Tuesday, 28 June 2011

A " Tooth Fairy " promise !

Julia Gillards promise that nine out of ten households will be fully compensated for the carbon tax can be taken as a " political " promise.   Anything to get the average person to go along with the government's wishes - and no legal obligation to keep any promise that is made.

If this carbon tax is implemented it will have a huge impact on the Australian economy - and there will be many unintended consequences that economists do not plan when looking into their crystal ball.  The one thing that is absolutely certain is that there will be price rises as a consequence - and therefore the amount of compensation can not be accurately predicted at this time - when the price of carbon has not yet even been established.

It is the oldest trick in the world for governments to promise - and deliver - a benefit which seems adequate at the time it is delivered, but which quickly falls behind rising costs when it is not revised to keep relevant with inflation.

This carbon tax looks like being implemented against the wishes of the majority of the citizens and there is no way it's impact on jobs, industry and household budgets can be accurately forecast.  There will probably be some new " green "jobs created, but will they compensate for jobs lost when some other industries are forced to cut back ?     That is as good a question as to whether this promised compensation will still be adequate twelve months down the track after the carbon tax is installed.

The citizens have a right to be cynical.   Promises made by politicians - and whatever government is in power consists of politicians -  are about as relevant as expectations of wealth from the Tooth Fairy !

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