There’s something faintly ridiculous about the Australian Food and Grocery Council. More ridiculous, that is, than most peak business groups, whose CEOs and media people can often be found, hand on heart, averring that black is white and one plus one equals 387, in the interests of their members.
Maybe it’s the presence of Kate Carnell, who comes with all that baggage from her time as ACT Chief Minister. Perhaps it’s the sheer stupidity of the sorts of campaigns that the AFGC mounts. Last year it was the laughable food protectionism campaign launched by the council, in relation to which Carnell said “we’re not asking for a government handout … but we are after a [supportive] regulatory environment.”
I had a whack at this food security garbage but it seemed to personally offend Ross Gittins, who undertook quite the most savage and forensic takedown I can recall reading from him in nearly three decades.
Now, typically, the Food Council has jumped on the anti-carbon tax bandwagon being pushed by big polluters and their media champions. All the usual clichés were there in the council’s press release yesterday. Carnell, of course, doesn’t oppose a carbon price, “but industry is opposed to a tax that will increase the cost of food and grocery manufacturing in Australia”.
What sort of impact will a carbon price have on food manufacturing? Well, Treasury modelled the impact on food prices, so we at least know how much food manufacturers will, in Treasury’s estimation, pass through to consumers. Under the highest carbon price modelled, with no petrol offset, food prices will go up a massive … $2.30 a week. With a petrol offset, it’s $1.60, for a grand total of $83.20 a year.
Based on a $20 carbon price, which Greg Combert used as his example last week, suggesting that’s where Labor will come out on its initial price, food will go up … ready? Brace yourself: 80 cents a week with a petrol offset.
That’s a shocking $41.60 a year on households doing it tough in the face of rising prices.
This, of course, isn’t the actual direct impact on food manufacturing of a carbon price. It’s only what would be passed on to consumers. Perhaps the food industry thinks that it would be unable to pass on the impact, that the almost negligible impacts found by Treasury are just a fraction of the overall costs. But they don’t say that. That would require them advancing some evidence or reasoning, rather than mere assertions about how apocalyptic a carbon price would be.
The constant claim from business that they support a carbon price, but not one that will affect them (usually, “cost jobs”), is, literally, nonsensical. You can’t support a carbon price if you don’t want it to change anything. It’s like declaring in 1988 “I support the removal of tariffs, but not if it costs any jobs”. The purpose of a carbon price — the only purpose — is exactly to change things, to start decarbonising the world’s most emissions-intensive economy, so that at least we catch up with the rest of the world in per capita carbon usage, even if we’re in no danger of leading the world.
But at least when the Hawke government unleashed its second round of tariff reform in 1991, the economy was already plunging into recession. The reform, necessary as it was, exacerbated a serious downturn and helped turn it into a years-long period of high unemployment that wrecked tens of thousands of lives, not to mention the Keating government’s budgets. For anyone prescient enough, it would have made sense back then to warn of the impacts of reform and urge delay.
Now, unemployment is below 5% and one of the biggest dangers to the economy is skills shortages. Even if you accept the more absurdly dire claims advanced by the likes of Bluescope Steel, there will never be a better time to introduce a carbon price.
Yet the manufacturing sector — companies and unions — want to freeze the Australian economy in time, to turn it into a living museum to a carbon-era economy. They want to keep the prop of carbon protectionism, the insistence that the implicit subsidy provided by allowing big polluters to not pay the costs of carbon emissions should be retained when other forms of protectionism have mostly been stripped away.
The stripping away of that protectionism has cost far more jobs than a carbon price ever will, but they’ve been more than offset by new jobs elsewhere in a more competitive economy. Just like what will happen after a carbon price is introduced.
But rather like climate deniers, there’s a sense in which a carbon price is simply the excuse for more fundamental concerns. Manufacturing has been steadily shrinking as a proportion of the Australian economy since the 1980s, even before tariff reform. It slipped below 1 million workers last year and continues to fall. The high Australian dollar and high energy and commodities prices caused by the resources boom are only relatively recent, but they look like continuing to pressure manufacturing for years to come — how will Bluescope Steel ever make a profit again if the dollar goes to 110 US cents and iron ore prices remain at historic highs? But that’s a relatively recent phenomenon.
Other longer-term trends are shrinking manufacturing, especially the preferences of Australian consumers. Local car manufacturers continued to churn out large family vehicles when Australians increasingly wanted smaller cars, which they happily bought from importers despite tariffs. Local food and grocery manufacturers complain about rising food imports and demand government action, but there’s no one forcing Australians to buy foreign-made — they do it because they want to.
Compared to these factors — and certainly compared to the impact of tariff reform — the impact of a carbon price, even without compensation, is trivial. The so-called carbon price “revolt” is good old-fashioned protectionism by another name. And like the old variety that Labor took the historic decision to end, it won’t work in an open economy.