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

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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