Roger Douglas – carbon tax is better

Roger Douglas of the ACT party in New Zealand, also of “Rogernomics” fame during his time as the 1980s Labour government Finance Minister, has paid homage to the work done by the Centre for Independent Studies (CIS) in it’s highlighting of how a carbon tax has more merits than an Emissions Trading Scheme.

Maybe Malcolm Turnbull or Kevin Rudd should take another look.

22 thoughts on “Roger Douglas – carbon tax is better

  1. If the Libs came out and said, “Hey – lets have a(nother) new tax” they would be committing political suicide.

    Of course, the ETS effectively is a tax – a very inefficient one – but politics is a funny old business (I also think that the worm is turning and that the ETS will itself become increasingly unpopular as its implementation approaches).

  2. I’m not sure about that, Kirk. If a policy, even a new tax, can be framed in the right way, it can be fairly successful.

    People stopped whinging about the GST after about a year. I think that framed as the better looking younger brother of the ETS, a carbon tax could be successful.

    The largest difficulty in my opinion will be trying to get across the fact that it’s about changing incentives rather than capping emissions, which is where Wong & Co have been winning this debate.

  3. People stopped whinging about the GST after about a year

    And the Libs actually lost the two-party preferred vote in that election (prior to the GST’s promised introduction) – they were lucky to get back in.

  4. A carbon tax, or an ETS are dependent on the possibility that the theory of AGW is real. Rodney Hide, Roger Douglas’s colleague and party leader, believes it is bunkum. So do I.

    The best strategy is to continue to make soothing noises to placate the nervous nellies and the green hypocrites and let ongoing science (the CLOUD experiment, and ARGOS), prove it wrong.

  5. That’s true, Kirk. I don’t mean to say that there won’t necessarily be any political pain. The main difference in this case is that most people seem to want “action on global warming”. The GST was (arguably) an unpopular success. If the worm doesn’t turn as far as you’re predicting, a carbon tax could have more support.

    I actually differ with Ayrdale above. A carbon tax is dependent on the political reality that there will be government action on this issue. It’s important to ensure that, if we choose to act, we choose the least bad intervention. I think that John Humphreys’ various papers and other research has shown convincingly that a carbon tax is the best option.

    I do agree that we should let science run its course. I think that calls from KRudd of “the science is settled” are premature and may be proved incorrect, but we’re dealing with a political system which isn’t necessarily tied directly to the science.

    The people want a carbon price and they will get it. We might end up hating it and choose to get rid of it. Who knows? We should definitely choose the least worst way to put a price on carbon. A carbon tax would probably be easier to roll back, anyway.

  6. A note I made on the catallaxy open forum [and the ALS discussion/open forum thread]:


    Pissing off climate change denialists and alarmists:

    Apparently all we have to do is let money hungry farmers run farms with little subsidy and we might avoid disaster.

    “The fabulous thing about sequestering carbon in grasslands is that you can keep on doing it forever – you can keep building soil on soil on soil… perennial grasses can outlive their owners; they’re longer-lived than a lot of trees, so the carbon sequestration is more permanent than it is in trees: the carbon’s not going to re-cycle back into the atmosphere if we maintain that soil management… and there’s no limit to how much soil you can build… for example, we would only have to improve the stored carbon percentage by one percent on the 415 million hectares (1,025,487,333 acres) of agricultural soil in Australia and we could sequester all of the planet’s legacy load of carbon. It’s quite a stunning figure.”

  7. Perhaps with some genetic engineering we could make super grass that sucks up carbon at a super rapid rate. Of course the risk with that is that in a few years we might find we have sucked all the carbon out of the atmosphere and that we then have a different sort of climate change problem. 😉

  8. Malcolm Turnball has stated that he is up for compromising and I presume accepting a modified ETS.

    The only opposition has come from Tuckey and Fielding. And they are definitely not people you want batting on your side. They are not capitalists and the general public will write them off as crack pots or attention seekers (even though people don’t do this with Xenophon, people will apply a double standard. Why?).

    The earth has cooled for the last 10 or so years and we’re still going to destroy jobs with an ETS.
    If I’m correct there will most likely be ZERO reductions in CO2 emissions worldwide when Australia adopts the ETS.
    So it seems, people are not interested in objective economic/scientific evaluations if they don’t agree with their moral convictions.

    So I agree that Australia is royally stuffed in this area. Therefore, I can understand the promotion of a carbon tax. However my objection is that this is a very short term approach. And as many libertarians and economists know, what appears good in the short term is often harmful in the long term.

    The important questions that need answering are:
    Why are people so insistent of evading reality?
    Why doesn’t the media report that the earth has cooled?
    Why doesn’t the liberal party come out and state firmly that people losing jobs due to an ETS is unacceptable?

    And the answer isn’t just that people are too stupid to understand. Grasping the fact that an ETS will cost jobs and will cause a drop in living standards for the majority is a very simple concept, easily proven by both theory and empirical observations.

    I think people believe it is ethical to sacrifice themselves to the earth or something similar.
    You cannot tackle fundamentally flawed premises like this by promoting a carbon tax. Because you are accepting the premise and jumping on the slippery slope. I think it’s more valuable to focus energies on the more difficult longer term approach of getting people to realise that “exploiting” the earth is a good thing and is necessary for all human survival and prosperity.

    In the best case (and unlikely) scenario where people like Humphreys put in all that effort and achieve enough publicity and influence so that Australia ends up with a carbon tax as opposed to an ETS. Then what?
    Then, you’ll find there’ll shortly be another carbon tax, and even more “green shoots” subsidies, and generally more and more individual/business rights violations to “fix” the un-examined consequences. And all that time where you could have been tackling the more fundamental issues has been wasted. Will you continue wasting time on fighting against the fixes?
    A good example is how historically, the Republican party in the US actually promoted the abolishion of welfare as one of their policies. This is unimaginable now. Look how the Democrats beat them down over time and continue to do so.

    In summary, I don’t think pussy footing around with carbon taxes will achieve anything in the long run.

    And I don’t think this is a pessimisitc view. Because I think it’s pessimistic to assume that the battle is already lost and to thereby promote a carbon tax.

    As you guys know, Libertarians are often called cynical or pessimistic when it comes to government policies and regulations.
    This is totally false. It’s actually those that assume that humans cannot handle freedom that are the real cynics. I don’t want to see Libertarians joining the ranks of these real cynics/pessimists – society is already overrun by this attitude and this is the real problem.

  9. Really Tim R?

    What do you think has stopped an ETS? Talking about the ins and outs of different schemes or the advocacy of cooling/GW denial?

  10. Dear Tim, whilst the Earth is not heating as fast as it was, despite carbon still pouring into the atmosphere, I don’t know if you can call that ‘cooling’.
    On a positive note, The Oz has clippings from UK papers, complaining about the rain, and generally miserable weather, of London. This is different to 2003, which is looking more and more like an exceptionally bad year for Britain, but not an omen of the future.
    And here in Sydney, today, we’re getting very warm weather. I blame the moon- the eclipse must be bending more light Earthwards than would be normal. (Hey, that almost sounds realistic!)

  11. Tim R – I don’t share your complete dismissal of the global warming theory so I suppose that colours my policy outlook. I think all taxes suck so I can’t see how a revenue neutral carbon tax does much relative harm. If somebody wants to put a tax on electricity because electricity upsets the unicorns and space fairies then I’d probably vote for it if it was revenue neutral and we abolished something like payroll tax as part of the package. The point of promoting a carbon tax is to get somebody in the vicinity of power to reframe the debate.

  12. Is there anyone here who wouldn’t prefer either an ETS or carbon tax if it were to replace payroll taxes in a revenue neutral manner?

  13. I’m not sure I’d prefer an ETS over a payroll tax. However I’d ditch payroll tax for a carbon tax with next to no hesitation.

  14. I agree with Terje (#14)… and I think it goes to a point that Kirk & TimR & others miss. Not all government policies are equal and the ETS is significantly worse than a carbon tax.

    As for the politics, I think the Liberals are already in trouble politically on this issue, with no clear position. They could use a point of political differentiation, and on policy grounds where they will win the intelligent argument. As they are already a mile behind, this could be a risk worth taking.

    An election fought on “higher electricity prices and a confusing corrupt scheme” against “higher electricity prices, a more efficient approach and tax cuts” I think the later would be fairly popular.

    I disagree that the carbon tax strategy is short-term. A tax will be much easier to remove than a trading system if climate change isn’t a problem. Trying to remove the ETS will be like trying to remove taxi licences. Too many vested interests.

    And even if it isn’t removed, a carbon tax will naturally disappear at technology evolves. In contrast, the income tax is not going to go away as technology changes. So swapping a carbon tax for income tax is introducing a short-term tax to replace a long-term tax. That is a good trick for dropping the total tax burden in the long-run.

  15. The left really aren’t too bright. Lindy Edwards, previously an advisor to the Democrats and now ANU academic, thinks that the ETS is a “neo-liberal” policy. Sigh. These people really do have no regard for the truth.

    But in her op-ed, she does raise some relevant points about the costs of an ETS.

  16. John – neo-liberal just means evil. So of course the ETS is a neo-liberal policy. 😉

  17. Terje and Mark, I think the acceptance or rejection of AGW theory is irrelevant to policy making. Capitalism is the ideal no matter what. This message isn’t getting through to most people.
    ie: If environmentalists really cared about the environment, they should be capitalists. Because as we know, capitalism encourages the most innovation for any perceived problems. And because historical evidence shows that destruction of natural resources and pollution catastrophies are more common in socialist countries.

    Well John, considering that international share markets took a turn for the worse recently, hopefully there will be enough economic pressure for the Labour party to seriously consider delaying the ETS.

    I still think the long term observation of Republican party policies in the US (at comment #9) is valid.
    And more generally I think it’s of highest importance to focus as much energy as possible on a long term focus of promoting unapologetic, uncompromising capitalism, freedom and indidualism. eg/ Where are the people saying that collectivist legislation against certain industries is unjust legislation practise. This collectivist vs individualist principle applies to the recent bikie laws too.

    Considering comment 14:
    Perhaps libertarians could make more noise about lowering production taxes (payroll, income, capital gains) then. In economic tough times, we all know this would be the ideal way to really stimulate the economy, especially the lagging production/supply side.
    I wrote to Turnball about it a few times. Got the usual, thanks for your email type thing. A group campaign could possibly gain publicity and wide support from small business types that are concerned about payroll tax. If you read the comments on Turnball’s site when he requested suggestions for creating jobs, there was a large amount of popular support for abolishion of payroll tax.

    What’s the use of winning one battle if you lose the war? I don’t know how you guys can motivate yourself to do the work on the carbon tax vs ETS and that in itself concerns me. But of course I hope something good comes out of it.
    And I’m not disputing that a carbon tax would not be better. However I think that promoting a carbon tax is extremely dangerous and walks a very fine line.
    I think all press releases should first state that no government intervention is by far the best approach.
    I though Alan Moran’s efforts (seen on Prodos’s blog were good)

    And one final thing.
    Can anyone guess at the chances of achieving the carbon tax as opposed to ETS?
    Because my impression is that the Labour party are going to do their level best to implement the ETS.
    I would say their pro-environment image is currently one of their biggest reasons for their popularity. And for them to look like they don’t know what they are doing by chopping and changing policies may well be too big a risk to take. Some of the stuff that comes out of Penny Wong’s mouth is frightening, but it’s popular.

  18. Australia does not have any responsibility what-so-ever to reduce or even discourage carbon emissions.

    There is no doubt that given our massive land, huge amount of vegetation, mild winters, and low population, that we are net carbon absorber, not a net carbon emitter.

    In-fact pretty much only the countries in the northern hemisphere where trees have no leaf for 6 months of the year are actually net emitters. Australia should not be ‘world leader’ to solving a problem it has nothing to do with.

    If States define themselves via their land, then they should have to take responsibility for their use of land considering their population. We know for a fact that the north hemisphere absorbs more CO2 than it releases during summer (since C02 levels drop in summer), but then they release huge amounts in winter when there are no plants absorbing any.

  19. DaveM, you naive idealist! What have the facts got to do with the matter? Australia is a part of the Western world, and is therefore guilty of something!
    Oh, and nothing you do will ever be good enough to expunge that stain, not even blind obedience to the enviromaniac of your choice. Just get used to it.

  20. TimR — if you think that considering a carbon tax would be politically troublesome for the ALP and could get in the way of their drive for an ETS… isn’t that a good thing?

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