Bad climate for car users as the government's proposed emissions-reduction standard unfairly adds to the burden of ordinary Aussies...
In 2014, then-treasurer Joe Hockey infamously opined that a fuel tax increase would disproportionately hit the rich since the poorest people "either don't have cars or actually don't drive very far in many cases”. Not only was the claim factually unsound, it also revealed how deeply out of touch politicians could be to realities faced by ordinary Australians, and torpedoed both Hockey's political career, as well as chances of passing measures to restore the budget bottom line. You’d be forgiven for hoping the government has learnt a lesson in prioritising ordinary taxpayers' interests over a political agenda.
A new emissions-reduction standard proposed by the Turnbull government to meet Australia's Paris Accord obligations will instead hit businesses with a whopping $2 billion burden, likely to be passed on to Aussies buying cars as an effective carbon tax. Contrary to the Turnbull government’s tax-relief agenda, the price of top-selling cars like the Ford Ranger and Toyoya Hilux will be among those severely affected at a time when the US government has rescinded an emissions-reduction standard that would have had similar effects.
This wouldn’t be our government’s first cash grab from Australian car users. A 5 per cent tariff on imported cars remains even though the local car-manufacturing industry it was intended to protect no longer exists. Taxes and tariffs will add an estimated $5 billion to the price of new cars sold over the next four years. They also contribute to the relative age of cars on Australian roads - 10 years on average compared to 7.3 years for Germany’s light commercial vehicles and nine years for French passenger cars. Ironically, this tariff makes it difficult for Australians to buy newer, environmentally friendly and fuel-efficient cars, yet the Turnbull government has no plans to scrap it prior to their new proposal. The car carbon tax also reveals flaws in the government’s National Energy Guarantee, which purports to relieve Australians of the burden imposed by the Renewable Energy Target by replacing it with a supposedly less-imposing "emissions-reduction target” still allows Australia to remain a committed signatory to the Paris Accord climate change agreement.
A recent report found that taxpayer-funded subsidies to unreliable, expensive and intermittent wind and solar energy under the RET have driven Australian coal-fired power stations into premature retirement. These subsidies have also increased our reliance on expensive natural gas and increased the volatility of electricity prices as well as risk of blackouts across the National Energy Market grid encompassing Victoria, NSW, Queensland, ACT, SA and Tasmania. Coal provided more than 80 per cent of Australia’s energy in the early 2000s when we enjoyed some of the developed world’s lowest power bills under exponentially less green tape. Today, our power bills are among the world’s highest, burdening Australian families and businesses while driving investment, jobs and industry overseas to economies that deliver cheaper electricity.
Although the National Energy Guarantee will remedy some of these issues by abolishing the RET’s subsidies, any costs imposed by distorting the market through artificial carbon reduction targets will ultimately be borne by Australian consumers. Worryingly, Australia accounts for barely 1/50th of global greenhouse gas emissions, meaning that burdens imposed by Paris accord policies, such as the emissions-reduction target, will have no material impact on resolving climate change. A peer-reviewed 2015 study found that even if all the agreement’s original signatories, including the US which withdrew last year, meet their promises, global temperatures will reduce by a paltry one-fifth of a degree Celsius … in 82 years’ time. We must rethink the trade-off between meeting this poor result and avoiding expensive fuel, food and electricity costs for global populations who need the benefits of economic development and innovation to mount an effective response to a changing climate’s effects.
This is a lesson that negotiators from developing states know well. A bloc of nations led by China and India rejected the insertion of “any obligatory review mechanism for increasing individual efforts of developing countries” during the negotiation phase of the accord. The countries also rejected the introduction of a common standard for countries to reduce emissions — effectively allowing some countries to self-define their targets. As a result, China and India continue to expand coal-fired power generation despite accounting for a whopping 1/3 and 1/14 of total global emissions respectively, while developed nations including Australia shoulder a majority of the burden in meeting Paris Accord targets. Why should Australians cop an effective transfer of wealth to heavily polluting nations when cost-of-living pressures are a major issue in our densely populated cities? The government must prioritise effective policies and the interests of ordinary families, businesses and taxpayers instead of slugging us with higher costs to our cars, fuel and electricity to raise revenue and meet the standards of an unfavourable, ineffective global deal. If the United States can withdraw from the accord in its own citizens’ interests and less developed economies than ours can negotiate shrewdly to their own people’s advantage, there is no reason why our politicians and bureaucrats shouldn’t do the same.
Satya Marar is Director of Policy at the Australian Taxpayers' Alliance
[This article first appeared in The Daily Telegraph]