Making polluters pay could fix Australia’s climate problem – and its budget |
A new report shows how making polluters pay will not only diminish the threat from climate change, but it can also help restore the budget and the economy.
The key domestic policy challenges facing Australia’s national government right now are climate change, restoring Australia’s fiscal capacity, and lifting Australia’s stagnant economic growth rate.
The best way forward in responding to these challenges are the tax changes proposed by the Superpower Institute in a very important report released on 29 January. Unfortunately, this report has been received very little attention by the mainstream media, and hence this summary that follows.
Climate change
As the Superpower Report demonstrates we are not on track to meet our climate targets.
“Sectors representing nearly 40 per cent of Australia’s emissions in 2005 have not begun to reduce. Transport emissions have risen by more than 20 per cent, industry by about seven per cent and stationary energy by more than 20 per cent. Almost all progress has come from land-use change”.
As the report says, “Australia’s current emissions-reduction policies are inefficient because they are narrow and fragmented, with large gaps in coverage… The current policy mix is also expensive to the Budget”, and none of the present policies raise the revenue required to support households and businesses in making the transition to net zero.
More than 50 years ago, the member countries of the OECD, including Australia, agreed that the polluter must pay.
Allowing free pollution is of course economically inefficient, as economic efficiency depends upon the people who destroy productive capacity and well-being being responsible for paying the costs of remediation. Otherwise, they have no incentive to stop polluting.
But making the polluter pay is not what we are presently doing in Australia, and most polluters incur no cost. The present Safeguard Mechanism is capturing only 30 per cent of Australia’s emissions. While the other main instrument for reducing carbon emissions – the Capacity Investment Scheme – has only commenced construction or commissioned less than 3GW of capacity compared to a target of 40GW of new renewable energy capacity and storage.
In addition, gas companies in Australia do not pay an adequate return for being allowed to........