Carbon Tax in the Australian Legislation the Essay

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Carbon tax in the Australian legislation

The threat of global warming is no longer to be neglected and international action is coming to be taken, and even supported by federal institutions. In Australia, the government has focused on the development and implementation of a legislation to tax carbon emissions. The measure has been welcomed with both praises as well as criticism, but its implementation is underway and the benefits would be felt on the long-term.

Global warming has generically been a highly debated subjected, with activities on the one hand arguing that the threat is irreversible and that the safety of the planet is in great danger, whereas corporations arguing that global warming is a make belief phenomenon. ExxonMobil for instance invested millions of dollars each year in campaigns which denied the existence of global warming (Mandia, 2011).

This year however, global warming became a verified fact and it is now impossible to scientifically argue that the threats are not real. In such a context then, the future actions of corporations are uncertain, but those of legislators converge towards environmental stability.

For several years now, economic agents and policy makers have militated for the need for environmental stability and responsibility. But in the majority of the cases, the actual efforts were limited to the recognition and the raising of awareness regarding the threats of pollution and global warming. Nowadays however, the Australian authorities have taken one step ahead and have development a new carbon law.

The carbon law developed and implemented by the Australian government -- and supported by the European Union -- represents a real effort in fighting global warming. The country as such becomes a new pioneer in battling carbon emissions and unites its goals with the other 90 countries across the globe which fight to reduce their own carbon prints (Australia Broadcasting Corporation, 2011).

2. Carbon tax law in Australia

Australia has been for years struggling to better control the environmental threats of global warming. Similar to other regions across the globe, the first step was represented by the recognition of the threats posed by global warming, which is now being followed by a more proactive approach. In line with this new approach, the Australian government has developed a new law which charges increased taxes for the companies which create the highest levels of carbon dioxide emissions.

At a more detailed level, the new law would be applied starting with July 2012 and it would impose a tax of 23 Australian dollars per tone of carbon dioxide emission. The value of the tax is the equivalent of 25 American dollars and 15 Great British pounds. It would initially focus on 500 companies, but starting with 2015, the law would be applied with the aid of the market-based system (Australia Broadcasting Corporation, 2011).

The measure was taken with the realization that Australia is one of the largest global pollutants, registering also among the highest levels of greenhouse emissions per capita of citizen. Australia depends in a proportion of 80 per cent on energy generated by coal, and it is also one of the largest coal exporters on the globe. In terms of its actual energy consumption and trade patterns, the following are noteworthy:



Rank in the global chart of the same indices


Volume of electricity produced

239.9 billion kWh



Volume of electricity consumed

222 billion kWh



Volume of electricity exports

0 kWh

Not applicable


Volume of electricity imports

0 kWh

Not applicable


Oil production

589,200 bbl per day



Oil consumption

946,300 bbl per day



Exports of oil

311,900 bbl per day



Imports of oil




Proven reserves of oil

3.318 billion bbl



Production of natural gas

42.33 billion cubic meters



Consumption of natural gas

26.59 billion cubic meters



Exports of natural gas

22.3 billion cubic meters



Imports of natural gas

6.56 billion cubic meters



Proven reserves of natural gas

3.115 trillion cubic meters


Data retrieved from the website of the Central Intelligence Agency, 2011

In this context of high levels of production, consumption and export of energy, oil and gas, the Australian government has developed new sets of legislations which force economic agents and institutions that generate high levels of carbon dioxide emissions to pay taxes for their environmental damage. The law has been criticized by the opposition, with the main argument being an economic one. Specifically, it was argued that the imposition of new taxes would materialize in larger operational costs for the economic agents. In turn, these costs would not be supported by the economic agents, but would be reflected in the retail prices of the products and services, and they would as such impact the customer.

At this incipient stage, it was estimated that prices would not increase by more than one per cent. Still, this value of the price increases could be higher than initially projected, and it would certainly be felt by the customer. An immediate impact of this price increase would be represented by the decreasing purchasing power of the Australian consumers, but a wider impact would also be felt. In this order of ideas, the Australian products and services would become more expensive within the international market, meaning as such that they would become less appealing in comparison to other products that would retail at lower prices. Specifically, it is argued by the opposition that the imposition of new taxes on carbon emissions would make Australian exports less competitive within the international market (BBC News, 2011).

In other words, the carbon tax is blamed for the weakening of the Australian economy, a problem which is even more so sensitive in the context of the internationalized economic crisis. Also, it is believed that the tax would increase the cost of living specifically for those who are mostly sensitive and susceptible -- the population living with below average incomes. Additionally, negative impacts would be felt by the industries which rely massively on energy to create their products and deliver their services, and these would also be negatively impacted. Also, it is expected for the prices of gas, oil and electricity to dramatically increase.

In this setting then, the costs to operate nationally for the economic agents would surge and this would eventually force economic agents to move outside Australia. The processes of outsourcing and offshoring would as such intensify and they would translate into higher rates of unemployment for the overall population (Bolt, 2011). In such a context then, the final benefits of the carbon tax are debatable and difficult to quantify. It would appear that the decisive criteria would be represented by desires for profitability and support for environmental responsibility.

Still, in order to compensate for the increase in price which would be generated by the new carbon tax, Prime Minister Julia Gillard has argued that $15 billion would be allocated in compensation programs to the population. The aim of the project is that of counteracting the price increases due to the implementation of the carbon tax starting with July 2012.

The financial subsidy for the Australian households would come in either or both of the two forms -- tax deductions or extra payments. It is generically expected for the subsidies to cover the full dimension of the price increases, and even to improve the living standards of the financially challenged population. At a more detailed level, the compensation program of the Australian government would include, among others, the following:

The retired population would receive up to $338 per individual, maximum $510 per year per couple

For the families which receive Family Tax Benefits, the government would offer up to $110 per child in the families with the Plan A and $69 per child in the families in the Plan B

People on allowances would be provided with an addition up to $218 per year per individual and $390 per year per couple

Singe parents would receive up to $234 per year (Thompson, 2011).

When getting passed the administrative hurdle and the potential negative impacts of the carbon tax, the benefits of the legislation emerge. These include the following:

The limitation of the costs of carbon dioxide emissions

Quick implementation and the quick generation of results

They are motivators to create environmental sustainability and they cannot be strategically avoided by economic agents (Parliament of Australia, 2010)

The positive results would manifest nation wide and would place Australia in line with other countries fighting for environmental sustainability (Premier Solar Blog, 2011).

3. Conclusions

The world is currently facing one of its most severe challenges and the primary impulse would be that of thinking of the internationalized economic crisis. This crisis would however be overcome eventually, as have others before. What is not however sure can be overcome is global warming.

Throughout its existence, human kind has severely damaged the planet to a point at which its very stability is jeopardized. The response of…[continue]

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