ECON1012 Principles of Economics Assignment
Coalition opposes carbon scheme as ‘tax on business’
John Kehoe – Economics editor 11 Jan 2023
The federal Coalition will oppose the Albanese government’s more aggressive limits on industrial emissions, arguing the planned $75-a-tonne carbon price cap is triple the size of former prime minister Julia Gillard’s discarded carbon tax.
Despite general support from business groups for Labor’s planned restrictions on industrial emissions, opposition climate and energy spokesman Ted O’Brien said the government was reintroducing a carbon tax that would hurt businesses and consumers.
“This is effectively a carbon tax three times the size of what Julia Gillard did,” Mr O’Brien said on Wednesday. “It’s a tax on businesses that will be passed on to households.”
Energy and Climate Minister Chris Bowen said without taking decarbonisation action, Australian businesses could have been hit by carbon tariffs from foreign trading partners under the former Coalition government. The Gillard government initiated a $23-a-tonne carbon price across the economy in 2012, but the policy was scrapped by the Abbott government in 2014.
Since then, business has grown more supportive of pricing carbon to provide investment certainty and to avoid carbon penalties being imposed by foreign trading partners.
With the Coalition signalling its opposition to the decarbonisation policy, the government will require the Senate support of the Greens plus one other senator such as David Pocock to pass the reforms.
‘Just hot air’
Acting Greens Leader Mehreen Faruqi said on Tuesday the safeguard rules “don’t go far enough and risk continuing to be captured by coal and gas interests”.
“Labor’s safeguard mechanism is giving coal and gas a green light to keep expanding as long as they buy
enough offsets.
“The Greens will use our balance of power position to push Labor to stop opening up new coal and gas
projects and ensure real cuts to pollution, not just hot air.”
Senator David Pocock, who is pro-climate change action, declined to comment on Wednesday.
About 215 of the country’s biggest industrial emitters will be required to cut emissions by an average of 4.9 per cent each year to 2030, to help the government meet its 43 per cent reduction target and aim to reach net-zero by 2050.
The safeguard mechanism will cover the mining, manufacturing, transport, oil and gas, and waste industries, which represent about 28 per cent of national emissions.
High-emitting facilities that overshoot their cap will need to purchase carbon credits on the open market such as from landowners planting trees, or from companies that over-achieve on their emission reduction and have surplus credits.
Australian carbon credit units now cost about $34, which will rise over time as the emission limits become stricter.
As a backstop option under Labor’s plan to shield business from the risk of future cost spikes and provide cost certainty, the government will offer to sell credits for $75, rising with inflation plus 2 per cent each year. The price could exceed $100 by 2030, depending on inflation.
Although $75 is more than double the current domestic carbon price, it is well below the European carbon
price of about €85 ($130).
Cross-border tariffs
Mr Bowen said on Wednesday the safeguard package proposal would help Australian managers at international firms show they are legally obliged to achieve carbon reduction.
“What I say to the person in regional Australia is that your region has powered Australia for many, many
decades, and it will power Australia into the future, but that power will be renewable,” Mr Bowen said.
For the first time, the Albanese government also said it would consider replicating Europe’s planned carbon border adjustment tariff on imports from countries that do not have a carbon price – such as China – in response to industry angst that a domestic emission cap would disadvantage trade-exposed firms and shift pollution and jobs offshore.
Mr Bowen said this would not have been possible under the former Coalition government.
“Australian industries would have been subjected to carbon tariffs under the previous government.
“This reform is about protecting Australian industries from having those sorts of tariffs applied to them.
“But we can now have at least the conversation and the consideration of Australia’s role in the carbon tariff
and CBAM [carbon border adjustment mechanism] conversation.”
Mr O’Brien said the Coalition did not require a carbon border adjustment because it didn’t have a “dumb”
carbon policy.
A spokeswoman for the Jacqui Lambie Network; said: “Senator Lambie and Senator Tyrrell are currently
reviewing the policy released yesterday. As with everything, they’ll do their homework and consult with their communities.”
Task:
Utilise the models of marginal benefit and marginal cost, and taxes to explain the carbon price described in this article. Clearly explain the likely impacts on prices and quantities of goods and services in Australia and ensure include a discussion whether or not this is a ‘tax on business’.
Ensure that you use diagrams where relevant to support your answer, and make sure to use key terminology and course concepts where appropriate.
Format:
The format of your response should be an essay-style response. You do not need subheadings or subsections.
You do not need to spend as much attention on formal essay structure as you might for a persuasive or research-based essay. Instead you should focus on communicating your ideas in a clear and concise manner and making sure there is a logical flow of ideas and explanation.
Word Limit:
800 words (excluding diagrams and references)
Diagrams:
As stated in the task, you should include diagrams where relevant. Where you use diagrams, they should be created by you. It is recommended that you draw them by hand and scan/photo them into your document as this will give you the opportunity to practice preparing such diagrams. If you prepare them electronically, they must be your own work. You should not paste in diagrams from the internet or the textbook, even with referencing, as this will not adequately show the grader your understanding of these diagrams and models.
Referencing:
This is not a research assignment. So you do not necessarily need to find other references. You should answer the question based on what you have learned in the course and the excerpt provided.
However, it is important that if you do take content directly from other sources including course materials, both quoting and paraphrasing, that you appropriately reference to show what is your own original thoughts and what ideas you have borrowed from others. Please refer to the https://www.adelaide.edu.au/writingcentre/resources/avoiding-plagiarism for further guidance and links regarding referencing, plagiarism, and academic integrity.
Where referencing is used, it can be in any standard style, so long as it is consistent. The Harvard referencing style is preferred, as it is the standard in Economics and is also common in Business disciplines. https://www.adelaide.edu.au/writingcentre/resources/referencing-guides
All submissions will be analysed with the assistance of Turnitin, checking for plagiarism against other students in the class and external sources.
Submission and Feedback
Students must submit the assignment by the due date via the electronic submission portal on MyUni (the same page you downloaded this pdf!). https://community.canvaslms.com/t5/Student- Guide/How-do-I-upload-a-file-as-an- assignment-submission-in-Canvas/ta-p/274
It is students’ responsibility to ensure that it is correctly submitted by the due date. Make sure that
you see and check that is says ‘Submitted’.
Late submissions will generally *not* be accepted at all. Not even one minute late. This might seem more strict than some of your other classes, but do keep in mind that we also have a ‘best 4 of 5’ policy on the Summative Assignments. If you have a medical or other circumstance that you believe may allow an extension, please email the course coordinator as soon as practical, and generally this must be before the due date has passed.
Assignments will be graded, with grades and feedback provided within MyUni approximately one week after the submission due date.
