The ABC has a column on why we need a carbon tax - We need a great big tax on carbon.
Our brand new Prime Minister has nominated "putting a price on carbon" as one of the goals of her government. Re-badging the ETS as "putting a price on carbon" is a deceptive piece of political spin.
Julia Gillard didn't invent this new expression for the pre-Global Financial Crisis drive by the financial sector for a great big global derivatives scheme that many people thought would become the largest derivatives trading market in the world.
For the most obvious of reasons (lots of money) there were and are very powerful people (mostly accountants and lawyers) that desperately argued that rejecting the ETS is the same as being a climate change sceptic. They are still conceptually, joined at the hip in most of the propaganda about how to combat climate change.
If climate change is the greatest moral challenge of our times then maybe we should stop people making a fortune out of it. They will if they sell a lot more derivatives than need to be sold at prices that are either a lot higher or lower than they should be to achieve the purpose of putting a price on carbon emissions.
Are governments going to allow shorting the markets to sell emission derivatives that aren't owned by the seller? Will market systems be created that permit huge bundles of derivatives to be sold at any given moment to arbitrage minute price differences from market to market? Will there be a global market (that will be a first that will take half a century to achieve)? And after all that, why is an ETS more efficient or equitable than a tax?
This is, simply put, a complete perversion of the social policy imperative.
A consumption tax puts a wholesale price on carbon. It doesn't allow a retail price that can be doubled by managers and manipulators of an emissions derivatives trading market. No proponent of the ETS has denied that the system is a derivative which will enable the global derivatives punters to expand the ETS to a size that is far beyond its original worthy purpose.
Any sceptic should have a look at what has happened in the past 20 years in the market for foreign currencies, which is essential for the sale of exports and the purchase of imports. In Australia 2010, the market for the Aussie dollar is more than 300 times the market volume needed to enable international traders to sell Australian dollars and obtain the foreign currency they need to pay for imports of goods and services.
An ETS is better for some - the operators and the traders. It will also hugely benefit the accountants who will measure how many ETS derivatives are needed to reduce a company's carbon footprint to the determined policy level at any point in time. They will then have the life time job of auditing emissions. Audits are the continuing source of income for accounting firms. They love them.
Some are already profiting from the idea. I wonder what airlines do with the money they receive when passengers opt to pay a charge to remove their carbon footprint?
Back to first principles. What are we trying to do? Reduce carbon emissions. How do we do that? Tax carbon emissions so heavily that the emitters - you and I - start to watch our emissions because they cost too much. Sounds boring but it is just like taxing tobacco, alcohol and petrol. They are taxes intended to reduce the consumption of goods that are regarded as anti-social. The cost to our society from their consumption massively outweighs any GST or other conventional tax. So we put a great big tax on them and every body pays at a rate equal to their consumption of the anti-social goods.