One year on: The carbon tax reality

Written By Unknown on Sabtu, 29 Juni 2013 | 22.54

Protesters voice their concerns about the carbon tax. (Photo by Cole Bennetts/Getty Images) Source: Getty Images

THE Federal Government has underplayed the effect of the carbon tax on households and businesses while overstating the environmental benefit.

The cost-of-living impact in the first 12 months of the tax will be a rise of 0.7 per cent, according to Westpac and NAB - exactly what Federal Treasury forecast.

Westpac senior economist Huw Mackay said: "I think consumers are probably pleasantly surprised by how modest the impost is."

But not modest enough for the Government.

It says in a new report, "How Australia's carbon price is working One Year On", that "Westpac and National Australia Bank economists have estimated that the carbon price has increased the Consumer Price Index by just 0.4 per cent".

The report, which bizarrely has an American family on the cover, continues: "This means the Household Assistance Package has left many millions of Australian families better off financially."

Farming pigs ... and now carbon, there's tonnes to be made

A Government spokesman on Climate Change said it was not misleading to use the 0.4 per cent figure even though it related to a period before the tax began.

Meanwhile, manufacturers, construction firms and service providers say profits have cooled due to Australia's effort to keep global temperatures from rising more than 2C.

"For most businesses the high fixed carbon tax has so far reduced profitability rather than encouraging change, while squeezing product development, innovation and jobs growth," said Innes Willox, CEO of the Australian Industry Group, which represents more than 60,000 businesses.

But the government report says: "Since the carbon price started, Australia's manufacturing industry has been investing in new equipment to improve energy efficiency and pollution."

These investments are "cleaning up Australian manufacturing and generating big savings for business".

The report also says there has been a five per cent decline in carbon pollution per unit of electricity because the tax has made greener power "more competitive when compared to higher-polluting coal-fired electricity generation".

"As a result, electricity generation is switching away from high-polluting fuels like brown coal."

Renewable energy output was up 30 per cent, it says. Generation from coal was down 14 per cent.

National Generators Forum executive director Tim Reardon said energy from coal was down "largely due to unforeseen technical outages". The increase in hydro was "due to a wet season - there's been no additional build".

The carbon price would need to be more than $100 per tonne to change the economics of generation, Mr Reardon said.

Energy Supply Association CEO Matthew Warren said: "If we didn't have a carbon price we would still see a drop in emissions."

Coalition spokesman on "Climate Action" Greg Hunt said: "If elected, the carbon tax will be repealed and won't make a second anniversary."

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