We need to act, but not with a carbon tax: Abbott

Readiness to make tough decisions is one of the signs of a good government but just because a decision is tough doesn’t mean it’s right. Families Minister Jenny Macklin plugged the government’s carbon tax on Mamamia last week as the “right thing to do for our children”.

I have kids too (three gorgeous girls aged 22, 20 and 18) and I want the best for them and for their children. I’m all in favour of taking action to protect the environment and to combat climate change but it has to be sensible action that works, not massive change that will make a lot of other things worse.

As a minister, I was responsible for establishing the Green Corps, a government programme that gave young people six month environmental traineeships harvesting seeds, planting trees and dealing with exotic weeds and introduced animals. One of the key policies that the Coalition took to last year’s election was to create a standing Green Army, 15,000 strong, to supplement the land care work of farmers, volunteers and local councils.

My argument with the government is not over the need to tackle climate change but over the way to tackle it. Both the government and the opposition accept that Australia should reduce our emissions by 5 per cent by 2020. The government wants to do this by making fuel and electricity more expensive in a bid to make renewable power and electric cars more attractive. The Coalition wants to reduce emissions by planting more trees, boosting the carbon content of soil and using smart technology to turn power station emissions from a waste product into something valuable like fast growing algae for stock feed and bio-diesel.

Much of this is already happening. Most people don’t know that Australia has reduced its emissions intensity by nearly 50 per cent over the past 15 years through common sense measures to recycle and use energy more efficiently. The Coalition wants to encourage more of this by establishing a new fund, about $1 billion a year, to help pay for the most cost-effective proposals for reducing emissions via a tender process.

This means more money for farmers with the best environmental practices and for environmental innovators. What’s more, the money will all be spent in Australia, not sent offshore to foreign carbon farmers in countries where environmental standards may not be well policed. Farmers are already changing from chemical to organic farming practices because that makes economic sense, so relatively modest payments should help to realise the emissions reductions from soil carbon that Professor Garnaut flagged in his first report.

The Coalition’s policy means building on the good work that’s already being done. The government’s means a new tax, a new source of revenue for government, a massive new green bureaucracy and more politically targeted handouts. And for what? Even on the government’s own figures, with a carbon tax, Australia’s emissions still rise from 578 million tonnes a year now to 621 million tonnes in 2020. We only achieve our emissions reductions target through purchasing $3.5 billion in overseas carbon credits.

The government’s policy won’t work and it isn’t fair. Families’ struggle to make ends meet has grown much harder since December 2007 and a carbon tax will make it worse. Over the past three years, power prices have risen 51 per cent, gas is up 30 per cent, water up 46 per cent, health costs are up 20 per cent, education costs up 24 per cent, rent is up 20 per cent and fruit and vegetables are up 27 per cent. Since the middle of 2009, the average mortgage repayment is up by $500 a month.

Even on the government’s own figures, more than three million households will be worse off. Single income families with a child are worse off from below average weekly earnings. Families that are far from rich such as a school teacher and a shop assistant or a police officer and a part-time nurse are all worse off under the government’s own figures.

On the government’s own figures, families in the same financial position have different outcomes because of the way compensation is structured. For instance, if one partner earns $60,000 and the other earns $50,000 and they have a four year old son, they will receive $606 in compensation. If one partner earns $78,000 a year and the other earns $32,000 a year and they have a four year old son, the family will receive just $393 in compensation. If one partner earns $110,000 and the other has no income and they have a four year old son, they will receive only $372 in compensation. How is this fair given that relatively few families with a four year old will have both partners working full time?

The government’s modelling assumes that other countries take similar action to price carbon from 2016. Household compensation has been modelled at $23 a tonne but other parts of the package have been modelled at $20 a tonne and parts of it haven’t been modelled at all. The government says that power prices will rise 10 per cent but the NSW Treasury says that they will rise 20 per cent. The government says that household expenses will rise by $515 a year on average but the Master Builders Association says that the price of a modest new home will rise by $5000 and that this alone will add $480 a year to mortgage repayments.

The compensation that the government has promised families will be funded by revenue from selling carbon permits. After 2015, these permits can be purchased from abroad. Australian business will still have to achieve reductions and will still pass the increased costs onto consumers but the more credits they purchase from overseas the less revenue the Australian government will have in order to continue to fund compensation. This is one of the many questions that the Prime Minister has failed to answer this week.

Even on the government’s own figures, on average, households will pay $9-90 a week more under a carbon tax and receive $10-10 in compensation. This is a very thin margin for error from a government that doesn’t have a good record at getting things right.

With the Australian economy patchy and the international economic situation uncertain at best, this is the last time to be clobbering households with a new tax and hitting our economy with a structural upheaval. At the very least, the Prime Minister should seek a clear popular mandate for her new tax before trying to introduce it.

Promising before an election that “there will be no carbon tax under the government I lead” but doing the opposite afterwards has badly damaged respect for the government and the Prime Minister’s authority. Only a credible government can successfully manage a very big and complex change that requires the public to take much on trust. That’s hardly what we have now.

What do you think, is Mr Abbott on the right track? Or has he lost you?