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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