Originally published in The Australian Financial Review on July 15, 2014

Just as introducing the carbon tax didn’t really drive the cost of a leg of lamb to $100, removing it isn’t really going to have any noticeable impact on the cost of living.

Supermarkets are adamant they didn’t increase prices when the carbon price came in, and they are just as adamant they won’t cut prices when it is scrapped.

In rich countries with strong economies, politics revolves around symbolic issues. Asylum seekers account for a tiny fraction of our rapid population growth but are the focus of all our debate about population.

Our public debt is tiny, but the political furore around it prevents meaningful debate about the kind of infrastructure and human capital we should invest in. The carbon price was never really a “wrecking ball” through the economy, but the polemic around it prevented meaningful debate about shifting the burden of tax away from labour and towards pollution.

If not repealed, the carbon price introduced by Labor is set to fall from $25.40 today to about $8 next June, when the fixed-price period ends and the floating-price period begins.

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