Thursday, August 04, 2011

CleanEnergyFuture booklet received in the mail

I received the CleanEnergyFuture booklet in the mail and thought I’d read it. What concerned me was it really felt like the government is really pushing too hard the idea of what people are going to get back financially. Over 70% of the pages contained a message about what we were getting. Somehow I think the government is trying a bit too hard.

There are a couple of interesting things I noted. First they say there won’t be any profiteering as they’ll be doing what they did for GST. The difference was GST was easy to monitor as it was added at the end of the calculation and was very transparent. Price increases with the carbon tax won’t be transparent at all. Many businesses work out their prices by taking their costs and multiplying by a percentage markup. Since the carbon price increase isn’t separated businesses have no option but to use the percentage markup approach and that means markup is applied to the carbon tax. This doesn’t happen once, but at each level in the distribution channel. It could easily happen 3-4 times.

We now find the GST added 2.5%. Now we get hit with another supposed 0.7%. The base cost for living in our society as a result of government charges continues to increase. Interesting how the average annual inflation rate between 2001-2002 and 2009-2010 is 2.9 per cent and my latest water rates have increased probably in the order of 10-15% and other utilities aren’t much better. This base cost of living is going to be a cost on our society that never goes away. Those hardest hit will be those trying not to depend on the government welfare system and I don’t think that is fair.

A good way to get a feeling for how much the carbon tax will add to your direct utility bills is to check the bill. We use about 40% of the average electricity usage for a household (yes we’ve reduced our usage) and we’re producing approximately 1 tonne of carbon a quarter or 4 tonne a year. An average family would thus use about 2.5 times this which is 10 tonne a year. For the electricity bill alone that would be $230. Using the figure that gas is about half electricity the amount the average household for gas and electricity should be paying around $300. Gas and electricity as just part of our costs and probably amount to 10-15% of our household spending. So what about all the other things we buy which will go up due to the carbon tax. The government calculations start to look a bit shaky.

I really don’t see why the government needs to give back money that they’re effectively taking away in the first place. Surely they could work directly with the 500 companies to put into place limits and have the companies put into place carbon offset plans. Why is it we are being compensated? Shouldn’t we be looking at ways to reduce our carbon footprint and if higher prices is what is required to change our behaviour then why does the government not want that behaviour to change.

The government has sent out a well produced brochure on What a carbon price means for you, surely there is more to it than what we get back in our pocket after they’ve taken more away from us in the first place.

JustLocal is all about helping to build a stronger local community. To encourage people to buy and work locally. A carbon tax simply raises the burden on all of us. The minimum we need to earn to live in our society. This burden needs to be kept in check. Once in place these taxes are never removed. Once this carbon tax becomes part of a larger trading scheme how much will the price of carbon then be and will the compensation keep pace with the increased prices and inflation. The government hasn’t in the past so I don’t see why the future will be any different.

Kelvin Eldridge

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