Wednesday, August 3, 2011

The government's carbon price mailout

I've just finished reading the Gillard governments' carbon price mailout which arrived yesterday.

It reinforces in my mind, how, by creating a comprehensive policy, they have also created quite a complex policy. Although the household compensation is only one aspect of the package it takes up the vast majority of the handout. (For anyone reading who wants to know how you and your family will be affected the best way to check is this online calculator). As far as I can tell everything in the mailout is more or less correct and I thought the section "How will a carbon price cut pollution?" was quite good with some pertinent points:

"Currently, releasing carbon pollution is free despite the fact that it is harming Australia's environment

A carbon price changes this. It puts a price on the carbon pollution that Australia's largest polluters produce. This creates a powerful incentive for businesses to cut their pollution, by investing in clean energy or finding more efficient ways of operating"
I think this is quite a good way to explain in a nutshell how and why a carbon price will be effective. It seems the govt has decided to back off talking about how carbon pricing will change consumer behaviour at the household level (although it will to some extent) and focus on where most of the action is, which is investment decisions by large companies, especially the large polluters.

The mailout does spend a bit of time talking about one aspect of the package that I like, which is the increase in the tax free threshold from $6000/year to over $18 000/year. I have seen some commentators criticize the package for including things like this, saying it makes it too complex and distracts from the main message. On the other hand, since the package needed to include household compensation anyway, why not utilise the chance to introduce a tax change recommended by the Henry review and which the economic boffins think is a good idea.

Conversely the mailout spends very little time talking about the $10 billion dollars for clean energy in the carbon package. $10 billion dollars is a serious chunk of change and should be a big shot in the arm to the industry. Hopefully this policy has got into the general consciousness of the public despite all the other parts of the package competing for airtime.

Lastly, it is always going to be somewhat controversial when a government carries out public education campaigns. I can understand why some would rather the government not spend any taxpayer money on such things. On the other hand, this is a large and complex policy with important implications for the country. A loud, well funded and often misleading campaign has and is being run against it. In such a case do people not deserve to be given the facts lest they form their opinions based on incorrect or misleading information? In this the mailout does ok but isn't perfect, while it is clear from reading it that not everyone is fully compensated, perhaps unsurprising there are no profiles on a family from the minority of Australian's (generally the wealthy) who won't be fully compensated. Guess that's PR for you.

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