Nuts to NAB

If ever you needed a demonstration that “senior bankers” view the economy only as a prop for their loan books this nonsense is it.

“‘If you are asking for an economic assessment of the two (policies), a carbon price followed by an ETS is economically superior. It will drive certainty and investment,’ the NAB chief told a lunch organised by the Committee for Economic Development of Australia.” Extract from The Australian

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p>How can a tax that reduces growth (even in the Treasury’s dubious projections) “drive investment”? Even “revenue neutral” taxes only re-allocate resources. They don’t create jobs, don’t lift demand, don’t encourage investment. Taxes on our comparative advantage in carbon production will inevitably cost jobs by raising prices (= reducing factor returns) thus feeding consumer caution and depressing both domestic and foreign investment.

As for “creating certainty”, the carbon tax will do so only by confirming what you feared all along; the fiscal avarice of wasteful governments like the present Labor/Green coalition.

I agree we can safely predict the emergence of a narrow, rent-seeking class of investors who will be energised by the regulations surrounding a carbon tax…

The market for government tax-subsidies (such as defined exceptions or “free” emission permits under an ETS) will flourish. It is already building steam. But these unproductive “investments” are nothing more than barnacles on the bottom of a foundering ship.

Maybe Clyne thinks that there will be a big demand for investment in “renewables” and “clean coal” or mitigation technologies. But what basis is there for believing that any of these investments will match our export coal, gas, minerals processing and manufacturing industries? His shareholders should demand a full explanation of such an eccentric strategy.

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