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Goodbye Berly, hello carbon tax

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by Peter Switzer

The resignation of the Italian Prime Minister Silvio Berlusconi is at least some good news to offset the bad news that Australia has been forced to embrace a carbon tax ahead of the rest of the world. And before you accuse me of being a climate change sceptic, think about calling me something even more insulting, such as an economist!

The Carbon Crunch

Also let me throw into the mix the fact that I have published a book called the Carbon Crunch, which saw the light of day under the leadership of Kevin Rudd, and so this new carbon tax will give birth to a new book — Carbon Crunch MkII.

For those who missed it, I admitted that I wasn’t sure about the science but I concluded that most governments and many big businesses had bought the story and there seemed to be an irrepressible movement towards a cleaner, greener world economy.

This of course was before the failed Copenhagen climate change conference and it was before the GFC.

Planet issues not top of mind

Since the world economies and stock markets have been taken down to a virtual ground zero predicament, the world really doesn’t give a toss about the planet, climate science and all of the ‘important’ issues as people’s lives, jobs and families are threatened by the sack and bankruptcy.

The Portuguese, the Italians, the Irish, the Greeks and the Spaniards would hardly be worrying about the future of the planet and the credibility of climate science as they cope with 20 per cent unemployment, tax hikes, longer working hours, less holidays and everything else that goes with austerity programs.

The Greeks tossing firebombs in Athens aren’t doing this because they want their government to reduce the carbon footprint!

It’s the economy, stupid

As Bill Clinton famously once said: “It’s the economy, stupid.” And this is why I’m perplexed that Prime Minister Julia Gillard allowed herself to be forced by Bob Brown to lie to the people who had enough faith in her to make her Prime Minister.

You can put all the spin you like on this but our carbon tax with its excessive payments for voting Australians won’t change behaviours towards heating and air conditioning. The actions will hurt businesses already finding it hard to compete in a challenging world which has been made harder by a very high currency and too-high interest rates.

Economically, this isn’t the right time to overload our economy with a new impost and the action, if we must have it, should have been timed to coincide when the world was ready to play ball for the sake of the planet.

Our contribution to world carbon pollution is so small, our actions might be noble but they’re nothing more than symbolic and ill-timed with the effect of it being that it will put us at an unnecessary competitive disadvantage.

The connection

So, what is the link to Berlusconi? Well, the Dow Jones index went up 101.79 points, or 0.84 per cent, to 12,170.18 and the S&P 500 put on 14.8 points, or 1.17 per cent, to finish at 1275.92 on the strength of his promised exit after his new budget laws are passed by the Italian Parliament.

This is purely symbolic but as we saw in Greece, it looks like things are changing and there’s a rough chance that the Europeans, who have been so disappointing in responding to their rescue and reform plans in light of their debt predicament, could be heading in the right direction.

If this can happen, then global stock markets could start to reflect hope and optimism about the global economic future, which in turn could speed up the overall recovery process of both global economies and financial markets.

I believe we’ve moved too quickly to reduce our carbon footprint and the longer the world economy is under threat of recession and even depression, the dumber this move to a carbon tax looks. That’s why the Greens and the Gillardians should be happy to see the end of Silvio Berlusconi but they need to see a lot more change out of Europe to justify this punt on a hot air tax.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Wednesday, November 09, 2011

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