Treasury’s advocacy of a CO2 tax

One thing on which I agree with Julia Gillard is the poor qual­i­ty of many jour­nal­ists’ analy­sis of her pro­pos­als. But when you cram jour­nal­ists with non­sense, you must expect some of them to regur­gi­tate it from time to time.

In the­o­ry, this is an inge­nious mod­el for adapt­ing our fos­sil fuel econ­o­my to glob­al cli­mate change action. It was round­ly endorsed by this week’s annu­al Aus­tralian Con­fer­ence of Econ­o­mists. But vot­er fears stirred up by Abbott reflect gen­uine uncer­tain­ties about the assump­tions.” Extract from Michael Stutch­bury in he Aus­tralian

To talk of the Treasury’s mod­el­ling report as if it were some sort of plan for cut­ting CO2 emis­sions rather than a piece of advo­ca­cy is at best naïve. Eco­nom­ic mod­els are nev­er a plan. They’re incom­plete maps of pos­si­bly-imag­i­nary land­scapes. The Treasury’s mod­el is a piece of advo­ca­cy mas­querad­ing as an objec­tive ex-ante assess­ment. Con­se­quent­ly, the report­ed “endorse­ment” from the Con­fer­ence of Econ­o­mists can be noth­ing more than a state­ment of pref­er­ences. There is no basis for test­ing the truth of advo­ca­cy; we can only dis­cuss whether the under­ly­ing pol­i­cy pro­pos­al is valid or not. What we can say of this mod­el is that, giv­en the extent and implau­si­bil­i­ty of its assump­tions, it is a weak argu­ment. Indeed, most­ly a fan­ta­sy.

I have more faith in com­mon sense than Mr Stutch­bury. I doubt that Tony Abbott has “stirred up” vot­ers fears about the assump­tions built-into this pol­i­cy (and into the Treasury’s mod­el). Vot­ers are able to work out for them­selves that try­ing to “fix” the glob­al atmos­phere on our own (assum­ing it needs a “fix”; many vot­ers rea­son­ably doubt it) is com­plete mad­ness, espe­cial­ly for a coun­try that exports car­bon. If more of Aus­tralian vot­ers knew how much the mod­el depends on the Treasury’s assump­tions —about the avail­abil­i­ty of for­eign emis­sions “per­mits”; about the com­mer­cial suc­cess of “alter­nate” ener­gy sup­plies; about steep increas­es in the price of Aus­tralian emis­sion taxes—they might be still more “stirred up”.

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