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John Passant

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June 2011
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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
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The battlers’ buffer or the battlers’ bluffer?

So what is all this talk about a battler’s buffer for the carbon tax?

Small details like the actual carbon price and the amount of the compensation could be weeks away. But the Gillard Government’s approach is pretty clear. The carbon tax won’t cost us anything. In fact in terms of money 3 million Australians – the poor and low paid – are going to be better off.

So why do it?  The answer I think is because this is a long term strategy.

When the figures come out, the compensation – tax cuts, increased pensions and the like – will compensate 90 percent of families.  And I have no doubt that battlers will be ‘overcompensated’ for the predicted price impacts of the carbon tax, probably by the claimed 20% over and above the predicted price increases.

Well, I do have some doubts but that is what the Government has said it is going to do. Not to deliver would be political suicide and absolutely guarantee an Abbott government.

But there are a few questions.

90 percent of families will be compensated. Isn’t there a word missing from that sentence? Fully, as in fully compensated.

And how reliable will be the official predicted cost impacts be?

Gillard says three million of the lowest earning Australians will be eligible for a safety net buffer of 20 per cent more than the expected impact of the carbon price. How long will the compensation last?

Howard offered tax cuts as compensation for his GST too. How long did they last? A few years, eaten away by tax bracket creep.

Would the left have accepted just a little GST? So why do sections of the Left today accept just a little carbon tax? Indeed why do some sections of the Left (broadly understood) want a massive tax on carbon?

That’s the point. The carbon tax is a regressive tax designed to pocket more and more from workers over time or to lead to an emissions trading scheme which does the same. 

The carbon tax is a mini-GST , limited to carbon and coming in at a low price. The level that the Government will pick, somewhere around $20 to $30 a tonne, isn’t enough to make gas viable let alone renewables. It is designed as a slow creeper, to increase over time. Will there be compensation for those increases over time?

The Government’s plan is to move from the tax to an emissions trading scheme in 2015. 

A carbon tax is a levy put on the carbon content of fuels. Each type of fuel has a particular carbon content so the amount of tax is easy to calculate. 

Under an emissions trading scheme on the other hand the Government sets the overall limit for national pollution. It issues permits that then become tradeable. It is a bankers’ bonanza.

Either way the actions impose a cost on carbon or emissions. The way capitalism is organised means that working people will pay the costs of that price.

Labor’s proposed switch from a carbon tax to an emissions trading scheme is itself a medium to long term project to further gradually pass and increase the burden of dealing with climate change on to working people while leaving untouched the profits of capital if not of all parts of capital. 

Such a shift may depend on there being some form of global trading in pollution permits. Such  an international scheme is unlikely to be in place by 2015 so the carbon tax will likely continue past then,with the price increasing at 4 percent per year.

What compensation will be built in for these indexed carbon price increases?

Is there an alternative? Even short of revolution and putting people before profit there are some things that could be done, if workers fought for them.

Taxing the profits of the polluters would be a start. Imposing price controls on them to prevent them passing on the cost to consumers.

Stopping them sacking anyone would be a third step. Retraining workers on full wages and setting up massive government owned solar farms, wind farms, geothermal plants and the like would all be good steps.

But capitalism and its profit motive, with its concepts of cost and efficiency and its constant drive to accumulate, will prevent any of this happening in a way that will meaningfully address climate change and its consequences.



Comment from Tony
Time June 27, 2011 at 11:48 pm

Agreed, John. It is definitely a policy in motion.

In addition to the Government’s revenue take and not burdening polluters, the model suggests the intent of the future secondary market is to provide investment bankers with transaction commissions trading within the ETS. These fees will reduce their need to find new opportunities in the real (commodity goods and services) economy.

A recent David Harvey interview discusses this inherent conflict in the growth trajectory. Consequently, capitalists have little choice but to invent techniques of accumulation by dispossession.

As you say, the capitalist gets a new long term rentier profit stream, paid for by the worker.

I too doubt this model will achieve its stated objectives. As far as “cleaning” electricity generation, I’d anticipate economies of scale will see falling “clean” energy product prices doing far more for “clean” generation uptake than the carbon tax/ETS.

Due to a massive global expansion in productive capacity in recent years, that day is not far off. Indeed, the recent global economic malaise has seen a number of renewable energy product manufacturers take production facilities offline to improve their cashflow. Thus, there is no longer a productive capacity constraint in the supply chain.

Couldn’t our Government simply pay such a manufacturer to restart a production line, buying out all production for the forseeable future (given our so called mining boom) and create an NBN type enterprise to build this capacity to supply all government owned facilities? This is one way to reduce the recurrent costs of Government for when trade conditions erode.

It leaves me asking, do The Greens and independents understand it is feeding financial rent seekers that is the most likely outcome of this carbon tax/ETS approach and not a rapid switch to “clean” generation infrastructure?

Comment from Ross
Time June 28, 2011 at 1:35 am

John .The carbon tax is all about churning money and giving more power to the elites.If they are compensating the workers,then why tax them at all ?Any one earning less than $40,000 pa should not be paying any tax.The GST was brought in to service debt to private banksters when the Commonwealth bank was sold off.Now we have to sell of private assets to service even more public debt.

We need to bring back Govt Banks.We once had 4 State banks and the Commonwealth.So long as as increases in productivity get expressed as debt by private banks,nothing will change.The US Federal Reserve continues to steal from the people via “Quantitive Easing?” In all reality it is theft from the US people to save Wall St and their thieving banking scams.Let the big boys fail and the real economy will recover.

Gillard and Rudd have not a clue.They are just puppets to our masters.

Comment from Phil
Time June 28, 2011 at 4:24 pm

Thank god for John Passant as I thought I was going mad with many so called progressive acquaintances insisting this money rake was somehow a Good Thing.

This is merely business-as-usual with the risk shifted to the household sector.

Like the stimulus package the ultimate beneficiaries are big corporates (in that case the big four banks, in this case big energy, mostly foreign owned) niot the hosuehold sector which this Thatcherite Government uses as a fig leaf to cover the naked pusillanimity towards the unrestrained greed of big capital.

Primarily It’s because I don’t think they understand it, as an interesting email exchange I had with a staffer from Christine Milne’s office revealed.

On top of the assumed partial natuire of the proposed compensation we can add a lack of indexation. This is what killed the GST compo, which was all but wiped out within three years with over 2.5% annualised CPI increases.

Garnaut openly admits in his final report that households will pay in the end, one way or another, and people like me who have fixed costs of transport (there is no public transport when you travel 160ks to work) will be worn down over time.

i also heartily concur with Ross. I work as a Postie and pull in around $30K depending on overtime and I cheered when that otherwise questionable gnome Ken Henry came out and stated the bleeding obvious – that taxing incomes below abput $25K was an exercise in futility and actually worse than useless, as anyone who has shifted from long term Unemployment benefits/Newstart Allowance can attest.

Speaking of rent seekers, I am looking forward to the economist/political scientist who tearsthat great white elephant, the Job network, to shreds. apart from rendering at least one former First lady a millionaire, this useless soak on public resources is a brilliant example of the flaws of privatisation and well worth investigation.

If anyone is aware of any academic or polemical publication on the inherent flaws in the Job Network I would be very interested in being directed there.

Apologies for the off topic digression, but people cloaking an unarmed hold-up of the public as a Good Thing need to be exposed.

Keep up the good work John.

Comment from Tony
Time June 28, 2011 at 4:46 pm

There’s little doubt the eventual ETS is just what the bankers ordered.

Obviously, economically superior is not analogous to an effective outcome achieving on the ground objectives, namely “clean” electricity generation. However, that isn’t an objective of the bankers.

“…the carbon price followed by an ETS (emissions trading scheme) is economically superior to the direct action policy,” he said.

Comment from Ross
Time June 29, 2011 at 8:15 am

Tony notice that Tony Windsor has been selling farms to coal companies.He is getting 6-10 times the market value for caol seam gas that is destroying the land and the water table.Here is the hypocrite who wants the carbon tax and profits from pollution himself.

John Anderson the former National Party Leader is on the board of one of these coal companies.

Comment from Tony
Time June 30, 2011 at 6:16 pm

Ross: Yes, that’s appalling. It appears to me, that like the UK’s recent announcement, an expansion of clean energy in Australia is deemed to be burning new CSG resources rather than coal. Given the impacts of CSG you mention, this doesn’t seem like real step forward. Although, if you only get to see half the picture, then it “seems clean”. I’m sure that’s what the rhetoric is banking on. Banks will make loans to build the infrastructure.

A significant amount of the main gas fields in Australia are sold to China, Japan and the US on long term contracts. I guess their plan is to exploit CSG to meet addtional domestic needs, but also for additional exports.

The renewable industry crumbs of support is for display only, specifically it is the koolaid for us to drink. Typical of Australian projects, we see a few one off high risk blue sky headline (prototype) projects, ending up massively over budget and the learnings never be scaled up to a production level to make an internationally competitive export industry.