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Aug 12, 2011

The Coalition’s Direct Action Plan

Crikey readers have their say.

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The Coalition’s Direct Action Plan:

Greg Hunt, Shadow Minister for Climate Action, Environment and Heritage, writes: Re. “‘Direct action’ in more trouble as ‘soil magic’ blowouts loom” (Monday, item 4). I refer to reporting made by Mr Bernard Keane of Crikey regarding costings for the Coalition’s Direct Action Plan climate policy.

Mr Keane has made inaccurate reports on a number of occasions regarding the Coalition’s Direct Action Plan, most recently on Monday 8 August 2011 in an article titled “Direct Action in more trouble as soil magic blowouts loom”. In his article, Mr Keane says:

“Hunt’s costings already appear to have blown out once, after he stated in May that the average price of abatement purchased under his policy would be $15 a tonne, rather than about $11 a tonne in the Coalition’s original costings document.”

Mr Keane has unfortunately reversed the order of things. The Coalition’s policy estimates a cost of soil carbon reductions of between $8-10 per tonne for 85 million tonnes of soil carbon abatement as well as a general weighted average cost for abatement of around $12 a tonne. However we conservatively budgeted for a weighted average cost of abatement of around $15 a tonne or 25% more than we believe will be required. As I said in a speech to the National Press Club on 10 February 2010:

“Surely there must be a more effective way to reduce emissions than raising $4.5 billion to reduce 13 million tonnes. That is why we worked with firms to identify low cost abatement. We only needed to identify 140 million tonnes of abatement. Instead we identified 208 million tonnes of abatement at a weighted average cost of around $12 although in the paper we have allowed an average abatement price of $15.”

I enclose a full copy of the original speech for your information. Our costing estimates have not changed over the last 18 months, although we believe it may be possible to achieve an even lower weighted average cost for abatement. Unfortunately Mr Keane has reversed these figures, and seems to believe we have estimated a cost of $15 per tonne but budgeted for $12.

The Sunday Age:

Gay Alcorn, Editor, The Sunday Age, writes: Re. “OurSay gets a boost via a Bolt from the blue” (yesterday, item 16).  There was a misunderstanding in Margaret Simons’ story on The Sunday Age‘s Climate Agenda in yesterday’s Crikey.

The paper is committed to reporting on the 10 most popular questions, whatever they are. That’s the point of the exercise — allowing readers the chance to set the agenda for the paper.

And the stories will appear over several weeks after the OurSay poll closes.

The National Disability Insurance Scheme:

Melissa Madsen writes: Re. “National insurance scheme a ‘sense of empowerment’: carer mum” (yesterday, item 12). The National Disability Insurance Scheme is great news for people with disabilities, supporters, friends and families. Perhaps greater government responsibility for the costs borne by Australians living with a disability will shed some light on why prices for much essential disability equipment are so much higher in Australia than offshore. It’s almost certain that Billie’s power wheelchair does not cost as much as $17,000 if purchased in the US.

Items as basic as a Roho cushion (air cushion used by wheelchair users to prevent pressure sores) can be bought online from US retailers and shipped to Australia, for roughly half what they cost if purchased locally. (See here for details.)

The NDIS might start to look like a more affordable proposition if Commonwealth and State governments learnt to shop online for disability equipment, or allowed people with disabilities to shop around for the best price on their equipment!

Thatcher:

Justin Templer writes: Re. “Rundle: people feel like they’ve got a stake through their heart” (yesterday, item 3). It is generally accepted that mentioning Nazis or Hitler in any argument automatically nullifies the proposition being made. Equally, Rundle should know that writing that “these are Thatcher’s children, and this is Thatcher’s England, still and again, and in its third decade” nullified his argument.

Thatcher lost power in 1990 — can we please move on?

Taxing the US economy:

Sharon Grey writes: Delighted to see that Matthew Auger (yesterday, comments) takes issue with the quote from The New York Times regarding the diminution over time in US corporate tax revenue receipts as a percentage of all US federal revenue owing to increasingly aggressive tax minimisation strategies over the past 60 years.

While arguing for an apples/apples comparison, Matthew asserts that a comparison between revenues received in 1950 (30%) ought better be compared with revenues received in the mid-2000’s rather than in 2009 (6.6%). It would indeed be interesting to see those figures, but it seems highly unlikely that they would underscore anything other than a downward receipts trend.

While, as Matthew states, it is true that General Motors was “an absolute industrial powerhouse” in the 1950’s (although Matthew doesn’t note GM’s tax contribution during that time), General Electric is now the US’s largest corporation. In 2010, according to the New York Times, GE “reported worldwide profits of $US14.2 billion, and said $US5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, GE claimed a tax benefit of $US3.2 billion.” Should this be considered “arrogance”?

Matthew avers that it is “folly” to have “a tax base too heavily dependent on company tax revenue” because “if you are trying to fund steadily increasing government programmes … you really want [a] relatively steadily increasing source of revenue” and that he dislikes tax revenue volatility. Hence he suggests an American GST.

Perhaps the US should adopt some form of value-added tax, but it seems to me that the US would do well to seek to ensure appropriate returns from its existing tax mandates. The US’s Institute for Public Studies released some interesting figures on April 7, 2011 which touch on this:

  • 15,753: The number of households in 1961 with $US million in taxable income (adjusted for inflation).
  • 361,000: The number of households in 2011 estimated to have $1 million in taxable income.
  • 43.1: Percent of total reported income that Americans earning $US1 million paid in taxes in 1961 (adjusted for 2011 dollars).
  • 23.1: Percent of total reported income that Americans earning $US1 million are likely to pay in taxes in 2011, estimated from latest IRS data.
  • 47.4: Percent of profits corporation paid in taxes in 1961.
  • 11.1: Percent of profits corporations paid in taxes in 2011.

In other words, IPS researchers found that “if households with income over $US1 million today paid their federal income taxes at the same rate that comparable households paid taxes in 1961, [the US] would this year raise an additional $US231 billion” and that “if US corporations paid at the same effective tax rate that they paid in 1961, the additional tax revenue would total $US485 billion”.

It won’t happen, of course. And corporates — and individuals — are permitted to minimise tax. But taking this to the extreme, does this mean that no “legal person” would pay tax, thereby effectively refusing to support any form of “social contract”?  And then what?  Because that’s the real question.

The reduction in corporate share of US federal tax receipts over time — or as Matthew might say, the “volatility” in this revenue (over 60 years) — is one of the bases for the US’s debt issues. All this without suggesting “indulging in some seriously poor use of statistics” or being “pretty ridiculous”.

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2 comments

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2 thoughts on “The Coalition’s Direct Action Plan

  1. wayne robinson

    Gay Alcorn,

    Lots of luck regarding the Oursay forum on AGW. I’ve looked at most of the questions submitted and almost all of the most popular questions are from denialists, and not particularly good ones either.

    I personally think the best way of proceeding would be to have a published debate. Have a climate scientist put the case for AGW occurring and the consequences. Have a sceptical scientist put the case that it isn’t occurring or that it won’t be as bad as projected. Then have each address the arguments of the other.

    A similar debate could be held regarding the government’s and opposition’s plans with economists doing the arguing.

  2. Kevin Herbert

    Bernard Keane’s data interpretation skills are in question…not for the first time apparently…..c’mon Bernard……you can do better

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