EDIT: THIS ARTICLE NOW LINKS TO HEREGreg Hunt, federal Liberal MP and parliamentary environment secretary, has revealed the Liberal party's ignorance of basic economics in an attack on the Labor party's proposed carbon tax. He claimed that carbon taxes would not work because energy demand is not price sensitive, while at the same time claiming the increase in price would make energy prohibitively expensive to some consumers.
The tax would not work because energy demand was not price-responsive, and would be prohibitive to pensioners and the poor, he said.He appears to be unaware of the vast resources available to industry and the public to reduce greenhouse emissions without significantly harming productivity. If electricity consumption were as insensitive to price as he claimed, this would not make a carbon tax inappropriate. In fact, it would make electricity a good choice for a revenue raising tax. Either way, it makes economic sense to apply the tax. Also, there are plenty of other man made sources of carbon emissions and to suggest that they are all price insensitive in absurd.
He also implied the possibility of not passing the cost of cleaning up our electricity supply onto consumers - effectively subsidising it when we should be cutting back on it's use. Finally, he suggested a carbon trading system - a system that would cause electricity prices to rise just as much as a tax (of equal effectiveness), but not offer the opportunity to lower other taxes. Instead, the extra cost of electricity would go into lining the coffers of oil and coal companies.
It looks like the Labor party has the most economically rational policy on this issue, while the Liberals are stuck protecting the interests of big energy companies and trying to confuse the public about the implications of the available options to reduce our emissions.
The article from the smh:
http://www.smh.com.au/news/National/Carbon-cleanup-could-hike-power-bills/2006/12/01/1164777754081.html