Opponents of the 2012 carbon tax, announced last week by the Labor government, may have seen nothing yet. Leaked government papers imagined by your scribe this week reveal a more punitive round of legislation yet to come.
A new 10-point plan of proposed policy initiatives to be considered for future legislation is revealed below:
1. Moving walkways are to be installed in all government buildings in Canberra to allow politicians to reach important meetings effortlessly – thereby reducing carbon emissions from heavy breathing caused by overexertion.
2. Fizzy drinks are to be phased out by 2020. A range of caffeine-free, sugar-free and carbon-free drinks will be marketed under a newly labeled “enjoyment-free” brand to include colas and other non-alcoholic flavours.
3. Sparkling wine will attract an excess carbon levy, commencing at $23 per 750ml. Wine producers will be included in an expanded government compensation package. Carbon compensation schemes will be further enhanced via receipts from the 2012 mining tax – with redistribution bias towards less competitive industries than mining.
4. Baked beans will be phased out from government canteens in order to reduce the incidence of farting by politicians. Baked bean producers will also be eligible for government compensation.
5. Special farting chambers will be introduced alongside washrooms in Canberra with government-installed carbon dioxide filter systems to be fitted, subject to successful grant application.
6. Chicken vindaloos will now only be available if purchased with accompanying Vindaloo Offset Scheme (VOS) credits. VOS credits are to be traded internationally from 2015. The government has commissioned Ross Garnaut to report on the economic efficiency of VOS credits.
7. A new 2020 target will be to achieve a 20% GFC (gigafarts-per capita) emissions reduction.
8. Breathing, including snoring, in the House of Representatives will be reduced. Pre-selection criteria for MPs from 2015 will positively discriminate in favour of the recently deceased.
9. New legislation will require Australian sports administrators to prevent players from running during sporting contests – introducing walking as a viable alternative during matches to lower overall carbon emissions.
10. Carbon compensation funds will allow the introduction of cheaper tickets for international sporting events across Australia. Cheaper tickets should assist in maintaining crowd interest, as the performance of Australian national teams is expected to decline due to the new restriction preventing our players from running. Opposing international teams, analogous to international business competitors, will continue to be allowed to move freely during the game.
An opposition spokesperson commented: “This is rushed: A clear case of premature exasperation.”
Leaving jokes aside however, the high-level economics of carbon are not perhaps as complex as our politicians (or even economists) would have us believe. Here is the short-form version:
At the micro-economic level, imposition of a carbon tax simply reshapes industry cost curves to a greater or lesser extent depending upon each industry’s carbon intensity and the relative intensity of different producers in a given market. The outcome is undoubtedly a shift “up and to the left for the cost curve” using economic-speak through what is referred to as the “internalisation of externalities”.
At a macro-economic level, the carbon tax debate is founded in the concept of comparative economic advantage: imposition of a carbon tax acts to compete away Australia’s natural advantage in the coal market, for example.
The choice now lies between Adam Smith’s classic invisible hand of the market and the somewhat more visible hand of Bob Brown.
Good Hunting.
Allan Trench is Adjunct Professor at the Western Australian School of Mines and a Non-Executive Director of several resources sector companies. He is the Perth representative for CRU Strategies, the consulting division of independent metals & mining advisory CRU group (allan.trench@crugroup.com).
