ECON1012 :Coalitionopposescarbonschemeastaxonbusiness case study

Coalitionopposescarbonschemeastaxonbusiness

JohnKehoe Economicseditor11Jan2023

ThefederalCoalitionwillopposetheAlbanesegovernmentsmoreaggressivelimitsonindustrialemissions,arguing the planned $75-a-tonne carbon price cap is triple the size of former prime minister Julia Gillardsdiscardedcarbontax.

Despite general support from business groups for Labors planned restrictions on industrial emissions,opposition climate and energy spokesman Ted OBrien said the government was reintroducing a carbon taxthat wouldhurtbusinesses andconsumers.

Thisiseffectivelyacarbontaxthreetimesthesizeof what JuliaGillarddid,MrOBriensaidonWednesday.Itsataxonbusinessesthatwill bepassedontohouseholds.

Energy and Climate Minister Chris Bowen said without taking decarbonisation action, Australian businessescould have been hit by carbon tariffs from foreign trading partnersunder the former Coalition government.The Gillard government initiated a $23-a-tonne carbon price across the economy in 2012, but the policy wasscrappedby theAbbottgovernmentin2014.

Since then, business has grown more supportive of pricing carbon to provide investment certainty and toavoidcarbonpenaltiesbeingimposed byforeigntrading partners.

WiththeCoalitionsignallingitsoppositiontothedecarbonisationpolicy,thegovernmentwillrequiretheSenatesupportoftheGreensplusoneothersenatorsuchasDavidPococktopassthereforms.

Justhotair

Acting Greens Leader Mehreen Faruqi said on Tuesday the safeguard rules dont go far enough and riskcontinuingtobecaptured bycoalandgasinterests.

Laborssafeguardmechanismisgiving coalandgasagreenlighttokeepexpanding aslongastheybuy

enoughoffsets.

TheGreenswilluseour balanceofpowerpositiontopushLabortostopopeningupnewcoalandgas

projectsandensurerealcutstopollution,notjusthotair.

SenatorDavidPocock,whoispro-climatechangeaction,declinedtocommentonWednesday.

About 215 of the countrys biggest industrial emitters will be required to cut emissions by an average of 4.9per cent each year to 2030, to help the government meet its 43 per cent reduction target and aim to reachnet-zeroby2050.

The safeguard mechanism will cover the mining, manufacturing, transport, oil and gas, and waste industries,whichrepresent about 28percentofnational emissions.

High-emitting facilities that overshoot their cap will need to purchase carbon credits on the open market suchas from landowners planting trees, or from companies that over-achieve on their emission reduction and havesurpluscredits.

Australiancarboncreditunitsnowcostabout$34,whichwillriseovertimeastheemissionlimitsbecomestricter.

AsabackstopoptionunderLaborsplantoshieldbusinessfromtheriskof futurecostspikesandprovidecostcertainty, the government will offer to sell credits for $75, rising with inflation plus 2 per cent each year. Thepricecouldexceed$100by2030, dependingoninflation.

Although$75ismorethandoublethecurrentdomesticcarbonprice,itiswellbelowtheEuropeancarbon

priceofabout85($130).

Cross-bordertariffs

MrBowensaidonWednesdaythesafeguardpackageproposalwouldhelpAustralianmanagersatinternationalfirmsshowtheyarelegally obligedtoachievecarbonreduction.

WhatIsaytothepersoninregionalAustraliaisthatyourregionhaspoweredAustraliaformany,many

decades,anditwillpowerAustraliaintothefuture,but that powerwillberenewable,MrBowensaid.

For the first time, the Albanese government also said it would consider replicating Europes planned carbonborder adjustment tariffon imports from countries that do not have a carbon price such as China inresponse to industry angst that a domestic emission cap would disadvantage trade-exposedfirms and shiftpollutionandjobsoffshore.

MrBowensaidthiswouldnothavebeenpossibleunder theformerCoalitiongovernment.

Australianindustrieswouldhavebeensubjectedtocarbontariffsunderthepreviousgovernment.

This reformisaboutprotectingAustralianindustriesfromhavingthosesortsoftariffsappliedtothem.

Butwecannowhaveatleasttheconversationandtheconsiderationof Australiasroleinthecarbontariff

andCBAM[carbonborderadjustmentmechanism]conversation.

MrOBriensaidtheCoalitiondidnotrequireacarbonborderadjustmentbecauseitdidnthaveadumb

carbonpolicy.

AspokeswomanfortheJacquiLambieNetwork;said:SenatorLambieandSenatorTyrrellarecurrently

reviewingthepolicyreleasedyesterday.As witheverything,theylldotheirhomeworkandconsultwiththeircommunities.

Task:

Utilise the models of marginal benefit and marginal cost, and taxes to explain the carbon pricedescribed in this article. Clearly explain the likely impacts on prices and quantities of goods andservicesinAustraliaandensureincludeadiscussionwhetherornot thisisataxonbusiness.

Ensure that you use diagrams where relevant to support your answer, and make sure to use keyterminologyandcourse conceptswhere appropriate.

Format:

The format of your response should be an essay-style response.Youdonot needsubheadingsorsubsections.

Youdonotneedtospendasmuchattentiononformalessaystructureasyoumightforapersuasiveor research-based essay. Instead you should focus on communicating your ideas in a clear andconcisemannerandmakingsure thereisalogicalflowofideasandexplanation.

WordLimit:

800words(excludingdiagramsand references)

Diagrams:

As stated in the task, you should include diagrams where relevant. Where you use diagrams, theyshouldbecreatedbyyou.Itisrecommendedthat youdrawthembyhandandscan/photothemintoyour document as this will give you the opportunity to practice preparing such diagrams. If youprepare them electronically,they mustbe yourownwork. You should notpaste in diagramsfromthe internet or the textbook, even with referencing, as this will not adequately show the grader yourunderstandingofthese diagramsandmodels.

Referencing:

This is not a research assignment. So you do not necessarily need to find other references. Youshouldanswerthequestionbasedonwhatyouhavelearnedinthecourseandtheexcerptprovided.

However, it is important that if you do take content directly from other sources including coursematerials, both quoting and paraphrasing, that you appropriately reference to show what is yourown original thoughts and what ideas you have borrowed from others. Please refer to thehttps://www.adelaide.edu.au/writingcentre/resources/avoiding-plagiarism for further guidance andlinksregarding referencing, plagiarism, andacademicintegrity.

Where referencing is used, it can be in any standard style, so long as it is consistent. The Harvardreferencing style is preferred, as it is the standard in Economics and is also common in Businessdisciplines.https://www.adelaide.edu.au/writingcentre/resources/referencing-guides