Analyst: Carbon tax repeal is “perfect storm of stupidity”

BUSINESS groups have welcomed the abolition of the carbon tax, but economics experts have warned the repeal is only delaying the inevitable, which will cost more the longer the delay.

Prime Minister Tony Abbott and his Environment Minister Greg Hunt were among Coalition frontbenchers celebrating the election policy achievement in Canberra on Thursday.

After navigating the route through a hostile Senate, the government, on its third attempt, succeeded in repealing the carbon tax on the last certain day of sittings before a five-week winter recess.

Roundly criticised by Labor and The Greens, the repeal of the tax will be sealed once signed off on by Governor-General Sir Peter Cosgrove.

While most of the business community welcomed the government's achievement, Deloitte analyst Paul Dobson said the removal of the tax was not the end of the matter.

He said the changing policy landscape on climate change, and the government's plans for direct action - albeit threatened by the Senate - will mean a continued focus on emissions reductions.

Mr Hunt on Thursday was quick to say the policy, of giving big polluters $2.5 billion to reduce their emissions, was a "long-term" one, despite the deteriorating budget.

But Mr Dobson said businesses would still have to deal with the "long tail of compliance" involved in adjusting to the removal of the tax, and prepare for any new policies that could result from the volatile Senate.

But climate policy and economic experts on climate policy have variously described the move as a "backwards step" and a "perfect storm of stupidity".

Melbourne Energy Institute senior energy analyst Dr Roger Darville said the carbon tax had already reduced emissions by 10 mega tonnes of carbon dioxide between 2012 and 2014.

"This change has been driven by the price on carbon, as well as declining demand and increasing wind power," he said.

"The cost of this shift is carried primarily by the largest emitters who have seen their revenue slashed, which is exactly what the price on carbon was supposed to do."

Victoria Institute of Strategic Economic Studies' Professor Roger Jones similarly described the repeal as a "perfect storm of stupidity", combining "poor reasoning and bad policy making".

He said the carbon tax repeal showed a complete disregard of climate change and its impacts, a "mistrust of market forces", and largely, "a total failure of governance by government".

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