Carbon Tax vs Direct Action

The Institute of Public Affairs' James Paterson shows how the Coalition's Direct Action policy exposes taxpayers to "industrial scale rent seeking" on ABC's Q&A, Monday 10 November 2014.

Direct Action will lower the globe’s temperature by about as much as Labor’s carbon tax would have, (ie virtually nothing; Ed) which is to say: not very much at all because Australia makes up a very tiny proportion of the globe’s emissions.

On the Positive side of Direct Action you would certainly do less damage to the Australian economy  than the carbon tax would have. And it does have the advantage that, if the government changes its mind, it can be switched off relatively easily. On the negative side, though, I worry that it encourages business to think of government as a customer or a source of finance.

Now earlier this year the Abbott Government made in my view an excellent decision to refuse a bail-out to Qantas; but Qantas has recently said that they’ll be seeking funds through the Emissions Reduction Fund to buy a whole new fleet of planes that are more energy efficient.

It’ll be quite ironic if the government refused a bail-out for jobs but turned around and gave them a bail-out for environment. This is the kind of industrial scale rent seeking that these kinds of policies encourage and it’s very dangerous.