The dire state of Australia’s home electrical energy market, and our lack of funding in renewables, has been a multitude of our personal making, former Treasury secretary Ken Henry has stated.
Key factors:
- A “gas export windfall tax” would pull Australia’s home gasoline costs again down
- The tax charge on windfall income may very well be 100 per cent
- It would additionally help the economic system transition to renewable energy
Australia has additionally squandered its alternative to use its enormous home gasoline reserves as a transitional gasoline to shift our electrical energy system away from a heavy reliance on coal to renewables, he says.
“It’s been squandered through politicking — partly ideological, partly I think driven by personal ambition — and it’s put us in a very bad place,” he instructed the ABC this week.
“It’s too late to have the sort of reliance upon gas-fired power as a transitional fuel that we were imagining last century.”
Dr Henry, who was Australia’s Treasury secretary from 2001 to 2011, argued in 2004 that Australia ought to undertake a nationwide emissions buying and selling scheme.
In his 2010 Tax Review, he warned energy markets may change into unstable if traders weren’t supplied with adequate certainty to make long-term funding plans for renewable energy.
Now, wanting again, he says no-one concerned in energy policy-making within the late Nineteen Nineties and early 2000s may say that they did not see Australia’s present energy disaster coming.
But a gasoline export windfall tax may help to fix issues, he stated.
Australian policymakers blew it
Dr Henry spoke to the ABC following one of the vital tumultuous weeks in Australia’s energy coverage expertise.
Last week, the electrical energy system on Australia’s japanese seaboard was thrown into chaos as a scarcity of energy provide ran headlong into spikes in demand as individuals elevated their energy use throughout a extreme chilly snap.
Some fossil-fuel turbines had withdrawn an enormous quantity of capability from National Electricity Market, which worsened the forecast scarcity of electrical energy and prompted unprecedented regulatory intervention.
There had been dire warnings about doable blackouts, which prompted politicians to ask voters to change off home equipment to keep away from catastrophic stresses on the system.
And the disaster of skyrocketing gasoline costs continued, as multinationals made extraordinary income exporting Australian gasoline abroad.
Dr Henry stated it was a scenario we should not be in.
“It’s weird is not it?” he said.
“We’ve got a global energy price shock, energy prices around the world are going through the roof. Australia is an energy superpower; we have an abundance of just about every source of energy imaginable.
“And but, we have got multinational corporations making extraordinary windfall income whereas Australian households, and Australian producers reliant upon energy, are getting it within the neck.
“How did we end up in this place?”
A gas-led restoration?
Dr Henry stated Australia’s political leaders blew their alternative to have extra management over Australia’s gasoline fields to help us transition our energy system to renewable energy.
He stated the present disaster was foreseeable, and it has been a catastrophe lengthy within the making.
“Many people will remember that 25 years ago the Kyoto Protocol was signed, in 1997. It came into force in 2005,” he stated.
“That gave Australia eight years to design an optimum coverage strategy for local weather change.
“Senior public servants in Canberra readily got here to the conclusion that an optimum coverage response would be an economy-wide value on carbon,” he said.
A Coalition government, led by prime minister John Howard, was in power from 1996 to 2007.
Dr Henry said a price on carbon could have been introduced in different ways, either with an emissions trading scheme or a carbon tax of some sort.
But it was “essential” that a price on carbon be introduced as quickly as possible, before Kyoto came into force, to help the business community make long-term investment decisions as Australia prepared to shift to a heavy reliance on renewables.
“And the explanation was that, approach again then, final century, individuals had in thoughts that the Australian electrical energy system would undergo phases,” he said.
“From a heavy reliance upon coal, to a transitional part that would be closely reliant upon gas-fired energy turbines, till we acquired to the third part, and the last word part, of heavy reliance upon renewable energy.
“But the risk was that if we didn’t get the policy settings right, way back then, we would miss out on the opportunity to rely upon our vast gas reserves as a transitional energy fuel.
“And guess what? That’s what we have accomplished.”
A Labor government, in power federally between 2007 and 2013, eventually introduced a carbon pricing scheme late in 2012, but it was repealed by the next Coalition government in 2014.
Meanwhile, gas prices on Australia’s east coast have been deliberately linked to global gas prices — with no reservation policy for Australian households — and multinationals are making extraordinary profits exporting our gas overseas.
Dr Henry said it was a situation we shouldn’t be in, but we couldn’t turn the clock back.
However, he said if we still wanted to have a “gas-led restoration” we’d have to do something about the domestic price of gas.
And the simplest way to do that would be with taxation, he said.
We could start pushing domestic gas prices back down for Australian consumers and manufacturers by heavily taxing the windfall profits of the multinational gas companies.
“Given the place we are actually, I do assume a gasoline export windfall tax would be the best approach to scale back the home value under the world value,” he said.
“[It would] assure adequate provide of gasoline for home customers, each households and companies, and naturally it would have the extra advantage of producing very substantial income for the price range.”
He said there was “no financial case” why those windfall profits couldn’t be taxed at a rate of 100 per cent.
Gas export tax would help to fix Australia’s energy crisis, says Dr Ken Henry & More Latest News Update
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