Combet's carbon tax thesis is based on a false premise
letter published in The Australian, 1 October 2011
CLIMATE Change Minister Greg Combet claims that reducing emissions intensity is necessary for environmental and economic reasons ("Carbon tax is in the best Labor tradition of reform", 30/9).
His comparison with the reductions in protection effected in the 1980s is, however, a false one.
Those reductions improved economic growth because they shifted resources into more efficient areas of the economy. By contrast, the government's climate change policy will reduce efficiency and economic growth. This is acknowledged by Treasury and by the ACTU.
The Treasury modelling assumes that other countries (or at least the big emitters) will adopt similar policies through a global trading scheme or subsidised renewable energy policies. But it is now evident that it is extremely unlikely that the big emitters will in the foreseeable future adopt policies on a basis comparable with those proposed by the government.
In that highly likely event, the slowing in Australia's economic growth would be greater than the questionable slowing Treasury has modelled. And the uncertainty for business would also be greater.
Combet's thesis is that Australia should prepare for a bout of economic suicide. The sensible course is to delay the introduction of the carbon tax and associated policies until the global situation becomes clear and binding commitments on reducing emissions are agreed by the big emitters.
Des Moore, Former Treasury deputy secretary, South Yarra, Vic