Direct Action can work as a policy but only if it is funded. The Abbott Government has explicitly not funded it, with Treasury estimates of the shortfall as much as $8 billion per year by 2020 if we are to meet our existing carbon reduction targets, let alone any more aggressive ones. As well, in what economic universe does a government reverse auction of cash for carbon reduction programs operate more efficiently than a universal price on carbon? Answer: none. In one system you’ll get big rent-seekers crawling all over government and bureaucrats making narrow decisions versus the other in which the universal price drives every single individual and business to new levels of efficiency, innovation, investment and technological breakthrough based upon the consideration of price. There are arguments in favour of Direct Action. One could rightly argue that the politics of the carbon price made it unworkable, or that financial markets would have Shanghaied it, or that nobody else was going to do it and thus Direct Action is a better option. But you can only argue that if it is properly funded.
Posted on: Wed, 05 Nov 2014 10:48:38 +0000
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