Happy Carbon Tax Day

So, today was the first day of the Clean Energy plan, highlighted by the introduction of the carbon price on major emitters.

There are 294 companies to pay the tax

So, let's set a couple of things straight.  There are 294 liable entities for the 2012/13 who have to pay the carbon tax.  No, it isn't 500 companies as been widely reported.  It's just 294.

Most of them are involved in energy or mining, plus a number of councils who operate landfills.

Hardly any impact on the average person

How is this going to affect the regular person? Well, some prices will go up, but the average person will be compensated, so there will be very little impact.  In fact, many people will finish off better off.

Given that prices go up and down for various reasons, it will be very surprising if the carbon tax impacts are as noticeable as the GST.  It isn't as if prices will suddenly go up by 2% this week.  Instead, companies that have to pay the carbon tax will carefully consider their pricing, and will make decisions as to whether they will pass the price on.

Companies that increase their prices will risk losing customers, so that is quite a disincentive. And given the level of industry support, there is a good chance that many won't shift their prices, at least not straight away.

So if people won't lose and companies won't put prices up, how does this work?

Just to clarify, there will be some price rises.  But, the real way that the carbon tax will work is to penalise companies that pollute and advantage those that are clean.

Very quickly, capital will move towards the green companies (we are already seeing that happen). And the big energy companies are accelerating their green programs.

Dirty coal plants like those in the Latrobe Valley will be phased out, and workers in those plants will transition to other jobs.  Some will stay in the energy industry and others will do something different altogether.

Economists call this the productive use of resources. I call it helping to get workers out of dead-end industries.  There are hardly any blacksmiths any more, and that's because there are a lot less horses being shod.  In a few years time, there will be a lot less brown coal workers, and that will be because we will have weaned ourselves off brown coal.

Any change is contentious and emotional.  The carbon tax is a good change.  Time will show this to be true.

Let me know what you think

Mark S

P.S. Check out the http://www.cleanenergyfuture.gov.au/ website for more information

Australia's carbon price legislation is a sign of growing up

After years of dithering, today's decision by the Senate to pass the Clean Energy Bill is a momentous occasion in more ways than one.  Yes, I think the policy itself is a good one, but it's the maturity as a country that has really struck a chord internationally.

So the largest polluters will pay for carbon emissions, pass on the costs to consumers who will be compensated, and clean energy innovation will thrive.  Economically and ecologically the evidence suggests this will be a positive for Australia.

Huge international interest

But what has been more compelling is the positive international response. Within 12 hours, there are over 800 global news stories covering this decision, and a variety of opinions.

BBC: Australia's Senate has approved a controversial law on pollution, after years of bitter political wrangling.
WSJ: Australia's Carbon Tax Clears Final Hurdle
Xinhua: A latest report showed the carbon tax will cost 0.98 trillion U. S. dollars on the Australian economy, or 39,086 U.S. dollars per Australian from July next year to 2050.
TVNZ: Australia passes landmark carbon tax laws

Leadership by Gillard

Whether you like the law, or dislike it; whether you see it as an economic positive or negative, this story has put Australia's leadership credentials on the global stage.  Rather than waiting to be led by the next Kyoto round, or following the path of larger countries, Prime Minister Gillard has shown real leadership.

Whether you agree with him or not, you can't ignore the power of Al Gore.  And when he says, "With this vote, the world has turned a pivotal corner in the collective effort to solve the climate crisis,” it is a clear sign that Australia is setting the agenda on a major issue.

After failing to vote for a Republic 12 years ago, finally Australia is growing up.  Whatever your views on the Clean Energy Act, we should be proud to take our place on the world stage. Oh, and it's good for our brand.

Let me know what you think