Too much pain, too little to gain

The government says its emissions trading scheme tax will bring no risk to the economy. Indeed, Kevin Rudd constantly harps about savings of 15 per cent if we move early to implement the tax.

In fact, there is a considerable risk to the economy from the ETS tax and any alternative measures designed to force marked reductions in carbon dioxide emissions. Policies to force such reductions inevitably entail large hikes in energy prices. Even the super-optimists recognise that decarbonising the economy means dislocations in transforming the Australian economy. And the likelier outcome is that the price increases necessary to force abatement of CO2 emissions will cause dramatic reductions in living standards. Read more.