admin /20 July, 2006
The Victorian Government was seeking to demonstrate its green credentials by proposing to introduce an energy tax that will force all electricity users to increase the renewable content of their electricity supply from the present 4 per cent to 10 per cent, wrote Alan Moran, Director, Deregulation, at the Institute of Public Affairs, in The Age (20 July 2006, p.B10).
Tax of $43/MWh: The tax is to be set at $43/MWh. This means a doubling of the cost compared with the coal-fired electricity that provides 90 per cent of Victoria’s electricity.
Oh, yeah? In releasing the proposals, Energy Minister Theo Theophanous and Environment Minister John Thwaites claim the cost to households will be a mere $1 a month. They also say that the measures will create 2200 jobs. Says Moran: "One can only assume that among the contenders for next week’s press release are the proposals to turn water to wine and transform lead into gold!"
Cost far from trivial: He argues that the notion that the costs will be trivial is contradicted by the supporting material, scant as it is, that the Ministers have released. This says that the measures will bring an increase in exotic renewables of 385,000MWh a year. At the $43/MWh penalty tax deemed necessary to bring this about, that means an annual cost of $164 million, amounting to more than $2 billion over the course of its life.
ABARE telling it like it is: Hard on the heels of those proposals, ABARE, the Commonwealth’s leading economic research agency, released a report on greenhouse gas emission restraint measures. That report, prepared for the CSIRO, estimates the tax-equivalent measures necessary to reduce Australia’s greenhouse gas emissions by 36-68 per cent of business-as-usual levels. Naturally this involves much higher taxes than the $43 involved in the Victorian program, which would reduce the state’s emissions by, at best, 6 per cent.
Vic being led into trouble: And ABARE minces no words about the costs, says Moran. It estimates real wage reductions of 4 to 21 per cent, depending on the severity of the emission-reduction program. "The Victorian Government claims it is exercising leadership in the energy debate. If so, its leadership is demonstrating how to reduce living standards."
The Age, 20/7/2006, p. B10
Source: Erisk Net