Carbon tax badly designed, says expert

Lowy Institute professorial fellow and Australian National University professor Warwick McKibbin has spoken out against the carbon tax, saying that it will hurt Australia's economic prosperity.

"The carbon tax taxes our competitive advantage [and has] created a system that could self-destruct because the economic costs may become so great," Mr McKibbin said in a video interview posted yesterday (July 4).

Mr McKibbin did point out that a price on carbon was necessary in Australia in order to encourage people to change their behaviours, but argued that the switch from a known price to a carbon trading scheme in 2015 would be disruptive to businesses and prevent long term predictions and decisions from being made.

While opposition leader Tony Abbott has spoken out firmly against the carbon tax, and promised to repeal it if elected into parliament, Mr McKibbin believes that the Coalition's direct action policy is also flawed.

"The opposition's policy, which is a direct action policy, might work for small abatement targets but if you're talking about substantial reductions in greenhouse emissions, it's hard to see how that policy could be scaled up," Mr McKibbin added.

Electricity suppliers across the country have been forced to raise electricity prices due to the carbon tax, although increased costs of maintenance and poles and wires have also contributed.

Households and small businesses concerned about the impact of the carbon tax might consider shopping around for a better option, as different suppliers can offer different prices based on location and usage requirements.

Posted by Charlie Moore