Friday 24 Sep 2021 | 22:51 | SYDNEY
Friday 24 Sep 2021 | 22:51 | SYDNEY

The new carbon tax ad gets it right


Stephen Grenville

31 May 2011 12:16

I beg to differ with Sam on the carbon tax ad. Accepting that any ad will simplify this complex story, this one gets at the essence of the issues.

First, the tax should be imposed as close as possible to the source of the problem. This gives maximum bang-per-buck. It's not unreasonable to say that if you create a harmful externality, this should be taxed. Of course it is not just the 'big companies' that put carbon into the atmosphere (burping livestock do it also), but it's a pretty good starting point. This will change relative production prices and encourage producers to find less carbon-intensive ways of producing energy.

Second, the emphasis should be on carbon: electricity can be produced by less carbon-intensive means (gas instead of brown coal), so the focus needs to be on carbon rather than, say, on energy in general.

Third, if this is to be politically acceptable, we need to compensate the economically-weakest of the energy consumers (and, incidentally, in so doing, the carbon-reducing effect is not weakened). The tax provides the revenue to do this, thus it is not just sensible, but feasible as well.

Fourth, we need to put to one side the endless debate on the detail of the ultimate solution (carbon tax versus ETS etc.), and get along with moving in the right general direction, because a longer transition makes the process less painful.

The ad does all these things. Does it go over the top? Well, compared with the sledge-hammer subtlety of the miners' ads, drawing on every patriotic heart-string cliché to defend the narrow self-interest of an industry which has become suddenly rich through the accidents of world commodity prices, this one is a paragon of objectivity.