Monday, June 15, 2009

We smell a RAT, Mr Rudd

“Carbon Sense”
June 2009
The RAT Scheme.

“The RAT Scheme will destroy jobs, jobs, jobs.”

A statement/letter by Mr Viv Forbes, Chairman of the Carbon Sense Coalition.
13 June 2009

Any politician interested in preserving Australian jobs must vote against “The Carbon Pollution Reduction Scheme”. It will not change the climate, it will do nothing useful for the planet and it will destroy real jobs faster than green jobs can be created.

This deceptively misnamed bill is not about “carbon” nor about “pollution reduction” – it is designed to Ration and Tax human production of carbon dioxide (CO2). It is correctly named “the Carbon Dioxide Ration and Tax Scheme” or “the RAT Scheme” for short.

There is no human activity or business that produces zero carbon dioxide – every activity (even sleeping on the job) produces CO2, either directly or indirectly. And for Australia’s chief industries, there is no feasible alternative on the horizon. Electricity generation, transport and tourism, agriculture and food processing, mining and mineral processing, infrastructure and construction, forestry and fishing, metals and cement, electronics and appliances – all depend for most of their energy on hydro-carbons – coal, oil and gas.

Even with a crash-through program of investment in alternative energy, the base load power will still be required, with boilers charged and staff on standby to cope with the many times when there is neither sun nor wind energy available. Given time and the political will, nuclear power could take up base-load power generation (at higher costs). But that looks unlikely to occur any time soon.

The first thing the RAT Scheme will do is establish a “cap” - a ration or limit on the production of CO2. (The exact level of the cap, and the base reference year will apparently be set using a roulette wheel in Penny Wong’s office.)

A Carbon Energy Ration Card from an Earlier Era.

The whole purpose of the cap is to force Australia’s backbone industries to reduce production of CO2 (unless of course they are exempted, but that would make the whole exercise even more pointless and unfair than it is now). There are no real alternatives available in many applications (solar aircraft? wind powered trucks? geothermal fishing trawlers?) Thus the cap must thus reduce production.

This throttling of our key industries by way of Emission ration permits will cause the first round of job layoffs.

Then comes the tax whammy.

Most industries will have to pay for their cap entitlement – ie they have to pay to do what they have previously been doing for free. Even after they have paid for production up to their rationed entitlement, any business which wishes to return to its pre-Rat scheme production levels (above the cap), must buy new ration permits in a speculative Emissions Permit market. This is another tax which has to be recovered from customers, other businesses or shareholders.

The first law of fiscal policy is this: “If you tax something, less of it will be produced.” This is the real aim of the RAT Scheme and it will achieve that aim.

There are always marginal businesses in all industries. An increase in taxes will cause a few of them to close their doors or move to a more enlightened country. And there are always nervous bankers ready to pull the plug because of the extra risk in the speculative carbon trading market.

In the green new world there is also no room for new projects or new jobs in traditional industries – any new project will need to force closure of an old project by buying its Ration permits on the market.

These new and uncertain taxes on existing production will cause the second round of job losses.

Even those businesses that survive the production cap, the ration fee and the excess carbon tax, will be forced to increase their prices to recoup the extra costs. This makes them less able to compete with imports in the Australian market, or with other exporters in the world market. Countries such as India, China, Brazil and South Africa, who have no intention of embracing the shackles of a RAT Scheme, will be the chief beneficiaries. Overseas is where the real new jobs will be created.

This unfair competition from foreign firms will cause the third round of jobs layoffs.

To date we have only looked at things from the perspective of existing industry.

There is also a whole gamut of global warming policies that will directly or indirectly subsidize regulators, inspectors, auditors, lawyers, bankers, carbon traders, international conferences, and the manufacture and operation of subsidised facilities such as wind farms, solar arrays, carbon forests and facilities granted exemptions from the costs everyone else must bear.

The second law of fiscal policy is this: “If you subsidise something, you will get more of it”.

We will thus get more of these costly subsidised things – the Climate Change Industry looks like becoming the biggest industry in the world. It will compete with real industry for materials, labour and rationed energy, but will not put cheaper food on our plate, cheaper or more reliable electricity into the grid or make a net contribution to tax revenue.

The growing costs of the Climate Change Industry must filter back to the real economy, causing more job layoffs.

Three places in the world have already tested the Green Job Creation Myth – Spain and Denmark with massive wind and solar power developments and California which tries to lead the world in everything green.

All three have seen loss of jobs as industries close or relocate because of costly or unreliable electricity supply. A recent study in Spain has concluded that more than 2 real jobs were destroyed for every green job created. In addition Spain has 17% unemployment, electricity shortages, and power costs up by from 30% (homes) to 100% (businesses). Denmark is selling unreliable wind power at a loss, and California’s climate madness has caused a huge loss of jobs and tax revenue.

Surely Australia can learn from the mistakes of others and refuse to pass this dangerous legislation.

For more information on Green Job destruction in Spain see:

Viv Forbes Chairman
The Carbon Sense Coalition
MS 23 Rosewood Qld Australia 4340
0754 640 533

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