Dr Martin Parkinson on the Need for a Carbon Tax

The carbon tax debate is amping up ahead of Julia Gillard’s announcement of the long-awaited carbon tax specifics, to be broadcast nationally on Sunday night. Gillard has said that almost 70% of households will be compensated.

The government’s chief economic adviser, treasury secretary Dr Martin Parkinson (pictured), is on the record as a supporter of a carbon tax. He succeeded Ken Henry in the role only a few weeks ago after heading the government’s Department of Climate Change. In March, he weighed into the debate on a carbon tax, speaking before a Senate committee earlier this year, when he voiced his doubts that the Coalition’s direct action policies could achieve the target of a 5% cut of 2000-level carbon emissions by 2020.

Speaking at an emissions trading panel during the Deakin Lectures last year, Dr Parkinson said, “We conceptually have a choice between a carbon price and regulation.” (View the video here.) To meet our bipartisan target, said Parkinson, we need to take into account that, at current rates, our carbon emissions in 2020 will be 121% of 2000 levels, so in fact what’s required is not a 5% cut but a cut of 26%.

“Any effort to achieve the targets that we have adopted bipartisanly [sic] in Australia that relies on regulation essentially relies on bureaucratic prescience… Now that by itself is so patently unrealistic it should give us all cause for pause when we come to think about regulation. The second thing that’s important in thinking about regulation is just the sheer magnitude of the abatement task in front of us.”

The choice, in the Treasury chief’s view, is a no-brainer. “These are incredibly ambitious targets… So the bottom line for us is, can we meet these bipartisan targets without a carbon price? In my mind, there is absolutely no chance we can do so.” Maybe so, but some commentators, such as Bernard Keane writing in Crikey, wonder whether the proposed tax will achieve any emissions cut at all, questioning the wisdom of so many handouts to households and business.

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