Carbon Tax Rant

The expected cost of living rise due to the carbon tax seems to be the only thing most anti-carbon tax warriors focus on. I can understand why people are concerned about this (I'm not thrilled about it myself), however there are a couple of much bigger issues that need to be considered. These are the economic impact, and the (lack of) environmental impact.

The economic impact is due to competitive disadvantage. Adding an extra cost to Australian producers is going to disadvantage them against producers of the same goods who are located in countries that do not have this additional cost. If our output suffers, Australian jobs can be lost due to decreased production. Since global demand will remain unchanged, the diminished supply of goods from Australian companies will simply be filled by foreign countries who will increase their production, leading to my second point.

My second point is that globally emissions may remain unchanged. As previously stated, if Australia's output reduces due to a decline in local production because of our competitive disadvantage, then a foreign country will simply increase their production to meet existing global demand. This foreign country may not have any carbon emissions scheme in place; they could in fact be a much worse polluter. So while Australia's carbon emissions may have been successfully reduced, globally emissions are likely to remain very much the same.

It's great that the Government is taking the initiative to do something about a concerning problem. Unfortunately, the approach they have chosen to take is one that I believe will have negligible impact on world-wide carbon emissions, and a significant (negative) impact on the Australian economy. The only way a system like this could work would be if the whole world was on board with exactly the same scheme.