Tuesday, 17 September 2013

16/9 Industry curbed by tax, says OECD

Industry curbed by tax, says OECD


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OECD research has backed Coalition claims that Australia's pioneering carbon pricing is damaging its competitvieness, with energy-intensive industries shifting offshore to countries that do not tax carbon.
The study says the only way this can be stopped is if regions with carbon prices, such as the EU and Australia, start imposing tariffs on imports from countries that have not taken action, but it concedes this could fall foul of the World Trade Organisation.
Coalition climate change spokesman Greg Hunt said the study exposed the damage the carbon tax was causing.
"The report highlights the damage caused to the Australian economy by imposing a carbon tax which is far broader and more expensive than our overseas competitors as, rather than reducing emissions, it sends Australian jobs overseas," Mr Hunt said. "There is no advantage to the climate-only penalties for Australian businesses . . . faced with an unfair tax on their domestic operations."
Treasury's budget forecasts have made an optimistic assumption that both advanced and developing countries are true to their pledges of action for reducing their carbon emissions made at the 2009 Copenhagen climate change summit.
However, the OECD study, co-written by an Australian Treasury official, Damian Mullaly, examines what happens if only a handful of advanced countries takes the minimum action pledged. In the case of Australia, that would require a 5 per cent cut in emissions from its 2000 level.
The study finds that production of goods such as alumina and steel will move to the Middle East, Indonesia and North Africa, with Australia's exports of energy-intensive goods falling by 15.9 per cent by 2020.
While Australian living standards would not be affected if all countries around the world were pricing carbon, there would be a 1.2 per cent fall in average incomes if emerging countries remained outside the scheme.
The study found that Australia was one of the most seriously affected countries, with the impact focused on its competitive position in its main export markets.
The OECD also looked at what would happen if, as is the case with Australia's emissions scheme, carbon pricing excluded agriculture, emissions from households and government, and other greenhouse gases besides carbon. This exercise showed that to meet Australia's minimum target of a 5 per cent reduction would require a carbon price of $75 a tonne, or 10 times the current European price.
The study looked at what can be achieved if the places with emissions trading systems -- the EU, Norway, Australia, New Zealand and Kazakhstan -- link together, as was proposed under the Labor government. It found that this would not stop the "leakage" of carbon emissions.
The only effective strategy would be imposing penalty tariffs on imports from countries without carbon taxes. However, it said there was "potential incompatibility with the World Trade Organisation and the risk of retaliation by other countries."
- See more at: http://www.theaustralian.com.au/national-affairs/election-2013/nation-losing-out-to-offshore-locations/story-fn9qr68y-1226719612484#sthash.1kcoUcJK.dpuf

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