Carnegie hits out at Abbott's carbon roll-back plan

AAP

Federal Opposition Leader Tony Abbott's plan to roll back the carbon tax will put the budget's bottom line under pressure, an investment banker says.

MH Carnegie & Co founder Mark Carnegie said there was immense confusion about what Mr Abbott was going to do if he became prime minister, especially with the carbon tax.

"He is going to turn around and roll back the carbon tax at a time when it is clear that the revenues of the budget are under immense pressure," Mr Carnegie told a business forum in Sydney on Wednesday.

"One of the least painful ways to raise a significant amount of money is with a carbon tax, forget the scare mongering."

Mr Carnegie said energy giants ExxonMobil and Shell and BP had called for the carbon tax to stay as it would provide planning certainty.

"The real question is, we know what Tony Abbott said he's going to do but what is he really going to do," Mr Carnegie said.

"That's the big question we've got to work out.

"He is the person least committed to free market economics of the viable political leaders, of which there are four in Australia."

Mr Carnegie was referring to Julia Gillard, Kevin Rudd, Tony Abbott and Malcolm Turnbull.

He also said Mr Abbott could be at least a two-term prime minister, given the work Labor would have to do after its expected resounding defeat on September 14, as the opinion polls suggested.

"The election has already been fought and lost by the Labor Party and the experiment of minority government in Australia has been a comprehensive failure," Mr Carnegie said.

Mr Carnegie was speaking at an Australian British Chamber of Commerce function.

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It is easy for Mr Carnegie to snipe at Mr Abbott - we all know that Bankers have a vested interest in making lots of moola out of non commercial things like a Carbon Tax. He should simply butt out of these issues or at least first declare his commercial interests.
Peter , he did declare his commercial interests........he's a banker ! That is self explanatory as you then go on to outline. As for large , foreign , international energy organisations ( Exxon , BP etc ) , who cares what they think ! The Australian economy does not exist solely for their benefit. If Mr Abbott or any other Australian leader holds a different view to a 'large , foreign organisation , then I will support the Australian leader every time ! ( and I am sure that I am not alone ).
Even under the current scheme the carbon tax transfers to an ETS in 2 years locked in with the the European Price which is currently approx $6...not sure how that will protect the budget bottom line. I'm sure an investment banker would be aware of that!!!
I'm with Peter. Why would I give any credibility to an Investment Banker 's political opinions . There are far too many commentators spruking outside their areas of expertise.
I disagree with Mr. Carnegie's comment about Abbott "least committed to free market economics." He is the most committed as there is nothing free about the carbon tax and in terms of a the carbon tax and market economics: it is a government mandated market that appears currently incapable of meeting its CO2 reduction aim: as most of the world is not participating. Most of the world not participating = no properly functioning market = futility of effort. I think Abbott may disturb Mr. Carnegie with Direct Action plans. In my opinion, Abbot should scale back Direct Action while the world is deciding if or if not there will be global climate action, and the focus should go into mitigation such as increasing height of Warragamba Dam. Also, Abbot should declare that the renewable energy target should not exceed 20%. Right now as Combet is ignoring original policy of 20% and now wants 25-27% (do we need a vote in Parliament for this change?) as energy forecasts are not as high - this will mean much higher electricity bills, again, then otherwise. And it is another area where Australia will be out to lead the world on Climate Action, according to global renewable energy targets as listed by Wikipedia.
It is beyond debate that direct action is far, far more expensive (and far less effective) than a carbon tax or cap and trade system - independent studies by the Grattan Institute and many others have found this (perhaps assuming the permit price is lowered by integrating with the European scheme). Given Abbott’s policy is to achieve the same emissions reduction target by direct action rather than a carbon tax/emissions trading scheme, he is effectively saying he thinks we are not spending enough on reducing emissions, and we should spend more! It’s ridiculous, and will hollow out the budget by sucking up whatever other money is available for infrastructure and services. If Abbott had any intellectual integrity he would commit to the cheapest way of achieving his target – by keeping a version of the current system – or else admit he is not really committed to the emissions target and drop it altogether. The middle ground is economic vandalism.
The most sensible thing would be to drop the carbon tax until the rest of the world shows it is going to do something. Why should we disadvantage ourselves by trying to lead in this area? If we really want to reduce carbon, then direct action will actually have an effect while the carbon trading approach is unlikely to do anything except provide another means for traders to rort the system.
Roger, you've been sold a dummy with that argument. Direct action does not guarantee emissions reductions. It involves contracts to ATTEMPT to reduce emissions. But what do you do if the direct action projects don't actually work? You can't get the money back. Direct action will achieve LESS than a properly designed carbon tax/trading ststem, and will cost MORE. This is almost certain. Even the Shadow Minister for Climate Change, Greg Hunt, argued for a carbon trading scheme in his economics thesis. If your view is that we should not lead other nations, then we should attempt neither carbon trading nor direct action. A half way house would be energy efficiency schemes but no carbon trading, and certainly no direct action - it is the most expensive, least effective means available. And if you want a theoretical argument, it's the old capitalism vs communism argument - governments cannot pick winners better than a market.
Roger, you've been sold a dummy with that argument. Direct action does not guarantee emissions reductions. It involves contracts to ATTEMPT to reduce emissions. But what do you do if the direct action projects don't actually work? You can't get the money back. Direct action will achieve LESS than a properly designed carbon tax/trading ststem, and will cost MORE. This is almost certain. Even the Shadow Minister for Climate Change, Greg Hunt, argued for a carbon trading scheme in his economics thesis. If your view is that we should not lead other nations, then we should attempt neither carbon trading nor direct action. A half way house would be energy efficiency schemes but no carbon trading, and certainly no direct action - it is the most expensive, least effective means available. And if you want a theoretical argument, it's the old capitalism vs communism argument - governments cannot pick winners better than a market. Might I add, the media has seriously let Australians down on this debate. Everyone is so caught up with the fact that Gillard promised not to introduce a carbon tax, and with the fact that Gillard's policy has the word 'tax' in it, that they think there couldn't be anything worse than the carbon tax. There is - and it's called the coalition's direct action policy. I can't believe Abbott's still getting away with so little criticism of it, to be honest.
What a surprise that Carnegie would put forward this view. He along with the major merchant bankers of the world have been promoting this line for years. Have a look at who sponsored the Copenhagen gathering that Rudd was hooked on. Nothing more than a vested interest to make money out of what they believe is gold at the end of the rainbow. Why would Business Spectator give him the time of day with such nonsense.
Peter and Keith --> Why not address his argument rather than his credentials? Have you a valid counter to his argument that pricing carbon is an efficient vehicle for tax collection? Many experts seem to agree. Ross Garnaut for example. Julien --> the carbon price is fixed for the first three years before we enter a trading period. So emitters will have to wait before they can use cheap European permits. Thus government revenue will be relatively stable during this period.
What Mr Carnegie should understand is that Tony Abbott and his team will always do as they said all along. In my opinion it is a matter of understanding plain English and take your pick for the next election and plan accordingly.
Ross Garnaut an expert !!! give us a break.