Winners and big losers when CO2 tax hits

STATE Scene attended last weekend’s Labor Party state conference to hear Prime Minister Julia Gillard and hopefully become absolutely clear on her mad rush to impose the outrageous tax on carbon dioxide.

She certainly didn’t disappoint. In her 3,000-word speech – ‘My plan for Australia’s future is a plan which understands the west’ – 84 words were crucial.

Here they are.

“And our government has made decisions which are designed to help.

“Paid maternity leave for young mums, extending the education tax rebate for young families, extra family payments for parents of teens.

“Lifting the low income tax offset for millions of working people, a historic increase in the pension for millions of older Australians.

“Friends, we will be making more decisions in coming weeks. 

“Finalising our plans for tax cuts and increases in payments to deliver household assistance when we have a carbon price.”

Interestingly, no applause after Ms Gillard uttered the words ‘carbon price’.

There should have been, since she’d effectively said the following to her WA faithful: ‘Look comrades, what I’m in the process of doing for those damn Greens and with the help of those two renegade Nationals, Tony Windsor and Rob Oakeshott, is revamping things for social welfare recipients and the income tax system for lower-end income earners. I’m not worried about higher income earners – only they are going to be slugged, and heavily, for Australia’s CO2 emissions. In future all Centrelink outlays and the Australian Taxation Office will be taking into account the financial impact of what I’m calling the ‘carbon price’. But all welfare expenditures and income taxes will be commensurately adjusted. That way Labor’s core backers – those on welfare, pensions or lower incomes – won’t be impacted upon by the carbon price so we’ll continue being assured of their votes.’

Her crucial 84 words and the message set out in my hypothetical re-phrasing deserve thinking about.

Australia’s entire welfare and taxation systems will be realigned because Ms Gillard decided to break her promise straight after election day by moving to impose a tax on CO2.

She’s therefore out to favour some, and penalise others.

And the reason is, even if she opts for a $20 to $25 tax rate on CO2– which most predict – that’s going to hugely impact upon domestic electricity charges (water heating, washing, cooking, lighting, air-conditioning, plus plasmas), plus food prices, because of high transport and distribution costs.

On transportation, remember the Howard government’s National Greenhouse and Energy Reporting Act even compels road haulers to annually audit and report CO2 fleet emissions.

Furthermore, since petrol and dieseline are distributed to service stations by road haulers, there will be higher costs there also.

There will definitely be extra costs all-round once government embarks upon what Green ideologues call “decarbonising Australia’s economy”, which the Gillard-Greens-two renegade Nationals government is planning.

So her message, because the cost of everything will be rising significantly, means Labor, with the help of the Greens and those two ex-Nationals, will be insulating its core supporters from their CO2 gas tax.

For some time State Scene has been trying to discover at what point on the income scale compensating cuts-out.

The Greens-Gillard-two-ex-National team must pick a point that inoculates some from their CO2 gas tax while slugging others.

Although I’d thought it would probably have been about the $60,000 a year salary level, one smart observer assures me he hears it will be $80,000.

In other words, anyone earning less won’t be financially affected by the CO2 tax we weren’t going to have because of compensatory taxing adjusting and boosted welfare outlays.

Although time will tell, on first inspection this appears to me at least to suggest that those earning above that figure are in for quite a hefty extra tax slug.

There are a lot fewer people earning above $80,000 than below, and one must include all those on welfare – retirees, disabled, unemployed, and so on – in the below-$80,000 level.

Since we’re still in the guessing zone, all we can do is sit and wait.

But whatever the income cut-off, the

CO2 tax is clearly not a policy designed, as some assumed, to drastically slash those emissions since so many won’t be feeling its impact.

Quite the contrary.

If the postulating above is correct, this new tax is set to become a massive wealth or income redistributing exercise, from higher to lower income earners and welfare recipients rather than a wholesale attack on emissions.

Is there anything wrong, if that’s the correct term, with that?

Before engaging that question let me say I’m well below the $80,000 level, so I should be judged with that in mind.

That said, all others below – welfare and other such recipients – will have no financial reason to object.

Why shouldn’t the richer (if you regard $80,000 as making you rich, which I definitely don’t) pay more, such beneficiaries may contend.

My response is why shouldn’t everyone carry the burden commensurately of the Greens-Gillard-etc CO2 tax?

Yes, if CO2 is as evil as Kevin Rudd claimed, and as the Greens and Ms Gillard contend, why not everyone?

State Scene, of course, doesn’t believe CO2 gas is evil.

Over the past half-century or so its miniscule increased atmospheric presence has markedly boosted the extent of the world’s forest cover, grain and vegetable output and productivity, since nutrients do such things.

But that’s not how the Greens and Ms Gillard, or Professor Ross Garnaut, for that matter, see things

And it’s they who, unfortunately, are calling the shots, despite Ms Gillard’s claim before election day there wouldn’t be such a tax.

A major drawback in their approach is that those aspiring to improve themselves will forever be carrying an additional tax burden.

In other words, those Australians wishing to get ahead, improve their lot, better things, earn more, will be lugging the burden of the CO2 hoax throughout their lives.

But there’s another not widely appreciated aspect to all this.

We all know the Greens’ vote has risen steadily since the early 1990s.

According to one source, at the 2001 federal election it doubled from 2.6 to 5.0 per cent.

Today there are 10 Greens MPs.

We also know the most enthusiastic Greens backers are aged 18-24-years (around 30 per cent of the electorate) and the 25-34-years group (about 20 per cent).

Less well known is that Greens voters, who are generally inner-city dwellers and professional types, on average are in higher income brackets – over that $80,000.

In other words, it’s they who’ll be disproportionately carrying the load of their unnecessary CO2 tax.

Couldn’t have happened to a nicer mob.

If Tony Abbott’s boffins are smart they’d promptly set about devising a strategy, including advertising campaigns, for the coming election telling those in this short-sighted and gullible aspirational voter group how they’ve been conned.

Or, more correctly, how they conned themselves or allowed themselves to be tricked.

And in the process he’d be doing us all a favour by electorally diminishing the hoax-promoting Greens.