ETS a tax?

Well, a day into the new Liberal leadership and the predictable scare campaign starts: "the ETS is nothing more than new a tax!"
Well of course it's a tax, you dipshits - it's a tax on big polluters who otherwise wouldn't be forced to pay for the costs they impose on the environment [and others] in the search of profit!

The environment is a 'public good' - ie one which is freely available to all and which is not charged to users. But big polluters impose a big cost on the the environment [& us all] so an ETS - or a carbon tax, for that matter - work to impose a cost on them, so that they will no longer be able to make as much money by causing damage to the environment - ie they will have to bear some cost for the damage they cause, causing them to pollute less!

So Tony Abbott and Barnaby Joyce, to the extent that it will force them to consider the cost of polluting in their business decisions, yes it is a tax, and that is not a bad thing!

A

Of backflips, and conservative perversion

The Liberal Party's repudiation of their previous agreement to pass the Federal Government's ETS scheme is [apart from being treacherous in terms of breaking a negotiated settlement] both perverse and cycnical.

Perverse, because this deal - while possibly too generous to big polluters - was probably the best scheme that big business could ever hope for, and cynical because, to satisfy a core conservative constituency [ie the Liberal heartland] in the short term, they are dealing a blow to Australia's and the Liberal's long-term interests.

And the irony is that the Labour Govt's ETS is not that much different from John Howard's ETS policy at the 2007 election. As George Megalogenis writes in today's Australian, "no mainstream political party has ever obstructed the government on an issue that it itself had promised at the ballot box... no party has ever tried to double-cross the electorate in this way before".

The Liberal backflip is a perverse reaction, to keep conservatives and grumpy old men happy. They don't deserve to win an election for a long time, and certainly not under Tony Abbott.

A "Peoples' Bank" - why not?

In last week's Australian Financial Review, there was an article where the creation of a state-funded bank, or a "peoples' bank" was proposed, to help counter-act the anti-competitive [semi-cartel] framework of the current big-four banks in Australia.

This idea was floated by a group of economists who argued that 'the global financial crisis has exposed flaws in the financial regualtory infrastructure and in the competitiveness of the financial system here'. Well 'hear, hear' I say, as this is a concept, similar to NZ's Kiwi Bank, is a concept I have floated for a number of months.

Treasurer Wayne Swan has apparently ruled it out, without any clear reason, other than to state that ' the financial system has performed very well during the gloabal financial crisis compart to all other comparable economies'... Perhaps, but at what cost?

Basically the 'big four' banks in Australia have a cosy cartel, with very limited competitive pressure imposed on them. When the Reserve Bank lowered interest rates a couple of months ago, they didn't feel compelled to pass on those cuts to their home-loan customers, and one bank even increased their mortgage rates slightly!

I cannot see any compelling reason why you would not seriously look at establishing a state-owned and state run bank in Australia. This does not stem from any 'socialist' principles, but rather because it seems that the Reserve Bank [& therefore the Government] has very little leverage over the Big four's cosy cartel - what better way to force them to keep rates low than a competitor who will offer mortgages at fair value, and pass any cuts in funding costs, directly on to their customers!

As an ancilliary benefit, it might help with the unemployment figures. Wayne, you need to lift your game a little here!

-A