Australia's Carbon Tax: An Economic Evaluation

Abstract

Australia's carbon tax has been in place since July 2012. Following the 2013 federal election and change of government, it is likely that the tax will be abolished. This paper evaluates Australia's carbon tax experience and draws lessons for policymakers in other jurisdictions who may be considering following the Australian example and implementing their own carbon taxes or cap and trade schemes. Overall, the policy was poorly thought through, badly implemented, and lacked majority public support before it began. Australia's carbon tax experience is an interesting case study in how not to go about implementing climate change policy.JEL codes: H23, Q52, Q54.

Regulatory impact on voluntary climate change–related reporting by Australian government‐owned corporations

“…Several authors have conjectured that the former regulation might have an impact on CCDs (Hogan & Lodhia, ; Lodhia, ; Hrasky, ; and Choi, Lee, & Psaros, ) and call for research into this issue. The latter regulation has been described as ‘one of the biggest structural economic reforms in the country's history’ (KPMG, ; and Luo & Tang, , p. 354), with substantial impacts on economic performance through higher electricity prices, which is difficult to pass on to consumers (Robson, ), not to mention direct effects for tax liable entities. As such, it is important to examine the impact of these regulations on CCDs, notwithstanding evidence of inconsistency between disclosure content and best practice or actual performance in other environmental contexts (Boesso, Kumar, & Michelon, ; and Chu, Chatterjee, & Brown, ).…”

The Australian Economy and Economic Policy During and After the Mining Boom

“…The other major tax introduced at the peak of the mining boom was Australia's carbon tax. As detailed by the author elsewhere (Robson ), this was also poorly designed from the point of view of overall fiscal sustainability. Tax cuts to compensate for the expected increase in the cost of living were locked in without reference to actual carbon tax prices, and so the tax was expected to worsen the budget bottom line over the medium term.…”

Critical issues in social science climate change research

“…The economic question that Turner et al (2012) ask about the efficacy of input-output accountancy methods is also fundamentally a political one, about the distribution of the cost of climate change, the apportionment of responsibility for pollutants, and the negotiation between region and nation over economic winners and losers. Thus political capital is also expended when economic policies for climate change are implemented -as in the case of Australia's recent experience with carbon tax (Robson, 2014). Third, Turner et al's (2012) concern with the degree to which consumers or producers share the responsibility for pollution demonstrates, if only implicitly, how indifferent most of us are to the global processes that bind us to distant makers, exporters and providers (Cook & Woodyer, 2012).…”