Fate Of The "Fake Carbon Tax"

Mr Clive Palmer MP                                                                                  1 July 2014
House of Representatives
Parliament House
Canberra   ACT  2600

Dear Mr Palmer

Ever since Ross Garnaut's "Climate Change Review" report in 2008, I have been observing the downward spiral of logic, commonsense, understanding, and reason about a massive issue confronting humanity - "climate change". I have witnessed a former government that was incapable of articluating in plain language what scientists are telling us about the impacts of climate change, and how it will affect every citizen in Australia. I have witnessed the deplorable deceit of the current government on this same issue.

In recent times, the federal government has used "climate change" as a political pawn, to be moved around on the chessboard of fear; it has smothered the facts what the impacts will be on Australia; it either simply does not understand, or does not want to understand, what the Clean Energy Act is all about. The government refuses to listen, and is becoming increasingly irrational. 

So today I am writing to you to express my concerns about the planned repeal of the Clean Energy Act, and more specifically in the case of the federal government, the repeal of the carbon pricing mechansism (commonly referred to - erroneously - as the "carbon tax").

I understand that your, and Palmer United Party's, position is to repeal the "carbon tax".  

I think most Australians are totally confused by, and simply do not understand, the so-called "carbon tax", that misnamed part of the carbon pricing mechanism that was initially introduced to change the behaviour of about 300 highest greenhouse gas emitters in Australia.

Did you know that the Clean Energy Act under which Australia's carbon pricing mechanism is framed, does not make any reference whatsoever to a "carbon tax"? 

I have stated this in my submssion in February this year about the Emissions Reduction Fund, and more recently in a letter to the Prime Minister.

And yet, the government believes so much in the deception about the "toxic carbon tax" - that three word slogan that Mr Abbott has duped the populace with - that it has a bill before parliament called "Carbon Tax Repeal Bill". I contend it is a bill to repeal nothing, because if the Clean Energy Act had mentioned "carbon tax" just once then perhaps there may be some legitimacy to it. But of course it hasn't.

If you wish, you can read my letter to the Prime Minister about this deception.

The Clean Energy Act is much more than a "carbon tax"!

On Thursday 26 June, 2014 you voted to repeal the "carbon tax", and that PUP senators-elect will do likewise when the repeal bill enters the Senate. You have also stated that you favour an emissions trading scheme with Australia's trading partners only if they have a similar ETS. This ETS would commence with a zero value you have said.

Would you please explain which part of the Clean Energy Act have you assisted to repeal?
Is it the whole Act (as the government wishes to repeal) or is it just parts?

If it is the whole Act, then are you aware of the following?

  • that industry assistance provided under the Jobs & Competitiveness Program (JCP) and the Energy Security Fund will cease
  • that assistance to the steel industry will cease
  • that funding for the Australian Renewable Energy Agency will be adjusted (what-ever that means)
  • that conservation tillage tax offset will be removed - this will affect all dryland farmers. What does the National Party think about that?
  • that personal income tax cuts that were to commence on July 1, 2015 will cease; this affects all low-income earners.
  • that the net budget impact will be -$7,372 million (yes, minus) to the end of 2016-17 … more than $7.3 billion comes out of the budget!
  • that Australia's renewable energy industry will be under threat of decline 

And of course, you are already aware that;

All this, and a lot more, is stated in the Clean Energy Legislation (Carbon Tax Repeal) Bill 2013.

Are you aware that your vote will abolish all this?

Are PUP Senators aware about all these aspects? 

Are they aware of the real cost to the Australian economy, and of the jobs that are under threat?

Here are two examples.

On Monday 30 June, 2014 I read that Hydro Tasmania will be laying off 100 employees because of the likely abolition of the "carbon tax". This is just the start of business "re-adjustment".

Source: http://www.abc.net.au/news/2014-06-27/hydro-tasmania-to-cut-100-jobs/5555732?section=business

Respected former Reserve Bank Board member Jillian Broadbent, now chair of the Clean Energy Finance Corporation (an importnat part of the Clean Energy Act), has urged the Abbott government to retain the CEFC. It is making money for the government and the taxpayer from the carbon pricing mechanism. 
It is making a significant difference to many smaller operations.  Abolition of the CEFC will remove $200 million income from the budget plus $1.5 billion in private investment to date. 

Source:  http://www.afr.com/p/national/green_fund_in_the_black_says_jillian_yS05D9rEEb55sLOsiBQBQN

The CEFC is a very good example of how the private sector can get involved in driving cleaner industries, and reducing Australia’s carbon footprint. At the CEFC website, there are 50 projects that have been illustrated in a diverse range of settings. Similar prospects would disappear if the CEFC were to be abolished. 

One would have thought the Prime Minister would be in favour of retaining the 

CEFC, but sadly, that is not the case. Why?

The following is from CEFC.

In 2013, the CEFC's investments of $536 million mobilised on average $2.90 

of private sector investment for every $1 of CEFC investment and will 

achieve abatement of 3.88 million tonnes of CO2e per annum. These 

investments will deliver a positive return to the CEFC, with a cost of 

abatement in the order of negative $2.40 per tonne CO2e.


That speaks for itself.

As you would know, the CEFC is just one part of the Clean Energy Act. 

Given that you have stated that you want the CEFC retained, how do you and PUP 
senators-elect think that can be achieved within the present framework?

Have you sought facts and information from Jillian Broadbent about the CEFC?

The Government's Real Carbon Tax

In the Emissions Reduction Fund the government proposes to hand out grants from the public purse to high carbon emitters to clean up their operations. This is money from the public, and  is therefore a tax on the public. I say that this is the government's Carbon Tax.

The purpose of the original carbon pricing mechanism is to impose a cost on the 300 or so businesses that emit more than 25,000 tonnes of the three main greenhouse gases - CO2, methane, nitrous oxide. This is not a tax, but a cost on pollution and an incentive for these businesses to reduce their emissions in the interests of national and global climate change responsibilities!  And in the interests of Australia being a signatory to the Kyoto Protocol. 

This is precisely what President Obama is now planning for coal-fired power stations in the US to reduce their emissions by 30%!

But the government wishes to give such businesses a subsidy paid by the taxpayer. This is wrong, inequitable, and unethical.

The government has also repeatedly asserted that the carbon pricing mechanism places Australian businesses at a competitive disadvantage, and that Australia should not go alone on reducing greenhouse gas emissions. Both assertions are false. I recommend that you read this article.


Here's what is happening globally.

Two Vital Reports For Every Politician

Here are two reports that should be essential reading for all politicians. I hope you have time to read them before the senate decision on the repeal bill.

Assessing  "Dangerous Climate Change": Required Reduction of Carbon Emissions to Protect Young People, Future Generations and Nature (December 2013). 

This is a paper by James Hansen (Earth Institute, Columbia University, New York) and 17 other climate scientists, that encapsulates the enormous risks to humanity and every economy in the world if there is not a drastic retreat from the exploitation of fossil minerals. 

This report is in the public domain. It is what should inform climate change policies, not just short-term economic paradigms. 

There are very few Australians who really, really understand what this "climate change" stuff is all about. And yet many Australians, including almost all in government, have an opinion on the most puerile of questions of whether climate change exists, or if the world is warming? 

The government's abolition of the Clean Energy Act, and its own Direct Action Plan, reflect either their own failings to understand earth’s energy imbalance as a result of greenhouse gas emissions, or it reflects an intransigent ideology.

The next report is …

"National Security and the Accelerating Risks of Climate Change"

This US report by CNA Military Advisory Board is deeply disturbing and should be a huge wake-up call to all in parliament. This report by 16 retired high-ranking US military personnel begins …

The nature and pace of observed climate changes—and an emerging scientific consensus on their projected consequences—pose severe risks for our national security.  

The national security risks of projected climate change are as serious as any challenges we have faced. 

We are dismayed that discussions of climate change have become so polarizing and have receded from the arena of informed public discourse and debate. Political posturing and budgetary woes cannot be allowed to inhibit discussion and debate over what so many believe to be a salient national security concern for our nation. Each citizen must ask what he or she can do individually to mitigate climate change, and collectively what his or her local, state, and national leaders are doing to ensure that the world is sustained for future generations. Are your communities, businesses, and governments investing in the necessary resilience measures to lower the risks associated with climate change? In a world of high complex interdependence, how will climate change in the far corners of the world affect your life and those of your children and grandchildren? If the answers to any of these questions make you worried or uncomfortable, we urge you to become involved. Time and tide wait for no one. 

This report is another essential reason why Australia needs to remain engaged with the world on climate change, and one of the best international ways to do this is by an ETS.

When it comes time to consider the repeal of the Clean Energy Bill, it is my fervent hope that PUP senators will be fully informed of the terrible risks and scenarios that climate scientists have been warning about for years. 

I hope that you and PUP senators can frame a way forward that retains the fundamentals of the Clean Energy Bill. I would also hope that the government's Emissions Reduction Fund and the Direct Action Plan be exposed as the government's own "carbon tax", as I have already explained.


What about the Direct Action Plan?

In some respects, direct action is needed to complement a pricing mechanism. The Carbon Farming Initiative, already enshrined in legislation by the previous government, is an example of land-based carbon sequestration. This is a good thing.

But now consider the following;

  • The recent budget for 2014-15 has slashed DAP funding to $1.14 billion over 4 years (an average of just $285m annually). That is a very significant retreat from the $2.55 billion that was initially earmarked, and is a broken promise. The government is not serious at all about the seriousness of climate change.
  • Direct Action is a cost on the public purse - the ordinary taxpayer. So, combine this cost with the grants and subsidies to large emitters, and here you have a big Carbon Tax! This is the real carbon tax, the government's carbon tax, the one that ordinary workers will pay for. Forget the false statement by the Prime Minister about the "carbon tax" costing every household $550 annually (which they have already been compensated for anyway). I encourage you to look at the lost revenue of $7.3 billion, and ask how that is going to be replaced. 
  • The 1,000,000 solar roofs program described in the DAP has now been abolished in the recent budget. This is another broken promise by the government, it is deceitful, and it is a measure of how much disdain the government has for the Australian populace.  
  • The DAP is unlikely to result in Australia achieving the "5% emissions reduction target" by 2020. This has been assessed by a number of independent organisations.
  • Many economists oppose the government’s version of direct action, mainly because it reverses the long-held principle of “polluter pays” to “pay the polluter”. The Emissions Reduction Fund is the vehicle for paying the polluter - with taxpayer funds.

The DAP and the ERF are token efforts with dubious outcomes to a serious national and global problem.

A final sting in the tail

The net cost to the taxpayer for the combined loss of income from abolition of the carbon pricing mechanism and the cost of the DAP could well run into $10 billion by the end of 2016-17. 

This is the real carbon tax! And it will fall on every taxpayer in the land.

The government is also prepared to place a tax on businesses to support a spurious paid parental leave scheme, for limited social benefit. 

At the same time, however, the government is not prepared to place a price on environmental harm (quite possibly contributed to by many of these same businesses). The recent IPCC report no. 5 (and the Hansen et al report previously mentioned) has said that climate change will result in massive social change, human dislocation, increased heat-related deaths,  substantial hits on the economies of nations, species loss, water and food shortages, greater risk of wars, and much more. 

If there is understanding about the impacts of climate change, then logic says that the ultimate social good will be obtained not from a paid parental leave scheme, but from an economy-wide transition to clean energy and substantial reductions in greenhouse gas emissions, and an ETS.

Given your present rejection of the proposed paid parental leave scheme (with its limited social benefits), why do you not support a carbon pricing mechanism that would have far greater social, environmental, and economic benefits?

Now, there might be a logical case to support new parents in an equitable and affordable way, but I have concerns about the government's logic for the paid parental leave scheme. Here's one to mull over.

The government's support of a tax on business for a scheme that ostensibly encourages population growth and the rise of the next generation, is at odds with taking appropriate action to ensure that that generation is protected as far as possible about the greatest problem (climate change) that they will need to confront.


The tragedy of everything in this letter is that it need not have been this way had various participants not been so intransigent about a fixed high price on CO2 several years ago. This was a case of ideology that risked a good scheme. It is ideology from the government today that could kill it. And THAT would be the great tragedy.

I am hoping that Palmer United Party senators-elect and other PUP associates can cut through the ideology, be informed about climate science, see common sense, have a vision for the future, and protect the existing climate change framework for Australia. Help take the politics out of climate change.

Contrary to what the Prime Minister has stated recently,  ETS's are emerging as an expanding part of the business of many nations. 

Source : http://www.eco-business.com/news/2013-record-year-new-carbon-trading-schemes/

For example, five ETS's were established in provinces and cities in China in 2013. These are not small economies. 

The best way forward for economic growth, the environment, society, future international relations, and reducing the risk to global harmony (such as it is) is for Australia to participate as quickly as possible in an ETS, and the current legislation already provides for this. 

There is no logic in handing out taxpayer-funded grants, as the government wants to do, for businesses to lower their emissions voluntarily. It just won't happen. There has to be a carrot-and-stick approach involving rewards and penalties, and that's what a floating-price ETS can provide.

Will you and Palmer United Party support bringing forward the already legislated ETS (with a carbon price currently around AU$8 per tonne CO2-e), and retention of the Clean Energy Act?

Will you support deferring any decisions on the Clean Energy Act until such time as a full economic impact statement is prepared of the repeal bill and the government's Emissions Reduction Fund and Direct Action Plan?

I look forward to your reply.


Des Menz

Armagh, South Australia

© Des Menz 2014-18
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