An ETS is Simply the Wrong Policy

Australia faces one of the most important policy debates in recent memory.

Unfortunately, the scrutiny and implications for our nation of Labor’s Carbon Pollution Reduction Scheme (CPRS) have been lost amid Coalition leadership ructions and a lack of critical inquiry by many involved in the political process.

The CPRS is a misnamed Emissions Trading Scheme (ETS) that sets a limit on the level of carbon dioxide (CO2) emitted in Australia and allows the purchase and sale of the right to make these emissions. Basically, companies and industry will be forced to pay for the carbon dioxide emissions they produce.

At first blush, it sounds reasonable and even logical as a means of reducing the newly defined ‘dangerous gas’ that is necessary for life on this planet.

Labor’s CPRS is a pig of a policy and while the Coalition moving amendments will undoubtedly improve it, no amount of lipstick will disguise the fact that it is still a pig.

However, it is not just Labor’s CPRS that is flawed. The very notion of any form of ETS as a means of addressing the political demands for decreasing CO2 emissions needs to be reviewed.

An ETS is a new form of tax that introduces a cumbersome bureaucracy and a corruptible quasi-market mechanism. It transfers massive amounts of wealth from the productive area of the economy to an already bloated and inefficient government.

This new tax will increase the costs for every small business as the flow-on effects are passed through the economy.

These increased business costs will then be passed on to every consumer in Australia through higher prices for power, food and transport. In fact, the price of everything you purchase, use or consume will be affected by the introduction of an ETS.

Simply put, an ETS is like a Goods and Services Tax without any upper limit on the amount that can be levied. Once that is understood, it becomes clear why the Rudd Government prefers their new tax be known by the misleading title of a Carbon Pollution Reduction Scheme.

An ETS will be a burden on all Australians but a boon to the very financial market traders that Kevin Rudd has recently blamed for destroying the world economy. They will be able to manipulate a relatively small market, forcing prices ever higher as they seek to profit from your increased tax burden.

Even George Soros, the billionaire leftist and global financier of environmental causes, thinks an ETS is a bad policy response to climate change.

Supporters of an ETS also make a great deal of the ‘certainty’ for industry that an ETS provides. Left unchallenged, this sounds plausible, but once again, when subject to greater scrutiny it becomes clear this is an empty argument.

Consider for a moment the failed ETS operating in the European Union. Not only has it been ineffective in reducing CO2 emissions, but permits have varied in price twenty fold in only a few years. This is hardly the certainty and stability for industry claimed by the advocates of this pernicious new tax.

So why are some Australian politicians intent on implementing a form of ETS?

Well, the answer is surprisingly simple and will do little to quash the public’s already growing cynicism toward politicians. Put bluntly, it is too confusing for most people to understand.

The complexity associated with how an ETS operates means most people don’t ‘get’ it. Critical analysis has been vague, the detail is confusing and as I mentioned earlier, at first glance it appears logical. That makes it easy for people to set aside any serious thought about its operational implications.

Imagine the outcry though if, instead of a CPRS, the scheme was described as a new multi-billion dollar tax on industry. I am sure that would get a little more attention and enjoy even less popular support than the CPRS currently does.

Another problem (among the many) with an ETS is the inability to ‘unscramble the egg’ when it is identified as an expensive and failed policy experiment. Once in place, it will be too hard to undo. After only a few years, billions of dollars will have been invested in this new scheme giving rise to property rights that cannot realistically be taken away.

In addition, government will have become addicted to the increased tax receipts, and consumers will have realised too late that they have been duped into accepting a flawed policy solution implemented for ‘their own good’.

I entered Parliament with five key principles that continue to drive my policy contribution. I am an advocate for smaller government, lower taxation, free enterprise, families and our traditional values.

An ETS is a policy solution that violates every single one of those principles. It is a policy that will not achieve its objectives. It will engorge government, damage our domestic industry, result in tens of thousands of Australian jobs being lost and place additional cost pressures on every family.

It is time we reconsidered the wisdom of introducing an ETS in any form as a means of achieving a reduction in atmospheric carbon dioxide.

An ETS is a disingenuous smokescreen that masks the true implications of a carbon dioxide tax on our nation. The fact that it won’t make any difference to our climate is another inconvenient truth advocates are hoping you won’t notice.