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Mar 28, 2009

Scrap the Cap-n-Tax Scheme

Cartoon: by "Mackay."

From Viv Forbes of the Carbon Sense Coalition.

The Carbon Sense Coalition has made a submission to the Economics Committee of the Australian Senate, which is looking into the Draft (and daft) Carbon Pollution Reduction Scheme Bill, known for short as the “Cap-n-Tax Scheme.”

The following is a brief excerpt of the contents of what is a very detailed and in depth analysis of the proposal, including the flaws in both the economics and the science, and areas which require a great deal of research prior to any introduction of carbon taxes. Those who will be affected by the governments proposals, which is in fact everybody are advised to read the entire submission.

“The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence: 

“The art of economics consists in looking not merely at the immediate but at the long term effects of any act or policy: it consists in tracing the consequences of that policy not merely for one group, but for all groups.” Henry Hazlitt “Economics in one Lesson”

1. The Important Matters 

This Senate Economics Committee is charged with the responsibility of assessing the economics effects of bills put before it.

This enquiry is focused on The Carbon Pollution Reduction Scheme Bill 2009. The name itself is a deliberate deception – the only truthful word is “Scheme” which the Oxford Pocket Dictionary defines as “artful or underhand design”. It is not about carbon or about pollution - it is “The Carbon Dioxide Cap, Trade and Tax Scheme Bill” (referred to hereafter as “The Cap-n-Tax Scheme” or “The Scheme” for short).

There is substantial doubt on the science on which this Scheme is justified. The chief justification is scare forecasts based on complex computerized climate models that few people believe and even fewer people understand. However, on the understanding that the science will be the basis of a separate full enquiry by the Senate Climate Change Committee, the scientific aspects of these matters will not be pursued in detail here. The Economics Committee, however, has a responsibility to look into all of the economic aspects, which include:

2. Is there a Sound Economic Justification? 

If implemented fully, the Cap-n-Tax Scheme will result in a massive dislocation of the
Australian economy. Huge funds will be transferred from viable carbon-based economic activities to favored community groups; to subsidized speculative alternate energy investments of dubious investment merit; to a biased selection of research activities; and in supporting a large expansion in government regulatory activities.

Any Scheme that proposes to forcibly transfer such massive amounts of money from one group of people to another needs a very detailed and competent cost benefit analysis.
The Senate committee needs to commission an independent enquiry into whether this has been done.

There are grave concerns within the community that neither the British Stern Report nor the Australian look-alike produced by Professor Garnaut would stand critical independent scrutiny.

In conclusion, the Carbon Sense Coalition is totally opposed to the introduction of any taxes on emissions of the harmless plant food carbon dioxide.
It also believes that the Cap-n-Tax Scheme proposed is poorly researched and the
Economics Committee of the Senate would be delinquent in their duty if they did not commission independent enquiries into:

 A cost-benefit analysis of the proposal done to the standards required for a prospectus seeking to raise very large funds from the public.

 The basis and reliability of the climate forecasts on which this Scheme is based.

 Whether this Scheme is based on good tax principles or whether a simple carbon tax would achieve the same results cheaper, with easier exit strategy and with less long term cost. And why there is no Sunset Clause.

 Why the Minister has not made repeal of all the other carbon-cutting state and federal regulations a condition of passage of this Scheme.

 The cost and feasibility of eliminating carbon dioxide emissions from base load power generation, and the risks posed by this Scheme to existing electricity generating capacity.

 The costs and benefits of Australia taking a leading world position in demonizing our biggest export earners, coal, cattle, tourism, metals and sheep.

 The likely effect of increasing the costs for carbon fuels on our outback and regional industries.

 The public support for massive transfers of money, jobs, businesses and technology from Australia to overseas locations.

This Cap-n-Tax Scheme should be rejected outright, as should its pale cousin, the Carbon Tax.

This submission was prepared by individual members of the Carbon Sense Coalition on their own initiative with no inducements or policy directions from any other groups. Many Coalition members are taxpayers, shareholders and consumers in interests likely to be affected by this Scheme. They declare a vested interest in ensuring that this does not savage the backbone industries of Australia ill timed and poorly designed initiative. They fear for the costs and capacity of the future electricity generating system and for the future of real jobs for their kids and grandkids.

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