THE CARBON AND MINING TAXES
At a time of global economic uncertainty, the mining and carbon taxes erode the minerals industry's international competitiveness. Australia should be seeking to maximise the benefits of the boom, not putting new hurdles in the way of growth in investment, exports and jobs.
Australia's carbon tax starts generating $77.3 million per week from today. New figures from the Centre for International Economics show that Europe's emissions trading scheme - which covers 30 nations - has generated $23 million per week so far in 2012.
Australia's weekly carbon tax bill is more than three times greater than Europe's but we emit less than a quarter of Europe's emissions.
The CIE figures show that in 2013-14, Australia's carbon tax will be generating $127.1 million per week and $140.5 million per week in 2014-15.
The design of world's biggest carbon tax fails every test of its objective and of good public policy.
It will not materially reduce emissions nor improve Australia's carbon productivity. The carbon tax imposes costs on the minerals industry that none of Australia's resources competitors will face. These same costs also undermine the industry's capacity to introduce the low emissions technologies needed to reduce emissions.
The failure to align the carbon tax with international efforts to reduce emissions means that the environmental benefits of the scheme will be negligible, while the costs on all Australians will be very real.
The carbon tax is designed to slow the growth of Australia's economy and that means jobs and exports for future generations will be forgone. That is the antithesis of economic reform.
Government modelling on the impact of the carbon tax rests on the heroic assumption that there will be a global carbon price and international emissions trading in place by 2016. No-one except the Australian Government believes this is likely to happen any time soon.
All the key outcomes of the modelling on the impact of the carbon tax are turned on their head when economic modelling assumes that global action will be patchy and difficult rather than universal from 2016.
Rather than a $32 billion reduction in GDP as claimed by the Government – there will be a $180 billion reduction compared with business as usual by 2020. Real wages will decline by $11,360 not $5110 and electricity prices will have jumped by nearly 30 per cent by 2020 – not the 10 per cent claimed by the Federal Treasury.
Though workable, the new mining tax is not necessary to achieve the Government's justification for another new tax, namely to spread the benefits of the mining boom to all Australians. This new tax is a top-up tax to existing company tax and royalties.
The minerals industry was paying its way under the tax arrangements that existed prior to the introduction of the Minerals Resource Rent Tax, contributing more than $20 billion to State and Federal coffers in 2010-2011 alone. This is 500% more than at the start of the mining boom.
Estimates from economic forecaster Macroeconomics show that between 2005 and 2015 the mining boom will add about $250 billion to the Federal Budget bottom-line without the MRRT and carbon tax. That is enough revenue to fund the Defence budget for more than a decade.