies. For comparison, if the target were delivered solely through budget spending [a subtle way of saying the Government’s Direct Action Emission Reduction Fund] it would cost between $100bn and $250bn in unadjusted terms.”

The Energy Supply Association representing businesses that are the country’s biggest source of greenhouse gas emissions echoed the sentiment:

The Government’s Emissions Reduction Fund was established to buy emissions to reach the current target of 5 per cent by 2020. The new target requires a material increase in abatement over the next decade, requiring a re-think about the policy measures needed to deliver this.

We won’t be able to buy our way to 26-28 per cent and beyond. We will need a credible, durable and bipartisan carbon policy to achieve this target.

I have made this point many times. Direct Action is a functional way to achieve carbon emissions reductions. The question is is it the cheapest way and is does it make the right people pay for it?

The answer is simple. There is not enough money budgeted for Direct Action to reach current emissions reductions targets let alone the expanded effort. Pick a number for what the extra cost will be but the one thing everyone agrees on is that it will be massive.

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And that’s where we come to the second answer. That money comes from the Budget, that is tax-payers. As such tax-payers will pay for the emissions reduction through enormous new taxes or it will not happen at all.

The alternative path, via a carbon price, makes the polluters pay, and uses that money to offer tax cuts so that tax-payers are not out of pocket at all.

I ask you, how did this gigantic lie ever form the basis of a government?

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.