Blog: Glenn BrooksNotes from a large island (Part 3)

Glenn Brooks | 10 November 2011

Australia is one of those countries where nothing much that affects the greater world can happen for long periods of time, but then suddenly a controversial innovation will appear, seemingly from nowhere. Take the new carbon tax which the federal government, reliant as it is on independents to stay in power, has nonetheless just managed to push through.

Most Australians are unhappy with the tax, which they worry will greatly damage businesses, especially those reliant on exports which are already troubled by a sky-high Aussie dollar. The idea behind the new tax, which kicks in from July 2012, is that polluters will pay per tonne of carbon they release into the atmosphere. This cost will initially be set at AU$23.00 (US$23.30), and increase gradually until 2015. After that, a trading scheme will be launched, which will let the market set the cost.

If you don't follow these things closely, it might come as a shock to learn that the Aussies are just about the highest per-capita polluters on the planet, thanks to the many coal-fired power stations which power this booming economy. According to government boffins, each person is credited with being responsible for an average of 500m tonnes of carbon pollution annually. That's a fairly sobering statistic for an advanced economy, whatever your views on the ongoing global eco-debate.

The big question for those of us who monitor these things is the impact on the car industry down here. GM Holden, Ford and Toyota have thus far tried to remain neutral. In fact, a local currency that has soared from 68 cents to beyond parity with the admitedly weakened US dollar during recent years is likely to remain the major source of concern to them, especially in light of export investment programme decisions now needing to be made for the second half of this decade.

It will be worth keeping an eye on just how much this carbon tax begins to affect the Australian economy into 2012, with many down here predicting a hard landing for this current darling of the international ratings agencies some time next year. Will taxing emissions work? Can it really be done in an efficient and fair way? And perhaps most importantly of all, how will major investors such as mining and manufacturing trans-nationals react? Not by moving operations offshore, Australians hope. Personally, I would wish to see cars engineered and built down here for some time to come but hope is of course an emotion. Reality is often a different thing. Not always, but mostly.


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